KLX (KLXI) 10-Q 26 May 16 2016 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Apr. 30, 2016	May. 23, 2016
Document And Entity Information
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Apr. 30, 2016
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q1
Entity Current Reporting Status	Yes
Entity Registrant Name	KLX Inc.
Entity Central Index Key	1,617,898
Current Fiscal Year End Date	--01-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		52,707,434

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions	Apr. 30, 2016	Jan. 31, 2016
Current assets:
Cash and cash equivalents	$ 449	$ 427.8
Accounts receivable–trade, less allowance for doubtful accounts ($11.0 at April 30, 2016 and $11.3 at January 31, 2016)	267.8	259.6
Inventories, net	1,284	1,295.3
Other current assets	39.5	40.1
Total current assets	2,040.3	2,022.8
Property and equipment, net of accumulated depreciation ($121.6 at April 30, 2016 and $109.3 at January 31, 2016)	266.7	260.5
Goodwill	968	954.9
Identifiable intangible assets, net	263.3	262.7
Deferred income taxes	159.6	163.4
Other assets	22.8	26.7
Total assets	3,720.7	3,691
Current liabilities:
Accounts payable	143.4	145.9
Accrued liabilities	112.2	115.3
Total current liabilities	255.6	261.2
Long-term debt	1,180.1	1,179.5
Deferred income taxes	15.6	16.2
Other non-current liabilities	$ 35.4	$ 31.6
Commitments, contingencies and off-balance sheet arrangements (Note 9)
Stockholders' equity:
Preferred stock, $0.01 par value; 1.0 million shares authorized; no shares outstanding
Common stock, $0.01 par value; 250.0 million shares authorized; 53.2 million shares issued as of April 30, 2016 and 53.3 million shares issued as of January 31, 2016	$ 0.5	$ 0.5
Additional paid-in capital	2,667.3	2,662.4
Treasury stock: 0.5 shares at April 30, 2016 and 0.4 shares at January 31, 2016	12.8	12.5
Accumulated deficit	(367.8)	(373.7)
Accumulated other comprehensive loss	(53.2)	(74.2)
Total stockholders' equity	2,234	2,202.5
Total liabilities and equity	$ 3,720.7	$ 3,691

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Apr. 30, 2016	Jan. 31, 2016
Condensed Consolidated Balance Sheets
Accounts receivable - trade, allowance for doubtful accounts	$ 11	$ 11.3
Property and equipment, accumulated depreciation	$ 121.6	$ 109.3
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	250,000,000	250,000,000
Common stock, shares issued	53,200,000	53,300,000
Treasury stock	500,000	400,000

Condensed Consolidated Statemen

Condensed Consolidated Statements of Earnings and Comprehensive Income (Unaudited) - USD ($) $ in Millions	3 Months Ended
	Apr. 30, 2016	Apr. 30, 2015
Condensed Consolidated Statements of Earnings and Comprehensive Income
Product revenues	$ 331.1	$ 348
Service revenues	37.1	83.5
Total revenues	368.2	431.5
Cost of sales - products	229.4	243.7
Cost of sales - services	49.3	80.2
Total cost of sales	278.7	323.9
Selling, general and administrative	60.4	60.1
Operating earnings	29.1	47.5
Interest expense	18.9	18.6
Earnings before income taxes	10.2	28.9
Income tax expense	4	11
Net earnings	6.2	17.9
Other comprehensive (loss) income:
Foreign currency translation adjustment	21	(0.4)
Comprehensive income	$ 27.2	$ 17.5
Net earnings per share - basic	$ 0.12	$ 0.34
Net earnings per share - diluted	$ 0.12	$ 0.34

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions	3 Months Ended
	Apr. 30, 2016	Apr. 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) earnings	$ 6.2	$ 17.9
Adjustments to reconcile net earnings to net cash flows provided by operating activities:
Depreciation and amortization	16.6	20.9
Deferred income taxes	2.4	9.8
Non-cash compensation	4.8	3.9
Amortization of deferred financing fees	1.1	0.8
Excess tax benefit realized from prior exercises of restricted stock		(0.9)
Provision for doubtful accounts	(0.3)	0.9
Loss on disposal of property and equipment	1.5	0.5
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable	(6.5)	(2.3)
Inventories	12.4	7.9
Other current and non-current assets	4.8	(2.4)
Accounts payable	(2.6)	18.4
Other current and non-current liabilities	1	31.2
Net cash flows provided by operating activities	41.4	106.6
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(19.2)	(35.6)
Acquisitions, net of cash acquired		1
Net cash flows used in investing activities	(19.2)	(34.6)
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock	(3.3)	(0.1)
Excess tax benefit realized from prior exercises of restricted stock		0.9
Deferred acquisition payments		(91)
Net cash flows used in financing activities	(3.3)	(90.2)
Effect of foreign exchange rate changes on cash and cash equivalents	2.3	0.1
Net increase (decrease) in cash and cash equivalents	21.2	(18.1)
Cash and cash equivalents, beginning of period	427.8	447.2
Cash and cash equivalents, end of period	449	429.1
Cash paid during period for:
Income taxes paid, net of refunds	$ 1.6	3.6
Interest		$ 0.4

