WESCO INTERNATIONAL, INC. PITTSBURGH, April 23, 2015 /PRNewswire/ -- WESCO International, Inc. (NYSE: WCC), a leading provider of electrical, industrial, and communications MRO and OEM products, construction materials, and advanced supply chain management and logistics services, announces its 2015 first quarter results.
The following are results for the three months ended March 31, 2015 compared to the three months ended March 31, 2014:
-- Net sales were $1,816.3 million for the first quarter of 2015, compared
to $1,810.8 million for the first quarter of 2014, an increase of 0.3%.
Organic sales increased 3.2%, acquisitions positively impacted sales by
1.2%, and foreign exchange rates and number of workdays negatively
impacted sales by 2.5% and 1.6%, respectively.
-- Gross profit was $367.7 million, or 20.2% of sales, for the first
quarter of 2015, compared to $374.8 million, or 20.7% of sales, for the
first quarter of 2014.
-- Selling, general and administrative ("SG&A") expenses were $264.6
million, or 14.6% of sales, for the first quarter of 2015, compared to
$265.5 million, or 14.7% of sales, for the first quarter of 2014.
-- Operating profit was $87.2 million for the current quarter, compared to
$93.0 million for the first quarter of 2014. Operating profit as a
percentage of sales was 4.8% in 2015, compared to 5.1% in 2014.
-- Interest expense for the first quarter of 2015 was $20.9 million,
compared to $20.7 million for the first quarter of 2014. Non-cash
interest expense, which includes convertible debt interest, interest
related to uncertain tax positions, amortization of deferred financing
fees and accrued interest, for the first quarter of 2015 and 2014 was
$5.4 million and $4.1 million, respectively.
-- The effective tax rate for the current quarter was 29.4%, compared to
28.2% for the prior year first quarter.
-- Net income attributable to WESCO International, Inc. of $47.0 million
for the current quarter was down 9.4% from $51.9 million for the prior
year quarter.
-- Earnings per diluted share for the first quarter of 2015 was $0.90 per
share, based on 52.2 million diluted shares, compared to $0.97 per share
in the first quarter of 2014, based on 53.4 million diluted shares.
-- Free cash flow for the first quarter of 2015 was $85.1 million, or 181%
of net income, compared to $41.7 million, or 80% of net income for the
first quarter of 2014.
Mr. John J. Engel, WESCO's Chairman and Chief Executive Officer, stated, "We had a challenging start to the year where reduced demand in the industrial market, winter weather impacts, and foreign exchange headwinds weighed heavily on our results in the first quarter. While organic sales per workday grew 3%, sales momentum decelerated through the quarter. Gross margin was down versus prior year but was flat sequentially. Effective cost controls partially mitigated the impact on operating profit and as a result EPS was down versus prior year. Free cash flow generation was particularly strong in the quarter enabling us to further improve our financial leverage and repurchase approximately 300,000 shares of stock. Our capital structure is in good shape and our acquisition pipeline remains robust with opportunities to strengthen our electrical core and further expand our portfolio of products and services this year. Based upon our first quarter results, we are revising our full year outlook to (3)% to 3% sales growth and $5.00 to $5.40 earnings per diluted share from our previous outlook of 0% to 3% sales growth and $5.20 to $5.60 earnings per diluted share."
Mr. Engel continued, "We expect reduced demand in commodity-driven industrial end markets and foreign exchange headwinds to continue throughout this year. As a result, we are taking additional actions to accelerate our One WESCO sales initiatives and simplify and streamline our business. These additional mitigating actions include consolidating a series of branches and reducing structural costs while adding to our salesforce to address underserved territories and customer accounts. Our One WESCO strategy continues to drive our long term value proposition, particularly for customers looking to reduce their supply chain costs."
Webcast and Teleconference Access
WESCO will conduct a webcast and teleconference to discuss the first quarter earnings as described in this News Release on Thursday, April 23, 2015, at 11:00 a.m. E.T. The call will be broadcast live over the Internet and can be accessed from the Company's Website at http://www.wesco.com. The call will be archived on this Internet site for seven days.
