EXHIBIT 99.1
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NEWS RELEASE
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WESCO International, Inc. / Suite 700, 225 West Station Square Drive
/ Pittsburgh, PA 15219
WESCO INTERNATIONAL, INC. REPORTS
FISCAL 2003 SECOND QUARTER RESULTS
Contact: Stephen A. Van Oss, Chief Financial Officer
WESCO International, Inc. (412) 454-2271, Fax: (412) 454-2477
http://www.wescodist.com
Pittsburgh, PA, July 23, 2003 - WESCO International, Inc. [NYSE:WCC], a
leading provider of electrical MRO products, construction materials, and
advanced integrated supply procurement outsourcing services, today announced its
2003 second quarter financial results.
Net sales for the second quarter of 2003 were $820.2 million versus
$848.4 million in 2002, a decline of 3.3%. Gross margins for the quarter
improved to 18.4% versus 17.6% for the comparable 2002 quarter. Operating income
for the current quarter totaled $19.0 million versus $21.6 million in last
year's comparable quarter. Depreciation and amortization included in operating
income was $5.1 million for 2003 versus $4.4 million in 2002. Net income in
2003's second quarter was $7.4 million versus $5.6 million in the comparable
2002 quarter. Earnings per share were $0.16 per share versus $0.12 per share in
2002.
On a year-to-date basis, net sales for the six months ended June 30,
2003 were $1,611.0 million versus $1,657.4 million in last year's comparable
period, a 2.8% decline. Gross margins in the current six-month period were 18.4%
versus 17.8% last year and operating income totaled $37.5 million versus $40.0
million last year. Depreciation and amortization included in operating income
was $10.3 million versus $9.6 million last year. Net income for the 2003
year-to-date period was $12.2 million versus $9.4 million last year, while
diluted earnings per share were $0.26 per share in 2003 versus $0.20 per share
in 2002.
Stephen A. Van Oss, Vice President and Chief Financial Officer, stated,
"We are pleased with the continuing improvements we have achieved in gross
margins, particularly given weak product demand from our end markets. Higher
employee benefit costs and out of the ordinary fees and expenses associated with
certain legal matters resulted in a 2.8% increase in selling, general and
administrative expenses over last year's comparable quarter. We expect to
achieve further improvements in our capital structure and in the quality of our
operations in the coming quarters. During the quarter, our free cash flow was
utilized to reduce total indebtedness (including our accounts receivable
securitization program), net of cash, by $26.9 million to $642.1 million as of
June 30, 2003. For the first six months of 2003, total indebtedness, net of
cash, was reduced by $46.3 million. The favorable resolution of certain prior
year tax contingencies resulted in a $2.4 million, or $0.05 per share, tax
benefit, reducing our effective tax rate to a 2.6% benefit for the quarter. We
currently expect our effective tax rate to return to a normalized level for the
balance of 2003."
Mr. Van Oss, continued, "We have an abundant supply of capital
available to operate in the current economic environment. As of June 30, 2003,
we had unutilized borrowing capacity of approximately $178 million. The Company
is working towards the successful completion of a revised and improved Accounts
Receivable Securitization financing in an amount of up to $350 million. The new
structure includes the addition of a three-year commitment of up to $150 million
that will minimize the commitment amount that is subject to an annual renewal.
This financing will conclude, for now, a series of capital market transactions
that the Company has undertaken over the past two years to improve its capital
structure and liquidity position."
WESCO's Chairman and Chief Executive Officer, Roy W. Haley, commented,
"WESCO has held its position in a difficult market, and we are confident that we
are well positioned for growth and gains in operating results as economic
activity improves. While we are optimistic in the long-term outlook for the
markets we serve, we have yet to see consistent evidence of a reversal in the
prolonged economic downturn that has adversely affected our industrial and
contractor customer base. For the near term, our strategy will be to emphasize
sales development programs and to achieve higher standards of service and
productivity through implementation of LEAN Enterprise initiatives in branch and
headquarters operations. As a result of the focus being given to these programs
by a large number of WESCO employees, we expect continued improvement in
profitability and cash flow during the remainder of the year."
