- Stable sequential sales: $1.13 billion in Q4 versus $1.15 billion
in Q3 - Product margins stable both sequentially and on a
year-over-year basis - Sales, general & administrative expenses
reduced by $140 million over prior year - Total debt, net of cash,
reduced by $292 million from year-end 2008 PITTSBURGH, Jan. 28
/PRNewswire-FirstCall/ -- WESCO International, Inc. (NYSE:WCC), a
leading provider of electrical MRO products, construction
materials, and advanced integrated supply procurement outsourcing
services, today announced its 2009 fourth quarter and full-year
financial results. (Logo:
http://www.newscom.com/cgi-bin/prnh/20030508/WCCLOGO ) The
following results are for the quarter-ended December 31, 2009
compared to the quarter-ended December 31, 2008: -- Consolidated
net sales were $1,132.7 million compared to $1,429.8 million, a
decline of 20.8%, including a 0.7% positive impact from foreign
exchange rates. Fourth quarter 2009 consolidated net sales were
down 1.7% compared to third quarter 2009 levels. -- Gross profit
was $217.0 million, or 19.2% of sales, compared to $284.4 million,
or 19.9% of sales. Fourth quarter 2009 gross margin was equal to
the third quarter 2009 gross margin. -- Sales, general &
administrative (SG&A) expenses were $168.3 million, or 14.9% of
sales, compared to $204.6 million, or 14.3% of sales. SG&A
expenses were down $36.3 million, or 17.7% over the comparable
quarter. -- Operating profit was $42.6 million, or 3.8% of sales,
compared to $73.2 million or 5.1% of sales. -- Total interest
expense was $13.8 million compared to $14.4 million. Interest
expense in the current quarter was comprised of $12.6 million of
cash interest expense and $1.2 million of non-cash interest
expense. Interest expense in the prior year quarter was comprised
of $10.8 million of cash interest and $3.6 million of non-cash
interest. -- Effective tax rate for the quarter was 26.6% compared
to 34.4%. -- Net income for the quarter was $21.8 million compared
to $39.7 million. -- Diluted earnings per share were $0.51 based on
42.9 million shares compared to $0.94 with 42.4 million shares. --
Free cash flow in the current quarter was a use of $1.7 million.
Mr. John J. Engel, WESCO's Chief Executive Officer, stated, "We
successfully closed a very challenging year having taken quick and
decisive actions resulting in operating cost reductions of $140
million. The economy appears to be in the bottoming process as we
have experienced two consecutive quarters of stable sequential
sales and margins. We are beginning to see signs of positive
momentum in certain end markets with continued pressure in
non-residential construction and utility. Overall, our 2009
performance was favorable compared to the last economic downturn
and demonstrates the improvements made to our business." The
following results are for the full-year period ended December 31,
2009 compared to the full-year period ended December 31, 2008: --
Consolidated net sales were $4,624 million compared to $6,111
million, a decline of 24.3% including a 0.9% negative impact from
foreign exchange rates, and a negative impact as a result of one
less workday. -- Gross profit was $900 million, or 19.5% of sales,
compared to $1,207 million, or 19.7% of sales. -- SG&A expenses
were $694 million, or 15.0% of sales, compared to $834 million, or
13.7% of sales. SG&A expenses were down $140 million, or 16.8%
over the comparable full-year. -- Operating profit was $180 million
or 3.9% of sales compared to $346 million, or 5.7% of sales. --
Total interest expense was $53.8 million compared to $64.2 million.
Interest expense in 2009 was comprised of $42.0 million cash
interest expense and $11.8 million non-cash interest expense.
Interest expense in the prior year was comprised of $49.7 million
cash interest expense and $14.5 million non-cash interest expense.
-- Full-year pre-tax income includes a $6.0 million gain, net of
expenses, related to the third quarter exchange of $357 million of
convertible debentures. -- Effective full-year tax rate was 23.4%
compared to 29.8%. Without the impact of the convertible debenture
exchange completed in the third quarter, the effective 2009
year-to-date tax rate would have been 24.0%. -- Net income for the
full-year was $105 million compared to $204 million. -- Diluted
earnings per share were $2.46 based on 42.7 million shares compared
to $4.71 based on 43.3 million shares. Previously, the Company
recorded a pre-tax gain on its third quarter convertible debt
exchange which had a $0.16 per share favorable impact on reported
results. -- Full-year free cash flow was $279 million, a record for
the Company. -- Total debt, including debt discount, was $875
million compared to $1,141 million. The debt discount related to
the convertible notes was $183 million compared to $40.5 million.
Total net debt was reduced by $292 million or 27.7% to $762 million
from year-end 2008 levels. Mr. Engel continued, "WESCO provides
leading supply chain solutions for customers and suppliers
supported by an extensive portfolio of products and services.
