7/7/2014 3:31:00 AM
HEADLINES
From FIN?s Stock Review of B/E Aerospace:
In 2008 B/E Aerospace Inc. completed acquisition of Honeywell’s aerospace fastener distribution business, Honeywell Consumable Solutions, for $1.06 billion, transforming B/E Aerospace into one of the largest distributors of aerospace fasteners in the world.
“The integration of Honeywell’s distribution business with ours is expected to be an important driver of margin expansion and earnings growth for B/E Aerospace over the next three years,” stated B/E Aerospace CEO Amin Khoury. “The combined businesses are expected to generate more than 50% of B/E Aerospace’s operating earnings beginning in 2009, and to steadily increase the distribution segment’s percentage contribution to B/E Aerospace’s operating earnings.”
B/E’s new segment, Consumables Management, provides logistics services OEMs, airlines, repair shops, flight service centers and distributors, as well as distributing aerospace fasteners.
As part of the deal, B/E signed a 30-year contract to become Honeywell’s exclusive licensee to sell fasteners, seals and other products, as well as supplying Honeywell’s production facilities.
Consumables Management operates a 62,000 sq ft manufacturing facility in Bridgeport, West Virginia, along with seven distribution centers in the U.S, two in Germany, two in the UK, and one in France.
Aerospace fastener supplier B/E Aerospace Inc. will separate its businesses into two independent, publicly traded companies — one manufacturing aircraft cabin interior equipment, and the second focused on distribution, logistics and technical services for the aerospace and energy services markets.
The company said the action “represents an important step in its ongoing strategic review process.”
“Our decision to separate the businesses was made as part of the evaluation of the company’s strategic alternatives which has been undertaken by our management team and board of directors, together with our independent advisors,” co-CEO Amin Khoury stated.
B/E Aerospace plans to separate the businesses via a tax-free distribution to shareholders, with shareholders holding shares in two independent and publicly traded companies.
One of those would be Services Co., which would distribute aerospace fasteners, consumables and logistics services to the airline and aerospace industries. Services include inventory management and replenishment, creative and differential supply chain solutions, packaging and bar-coding, parts kitting, quality assurance testing and purchasing assistance programs.
On a pro-forma basis, Services Co. had $1.6 billion in revenues and EBITDA (excluding transaction expenses) of approximately $365 million, representing 22.8% of revenues, for the trailing 12 months ending March 31, 2014, as adjusted for all recent acquisitions as if they had been made as of January 1, 2013.
Service Co. facilities include a 62,000 sq ft manufacturing facility in Bridgeport, WV, along with seven distribution centers in the U.S, two in Germany, two in the UK, and one in France.
Khoury – co-CEO with Werner Lieberherr – cited benefits to the businesses, including (1) focus on distinct operational priorities; (2) allow flexibility for each business to pursue the most appropriate growth and investment strategies; (3) determine the most appropriate compensation system and performance measurement metrics; (4) and pursue the optimal capital structure and free cash flow allocation policies.
If the businesses are separated, B/E projects it will happen in the first quarter of 2015.
Headquartered in Wellington, FL, in addition to aerospace fasteners, aircraft cabin interior products and the world’s leading provider of aerospace fasteners, consumables and logistics services. B/E Aerospace designs, develops and manufactures a broad range of products for both commercial aircraft and business jets. B/E Aerospace manufactured products include aircraft cabin seating, lighting systems, oxygen systems, food and beverage preparation and storage equipment, galley systems, and modular lavatory systems. The company also provides cabin interior reconfiguration, program management and certification services. Web: beaerospace.com
Editor’s Note: For a summary of each of the past six years of B/E Aerospace, CLICK HERE.
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