WESCO International, Inc. Reports Record Sales and Increased Earnings Per Share for the Second Quarter Ended June 2008
Consolidated net sales increase 6.3%; earnings per share increase 13%; 900 thousand shares repurchased
PRNewswire
Pittsburgh
(NYSE:WCC)

PITTSBURGH, July 24 /PRNewswire-FirstCall/ -- WESCO International, Inc. (NYSE: WCC), a leading provider of electrical MRO products, construction materials and advanced integrated supply procurement outsourcing services, announced today its second quarter 2008 financial results.

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Consolidated net sales for the second quarter of 2008 were $1,588 million compared to $1,518 million in 2007, an increase of 4.6%. Consolidated net sales grew 6.3% after adjusting for a previously announced divestiture. Gross margin for the current quarter was 19.5% compared to 20.3% in 2007. Operating income for the current quarter totaled $96.8 million versus $103.6 million in last year's second quarter. Depreciation and amortization included in operating income was $6.7 million for 2008 compared to $9.2 million in 2007. Net income for this quarter was $60.1 million versus $59.6 million in the comparable 2007 quarter. Diluted earnings per share for the quarter were $1.38 per share versus $1.22 per share in 2007.

Mr. Stephen A. Van Oss, Senior Vice President and Chief Financial and Administrative Officer stated, "Strong execution on our sales and operational activities during the quarter combined to produce record sales and earnings per share in the face of softening end markets. Consolidated sales increased over 6% for the quarter and marked the strongest sales growth since the third quarter of 2006. As expected, we are experiencing a tougher pricing environment which has put pressure on our gross margins. We are focused on getting supplier price increases implemented throughout the channel and expect to see margins improve as this is accomplished. Cost control efforts were effective in reducing SG&A expenses from the first quarter of the year as we achieved a net reduction in total employment during the quarter while increasing our investment in our sales force expansion. The increased investment in our sales force, we believe, is driving additional top line revenues and enabling us to further engage in a broader range of sales related activities."

Mr. Van Oss continued, "Our financial position is solid and our liquidity is now in excess of $300 million. During the quarter, we utilized our positive cash flow to purchase $36 million of stock while reducing financial leverage from last year. We will continue to take a measured approach in utilizing our free cash flow and liquidity position for acquisitions and share repurchases while maintaining our strong capital structure."

Consolidated net sales for the six months ended June 30, 2008 were $3,053 million versus $2,969 million in last year's comparable period, a 2.8% increase. Consolidated net sales grew 4.6% after adjusting for a previously announced divestiture. Gross margin in the current six-month period was 19.8% versus 20.5% last year and operating income totaled $173.9 million versus $186.1 million last year. Depreciation and amortization included in operating income was $13.6 million versus $18.1 million last year. Net income for the 2008 year-to-date period was $105.0 million versus $107.8 million last year. Diluted earnings per share were $2.39 per share in 2008 versus $2.14 per share in 2007.

Mr. Roy W. Haley, Chairman and Chief Executive Officer, commented, "We are encouraged by our quarterly results and believe we are taking the appropriate steps to expand our leading market roles. We continue to have frequent dialogue with our customers and suppliers, and we remain convinced our business model is generating new opportunities and is responsive to current market conditions. We are experiencing an ongoing trend where customers seek out large, well-capitalized partners who have the ability to serve their regional, national, and global needs with innovative supply chain solutions, a broad range of products, and competitive pricing. We are working hard to meet that challenge today and are determined to further extend our leadership position going forward."

Teleconference

WESCO will conduct a teleconference to discuss the second quarter earnings as described in this News Release on Thursday, July 24, 2008, 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. 2007 annual sales were approximately $6.0 billion. The Company employs approximately 7,300 people, maintains relationships with over 24,000 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 fully automated distribution centers and more than 400 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, 2007, as well as the Company's other reports filed with the Securities and Exchange Commission

SOURCE WESCO International, Inc.
CONTACT: Stephen A. Van Oss, Senior Vice President and Chief Financial
and Administrative Officer, WESCO International, Inc., +1-412-454-2271,
Fax: +1-412-454-2477
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Web site: http://www.wescodist.com
http://www.wesco.com
(WCC)


                            WESCO INTERNATIONAL, INC.
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
              (dollar amounts in millions, except per share amounts)
                                   (Unaudited)

                                       Three Months Ended   Three Months Ended
                                           June 30, 2008      June 30, 2007

    Net sales                            $1,587.8          $1,518.1
    Cost of goods sold
     (excluding depreciation
     and amortization below)              1,277.4   80.5%   1,210.0    79.7%
    Selling, general and
     administrative expenses                206.9   13.0%     195.3    12.9%
    Depreciation and amortization             6.7               9.2
    Income from operations                   96.8    6.1%     103.6     6.8%
    Interest expense, net                    12.5              16.8
    Other (income) expense                   (2.6)                -
    Income before income taxes               86.9    5.5%      86.8     5.7%
    Provision for income taxes               26.8              27.2
    Net income                              $60.1    3.8%     $59.6     3.9%

