WESCO International, Inc. Reports Fourth Quarter and Full-Year 2011 Results

WESCOq2PR250

Fourth quarter results compared to the prior year:

- Earnings per diluted share of $1.12 increased 56%
Operating margins improved to 5.8%, up 130 basis points
Consolidated sales of $1.59 billion increased 19%

Full year results compared to the prior year:

- Earnings per diluted share of $3.96 increased 58%
Operating margins improved to 5.4%, up 120 basis points
Consolidated sales of $6.1 billion increased 21%

PITTSBURGH, January 26, 2012/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 fourth quarter and full-year financial results.

The following results are for the quarter-ended December 31, 2011 compared to the quarter-ended December 31, 2010:

  • Consolidated net sales were $1,589.5 million for the fourth quarter of 2011, compared to $1,331.6 million for the fourth quarter of 2010, an increase of 19.4%. Acquisitions positively impacted consolidated sales by 6.2% while one less workday negatively impacted sales by 1.6%, resulting in a normalized organic growth rate of approximately 14.8%. There was no foreign exchange impact in the fourth quarter. Sequentially, fourth quarter 2011 sales increased 0.6%.
  • Gross profit of $328.0 million, or 20.6% of sales, for the fourth quarter of 2011 was up 30 basis points, compared to $270.3 million, or 20.3% of sales, for the fourth quarter of 2010.
  • Selling, general & administrative (SG&A) expenses of $227.8 million, or 14.3% of sales, for the fourth quarter of 2011 improved 100 basis points, compared to $204.1 million, or 15.3% of sales, for the fourth quarter of 2010.
  • Operating profit was $91.5 million for the current quarter, up 52.4% from $60.0 million for the comparable 2010 quarter. Operating profit as a percentage of sales was 5.8% in 2011, up 130 basis points from 4.5% in 2010.
  • Total interest expense for the fourth quarter of 2011 was $12.0 million, compared to $15.9 million for the fourth quarter of 2010. During the fourth quarter of 2010, WESCO resolved an outstanding tax matter dating back to 1998, which resulted in increased interest expense of $4.2 million. Non-cash interest expense, which includes convertible debt interest, interest related to uncertain tax positions, and the amortization of deferred financing fees, for the fourth quarter of 2011 and 2010 was $1.6 million and $5.6 million, respectively.
  • The effective tax rate for the current quarter was 31.1%, compared to 21.1% for the prior year quarter. The resolution of the previously mentioned tax matter, net of other international tax items, decreased fourth quarter 2010 tax expense by $2.9 million.
  • Net income of $54.8 million for the current quarter was up 57.5% from $34.8 million for the prior year quarter. The resolution of the previously mentioned tax matter, net of other international tax items, decreased fourth quarter 2010 net income by $1.3 million.
  • Earnings per diluted share for the fourth quarter of 2011 were $1.12 per share, based on 49.0 million diluted shares, and was up 55.6% from $0.72 per share in the fourth quarter of 2010, based on 48.3 million diluted shares. The resolution of the previously mentioned tax matter, net of other international tax items, negatively impacted fourth quarter 2010 earnings per diluted share by $0.03.
  • Free cash flow for the fourth quarter of 2011 was $86.4 million, compared to $46.8 million for the fourth quarter of 2010.

 

Mr. John J. Engel, WESCO’s Chairman and Chief Executive Officer, stated, “Our fourth quarter results were strong and close out an excellent year. We have now posted six consecutive quarters of double-digit organic sales growth and five consecutive quarters of EPS growth of at least 40% versus prior year. On a full year basis, operating margins were 5.4%, up 120 basis points versus prior year, and were driven by a balanced contribution of gross margin expansion and operating cost leverage. In addition, we announced that we completed the acquisition of RS Electronics earlier this month, marking our fifth acquisition in the last 18 months. These acquisitions total over $460 million in annual revenues and have expanded our portfolio of value creation solutions and strengthened our business. Our investments are paying off, effective execution of our growth strategy continues, and we are very pleased with the positive momentum and improved profitability of our business in 2011.”

The following results are for the full-year period ended December 31, 2011 compared to the full-year period ended December 31, 2010:

  • Consolidated net sales were $6,125.7 million, compared to $5,063.9 million, an increase of 21.0%. Acquisitions and foreign exchange positively impacted consolidated sales by 6.8% and 0.8%, respectively, while one less workday negatively impacted sales by 0.4%, resulting in a normalized organic sales growth of approximately 13.8%.
  • Gross profit of $1,236.6 million, or 20.2% of sales, was up 50 basis points, compared to $998.5 million, or 19.7% of sales.
  • SG&A expenses of $872.0 million, or 14.2% of sales, improved 90 basis points, compared to $763.6 million, or 15.1% of sales.
  • Operating profit was $333.0 million, up 57.9% from $211.0 million for the comparable 2010 period. Operating profit as a percentage of sales was 5.4% in 2011, up 120 basis points from 4.2% in 2010.
  • Total interest expense was $53.6 million, compared to $57.6 million. Non-cash interest expense, which includes convertible debt interest, interest related to uncertain tax positions, and the amortization of deferred financing fees, for 2011 and 2010 was $8.8 million and $11.8 million, respectively.
  • The effective full-year tax rate was 29.8% for 2011 compared to 26.7% for 2010. After adjusting for the net benefit of the previously mentioned tax matter, the full year 2010 effective tax rate would have been 27.9%.
  • Net income of $196.3 million for the full-year was up 69.9% from $115.5 million for the prior year.
  • Earnings per diluted share for 2011 were up 58.4% to $3.96 per share, based on 49.6 million diluted shares, versus $2.50 per share for 2010, based on 46.1 million diluted shares. The resolution of the previously mentioned tax matter, net of other international tax items, negatively impacted 2010 earnings per diluted share by $0.03.
  • Full-year free cash flow was $134.2 million, compared to $112.2 million in the prior year.

 

Mr. Engel continued, “We are focused on building on the positive momentum across WESCO as we continue to execute our growth strategy in 2012. The strength, diversity, and operating leverage of our business position us well in our global markets. I am very proud of the extra effort and results delivered by all WESCO associates in 2011, and I am confident in our team’s ability to produce excellent results again in 2012.”

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