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) |
January 30, 2014 | WESCO INTERNATIONAL, INC. | |||
(Date) | ||||
/s/ Kenneth S. Parks | ||||
Kenneth S. Parks | ||||
Senior Vice President and Chief Financial Officer |
NEWS RELEASE | |
WESCO International, Inc. / Suite 700, 225 West Station Square Drive / Pittsburgh, PA 15219 |
• | Consolidated sales of $1.9 billion, growth of 14.3% |
• | Operating profit of $110.6 million, up 25.1% from prior year adjusted results |
• | Adjusted earnings per share of $1.26, up 18.9% from prior year adjusted results |
• | Free cash flow of $128 million, or 191% of adjusted net income |
• | Record consolidated sales of $7.5 billion, growth of 14.2% |
• | Record adjusted operating profit of $445 million, up 20.0% from prior year adjusted results |
• | Record adjusted earnings per share of $5.02, up 11.8% from prior year adjusted results |
• | Record free cash flow of $308 million, or 117% of adjusted net income |
• | Net sales were $1,880.1 million for the fourth quarter of 2013, compared to $1,644.4 million for the fourth quarter of 2012, an increase of 14.3%. Acquisitions positively impacted sales by 13.8%, organic sales increased 1.5%, and foreign exchange negatively impacted sales by 1.0%. Sequentially, sales decreased 2.7%. Adjusting for the impact of one less workday in the quarter, organic sales decreased 1.1% sequentially. |
• | Gross profit was $376.2 million, or 20.0% of sales, for the fourth quarter of 2013, compared to $337.3 million, or 20.5% of sales, for the fourth quarter of 2012. |
• | Selling, general & administrative (SG&A) expenses were $248.6 million, or 13.2% of sales, for the fourth quarter of 2013, compared to $275.9 million, or 16.8% of sales, for the fourth quarter of 2012. As adjusted, fourth quarter SG&A expenses were $248.6 million and $230.8 million, or 13.2% and 14.2% of sales, in 2013 and 2012 respectively, an improvement of 100 basis points. The increase in |
• | Operating profit was $110.6 million for the current quarter, up 120.0% from $50.3 million for the comparable 2012 quarter. Operating profit as a percentage of sales was 5.9% and 3.1% in 2013 and 2012, respectively. As adjusted, fourth quarter operating profit was $110.6 million and $88.4 million, or 5.9% and 5.5% of sales, in 2013 and 2012, respectively, an improvement of 40 basis points. |
• | Interest expense for the fourth quarter of 2013 was $20.6 million, compared to $14.7 million for the fourth quarter of 2012. Interest expense increased for the quarter primarily due to the increase in indebtedness in December 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 fourth quarter of 2013 and 2012 was $3.5 million and $0.7 million, respectively. |
• | The effective tax rate for the current quarter was 24.4%, compared to 17.5% for the prior year fourth quarter. As adjusted, the effective tax rate for the current quarter was 25.5%. |
• | Net income attributable to WESCO International, Inc. of $58.0 million for the current quarter was up 118.9% from $26.5 million for the prior year quarter. Adjusted net income attributable to WESCO International, Inc. was $67.0 million, up 22.7% from the prior year. |
• | Earnings per diluted share for the fourth quarter of 2013 were $1.09 per share, based on 53.2 million diluted shares, compared to $0.52 per share in the fourth quarter of 2012, based on 51.4 million diluted shares. Adjusted earnings per diluted share in the fourth quarter of 2013 were $1.26, compared to $1.06 in the corresponding prior year period, an increase of 18.9%. |
• | Free cash flow for the fourth quarter of 2013 was $128.1 million, or 221% of net income, compared to $95.0 million for the fourth quarter of 2012. Free cash flow was 191% of adjusted net income for the fourth quarter of 2013. |
• | Net sales were $7,513.3 million for 2013, compared to $6,579.3 million for 2012, an increase of 14.2%. Acquisitions positively impacted sales by 14.6%, organic sales were flat, and foreign exchange negatively impacted sales by 0.4%. |
