Delaware (State or other jurisdiction of incorporation or organization) | 25-1723342 (I.R.S. Employer Identification No.) | |
225 West Station Square Drive Suite 700 Pittsburgh, Pennsylvania (Address of principal executive offices) | (412) 454-2200 (Registrant's telephone number, including area code) |
April 18, 2013 | WESCO INTERNATIONAL, INC. | |||
(Date) | ||||
/s/ Kenneth S. Parks | ||||
Kenneth S. Parks | ||||
Vice President and Chief Financial Officer |
NEWS RELEASE | |
WESCO International, Inc. / Suite 700, 225 West Station Square Drive / Pittsburgh, PA 15219 |
• | Net sales were $1,808.1 million for the first quarter of 2013, compared to $1,606.0 million for the first quarter of 2012, an increase of 12.6%. Acquisitions positively impacted sales by 16.0% and organic sales declined 3.4%. Adjusting for the impact of one less workday in the quarter, normalized organic sales declined approximately 1.8%. Sequentially, sales increased 10.0%, and organic sales decreased 2.1%. |
• | Gross profit of $381.1 million, or 21.1% of sales, for the first quarter of 2013 improved 120 basis points compared to $319.7 million, or 19.9% of sales, for the first quarter of 2012. |
• | Selling, general & administrative (SG&A) expenses of $227.5 million, or 12.6% of sales, for the first quarter of 2013 decreased 160 basis points, compared to $228.1 million, or 14.2% of sales, for the first quarter of 2012. First quarter 2013 SG&A expenses include a $36.1 million favorable impact resulting from the recognition of insurance coverage relating to a litigation-related charge recorded in the fourth quarter of 2012. Excluding the impact of this favorable item, SG&A expenses were $263.6 million, or 14.6% of sales. The increase in SG&A expenses was the result of acquisitions, primarily EECOL. |
• | Operating profit was $136.9 million for the current quarter, up 64.0% from $83.5 million for the comparable 2012 quarter. Operating profit as a percentage of sales was 7.6% in 2013, up 240 basis points from 5.2% in 2012. Excluding the favorable impact resulting from the recognition of insurance coverage on a litigation matter, operating profit was $100.8 million, or 5.6% of sales, up 20.7% and 40 basis points, respectively, from the prior year quarter. |
• | Interest expense for the first quarter of 2013 was $21.9 million, compared to $9.0 million for the first quarter of 2012. Interest expense increased for the quarter due to the increase in indebtedness in late 2012 associated with the EECOL acquisition. Non-cash interest expense, which includes convertible debt interest, interest related to uncertain tax positions, and the amortization of deferred financing fees, for the first quarter of 2013 was $2.3 million compared to $1.9 million of income in the first quarter of 2012. The first quarter of 2012 was impacted by a favorable adjustment of $3.2 million of previously recorded interest related to uncertain tax positions. This adjustment was the result of a favorable Internal Revenue Service appeals settlement in the first quarter of 2012 related to the years 2000 to 2006. |
• | The effective tax rate for the current quarter was 26.9%, compared to 29.0% for the prior year first quarter. |
• | Net income of $84.1 million for the current quarter was up 59.0% from $52.9 million for the prior year quarter. Excluding the favorable impact of non-recurring items in both years, first quarter 2013 adjusted net income was $58.6 million, compared to $50.9 million in the prior quarter, an increase of 15.1%. |
• | Earnings per diluted share for the first quarter of 2013 were $1.60 per share, based on 52.4 million diluted shares, and were up 55.3% from $1.03 per share in the first quarter of 2012, based on 51.3 million diluted shares. Excluding the favorable impact of non-recurring items in both years, adjusted earnings per diluted share in first quarter 2013 were $1.12, compared to $0.99 in the prior year quarter and increased 13.1%. |
• | Free cash flow for the first quarter of 2013 was $74.4 million, or 88% of net income, compared to $53.8 million for the first quarter of 2012. Excluding the favorable impact of non-recurring items, first quarter of 2013 free cash flow was 127% of adjusted net income. |
Three Months Ended | Three Months Ended | ||||||||||
March 31, 2013 | March 31, 2012 | ||||||||||
Net sales | $ | 1,808.1 | $ | 1,606.0 | |||||||
Cost of goods sold (excluding | 1,427.0 | 78.9 | % | 1,286.3 | 80.1 | % | |||||
depreciation and amortization below) | |||||||||||
Selling, general and administrative expenses | 227.5 | 12.6 | % | 228.1 | 14.2 | % | |||||
Depreciation and amortization | 16.7 | 8.1 | |||||||||
Income from operations | 136.9 | 7.6 | % | 83.5 | 5.2 | % | |||||
Interest expense, net | 21.9 | 9.0 | |||||||||
Income before income taxes | 115.0 | 6.4 | % | 74.5 | 4.6 | % | |||||
Provision for income taxes | 30.9 | 21.6 | |||||||||
Net income attributable to WESCO International, Inc. | $ | 84.1 | 4.7 | % | $ | 52.9 | 3.3 | % | |||
Earnings per diluted common share | $ | 1.60 | $ | 1.03 | |||||||
