UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 28, 2010
WESCO International, Inc.
(Exact name of registrant as specified in its charter)
Commission file number 001-14989
| Delaware | 25-1723345 | |
| (State or other jurisdiction of | (IRS Employer Identification No.) | |
| 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)
(Former name or former address, if changed since last report)
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:
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 7.01 | Regulation FD Disclosure |
The information in this Item 7.01 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 Item 7.01 shall not be incorporated by
reference into any registration statement or other document pursuant to the Securities Act of 1933,
as amended.
A slide presentation to be used by senior management of the Company in connection with its
discussions with investors regarding the Company’s financial results for the fourth quarter of 2009
and for the year ended December 31, 2009 is included in Exhibit 99.1 to this report and is being
furnished in accordance with Regulation FD of the Securities and Exchange Commission.
| Item 9.01 | Financial Statements and Exhibits |
| (d) | Exhibits | ||
| 99.1 Slide presentation for investors. |
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.
January 28, 2010
|
WESCO International, Inc. |
|
(Date) |
||
/s/ Richard P. Heyse |
||
Richard P. Heyse |
||
Vice
President and Chief Financial Officer |
Exhibit
99.1
| WESCO Fourth Quarter and Full-Year 2009 Results Supplemental Financial Data |
| Safe Harbor Statement Note: All statements made herein that are not historical facts should be considered as "forward- looking statements" within the meaning of the Private Securities Litigation Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. Such risks, uncertainties and other factors include, but are not limited to, debt level, changes in general economic conditions, fluctuations in interest rates, increases in raw materials and labor costs, levels of competition and other factors described in detail in Form 10-K for WESCO International, Inc. for the year ended December 31, 2008 and any subsequent filings with the Securities & Exchange Commission. Any numerical or other representations in this presentation do not represent guidance by management and should not be construed as such. |
| Q4 Results Q4 2009 Guidance Provided at Q3 Earnings Call Performance Performance Q4 sales forecasted to be down 4-6% from Q3 2009 Sales down 1.7% Q4 gross margins forecasted to be stable with Q2 and Q3 2009 levels Q2: 19.3%Q3: 19.2% Q4: 19.2% SG&A cost reductions of over $140 million on track for full-year 2009 2008 SG&A $834 million 2009 SG&A $694 million $140 million reduction Effective tax rate will trend up to approximately 30% over next several quarters with Q4 tax rate to be approximately 24% 26.6% Q4 tax rate |
| End Market Q4 2008 vs. Q4 2009 Q4 2009 vs. Q3 2009 Comments WESCO Consolidated (20.8%) (1.7%) Six months of stable salesProduct margins stable both sequentially and year over yearRecord full-year free cash flow of $279 millionStrengthened international operations with new subsidiaries in China, Australia, Africa Industrial (21.7%) 7.3% Industrial markets showing signs of improvementMaintained 100% contract renewal rate for third year in a rowGlobal Accounts bid activity up 40% with record pipeline of opportunitiesIntegrated supply and OEM up 11% sequentially Construction (18.4%) (5.1%) WESCO's construction business is mid-cycle orientedBacklog down 10% vs year end 2008Opened 11 new data communications operations since mid 2008; over 15 new operations planned in 2010 Utility (25%) (12.8%) U.S. Power demand remains weak; distribution grid spending tightTransmission spending the priorityCompetitive environment driven by lower activity levels Commercial, Institutional, Government (CIG) (18.6%) (1.0%) Government sales up 20% in 4th quarter, over 10% for the yearStimulus opportunities in outdoor lighting, wastewater facilities, low voltage security and infrastructure projectsStimulus-related orders totaled $40 million in 2009, over $120 million in the pipeline Q4 and Full Year End Market Comments Sequential and year-over-year quarter comparisons |
| 35% 18% 14% 13% 11% 9% Construction Non-Residential Data CommunicationsPre-Fabricated StructuresResidential CIG Government Education Healthcare Utility Investor OwnedPublic PowerUtility Contractors Industrial National AccountsOEMIntegrated SupplyGeneral Industry WESCO 2009 Market Mix and Product Portfolio 37% 17% 7% 39% Arrows depict expected end market momentum in 2010 2009 Markets 2009 Products Wire, Cable & Conduit General Supplies Data Communication Distribution Equipment Controls & Motors Lighting & Controls 113,000 active customers Majority of Fortune 500 companies are our customers 1,000,000 different products shipped annually, with 250,000 in stock 17,000 Suppliers |
