Global Fastener News

A Tale of Two Companies

A Tale of Two Companies
May 24
23:40 2018

In May, Boeing agreed to acquire aerospace fastener supplier KLX’s Aerospace Solutions Group, for $4.25 billion. The agreement comprises an all-cash transaction for $63 per share and the assumption of approximately $1 billion of debt.

“Our customers have long desired a supplier who could offer essentially 100 percent of their requirements for fasteners, consumables and expendables,” stated KLX CEO Amin Khoury.

Just a few years ago, that could easily have been Wesco Aircraft.

From 2012 to 2015, Valencia, CA-based Wesco Aircraft, which manages aerospace supply chains, with over 525,000 parts, including nuts, bolts, bushings, clamps, collars, pins, screws and washers, found impressive success.

During that time, Wesco Aircraft sales nearly doubled to $1.5 billion.

KLX – the former B/E Aerospace fastener division, launched in 2015.

With approximately 2,000 employees, Miami-based KLX Aerospace Solutions Group operates facilities in more than 15 countries. KLX distributes fasteners, bearings and other parts for commercial, military and business jets and provides logistics services.

“This acquisition is the next step in our services growth strategy, with a clear opportunity to profitably grow our business and better serve our customers in a $2.6 trillion, 10-year services market,” said Stan Deal, CEO of Boeing Global Services.

Boeing said KLX’s Aerospace Solutions Group will remain in Miami but will be integrated with aerospace parts distributor Aviall, which Boeing acquired in 2006.

During 2017, KLX Aerospace Solutions Group segment (ASG) revenues – primarily from fasteners – rose 5.9% to $1.42 billion, as revenues from both commercial aerospace manufacturing and aftermarket customers increased by approximately 6%. ASG operating earnings increased 8.1% to $238.5 million.

“KLX, which was spun out of airplane-seat maker B/E Aerospace in December 2014, seemingly had the upper hand on Wesco,” according to NASDAQ.com. “The company boasts more than 1 million part numbers in stock, compared to Wesco’s 565,000 active SKUs, and last year claimed it had booked about $625 million in new business.”

“The differential performance between ourselves and the No. 2 competitor in the industry is pretty stark,” KLX CEO Amin Khoury said on a conference call last summer.

Boeing is already one of the largest buyers of the fasteners, bolts, and seals that companies like KLX and Wesco distribute, and since 2012 has had an arrangement with parts manufacturers, including Arconic and  Berkshire Hathaway-owned Precision Castparts to buy parts at bulk pricing, according to NASDAQ.com.

For more detailed information on public companies with fastener holdings, visit the FIN STOCK REVIEW section of GlobalFastenerNews.com.

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