Weighted average common shares outstanding and common | |||||||||||
share equivalents used in computing earnings per diluted | |||||||||||
share (in millions) | 52.4 | 51.3 |
March 31, 2013 | December 31, 2012 | ||||||
Assets | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 116.8 | $ | 86.1 | |||
Trade accounts receivable, net | 1,094.3 | 1,036.2 | |||||
Inventories, net | 792.4 | 794.0 | |||||
Other current assets | 173.2 | 185.5 | |||||
Total current assets | 2,176.7 | 2,101.8 | |||||
Other assets | 2,492.6 | 2,527.8 | |||||
Total assets | $ | 4,669.3 | $ | 4,629.6 | |||
Liabilities and Stockholders' Equity | |||||||
Current Liabilities | |||||||
Accounts payable | $ | 745.0 | $ | 706.6 | |||
Current debt and short-term borrowings | 40.1 | 39.8 | |||||
Other current liabilities | 253.7 | 261.6 | |||||
Total current liabilities | 1,038.8 | 1,008.0 | |||||
Long-term debt | 1,634.8 | 1,695.4 | |||||
Other noncurrent liabilities | 378.3 | 372.5 | |||||
Total liabilities | 3,051.9 | 3,075.9 | |||||
Stockholders' Equity | |||||||
Total stockholders' equity | 1,617.4 | 1,553.7 | |||||
Total liabilities and stockholders' equity | $ | 4,669.3 | $ | 4,629.6 |
Three Months Ended | Three Months Ended | ||||||
March 31, 2013 | March 31, 2012 | ||||||
Operating Activities: | |||||||
Net income | $ | 84.1 | $ | 52.9 | |||
Add back (deduct): | |||||||
Depreciation and amortization | 16.7 | 8.1 | |||||
Deferred income taxes | 20.1 | 7.2 | |||||
Change in Trade and other receivables, net | (74.3 | ) | (38.2 | ) | |||
Change in Inventories, net | (2.4 | ) | 2.0 | ||||
Change in Accounts Payable | 41.8 | 50.3 | |||||
Other | (5.6 | ) | (24.0 | ) | |||
Net cash provided by operating activities | 80.4 | 58.3 | |||||
Investing Activities: | |||||||
Capital expenditures | (6.0 | ) | (4.5 | ) | |||
Acquisition payments | — | (22.0 | ) | ||||
Other | 4.9 | — | |||||
Net cash used by investing activities | (1.1 | ) | (26.5 | ) | |||
Financing Activities: | |||||||
Debt proceeds (repayments) | (52.1 | ) | (32.3 | ) | |||
Equity activity, net | (0.7 | ) | (0.6 | ) | |||
Other | 3.8 | (2.1 | ) | ||||
Net cash used by financing activities | (49.0 | ) | (35.0 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | 0.4 | 2.9 | |||||
Net change in cash and cash equivalents | 30.7 | (0.3 | ) | ||||
Cash and cash equivalents at the beginning of the period | 86.1 | 63.9 | |||||
Cash and cash equivalents at the end of the period | $ | 116.8 | $ | 63.6 |
Twelve Months Ended | Twelve Months Ended | ||||||
Financial Leverage: | March 31, 2013 | December 31, 2012 | |||||
(dollar amounts in thousands) | |||||||
Income from operations | $ | 386,242 | $ | 332,871 | |||
Add: ArcelorMittal litigation charge | — | 36,134 | |||||
Depreciation and amortization | 46,199 | 37,561 | |||||
Adjusted EBITDA | $ | 432,441 | $ | 406,566 | |||
March 31, 2013 | December 31, 2012 | ||||||
Current debt | $ | 40,090 | $ | 39,759 | |||
Long-term debt | 1,634,813 | 1,695,413 | |||||
Debt discount related to convertible debentures (1) | 182,504 | 183,644 | |||||
Total debt including debt discount | $ | 1,857,407 | $ | 1,918,816 | |||
Financial leverage ratio | 4.3 | 4.7 |
Three Months Ended | Three Months Ended | ||||||
Free Cash Flow: | March 31, 2013 | March 31, 2012 | |||||
(dollar amounts in millions) | |||||||
Cash flow provided by operations | $ | 80.4 | $ | 58.3 | |||
Less: Capital expenditures | (6.0 | ) | (4.5 | ) | |||
Free cash flow | $ | 74.4 | $ | 53.8 |
Three Months Ended | Three Months Ended | ||||||
Gross Profit: | March 31, 2013 | March 31, 2012 | |||||
(dollar amounts in millions) | |||||||
Net Sales | $ | 1,808.1 | $ | 1,606.0 | |||
Cost of goods sold (excluding depreciation and amortization) | 1,427.0 | 1,286.3 | |||||
Gross profit | $ | 381.1 | $ | 319.7 | |||
Gross margin | 21.1 | % | 19.9 | % |
Three Months Ended | Three Months Ended | ||||
Normalized Organic Sales Growth: | March 31, 2013 | March 31, 2012 | |||
Change in net sales | 12.6 | % | 12.2 | % | |
Impact from acquisitions | 16.0 | % | 2.6 | % | |
Impact from foreign exchange rates | — | % | (0.2 | )% | |
Impact from number of workdays | (1.6 | )% | 1.6 | % | |
Normalized organic sales growth | (1.8 | )% | 8.2 | % |
Three Months Ended | Three Months Ended | ||||||
Adjusted Earnings per Share: | March 31, 2013 | March 31, 2012 | |||||
(amounts in millions, except EPS) | |||||||
Income before income taxes | $ | 115.0 | $ | 74.5 | |||
Less: Favorable IRS appeals settlement | — | (3.2 | ) | ||||
Less: Recognition of insurance coverage for ArcelorMittal litigation charge | (36.1 | ) | — | ||||
Adjusted income before income taxes | 78.9 | 71.3 | |||||
Provision for income taxes | 20.3 | 20.4 | |||||
Adjusted net income attributable to WESCO International, Inc. | $ | 58.6 | $ | 50.9 | |||
Adjusted earnings per diluted common share | $ | 1.12 | $ | 0.99 | |||
Weighted average common shares outstanding and common share equivalents used in computing earnings per diluted share | 52.4 | 51.3 |
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