Description of Business and Bas

Description of Business and Basis of Presentation	3 Months Ended
	Apr. 30, 2016
Description of Business and Basis of Presentation
Description of Business and Basis of Presentation	Note 1. Description of Business and Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. All adjustments which, in the opinion of management, are considered necessary for a fair presentation of the results of operations for the periods shown are of a normal recurring nature and have been reflected in the condensed consolidated financial statements. The results of operations for the periods presented are not necessarily indicative of the results expected for the full fiscal year or for any future period. The information included in these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the KLX Inc. (the “Company” or “KLX”) Annual Report on Form 10-K for the fiscal year ended January 31, 2016. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and related disclosures. Actual results could differ from those estimates.

Recent Accounting Pronouncement

Recent Accounting Pronouncements	3 Months Ended
	Apr. 30, 2016
Recent Accounting Pronouncements
Recent Accounting Pronouncements	Note 2. Recent Accounting Pronouncements In September 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-16, Business Combinations (Topic 805) (ASU 2015-16). ASU 2015-16 requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments in this update require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amendments in this update require an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The Company adopted the provisions of ASU 2015-16 during the quarter ended April 30, 2016. The adoption of ASU 2015-16 did not have a material impact on the Company’s consolidated financial condition, results of operations, cash flows, or disclosures . In June 2014, the FASB issued ASU 2014-12, Compensation – Stock Compensation (Topic 718) Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period, a consensus of the FASB Emerging Issue Task Force (ASU 2014-12). ASU 2014-12 brings consistency to the accounting for share-based payment awards that require a specific performance target to be achieved in order for employees to become eligible to vest in the awards. The Company adopted the provisions of ASU 2014-12 prospectively to all awards granted or modified after the effective date during the quarter ended April 30, 2016. The adoption of ASU 2014-12 did not have a material impact on the Company’s consolidated financial condition, results of operations, cash flows, or disclosures . In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting , which amends ASC Topic 718, Compensation – Stock Compensation . The ASU includes multiple provisions intended to simplify various aspects of the accounting for share-based payments. The ASU is effective for annual periods beginning after December 15, 2016, and interim periods within those years. Earlier adoption is permitted. The Company is currently evaluating the effect this update will have on our consolidated financial statements. In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers , which updated the guidance in ASC Topic 606, Revenue Recognition . The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should identify the contract(s) with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when (or as) the entity satisfies a performance obligation. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date . The amendments in this update deferred the effective date for implementation of ASU 2014-09 by one year and is now effective for annual reporting periods beginning after December 15, 2017. Early application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that period. In April 2016, FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing , and in May 2016, ASU 2016-12, Revenues from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients both of which provide supplemental adoption guidance and clarification to ASU 2014-09. ASU 2016-10 and ASU 2016-12 must be adopted concurrently with the adoption of ASU 2014-09. The Company is currently evaluating the impact this guidance will have on its consolidated financial condition, results of operations, cash flows and disclosures and is currently unable to estimate the impact of adopting this guidance.

Inventories

Inventories	3 Months Ended
	Apr. 30, 2016
Inventories
Inventories	Note 3. Inventories Inventories, made up of finished goods, consist primarily of aerospace fasteners and consumables. The Company values inventories at the lower of cost or market, using first ‑in, first ‑out or weighted average cost method. The Company regularly reviews inventory quantities on hand and records a provision for excess and obsolete inventory based primarily on historical demand, estimated product demand to support contractual supply agreements with its customers and the age of the inventory, among other factors. Demand for the Company’s products can fluctuate from period to period depending on customer activity. In accordance with industry practice, inventories include amounts relating to long-term contracts with long production cycles, some of which are not expected to be realized within one year. Reserves for excess and obsolete inventory were approximately $42.7 and $40.4 as of April 30, 2016 and January 31, 2016, respectively. Substantially all of our inventory is comprised of aerospace grade fasteners, which support original equipment manufacturer (“OEM”) production and the aftermarket over the life of the airframe. Inventory with a limited shelf life is continually monitored and reserved for in advance of expiration. The annual provision for inventory with limited shelf life has historically been immaterial.

