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Wesco International Annual Report, Year Ended Dec 31, 2004

Filing Date
Filed March 7, 2005
Period End
December 31, 2004
Security
WCC
In the record · 2016–202610-K1210-Q338-K143

WCC filed 12 annual reports (10-K), 33 quarterly reports (10-Q) and 143 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Mar ’18Mar ’18
  2. Deal closed8-K · Jun ’20Jun ’20
  3. Material agreement8-K · Mar ’22Mar ’22
  4. Leadership change8-K · Dec ’25Dec ’25

01—Abstract

Summary

Summary of the 10-K filed March 7, 2005. Cited figures are marked; the original filing is the authoritative source.

WESCO International, Inc. reported 2004 net sales of $3,741.3 milliona, up 13.8% from $3,286.8 million in 2003, with net income of $64.9 million and diluted earnings per share of $1.47 versus $0.65 in 2003.

Gross profit rose to $712.1 millionb, with the gross margin percentage at 19.0% compared with 18.6%, and income from operations increased to $149.4 million from $86.0 million. The company describes itself as the second largest distributor in the estimated $83 billion U.S. electrical distribution industry and the largest provider of integrated supply services for MRO goods in the United States, with about 350 branches and five distribution centers. The balance sheet strengthened as stockholders' equity rose to $353.6 million from $167.7 million, driven by a December 2004 public offering of 4.0 million shares (net proceeds of approximately $99.6 million, designated to repurchase senior subordinated notes).

Consolidated indebtedness was $417.6 millionc at year-end, and on March 1, 2005 the company redeemed $123.7 million of its 9 1/8% senior subordinated notes at a net loss of $6.3 million. The filing notes that the company is significantly leveraged, that a $190.0 million portion of its Receivables Facility requires annual renewal (expiring August 30, 2005), and that the Bruckner earnout was converted into a $50 million note.

The filing also highlights risks including dependence on a few suppliers (the ten largest accounted for approximately 35%d of purchases, with Eaton Corporation about 12%), and a 28% stake held by Cypress Group LLC. The company has not paid dividends and does not presently plan to, and it was in compliance with all covenants at December 31, 2004.

02—Key points

Key Highlights

  1. Net sales rose 13.8% to $3,741.3 million in 2004, with stronger demand and market share gains accounting for about 11 percentage points of the increase.
  2. Diluted EPS was $1.47 in 2004, versus $0.65 in 2003; net income was $64.9 million versus $30.0 million.
  3. Gross margin improved to 19.0% from 18.6%, and SG&A fell to 14.6% of revenue from 15.3%.
  4. Stockholders' equity more than doubled to $353.6 million, supported by the December 2004 offering of 4.0 million shares.
  5. Total indebtedness was $417.6 million at year-end, and $123.7 million of 9 1/8% senior subordinated notes were redeemed on March 1, 2005.
  6. Concentration risks include the ten largest suppliers at about 35% of purchases and Cypress Group LLC holding approximately 28% of common stock.
  7. The company does not plan to pay dividends in the foreseeable future and expects to retain earnings for growth or debt reduction.

03—Questions

Frequently Asked Questions

  1. How did WESCO's profitability change in 2004?

    Income from operations increased to $149.4 million from $86.0 million, and net income rose to $64.9 million from $30.0 million. The filing attributes the improvement to higher gross profit and lower SG&A as a percentage of sales, along with lower depreciation.

  2. How much debt does WESCO carry and what did it do to reduce it?

    Consolidated indebtedness was $417.6 million at December 31, 2004, including $323.5 million of 9 1/8% senior subordinated notes due 2008. The company used proceeds from its December 2004 stock offering to repurchase notes and redeemed $123.7 million of notes on March 1, 2005, at a net loss of $6.3 million.

  3. What are the main risks to WESCO's business according to the filing?

    The filing cites industry downturns tied to construction and industrial activity, competition that could pressure prices, reliance on key suppliers (the ten largest accounted for about 35% of purchases), information system disruptions, and high leverage with restrictive debt covenants. It also notes the Receivables Facility's $190.0 million portion expires August 30, 2005 unless renewed.

  4. Does WESCO pay dividends, and who are its largest shareholders?

    WESCO has not paid dividends and does not presently plan to in the foreseeable future, and its revolving credit facility and indenture restrict dividend payments. Cypress Group LLC and its affiliates hold approximately 28% of the outstanding common stock and have the right to nominate one board candidate, with two of nine directors currently representing Cypress.

04—Continue

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