What happened

Shares of Wesco Aircraft Holdings (NYSE:WAIR) climbed more than 18% on Friday after the aerospace parts distribution company reported better-than-expected earnings and indicated its long-running restructuring plan was nearing its final stages.

So what

Wesco reported fiscal second-quarter adjusted earnings of $0.23 per share on revenue of $426.5 million, beating analyst expectations for $0.20 per share on sales of $415 million. The company said that based on the first six months of its fiscal year, it now expects net sales in fiscal 2019 to increase at a mid- to high-single-digit rate compared with last year, and expects a high-single-digit increase to adjusted EBITDA for the year.

The company, a distributor of fasteners, consumables, and related products to the aerospace sector, had been an underperformer in recent years, and its competitive position became more complicated last year when Boeing (NYSE:BA) acquired Wesco archrival KLX in a bid to grow its distribution business.

Two planes flying.

Image source: Getty Images.

Wesco has responded with a cost-cutting plan it calls Wesco 2020 designed to streamline the company and help it better compete with Boeing and other distribution efforts. CEO Todd Renehan in a statement accompanying earnings said the full impact of the plan is only beginning to work through the system.

"Cost savings are expected to increase during the year as we move closer to our annualized pre-tax benefit target of at least $30 million during fiscal 2020," Renehan said. "While we still have a lot of work ahead of us, I'm pleased with our progress to date."

Now what

Fiscal 2019 was billed by Wesco as a year of transition. And based on the results, it appears that transition is going well. The plan is for most of the one-time costs and investment associated with the restructuring to be complete by the end of the current fiscal year, allowing for results to improve into 2020.

There are still some issues investors need to watch closely. Gross margins fell 160 basis points year over year due to what the company described as "strategic" contract renewals that had lower pricing, and due to slowness in Europe and Asia. It remains to be seen if Wesco is being dragged into a pricing war, or at least forced to accept lower pricing to keep key customers, and weakness in international markets could slow or complicate matters in the quarters to come.

But after a long run of difficulty that caused its shares to underperform the S&P 500 by nearly 100 percentage points over a five-year period, Wesco appears to finally be on the mend. And that was reason enough for investors to rejoice on Friday.