Goodwill and Long-lived Assets

Goodwill and Long-lived Assets	3 Months Ended
	Apr. 30, 2016
Goodwill and Long-lived Assets
Goodwill and Long-lived Assets	Note 4. Goodwill and Long-lived Assets The table below sets forth the intangible assets by major asset class, all of which were acquired through business purchase transactions: April 30, 2016 Useful Life Original Accumulated Net Book (Years) Cost Amortization Value Customer contracts and relationships 8 - 30 $ $ $ Covenants not to compete 4 - 5 Developed technologies 15 Trade names Indefinite - $ $ $ Substantially all of the unamortized long-lived assets and goodwill at April 30, 2016 relates to the Aerospace Solutions Group (“ASG”) segment. Amortization expense associated with identifiable intangible assets was approximately $4.7 and $6.6 for the three months ended April 30, 2016 and 2015, respectively, The Company currently expects to recognize amortization expense of approximately $15.0 in each of the next five fiscal years (primarily related to our ASG business). The future amortization amounts are estimates. Actual future amortization expense may be different due to future acquisitions, impairments, changes in amortization periods or other factors such as changes in exchange rates for assets acquired outside the United States. The Company expenses costs to renew or extend the term of a recognized intangible asset. Goodwill increased by $13.1 as compared to January 31, 2016 as a result of foreign currency translation adjustments offset by a purchase price allocation adjustment of $2.5 associated with a small acquisition made by the Energy Services Group (“ESG”).

Related Party Transactions

Related Party Transactions	3 Months Ended
	Apr. 30, 2016
Related Party Transactions
Related Party Transactions	Note 5. Related Party Transactions On December 17, 2014, B/E Aerospace, Inc. (“Former Parent” or “B/E Aerospace”) created an independent public company through a spin-off of its ASG and ESG businesses to Former Parent’s stockholders (“Spin-Off”). Following the Spin-Off, we created in-house substantially all of the functions that were previously provided to us by B/E Aerospace. In addition, we have entered into certain agreements with B/E Aerospace relating to transition services and IT services for a transitional period of approximately 24 months following the Spin-Off. In addition, we entered into an employee matters agreement and a tax sharing and indemnification agreement with B/E Aerospace in connection with the Spin-Off. This transitional support enables KLX to establish its stand-alone processes for various activities that were previously provided by B/E Aerospace and does not constitute significant continuing support of KLX’s operations. Expenses incurred under those agreements totaled $2.7 and $2.4 for the three months ended April 30, 2016 and 2015, respectively. As of April 30, 2016, the Company has recorded a tax indemnity payable to B/E Aerospace totaling $4.7 , of which $0.1 is classified in other current liabilities and $4.6 is classified in other long term liabilities. Sales to B/E Aerospace for the three months ended April 30, 2016 and 2015 were $5.7 and $4.5 , respectively.

Accrued Liabilities

Accrued Liabilities	3 Months Ended
	Apr. 30, 2016
Accrued Liabilities
Accrued Liabilities	Note 6. Accrued Liabilities Accrued liabilities consist of the following : April 30, 2016 January 31, 2016 Accrued salaries, vacation and related benefits $ $ Accrued commissions Income taxes payable Accrued interest Other accrued liabilities $ $

Long-Term Debt

Long-Term Debt	3 Months Ended
	Apr. 30, 2016
Long-Term Debt
Long-Term Debt	Note 7. Long-Term Debt As of April 30, 2016, long-term debt consisted of $1,200.0 aggregate principal amount of the Company’s 5.875% senior unsecured notes due 2022 (the “5.875% Notes”). On a net basis, after taking into consideration the debt issue costs for the Term Loan Facility, total debt was $1,180.1 . As of April 30, 2016, the Company also had a $750.0 secured revolving credit facility pursuant to a credit agreement dated as of December 16, 2014 and amended and restated on May 19, 2015 (the “Revolving Credit Facility”). Borrowings under the Revolving Credit Facility bear interest at an annual rate equal to the London interbank offered rate (“LIBOR”) (as defined in the Revolving Credit Facility) plus the applicable margin (as defined). No amounts were outstanding under the Revolving Credit Facility as of April 30, 2016. The Revolving Credit Facility is tied to a borrowing base formula and has no maintenance financial covenants. This Revolving Credit Facility matures in May 2020. Letters of credit outstanding under the Revolving Credit Facility aggregated $3.3 and $0.4 at April 30, 2016 and 2015, respectively.

