PITTSBURGH, July 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 second
quarter results.
The following are results for the three months ended
June 30, 2015 compared to the three months ended June 30,
2014:
- Net sales were $1,916.7 million
for the second quarter of 2015, compared to $2,005.2 million for the second quarter of 2014,
a decrease of 4.4%. Normalized organic sales decreased 3.0%;
foreign exchange rates negatively impacted sales by 3.0% and were
partially offset by a 1.6% positive impact from acquisitions.
Sequentially, sales increased 5.5%, and normalized organic sales
increased 1.1%.
- Gross profit was $381.6 million,
or 19.9% of sales, for the second quarter of 2015, compared to
$411.8 million, or 20.5% of sales,
for the second quarter of 2014.
- Selling, general and administrative ("SG&A") expenses were
$275.2 million, or 14.4% of sales,
for the second quarter of 2015, compared to $278.7 million, or 13.9% of sales, for the second
quarter of 2014.
- Operating profit was $90.3
million for the current quarter, compared to $115.9 million for the second quarter of 2014.
Operating profit as a percentage of sales was 4.7% in 2015,
compared to 5.8% in 2014.
- Interest expense for the second quarter of 2015 was
$18.6 million, compared to
$20.3 million for the second 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 second
quarter of 2015 and 2014 was $1.6
million and $2.2 million,
respectively.
- The effective tax rate for the current quarter was 29.3%,
compared to 28.0% for the prior year second quarter.
- Net income attributable to WESCO International, Inc. of
$51.8 million for the current quarter
was down 24.8% from $68.9 million for
the prior year quarter.
- Earnings per diluted share for the second quarter of 2015 was
$1.00 per share, based on 51.9
million diluted shares, compared to $1.29 per share in the second quarter of 2014,
based on 53.5 million diluted shares.
- Free cash flow for the second quarter of 2015 was $34.9 million compared to a net cash outflow of
$2.7 million for the second quarter
of 2014.
Mr. John J. Engel, WESCO's
Chairman and Chief Executive Officer, stated, "Our second quarter
sales declined 4% reflecting continued foreign exchange headwinds
and weakness in the industrial market as well as a slow seasonal
start in the non-residential construction market. For the
quarter, organic sales in the U.S. were flat while organic sales in
Canada declined 7%. Business mix,
rebate accruals, and a continued competitive pricing environment
drove gross margin lower while cost reduction actions partially
mitigated the impact on earnings per share, which was lower than
prior year. Free cash flow was solid and exceeds 120% of net income
on a year-to-date basis. We repurchased approximately 750 thousand
shares in the second quarter bringing year-to-date repurchases to
approximately 1.1 million shares or $75
million of the $300 million
share repurchase authorization. Based on our second quarter
results and a challenging market outlook, we are revising our full
year outlook for sales growth of (3)% to flat and $4.50 to $4.90 earnings per diluted share from
our previous outlook of (3)% to 3% sales growth and $5.00 to $5.40 earnings per diluted share."
The following results are for the six months ended June 30,
2015 compared to the six months ended June 30, 2014:
- Net sales were $3,733.0 million
for the first six months of 2015, compared to $3,816.0 million for the first six months of
2014, a decrease of 2.2%. Normalized organic sales decreased 0.1%;
acquisitions positively impacted sales by 1.4%, and foreign
exchange rates and number of workdays negatively impacted sales by
2.7% and 0.8%, respectively.
- Gross profit of $749.3 million,
or 20.1% of sales, for the first six months of 2015 compared to
$786.5 million, or 20.6% of sales,
for the first six months of 2014.
- Selling, general and administrative ("SG&A") expenses were
$539.8 million, or 14.5% of sales,
for the first six months of 2015, compared to $544.2 million, or 14.3% of sales, for the first
six months of 2014.
- Operating profit was $177.4
million for the first six months of 2015 compared to
$208.7 million for the first six
months of 2014. Operating profit as a percentage of sales was 4.8%
in 2015 compared to 5.5% in 2014.
- Interest expense for the first six months of 2015 was
$39.5 million, compared to
$41.0 million for the first six
months 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 six months of 2015 and 2014 was
$7.0 million and $4.7 million, respectively.
- The effective tax rate was 29.4% for the six months ended
June 30, 2015, compared to 28.1% for
the six months ended June 30,
2014.