| WESCO Growth Engines with End Market Trends Fortune 1000 focus Sell all WESCO products and services Capture new customers and expand with current customers Maintain 100% National Account renewal rate Global Accounts and Integrated Supply Electrical plus data communications Global Accounts model Construction project management LEAN applications to construction life cycle EPCs and Contractors Migrate from National to Global accounts Invest and take share in Canada Expand global footprint (China, Dubai, Australia) Broaden geographic reach in Mexico International Aligned WESCO government resources into one team Expanded government sales resources Dedicated stimulus team established Government Expand scope of supply and value proposition to Investor Owned Utilities Grow share in Public Power Grow high voltage business serving transmission, substation and alternative energy markets Utility Leverage WESCO National Accounts position and geographic footprint Data centers (data plus electrical products) Targeted marketing initiatives (secure networking, security, etc.) Data Communications Invest and take share in lighting Marketing and sales initiatives focused on lighting solutions Dedicated region resources coupled with a focused set of lighting branches Lighting Use LEAN Value Creation toolset as a differentiator Target major metropolitan markets with a density of healthcare institutions Expand agreements with Group Purchasing Organizations and Integrated Delivery Networks Healthcare and Education Arrows depict expected end market momentum in 2010 |
| 2008/2009 Year-End Key Financial Metrics 2008/2009 Year-End Key Financial Metrics 2008/2009 Year-End Key Financial Metrics 2008/2009 Year-End Key Financial Metrics 2008/2009 Year-End Key Financial Metrics 2008 2009 Liquidity $382 million $442 million Free Cash Flow $245 million $279 million Financial Leverage 3.1x 4.2x ($Millions) Outstanding at December 31, 2008 Outstanding at December 31, 2008 Outstanding at December 31, 2009 Outstanding at December 31, 2009 2009 DebtMaturity Schedule 2009 DebtMaturity Schedule AR Securitization (V) $295 $45 $45 2012 Inventory Revolver (V) $198 $196 $196 2013 Real Estate Mortgage (F) $42 $41 $41 2013 High Yield Bonds (F) $150 $150 $150 2017 Convertible Bonds (F)* $450 $438 $438 2010 / 2011 / 2029 Other(F) $6 $5 $5 N/A Total Debt $1,141 $875 $875 Capital Structure V = Variable Rate Debt F = Fixed Rate Debt * = Adjusted for 2029 convertible bonds issued 8/27/29 (1) See page 8 for reconciliation of non-GAAP financial measures (1) |
| Convertible Debt GAAP vs. Non-GAAP Debt Reconciliation Non-Cash Interest Expense Schedule ($millions) ($millions) ($millions) ($millions) ($millions) ($millions) ($millions) ($millions) 2025 Bond 2029 Bond Total 2010 $2.1 $2.1 $4.2 2011 $0.0 (1) $2.4 $2.4 (1) Assumes the 2025 bond is put to Company in October 2010 Convertible Debentures Convertible Debentures Convertible Debentures Convertible Debentures Convertible Debentures Convertible Debentures Convertible Debentures Convertible Debentures Maturity Par Value of Debt Debt Discount Debt per Balance Sheet 2025 $ 92,327 $ (2,134) $ 90,193 2026 $ 234 $ 17 $ 217 2029 $ 345,000 $ (180,539) $ 164,461 Total $ 437,561 $ (182,690) $ 254,871 |
| Q1 and 2010 Outlook Q1 Q1 sales expected to be 1% to 3% lower than Q4 2009 sales versus normal sales seasonality down 2% to 5% Gross margins forecasted to be in the mid-19% range SG&A expenses expected to be $5 to $9 million higher than Q4 2009 Operating margins are expected to be at or below 3.4% Interest expense and effective tax rates expected to be consistent with full-year 2010 guidance 2010 Economic recovery expected to be slow with gradual recovery in industrial, international, and government markets, offset by contraction in non-residential construction and utility. Sales to Utility end market forecasted to be down mid-single digits. Consolidated end market demand forecasted to be down 3% to 5%; Company's growth initiatives are expected to somewhat offset soft end market demand. Pricing and foreign exchange expected to have positive impact but too volatile to predict Gross Margin forecasted to increase moderately from Q4 2009 levels Due to restoration of 2009 Corporate discretionary cost reductions, quarterly SG&A expense run rate expected to be $6 to $8 million higher than Q4 2009. Additionally, SG&A expenses expected to increase modestly to support various growth initiatives. Cash interest expense rates to be stable to slightly higher. Convertible bond non-cash interest expense should be approximately $4.2 million. Effective tax rate anticipated to be 28 to 30% for 2010 and beyond for several years Capital expenditures expected to be in the range of $20 million Free Cash Flow forecasted to be 85 to 90% of net income |