B/E Aerospace issues $2.2 billion of term debt for KLX spinoff, ends Q4 with $293 million cash

By Lisa Kerner

Charlotte, N.C., Jan. 29 – B/E Aerospace, Inc. executive chairman Amin Khoury said 2014 was “a defining year in the history of the company” with the spinoff of KLX Inc. on Dec. 16.

Khoury made his comments during the company’s fourth-quarter and full-year 2014 earnings conference call on Thursday.

“As part of the spinoff, we refinanced the capital structure of ‘new’ B/E by redeeming $2.6 billion of pre-spin B/E Aerospace debt with ‘new’ B/E issuing $2.2 billion of prepayable term debt and putting in place a $600 million revolver, which is currently undrawn,” he said.

When asked about deleveraging, management said that after the refinancing B/E was in the “four range” but is more comfortable at around 2.5 times. Expected free cash flow should help drive leverage down to a more comfortable level “before the end of 2016.”

Following the spin off, B/E’s board adopted a capital allocation policy geared toward returning cash to shareholders and paying down debt. The company initiated a $0.76-per-share dividend for 2015 and authorized a $400 million share repurchase program, according to Khoury.

The company ended the year with cash and cash equivalents of $293 million and total long-term liabilities of $2.43 billion. This compares to $638 million and $2.21 billion at Dec. 31, 2013, according to the earnings news release.

Financial highlights

Annual revenues increased 18% to $2.6 billion and adjusted operating earnings were up 20% at about $466 million, year over year.

Full-year adjusted EBITDA of $571 million represents a 21% increase over the prior year.

Fourth-quarter revenues were up 10% at $638 million, adjusted operating earnings were up about 8% at $111 million and adjusted EBITDA increased 12% to $138 million.

The company had 2014 adjusted net earnings and adjusted net earnings per diluted share of $261.9 million and $2.51 per share, respectively. This represents year-over-year increases of 26.3% and 25.5%, respectively.

B/E’s fourth-quarter adjusted net earnings were $59.8 million, an 8% increase from the prior-year period, while adjusted net earnings per diluted share increased 7.5% to $0.57 per share.

2015 guidance

Looking ahead, Khoury said B/E maintains leading positions in growing markets and has a very substantial backlog plus strong cash flow generation.

He confirmed the company’s full-year 2015 guidance of revenues between $2.8 billion and $2.9 billion, or a 10% growth over 2014.

Earnings per share for 2015 are expected to be about $3.00 per diluted share, or roughly 20% higher than 2014 adjusted earnings per share, according to the release.

For the first quarter of 2015, B/E expects revenues to increase by about 8% and operating earnings to increase by 10%. First-quarter EBITDA is expected to increase 13% compared to the first quarter of 2014. The company expects first-quarter 2015 earnings per diluted share to increase roughly 16% to $0.72.

B/E Aerospace is a Wellington, Fla., manufacturer of aircraft cabin interior products and provider of aerospace fasteners, consumables and logistics services.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.