- Net income attributable to WESCO International, Inc. of
$98.7 million for the six months
ended June 30, 2015 was down 18.2%
from $120.7 million for the six
months ended June 30, 2014.
- Earnings per diluted share for the first six months of 2015 was
$1.90 per share, based on 52.1
million diluted shares, versus $2.26
per share for the first six months of 2014, based on 53.4 million
diluted shares.
- Free cash flow for the six months ended June 30, 2015 was $120.0
million, or 122% of net income, compared to free cash flow
of $39.0 million, or 32% of net
income for the six months ended June 30,
2014.
Mr. Engel continued, "We expect reduced demand in
commodity-driven end markets in the near term and foreign exchange
headwinds to continue for the remainder of the year. Actions
initiated in the second quarter to accelerate our One WESCO sales
initiatives and simplify and streamline the business are expected
to help improve profitability in the second half of the year. We
are pleased with the acquisition of Hill Country in the second
quarter, and they are off to a solid start. Our capital structure
is in good shape, and we will continue to take a disciplined
approach to supplement our growth strategy by strengthening our
electrical core and expanding our portfolio of products and
services through acquisitions. As consolidation and outsourcing
accelerates in our industry, customers are looking for a
one-stop-shop to manage their global supply chain needs. Our One
WESCO value proposition provides customers with the comprehensive
product and service solutions they need to meet their MRO, OEM and
Capital Project management requirements."
Webcast and Teleconference Access
WESCO will conduct a webcast and teleconference to discuss the
second quarter earnings as described in this News Release on
Thursday, July 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
|
|
|
June 30,
2015
|
|
|
June 30,
2014
|
|
Net sales
|
$
|
1,916.7
|
|
|
|
$
|
2,005.2
|
|
|
Cost of goods sold
(excluding
|
1,535.1
|
|
80.1
|
%
|
|
1,593.4
|
|
79.5
|
%
|
depreciation and amortization below)
|
|
|
|
|
|
Selling, general and
administrative expenses
|
275.2
|
|
14.4
|
%
|
|
278.7
|
|
13.9
|
%
|
Depreciation and
amortization
|
16.1
|
|
|
|
17.2
|
|
|
Income from operations
|
90.3
|
|
4.7
|
%
|
|
115.9
|
|
5.8
|
%
|
Interest expense,
net
|
18.6
|
|
|
|
20.3
|
|
|
Income before income taxes
|
71.7
|
|
3.7
|
%
|
|
95.6
|
|
4.8
|
%
|
Provision for income
taxes
|
21.0
|
|
|
|
26.7
|
|
|
Net income
|
50.7
|
|
2.6
|
%
|
|
68.9
|
|
3.4
|
%
|
Net loss attributable
to noncontrolling interests
|
(1.1)
|
|
|
|
—
|
|
|
Net income attributable to WESCO International, Inc.
|
$
|
51.8
|
|
2.7
|
%
|
|
$
|
68.9
|
|
3.4
|
%
|
|
|
|
|
|
|
Earnings per diluted
common share
|
$
|
1.00
|
|
|
|
$
|
1.29
|
|
|
Weighted-average
common shares outstanding and common
|
|
|
|
|
|
share equivalents used
in computing earnings per diluted
|
|
|
|
|
|
share (in
millions)
|
51.9
|
|
|
|
53.5
|
|
|
WESCO
INTERNATIONAL, INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
(dollar amounts in
millions, except per share amounts)
|
(Unaudited)
|
|
|
Six Months
Ended
|
|
|
June 30,
2015
|
|
|
June 30,
2014
|
|
Net sales
|
$
|
3,733.0
|
|
|
|
$
|
3,816.0
|
|
|
Cost of goods sold
(excluding
|
2,983.7
|
|
79.9
|
%
|
|
3,029.5
|
|
79.4
|
%
|
depreciation and amortization below)
|
|
|
|
|
|
Selling, general and
administrative expenses
|
539.8
|
|
14.5
|
%
|
|
544.2
|
|
14.3
|
%
|
Depreciation and
amortization
|
32.1
|
|
|
|
33.6
|
|
|
Income from operations
|
177.4
|
|
4.8
|
%
|
|
208.7
|
|
5.5
|
%
|
Interest expense,
net
|
39.5
|
|
|
|
41.0
|
|
|
Income before income taxes
|
137.9
|
|
3.7
|
%
|
|
167.7
|
|
4.4
|
%
|
Provision for income
taxes
|
40.5
|
|
|
|
47.1
|
|
|
Net income
|
97.4
|
|
2.6
|
%
|
|
120.6
|
|
3.2
|
%
|
Net loss attributable
to noncontrolling interests
|
(1.3)
|
|
|
|
(0.1)
|
|
|
Net income attributable to WESCO International, Inc.
