PITTSBURGH, April 28, 2016
/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 results for the
first quarter of 2016.
Mr. John J. Engel, WESCO's
Chairman, President and CEO, commented, "In line with our
expectations, our first quarter sales declined 2%, reflecting
continued weakness in commodity-driven end markets and foreign
exchange headwinds. Organic sales were down 7%, with the U.S.
and Canada down 6% and 11%,
respectively. While the top line remains pressured overall,
the benefits of ongoing cost reduction and organizational
streamlining actions partially mitigated the impact of lower sales
on earnings per share. Free cash flow remained strong and exceeded
200% of net income, allowing us to maintain our leverage ratio at
3.8 times EBITDA, in line with our expectations following the
completion of our acquisition of Atlanta Electrical Distributors
during the first quarter. With continued strong cash
generation, we expect to reduce our leverage ratio back within our
target range in the near term. Based upon our first quarter
results, we reaffirm our full year expectations of sales in the
range of flat to down 5%, EPS of $3.75 to
$4.20 per diluted share, and free cash flow generation of at
least 90% of net income."
The following are results for the three months ended
March 31, 2016 compared to the three months ended
March 31, 2015:
- Net sales were $1,776.0 million
for the first quarter of 2016, compared to $1,816.3 million for the first quarter of 2015, a
decrease of 2.2%. Normalized organic sales decreased 6.7%; foreign
exchange rates negatively impacted sales by 2.6%, and were
partially offset by the positive impacts from acquisitions and
number of workdays of 3.9% and 3.2%, respectively.
- Gross profit was $355.2 million,
or 20.0% of net sales, for the first quarter of 2016, compared to
$367.7 million, or 20.2% of net
sales, for the first quarter of 2015.
- Selling, general and administrative ("SG&A") expenses were
$269.3 million, or 15.2% of net sales
for the first quarter of 2016, compared to $264.6 million, or 14.6% of net sales, for the
first quarter of 2015.
- Operating profit was $69.5
million for the current quarter, compared to $87.2 million for the first quarter of 2015.
Operating profit as a percentage of net sales was 3.9% for the
first quarter of 2016, compared to 4.8% for the first quarter
2015.
- Interest expense for the first quarter of 2016 was $18.8 million, compared to $20.9 million for the first quarter of 2015.
Non-cash interest expense for the first quarter of 2016 and 2015,
which includes amortization of debt discounts and deferred
financing fees, interest related to uncertain tax positions, and
accrued interest, was $3.7 million
and $5.4 million, respectively.
- The effective tax rate for the current quarter was 31.9%,
compared to 29.4% for the prior year first quarter. The Company
recognized a discrete item in the first quarter of 2016 related to
the settlement of an outstanding tax matter, which increased the
effective tax rate by 3.4 percentage points.
- Net income attributable to WESCO International, Inc. of
$36.0 million for the current quarter
was down 23.4% from $47.0 million for
the prior year quarter.
- Earnings per diluted share for the first quarter of 2016 was
$0.77 per share, based on 46.8
million diluted shares, compared to $0.90 per share in the first quarter of 2015,
based on 52.2 million diluted shares.
- Free cash flow for the first quarter of 2016 was $75.0 million, or 217% of net income, compared to
$85.1 million, or 182% of net income
for the first quarter of 2015.
Mr. Engel continued, "We remain focused on executing our One
WESCO strategy to deliver above-market sales growth, improve
profitability, generate strong cash flow, and increase shareholder
value. Our value proposition provides customers with the
comprehensive product and service solutions they need to meet their
MRO, OEM, and capital project management requirements. The
free cash flow generation capability of our business supports
continued investment in our growth initiatives, including
acquisitions, where our pipeline remains robust and we see
excellent ongoing opportunities to strengthen our electrical core
and broaden our portfolio of products and services."