During this period of economic uncertainty and slow market
recovery, we remain focused on growing sales and margins while
providing excellent customer service. I am very proud of the extra
effort demonstrated by all WESCO employees in 2009 and am confident
in our team's ability to perform well in 2010." Teleconference
WESCO will conduct a teleconference to discuss the fourth quarter
earnings as described in this News Release on Thursday, January 28,
2010, at 11:00 a.m. E.S.T. The conference call will be broadcast
live over the Internet and can be accessed from the Company's
website at http://www.wesco.com/. The conference call will be
archived on this Internet site for seven days. WESCO International,
Inc. (NYSE:WCC) is a publicly traded Fortune 500 holding company,
headquartered in Pittsburgh, Pennsylvania, whose primary operating
entity is WESCO Distribution, Inc. WESCO Distribution is a leading
distributor of electrical construction products and electrical and
industrial maintenance, repair and operating (MRO) supplies, and is
the nation's largest provider of integrated supply services. 2009
annual sales were approximately $4.6 billion. The Company employs
approximately 6,100 people, maintains relationships with over
17,000 suppliers, and serves more than 113,000 customers worldwide.
Major markets include commercial and industrial firms, contractors,
government agencies, educational institutions, telecommunications
businesses and utilities. WESCO operates seven fully automated
distribution centers and approximately 380 full-service branches in
North America and select international markets, providing a local
presence for area 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, 2008, 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 Three Months
Ended Ended December 31, December 31, 2009 (1) 2008 (1) (2) Net
sales $1,132.7 $1,429.8 Cost of goods sold (excluding depreciation
and amortization below) 915.7 80.8% 1,145.4 80.1% Selling, general
and administrative expenses 168.3 14.9% 204.6 14.3% Depreciation
and amortization 6.1 6.6 --- --- Income from operations 42.6 3.8%
73.2 5.1% Interest expense, net 13.8 14.4 Gain on debt exchange - -
Other income (0.9) (1.7) ---- ---- Income before income taxes 29.7
2.6% 60.5 4.2% Provision for income taxes 7.9 20.8 --- ---- Net
income $21.8 1.9% $39.7 2.8% ===== ===== Diluted earnings per
common share $0.51 $0.94 Weighted average common shares outstanding
and common share equivalents used in computing diluted earnings per
share (in millions) 42.9 42.4 (1) See Exhibit A for footnote detail
regarding the new accounting standard for the convertible
debentures. (2) Balances have been revised to reflect retrospective
implementation of the new accounting standard for the convertible
debentures. WESCO INTERNATIONAL, INC. CONDENSED CONSOLIDATED
STATEMENTS OF INCOME (dollar amounts in millions, except per share
amounts) (Unaudited) Twelve Months Twelve Months Ended Ended
December 31, December 31, 2009 (1) 2008 (1) Net sales $4,624.0
$6,110.8 Cost of goods sold (excluding depreciation and
amortization below) 3,724.1 80.5% 4,904.2 80.3% Selling, general
and administrative expenses 693.9 15.0% 834.3 13.7% Depreciation
and amortization 26.0 26.7 ---- ---- Income from operations 180.0
3.9% 345.6 5.7% Interest expense, net 53.8 64.2 Gain on debt
exchange (6.0) - Other income (5.0) (9.4) ---- ---- Income before
income taxes 137.2 3.0% 290.8 4.8% Provision for income taxes 32.1
86.7 ---- ---- Net income $105.1 2.3% $204.1 3.3% ====== ======
Diluted earnings per common share $2.46 $4.71 Weighted average
common shares outstanding and common share equivalents used in
computing diluted earnings per share (in millions) 42.7 43.3 (1)
See Exhibit A for footnote detail regarding the new accounting
standard for the convertible debentures. WESCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (dollar amounts in millions)
(Unaudited) December 31, December 31, 2009 (1) 2008 (1)(2) Assets
Current Assets Cash and cash equivalents $112.3 $86.3 Trade
accounts receivable 635.8 791.4 Inventories, net 507.2 605.7 Other
current assets 75.7 74.3 ---- ---- Total current assets 1,331.0
1,557.7 Other assets 1,163.2 1,162.1 ------- ------- Total assets
$2,494.2 $2,719.8 ======== ======== Liabilities and Stockholders'
Equity Current Liabilities Accounts payable $453.1 $556.5
Short-term and current debt 94.0 298.8 Other current liabilities
133.7 150.7 ----- ----- Total current liabilities 680.8 1,006.0
Long-term debt 597.9 801.4 Other noncurrent liabilities 219.2 157.3
----- ----- Total liabilities 1,497.9 1,964.7 Stockholders' Equity
Total stockholders' equity 996.3 755.1 ----- ----- Total
liabilities and stockholders' equity $2,494.2 $2,719.8 =======
======== (1) See Exhibit A for footnote detail regarding the new
accounting standard for the convertible debentures. (2) Certain
balances have been reclassified to conform with current year
