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Wesco International Annual Report, Year Ended Dec 31, 2009

Filing Date
Filed February 26, 2010
Period End
December 31, 2009
Security
WCC
One revenue dollarkept$0.02
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 26, 2010. Cited figures are marked; the original filing is the authoritative source.

WESCO International, Inc. reported net sales of $4,623,954 thousanda ($4.62 billion) for fiscal 2009, down 24.3% from $6,110.8 million in 2008.

Income from operations fell 47.9% to $180.0 millionb, and net income decreased 48.5% to $105.1 million, or $2.46 per diluted share versus $4.71 in 2008. Cost of goods sold rose to 80.5% of net sales from 80.3%, while SG&A fell 16.8% to $693.9 million, though SG&A as a share of sales rose to 15.0%. Management attributed the sales decline to weak end-market conditions, lower commodity prices and unfavorable foreign currency rates.

The company describes itself as a leading North American distributor of electrical and industrial MRO and OEM products, with about 380 branches and seven distribution centers, over 100,000 customers and approximately 6,100 employees at year-end 2009. Balance sheet and liquidity improved during the year. Total debt was $691.8 millionc at December 31, 2009, down from $1,100.3 million, after an August 2009 exchange offer that issued $345.0 million of 6.0% Convertible Senior Debentures due 2029 in exchange for approximately $299.7 million of 2026 Debentures and $57.7 million of 2025 Debentures.

Operating cash flow was $291.7 million, cash rose to $112.3 milliond, and stockholders' equity increased to $996.3 million. Total available borrowing capacity was $350.1 million, and the company stated it was in compliance with its debt covenants. Management expects 2010 demand to fall approximately 3% to 5% from 2009 levels, with continued contraction in non-residential construction and utility markets.

Key risks include the $874.5 million of consolidated indebtedness and the expected repayment of about $146.7 million over the next three years, with holders of the 2025 Debentures able to require repurchase in October 2010. The company also disclosed a co-defendant lawsuit in Indiana seeking $52 million in damages, for which no liability has been recorded.

02—Key points

Key Highlights

  1. Net sales fell 24.3% to $4,623,954 thousand in 2009 from $6,110,840 thousand in 2008, driven by weak market conditions, lower commodity prices and unfavorable foreign currency rates.
  2. Income from operations decreased 47.9% to $180.0 million; net income declined 48.5% to $105.1 million, and diluted EPS was $2.46 versus $4.71 in 2008.
  3. SG&A expenses decreased 16.8% to $693.9 million through cost reduction actions, but rose to 15.0% of net sales from 13.7%.
  4. Total debt declined to $691.8 million from $1,100.3 million, following the August 2009 convertible debt exchange that issued $345.0 million of 6.0% Convertible Senior Debentures due 2029.
  5. Operating cash flow was $291.7 million, and cash and cash equivalents increased to $112.3 million at December 31, 2009.
  6. Total available borrowing capacity was $350.1 million at year-end, and the company reported compliance with all debt covenants.
  7. Management expects 2010 demand in its markets to decline about 3% to 5% from 2009 levels, with continued contraction in non-residential construction and utility markets.

03—One dollar

Follow one dollar

Of each $1.00 of revenue in FY2009, Wesco International kept $0.02.

  1. Revenue$4.62B100.0%
  2. Cost of revenue−$3.72B80.5%
  3. Gross profit$899.9M19.5%
  4. Operating costs−$719.9M15.6%
  5. Operating income$180.0M3.9%
  6. Interest, other & tax−$74.9M1.6%
  7. Net income$105.1M2.3%
Computed from 10-KFY2009filed February 26, 2010Computed from this filing’s revenue, gross profit, operating income and net income · right columngrey figure: share of revenue

Where FY2009 revenue went

$4.62B
  • Cost of revenue: $3.72B, 81% of revenue
  • SG&A: $693.9M, 15% of revenue
  • Net income: $105.1M, 2.3% of revenue
  • Other operating costs: $26.0M, 0.6% of revenue
  • Interest, other & tax: $74.9M, 1.6% of revenue

Kept 2.3% as net incomeNet income $105.1M · 2.3%

Full revenue history →

04—Financials

Financial Highlights

Figures from 10-KFY2009filed February 26, 2010
Revenue$4.62B19.5% Gross MarginNet Income$105.09M2.3% Net MarginEPS (Diluted)$2.46Total Assets$2.49BCash & Equivalents$112.33MFree Cash Flow$291.66M

Financial Statements

FY2009 against FY2008

Line itemFY2009FY2008Change
Revenue$4.62B$6.11B−24.3%
Cost of Revenue$3.72B$4.90B−24.1%
Gross Profit$899.89M$1.21B−25.4%
SG&A Expenses$693.90M$834.28M−16.8%
Operating Income$179.95M$345.67M−47.9%
Interest Expense$53.75M$64.15M−16.2%
Net Income$105.09M$204.13M−48.5%
EPS (Basic)$2.49$4.82−48.3%
EPS (Diluted)$2.46$4.71−47.8%
Shares Outstanding (Basic)42.28M——
Shares Outstanding (Diluted)42.67M——

05—Questions

Frequently Asked Questions

  1. How much did WESCO's sales and profits decline in 2009?

    Net sales fell 24.3% to $4,623,954 thousand from $6,110,840 thousand. Income from operations decreased 47.9% to $180.0 million, and net income fell 48.5% to $105.1 million, or $2.46 per diluted share compared with $4.71 in 2008.

  2. What did the convertible debt exchange in August 2009 accomplish?

    WESCO issued $345.0 million of 6.0% Convertible Senior Debentures due 2029 in exchange for approximately $299.7 million of its 2026 Debentures and $57.7 million of its 2025 Debentures. The company recorded a gain of $6.0 million on the exchange, and total debt fell to $691.8 million at year-end from $1,100.3 million.

  3. How much debt does WESCO face in the near term?

    Consolidated indebtedness was $874.5 million principal at December 31, 2009. The company expects to repay approximately $146.7 million over the next three years, and holders of the 2025 Debentures may require repurchase in October 2010, with the 2026 Debentures repurchase expected in November 2011.

  4. What is management's outlook for 2010?

    Management anticipates that demand in its markets will drop approximately 3% to 5% from 2009 levels, with continued contraction in non-residential construction and utility markets and gradual recovery in industrial, international and government markets. It expects moderate gross margin improvement and higher operating expenses than in the fourth quarter of 2009.

  5. Are there material legal proceedings against WESCO?

    WESCO is a co-defendant in an Indiana state court lawsuit in which a customer alleges the company sold defective products and seeks $52 million in damages. The company has denied liability and intends to defend itself vigorously, and no liability has been recorded as of December 31, 2009.

06—Continue

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