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): October 18, 2007
WESCO
International, Inc.
(Exact
name of registrant as specified in its charter)
Commission
file number 001-14989
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Delaware
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25-1723345
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(State
or other jurisdiction of incorporation or organization)
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(IRS
Employer Identification No.)
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225
West Station Square Drive
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Suite
700
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Pittsburgh,
Pennsylvania 15219
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(412)
454-2200
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(Address
of principal executive offices)
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(Registrant's
telephone number, including area
code)
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N/A
(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:
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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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 18, 2007, WESCO issued a press release announcing its earnings for
the
second quarter of 2007. A copy of the press release is attached hereto.
Item
9.01 Financial Statements and Exhibits
(d)
Exhibits
99.1
Press Release dated October 18, 2007.
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.
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October
18, 2007
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WESCO
International, Inc.
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(Date)
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/s/
Stephen A. Van Oss
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Stephen
A. Van Oss
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Senior
Vice President, Chief Financial and
Administrative
Officer
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NEWS
RELEASE
WESCO
International, Inc. Reports Third
Quarter 2007 Results: Record Sales, Operating Profit, Earnings Per Share
and
Free Cash Flow
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.wesco.com
PITTSBURGH,
October 18 /PRNewswire-FirstCall/ -- WESCO International, Inc. (NYSE: WCC),
a
leading
provider of electrical MRO products, construction materials, and advanced
integrated supply procurement outsourcing services, today announced its 2007
third quarter financial results.
Third
Quarter Results
Consolidated
net sales for the third quarter of 2007 were $1,546 million compared to $1,343
million in 2006, an increase of 15.1%. Included are sales from recent
acquisitions totaling approximately $183 million. Gross margin for the quarter
was 20.3% compared to 20.5% for the comparable 2006 quarter. Operating income
for the current quarter totaled $109 million versus $100 million in last
year's
comparable quarter. Depreciation and amortization included in operating income
was $9 million for 2007 compared to $7 million in 2006. Net income for this
quarter was $70 million versus $59 million in the comparable 2006 quarter.
Diluted earnings per share for the quarter were $1.50 per share versus $1.13
per
share in 2006. Third quarter net income includes approximately $10 million
of
favorable one-time benefits from foreign exchange gains and tax benefits,
primarily the ability to now recognize prior years’ state net operating
losses.
Stephen
A. Van Oss, Senior Vice President and Chief Financial Officer, stated,
“We
performed well in the face of challenging end markets. Our operating results
for
the quarter were very strong and set records for the Company in virtually
every
key financial category. These results reflect progress across a broad spectrum
of performance improvement initiatives, particularly those dealing with margin
protection and cost efficiency. We further improved our position as a low
cost
operator and recorded our best ever SG&A expense ratio for our core
operations.”
Mr.
Van
Oss continued, “During the quarter, we purchased another 1.2 million shares for
a total of 6.4 million shares purchased year to date, completing the $400
million program authorized in February of this year. Our balance sheet is
in
great shape. Our strong free cash flow of $75 million and ample liquidity
has
positioned the Company to execute on the new $400 million share repurchase
program announced in September in a measured fashion while maintaining current
levels of financing leverage.”
Year
to Date Results
Consolidated
net sales for the nine months ended September 30, 2007 were $4,514 million
versus $3,945 million in last year's comparable period, a 14.4% increase.
Sales
from recent acquisitions for the first nine months totaled $524 million.
Gross
margin in the current nine-month period was 20.4% versus 20.3% last year
and
operating income totaled $295 million versus $272 million last year.
Depreciation and amortization included in operating income was $27 million
versus $19 million last year. Net income for the 2007 year-to-date period
was
$178 million versus $159 million last year. Diluted earnings per share were
$3.62 per share in 2007 versus $3.04 per share in 2006.
Roy
W.
Haley, Chairman and CEO, stated, “The macro-economic environment continues to
provide opportunities for growth as we look out into the fourth quarter.
We have
added personnel to a variety of longer term sales and marketing initiatives,
and
these programs are beginning to yield positive results. We are early in this
cycle of investment in vertical market segment initiatives and we expect
to see
new opportunities being converted into higher levels of sales performance
over
the next several quarters. Our base is strong, and we are very well positioned
to improve our overall economic returns while delivering ongoing supply chain
cost savings to our customers. We are focused on strong operational execution
of
the business as the principle driver of our performance.”
#
#
#
Teleconference
WESCO
will conduct a teleconference to discuss the third quarter earnings as described
in this News Release on Thursday, October 18, 2007, at 11:00 a.m. E.D.T.
The
conference call will be broadcast live over the Internet and can be accessed
from the Company's website at http://www.wesco.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. 2006 annual sales were approximately $5.3 billion.
The Company employs approximately 7,100 people, maintains relationships with
over 26,000 suppliers, and serves more than 110,000 customers worldwide.
Major
markets include commercial and industrial firms, contractors, government
agencies, educational institutions, telecommunications businesses and utilities.
WESCO operates seven automated distribution centers and approximately 400
branches in North America and selected international markets, providing a
local
presence for area customers and a global network to serve multi-location
businesses and multi-national corporations.
The
matters discussed herein may contain forward-looking statements that are
subject
to certain risks and uncertainties that could cause actual results to differ
materially from expectations. Certain of these risks are set forth in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2006, as well as the Company's other reports filed with the Securities and
Exchange Commission.
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WESCO
INTERNATIONAL, INC.
