PITTSBURGH, Feb 03, 2005 /PRNewswire-FirstCall via COMTEX/ -- 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 fourth quarter financial results.
Net sales for the fourth quarter of 2004 were $987.9 million versus $850.1 million in 2003, an increase of 16.2%. Gross margins for the quarter improved by $24.9 million over the comparable 2003 quarter. Operating income for the current quarter totaled $39.4 million versus $24.7 million in last year's comparable quarter, an improvement of 60%. Depreciation and amortization included in operating income was $4.1 million for 2004 versus $7.2 million in 2003. Net income in 2004's fourth quarter was $17.1 million versus $9.4 million in the comparable 2003 quarter. Earnings per share in the current quarter were $0.38 per share versus $0.21 per share in 2003.
For the year 2004, net sales increased 13.8% to $3,741.3 million versus $3,286.8 million in 2003. Gross margins in 2004 were 19.0% compared to 18.6% last year, and operating income totaled $149.5 million versus $86.1 million last year. Depreciation and amortization included in operating income was $18.1 million versus $22.5 million last year. Net income for 2004 was $64.9 million compared to $30.0 million last year, while diluted earnings per share were $1.47 per share in 2004 versus $0.65 per share in 2003.
Stephen A. Van Oss, Senior Vice President and Chief Financial and Administrative Officer, stated, "Strong sales momentum and higher margin dollars produced record best performance in virtually all financial metrics for 2004. Earnings per share for the year were a record $1.47. Earnings per share improved by 125% over 2003 and reflect the strong operating leverage in our business model and excellent execution of our sales and cost initiatives by field and headquarter personnel. Free cash flow of $18.1 million for the fourth quarter and $28.5 million for the full year were driven primarily by higher net income, which more than offset increased working capital requirements needed to support sales growth of almost 14%, demonstrating the strong cash generation capacity of our business."
Mr. Van Oss continued, "In December 2004, WESCO successfully completed a $290 million stock offering comprised of four million shares issued by the Company and seven million shares sold by existing shareholders. The $100 million of proceeds received from the shares issued by the Company, combined with approximately $24 million of low-cost debt from existing facilities, will be used to redeem $124 million of the outstanding and callable Senior Subordinated Notes. The Notes will be redeemed in March 2005. The cost of retiring these Notes will result in a non-recurring charge of $6.3 million to net income which is comprised of costs for redemption and write-off of original issuance discount costs. The majority of the $6.3 million will be a non-cash charge. On a going-forward basis, the interest savings from the redeemed Notes makes the issuance of the four million shares of common stock slightly accretive to earnings per share."
Chairman and CEO, Roy W. Haley, commented, "WESCO's fourth quarter and full-year 2004 performance was outstanding. Our sales results have been particularly strong, and our sales and service personnel have delivered record levels of performance and productivity."
Mr. Haley continued, "The economy is showing continued strength on a broad basis. The recovery in industrial markets throughout 2004 has had a positive impact on our results. We are now seeing strengthening in the commercial construction market, particularly the small-and medium-sized projects. We believe the economic fundamentals are favorable for larger-sized projects to materialize during 2005. We are well positioned to fully participate in this market segment as it begins to recover."
WESCO will conduct a teleconference to discuss the fourth quarter earnings as described in this News Release on February 3, 2005, at 11:00 a.m. E.S.T. The conference call will be broadcast live over the Internet and can be accessed from the Company's home page 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 with 2004 annual product sales of approximately $3.7 billion. The Company employs approximately 5,350 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 December 31, 2004 December 31, 2003 Net sales $987.9 $850.1 Cost of sales 802.9 690.0 Gross profit 185.0 18.7% 160.1 18.8% Selling, general & admin. expenses 141.5 14.3% 128.2 15.1% Depreciation & amortization 4.1 7.2 Income from operations 39.4 4.0% 24.7 2.9% Interest expense, net 10.5 10.3 Loss on debt extinguishment 0.5 - Other expense 2.1 1.0 Income before income taxes 26.3 2.7% 13.4 1.6% Provision (benefit) for income taxes 9.2 4.0 Net income $17.1 1.7% $9.4 1.1% Diluted earnings per common share: Net income $0.38 $0.21 Weighted average shares outstanding 45.3 45.4 Twelve Months Ended Twelve Months Ended December 31, 2004 December 31, 2003 Net sales $3,741.3 $3,286.8 Cost of sales 3,029.2 2,676.7 Gross profit 712.1 19.0% 610.1 18.6% Selling, general & admin. expenses 544.5 14.6% 501.5 15.3% Depreciation & amortization 18.1 22.5 Income from operations 149.5 4.0% 86.1 2.6% Interest expense, net 40.8 42.3 Loss on debt extinguishment 2.6 0.2 Other expense 6.6 4.5 Income before income taxes 99.5 2.7% 39.1 1.2% Provision for income taxes 34.6 9.1 Net income $64.9 1.7% $30.0 0.9% Diluted earnings per common share: Net income $1.47 $0.65 Weighted average shares outstanding 44.1 46.3 WESCO INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (dollar amounts in millions, except per share amounts) (unaudited) December 31, December 31, Assets 2004 2003 Current Assets Cash and cash equivalents $34.5 $27.5 Trade accounts receivable 383.4 266.6 Inventories, net 387.3 321.0 Prepaid expenses and other current assets 49.7 41.2 Total current assets 854.9 656.3 Total other assets 502.0 504.9 Total assets $1,356.9 $1,161.2 Liabilities and Stockholders' Equity Current Liabilities Accounts payable $456.7 $366.4 Other current liabilities 108.2 113.3 Total current liabilities 564.9 479.7 Long-term debt (See Note) 385.5 420.0 Other non-current liabilities 52.9 93.8 Total liabilities 1,003.3 993.5 Stockholders' Equity: Total stockholders' equity 353.6 167.7 Total liabilities and stockholders' equity $1,356.9 $1,161.2 Note: Trade accounts receivable and long-term debt have each been reduced by $208 million and $225 million as of December 31, 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 $1.2 million during the twelve months ended December 31, 2004 as a result of changes in carrying 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) December 31, December 31, 2004 2003 Total debt $416.7 $422.2 Plus: A/R Securitization 208.0 225.0 Less: Cash and cash equivalents (34.5) (27.5) Total indebtedness (including A/R Securitization Program), net of cash (See Note) $590.2 $619.7 Note: Total indebtedness (including A/R Securitization Program), net of cash is provided by the Company as 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 Twelve Months Ended December 31, 2004 December 31, 2004 Cash flow provided by operations ($68.7) $23.6 Add: Decrease in A/R Securitization 92.0 17.0 Less: Capital expenditures (5.2) (12.1) Free cash flow (excluding effects of A/R Securitization Program) (See Note) $18.1 $28.5 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.
SOURCE WESCO International, Inc.
Stephen A. Van Oss, Senior Vice President and Chief Financial and Administrative Officer of WESCO International, Inc., +1-412-454-2271, or fax, +1-412-454-2477