PITTSBURGH, April 27, 2017
/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 2017.
Mr. John J. Engel, WESCO's
Chairman, President and CEO, commented, "Our first quarter results
were in line with our expectations and the outlook we provided in
January. Our sales results reflect improving momentum in our
business, driven by a return to growth in Industrial and in
Canada. Operating margin was also
in line with our expectations, as we continue to execute our cost
management and supply chain initiatives in a still-challenging and
demand-constrained pricing environment. Net income grew in the
quarter, and we once again delivered strong free cash flow,
enabling us to reduce our debt and further improve our financial
leverage ratio. Based upon our first quarter results, we
reaffirm our full-year expectations of sales in the range of flat
to up 4%, EPS of $3.60 to $4.00 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, 2017 compared to the three months ended
March 31, 2016:
- Net sales were $1.77 billion for
the first quarter of 2017, compared to $1.78
billion for the first quarter of 2016, a decrease of 0.2%.
Acquisitions and foreign exchange rates had positive impacts on net
sales of 0.9% and 0.6%, respectively, resulting in a 1.7% decrease
in organic sales.
- Cost of goods sold for both the first quarter of 2017 and 2016
was $1.42 billion. Gross profit was
$350.0 million and $355.2 million for the first quarter of 2017 and
2016, respectively. As a percentage of net sales, gross profit was
19.7% and 20.0% for the first quarter of 2017 and 2016,
respectively.
- Selling, general, and administrative ("SG&A") expenses were
$266.9 million, or 15.1% of net sales
for the first quarter of 2017, compared to $269.3 million, or 15.2% of net sales, for the
first quarter of 2016.
- Operating profit was $67.1
million for the current quarter, compared to $69.5 million for the first quarter of 2016.
Operating profit as a percentage of net sales was 3.8% for the
first quarter of 2017, compared to 3.9% for the first quarter of
2016.
- Interest expense for the first quarter of 2017 was $16.7 million, compared to $18.8 million for the first quarter of 2016.
Non-cash interest expense for the first quarter of 2017 and 2016,
which includes amortization of debt discounts and deferred
financing fees, and interest related to uncertain tax positions,
was $1.1 million and $2.1 million, respectively.
- The effective tax rate for the current quarter was 25.0%,
compared to 31.9% for the prior year first quarter. In the current
quarter, the application of Accounting Standards Update No. 2016-09
resulted in a discrete benefit from the exercise of stock-based
awards, which lowered the effective tax rate by 3.1 percentage
points. In the first quarter of 2016, the settlement of an
outstanding tax matter increased the effective tax rate by 3.4
percentage points.
- Net income attributable to WESCO International, Inc. was
$37.7 million and $36.0 million for the first quarter of 2017 and
2016, respectively.
- Earnings per diluted share was $0.76 for the first quarter of 2017, based on
49.4 million diluted shares, compared to earnings per diluted share
of $0.77 for the first quarter of
2016, based on 46.8 million diluted shares.
- Operating cash flow for the first quarter of 2017 was
$47.6 million, compared to
$78.6 million for the first quarter
of 2016. Free cash flow for the first quarter of 2017 was
$43.1 million, or 114% of net income,
compared to $75.0 million, or 217% of
net income for the first quarter of 2016.
Mr. Engel continued, "We remain focused on executing our
strategies to deliver above-market sales growth, improve
profitability, generate strong cash flow, and increase shareholder
value. The free cash flow generation capability of our business
supports continued investment in our One WESCO growth initiatives,
including acquisitions, while providing us with the ability to
return capital to our shareholders. Our efforts remain centered on
providing excellent customer service and delivering value to our
customers' operations and supply chains by providing comprehensive
product and service solutions, which meet their capital project,
MRO, and OEM needs."