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||||||||||||||
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CONDENSED
CONSOLIDATED STATEMENTS OF
INCOME
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(dollar
amounts in millions, except per share
amounts)
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(Unaudited)
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||||||||||||||
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Three
Months Ended
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Three
Months Ended
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September
30, 2007
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September
30, 2006
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Net
sales
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$
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1,545.6
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$
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1,343.1
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Cost
of goods sold (excluding
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depreciation
and amortization below)
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1,232.5
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1,067.4
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Gross
profit
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313.1
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20.3
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%
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275.7
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20.5
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%
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||||||||
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Selling,
general and administrative expenses
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194.8
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12.6
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%
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168.8
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12.6
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%
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Depreciation
and amortization
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9.0
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6.7
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Income
from operations
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109.3
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7.1
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%
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100.2
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7.5
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%
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Interest
expense, net
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17.6
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5.1
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Other
expenses
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-
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5.8
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Income
before income taxes
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91.7
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5.9
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%
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89.3
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6.6
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%
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Provision
for income taxes
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21.7
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29.9
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Net
income
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$
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70.0
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4.5
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%
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59.4
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4.4
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%
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Diluted
earnings per common share
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$
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1.50
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$
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1.13
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Weighted
average shares outstanding (in millions)
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46.6
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52.5
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Nine
Months Ended
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Nine
Months Ended
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September
30, 2007
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September
30, 2006
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Net
sales
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$
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4,514.3
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$
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3,944.6
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Cost
of goods sold (excluding depreciation and amortization
below)
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3,594.1
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3,145.3
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||||||||||||
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Gross
profit
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920.2
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20.4
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%
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799.3
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20.3
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%
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||||||||
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Selling,
general and administrative expenses
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597.6
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13.2
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%
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508.2
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12.9
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%
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Depreciation
and amortization
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27.2
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19.3
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Income
from operations
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295.4
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6.5
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%
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271.8
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6.9
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%
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Interest
expense, net
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46.6
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17.1
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Other
expenses
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-
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17.1
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Income
before income taxes
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248.8
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5.5
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%
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237.6
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6.0
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%
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Provision
for income taxes
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71.0
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78.6
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Net
income
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$
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177.8
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3.9
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%
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159.0
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4.0
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%
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Diluted
earnings per common share
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$
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3.62
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$
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3.04
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Weighted
average shares outstanding (in millions)
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49.1
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52.2
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Note:
As previously reported on March 1, 2007, in WESCO’s Annual Report on Form 10-K,
WESCO amended and restated its accounts receivable securitization facility
as of
December 29, 2006. Prior to the amendment and restatement, interest expense
and
other costs related to the Receivables Facility were recorded as other expense
in the consolidated statement of income. As of September
30, 2007, costs associated with the Receivables Facility totaled $20.8 million
and are included within interest expense in the consolidated statement of
income.
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WESCO
INTERNATIONAL, INC.
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CONDENSED
CONSOLIDATED BALANCE SHEETS
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(dollar
amounts in millions)
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(Unaudited)
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September
30,
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December
31,
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||||||
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Assets
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2007
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2006
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Current
Assets
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Cash
and cash equivalents
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$
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64.5
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$
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73.4
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||||||
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Trade
accounts receivable (See Note)
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913.7
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830.0
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Inventories,
net
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648.1
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613.6
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Other
current assets
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85.2
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101.1
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||||||||
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Total
current assets
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1,711.5
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1,618.1
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Other
assets
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1,166.5
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1,205.9
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Total
assets
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$
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2,878.0
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$
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2,824.0
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||||||
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Liabilities
and Stockholders' Equity
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||||||||||
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Current
Liabilities
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||||||||||
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Accounts
payable
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$
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680.1
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$
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590.3
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||||||
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Other
current liabilities
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682.2
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563.4
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||||||||
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Total
current liabilities
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1,362.3
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1,153.7
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||||||||
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Long-term
debt (See Note)
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801.5
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743.9
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||||||||
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Other
noncurrent liabilities
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153.7
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163.2
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||||||||
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Total
liabilities
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2,317.5
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2,060.8
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||||||||
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Stockholders'
Equity
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||||||||||
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Total
stockholders' equity
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560.5
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763.2
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||||||||
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Total
liabilities and stockholders' equity
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$
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2,878.0
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$
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2,824.0
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||||||
Note:
As previously noted, WESCO amended and restated its accounts receivable
securitization facility as of December 29, 2006. Historically, accounts
receivable sold under the facility were removed from the consolidated balance
sheet and accounted for as an off-balance sheet arrangement. Effective with
the
amendment, sales of accounts receivable pursuant to the facility no longer
qualify for “sale treatment” under GAAP. Therefore, the consolidated balance
sheets as of September 30, 2007 and December 31, 2006 reflect $500.0
million and $390.5 million of additional accounts receivable and related
borrowings.
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WESCO
INTERNATIONAL, INC.
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RECONCILIATION
OF NON-GAAP FINANCIAL MEASURES
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(dollar
amounts in millions)
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|
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(Unaudited)
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|
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Three
Months Ended September 30, 2007
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Nine
Months Ended
September
30, 2007
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||||||
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||||||
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Net
income
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$
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70.0
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$
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177.8
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|||
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Depreciation
and amortization
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9.0
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27.2
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|||||
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Accounts
Receivable
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(21.7
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)
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(62.3
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)
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|||
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Inventory
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(9.3
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)
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(23.6
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)
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|||
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Accounts
Payable
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11.1
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77.6
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|||||
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Other
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19.9
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10.7
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|||||
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Cash
flow provided by operations
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$
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79.0
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$
|
207.4
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|||
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Less:
Capital expenditures
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(4.5
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)
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(11.2
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)
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|||
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Free
cash flow
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$
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74.5
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$
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196.2
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Note:
Free cash flow is provided by the Company as an additional liquidity measure.
Capital expenditures are deducted from operating cash flow to determine free
cash flow. This amount represents excess funds available to management to
service all of its financing needs.