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Teleconference
WESCO will conduct a teleconference to discuss the second quarter earnings as
described in this News Release on July 23, 2003, at 11:00 a.m. E.S.T. The
conference call will be broadcast live over the Internet and can be accessed at
http://www.shareholder.com/wesco/medialist.cfm> or from the Company's home page
at (http://www.wescodist.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 2002 annual product sales of approximately $3.3
billion. The Company employs approximately 5,400 people, maintains relationships
with 24,000 suppliers, and serves more than 100,000 customers worldwide. Major
markets include commercial and industrial firms, contractors, government
agencies, educational institutions, telecommunications businesses and utilities.
WESCO operates five fully automated distribution centers and over 350
full-service branches in North America and selected international markets,
providing a local presence for area customers and a global network to serve
multi-location businesses and multi-national corporations.
# # #
The matters discussed herein may contain forward-looking statements that are
subject to certain risks and uncertainties that could cause actual results to
differ materially from expectations. Certain of these risks are set forth in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2002, as well as the Company's other reports filed with the Securities and
Exchange Commission.
WESCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share amounts)
THREE MONTHS ENDED THREE MONTHS ENDED
JUNE 30, 2003 JUNE 30, 2002
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Net sales $ 820.2 $ 848.4
Cost of sales 669.3 699.0
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Gross Profit 150.9 18.4% 149.4 17.6%
Selling, general & admin. expenses 126.8 15.5% 123.4 14.5%
Depreciation & amortization 5.1 4.4
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Income from operations 19.0 2.3% 21.6 2.5%
Interest expense, net 10.5 11.1
Other expense 1.3 1.7
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Income before income taxes 7.2 0.9% 8.8 1.0%
Provision (benefit) for income taxes (0.2) 3.2
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Net income $ 7.4 0.9% $ 5.6 0.7%
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Diluted earnings per common share:
Net Income $ 0.16 $ 0.12
Weighted Average Shares Outstanding 46.5 47.1
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2003 JUNE 30, 2002
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Net sales $1,611.0 $1,657.4
Cost of sales 1,314.7 1,362.3
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Gross Profit 296.3 18.4% 295.1 17.8%
Selling, general & admin. expenses 248.5 15.4% 245.5 14.8%
Depreciation & amortization 10.3 9.6
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Income from operations 37.5 2.3% 40.0 2.4%
Interest expense, net 20.9 22.0
Loss on debt extinguishment - 1.1
Other expense 2.7 3.1
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Income before income taxes 13.9 0.9% 13.8 0.8%
Provision for income taxes 1.7 4.4
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Net income $ 12.2 0.8% $ 9.4 0.6%
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Diluted earnings per common share:
Net Income $ 0.26 $ 0.20
Weighted Average Shares Outstanding 46.5 47.0
WESCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions, except per share amounts)
(unaudited)
ASSETS JUNE 30, 2003 DECEMBER 31, 2002
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CURRENT ASSETS
Cash and cash equivalents $ 33.2 $ 22.6
Trade accounts receivable 272.4 182.2
Inventories, net 337.9 338.8
Prepaid expenses and other current assets 26.6 33.4
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Total current assets 670.1 577.0
Total other assets 427.9 438.1
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Total assets $1,098.0 $1,015.1
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 374.6 $ 346.5
Other current liabilities 56.5 51.9
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Total current liabilities 431.1 398.4
Long-term debt (See Note) 444.2 412.2
Other non-current liabilities 33.9 35.2
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Total liabilities 909.2 845.8
STOCKHOLDERS' EQUITY:
Total stockholders' equity 188.8 169.3
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Total liabilities and stockholders' equity $1,098.0 $1,015.1
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Note: Trade accounts receivable and long-term debt have each been reduced by
$225 million and $293 million as of June 30, 2003 and December 31, 2002,
respectively, in accordance with WESCO's accounting for its accounts receivable
securitization facility. In addition, the carrying value of long-term debt
decreased a net $2.1 million during the six months ended June 30, 2003 as a
result of the decrease in fair 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 MEASURERS
(dollar amounts in millions)
(Unaudited)
JUNE 30, 2003 MARCH 31, 2003 DECEMBER 31, 2002
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Total debt $450.3 $448.4 $418.0
Plus: A/R Securitization 225.0 252.0 293.0
Less: Cash and cash equivalents (33.2) (31.4) (22.6)
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Total indebtedness (including A/R
Securitization Program), net of cash
(See Note) $642.1 $669.0 $688.4
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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.
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