• | Gross profit of $1,545.4 million, or 20.6% of sales, for 2013 was up 40 basis points, compared to $1,331.4 million, or 20.2% of sales, for 2012. |
• | SG&A expenses for 2013 were $996.8 million, or 13.3% of sales, compared to $961.0 million, or 14.6% of sales, for 2012. As adjusted, SG&A expenses were $1,032.9 million and $915.9 million, or 13.7% and 14.0% of sales, in 2013 and 2012, respectively, an improvement of 30 basis points. The increase in SG&A is attributable to acquisitions, partially offset by a $16.2 million decrease in core SG&A. |
• | Operating profit was $481.0 million for 2013, up 44.5% from $332.8 million for 2012. Operating profit as a percentage of sales was 6.4% in 2013, up from 5.1% in 2012. As adjusted, operating profit was $444.9 million and $370.9 million, or 5.9% and 5.7% of sales, in 2013 and 2012, respectively, an improvement of 20 basis points. |
• | Interest expense for 2013 was $85.6 million, compared to $47.7 million for 2012. Interest expense increased for 2013 primarily due to the increase in indebtedness in December 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 2013 and 2012 was $10.2 million and $1.5 million, respectively. |
• | The effective tax rate was 27.2% for 2013 compared to 28.3% for 2012. As adjusted, the effective tax rate for the current year was 26.4%. |
• | Net income attributable to WESCO International, Inc. of $276.4 million for 2013 was up 37.0% from $201.8 million for 2012. Adjusted net income attributable to WESCO International, Inc. was $264.2 million for 2013, compared to $229.9 million for 2012, an increase of 14.9%. |
• | Earnings per diluted share for 2013 were up 32.9% to $5.25 per share, based on 52.7 million diluted shares, versus $3.95 per share for 2012, based on 51.1 million diluted shares. Adjusted earnings per diluted share were $5.02 for 2013, compared to $4.49 for the corresponding prior year period and increased 11.8%. |
• | Free cash flow for 2013 was $308.4 million, or 112% of net income, compared to $265.1 million in 2012. Free cash flow was 117% of adjusted net income for 2013. |
Three Months Ended | Three Months Ended | ||||||||||||
December 31, 2013 | December 31, 2012 | ||||||||||||
Net sales | $ | 1,880.1 | $ | 1,644.4 | |||||||||
Cost of goods sold (excluding | 1,503.9 | 80.0 | % | 1,307.1 | 79.5 | % | |||||||
depreciation and amortization below) | |||||||||||||
Selling, general and administrative expenses | 248.6 | 13.2 | % | 275.9 | 16.8 | % | |||||||
Depreciation and amortization | 17.0 | 11.1 | |||||||||||
Income from operations | 110.6 | 5.9 | % | 50.3 | 3.1 | % | |||||||
Interest expense, net | 20.6 | 14.7 | |||||||||||
Loss on debt extinguishment | 13.2 | 3.5 | |||||||||||
Income before income taxes | 76.8 | 4.1 | % | 32.1 | 2.0 | % | |||||||
Provision for income taxes | 18.8 | 5.6 | |||||||||||
Net income | 58.0 | 3.1 | % | 26.5 | 1.6 | % | |||||||
Less: Net loss attributable to noncontrolling interest | — | — | |||||||||||
Net income attributable to WESCO International, Inc. | $ | 58.0 | 3.1 | % | $ | 26.5 | 1.6 | % | |||||
Earnings per diluted common share | $ | 1.09 | $ | 0.52 | |||||||||
Weighted average common shares outstanding and common share equivalents used in computing earnings per diluted share (in millions) | 53.2 | 51.4 |
Twelve Months Ended | Twelve Months Ended | ||||||||||||
December 31, 2013 | December 31, 2012 | ||||||||||||
Net sales | $ | 7,513.3 | $ | 6,579.3 | |||||||||
Cost of goods sold (excluding | 5,967.9 | 79.4 | % | 5,247.9 | 79.8 | % | |||||||
depreciation and amortization below) | |||||||||||||
Selling, general and administrative expenses | 996.8 | 13.3 | % | 961.0 | 14.6 | % | |||||||
Depreciation and amortization | 67.6 | 37.6 | |||||||||||
Income from operations | 481.0 | 6.4 | % | 332.8 | 5.1 | % | |||||||
Interest expense, net | 85.6 | 47.7 | |||||||||||
Loss on debt extinguishment | 13.2 | 3.5 | |||||||||||
