WESCO International, Inc. Reports Third Quarter 2011 Results
Third quarter results compared to the prior year:
Diluted EPS of $1.11 per share, up 50% from $0.74 per share
Net Income of $53.9 million, up 60% from $33.7 million
Operating margin of 5.8%, up 120 basis points from 4.6%
Consolidated sales of $1.58 billion increased 19% from $1.32 billion
PITTSBURGH, October 20, 2011/PRNewswire/ — WESCO International, Inc. (NYSE: WCC), 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 2011 third quarter financial results.
The following results are for the three months ended September 30, 2011 compared to the three months ended September 30, 2010:
· Consolidated net sales were $1,580.4 million for the third quarter of 2011, compared to $1,324.6 million for the third quarter of 2010. The 19.3% increase in sales includes positive impacts of approximately 6.9% from acquisitions and 1.1% from foreign exchange rates, resulting in organic sales growth of approximately 11.3%. Sequential sales increased 3.7%, and includes a positive impact of approximately 0.1% from acquisitions and a negative impact of approximately 0.1% from foreign exchange.
· Gross profit of $315.7 million, or 20.0% of sales, for the third quarter of 2011 was up 50 basis points, compared to $257.8 million, or 19.5% of sales, for the third quarter of 2010.
· Selling, general & administrative (SG&A) expenses of $216.2 million, or 13.7% of sales, for the third quarter of 2011 improved 70 basis points, compared to $190.6 million, or 14.4% of sales, for the third quarter of 2010.
· Operating profit was $91.8 million for the current quarter, up 49.8% from $61.2 million for the comparable 2010 quarter. Operating profit as a percentage of sales was 5.8% in 2011, up 120 basis points from 4.6% in 2010.
· Total interest expense for the third quarter of 2011 was $15.1 million, compared to $13.7 million for the third quarter of 2010. Interest expense for the current quarter included the write-off of $1.8 million of deferred financing fees as a result of a new revolving credit agreement. 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 2011 and 2010 was $3.5 million and $2.1 million, respectively.
· The effective tax rate for the current quarter was 29.7%, compared to 29.1% for the prior year quarter.
· Net income of $53.9 million for the current quarter was up 60.1% from $33.7 million for the prior year quarter.
· Earnings per diluted share for the third quarter of 2011 was $1.11 per share, based on 48.5 million diluted shares, and was up 50.0% from $0.74 per share in the third quarter of 2010, based on 45.5 million diluted shares. Earnings per diluted share for the third quarter, adjusted for the $1.8 million write-off of deferred financing fees as a result of a new revolving credit agreement, would have been $1.13 per diluted share. The acquisitions of TVC Communications in December 2010 and RECO in March 2011 had a favorable impact of approximately $0.10 per diluted share on third quarter results.
· Free cash flow for the third quarter of 2011 was $41.2 million, compared to $2.6 million for the third quarter of 2010.
Mr. John J. Engel, WESCO’s Chairman and Chief Executive Officer, stated, “Our third quarter results reflect our effective execution and consistent ability to deliver strong earnings growth in a challenging economic environment. We have now posted five consecutive quarters of double digit organic sales and backlog growth. Operating margins improved 120 basis points to 5.8% in the third quarter, driven by a balanced contribution of gross margin expansion and operating cost leverage. We also completed the acquisition of Brews Supply on October 3, our fourth acquisition since June of last year. These acquisitions are exceeding our expectations and have expanded our portfolio of value creation solutions and strengthened our business. Our investments are paying off with our growth strategy driving improvements in our market position and increased profitability of our business.”