presentation. WESCO INTERNATIONAL, INC. CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (dollar amounts in millions) (Unaudited)
Twelve Months Twelve Months Ended Ended December 31, December 31,
2009 2008 Operating Activities: Net income $105.1 $204.1 Add back
(deduct): Depreciation and amortization 26.0 26.7 Deferred income
taxes (8.0) (3.7) Change in Trade and other receivables, net 179.7
28.4 Change in Inventories, net 107.8 26.6 Change in Accounts
Payable (114.3) (31.2) Other (4.7) 29.0 ---- ---- Net cash provided
by operating activities 291.6 279.9 Investing Activities: Capital
expenditures (13.0) (35.3) Proceeds from sale of subsidiary - 60.0
Other 2.3 (8.3) --- ---- Net cash (used) provided by investing
activities (10.7) 16.4 Financing Activities: Debt borrowings
(repayments), net (255.6) (178.1) Equity activity, net 2.6 (57.9)
Other (11.9) (29.0) ----- ----- Net cash used by financing
activities (264.9) (265.0) Effect of exchange rate changes on cash
and cash equivalents 10.0 (17.3) ---- ----- Net change in cash and
cash equivalents 26.0 14.0 Cash and cash equivalents at the
beginning of the period 86.3 72.3 ---- ---- Cash and cash
equivalents at the end of the period $112.3 $86.3 ====== =====
WESCO INTERNATIONAL, INC. RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES (dollar amounts in thousands) (Unaudited) Twelve Months
Twelve Months Ended Ended December 31, December 31, Financial
Leverage: 2009 2008 Income from operations $179,952 $345,667
Depreciation and amortization 26,045 26,731 ------ ------ EBITDA
$205,997 $372,398 ======= ======== December 31, December 31, 2009
2008 Short-term debt $- $295,000 Current debt 93,977 3,823
Long-term debt 597,869 801,427 Debt discount related to convertible
notes (1) 182,689 40,501 ------- ------ Total debt including debt
discount $874,535 $1,140,751 ======== ========== Financial leverage
ratio 4.2 3.1 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
the trailing twelve months earnings before interest, taxes,
depreciation and amortization (EBITDA). Three Months Twelve Months
Ended Ended Free Cash Flow: December 31, December 31, (dollar
amounts in millions) 2009 2009 Cash flow provided by operations
$0.8 $291.6 Less: Capital expenditures (2.5) (13.0) ---- ----- Free
cash flow $(1.7) $278.6 ===== ====== 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 provide a source of
funds for any of the Company's financing needs. (1) The convertible
debentures are presented in the consolidated balance sheets in
long-term debt net of the unamortized discount. WESCO
INTERNATIONAL, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(CONTINUED) (dollar amounts in millions) (Unaudited) Three Months
Three Months Ended Ended December 31, December 31, Gross Profit:
2009 2008 Net sales $1,132.7 $1,429.8 Cost of goods sold (excluding
depreciation and amortization) 915.7 1,145.4 ----- ------- Gross
profit $217.0 $284.4 ===== ====== Gross margin 19.2% 19.9% Twelve
Months Twelve Months Ended Ended December 31, December 31, Gross
Profit: 2009 2008 Net sales $4,624.0 $6,110.8 Cost of goods sold
(excluding depreciation and amortization) 3,724.1 4,904.2 -------
------- Gross profit $899.9 $1,206.6 ===== ======== Gross margin
19.5% 19.7% 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. Exhibit
A On January 1, 2009, WESCO retrospectively implemented the
provisions of new guidance concerning convertible debt instruments
to its 2.625% Convertible Senior Debentures due 2025 and 1.75%
Convertible Senior Debentures due 2026 and on August 27, 2009 WESCO
applied the guidance to its 6.0% Convertible Senior Debentures due
2029. Prior to the adoption of this guidance, WESCO accounted for
its convertible debt instruments solely as long-term debt. The new
guidance requires an issuer of certain convertible debt instruments
to separately account for the liability and equity components of
convertible debt instruments in a manner that reflects the issuer's
nonconvertible debt borrowing rate. This accounting treatment
results in an increase in non-cash interest reported in the
financial statements, a decrease in long term debt, an increase in
equity and an increase in deferred income taxes. The following
table provides the incremental effect of applying the new guidance
on individual line items in the three months ended December 31,
2008 consolidated income statement: Previously Reported Revised
---------- ------- Three Months Three Months Ended Ended December
31, December 31, 2008 2008 ---- ---- Condensed Consolidated
Statement of Income Interest Expense, net $10.8 $14.4 Income before
income taxes $64.1 $60.5 Provision for income taxes $22.2 $20.8 Net
Income $41.9 $39.7 Earnings per share: Diluted $0.99 $0.94
http://www.newscom.com/cgi-bin/prnh/20030508/WCCLOGO
http://photoarchive.ap.org/ DATASOURCE: WESCO International, Inc.
CONTACT: Richard Heyse, Vice President & Chief Financial
Officer, WESCO International, Inc., +1-412-454-2392, Fax:
+1-412-222-7566 Web Site: http://www.wescodist.com/
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