PITTSBURGH, Jan. 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, today announced its 2015 fourth quarter results.
Mr. John J. Engel, WESCO's
Chairman and Chief Executive Officer, stated, "Our fourth quarter
sales declined 7%, reflecting weakness in commodity-driven end
markets and continued foreign exchange headwinds. Organic
sales were down 8% against a strong prior year quarter, with the
U.S. and Canada down 5% and 14%,
respectively. Although overall sales were down, our data
communications and utility sales grew again in the quarter. We
continued to tightly manage our costs and streamline our
organization, and the benefits of these actions partially mitigated
the impact of lower sales and business mix on earnings per share,
which declined versus prior year. Free cash flow generation
was very strong at more than two times net income. As
anticipated, our leverage ratio ended the year slightly above our
target range following the acquisition of Needham Electric Supply
during the fourth quarter. With continued strong cash
generation, we expect to reduce our leverage ratio back within our
target range of 2.0 to 3.5 times EBITDA in the near term."
The following are results for the three months ended
December 31, 2015 compared to the three months ended
December 31, 2014:
- Net sales were $1,861.5 million
for the fourth quarter of 2015, compared to $1,995.5 million for the fourth quarter of 2014,
a decrease of 6.7%. Normalized organic sales decreased 7.6%;
foreign exchange rates negatively impacted sales by 3.7% and were
partially offset by the positive impacts from acquisitions and
number of workdays of 3.0% and 1.6%, respectively.
- Gross profit was $363.5 million,
or 19.5% of sales, for the fourth quarter of 2015, compared to
$402.2 million, or 20.2% of sales,
for the fourth quarter of 2014.
- Selling, general & administrative (SG&A) expenses were
$256.9 million, or 13.8% of sales,
for the fourth quarter of 2015, compared to $260.9 million, or 13.1% of sales, for the fourth
quarter of 2014.
- Operating profit was $90.0
million for the current quarter, compared to $124.2 million for the fourth quarter of 2014.
Operating profit as a percentage of sales was 4.8% and 6.2% in 2015
and 2014, respectively.
- Interest expense for the fourth quarter of 2015 was
$9.9 million, compared to
$20.2 million for the fourth quarter
of 2014. Non-cash interest expense, which includes convertible debt
interest, interest related to uncertain tax positions, the
amortization of deferred financing fees and accrued interest, for
the fourth quarter of 2015 and 2014 was income of $8.1 million and expense of $0.6 million, respectively. The resolution of
transfer pricing matters associated with previously filed tax
positions resulted in non-cash interest income of $9.4 million for the fourth quarter of 2015.
- The effective tax rate for the current quarter was 39.3%
compared to 28.8% for the prior year fourth quarter. The resolution
of the tax matter described above resulted in incremental income
tax expense of $11.7 million, which
combined with the effect of the interest income associated with
this matter, increased the effective tax rate in the fourth quarter
of 2015 by 11.3 percentage points.
- Net income attributable to WESCO International, Inc. of
$48.4 million for the current quarter
was down 35.0% from $74.5 million for
the prior year quarter.
- Earnings per diluted share for the fourth quarter of 2015 were
$1.03 per share, based on 47.2
million diluted shares, compared to earnings per diluted share of
$1.40 in the fourth quarter of 2014,
based on 53.0 million diluted shares.
- Free cash flow for the fourth quarter of 2015 was $101.6 million, or 209% of net income, compared
to $106.9 million for the fourth
quarter of 2014.
Mr. Engel continued, "On a full year basis, our results reflect
the challenging economic and end market environment. Sales,
operating margin and earnings per share declined versus prior year
but were in line with the outlook we provided during our third
quarter earnings call. We remain clearly focused on executing
our One WESCO strategy 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 a return of
capital to shareholders. We reaffirm our expectation 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 in 2016, as we
outlined in our investor outlook call in December."
The following results are for the year ended December 31, 2015 compared to the year ended
December 31, 2014:
- Net sales were $7,518.5 million
for 2015, compared to $7,889.6
million for 2014, a decrease of 4.7%. Normalized organic
sales decreased 3.3%; foreign exchange rates negatively impacted
sales by 3.4% and were partially offset by a positive impact from
acquisitions of 2.0%.
- Gross profit was $1,493.7
million, or 19.9% of sales, for 2015 compared to
$1,611.0 million, or 20.4% of sales,
for 2014.
- SG&A expenses for 2015 were $1,055.0
million, or 14.0% of sales, compared to SG&A expenses of
$1,076.8 million, or 13.6% of sales,
for 2014.