|
$
|
98.7
|
|
2.6
|
%
|
|
$
|
120.7
|
|
3.2
|
%
|
|
|
|
|
|
|
Earnings per diluted
common share
|
$
|
1.90
|
|
|
|
$
|
2.26
|
|
|
Weighted-average
common shares outstanding and common
|
|
|
|
|
|
share equivalents used
in computing earnings per diluted
|
|
|
|
|
|
share (in
millions)
|
52.1
|
|
|
|
53.4
|
|
|
WESCO
INTERNATIONAL, INC.
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(dollar amounts in
millions)
|
(Unaudited)
|
|
|
June 30,
2015
|
|
December 31,
2014
|
Assets
|
|
|
|
Current
Assets
|
|
|
|
Cash and cash
equivalents
|
$
|
174.3
|
|
|
$
|
128.3
|
|
Trade accounts
receivable, net
|
1,124.9
|
|
|
1,117.4
|
|
Inventories,
net
|
847.0
|
|
|
819.5
|
|
Current deferred
income taxes
|
36.7
|
|
|
35.9
|
|
Other current
assets
|
185.2
|
|
|
249.2
|
|
Total current assets
|
2,368.1
|
|
|
2,350.3
|
|
Other
assets
|
2,358.3
|
|
|
2,404.0
|
|
Total assets
|
$
|
4,726.4
|
|
|
$
|
4,754.3
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
Current
Liabilities
|
|
|
|
Accounts
payable
|
$
|
770.6
|
|
|
$
|
765.1
|
|
Current debt and
short-term borrowings
|
49.2
|
|
|
49.1
|
|
Other current
liabilities
|
192.0
|
|
|
249.6
|
|
Total current liabilities
|
1,011.8
|
|
|
1,063.8
|
|
|
|
|
|
Long-term
debt
|
1,436.8
|
|
|
1,366.4
|
|
Other noncurrent
liabilities
|
411.9
|
|
|
396.0
|
|
Total liabilities
|
2,860.5
|
|
|
2,826.2
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
Total stockholders' equity
|
1,865.9
|
|
|
1,928.1
|
|
Total liabilities and stockholders' equity
|
$
|
4,726.4
|
|
|
$
|
4,754.3
|
|
WESCO
INTERNATIONAL, INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(dollar amounts in
millions)
|
(Unaudited)
|
|
|
Six Months
Ended
|
|
June 30,
2015
|
|
June 30,
2014
|
Operating
Activities:
|
|
|
|
Net income
|
$
|
97.4
|
|
|
$
|
120.6
|
|
Add back
(deduct):
|
|
|
|
Depreciation
and amortization
|
32.1
|
|
|
33.6
|
|
Deferred
income taxes
|
16.7
|
|
|
13.7
|
|
Change in
trade receivables, net
|
(3.8)
|
|
|
(122.1)
|
|
Change in
inventories, net
|
(26.7)
|
|
|
(44.9)
|
|
Change in
accounts payable
|
0.8
|
|
|
47.1
|
|
Other
|
16.1
|
|
|
2.8
|
|
Net cash provided by
operating activities
|
132.6
|
|
|
50.8
|
|
|
|
|
|
Investing
Activities:
|
|
|
|
Capital
expenditures
|
(12.6)
|
|
|
(11.8)
|
|
Acquisition
payments
|
(68.5)
|
|
|
(133.3)
|
|
Other
|
1.4
|
|
|
—
|
|
Net cash used in
investing activities
|
(79.7)
|
|
|
(145.1)
|
|
|
|
|
|
Financing
Activities:
|
|
|
|
Debt borrowings, net
of repayments
|
74.4
|
|
|
76.3
|
|
Equity activity,
net
|
(79.1)
|
|
|
(0.4)
|
|
Other
|
2.7
|
|
|
(0.5)
|
|
Net cash (used in)
provided by financing activities
|
(2.0)
|
|
|
75.4
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
(4.9)
|
|
|
(3.2)
|
|
|
|
|
|
Net change in cash
and cash equivalents
|
46.0
|
|
|
(22.1)
|
|
Cash and cash
