Exhibit 99.1
NEWS RELEASE
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WESCO International, Inc. / Suite 700, 225 West Station Square Drive /
Pittsburgh, PA 15219
WESCO INTERNATIONAL, INC. REPORTS
2003 FIRST 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, April 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 first quarter financial results.
Net sales for the first quarter of 2003 were $790.8 million versus
$808.9 million in 2002, a decline of 2.2%. Gross margins for the quarter
improved to 18.4% versus 18.0% for the comparable 2002 quarter. Operating income
for the current quarter totaled $18.5 million versus $18.4 million in last
year's comparable quarter. Depreciation and amortization included in operating
income was $5.1 million for 2003 versus $5.1 million in 2002. Net income in
2003's first quarter improved to $4.8 million versus $3.8 million in the
comparable 2002 quarter. Earnings per share increased to $0.10 per share versus
$0.08 per share in 2002.
Stephen A. Van Oss, Vice President and Chief Financial Officer, stated,
"Despite weakness in the industrial production and commercial construction
markets, we delivered sequential and year-over-year improvements in our results
through focused efforts on product margin improvement, operating cost
containment and financial de-leveraging initiatives. SG&A expenses in the first
quarter of $121.8 million represented a three-year low for the Company, while
billing margin improved by 30 basis points over last year. We continued our
program of systematically paying down our credit facilities and improving
liquidity. We generated free cash flow of $22.7 million during the quarter
(excluding the effects of our accounts receivable securitization program), all
of which was utilized to pay down borrowings on our credit facilities."
Van Oss, continued, "We have made significant improvements in our
capital structure during the last twelve months, including a $51 million fixed
rate, ten-year term real estate financing that was completed during the 2003
first quarter. The proceeds from this financing were used to reduce revolving
borrowings under our asset-based credit facilities. As of March 31, 2003, we had
untapped borrowing capacity in excess of $185 million, compared to approximately
$47 million as of March 31, 2002. Our current capital structure and funding
availability places us in a position to expand our core business with a growing
economy, while at the same time providing ample resources to operate in a weaker
economic environment, if necessary."
Chairman and CEO, Roy W. Haley, commented, "While we continue to see
weakness in the industrial and commercial construction markets, steady progress
is being made in a variety of industrial segments, primarily as a result of new
or expanded integrated supply and national accounts agreements. We are
responding to continued economic pressures with a variety of marketing and sales
initiatives, including a new, national product sales organization, new products
and supplier line additions, and increased concentration on sales initiatives in
larger metropolitan markets. WESCO continues to emphasize quality and
productivity initiatives, and during the first quarter, we began to pilot
process improvement programs utilizing techniques drawn from leading
practitioners of LEAN Manufacturing business systems. It is expected that these
programs will be launched in approximately 1/3 of our branch operations in 2003.
Benefits from these programs include an increase in personnel productivity, a
shift in administrative and support activity to increased sales efforts, and
further improvements in working capital management. As a result of our marketing
and sales programs and emphasis on quality and productivity, we remain
optimistic about the Company's prospects, even with persistent economic
weakness."
# # #
Teleconference
WESCO will conduct a teleconference to discuss the first quarter earnings as
described in this News Release on April 23, 2003, at 11:00 a.m. E.D.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 5,500 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
(dollar amounts in millions, except per share amounts)
(Unaudited)
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, 2003 MARCH 31, 2002
------------------- ------------------
Net sales $790.8 $808.9
Cost of sales 645.4 663.3
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Gross profit 145.4 18.4% 145.6 18.0%
Selling, general & admin. expenses 121.8 15.4% 122.1 15.1%
Depreciation & amortization 5.1 5.1
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Income from operations 18.5 2.3% 18.4 2.3%
Interest expense, net 10.4 10.9
Loss on debt extinguishment - 1.1
Other expense 1.4 1.4
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Income before income taxes 6.7 0.8% 5.0 0.6%
Provision for income taxes 1.9 1.2
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Net income $ 4.8 0.6% $ 3.8 0.5%
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Net income per diluted share $ 0.10 $ 0.08
Weighted average shares outstanding 46.4 46.7
WESCO INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURERS
(dollar amounts in millions)
(Unaudited)
THREE MONTHS ENDED
MARCH 31, 2003
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Cash flow used by operations ($16.2)
Less: Decrease in A/R Securitization 41.0
Less: Capital expenditures (2.1)
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Free cash flow (excluding effects of
A/R Securitization Program) (See Note) $22.7
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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.
WESCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollar amounts in millions)
(Unaudited)
ASSETS MARCH 31, 2003 DECEMBER 31, 2002
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CURRENT ASSETS
Cash and cash equivalents $ 31.4 $ 22.6
Trade accounts receivable (See Note) 243.1 182.2
Inventories, net 336.5 338.8
Other current assets 25.9 33.4
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Total current assets 636.9 577.0
Other assets 438.2 438.1
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Total assets $1,075.1 $1,015.1
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 367.0 $ 346.5
Other current liabilities 53.9 51.9
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Total current liabilities 420.9 398.4
Long-term debt (See Note) 442.4 412.2
Other noncurrent liabilities 34.8 35.2
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Total liabilities 898.1 845.8
STOCKHOLDERS' EQUITY
Total stockholders' equity 177.0 169.3
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Total liabilities and stockholders' equity $1,075.1 $1,015.1
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Note: Trade accounts receivable and long-term debt have each been reduced by
$252 million and $293 million as of March 31, 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
increased a net $3.0 million during the quarter ended March 31, 2003 as a result
of the increase 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.