Mr. John J. Engel, WESCO’s Chairman, President and CEO, commented, “Our first quarter results were in line with our expectations and the outlook we provided in January. Our sales results reflect improving momentum in our business, driven by a return to growth in Industrial and in Canada. Operating margin was also in line with our expectations, as we continue to execute our cost management and supply chain initiatives in a still-challenging and demand-constrained pricing environment. Net income grew in the quarter, and we once again delivered strong free cash flow, enabling us to reduce our debt and further improve our financial leverage ratio. Based upon our first quarter results, we reaffirm our full-year expectations of sales in the range of flat to up 4 percent, EPS of $3.60 to $4.00 per diluted share, and free cash flow generation of at least 90 percent of net income.”
The following are results for the three months ended March 31, 2017 compared to the three months ended March 31, 2016:
- Net sales were $1.77 billion for the first quarter of 2017, compared to $1.78 billion for the first quarter of 2016, a decrease of 0.2 percent. Acquisitions and foreign exchange rates had positive impacts on net sales of 0.9 percent and 0.6 percent, respectively, resulting in a 1.7 percent decrease in organic sales.
- Cost of goods sold for both the first quarter of 2017 and 2016 was $1.42 billion. Gross profit was $350.0 million and $355.2 million for the first quarter of 2017 and 2016, respectively. As a percentage of net sales, gross profit was 19.7 percent and 20.0 percent for the first quarter of 2017 and 2016, respectively.
- Operating profit was $67.1 million for the current quarter, compared to $69.5 million for the first quarter of 2016. Operating profit as a percentage of net sales was 3.8 percent for the first quarter of 2017, compared to 3.9 percent for the first quarter of 2016.
- Net income attributable to WESCO International, Inc. was $37.7 million and $36.0 million for the first quarter of 2017 and 2016, respectively.
- Earnings per diluted share was $0.76 for the first quarter of 2017, based on 49.4 million diluted shares, compared to earnings per diluted share of $0.77 for the first quarter of 2016, based on 46.8 million diluted shares.
- Operating cash flow for the first quarter of 2017 was $47.6 million, compared to $78.6 million for the first quarter of 2016. Free cash flow for the first quarter of 2017 was $43.1 million, or 114 percent of net income, compared to $75.0 million, or 217 percent of net income for the first quarter of 2016.
Mr. Engel continued, “We remain focused on executing our strategies to deliver above-market sales growth, improve profitability, generate strong cash flow, and increase shareholder value. The free cash flow generation capability of our business supports continued investment in our One WESCO growth initiatives, including acquisitions, while providing us with the ability to return capital to our shareholders. Our efforts remain centered on providing excellent customer service and delivering value to our customers’ operations and supply chains by providing comprehensive product and service solutions, which meet their capital project, MRO, and OEM needs.”
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