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 28, 2016, 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. 2015 annual sales were
approximately $7.5 billion. The
Company employs approximately 9,300 people, maintains relationships
with over 25,000 suppliers, and serves over 80,000 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 500 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, 2015, 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,
2016
|
|
|
March 31,
2015
|
|
Net sales
|
$
|
1,776.0
|
|
|
|
$
|
1,816.3
|
|
|
Cost of goods sold
(excluding
|
1,420.8
|
|
80.0
|
%
|
|
1,448.6
|
|
79.8
|
%
|
depreciation and amortization below)
|
|
|
|
|
|
Selling, general and
administrative expenses
|
269.3
|
|
15.2
|
%
|
|
264.6
|
|
14.6
|
%
|
Depreciation and
amortization
|
16.4
|
|
|
|
15.9
|
|
|
Income from operations
|
69.5
|
|
3.9
|
%
|
|
87.2
|
|
4.8
|
%
|
Interest expense,
net
|
18.8
|
|
|
|
20.9
|
|
|
Income before income taxes
|
50.7
|
|
2.9
|
%
|
|
66.3
|
|
3.7
|
%
|
Provision for income
taxes
|
16.2
|
|
|
|
19.5
|
|
|
Net income
|
34.5
|
|
1.9
|
%
|
|
46.8
|
|
2.6
|
%
|
Net loss attributable
to noncontrolling interests
|
(1.5)
|
|
|
|
(0.2)
|
|
|
Net income attributable to WESCO International, Inc.
|
$
|
36.0
|
|
2.0
|
%
|
|
$
|
47.0
|
|
2.6
|
%
|
|
|
|
|
|
|
Earnings per diluted
common share
|
$
|
0.77
|
|
|
|
$
|
0.90
|
|
|
Weighted-average
common shares outstanding and common
|
|
|
|
|
|
share equivalents used
in computing earnings per diluted
|
|
|
|
|
|
share (in
millions)
|
46.8
|
|
|
|
52.2
|
|
|
WESCO
INTERNATIONAL, INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS (dollar amounts in millions)
(Unaudited)
|
|
|
March 31,
2016
|
|
December 31,
2015
|
Assets
|
|
|
|
Current
Assets
|
|
|
|
Cash and cash
equivalents
|
$
|
147.8
|
|
|
$
|
160.3
|
|
Trade accounts
receivable, net
|
1,091.5
|
|
|
1,075.3
|
|
Inventories,
net
|
844.1
|
|
|
810.1
|
|
Current deferred
income taxes (1)
|
—
|
|
|
8.5
|
|
Other current
assets
|
191.0
|
|
|
203.4
|
|
Total current assets
|
2,274.4
|
|
|
2,257.6
|
|
Other assets
(2)
|
2,416.4
|
|
|
2,312.2
|
|
Total assets
|
$
|
4,690.8
|
|
|
$
|
4,569.8
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
Current
Liabilities
|
|
|
|
Accounts
payable
|
$
|
734.9
|
|
|
$
|
715.5
|
|
Current debt and
short-term
borrowings
|
49.5
|
|
|
44.3
|
|
Other current
liabilities
|
198.9
|
|
|
188.0
|
|
Total current liabilities
|
983.3
|
|
|
947.8
|
|
|
|
|
|
Long-term debt
(2)
|
1,391.2
|
|
|
1,439.1
|
|
Other noncurrent
liabilities
|
422.8
|
|
|
409.0
|
|
Total liabilities
|
2,797.3
|
|
|
2,795.9
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
Total stockholders' equity
|
1,893.5
|
|
|
1,773.9
|
|
Total liabilities and stockholders' equity
|
$
|
4,690.8
|
|
|
$
|
4,569.8
|
|
|
|
(1)
|
The Company early
adopted Accounting Standards Update (ASU) 2015-17, Balance Sheet
Classification of Deferred Taxes, on a prospective basis during
the first quarter of 2016. This guidance requires that all deferred
tax assets and liabilities, along with any related valuation
allowance, be classified as noncurrent on the balance
sheet.
|
|
|
(2)
|
The Company adopted
ASU 2015-03, Simplifying the Presentation of Debt Issuance
Costs, and ASU 2015-15, Presentation and Subsequent
Measurement of Debt Issuance Costs Associated with Line-of-Credit
Arrangements, on a retrospective basis during the first quarter
of 2016. These ASUs simplify the presentation of debt issuance
costs by requiring that debt issuance costs related to a recognized
liability be presented in the balance sheet as a direct deduction
from the carrying amount of that debt liability, consistent with
debt discounts. As a result of adopting this guidance, the Company
reclassified approximately $17.7 million of deferred financing fees
from other noncurrent assets to long-term debt in the balance sheet
as of December 31, 2015.
