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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): JULY 21, 2004
WESCO INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Commission file number 001-14989
DELAWARE 25-1723342
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or
organization)
225 WEST STATION SQUARE DRIVE
SUITE 700
PITTSBURGH, PENNSYLVANIA 15219 (412) 454-2200
(Address of principal executive offices) (Registrant's telephone number,
including area code)
N/A
(Former name or former address, if changed since last report)
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ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
The information in this Current Report is being furnished and shall not
be deemed "filed" for the purpose of Section 18 of the Securities Exchange Act
of 1934, as amended, or otherwise subject to the liabilities of that section.
The information in this Current Report shall not be incorporated by reference
into any registration statement or other document pursuant to the Securities Act
of 1933, as amended.
On July 21, 2004, WESCO issued a press release announcing its earnings
for the second quarter of 2004. A copy of the press release is attached hereto.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
July 21, 2004 WESCO International, Inc.
--------------- -----------------------------------
(Date)
/s/ Stephen A. Van Oss
----------------------------------
Stephen A. Van Oss
Senior Vice President and Chief Financial
and Administrative Officer
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logo NEWS RELEASE
---------------------------------------------------------------
WESCO International, Inc. / Suite 700, 225 West Station Square
Drive / Pittsburgh, PA 15219
WESCO INTERNATIONAL, INC. REPORTS FISCAL 2004 SECOND QUARTER RESULTS
SALES INCREASE 13.5%
RECORD OPERATING PROFIT ACHIEVED
NET INCOME RISES SHARPLY
Contact: Stephen A. Van Oss, Senior Vice President and
Chief Financial and Administrative Officer
WESCO International, Inc. (412) 454-2271, Fax: (412) 454-2477
http://www.wescodist.com
Pittsburgh, PA, July 21, 2004 - WESCO International, Inc. [NYSE:WCC], a leading
provider of electrical MRO products, construction materials, and advanced
integrated supply procurement outsourcing services, today announced its 2004
second quarter financial results.
Stephen A. Van Oss, Senior Vice President and Chief Financial and Administrative
Officer, stated, "Our operating results were strong, continuing the momentum
demonstrated over the last two quarters as initiatives in sales, margin, cost
and working capital are generating solid returns. Demonstrating the
effectiveness of our cost controls and the significant operating leverage in our
business, a 13.5% increase in sales and a 130 basis point improvement in gross
margins resulted in operating profit of $42.9 million, more than doubling last
year's second quarter results. Net income of $19.1 million and earnings per
share of $0.44 are the best achieved by WESCO since it became a public company
in 1999."
Net sales for the second quarter of 2004 were $931.0 million compared to $820.2
million in 2003, an increase of 13.5%. Gross margins for the quarter improved to
19.7% from 18.4% for the comparable 2003 quarter. Operating income for the
current quarter totaled $42.9 million versus $19.0 million in last year's
comparable quarter. Depreciation and amortization included in operating income
was $4.6 million for 2004 compared to $5.1 million in 2003. Net income in 2004's
second quarter was $19.1 million versus $7.4 million in the comparable 2003
quarter. Earnings per share were $0.44 per share versus $0.16 per share in 2003.
Net sales for the six months ended June 30, 2004 were $1,778.8 million versus
$1,611.0 million in last year's comparable period, a 10.4% increase. Gross
margins in the current six-month period were 19.4% versus 18.4% last year and
operating income totaled $69.1 million versus $37.5 million last year.
Depreciation and amortization included in operating income was $9.7 million
versus $10.3 million last year. Net income for the 2004 year-to-date period was
$28.8 million versus $12.2 million last year, while diluted earnings per share
were $0.67 per share in 2004 versus $0.26 per share in 2003.
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Mr. Van Oss continued, "We have been successful in incorporating recent raw
material price increases into our pricing programs and expect to make further
progress in margin improvement initiatives. Working capital dollars increased
for the quarter, reflecting the investment required for the significant increase
in sales and higher raw material costs, although the working capital days'
performance showed continued improvement."
Chairman and CEO, Roy W. Haley, commented, "Financial and operational results
for the second quarter were excellent. We were particularly pleased with the
significant increase in sales volume and progress made with several targeted
market development programs. Sales growth and productivity benefits associated
with our active implementation of LEAN continuous improvement programs drove
record levels of earnings per share."
Mr. Haley continued, "Economic conditions have generally been favorable for our
business, even though capital spending on industrial, commercial, and
institutional building or expansion projects has continued to be below peak
levels of several years ago. Recent reports by economists suggest some weakness
in market conditions, but we are anticipating that sales growth for the third
quarter could again top 10%."
# # #
Teleconference
WESCO will conduct a teleconference to discuss the second quarter earnings as
described in this News Release on July 21, 2004, at 11:00 a.m. E.S.T. The
conference call will be broadcast live over the Internet and can be accessed at
(http://www.shareholder.com/wesco/medialist.cfm) or from the Company's home page
at (http://www.wescodist.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 with 2003 annual product sales of approximately $3.3
billion. The Company employs approximately 5,200 people, maintains relationships
with 24,000 suppliers, and serves more than 100,000 customers worldwide. Major
markets include commercial and industrial firms, contractors, government
agencies, educational institutions, telecommunications businesses and utilities.
WESCO operates five fully automated distribution centers and approximately 350
full-service branches in North America and selected 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,
2003, as well as the Company's other reports filed with the Securities and
Exchange Commission.