Loss on sale of Argentina business | 2.3 | — | |||||||||||
Income before income taxes | 379.9 | 5.1 | % | 281.6 | 4.3 | % | |||||||
Provision for income taxes | 103.4 | 79.8 | |||||||||||
Net income | 276.5 | 3.7 | % | 201.8 | 3.1 | % | |||||||
Less: Net income attributable to noncontrolling interest | 0.1 | — | |||||||||||
Net income attributable to WESCO International, Inc. | $ | 276.4 | 3.7 | % | $ | 201.8 | 3.1 | % | |||||
Earnings per diluted common share | $ | 5.25 | $ | 3.95 | |||||||||
Weighted average common shares outstanding and common share equivalents used in computing earnings per diluted share (in millions) | 52.7 | 51.1 |
December 31, 2013 | December 31, 2012 | ||||||
Assets | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 123.7 | $ | 86.1 | |||
Trade accounts receivable, net | 1,045.1 | 1,036.2 | |||||
Inventories, net | 787.3 | 794.0 | |||||
Current deferred income taxes | 44.7 | 42.1 | |||||
Other current assets | 197.7 | 143.4 | |||||
Total current assets | 2,198.5 | 2,101.8 | |||||
Other assets | 2,419.8 | 2,527.8 | |||||
Total assets | $ | 4,618.3 | $ | 4,629.6 | |||
Liabilities and Stockholders' Equity | |||||||
Current Liabilities | |||||||
Accounts payable | $ | 735.1 | $ | 706.6 | |||
Current debt and short-term borrowings | 40.1 | 39.8 | |||||
Other current liabilities | 268.6 | 261.6 | |||||
Total current liabilities | 1,043.8 | 1,008.0 | |||||
Long-term debt | 1,447.6 | 1,695.4 | |||||
Other noncurrent liabilities | 362.2 | 372.5 | |||||
Total liabilities | 2,853.6 | 3,075.9 | |||||
Stockholders' Equity | |||||||
Total stockholders' equity | 1,764.7 | 1,553.7 | |||||
Total liabilities and stockholders' equity | $ | 4,618.3 | $ | 4,629.6 |
Twelve Months Ended | Twelve Months Ended | ||||||
December 31, 2013 | December 31, 2012 | ||||||
Operating Activities: | |||||||
Net income | $ | 276.5 | $ | 201.8 | |||
Add back (deduct): | |||||||
Depreciation and amortization | 67.6 | 37.6 | |||||
Deferred income taxes | 20.6 | 17.7 | |||||
Change in trade receivables, net | (30.5 | ) | 58.2 | ||||
Change in inventories, net | (9.3 | ) | (29.4 | ) | |||
Change in accounts payable | 37.8 | (24.3 | ) | ||||
Other | (47.6 | ) | 26.6 | ||||
Net cash provided by operating activities | 315.1 | 288.2 | |||||
Investing Activities: | |||||||
Capital expenditures | (27.8 | ) | (23.1 | ) | |||
Acquisition payments | — | (1,289.5 | ) | ||||
Other | 9.6 | 1.6 | |||||
Net cash used by investing activities | (18.2 | ) | (1,311.0 | ) | |||
Financing Activities: | |||||||
Debt (repayments) proceeds | (239.1 | ) | 1,067.8 | ||||
Equity activity, net | (4.2 | ) | 2.3 | ||||
Other | (14.2 | ) | (26.1 | ) | |||
Net cash (used by) provided by financing activities | (257.5 | ) | 1,044.0 | ||||
Effect of exchange rate changes on cash and cash equivalents | (1.8 | ) | 1.0 | ||||
Net change in cash and cash equivalents | 37.6 | 22.2 | |||||
Cash and cash equivalents at the beginning of the period | 86.1 | 63.9 | |||||
Cash and cash equivalents at the end of the period | $ | 123.7 | $ | 86.1 |
Three Months Ended | Twelve Months Ended | ||||
Normalized Organic Sales Growth: | December 31, 2013 | December 31, 2013 | |||
Change in net sales | 14.3 | % | 14.2 | % | |
Impact from acquisitions | 13.8 | % | 14.6 | % | |
Impact from foreign exchange rates | (1.0 | )% | (0.4 | )% | |
Impact from number of workdays | — | % | — | % | |
Normalized organic sales growth | 1.5 | % | — | % |
Three Months Ended | Twelve Months Ended | ||||||
Adjusted Sales: | December 31, 2012 | December 31, 2012 | |||||
(dollar amounts in millions) | |||||||
Net sales | $ | 1,644.4 | $ | 6,579.3 | |||
Less: 2012 EECOL Electric sales | (24.0 | ) | (24.0 | ) | |||
Adjusted net sales | $ | 1,620.4 | $ | 6,555.3 |
Three Months Ended | Twelve Months Ended | ||||||||||||||
Gross Profit: | December 31, 2013 | December 31, 2012 | December 31, 2013 | December 31, 2012 | |||||||||||
(dollar amounts in millions) | |||||||||||||||
