Pittsburgh, PA - WESCO International, Inc. announced its 2014 first quarter results.
The following are results for the three months ended March 31, 2014 compared to the three months ended March 31, 2013. A reconciliation of adjusted results is provided in the Non-GAAP Financial Measures section of this release.
Net sales were $1,810.8 million for the first quarter of 2014, compared to $1,808.1 million for the first quarter of 2013, an increase of 0.2%. Organic sales increased 1.6%, acquisitions positively impacted sales by 0.5%, and foreign exchange negatively impacted sales by 1.9%. Sequentially, sales decreased 3.7%, and organic sales decreased 3.1%.
Gross profit was $374.8 million, or 20.7% of sales, for the first quarter of 2014, compared to $381.1 million, or 21.1% of sales, for the first quarter of 2013.
Selling, general & administrative (SG&A) expenses were $265.5 million, or 14.7% of sales, for the first quarter of 2014, compared to $227.5 million, or 12.6% of sales, for the first quarter of 2013. First quarter 2014 SG&A expenses increased 10 basis points from first quarter 2013 adjusted SG&A expenses of $263.6 million, or 14.6% of sales.
Operating profit was $93.0 million for the current quarter, compared to $136.9 million for the first quarter of 2013. Operating profit as a percentage of sales was 5.1% and 7.6% in 2014 and 2013, respectively. First quarter 2014 operating profit decreased 50 basis points from first quarter 2013 adjusted operating profit of $100.8 million, or 5.6% of sales.
Interest expense for the first quarter of 2014 was $20.7 million, compared to $21.9 million for the first quarter of 2013. 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 quarter of 2014 and 2013 was $2.5 million and $2.3 million, respectively.
The effective tax rate for the current quarter was 28.2%, compared to 26.9% for the prior year first quarter.
Net income attributable to WESCO International, Inc. of $51.9 million for the current quarter was down 38% from $84.0 million for the prior year quarter. First quarter 2014 net income attributable to WESCO International, Inc. decreased 11.3% from prior year adjusted net income attributable to WESCO International, Inc of $58.5 million.
Earnings per diluted share for the first quarter of 2014 were $0.97 per share, based on 53.4 million diluted shares, compared to $1.60 per share in the first quarter of 2013, based on 52.4 million diluted shares. Earnings per diluted share in the first quarter of 2014 decreased 13.4% from adjusted earnings per diluted share of $1.12 in the corresponding prior year period.
Free cash flow for the first quarter of 2014 was $41.7 million, or 80% of net income, compared to $74.4 million for the first quarter of 2013.
Mr. John J. Engel, WESCO's Chairman and Chief Executive Officer, stated, "Our first quarter results reflect an improving U.S. economy largely offset by the impacts of severe winter weather conditions in both the U.S and Canada. Sales in the U.S. were up approximately 3% with mid-single digit organic sales growth in all of our end markets, except construction, where sales declined primarily due to weather related project delays. Sales in Canada declined approximately 4% organically versus last year. While we face near-term foreign exchange headwinds in Canada, we continue to view that market favorably. After a slow start in January, sales momentum improved through the quarter and has further accelerated in April. We expect business conditions to improve this year with a strengthening recovery in non-residential construction. Our full year outlook remains unchanged at 3% to 6% sales growth and $5.30 to $5.70 earnings per diluted share."
Mr. Engel continued, "This low growth economic environment provides an excellent opportunity for WESCO to further strengthen our position as an industry leader, and expand our customer and supplier relationships for long-term growth. We continue to invest in our growth engines and maintain a view that scale matters in distribution. The acquisitions of LaPrairie and Hazmasters were excellent additions to our Canadian business in the first quarter. As a result of solid free cash flow generation, financial leverage remained within our targeted range, including the impact of these two acquisitions. Our acquisition pipeline remains robust, and we see continuing opportunities to strengthen our electrical core while broadening our portfolio of products and services."