PITTSBURGH, July 20 /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 2006 second quarter financial results.
Consolidated net sales for the second quarter of 2006 were $1,336 million compared to $1,062 million in 2005, an increase of 25.8%. Sales from the two acquisitions completed in the third quarter of 2005 were approximately $107 million. Gross margin for the quarter was 20.3% compared to 18.3% for the comparable 2005 quarter. Operating income for the current quarter totaled $94.7 million versus $48.9 million in last year's comparable quarter. Depreciation and amortization included in operating income was $6.3 million for 2006 compared to $3.7 million in 2005. Net income for this quarter was $55.2 million versus $27.4 million in the comparable 2005 quarter. Diluted earnings per share for the quarter were $1.05 per share versus $0.56 per share in 2005.
Stephen A. Van Oss, Senior Vice President and Chief Financial Officer, stated, "Our organization continues to successfully execute on its strategy of driving above market sales growth and expanding operating margins. Our second quarter financial results were outstanding as productivity initiatives positively impacted operational and administrative functions across the Company. This quarter's results mark the ninth consecutive quarter of double- digit organic sales growth. Additionally, over the last three quarters we have delivered record best performance in essentially all key financial metrics. Operating profit increased by 94%, to $94.7 million, over the second quarter of 2005. Earnings per share reached a record level of $1.05 for the quarter versus $0.56 last year. Free cash flow was strong and is being directed towards debt reduction. WESCO's capital structure has never been stronger."
Mr. Van Oss further commented, "We continue to see sustained momentum in our end markets as demand across most sectors remains healthy. In particular, we see improvement in our commercial construction activity in addition to strong maintenance, repair and operating supply (MRO) sales."
Consolidated net sales for the six months ended June 30, 2006 were $2,601 million versus $2,053 million in last year's comparable period, a 26.7% increase. Sales from the two previously mentioned acquisitions for the first six months totaled $214 million. Gross margin in the current six-month period was 20.1% versus 18.5% last year and operating income totaled $171.7 million versus $87.5 million last year. Depreciation and amortization included in operating income was $12.6 million versus $7.6 million last year. Net income for the 2006 year-to-date period was $99.6 million versus $38.7 million last year, which included a charge for redeeming a portion of the Company's senior subordinated notes. Diluted earnings per share were $1.91 per share in 2006 versus $0.79 per share in 2005.
Chairman and CEO, Roy W. Haley, commented, "WESCO's record-breaking quarter is again the result of our organization's energetic response to sales and service opportunities and our dedication to performance enhancement in all areas of the Company. We are demonstrating that our business model, combined with a culture of continuous improvement, produces above average growth and capitalizes on potential economies of scale. Great results are being achieved each quarter, and we remain committed to systematic, incremental progress supporting our long-term goals of operational excellence, double-digit internally driven growth, and increasing operating margins."
WESCO will conduct a teleconference to discuss the second quarter earnings as described in this News Release on Thursday, July 20, 2006, 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 home page at http://www.wesco.com. The conference call will be archived on our 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. 2005 annual sales were approximately $4.4 billion. The Company employs approximately 6,100 people, maintains relationships with over 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 seven fully automated distribution centers and approximately 370 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, 2005, as well as the Company's other reports filed with the Securities and Exchange Commission.
WESCO INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (dollar amounts in millions, except per share amounts) (Unaudited) Three Months Three Months Ended Ended June 30, 2006 June 30, 2005 Net sales $ 1,336.0 $ 1,062.1 Cost of goods sold (excluding depreciation and amortization below) 1,065.4 867.5 Gross profit 270.6 20.3% 194.6 18.3% Selling, general and administrative expenses 169.6 12.7% 142.0 13.4% Depreciation and amortization 6.3 3.7 Income from operations 94.7 7.1% 48.9 4.6% Interest expense, net 5.6 6.8 Loss on debt extinguishment - net - - Other expenses 6.2 3.0 Income before income taxes 82.9 6.2% 39.1 3.7% Provision for income taxes 27.7 11.7 Net income 55.2 4.1% $27.4 2.6% Diluted earnings per common share $1.05 $0.56 Weighted average shares outstanding (in millions) 52.7 49.2 Six Months Six Months Ended Ended June 30, 2006 June 30, 2005 Net sales $ 2,601.5 $ 2,052.9 Cost of goods sold (excluding depreciation and amortization below) 2,077.8 1,673.1 Gross profit 523.7 20.1% 379.8 18.5% Selling, general and administrative expenses 339.4 13.1% 284.7 13.9% Depreciation and amortization 12.6 7.6 Income from operations 171.7 6.6% 87.5 4.3% Interest expense, net 12.0 16.0 Loss on debt extinguishment - net - 10.1 Other expenses 11.4 5.0 Income before income taxes 148.3 5.7% 56.4 2.7% Provision for income taxes 48.7 17.6 Net income 99.6 3.8% $38.8 1.9% Diluted earnings per common share $1.91 $0.79 Weighted average shares outstanding (in millions) 52.1 49.1 WESCO INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (dollar amounts in millions) (Unaudited) Assets June 30, December 31, Current Assets 2006 2005 Cash and cash equivalents $37.8 $22.1 Trade accounts receivable (See Note) 386.2 315.6 Inventories, net 534.3 500.8 Other current assets 59.3 70.3 Total current assets 1,017.6 908.8 Other assets 748.9 742.4 Total assets 1,766.5 $ 1,651.2 Liabilities and Stockholders' Equity Current Liabilities Accounts payable 610.8 $572.5 Other current liabilities 88.3 147.4 Total current liabilities 699.1 719.9 Long-term debt (See Note) 349.1 352.2 Other noncurrent liabilities 88.5 87.6 Total liabilities 1,136.7 1,159.7 Stockholders' Equity Total stockholders' equity 629.8 491.5 Total liabilities and stockholders' equity $ 1,766.5 $ 1,651.2
Note: Trade accounts receivable and long-term debt have each been reduced by $380 million and $397 million as of June 30, 2006 and December 31, 2005, respectively, in accordance with WESCO's accounting for its accounts receivable securitization facility.
WESCO INTERNATIONAL, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (dollar amounts in millions) (Unaudited) June 30, 2006 March 31, 2006 Dec. 31, 2005 Total debt 354.8 $ 374.7 $ 403.6 Plus: A/R Securitization 380.0 395.0 397.0 Less: Cash and cash equivalents (37.8) (30.4) (22.1) Total indebtedness (including A/R Securitization Program), net of cash (See Note) 697.0 $ 739.3 $ 778.5
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) Six Months Ended June 30, 2006 Cash flow provided by operations 54.1 Change in A/R Securitization 17.0 Less: Capital expenditures (8.7) Free cash flow (excluding effects of A/R Securitization Program) (See Note) 62.4
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.
SOURCE WESCO International, Inc.
CONTACT: Stephen A. Van Oss, Senior Vice President and Chief Financial
and Administrative Officer of WESCO International, Inc., +1-412-454-2271, or