- Operating profit was $373.7
million for 2015, compared to $466.2
million for 2014. Operating profit as a percentage of sales
was 5.0% and 5.9% in 2015 and 2014, respectively.
- Interest expense for 2015 was $69.8
million, compared to $82.1
million for 2014. Non-cash interest expense, which includes
convertible debt interest, interest related to uncertain tax
positions, the amortization of deferred financing fees and accrued
interest, for 2015 and 2014 was $3.5
million and $8.1 million,
respectively. The resolution of transfer pricing matters associated
with previously filed tax positions resulted in non-cash interest
income of $9.4 million in the fourth
quarter of 2015.
- The effective tax rate was 31.4% for 2015 compared to 28.3% for
2014. The resolution of the tax matter described above resulted in
incremental income tax expense of $11.7
million, which combined with the effect of the interest
income associated with this matter, increased the effective tax
rate in 2015 by 2.9 percentage points.
- Net income attributable to WESCO International, Inc. of
$210.7 million for 2015 was down
23.6% from $275.9 million for
2014.
- Earnings per diluted share for 2015 were $4.18 per share, based on 50.4 million diluted
shares, compared to earnings per diluted share of $5.18 per share for 2014, based on 53.3 million
diluted shares.
- Free cash flow for 2015 was $261.4
million, or 125% of net income, compared to $230.7 million in 2014.
Mr. Engel added, "WESCO provides leading supply chain solutions
for customers and suppliers supported by a broad and expanding
portfolio of products and services. During this period of
economic uncertainty and slow market recovery, customers and
suppliers are looking for strong value-creating supply chain
partners. Our efforts are centered on providing excellent
customer service and delivering value to our customers' operations
and supply chains. I am very proud of the extra effort
demonstrated by all WESCO associates in serving our customers last
year, and I am confident in our team's ability to improve our
performance in 2016."
Webcast and Teleconference Access
WESCO will conduct a webcast and teleconference to discuss the
fourth quarter earnings as described in this News Release on
Thursday, January 28, 2016, at
11:00 a.m. E.S.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 replay will be
available on the WESCO website through 9:00
A.M., February 4, 2016.
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, 2014, as well as the Company's other
reports filed with the Securities and Exchange Commission.
WESCO
INTERNATIONAL, INC.
|
|
CONDENSED
CONSOLIDATED STATEMENT OF INCOME
|
(dollar amounts in
millions, except per share amounts)
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
|
|
Three Months
Ended
|
|
|
December 31,
2015
|
|
|
|
|
December 31,
2014
|
|
Net sales
|
$
|
1,861.5
|
|
|
|
|
|
$
|
1,995.5
|
|
|
Cost of goods sold
(excluding
|
1,498.0
|
|
80.5
|
%
|
|
|
|
1,593.3
|
|
79.8
|
%
|
depreciation and amortization below)
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
256.9
|
|
13.8
|
%
|
|
|
|
260.9
|
|
13.1
|
%
|
Depreciation and
amortization
|
16.6
|
|
|
|
|
|
17.1
|
|
|
Income from operations
|
90.0
|
|
4.8
|
%
|
|
|
|
124.2
|
|
6.2
|
%
|
Interest expense,
net
|
9.9
|
|
|
|
|
|
20.2
|
|
|
Income before income taxes
|
80.1
|
|
4.3
|
%
|
|
|
|
104.0
|
|
5.2
|
%
|
Provision for income
taxes
|
31.5
|
|
|
|
|
|
29.9
|
|
|
Net income
|
48.6
|
|
2.6
|
%
|
|
|
|
74.1
|
|
3.7
|
%
|
Less: Net income
(loss) attributable to noncontrolling interest
|
0.2
|
|
|
|
|
|
(0.4)
|
|
|
Net income attributable to WESCO International, Inc.
|
$
|
48.4
|
|
2.6
|
%
|
|
|
|
$
|
74.5
|
|
3.7
|
%
|
|
|
|
|
|
|
|
|
Earnings per diluted
common share
|
$
|
1.03
|
|
|
|
|
|
$
|
1.40
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding and common share equivalents used in
computing earnings per diluted share (in millions)
|
47.2
|
|
|
|
|
|
53.0
|
|
|
WESCO
INTERNATIONAL, INC.