Fair Value Measurements

Fair Value Measurements	3 Months Ended
	Apr. 30, 2016
Fair Value Measurements
Fair Value Measurements	Note 8. Fair Value Measurements All short-term financial instruments are generally carried at amounts that approximate estimated fair value. The fair value is the price at which an asset could be exchanged in a current transaction between knowledgeable, willing parties. Assets measured at fair value are categorized based upon the lowest level of significant input to the valuations. Level 1 – quoted prices in active markets for identical assets and liabilities. Level 2 – quoted prices for identical assets and liabilities in markets that are not active, or observable inputs other than quoted prices in active markets for identical assets and liabilities. Level 3 – unobservable inputs in which there is little or no market data available, which require the reporting entity to develop its own assumptions. The carrying amounts of cash and cash equivalents (which the Company classifies as Level 1 assets), accounts receivable – trade and accounts payable represent their respective fair values due to their short- term nature. There was no debt outstanding under the Revolving Credit Facility as of April 30, 2016. The fair value of the Company’s 5.875% Notes, based on market prices for publicly-traded debt (which the Company classifies as Level 2 inputs), was $1,197.0 and $1,136.4 as of April 30, 2016 and January 31, 2016, respectively.

Commitments, Contingencies and

Commitments, Contingencies and Off-Balance Sheet Arrangements	3 Months Ended
	Apr. 30, 2016
Commitments, Contingencies and Off-Balance Sheet Arrangements
Commitments, Contingencies and Off-Balance Sheet Arrangements	Note 9. Commitments, Contingencies and Off-Balance Sheet Arrangements Lease Commitments - The Company finances its use of certain facilities and equipment under committed lease arrangements provided by various institutions. Since the terms of these arrangements meet the accounting definition of operating lease arrangements, the aggregate sum of future minimum lease payments is not reflected on the condensed consolidated balance sheets. At April 30, 2016, future minimum lease payments under these arrangements approximated $91.1 , the majority of which related to long-term real estate leases. Litigation - The Company is a defendant in various legal actions arising in the normal course of business, the outcomes of which, in the opinion of management, neither individually nor in the aggregate are likely to result in a material adverse effect on the Company’s consolidated financial statements. Indemnities, Commitments and Guarantees - During its normal course of business, the Company has made certain indemnities, commitments and guarantees under which it may be required to make payments in relation to certain transactions. These indemnities include indemnities to various lessors in connection with facility leases for certain claims arising from such facility or lease and indemnities to other parties to certain acquisition agreements. The duration of these indemnities, commitments and guarantees varies, and in certain cases, is indefinite. Many of these indemnities, commitments and guarantees provide for limitations on the maximum potential future payments the Company could be obligated to make. However, the Company is unable to estimate the maximum amount of liability related to its indemnities, commitments and guarantees because such liabilities are contingent upon the occurrence of events that are not reasonably determinable. Management believes that any liability for these indemnities, commitments and guarantees would not be material to the accompanying consolidated financial statements. Accordingly, no significant amounts have been accrued for indemnities, commitments and guarantees. The Company has employment agreements with three year initial terms, which renew for one additional year on each anniversary date, with certain key members of management. The Company’s employment agreements generally provide for certain protections in the event of a change of control. These protections generally include the payment of severance and related benefits under certain circumstances in the event of a change of control.

Accounting for Stock-Based Comp

Accounting for Stock-Based Compensation	3 Months Ended
	Apr. 30, 2016
Accounting for Stock-Based Compensation
Accounting for Stock-Based Compensation	Note 10. Accounting for Stock-Based Compensation The Company has a Long-Term Incentive Plan (“LTIP”) under which the Company’s Compensation Committee has the authority to grant stock options, stock appreciation rights, restricted stock, restricted stock units or other forms of equity-based or equity-related awards. The Company accounts for share-based compensation arrangements in accordance with the provisions of FASB ASC 718, Compensation—Stock Compensation , whereby share-based compensation cost is measured on the date of grant, based on the fair value of the award, and is recognized over the requisite service period. Compensation cost recognized during the three months ended April 30, 2016 and 2015 related to KLX restricted stock and stock options granted during 2015 was $4.6 and $3.8 , respectively. Unrecognized compensation expense related to these grants was $40.4 at April 30, 2016. KLX has established a qualified Employee Stock Purchase Plan, the terms of which allow for qualified employees (as defined in the Plan) to participate in the purchase of designated shares of KLX’s common stock at a price equal to 85% of the closing price on the last business day of each semi ‑ annual stock purchase period. The fair value of employee purchase rights represents the difference between the closing price of KLX’s shares on the date of purchase and the purchase price of the shares. Compensation cost for this plan was not material to any of the periods presented.