equivalents at the beginning of the period
|
128.3
|
|
|
123.7
|
|
Cash and cash
equivalents at the end of the period
|
$
|
174.3
|
|
|
$
|
101.6
|
|
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
|
|
Six Months
Ended
|
Normalized Organic
Sales Growth - Year-Over-Year:
|
June 30,
2015
|
|
June 30,
2015
|
|
|
|
|
Change in net sales
|
(4.4)
|
%
|
|
(2.2)
|
%
|
Impact from acquisitions
|
1.6
|
%
|
|
1.4
|
%
|
Impact from foreign exchange rates
|
(3.0)
|
%
|
|
(2.7)
|
%
|
Impact from number of workdays
|
—
|
%
|
|
(0.8)
|
%
|
Normalized
organic sales growth
|
(3.0)
|
%
|
|
(0.1)
|
%
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Normalized Organic
Sales Growth - Sequential:
|
June 30,
2015
|
|
|
|
|
|
|
Change in net sales
|
5.5
|
%
|
|
|
Impact from acquisitions
|
1.5
|
%
|
|
|
Impact from foreign exchange rates
|
(0.3)
|
%
|
|
|
Impact from number of workdays
|
3.2
|
%
|
|
|
Normalized
organic sales growth
|
1.1
|
%
|
|
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
|
|
Six Months
Ended
|
Gross
Profit:
|
June 30,
2015
|
|
June 30,
2014
|
|
June 30,
2015
|
|
June 30,
2014
|
|
|
|
|
|
|
|
|
Net Sales
|
$
|
1,916.7
|
|
|
$
|
2,005.2
|
|
|
$
|
3,733.0
|
|
|
$
|
3,816.0
|
|
Cost of goods sold
(excluding depreciation and amortization)
|
1,535.1
|
|
|
1,593.4
|
|
|
2,983.7
|
|
|
3,029.5
|
|
Gross
profit
|
$
|
381.6
|
|
|
$
|
411.8
|
|
|
$
|
749.3
|
|
|
$
|
786.5
|
|
Gross
margin
|
19.9
|
%
|
|
20.5
|
%
|
|
20.1
|
%
|
|
20.6
|
%
|
|
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:
|
June 30,
2015
|
|
December 31,
2014
|
|
|
|
|
|
|
Income from
operations
|
$
|
434.9
|
|
|
$
|
466.2
|
|
|
Depreciation and
amortization
|
66.5
|
|
|
68.0
|
|
|
EBITDA
|
$
|
501.4
|
|
|
$
|
534.2
|
|
|
|
|
|
|
|
|
June 30,
2015
|
|
December 31,
2014
|
|
Current debt and
short-term borrowings
|
$
|
49.2
|
|
|
$
|
49.1
|
|
|
Long-term
debt
|
1,436.8
|
|
|
1,366.4
|
|
|
Debt discount related
to convertible debentures and term loan(1)
|
167.0
|
|
|
170.4
|
|
|
Total debt including
debt discount
|
1,653.0
|
|
|
1,585.9
|
|
|
|
|
|
|
|
Financial leverage
ratio
|
3.3
|
|
|
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
|
|
Six Months
Ended
|
|
Free Cash
Flow:
|
June 30,
2015
|
|
June 30,
2014
|
|
June 30,
2015
|
|
June 30,
2014
|
|
|
|
|
|
|
|
|
|
|
Cash flow provided by
operations
|
$
|
42.5
|
|
|
$
|
4.1
|
|
|
$
|
132.6
|
|
|
$
|
50.8
|
|
|
Less: Capital
expenditures
|
(7.6)
|
|
|
(6.8)
|
|
|
(12.6)
|
|
|
(11.8)
|
|
|
Free cash
flow
|
$
|
34.9
|
|
|
$
|
(2.7)
|
|
|
$
|
120.0
|
|
|
$
|
39.0
|
|
|
Percent of net income
attributable to
|
|
|
|
|
|
|
|
|
WESCO International,
Inc.
|
68
|
%
|
|
(4)
|
%
|
|
122
|
%
|
|
32
|
%
|
|
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-second-quarter-2015-results-300117509.html
SOURCE WESCO International, Inc.