WESCO International, Inc. (NYSE: WCC), a publicly traded Fortune 500 holding company headquartered in Pittsburgh, Pennsylvania, is a leading provider of electrical, industrial, and communications maintenance, repair and operating ("MRO") and original equipment manufacturers ("OEM") product, construction materials, and advanced supply chain management and logistic services. 2014 annual sales were approximately $7.9 billion. The Company employs approximately 9,400 people, maintains relationships with over 25,000 suppliers, and serves over 75,000 active customers worldwide. Customers include commercial and industrial businesses, contractors, government agencies, institutions, telecommunications providers and utilities. WESCO operates nine fully automated distribution centers and approximately 485 full-service branches in North America and international markets, providing a local presence for customers and a global network to serve multi-location businesses and multi-national corporations.
The matters discussed herein may contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from expectations. Certain of these risks are set forth in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014, as well as the Company's other reports filed with the Securities and Exchange Commission.
WESCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollar amounts in millions, except per share amounts)
(Unaudited)
Three Months Ended
------------------
March 31, March 31,
2015 2014
---- ----
Net sales $1,816.3 $1,810.8
Cost of goods sold (excluding 1,448.6 79.8% 1,436.0 79.3%
depreciation and amortization below)
Selling, general and administrative expenses 264.6 14.6% 265.5 14.7%
Depreciation and amortization 15.9 16.3
---- ----
Income from operations 87.2 4.8% 93.0 5.1%
Interest expense, net 20.9 20.7
---- ----
Income before income taxes 66.3 3.7% 72.3 4.0%
Provision for income taxes 19.5 20.4
---- ----
Net income 46.8 2.6% 51.9 2.9%
Net loss attributable to noncontrolling interests (0.2) -
---- ---
Net income attributable to WESCO International, Inc. $47.0 2.6% $51.9 2.9%
===== =====
Earnings per diluted common share $0.90 $0.97
Weighted-average common shares outstanding and common
share equivalents used in computing earnings per diluted
share (in millions) 52.2 53.4
WESCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollar amounts in millions)
(Unaudited)
March 31, December 31,
2015 2014
---- ----
Assets
Current Assets
Cash and cash
equivalents $154.4 $128.3
Trade
accounts
receivable,
net 1,082.2 1,117.4
Inventories,
net 814.4 819.5
Current
deferred
income taxes 36.5 35.9
Other current
assets 226.0 249.2
----- -----
Total current
assets 2,313.5 2,350.3
Other assets 2,298.9 2,404.0
Total assets $4,612.4 $4,754.3
======== ========
Liabilities and Stockholders'
Equity
Current Liabilities
Accounts
payable $771.9 $765.1
Current debt
and short-
term
borrowings 51.9 49.1
Other current
liabilities 215.3 249.6
----- -----
Total current
liabilities 1,039.1 1,063.8
Long-term
debt 1,336.9 1,366.4
Other
noncurrent
liabilities 399.1 396.0
----- -----
Total
liabilities 2,775.1 2,826.2
Stockholders' Equity
Total
stockholders'
equity 1,837.3 1,928.1
------- -------
Total
liabilities
and
stockholders'
equity $4,612.4 $4,754.3
======== ========
WESCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollar amounts in millions)
(Unaudited)
Three Months Ended
------------------
March 31, March 31,
2015 2014
---- ----
Operating Activities:
Net income $46.8 $51.9
Add back (deduct):
Depreciation and
amortization 15.9 16.4
Deferred income
taxes 7.9 7.9
Change in trade
receivables, net 9.7 (55.3)
Change in
inventories, net (13.2) (17.4)
Change in accounts
payable 20.6 43.6
Other 2.4 (0.4)
--- ----
Net cash provided
by operating
activities 90.1 46.7
Investing Activities:
Capital
expenditures (5.0) (5.0)
Acquisition
payments - (91.2)
Other 0.8 -
--- ---
Net cash used in
investing
activities (4.2) (96.2)
Financing Activities:
Debt borrowings
(repayments), net (19.4) 19.7
Equity activity,
net (27.7) (0.3)
Other (6.7) 4.2
---- ---
Net cash provided
by (used in)
financing
activities (53.8) 23.6
Effect of exchange
rate changes on
cash and cash
equivalents (6.0) (1.4)
---- ----
Net change in cash
and cash
equivalents 26.1 (27.3)
Cash and cash
equivalents at
the beginning of
the period 128.3 123.7
Cash and cash
equivalents at
the end of the
period $154.4 $96.4
====== =====
NON-GAAP FINANCIAL MEASURES
This earnings release includes certain non-GAAP financial measures. These financial measures include normalized organic sales growth, gross profit, financial leverage and free cash flow. The Company believes that these non-GAAP measures are useful to investors in order to provide a better understanding of the Company's organic growth trends, capital structure position and liquidity on a comparable basis. Management does not use these non-GAAP financial measures for any purpose other than the reasons stated above.
