SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
October 21, 2004 (October 21, 2004)
WESCO International, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 001-14989 25-1723345
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
225 West Station Square Drive, Suite 700
Pittsburgh, Pennsylvania 15219
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (412) 454-2200
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2.):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 2.02. 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 October 21, 2004, WESCO issued a press release announcing its
earnings for the third quarter of 2004. A copy of the press release is attached
hereto.
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.
Dated: October 21, 2004 WESCO INTERNATIONAL, INC.
By: /s/ STEPHEN A. VAN OSS
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Stephen A. Van Oss
Senior Vice President and
Chief Financial and Administrative Officer
NEWS RELEASE
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WESCO International, Inc. / Suite 700, 225 West Station Square
Drive/Pittsburgh, PA 15219
WESCO INTERNATIONAL, INC. REPORTS
FISCAL 2004 THIRD QUARTER RESULTS
SALES INCREASE 18%
NET INCOME DOUBLES
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, October 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 third quarter financial results.
Net sales for the third quarter of 2004 were $974.5 million versus $825.6
million in 2003, an increase of 18%. Gross margins for the quarter improved to
18.7% versus 18.6% for the comparable 2003 quarter. Operating income for the
current quarter totaled $40.1 million versus $23.8 million in last year's
comparable quarter. Depreciation and amortization included in operating income
was $4.5 million for 2004 versus $5.2 million in 2003. Net income in 2004's
third quarter was $18.5 million versus $8.4 million in the comparable 2003
quarter. Earnings per share were $0.42 per share versus $0.18 per share in 2003.
Stephen A. Van Oss, Senior Vice President and Chief Financial and Administrative
Officer, stated, "Sales for the quarter were strong as positive momentum in
Company initiatives in local marketing activities and national accounts and
integrated supply programs drove market share gains. Our operating results
continue to demonstrate the substantial operating leverage inherent in our
business with the sales gain yielding a 120 basis point expansion in operating
margins and a doubling of net income over last year's third quarter to $18.5
million."
On a year-to-date basis, net sales for the nine months ended September 30, 2004
were $2,753.3 million versus $2,436.6 million in last year's comparable period,
a 13% increase. Gross margins in the current nine-month period were 19.1% versus
18.5% last year and operating income totaled $109.3 million versus $61.3 million
last year. Depreciation and amortization included in
operating income was $14.1 million versus $15.4 million last year. Net income
for the 2004 year-to-date period was $47.3 million versus $20.6 million last
year, an increase of 130%, while diluted earnings per share were $1.09 per share
in 2004 versus $0.44 per share in 2003.
Mr. Van Oss continued, "Personnel productivity improved throughout the Company
as we achieved best-ever levels of sales per employee. Even with the additional
requirements associated with an 18% increase in sales, productivity improvements
in working capital, combined with strong earnings, produced free cash flow of
$18.5 million for the quarter."
Chairman and CEO, Roy W. Haley, commented, "The economic climate continues to be
positive for most of WESCO's end-user markets, and the response of our sales and
service personnel to the markets' increased demands has been excellent. As a
result, the Company is setting new records for sales and operational
productivity.
Our LEAN continuous improvement program is having a favorable impact in most
areas of our business, and we continue to be very encouraged by the results. The
investments we've made over the past couple of years in sales and marketing
programs, information systems, and personnel training and development are paying
dividends as WESCO continues to develop significant new customer relationships
and improve overall performance."
Mr. Haley continued, "Over the past two quarters, we have experienced
significant sales momentum, even though increased capital spending associated
with large construction projects has been slow to develop. Based on current
activity levels, we expect to experience fourth quarter sales gains of around
10% over last year."
Separately, the Company announced its intent to file a universal shelf
registration statement for debt and equity securities in an aggregate principal
amount of up to $400 million.
# # #
Teleconference
WESCO WILL CONDUCT A TELECONFERENCE TO DISCUSS THE THIRD QUARTER EARNINGS AS
DESCRIBED IN THIS NEWS RELEASE ON OCTOBER 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.
WESCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollar amounts in millions, except per share amounts)
(Unaudited)
THREE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, 2004 SEPTEMBER 30, 2003
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Net sales $974.5 $825.6
Cost of sales 791.9 671.9
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Gross profit 182.6 18.7% 153.7 18.6%
Selling, general & admin. expenses 138.0 14.2% 124.7 15.1%
Depreciation & amortization 4.5 5.2
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Income from operations 40.1 4.1% 23.8 2.9%
Interest expense, net 10.3 10.8
Loss on debt extinguishments 0.5 0.5
Other expense 1.9 0.7
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Income before income taxes 27.4 2.8% 11.8 1.4%
Provision for income taxes 8.9 3.4
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Net income $18.5 1.9% $8.4 1.0%
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Diluted earnings per common share:
Net income $0.42 $0.18
Weighted average shares outstanding 44.2 46.9
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 2004 SEPTEMBER 30, 2003
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Net sales $2,753.3 $2,436.6
Cost of sales 2,226.2 1,986.6
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Gross profit 527.1 19.1% 450.0 18.5%
Selling, general & admin. expenses 403.7 14.7% 373.3 15.3%
Depreciation & amortization 14.1 15.4
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Income from operations 109.3 4.0% 61.3 2.5%
Interest expense, net 30.3 32.0
Loss on debt extinguishments 2.1 0.2
Other expense 4.5 3.4
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Income before income taxes 72.4 2.6% 25.7 1.1%
Provision for income taxes 25.1 5.1
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Net income $47.3 1.7% $20.6 0.8%
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Diluted earnings per common share:
Net income $1.09 $0.44
Weighted average shares outstanding 43.6 46.7
WESCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollar amounts in millions, except per share amounts)
(Unaudited)
ASSETS SEPTEMBER 30, 2004 DECEMBER 31, 2003
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CURRENT ASSETS
Cash and cash equivalents $19.2 $27.5
Trade accounts receivable (See Note) 294.7 266.6
Inventories, net 381.9 321.0
Prepaid expenses and other current assets 37.5 41.2
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Total current assets 733.3 656.3
Total other assets 497.2 504.9
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Total assets $1,230.5 $1,161.2
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $454.7 $366.4
Other current liabilities 108.4 113.3
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Total current liabilities 563.1 479.7
Long-term debt (See Note) 396.4 420.0
Other non-current liabilities 43.3 93.8
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Total liabilities 1,002.8 993.5
STOCKHOLDERS' EQUITY
Total stockholders' equity 227.7 167.7
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Total liabilities and stockholders' equity $1,230.5 $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 September 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
increased a net $1.9 million during the nine months ended September 30, 2004 as
a result of changes in the 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.
WESCO INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(dollar amounts in millions)
(Unaudited)
SEPTEMBER 30, 2004 JUNE 30, 2004 DECEMBER 31, 2003
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Total debt $427.6 $435.6 $422.2
Plus: A/R Securitization 300.0 300.0 225.0
Less: Cash and cash equivalents (19.2) (9.4) (27.5)
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Total indebtedness (including A/R
Securitization Program), net of cash
(See Note) $708.4 $726.2 $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)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 2004 SEPTEMBER 30, 2004
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Cash flow provided by operations $20.2 $92.3
Less: Increase in A/R Securitization -- (75.0)
Less: Capital expenditures (1.7) (6.9)
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Free cash flow (excluding effects of
A/R Securitization Program)
(See Note) $18.5 $10.4
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.