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 27, 2017, 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) products, construction materials, and advanced supply chain
management and logistic services. 2016 annual sales were
approximately $7.3 billion. The
company employs approximately 9,000 people, maintains relationships
with over 25,000 suppliers, and serves approximately 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 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, 2016, 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,
2017
|
|
|
March 31,
2016
|
|
Net sales
|
$
|
1,772.6
|
|
|
|
$
|
1,776.0
|
|
|
Cost of goods sold
(excluding
|
1,422.6
|
|
80.3%
|
|
1,420.8
|
|
80.0%
|
depreciation and amortization)
|
|
|
|
|
|
Selling, general and
administrative expenses
|
266.9
|
|
15.1%
|
|
269.3
|
|
15.2%
|
Depreciation and
amortization
|
16.0
|
|
|
|
16.4
|
|
|
Income from operations
|
67.1
|
|
3.8%
|
|
69.5
|
|
3.9%
|
Interest expense,
net
|
16.7
|
|
|
|
18.8
|
|
|
Income before income taxes
|
50.4
|
|
2.8%
|
|
50.7
|
|
2.9%
|
Provision for income
taxes
|
12.6
|
|
|
|
16.2
|
|
|
Net income
|
37.8
|
|
2.1%
|
|
34.5
|
|
1.9%
|
Net income (loss)
attributable to noncontrolling interests
|
0.1
|
|
|
|
(1.5)
|
|
|
Net income attributable to WESCO International, Inc.
|
$
|
37.7
|
|
2.1%
|
|
$
|
36.0
|
|
2.0%
|
|
|
|
|
|
|
Earnings per diluted
common share
|
$
|
0.76
|
|
|
|
$
|
0.77
|
|
|
Weighted-average
common shares outstanding and common
|
|
|
|
|
|
share equivalents used
in computing earnings per diluted
|
|
|
|
|
|
share (in
millions)
|
49.4
|
|
|
|
46.8
|
|
|
WESCO
INTERNATIONAL, INC.
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(dollar amounts in
millions)
|
(Unaudited)
|
|
|
March 31,
2017
|
|
December 31,
2016
|
Assets
|
|
|
|
Current
Assets
|
|
|
|
Cash and cash
equivalents
|
$
|
103.0
|
|
|
$
|
110.1
|
|
Trade accounts
receivable, net
|
1,060.6
|
|
|
1,034.4
|
|
Inventories
|
850.1
|
|
|
821.4
|
|
Other current
assets
|
189.7
|
|
|
206.5
|
|
Total current assets
|
2,203.4
|
|
|
2,172.4
|
|
|
|
|
|
Other
assets
|
2,307.9
|
|
|
2,318.5
|
|
Total assets
|
$
|
4,511.3
|
|
|
$
|
4,490.9
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
Current
Liabilities
|
|
|
|
Accounts
payable
|
$
|
712.4
|
|
|
$
|
684.7
|
|
Current debt and
short-term borrowings
|
29.3
|
|
|
22.1
|
|
Other current
liabilities
|
178.4
|
|
|
190.0
|
|
Total current liabilities
|
920.1
|
|
|
896.8
|
|
|
|
|
|
Long-term
debt
|
1,309.8
|
|
|
1,363.1
|
|
Other noncurrent
liabilities
|
223.9
|
|
|
221.0
|
|
Total liabilities
|
2,453.8
|
|
|
2,480.9
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
Total stockholders' equity
|
2,057.5
|
|
|
2,010.0
|
|
Total liabilities and stockholders' equity
|
$
|
4,511.3
|
|
|
$
|
4,490.9
|
|
WESCO
INTERNATIONAL, INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(dollar amounts in
millions)
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
March 31,
2017
|
|
March 31,
2016
|
Operating
Activities:
|
|
|
|
Net income
|
$
|
37.8
|
|
|
$
|
34.5
|
|
Add back
(deduct):
|
|
|
|
Depreciation
and amortization
|
16.0
|
|
|
16.4
|
|
Deferred income
taxes
|
2.3
|
|
|
6.5
|
|
Change in trade
receivables, net
|
(22.1)
|
|
|
10.6
|
|
Change in
inventories
|
(26.4)
|
|
|
(17.5)
|
|
Change in accounts
payable
|
26.1
|
|
|
3.2
|
|
Other
|
13.9
|
|
|
24.9
|
|
Net cash provided by
operating activities
|
47.6
|
|
|
78.6
|
|
|
|
|
|
Investing
Activities:
|
|
|
|
Capital
expenditures
|
(4.5)
|
|
|
(3.6)
|
|
Acquisition
payments
|
—
|
|
|
(50.3)
|
|
Other
|
—
|
|
|
(8.2)
|
|
Net cash used in
investing activities
|
(4.5)
|
|
|
(62.1)
|
|
|
|
|
|
Financing
