Amin J. Khoury, CEO of B/E Aerospace (BEAV), spoke Wednesday morning at the Cowen & Co. 35th Annual Aerospace/Defense & Transportation Conference at the InterContinental New York Barclay in New York City. CFO Thomas P. McCaffrey joined Khoury for the presentation.
Khoury noted that the aftermarket sales for B/E Aerospace recouped over the last three quarters, after six quarters of tepid growth. Khoury expects that aftermarket growth for the next three to five years will track revenue passenger mile growth, supplemented by new products and services.
According to Khoury, B/E Aerospace’s inventory, breadth, depth, and IT assets provide it with a strong competitive advantage in the aftermarket space. In terms of the retro-fit market, he described it as providing solid performance in the last quarter of last year. He stated that robust delivery rates of wide body aircraft is likely to translate into high growth rates in the retro-fit market for B/E as airlines move to incorporate new equipment from those wide body aircraft into their exiting fleet.
Additionally, Khoury highlighted the competitive advantage of B/E Aerospace in providing same-day delivery of orders. In response to a question on why B/E Aerospace is increasing investments in the oilfield rental area, Khoury noted that the oilfield rental business is an excellent opportunity to accelerate growth rates of the CMS business which leverages several of the strengths of B/E Aerospace. He stated that the market is attractive because of strong secular growth, manageable competition and growth rates faster than the aerospace business at comparable margins.
Khoury estimated that the company will grow that business to approximately 10%, up from 5%, over the next several years. The appointment of Werner Lieberherr to Co-CEO, according to Khoury, does not indicate any changes in the management of the company.
Overall, Khoury stated B/E Aerospace expects quarterly earnings to progress over the first half of this year and to accelerate in the second half of the year due to the supplier furnished equipment and CMS business. He noted that the company is very well positioned, with an $8.8 billion backlog, and that it should be able to grow faster than the aerospace business generally due to its leverage to the wide body market, SFE programs and its large share of the first class business.
To view the full presentation on the company website, click here.
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