|
WESCO
INTERNATIONAL, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (dollar amounts in
millions)
(Unaudited)
|
|
|
Three Months
Ended
|
|
March 31,
2016
|
|
March 31,
2015
|
Operating
Activities:
|
|
|
|
Net income
|
$
|
34.5
|
|
|
$
|
46.8
|
|
Add back
(deduct):
|
|
|
|
Depreciation
and amortization
|
16.4
|
|
|
15.9
|
|
Deferred
income taxes
|
6.5
|
|
|
7.9
|
|
Change in
trade receivables, net
|
10.6
|
|
|
9.7
|
|
Change in
inventories
|
(17.5)
|
|
|
(13.2)
|
|
Change in
accounts payable
|
3.2
|
|
|
20.6
|
|
Other
|
24.9
|
|
|
2.4
|
|
Net cash provided by
operating activities
|
78.6
|
|
|
90.1
|
|
|
|
|
|
Investing
Activities:
|
|
|
|
Capital
expenditures
|
(3.6)
|
|
|
(5.0)
|
|
Acquisition
payments
|
(50.3)
|
|
|
—
|
|
Other
|
(8.2)
|
|
|
0.8
|
|
Net cash used in
investing activities
|
(62.1)
|
|
|
(4.2)
|
|
|
|
|
|
Financing
Activities:
|
|
|
|
Debt borrowings, net
of repayments
|
(46.3)
|
|
|
(19.4)
|
|
Equity activity,
net
|
(0.5)
|
|
|
(27.7)
|
|
Other
|
12.0
|
|
|
(6.7)
|
|
Net cash used in
financing activities
|
(34.8)
|
|
|
(53.8)
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
5.8
|
|
|
(6.0)
|
|
|
|
|
|
Net change in cash
and cash equivalents
|
(12.5)
|
|
|
26.1
|
|
Cash and cash
equivalents at the beginning of the period
|
160.3
|
|
|
128.3
|
|
Cash and cash
equivalents at the end of the period
|
$
|
147.8
|
|
|
$
|
154.4
|
|
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 - Year-Over-Year:
|
March 31,
2016
|
|
March 31,
2015
|
|
|
|
|
Change in net sales
|
(2.2)%
|
|
0.3%
|
Impact from acquisitions
|
3.9%
|
|
1.2%
|
Impact from foreign exchange rates
|
(2.6)%
|
|
(2.5)%
|
Impact from number of workdays
|
3.2%
|
|
(1.6)%
|
Normalized
organic sales growth
|
(6.7)%
|
|
3.2%
|
|
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,
2016
|
|
March 31,
2015
|
|
|
|
|
Net sales
|
$
|
1,776.0
|
|
$
|
1,816.3
|
Cost of goods sold
(excluding depreciation and
amortization)
|
1,420.8
|
|
1,448.6
|
Gross
profit
|
$
|
355.2
|
|
$
|
367.7
|
Gross
margin
|
20.0%
|
|
20.2%
|
|
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,
2016
|
|
December 31,
2015
|
|
|
|
|
Income from
operations
|
$
|
356.1
|
|
$
|
373.7
|
Depreciation and
amortization
|
65.4
|
|
65.0
|
EBITDA
|
$
|
421.5
|
|
$
|
438.7
|
|
|
|
|
|
March 31,
2016
|
|
December 31,
2015
|
Current debt and
short-term borrowings
|
$
|
49.5
|
|
$
|
44.3
|
Long-term
debt
|
1,391.2
|
|
1,439.1
|
Debt discount and
deferred financing fees(1)
|
180.2
|
|
182.0
|
Total debt
|
1,620.9
|
|
1,665.4
|
|
|
|
|
Financial leverage
ratio
|
3.8
|
|
3.8
|
|
(1) Long-term debt is
presented in the condensed consolidated balance sheets net of
deferred financing fees
and debt discount related to
the convertible debentures and term loan.
|
|
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,
2016
|
|
March 31,
2015
|
|
|
|
|
Cash flow provided by
operations
|
$
|
78.6
|
|
|
$
|
90.1
|
|
Less: Capital
expenditures
|
(3.6)
|
|
|
(5.0)
|
|
Free cash
flow
|
$
|
75.0
|
|
|
$
|
85.1
|
|
Percent of net
income
|
217
|
%
|
|
182
|
%
|
|
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.
|
Logo - http://photos.prnewswire.com/prnh/20160323/347627LOGO
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/wesco-international-inc-reports-first-quarter-2016-results-300259097.html
SOURCE WESCO International, Inc.