WESCO 3Q Sales Up 16.6%

Net sales were $1,931.3 million for the third quarter of 2013, compared to $1,656.2 million for the third quarter of 2012, an increase of 16.6%. Acquisitions positively impacted sales by 14.1%, organic sales increased 3.2%, and foreign exchange negatively impacted sales by 0.7%.

Pittsburgh, PA - WESCO International, Inc. announced its 2013 third quarter results.

The following are results for the three months ended September 30, 2013 compared to the three months ended September 30, 2012:

Net sales were $1,931.3 million for the third quarter of 2013, compared to $1,656.2 million for the third quarter of 2012, an increase of 16.6%.  Acquisitions positively impacted sales by 14.1%, organic sales increased 3.2%, and foreign exchange negatively impacted sales by 0.7%. Adjusting for the impact of one additional workday in the quarter, normalized organic sales increased 1.6%.  Sequentially, sales increased 2.0%, and organic sales increased 2.3%.   

Gross profit of $395.7 million, or 20.5% of sales, for the third quarter of 2013, compared to $338.8 million, or 20.5% of sales, for the third quarter of 2012.

Selling, general & administrative (SG&A) expenses of $255.2 million, or 13.2% of sales, for the third quarter of 2013 improved 40 basis points, compared to $225.8 million, or 13.6% of sales, for the third quarter of 2012.  Excluding acquisitions, SG&A was unchanged from the prior year.

Operating profit was $123.7 million for the current quarter, up 20.0% from $103.1 million for the comparable 2012 quarter.  Operating profit as a percentage of sales was 6.4% in 2013, up 20 basis points from 6.2% in 2012.

Interest expense for the third quarter of 2013 was $21.3 million, compared to $12.7 million for the third quarter of 2012.  Interest expense increased for the quarter due to the increase in indebtedness in late 2012 associated primarily with the EECOL acquisition. Non-cash interest expense, which includes convertible debt interest, interest related to uncertain tax positions, and the amortization of deferred financing fees, for the third quarter of 2013 and 2012 was $2.3 million and $1.3 million, respectively.

Net income attributable to WESCO International, Inc. of $69.2 million for current quarter was up 9.1% from $63.4 million for the prior year quarter.  Excluding the impact of the sale of the Company's EECOL Electric Argentina operations and the tax impact of the ArcelorMittal litigation recovery, net income attributable to WESCO International, Inc. was $74.7 million for the current quarter, up 17.8% from the prior year quarter.

The effective tax rate for the current quarter was 31.0%, compared to 29.9% for the prior year third quarter.  Excluding the impact of non-recurring items, the effective tax rate for the current quarter was 27.2%.

Earnings per diluted share for the third quarter of 2013 were $1.32 per share, based on 52.5 million diluted shares, and were up 5.6% from $1.25 per share in the third quarter of 2012, based on 50.8 million diluted shares.  Excluding the impact of non-recurring items, adjusted earnings per diluted share in the third quarter of 2013 were $1.42, compared to $1.25 in the corresponding prior year period and increased 13.6%.  

Free cash flow for the third quarter of 2013 was $72.3 million, or 104% of net income, compared to $67.2 million for the third quarter of 2012.  Excluding the impact of non-recurring items, free cash flow was 97% of adjusted net income for the third quarter of 2013. 

Mr. John J. Engel, WESCO's Chairman and Chief Executive Officer, stated, "Our third quarter results reflect solid execution in a low growth economic environment with end market conditions that continue to be challenging.  Organic sales increased approximately two percent versus prior year on a same workday basis, driven by growth in Data Communications and continued strength in Utility.  Our acquisitions continue to perform well and we remain on track to deliver our full year EPS accretion expectations for EECOL.  Free cash flow generation was also strong in the quarter and our financial leverage is now within our targeted range on a proforma basis.  We expect organic sales growth in the fourth quarter at the low end of our prior expectations, and have revised our full year EPS outlook to approximately $5.00 to $5.20 per diluted share, which equates to 15% to 19% growth over prior year, excluding the ArcelorMittal litigation and EECOL Argentina divestiture impacts."