    Diluted earnings per
     common share                           $1.38             $1.22
    Weighted average common
     shares outstanding and
     common share equivalents
     used in computing diluted
     earnings per share (in millions)        43.6              48.7


                                         Six Months Ended   Six Months Ended
                                          June 30, 2008       June 30, 2007

    Net sales                            $3,053.0          $2,968.7
    Cost of goods sold
     (excluding depreciation
     and amortization below)              2,447.0   80.2%   2,361.6    79.5%
    Selling, general and
     administrative expenses                418.5   13.7%     402.9    13.6%
    Depreciation and
     amortization                            13.6              18.1
    Income from operations                  173.9    5.7%     186.1     6.3%
    Interest expense, net                    27.1              29.0
    Other (income) expense                   (5.4)                -
    Income before income taxes              152.2    5.0%     157.1     5.3%
    Provision for income taxes               47.2              49.3
    Net income                             $105.0    3.4%    $107.8     3.6%

    Diluted earnings per
     common share                           $2.39             $2.14
    Weighted average common
     shares outstanding and
     common share equivalents
     used in computing diluted
     earnings per share
     (in millions)                           43.8              50.4



                            WESCO INTERNATIONAL, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                           (dollar amounts in millions)
                                   (Unaudited)

        Assets                                       June 30,   December 31,
                                                       2008           2007
    Current Assets
    Cash and cash equivalents                         $115.5          $72.3
    Trade accounts receivable, net                     918.8          844.5
    Inventories, net                                   646.5          666.0
    Other current assets                                62.2           97.7
      Total current assets                           1,743.0        1,680.5
    Other assets                                     1,156.2        1,179.4
      Total assets                                  $2,899.2       $2,859.9

        Liabilities and Stockholders' Equity
    Current Liabilities
    Accounts payable                                  $712.8         $626.3
    Other current liabilities                          631.3          665.6
      Total current liabilities                      1,344.1        1,291.9

    Long-term debt                                     742.7          811.3
    Other noncurrent liabilities                       143.0          148.2
      Total liabilities                              2,229.8        2,251.4

    Stockholders' Equity
    Total stockholders' equity                         669.4          608.5
      Total liabilities and stockholders' equity    $2,899.2       $2,859.9



                            WESCO INTERNATIONAL, INC.
                  RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
                                   (Unaudited)

                                               Twelve Months  Twelve Months
                                                   Ended          Ended
                                               June 30, 2008  June 30, 2007
    Financial Leverage:
    (dollar amounts in thousands)
      Income from operations                        $381,992       $379,470
      Depreciation and amortization                   32,268         34,180
        EBITDA                                      $414,260       $413,650

      Short term debt                                500,000        495,500
      Current debt                                     2,730          2,632
      Long term debt                                 742,693        838,485
        Total debt                                $1,245,423     $1,336,617

      Financial leverage ratio                           3.0            3.2


    Free Cash Flow:                               Three Months    Six Months
    (dollar amounts in millions)                      Ended         Ended
                                                 June 30, 2008  June 30, 2008

      Net Income                                       $60.1         $105.0

        Depreciation and amortization                    6.7           13.6
        Accounts receivable                            (53.2)         (70.1)
        Inventory                                      (30.8)          (3.9)
        Accounts payable                                73.5           96.9
        Other                                          (10.3)          (3.5)
            Cash flow provided by operations           $46.0         $138.0
    Less: Capital expenditures                          (8.3)         (19.6)
    Free cash flow                                     $37.7         $118.4

    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.



                            WESCO INTERNATIONAL, INC.
            RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (CONTINUED)
                           (dollar amounts in millions)
                                   (Unaudited)

                                                Three Months   Three Months
                                                    Ended         Ended
    Gross Profit:                              June 30, 2008  June 30, 2007

      Net sales                                     $1,587.8       $1,518.1
      Cost of goods sold (excluding
       depreciation and amortization)                1,277.4        1,210.0
        Gross profit                                  $310.4         $308.1
        Gross margin                                    19.5%          20.3%

                                                  Six Months     Six Months
                                                     Ended          Ended
                                               June 30, 2008  June 30, 2007

      Net sales                                     $3,053.0       $2,968.7
      Cost of goods sold (excluding
       depreciation and amortization)                2,447.0        2,361.6
        Gross profit                                  $606.0         $607.1
        Gross margin                                    19.8%          20.5%

    Note: Gross profit is provided by the Company as an additional financial
    measure. Gross profit is calculated by deducting cost of goods sold,
    excluding depreciation and amortization, from net sales. This amount
    represents an important financial measure within the distribution
    industry. Gross margin is calculated by dividing gross profit by net
    sales.