Second quarter results compared to the prior year:
- Earnings per diluted share of $1.15 increased 15%
- Net income of $58.9 million increased 17%
- Operating margins improved to 5.7%
- Consolidated sales of $1.67 billion increased 9.7%
Pittsburgh, PA -- WESCO International, Inc., a leading provider of electrical, industrial, and communications MRO and OEM products, construction materials, and advanced supply chain management and logistics services, today announced its 2012 second quarter results.
The following are results for the three months ended June 30, 2012 compared to the three months ended June 30, 2011:
- Consolidated net sales were $1,672.7 million for the second quarter of 2012, compared to $1,524.5 million for the second quarter of 2011. The 9.7% increase in sales includes a 2.2% positive impact from acquisitions and a 0.7% negative impact from foreign exchange rates, resulting in organic sales growth of approximately 8.2%. Sequentially, sales increased 4.2%.
- Gross profit was $335.6 million, or 20.1% of sales, for the second quarter of 2012 compared to $306.8 million, or 20.1% of sales, for the second quarter of 2011.
- Selling, general & administrative (SG&A) expenses of $231.2 million, or 13.8% of sales, for the second quarter of 2012 improved 30 basis points, compared to $214.2 million, or 14.1% of sales, for the second quarter of 2011.
- Operating profit was $96.0 million for the current quarter, up 13.0% from $85.0 million for the comparable 2011 quarter. Operating profit as a percentage of sales was 5.7% in 2012, up 10 basis points from 5.6% in 2011.
- Total interest expense for the second quarter of 2012 was $11.5 million, compared to $13.9 million for the second quarter of 2011. Non-cash interest expense, which includes convertible debt interest, interest related to uncertain tax positions, and the amortization of deferred financing fees, for the second quarter of 2012 and 2011 was $1.4 million and $2.4 million, respectively.
- The effective tax rate for the current quarter was 30.3%, compared to 29.4% for the prior year second quarter.
- Net income of $58.9 million for the current quarter was up 17.3% from $50.2 million for the prior year second quarter.
- Earnings per diluted share for the second quarter of 2012 were $1.15 per share, based on 51.1 million diluted shares, and was up 15.0% from $1.00 per share in the second quarter of 2011, based on 50.3 million diluted shares.
- Free cash flow for the second quarter of 2012 was $49.1 million, or 83% of net income, compared to a use of $19.6 million for the second quarter of 2011.
Mr. John J. Engel, WESCO's Chairman and Chief Executive Officer, stated, "Our second quarter results reflect the continued execution of our growth strategy and our ability to deliver solid sales and earnings growth in a challenging economic environment. We generated positive momentum and increased sales to customers in each of our Industrial, Construction, Utility and CIG end markets resulting in overall sales growth of 9.7%. Operating margins improved to 5.7%, and earnings per diluted share increased 15%, demonstrating the effective operating leverage of our business model. Free cash flow exceeded 90% of net income in the first half of 2012, and we exited the second quarter with financial leverage below 2.0 and record liquidity."
"Additionally, we are very pleased to have completed the acquisitions of Trydor Industries and Conney Safety Products earlier this month. These two transactions are expected to be accretive to earnings by at least $0.15 per diluted share on a combined basis over the next year."
The following results are for the six months ended June 30, 2012 compared to the six months ended June 30, 2011.
- Consolidated net sales were $3,278.7 million for the first six months of 2012, compared to $2,955.8 million for the first six months of 2011, an increase of 10.9%. Acquisitions positively impacted consolidated sales by 2.4%, while one additional workday positively impacted sales by 0.8% and foreign exchange provided a 0.5% negative impact resulting in a normalized organic growth rate of approximately 8.2%.
- Gross profit of $655.4 million, or 20.0% of sales, for the first six months of 2012 was down 10 basis points, compared to $592.9 million, or 20.1% of sales, for the first six months of 2011.
- SG&A expenses of $459.3 million, or 14.0% of sales, for the first six months of 2012 improved 50 basis points, compared to $428.0 million, or 14.5% of sales, for the first six months of 2011.
- Operating profit was $179.6 million for the first six months of 2012, up 19.9% from $149.7 million for the comparable 2011 period. Operating profit as a percentage of sales was 5.5% in 2012, up 40 basis points from 5.1% in 2011.
- Total interest expense for the first six months of 2012 was $20.4 million, compared to $26.5 million for the first six months of 2011. Cash interest expense was $20.9 million for the first six months of 2012. Non-cash interest expense, which includes convertible debt interest, interest related to uncertain tax positions, and the amortization of deferred financing fees, amounted to $0.5 million of income as a result of a favorable adjustment of $3.2 million of previously recorded interest related to uncertain tax positions. This adjustment was a result of a favorable Internal Revenue Service appeals settlement in the first quarter of 2012 related to the years 2000 to 2006.
- The effective six-month tax rate was 29.7% for 2012 compared to 29.0% for 2011.
- Net income of $111.9 million for the first six months of 2012 was up 27.8% from $87.5 million for the first six months of 2011.
- Earnings per diluted share for the first six months of 2012 were up 25.3% to $2.18 per share, based on 51.2 million diluted shares, versus $1.74 per share for the first six months of 2011, based on 50.4 million diluted shares. The adjustment of previously recorded interest related to uncertain tax positions in the first quarter of 2012 positively impacted year-to-date 2012 earnings per diluted share by approximately $0.04.
- Free cash flow for the six months of 2012 was $102.9 million, or 92% of net income, compared to $6.6 million in the comparable prior year period.
Mr. Engel continued, "Our long term outlook remains unchanged as we expect the economy to continue to recover slowly over the next several years. We are continuing to invest in our eight growth engines and our six operational excellence initiatives, and we remain focused on executing our One WESCO strategy of providing customers with the leading products, services and supply chain solutions they need to meet their MRO, OEM, and Capital Project requirements around the world."
