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Wesco International Annual Report, Year Ended Dec 31, 2007

Filing Date
Filed February 29, 2008
Period End
December 31, 2007
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 February 29, 2008. Cited figures are marked; the original filing is the authoritative source.

WESCO International, Inc. (NYSE: WCC) reported net sales of $6.0 billiona for 2007, up 12.8% from $5.32 billion in 2006, and net income of $240.6 million, up 10.7%.

Diluted earnings per share rose 20.5% to $4.99b. Income from operations increased 8.0% to $394.2 million, which management attributed mainly to acquisitions and cost containment. The company describes itself as a leading North American provider of electrical construction products and MRO supplies, with more than 400 branches and seven distribution centers, about 110,000 customers, and over 1,000,000 products from more than 24,000 suppliers.

The balance sheet carries significant leverage. As of December 31, 2007, consolidated indebtedness was $1.3 billionc against stockholders' equity of $608.5 million, down from $763.2 million a year earlier, mainly because of $430.8 million of stock repurchases. Of the debt, $480.0 million was drawn under the accounts receivable securitization facility and $187.3 million under the revolving credit facility, with about $146.2 million of revolver availability at year end.

Interest expense rose to $63.2 milliond from $24.6 million, largely because the receivables facility was reclassified as a secured borrowing in December 2006. Management expects activity in its major end markets to be somewhat softer in 2008 than in 2007, while still seeing opportunities in industrial and commercial construction.

The company disclosed a pending $52 million product-defect lawsuit in Indiana, which it says it will vigorously defend. Subsequent to year end, WESCO formed a joint venture with Deutsch Engineered Connecting Devices for its LADD operations, receiving about $75 million for a 60% stake, and it has a $400 million share repurchase program authorized through September 30, 2009.

02—Key points

Key Highlights

  1. Net sales rose 12.8% to $6,003.5 million in 2007, driven mainly by acquisitions and sales productivity initiatives; acquisition sales contributed $599.1 million of the increase.
  2. Net income increased 10.7% to $240.6 million, and diluted EPS rose 20.5% to $4.99 from $4.14.
  3. Income from operations grew 8.0% to $394.2 million; SG&A was 13.2% of net sales versus 13.0% in 2006.
  4. Total indebtedness was $1.3 billion at year end, with stockholders' equity falling to $608.5 million from $763.2 million after $430.8 million of share repurchases.
  5. Interest expense more than doubled to $63.2 million, reflecting the December 2006 amendment that classified receivables facility costs as interest expense.
  6. Management expects softer activity in major end markets in 2008, though it sees opportunities in industrial and commercial construction.
  7. A customer lawsuit in Indiana seeks $52 million in damages over allegedly defective products; the company denies liability.

03—Questions

Frequently Asked Questions

  1. How did WESCO perform financially in 2007?

    Net sales increased 12.8% to $6.0 billion, operating income rose 8.0% to $394.2 million, and net income grew 10.7% to $240.6 million. Diluted earnings per share were $4.99, compared with $4.14 in 2006.

  2. How leveraged is WESCO's balance sheet?

    At December 31, 2007, consolidated indebtedness was $1.3 billion, including $480.0 million under the receivables facility and $187.3 million under the revolving credit facility, against stockholders' equity of $608.5 million.

  3. Does WESCO pay dividends?

    No. The company has not paid dividends on its common stock and does not presently plan to. Earnings are expected to be retained for business growth, share repurchases or debt reduction, and the revolving credit facility and 2017 Notes indenture restrict dividends.

  4. What are the main risks flagged for investors?

    Key risks include debt service obligations and covenant restrictions, the potential need to repurchase convertible debentures and 2017 Notes upon a change of control, the $480.0 million receivables facility's renewal in May 2010, dependence on key suppliers (the top ten accounted for about 28% of purchases), and exposure to downturns in construction and industrial activity.

  5. What share repurchase activity did WESCO undertake?

    WESCO repurchased approximately 7.1 million shares for $430.6 million during 2007 under its $400 million program, which was completed in September 2007. A new $400 million program was authorized, expiring September 30, 2009.

04—Continue

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