Segment Reporting

Segment Reporting	3 Months Ended
	Apr. 30, 2016
Segment Reporting
Segment Reporting	Note 11. Segment Reporting The Company is organized based on the products and services it offers. As a result of the ESG acquisitions, the Company determined that ESG met the requirements of a reportable segment operating in a single line of business. The Company’s ASG reportable segment, which is also an operating segment, is comprised of consumables management and is in a single line of business. The segments regularly report their results of operations and makes requests for capital expenditures and acquisition funding to the Company’s chief operational decision-making group (“CODM”). This group is comprised of the Chairman and Chief Executive Officer and the President and Chief Operating Officer. As a result, the CODM has determined the Company has two reportable segments. The following table presents revenues and operating earnings (losses) by reportable segment: THREE MONTHS ENDED APRIL 30, APRIL 30, Revenues: 2016 2015 Aerospace Solutions Group $ $ Energy Services Group Total revenues Operating earnings (loss) (1) Aerospace Solutions Group Energy Services Group Total operating earnings Interest expense Earnings before income taxes $ $ (1) Operating earnings (loss) include an allocation of employee benefits and general and administrative costs based on the proportion of each segment’s number of employees for the three months ended April 30, 2016 and revenues for the three months ended April 30, 2015. The following table presents capital expenditures by reportable segment: THREE MONTHS ENDED APRIL 30, APRIL 30, 2016 2015 Aerospace Solutions Group $ $ Energy Services Group $ $ Corporate capital expenditures have been allocated to the above segments based on each segment’s percentage of total capital expenditures. The following table presents goodwill by reportable segment: April 30, January 31, 2016 2016 Aerospace Solutions Group $ $ Energy Services Group - $ $ The following table presents total assets by reportable segment: April 30, January 31, 2016 2016 Aerospace Solutions Group $ $ Energy Services Group $ $ Corporate assets (primarily cash and cash equivalents) of $592.7 and $559.5 at April 30, 2016 and January 31, 2016, respectively, have been allocated to the above segments based on each segment’s percentage of total assets.

Net Earnings Per Common Share

Net Earnings Per Common Share	3 Months Ended
	Apr. 30, 2016
Net Earnings Per Common Share
Net Earnings Per Common Share	Note 12. Net Earnings Per Common Share Basic net earnings per common share is computed using the weighted average common shares outstanding during the period. Diluted net earnings per common share is computed by using the weighted average common shares outstanding including the dilutive effect of stock options, shares issued under the KLX LTIP and restricted shares based on an average share price during the period. For the three months ended April 30, 2016 and 2015, approximately 0.2 and 0.1 shares of the Company’s common stock, respectively, were excluded from the determination of diluted earnings per common share because their effect would have been anti-dilutive. The computations of basic and diluted earnings per share for the three months ended April 30, 2016 and 2015 are as follows: THREE MONTHS ENDED APRIL 30, APRIL 30, 2016 2015 Net earnings $ $ (Shares in millions) Basic weighted average common shares Effect of dilutive securities - Dilutive securities Diluted weighted average common shares Basic net earnings per common share $ $ Diluted net earnings per common share $ $

Accounting for Uncertainty in I

Accounting for Uncertainty in Income Taxes	3 Months Ended
	Apr. 30, 2016
Accounting for Uncertainty in Income Taxes
Accounting for Uncertainty in Income Taxes	Note 13. Accounting for Uncertainty in Income Taxes In accordance with FASB ASC 740, Income Taxes , the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. As of April 30, 2016 and 2015, the Company had $11.0 and $9.3 , respectively, of net unrecognized tax benefits. This liability, if recognized, would affect the Company’s effective tax rate. Pursuant to the terms of the Tax Sharing Agreement with our former parent, B/E Aerospace, the Company may be liable for income tax in certain foreign jurisdictions arising from the examination of tax years during which the Company was part of the B/E Group. The statute of limitations in these foreign jurisdictions is open for tax years 2007-2015. There are currently no material income tax audits in progress. The Company classifies interest and penalties related to income tax as income tax expense. The amount included in the Company’s liability for unrecognized tax benefits for interest and penalties was $1.5 and $1.0 at April 30, 2016 and 2015, respectively.

Subsequent Events

Subsequent Events	3 Months Ended
	Apr. 30, 2016
Subsequent Events
Subsequent Events	Note 14. Subsequent Events On May 17, 2016, the Company acquired Herndon Aerospace & Defense LLC, an aftermarket aerospace supply chain management and consumables hardware distributor servicing principally aftermarket military depots as well as the commercial aerospace aftermarket for approximately $210.0 in cash plus a standard working capital adjustment. The valuation of the acquired assets and liabilities is not yet complete, and as such the Company has not yet finalized its allocation of the purchase price for the acquisition.