|
|
CONDENSED
CONSOLIDATED STATEMENT OF INCOME
|
(dollar amounts in
millions, except per share amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve
Months Ended
|
|
|
|
|
Twelve
Months Ended
|
|
|
December 31,
2015
|
|
|
|
|
December 31,
2014
|
|
Net sales
|
$
|
7,518.5
|
|
|
|
|
|
$
|
7,889.6
|
|
|
Cost of goods sold
(excluding
|
6,024.8
|
|
80.1
|
%
|
|
|
|
6,278.6
|
|
79.6
|
%
|
depreciation and amortization below)
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
1,055.0
|
|
14.0
|
%
|
|
|
|
1,076.8
|
|
13.6
|
%
|
Depreciation and
amortization
|
65.0
|
|
|
|
|
|
68.0
|
|
|
Income from operations
|
373.7
|
|
5.0
|
%
|
|
|
|
466.2
|
|
5.9
|
%
|
Interest expense,
net
|
69.8
|
|
|
|
|
|
82.1
|
|
|
Income before income taxes
|
303.9
|
|
4.0
|
%
|
|
|
|
384.1
|
|
4.9
|
%
|
Provision for income
taxes
|
95.5
|
|
|
|
|
|
108.7
|
|
|
Net income
|
208.4
|
|
2.8
|
%
|
|
|
|
275.4
|
|
3.5
|
%
|
Less: Net income
(loss) attributable to noncontrolling interest
|
(2.3)
|
|
|
|
|
|
(0.5)
|
|
|
Net income attributable to WESCO International, Inc.
|
$
|
210.7
|
|
2.8
|
%
|
|
|
|
$
|
275.9
|
|
3.5
|
%
|
|
|
|
|
|
|
|
|
Earnings per diluted
common share
|
$
|
4.18
|
|
|
|
|
|
$
|
5.18
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding and common share equivalents used in
computing earnings per diluted share (in millions)
|
50.4
|
|
|
|
|
|
53.3
|
|
|
WESCO
INTERNATIONAL, INC.
|
|
CONDENSED
CONSOLIDATED BALANCE SHEET
|
(dollar amounts in
millions)
|
(Unaudited)
|
|
|
December 31,
2015
|
|
December 31,
2014
|
Assets
|
|
|
|
Current
Assets
|
|
|
|
Cash and cash
equivalents
|
$
|
160.3
|
|
|
$
|
128.3
|
|
Trade accounts
receivable, net
|
1,075.3
|
|
|
1,117.4
|
|
Inventories,
net
|
810.1
|
|
|
819.5
|
|
Current deferred
income taxes
|
8.5
|
|
|
35.9
|
|
Other current
assets
|
203.4
|
|
|
249.2
|
|
Total current assets
|
2,257.6
|
|
|
2,350.3
|
|
Other
assets
|
2,329.9
|
|
|
2,404.0
|
|
Total assets
|
$
|
4,587.5
|
|
|
$
|
4,754.3
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
Current
Liabilities
|
|
|
|
Accounts
payable
|
$
|
715.5
|
|
|
$
|
765.1
|
|
Current debt and
short-term borrowings
|
44.3
|
|
|
49.1
|
|
Other current
liabilities
|
188.0
|
|
|
249.6
|
|
Total current liabilities
|
947.8
|
|
|
1,063.8
|
|
|
|
|
|
Long-term
debt
|
1,456.8
|
|
|
1,366.4
|
|
Other noncurrent
liabilities
|
409.0
|
|
|
396.0
|
|
Total liabilities
|
2,813.6
|
|
|
2,826.2
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
Total stockholders' equity
|
1,773.9
|
|
|
1,928.1
|
|
Total liabilities and stockholders' equity
|
$
|
4,587.5
|
|
|
$
|
4,754.3
|
|
WESCO
INTERNATIONAL, INC.