WESCO INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(dollar amounts in millions, except sales growth data)
(Unaudited)
Three Months Ended
------------------
Normalized Organic Sales Growth: March 31, March 31,
2015 2014
---- ----
Change in net sales 0.3% 0.2%
Impact from acquisitions 1.2% 0.5%
Impact from foreign exchange rates (2.5)% (1.9)%
Impact from number of workdays (1.6)% -%
----- ---
Normalized organic sales growth 3.2% 1.6%
=== ===
Note: Normalized organic sales growth is provided by the Company as an additional financial measure to provide a better understanding of the Company's sales growth trends. Normalized organic sales growth is calculated
by deducting the percentage impact from acquisitions, foreign exchange rates and number of workdays from the overall percentage change in consolidated net sales.
Three Months Ended
------------------
Gross Profit: March 31, March 31,
2015 2014
---- ----
Net Sales $1,816.3 $1,810.8
Cost of goods sold (excluding depreciation and amortization) 1,448.6 1,436.0
------- -------
Gross profit $367.7 $374.8
====== ======
Gross margin 20.2% 20.7%
Note: Gross profit is provided by the Company as an additional financial measure. Gross profit is calculated by deducting cost of goods sold, excluding depreciation and amortization, from net sales. This amount
represents a commonly used financial measure within the distribution industry. Gross margin is calculated by dividing gross profit by net sales.
WESCO INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(dollar amounts in millions)
(Unaudited)
Twelve Months Ended
-------------------
Financial Leverage: March 31, December 31,
2015 2014
---- ----
Income from operations $460.4 $466.2
Depreciation and amortization 67.6 68.0
---- ----
EBITDA $528.0 $534.2
====== ======
March 31, December 31,
2015 2014
---- ----
Current debt and short-term borrowings $51.9 $49.1
Long-term debt 1,336.9 1,366.4
Debt discount related to convertible debentures and term loan(1) 168.5 170.4
Total debt including debt discount 1,557.3 1,585.9
======= =======
Financial leverage ratio 2.9 3.0
(1) The convertible debentures
and term loan are presented in
the condensed consolidated
balance sheets in
long-term debt, net of the
unamortized discount.
Note: Financial leverage is a
non-GAAP financial measure
provided by the Company to
illustrate its capital
structure position. Financial
leverage ratio is calculated by
dividing total debt, including
debt discount, by EBITDA.
EBITDA is defined as the
trailing twelve months earnings
before interest, taxes,
depreciation and amortization.
Three Months Ended
------------------
Free Cash Flow: March 31, March 31,
2015 2014
---- ----
Cash flow provided by
operations $90.1 $46.7
Less: Capital
expenditures (5.0) (5.0)
Free cash flow $85.1 $41.7
===== =====
Percent of net income
attributable to
WESCO International,
Inc. 181.1% 80.3%
Note: Free cash flow is provided
by the Company as an additional
liquidity measure. Capital
expenditures are deducted from
operating cash flow to
determine free cash flow. Free
cash flow is available to fund
the Company's financing needs.
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SOURCE WESCO International, Inc.