The following results are for the nine months ended September 30, 2013 compared to the nine months ended September 30, 2012.

  • Net sales were $5,633.3 million for the first nine months of 2013, compared to $4,934.9 million for the first nine months of 2012, an increase of 14.2%.  Acquisitions positively impacted sales by 14.9%, organic sales decreased 0.4%, and foreign exchange negatively impacted sales by 0.3%.

  • Gross profit of $1,169.3 million, or 20.8% of sales, for the first nine months of 2013 was up 70 basis points, compared to $994.1 million, or 20.1% of sales, for the first nine months of 2012.

  • SG&A expenses of $748.2 million, or 13.3% of sales, for the first nine months of 2013 decreased 60 basis points, compared to $685.1 million, or 13.9% of sales, for the first nine months of 2012.  SG&A expenses for the first nine months of 2013 include a $36.1 million favorable impact resulting from the recognition of insurance coverage relating to a litigation-related charge recorded in the fourth quarter of 2012.  Excluding the impact of this favorable item, SG&A expenses were $784.3 million, or 13.9% of sales, and excluding acquisitions, SG&A declined $3.5 million from the prior year.

  • Operating profit was $370.4 million for the first nine months of 2013, up 31.1% from $282.6 million for the comparable 2012 period.  Operating profit as a percentage of sales was 6.6% in 2013, up 90 basis points from 5.7% in 2012.  Excluding the favorable impact resulting from the recognition of insurance coverage on a litigation matter, operating profit was $334.3 million, or 5.9% of sales.

  • Interest expense for the first nine months of 2013 was $65.0 million, compared to $33.1 million for the first nine months of 2012.  Interest expense increased for the first nine months of 2013 due to the increase in indebtedness in late 2012 associated with the EECOL acquisition.  Non-cash interest expense, which includes convertible debt interest, interest related to uncertain tax positions, and the amortization of deferred financing fees, for the first nine months of 2013 and 2012 was $6.7 million and $0.8 million, respectively. 

  • Net income attributable to WESCO International, Inc. of $218.4 million for the first nine months of 2013 was up 24.6% from $175.3 million for the first nine months of 2012.  Excluding the impacts of the recognition of insurance coverage on a litigation matter and the loss on the sale of the Company's EECOL Electric Argentina operations, adjusted net income for the first nine months of 2013 was $197.1 million, compared to $175.3 million in the first nine months of 2012, an increase of 12.4%.   

  • The effective nine-month tax rate was 27.9% for 2013 compared to 29.8% for 2012.  Excluding the impact of the non-recurring items, the effective tax rate for the current year was 26.8%. 

  • Earnings per diluted share for the first nine months of 2013 were up 21.6% to $4.17 per share, based on 52.4 million diluted shares, versus $3.43 per share for the first nine months of 2012, based on 51.1 million diluted shares.  Excluding the impact of non-recurring items, adjusted earnings per diluted share in the first nine months of 2013 were $3.76, compared to $3.43 in the corresponding prior year period and increased 9.6%.

  • Free cash flow for the nine months of 2013 was $180.3 million, or 83% of net income, compared to $170.1 million in the comparable prior year period.  Excluding the impact of non-recurring items, free cash flow was 91% of adjusted net income for the first nine months of 2013.   

Mr. Engel continued, "As consolidation and outsourcing continues in our industry, customers are looking for a one-stop-shop to manage their global supply chain needs.  Our One WESCO value proposition provides customers with the comprehensive product and service solutions they need to meet their MRO, OEM and Capital Project management requirements.  We are encouraged with the accelerating momentum of our One WESCO initiatives, and are continuing to make investments in our people, our processes, and our business."

 

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