|
|
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
|
(dollar amounts in
millions)
|
(Unaudited)
|
|
|
Twelve
Months Ended
|
|
Twelve
Months Ended
|
|
December 31,
2015
|
|
December 31,
2014
|
Operating
Activities:
|
|
|
|
Net
income
|
$
|
208.4
|
|
|
$
|
275.4
|
|
Add back (deduct):
|
|
|
|
Depreciation and amortization
|
65.0
|
|
|
68.0
|
|
Deferred income taxes
|
42.9
|
|
|
5.0
|
|
Change in trade receivables, net
|
40.1
|
|
|
(89.0)
|
|
Change in inventories, net
|
2.4
|
|
|
(36.8)
|
|
Change in accounts payable
|
(55.9)
|
|
|
37.6
|
|
Other
|
(19.8)
|
|
|
(9.0)
|
|
Net cash
provided by operating activities
|
283.1
|
|
|
251.2
|
|
|
|
|
|
Investing
Activities:
|
|
|
|
Capital expenditures
|
(21.7)
|
|
|
(20.5)
|
|
Acquisition payments
|
(151.6)
|
|
|
(138.6)
|
|
Other
|
3.0
|
|
|
15.0
|
|
Net cash
used in investing activities
|
(170.3)
|
|
|
(144.1)
|
|
|
|
|
|
Financing
Activities:
|
|
|
|
Debt repayments, net of proceeds
|
91.8
|
|
|
(63.7)
|
|
Equity activity, net
|
(154.2)
|
|
|
(0.7)
|
|
Other
|
(5.4)
|
|
|
(31.2)
|
|
Net cash
used in financing activities
|
(67.8)
|
|
|
(95.6)
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
(13.0)
|
|
|
(6.9)
|
|
|
|
|
|
Net change in cash
and cash equivalents
|
32.0
|
|
|
4.6
|
|
Cash and cash
equivalents at the beginning of the period
|
128.3
|
|
|
123.7
|
|
Cash and cash
equivalents at the end of the period
|
$
|
160.3
|
|
|
$
|
128.3
|
|
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
|
|
Twelve
Months Ended
|
Normalized Organic
Sales Growth - Year-Over-Year:
|
December 31,
2015
|
|
December 31,
2015
|
|
|
|
|
Change in net sales
|
(6.7)
|
%
|
|
(4.7)
|
%
|
Impact from acquisitions
|
3.0
|
%
|
|
2.0
|
%
|
Impact from foreign exchange rates
|
(3.7)
|
%
|
|
(3.4)
|
%
|
Impact from number of workdays
|
1.6
|
%
|
|
—
|
%
|
Normalized
organic sales growth
|
(7.6)
|
%
|
|
(3.3)
|
%
|
Note: 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. Organic sales growth is calculated by deducting the
percentage impact on net sales from acquisitions, foreign exchange
rates and number of workdays from the overall percentage change in
consolidated net sales.
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
Gross
Profit:
|
December 31,
2015
|
|
December 31,
2014
|
|
December 31,
2015
|
|
December 31,
2014
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
1,861.5
|
|
|
$
|
1,995.5
|
|
|
$
|
7,518.5
|
|
|
$
|
7,889.6
|
|
Cost of goods sold (excluding depreciation
and amortization)
|
1,498.0
|
|
|
1,593.3
|
|
|
6,024.8
|
|
|
6,278.6
|
|
Gross
profit
|
$
|
363.5
|
|
|
$
|
402.2
|
|
|
$
|
1,493.7
|
|
|
$
|
1,611.0
|
|
Gross
margin
|
19.5
|
%
|
|
20.2
|
%
|
|
19.9
|
%
|
|
20.4
|
%
|
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:
|
December 31,
2015
|
|
December 31,
2014
|
|
|
|
|
Income from operations
|
$
|
373.7
|
|
|
$
|
466.2
|
|
Depreciation and amortization
|
65.0
|
|
|
68.0
|
|
EBITDA
|
$
|
438.7
|
|
|
$
|
534.2
|
|
|
|
|
|
|
December 31,
2015
|
|
December 31,
2014
|
Current
debt
|
$
|
44.3
|
|
|
$
|
49.1
|
|
Long-term
debt
|
1,456.8
|
|
|
1,366.4
|
|
Debt discount related
to convertible debentures and term loan (1)
|
164.3
|
|
|
170.4
|
|
Total debt including debt discount
|
$
|
1,665.4
|
|
|
$
|
1,585.9
|
|
|
|
|
|
Financial leverage
ratio
|
3.8
|
|
|
3.0
|
(1)
|
The convertible
debentures and term loan are presented on the condensed
consolidated balance sheets in long-term debt, net of the
unamortized discount.
|
|
|
|
Note: Financial
leverage is provided by the Company as an indicator of capital
structure position. Financial leverage 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
|
|
Twelve Months
Ended
|
Free Cash
Flow:
|
December 31,
2015
|
|
December 31,
2014
|
|
December 31,
2015
|
|
December 31,
2014
|
|
|
|
|
|
|
|
|
Cash flow provided by
operations
|
$
|
107.1
|
|
|
$
|
111.4
|
|
|
$
|
283.1
|
|
|
$
|
251.2
|
|
Less: Capital
expenditures
|
(5.5)
|
|
|
(4.5)
|
|
|
(21.7)
|
|
|
(20.5)
|
|
Free cash flow
|
$
|
101.6
|
|
|
$
|
106.9
|
|
|
$
|
261.4
|
|
|
$
|
230.7
|
|
Percent of net
income
|
209
|
%
|
|
144
|
%
|
|
125
|
%
|
|
84
|
%
|
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.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/wesco-international-inc-reports-fourth-quarter-2015-results-300211206.html
SOURCE WESCO International, Inc.