Description of Business and Sum

Description of Business and Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Apr. 30, 2016
Description of Business and Summary of Significant Accounting Policies
Recent Accounting Pronouncements	Recent Accounting Pronouncements In September 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-16, Business Combinations (Topic 805) (ASU 2015-16). ASU 2015-16 requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments in this update require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amendments in this update require an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The Company adopted the provisions of ASU 2015-16 during the quarter ended April 30, 2016. The adoption of ASU 2015-16 did not have a material impact on the Company’s consolidated financial condition, results of operations, cash flows, or disclosures . In June 2014, the FASB issued ASU 2014-12, Compensation – Stock Compensation (Topic 718) Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period, a consensus of the FASB Emerging Issue Task Force (ASU 2014-12). ASU 2014-12 brings consistency to the accounting for share-based payment awards that require a specific performance target to be achieved in order for employees to become eligible to vest in the awards. The Company adopted the provisions of ASU 2014-12 prospectively to all awards granted or modified after the effective date during the quarter ended April 30, 2016. The adoption of ASU 2014-12 did not have a material impact on the Company’s consolidated financial condition, results of operations, cash flows, or disclosures . In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting , which amends ASC Topic 718, Compensation – Stock Compensation . The ASU includes multiple provisions intended to simplify various aspects of the accounting for share-based payments. The ASU is effective for annual periods beginning after December 15, 2016, and interim periods within those years. Earlier adoption is permitted. The Company is currently evaluating the effect this update will have on our consolidated financial statements. In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers , which updated the guidance in ASC Topic 606, Revenue Recognition . The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should identify the contract(s) with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when (or as) the entity satisfies a performance obligation. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date . The amendments in this update deferred the effective date for implementation of ASU 2014-09 by one year and is now effective for annual reporting periods beginning after December 15, 2017. Early application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that period. In April 2016, FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing , and in May 2016, ASU 2016-12, Revenues from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients both of which provide supplemental adoption guidance and clarification to ASU 2014-09. ASU 2016-10 and ASU 2016-12 must be adopted concurrently with the adoption of ASU 2014-09. The Company is currently evaluating the impact this guidance will have on its consolidated financial condition, results of operations, cash flows and disclosures and is currently unable to estimate the impact of adopting this guidance.

Goodwill and Long-lived Assets

Goodwill and Long-lived Assets (Tables)	3 Months Ended
	Apr. 30, 2016
Goodwill and Long-lived Assets
Intangible Assets by Major Asset Class	April 30, 2016 Useful Life Original Accumulated Net Book (Years) Cost Amortization Value Customer contracts and relationships 8 - 30 $ $ $ Covenants not to compete 4 - 5 Developed technologies 15 Trade names Indefinite - $ $ $

Accrued Liabilities (Tables)

Accrued Liabilities (Tables)	3 Months Ended
	Apr. 30, 2016
Accrued Liabilities
Accrued Liabilities	April 30, 2016 January 31, 2016 Accrued salaries, vacation and related benefits $ $ Accrued commissions Income taxes payable Accrued interest Other accrued liabilities $ $

Segment Reporting (Tables)

Segment Reporting (Tables)	3 Months Ended
	Apr. 30, 2016
Segment Reporting
Revenues and Operating Earnings (Losses) by Reportable Segment	THREE MONTHS ENDED APRIL 30, APRIL 30, Revenues: 2016 2015 Aerospace Solutions Group $ $ Energy Services Group Total revenues Operating earnings (loss) (1) Aerospace Solutions Group Energy Services Group Total operating earnings Interest expense Earnings before income taxes $ $ (1) Operating earnings (loss) include an allocation of employee benefits and general and administrative costs based on the proportion of each segment’s number of employees for the three months ended April 30, 2016 and revenues for the three months ended April 30, 2015.
Capital Expenditures by Reportable Segment	THREE MONTHS ENDED APRIL 30, APRIL 30, 2016 2015 Aerospace Solutions Group $ $ Energy Services Group $ $
Goodwill by Reportable Segment	April 30, January 31, 2016 2016 Aerospace Solutions Group $ $ Energy Services Group - $ $
Total Assets by Reportable Segment	April 30, January 31, 2016 2016 Aerospace Solutions Group $ $ Energy Services Group $ $

Net Earnings Per Common Share (

Net Earnings Per Common Share (Tables)	3 Months Ended
	Apr. 30, 2016
Net Earnings Per Common Share
Computation of Basic and Diluted Net Earnings Per Share	THREE MONTHS ENDED APRIL 30, APRIL 30, 2016 2015 Net earnings $ $ (Shares in millions) Basic weighted average common shares Effect of dilutive securities - Dilutive securities Diluted weighted average common shares Basic net earnings per common share $ $ Diluted net earnings per common share $ $

Inventories (Details)

Inventories (Details) - USD ($) $ in Millions	Apr. 30, 2016	Jan. 31, 2016
Inventories
Inventory reserves	$ 42.7	$ 40.4