Activities:
|
|
|
|
Debt repayments,
net
|
(48.2)
|
|
|
(46.3)
|
|
Equity activity,
net
|
(6.5)
|
|
|
(0.5)
|
|
Other
|
4.0
|
|
|
12.0
|
|
Net cash used in
financing activities
|
(50.7)
|
|
|
(34.8)
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
0.5
|
|
|
5.8
|
|
|
|
|
|
Net change in cash
and cash equivalents
|
(7.1)
|
|
|
(12.5)
|
|
Cash and cash
equivalents at the beginning of the period
|
110.1
|
|
|
160.3
|
|
Cash and cash
equivalents at the end of the period
|
$
|
103.0
|
|
|
$
|
147.8
|
|
NON-GAAP FINANCIAL MEASURES
This earnings release includes certain non-GAAP financial
measures. These financial measures include 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 sales
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 organic sales data)
|
(Unaudited)
|
|
|
Three
Months Ended
|
Organic Sales
Growth:
|
March 31,
2017
|
|
|
Change in net sales
|
(0.2)%
|
|
Impact from acquisitions
|
0.9%
|
|
Impact from foreign exchange rates
|
0.6%
|
|
Impact from number of workdays
|
—%
|
|
Organic
sales growth
|
(1.7)%
|
|
|
Note: Organic sales
growth is an additional financial measure provided to illustrate
the Company's sales trends. Organic sales growth is calculated by
deducting the percentage impact from acquisitions in the first year
of ownership, foreign exchange rates and number of workdays from
the overall percentage change in consolidated net sales.
|
|
Three Months
Ended
|
Gross
Profit:
|
March 31,
2017
|
|
March 31,
2016
|
|
|
|
Net sales
|
$
|
1,772.6
|
|
$
|
1,776.0
|
|
Cost of goods sold
(excluding depreciation
|
|
|
and
amortization)
|
1,422.6
|
|
1,420.8
|
|
Gross
profit
|
$
|
350.0
|
|
$
|
355.2
|
|
Gross
margin
|
|
19.7%
|
|
|
20.0%
|
|
|
|
|
|
|
|
|
Note: Gross profit,
which is a commonly used financial measure within the distribution
industry, is an additional financial measure provided by the
Company. Gross profit is calculated by deducting cost of goods
sold, excluding depreciation and amortization, from net sales.
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,
2017
|
|
December 31,
2016
|
|
|
|
|
Income from
operations
|
$
|
329.6
|
|
|
$
|
332.0
|
|
Depreciation and
amortization
|
66.4
|
|
|
66.9
|
|
EBITDA
|
$
|
396.0
|
|
|
$
|
398.9
|
|
|
|
|
|
|
March 31,
2017
|
|
December 31,
2016
|
Current debt and
short-term borrowings
|
$
|
29.3
|
|
|
$
|
22.1
|
|
Long-term
debt
|
1,309.8
|
|
|
1,363.1
|
|
Debt discount and
deferred financing fees(1)
|
16.3
|
|
|
17.3
|
|
Total debt
|
$
|
1,355.4
|
|
|
$
|
1,402.5
|
|
|
|
|
|
|
|
|
|
Financial leverage
ratio
|
|
3.4
|
|
|
|
3.5
|
|
|
|
|
|
|
(1) Long-term debt is
presented in the condensed consolidated balance sheets net of
deferred financing fees and debt discount.
|
Note: Financial
leverage is a financial measure provided by the Company to
illustrate its capital structure position. Financial leverage ratio
is calculated by dividing total debt, including debt discount and
deferred financing fees, 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,
2017
|
|
March 31,
2016
|
|
|
|
|
Cash flow provided by
operations
|
$
|
47.6
|
|
$
|
78.6
|
|
|
Less: Capital
expenditures
|
|
(4.5)
|
|
|
(3.6)
|
|
|
Free cash
flow
|
$
|
43.1
|
|
$
|
75.0
|
|
|
Percentage of net
income
|
|
114%
|
|
|
217%
|
|
|
|
|
|
|
Note: Free cash flow
is as an additional liquidity measure provided by the Company.
Capital expenditures are deducted from operating cash flow to
determine free cash flow. Free cash flow is available to fund other
investing and financing activities.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/wesco-international-inc-reports-first-quarter-2017-results-300446938.html
SOURCE WESCO International, Inc.