Net sales | $ | 1,880.1 | $ | 1,644.4 | $ | 7,513.3 | $ | 6,579.3 | |||||||
Cost of goods sold (excluding depreciation and amortization) | 1,503.9 | 1,307.1 | 5,967.9 | 5,247.9 | |||||||||||
Gross profit | $ | 376.2 | $ | 337.3 | $ | 1,545.4 | $ | 1,331.4 | |||||||
Gross profit | 20.0 | % | 20.5 | % | 20.6 | % | 20.2 | % |
Three Months Ended | Twelve Months Ended | ||||||||||||||
Adjusted Selling, General and Administrative Expenses: | December 31, 2013 | December 31, 2012 | December 31, 2013 | December 31, 2012 | |||||||||||
(amounts in millions except for diluted EPS) | |||||||||||||||
Selling, general and administrative expenses | $ | 248.6 | $ | 275.9 | $ | 996.8 | $ | 961.0 | |||||||
ArcelorMittal litigation charge (recovery) included in SG&A | — | (36.1 | ) | 36.1 | (36.1 | ) | |||||||||
Non-recurring acquisition charges and EECOL Electric results | — | (9.0 | ) | — | (9.0 | ) | |||||||||
Adjusted selling, general and administrative expenses | $ | 248.6 | $ | 230.8 | $ | 1,032.9 | $ | 915.9 | |||||||
Percent of adjusted sales | 13.2 | % | 14.2 | % | 13.7 | % | 14.0 | % | |||||||
Adjusted Income from Operations: | |||||||||||||||
Income from operations | $ | 110.6 | $ | 50.3 | $ | 481.0 | $ | 332.8 | |||||||
ArcelorMittal litigation charge (recovery) included in SG&A | — | 36.1 | (36.1 | ) | 36.1 | ||||||||||
Non-recurring acquisition charges and EECOL Electric results | — | 2.0 | — | 2.0 | |||||||||||
Adjusted income from operations | $ | 110.6 | $ | 88.4 | $ | 444.9 | $ | 370.9 | |||||||
Percent of adjusted sales | 5.9 | % | 5.5 | % | 5.9 | % | 5.7 | % | |||||||
Adjusted Net Income Attributable to WESCO International, Inc.: | |||||||||||||||
Income before income taxes | $ | 76.8 | $ | 32.0 | $ | 379.9 | $ | 281.6 | |||||||
ArcelorMittal litigation charge (recovery) included in SG&A | — | 36.1 | (36.1 | ) | 36.1 | ||||||||||
Loss on debt extinguishment | 13.2 | 3.5 | 13.2 | 3.5 | |||||||||||
Non-recurring acquisition charges and EECOL Electric results | — | 5.0 | — | 5.0 | |||||||||||
Loss on sale of Argentina business | — | — | 2.3 | — | |||||||||||
Adjusted income before income taxes | 90.0 | 76.6 | 359.3 | 326.2 | |||||||||||
Adjusted provision for income taxes | 23.0 | 22.0 | 95.0 | 96.3 | |||||||||||
Adjusted net income | 67.0 | 54.6 | 264.3 | 229.9 | |||||||||||
Less: Net (loss) income attributable to noncontrolling interest | — | — | 0.1 | — | |||||||||||
Adjusted net income attributable to WESCO International, Inc. | $ | 67.0 | $ | 54.6 | $ | 264.2 | $ | 229.9 | |||||||
Adjusted Diluted EPS: | |||||||||||||||
Diluted share count | 53.2 | 51.4 | 52.7 | 51.1 | |||||||||||
Adjusted Diluted EPS | $ | 1.26 | $ | 1.06 | $ | 5.02 | $ | 4.49 |
Twelve Months Ended | |||||||
Financial Leverage: | December 31, 2013 | December 31, 2012 | |||||
(dollar amounts in millions) | |||||||
Income from operations | $ | 481.0 | $ | 332.8 | |||
Adjust for ArcelorMittal litigation (recovery) charge | (36.1 | ) | 36.1 | ||||
Depreciation and amortization | 67.6 | 37.6 | |||||
Adjusted EBITDA | $ | 512.5 | $ | 406.5 | |||
December 31, 2013 | December 31, 2012 | ||||||
Current debt | $ | 40.1 | $ | 39.8 | |||
Long-term debt | 1,447.6 | 1,695.4 | |||||
Debt discount related to convertible debentures and term loan (1) | 174.7 | 183.6 | |||||
Total debt including debt discount | $ | 1,662.4 | $ | 1,918.8 | |||
Financial leverage ratio | 3.2 | 4.7 |
Three Months Ended | Twelve Months Ended | ||||||||||||||
Free Cash Flow: | December 31, 2013 | December 31, 2012 | December 31, 2013 | December 31, 2012 | |||||||||||
(dollar amounts in millions) | |||||||||||||||
Cash flow provided by operations | $ | 135.4 | $ | 98.6 | $ | 315.1 | $ | 288.2 | |||||||
Less: Capital expenditures | (7.3 | ) | (3.6 | ) | (27.8 | ) | (23.1 | ) | |||||||
Add: Non-recurring pension contribution | — | — | 21.1 | — | |||||||||||
Free cash flow | $ | 128.1 | $ | 95.0 | $ | 308.4 | $ | 265.1 |
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