Goodwill and Long-lived Asset26

Goodwill and Long-lived Assets (Major Asset Classes) (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 30, 2016	Jan. 31, 2016
Goodwill and Intangible Assets Disclosure [Line Items]
Original Cost	$ 382.9
Accumulated Amortization	119.6
Net Book Value	263.3	$ 262.7
Indefinite Life Trade Name [Member]
Goodwill and Intangible Assets Disclosure [Line Items]
Net Book Value	17.9
Customer contracts and relationships
Goodwill and Intangible Assets Disclosure [Line Items]
Original Cost	359.2
Accumulated Amortization	116.3
Net Book Value	$ 242.9
Customer contracts and relationships | Minimum
Goodwill and Intangible Assets Disclosure [Line Items]
Useful Life (years)	8 years
Customer contracts and relationships | Maximum
Goodwill and Intangible Assets Disclosure [Line Items]
Useful Life (years)	30 years
Covenants not to compete
Goodwill and Intangible Assets Disclosure [Line Items]
Original Cost	$ 3.3
Accumulated Amortization	3.2
Net Book Value	$ 0.1
Covenants not to compete | Minimum
Goodwill and Intangible Assets Disclosure [Line Items]
Useful Life (years)	4 years
Covenants not to compete | Maximum
Goodwill and Intangible Assets Disclosure [Line Items]
Useful Life (years)	5 years
Developed Technologies
Goodwill and Intangible Assets Disclosure [Line Items]
Original Cost	$ 2.5
Accumulated Amortization	0.1
Net Book Value	$ 2.4
Developed Technologies | Minimum
Goodwill and Intangible Assets Disclosure [Line Items]
Useful Life (years)	15 years
Developed Technologies | Maximum
Goodwill and Intangible Assets Disclosure [Line Items]
Useful Life (years)	15 years

Goodwill and Long-lived Asset27

Goodwill and Long-lived Assets (Goodwill and Amortization Expenses) (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 30, 2016	Apr. 30, 2015
Amortization expense of intangible assets	$ 4.7	$ 6.6
Expected amortization expenses in year one	15
Expected amortization expenses in year two	15
Expected amortization expenses in year three	15
Expected amortization expenses in year four	15
Expected amortization expenses in year five	15
Energy Services Group
Goodwill increase during period, foreign currency translation	13.1
Goodwill, purchase price adjustment	$ 2.5

Related Party Transactions (Det

Related Party Transactions (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 30, 2016	Apr. 30, 2015
Transitional period	24 months
Former parent
Cost incurred pursuant to arrangements	$ 2.7	$ 2.4
Sales	5.7	$ 4.5
Former parent | Tax Indemnification
Due to related party	4.7
Former parent | Other Current Liabilities | Tax Indemnification
Due to related party	0.1
Former parent | Other Long-term Liabilities | Tax Indemnification
Due to related party	$ 4.6

Accrued Liabilities (Details)

Accrued Liabilities (Details) - USD ($) $ in Millions	Apr. 30, 2016	Jan. 31, 2016
Accrued Liabilities
Accrued salaries, vacation and related benefits	$ 24.3	$ 28.7
Accrued commissions	4.7	6.2
Income taxes payable	10.1	11.4
Accrued interest	29.4	11.7
Other accrued liabilities	43.7	57.3
Total accrued liabilities	$ 112.2	$ 115.3

Long-Term Debt (Details)

Long-Term Debt (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 30, 2016	Jan. 31, 2016
Debt Instrument [Line Items]
Long-term debt	$ 1,180.1	$ 1,179.5
Outstanding letter of credit amount	3.3	$ 0.4
Revolving Credit Facility
Debt Instrument [Line Items]
Amount outstanding	0
Revolving credit facility	750
Senior Unsecured Notes 5.875 Percent Due 2022
Debt Instrument [Line Items]
Senior unsecured notes	$ 1,200
Debt, interest rate	5.875%
Long-term debt	$ 1,180.1

Fair Value Measurements (Detail

Fair Value Measurements (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 30, 2016	Jan. 31, 2016
Senior Unsecured Notes 5.875 Percent Due 2022
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt, interest rate	5.875%
Senior unsecured notes, fair value	$ 1,197	$ 1,136.4
Revolving Credit Facility
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Amount outstanding	$ 0

Commitments, Contingencies an32

Commitments, Contingencies and Off-Balance Sheet Arrangements (Details) $ in Millions	3 Months Ended
	Apr. 30, 2016USD ($)
Commitments, Contingencies and Off-Balance Sheet Arrangements
Future minimum lease payments	$ 91.1
Initial term of employment agreements	3 years
Number of additional years for which employment agreements may renew.	1 year