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WESCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollar amounts in millions, except per share amounts)
(Unaudited)
THREE MONTHS ENDED THREE MONTHS ENDED
JUNE 30, 2004 JUNE 30, 2003
------------------ ------------------
Net sales $ 931.0 $ 820.2
Cost of sales 747.3 669.3
-------- --------
Gross profit 183.7 19.7% 150.9 18.4%
Selling, general & admin. expenses 136.2 14.6% 126.8 15.5%
Depreciation & amortization 4.6 5.1
-------- --------
Income from operations 42.9 4.6% 19.0 2.3%
Interest expense, net 10.2 10.5
Loss on debt extinguishment 1.6 -
Other expense 1.3 1.3
-------- --------
Income before income taxes 29.8 3.2% 7.2 0.9%
Provision (benefit) for income taxes 10.7 (0.2)
-------- --------
Net income $ 19.1 2.1% $ 7.4 0.9%
======== ========
Diluted earnings per common share:
Net income $ 0.44 $ 0.16
Weighted average shares outstanding 43.7 46.5
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2004 JUNE 30, 2003
------------------- -------------------
Net sales $1,778.8 $1,611.0
Cost of sales 1,434.2 1,314.7
-------- --------
Gross profit 344.6 19.4% 296.3 18.4%
Selling, general & admin. expenses 265.8 14.9% 248.5 15.4%
Depreciation & amortization 9.7 10.3
-------- --------
Income from operations 69.1 3.9% 37.5 2.3%
Interest expense, net 20.0 20.9
Loss on debt extinguishment 1.6 0.3
Other expense 2.5 2.4
-------- --------
Income before income taxes 45.0 2.5% 13.9 0.9%
Provision for income taxes 16.2 1.7
-------- --------
Net income $ 28.8 1.6% $ 12.2 0.8%
-------- --------
Diluted earnings per common share:
Net income $ 0.67 $ 0.26
Weighted average shares outstanding 43.3 46.5
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WESCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollar amounts in millions, except per share amounts)
(Unaudited)
ASSETS JUNE 30, 2004 DECEMBER 31, 2003
------------- -----------------
CURRENT ASSETS
Cash and cash equivalents $ 9.4 $ 27.5
Trade accounts receivable (See Note) 269.4 266.6
Inventories, net 379.6 321.0
Prepaid expenses and other current assets 27.7 41.2
-------- --------
Total current assets 686.1 656.3
Total other assets 498.3 504.9
-------- --------
Total assets $1,184.4 $1,161.2
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 443.8 $ 366.4
Other current liabilities 91.2 113.3
-------- --------
Total current liabilities 535.0 479.7
Long-term debt (See Note) 403.4 420.0
Other non-current liabilities 44.6 93.8
-------- --------
Total liabilities 983.0 993.5
STOCKHOLDERS' EQUITY
Total stockholders' equity 201.4 167.7
-------- --------
Total liabilities and stockholders' equity $1,184.4 $1,161.2
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Note: Trade accounts receivable and long-term debt have each been reduced by
$300 million and $225 million as of June 30, 2004 and December 31, 2003,
respectively, in accordance with WESCO's accounting for its accounts receivable
securitization facility. In addition, the carrying value of long-term debt
decreased a net $2.9 million during the six months ended June 30, 2004 as a
result of the decrease in fair value of the Company's interest rate derivative
instruments and as a result of non-cash amortization of discounts associated
with the Company's Senior Notes.
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WESCO INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(dollar amounts in millions)
(Unaudited)
JUNE 30, 2004 MARCH 31, 2004 DECEMBER 31, 2003
------------- -------------- -----------------
Total debt $435.6 $424.8 $422.2
Plus: A/R Securitization 300.0 215.0 225.0
Less: Cash and cash equivalents (9.4) (13.8) (27.5)
------ ------ ------
Total indebtedness (including A/R
Securitization Program), net of cash
(See Note) $726.2 $626.0 $619.7
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Note: Total indebtedness (including A/R Securitization Program), net of cash is
provided by the Company as an additional measure of the Company's leverage.
Generally accepted accounting principles require that this financing facility be
presented off-balance sheet. As management internally evaluates the A/R
Securitization Facility as an additional form of indebtedness, management
believes it is helpful to provide the readers of its financial statements an
evaluation of its total indebtedness from all sources of financing. Cash and
cash equivalents are deducted from this total to determine total indebtedness
(including A/R Securitization Program), net of cash. This amount represents the
Company's net obligation due under all of its financing facilities.
WESCO INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(dollar amounts in millions)
(Unaudited)
SIX MONTHS ENDED
JUNE 30, 2004
----------------
Cash flow provided by operations $ 72.3
Less: Increase in A/R Securitization (75.0)
Less: Capital expenditures (5.2)
------
Free cash flow (excluding effects of
A/R Securitization Program)
(See Note) $ (7.9)
======
Note: Free cash flow (excluding the effects of A/R Securitization Program) is
provided by the Company as an additional liquidity measure. Generally accepted
accounting principles require that changes in this facility be reflected within
operating cash flows in the Company's consolidated statement of cash flows. As
management internally evaluates the A/R Securitization Facility as an additional
form of liquidity, management believes it is helpful to provide the readers of
its financial statements with the cash flow from operating activities other than
those related to the A/R Securitization Facility. Capital expenditures are
deducted from this adjusted operating cash flow amount to determine free cash
flow (excluding effects of A/R Securitization Program). This amount represents
excess funds available to management to service all of its financing needs
(including needs of its A/R Securitization Program) and other investing needs.
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