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Parts Distributor Hopes to Take Off in New Markets

Santa Clarita’s Wesco Aircraft Holdings Inc. should pick up new customers in Asia and in high-tech industries with its acquisition last week of Canadian firm Interfast Inc.

The $131 million deal, announced May 24, is Wesco’s first acquisition since the aerospace parts distributor and logistics provider went public last summer.

Carter Copeland, who follows Wesco’s stock as an analyst at Barclays Capital Inc. in New York, said in a research note that Toronto’s Interfast expands Wesco’s presence in industries other than aerospace, and gives the company new customers in both North America and Asia.

While aerospace manufacturing makes up the bulk of Interfast’s business, the company also distributes parts to the electronics and general industrial markets.

Interfast also has more customers in the business of aerospace maintenance, repair and overhaul, a business segment Wesco has wanted to expand into, Chief Executive Randy Snyder said in a company statement. Customers for maintenance, repair and overhaul, or MRO, represent just about 2 percent of Wesco’s sales.

“This transaction will support our initiative to implement an MRO platform to provide this important set of customers with the world-class service and on-time delivery that our (manufacturing) customers have experienced for decades,” Snyder said.

Wesco officials did not return calls for comment.

Interfast is privately held, but Copeland of Barclays estimated the company has annual sales of about $75 million. Wesco, by comparison, had sales worth $711 million last year.

The acquisition likely won’t affect Wesco’s earnings this year, Copeland said. He estimated 2012 earnings per share of 92 cents and maintained that estimate after last week’s announcement. But he believes the deal should increase Wesco’s earnings slightly next year and he boosted his estimate for 2013 by 3 percent from $1.20 to $1.24.

Copeland and another analyst, Ryan Merkel of William Blair & Co. LLC in Chicago, kept “buy” ratings for Wesco shares. Shares dropped slightly the day of the announcement, falling about 2 percent to close at $14.05.

Early this month, Wesco shares fell sharply after the company announced lower second quarter profits and lowered its guidance for the year. Net income for the quarter ended March 31 was 21 cents per share, down from 24 cents per share in the same period last year. The company said the lower profits were due in part to the added administrative expense of operating as a public company.


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