Accounting for Stock-Based Co33

Accounting for Stock-Based Compensation (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 30, 2016	Apr. 30, 2015
Accounting for Stock-Based Compensation
Share based compensation	$ 4.6	$ 3.8
Unrecognized compensation cost	$ 40.4
Qualified employees purchase of stock at a price equal to percentage of closing price	85.00%

Segment Reporting (Revenues and

Segment Reporting (Revenues and Operating Earnings (Losses) by Reportable Segment) (Details) $ in Millions	3 Months Ended
	Apr. 30, 2016USD ($)segment	Apr. 30, 2015USD ($)
Reportable Segments [Abstract]
Number of reportable segments | segment	2
Revenues [Abstract]
Revenues	$ 368.2	$ 431.5
Operating Income (Loss) [Abstract]
Operating earnings	29.1	47.5
Interest expense	18.9	18.6
Earnings before income taxes	10.2	28.9
Aerospace Solutions Group
Revenues [Abstract]
Revenues	331.1	348
Operating Income (Loss) [Abstract]
Operating earnings	59.9	60.8
Energy Services Group
Revenues [Abstract]
Revenues	37.1	83.5
Operating Income (Loss) [Abstract]
Operating earnings	$ (30.8)	$ (13.3)

Segment Reporting (Capital Expe

Segment Reporting (Capital Expenditures by Reportable Segment) (Details2) - USD ($) $ in Millions	3 Months Ended
	Apr. 30, 2016	Apr. 30, 2015
Property, Plant and Equipment [Line Items]
Capital expenditures	$ 19.2	$ 35.6
Aerospace Solutions Group
Property, Plant and Equipment [Line Items]
Capital expenditures	2.8	5.4
Energy Services Group
Property, Plant and Equipment [Line Items]
Capital expenditures	$ 16.4	$ 30.2

Segment Reporting (Goodwill by

Segment Reporting (Goodwill by Reportable Segment) (Details3) - USD ($) $ in Millions	Apr. 30, 2016	Jan. 31, 2016
Goodwill [Line Items]
Goodwill	$ 968	$ 954.9
Aerospace Solutions Group
Goodwill [Line Items]
Goodwill	$ 968	952.4
Energy Services Group
Goodwill [Line Items]
Goodwill		$ 2.5

Segment Reporting (Total Assets

Segment Reporting (Total Assets by Reportable Segment) (Details 4) - USD ($) $ in Millions	Apr. 30, 2016	Jan. 31, 2016
Segment Reporting, Asset Reconciling Item [Line Items]
Total assets	$ 3,720.7	$ 3,691
Aerospace Solutions Group
Segment Reporting, Asset Reconciling Item [Line Items]
Total assets	3,464.4	3,422.8
Energy Services Group
Segment Reporting, Asset Reconciling Item [Line Items]
Total assets	$ 256.3	$ 268.2

Segment Reporting (Corporate As

Segment Reporting (Corporate Assets by Reportable Segment) (Details) - USD ($) $ in Millions	Apr. 30, 2016	Jan. 31, 2016
Segment Reporting Information [Line Items]
Total assets	$ 3,720.7	$ 3,691
Corporate, Non-Segment
Segment Reporting Information [Line Items]
Total assets	$ 592.7	$ 559.5

Net Earnings Per Common Share39

Net Earnings Per Common Share (Details) - shares shares in Millions	3 Months Ended
	Apr. 30, 2016	Apr. 30, 2015
Net Earnings Per Common Share
Anti-dilutive securities excluded from determination of diluted earnings per common share	0.2	0.1

Net Earnings Per Common Share40

Net Earnings Per Common Share (Computations of Basic and Diluted Earnings Per Share) (Details 2) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended
	Apr. 30, 2016	Apr. 30, 2015
Net Earnings Per Common Share
Net earnings (loss)	$ 6.2	$ 17.9
Weighted average common shares - basic	52	52.2
Effect of restricted shares issued	0.2	0.1
Weighted average common shares - diluted	52.2	52.3
Net earnings per share - basic	$ 0.12	$ 0.34
Net earnings per share - diluted	$ 0.12	$ 0.34

Accounting for Uncertainty in41

Accounting for Uncertainty in Income Taxes (Details) - USD ($) $ in Millions	Apr. 30, 2016	Apr. 30, 2015
Accounting for Uncertainty in Income Taxes
Net unrecognized tax benefits that would affect effective tax rate, if recognized	$ 11	$ 9.3
Liability for unrecognized tax benefits for interest and penalties	$ 1.5	$ 1

Subsequent Events (Details)

Subsequent Events (Details) $ in Millions	May. 17, 2016USD ($)
Subsequent Event | Herndon Aerospace & Defense LLC
Subsequent Event [Line Items]
Acquisition price	$ 210