WESCO International, Inc. Reports Second Quarter 2010 Results

PITTSBURGH, July 22 /PRNewswire-FirstCall/ -- WESCO International, Inc. (NYSE: WCC),  a leading provider of electrical and industrial MRO products, construction materials, and advanced integrated supply procurement outsourcing services, today announced its second quarter 2010 financial results.

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The following are results for the three months ended June 30, 2010 compared to the three months ended June 30, 2009:

• Consolidated net sales were $1,259.1 million for the second quarter of 2010, compared to $1,159.2 million for the second quarter of 2009, an increase of 8.6%.  Second quarter 2010 consolidated net sales included a 1.9% positive impact from foreign exchange rates.  Second quarter sales increased 9.6% compared to the first quarter 2010 and included a 0.4% positive impact from foreign exchange.
• Gross profit was $242.9 million, or 19.3% of sales, for the second quarter of 2010, compared to $223.9 million, or 19.3% of sales, for 2009.  The relative sequential strength of construction end market sales had a negative mix impact on second quarter gross margins when compared to the first quarter's result of 19.8%.  
• Sales, general & administrative (SG&A) expenses were $186.0 million, or 14.8% of sales for the current quarter, compared to $169.9 million, or 14.7% of sales for 2009. WESCO's second quarter 2009 SG&A expenses included a net favorable impact of approximately $10 million in temporary cost and discretionary benefit reductions.
• Operating profit was $51.3 million, or 4.1% of sales, for the current quarter, compared to $47.6 million, or 4.1% of sales for the comparable 2009 quarter.  After adjusting for the 2009 impact of the temporary cost and discretionary benefit reductions, operating margins improved by approximately 80 basis points.  
• Total interest expense for the second quarter of 2010 was $14.4 million compared to $13.8 million for the second quarter 2009.  Interest expense in the current quarter was comprised of $13.1 million of cash interest expense and $1.3 million of non-cash interest expense.  Interest expense in the prior year quarter was comprised of $10.0 million of cash interest and $3.8 million of non-cash interest.  
• Effective tax rate for the current quarter was 28.2% compared to 24.2% for the prior year quarter.
• Net income for the current quarter was $27.8 million compared to $26.4 million for the prior year quarter and $19.2 million for the first quarter 2010.
• Diluted earnings per share for the second quarter of 2010 was $0.60 per share, based on 46.0 million shares outstanding versus $0.62 per share in the second quarter of 2009, based on 42.7 million shares outstanding, and first quarter's $0.44 per share based on 43.7 million shares outstanding.
• Free cash flow for the second quarter was a use of $3.7 million to support sales growth in the second quarter.

John J. Engel, WESCO's Chief Executive Officer, stated, "We are pleased with our sales and operating margin results and the improving momentum across our business.  All four of our major end markets and all six of our major product categories experienced positive sequential sales growth during the quarter. The last time we saw all our end markets and product categories grow sequentially was the second quarter of 2008, and the third quarter of 2004, respectively.  The recent acquisition of Potelcom in the quarter is consistent with our strategy of increasing sales in key industry segments and geographic regions.  We see excellent opportunities to strengthen our portfolio, invest in our growth initiatives, and improve our market position as we expand our business through the recovery phase of this economic cycle."  

The following results are for the six months ended June 30, 2010 compared to the six months ended June 30, 2009:

• Consolidated net sales were $2,407.7 million for the first six months of 2010 compared to $2,338.8 million for the first six months of 2009, an increase of 2.9%.  Consolidated net sales included a 1.9% positive impact from foreign exchange rates.
• Gross profit was $470.3 million, or 19.5% of sales, for the first six months of 2010, compared to $462.0 million, or 19.8% of sales, for the first six months of 2009.
• SG&A expenses were $369.0 million, or 15.3% of sales, for the first six months of 2010, compared to $357.3 million, or 15.3% of sales for the first six months of 2009.  
• Operating profit was $89.6 million, or 3.7% of sales, for the six months ended June 30, 2010, compared to $91.2 million, or 3.9% of sales for the six months ended June 30, 2009.
• Total interest expense for the six months ended June 30, 2010 was $27.9 million compared to $26.4 million for the six months ended June 30, 2009.  Interest expense in the first half of 2010 was comprised of $25.3 million cash interest expense and $2.6 million non-cash interest expense.  Interest expense in the first half of 2009 was comprised of $18.7 million cash interest expense and $7.7 million non-cash interest expense.  
• Effective six month tax rate was 28.8% for 2010 compared to 26.4% for 2009.  
• Net income for the first six months of 2010 was $47.0 million compared to $49.7 million for the first six months of 2009.
• Diluted earnings per share for the first six months of 2010 was $1.04 per share, based on 45.0 million shares outstanding versus $1.17 per share for the first six months of 2009, based on 42.6 million shares outstanding.
• Free cash flow for the first six months of 2010 was $62.8 million, compared to $198.5 million in the comparable prior year period.

Mr. Engel continued, "The market remains highly competitive and our customers' needs for supply chain efficiency and effectiveness are greater than ever.  I am very proud of the 'extra effort' of our WESCO employees and their commitment to understanding our customers' needs.  We are responding with solutions which utilize our entire portfolio of products and services while extending beyond the traditional distributor relationship."

Teleconference

WESCO will conduct a teleconference to discuss the second quarter earnings as described in this News Release on Thursday, July 22, 2010, at 11:00 a.m. E.D.T.  The conference call will be broadcast live over the Internet and can be accessed from the Company's website at http://www.wesco.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.  2009 annual sales were approximately $4.6 billion.  The Company employs approximately 6,100 people, maintains relationships with over 17,000 suppliers, and serves over 100,000 customers worldwide.  Major markets include commercial and industrial firms, contractors, government agencies, educational institutions, telecommunications businesses and utilities.  WESCO operates seven fully automated distribution centers and approximately 380 full-service branches in North America and select 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, 2009, as well as the Company's other reports filed with the Securities and Exchange Commission.

http://www.wesco.com

SOURCE WESCO International, Inc.