WESCO International, Inc. Reports Record Sales and $1.53 of Earnings per Share for...

WESCO International, Inc. Reports Record Sales and $1.53 of Earnings per Share
for the Third Quarter Ended September 2008
- Liquidity improves to $350 million

PITTSBURGH, Oct. 23 /PRNewswire-FirstCall/ -- WESCO International, Inc.
(NYSE: WCC), a leading provider of electrical MRO products, construction
materials and advanced integrated supply procurement outsourcing services,
announced today its third quarter 2008 financial results.
(Logo: http://www.newscom.com/cgi-bin/prnh/20030508/WCCLOGO )
Consolidated net sales for the third quarter of 2008 were $1,628 million
compared to $1,546 million in 2007, an increase of 5.3%. Gross margin for the
current quarter was 19.4% compared to 20.3% in 2007. Operating income for the
current quarter totaled $99 million, or 6.1% of sales, versus $109 million in
last year's third quarter. The current quarter operating income included a
foreign exchange loss of $1.9 million versus a foreign exchange gain of $4.6
million in last year's comparable quarter. Depreciation and amortization
included in operating income was $7 million for 2008 compared to $9 million in
2007. Equity income from the retained 40% interest in the previously announced
divestiture was $2.2 million. Net income for this quarter was $66 million
versus $72 million in the comparable 2007 quarter. Last year's net income
benefited from $9.1 million of non-recurring tax related items resulting in a
21.8% effective tax rate. The current quarter benefited from $3.4 million of
tax items which resulted in a 25.7% tax rate for the quarter. Diluted earnings
per share for the current quarter were $1.53 versus $1.54 per share in 2007.
Mr. Stephen A. Van Oss, WESCO's Chief Financial and Administrative Officer
stated, "We are pleased with our third quarter performance, particularly in
light of the current economic conditions. Consolidated net sales grew over 5%,
driven primarily by strength in our commercial construction and utility end
markets. Investments in the expansion of our sales force continues with a net
add of sales personnel during the quarter. Productivity and cost control
measures were effective, and we maintained our SG&A expense ratio after
adjusting for the impact of third quarter foreign exchange gains and losses in
2007 and 2008. Additionally, ongoing LEAN initiatives allowed us to reduce our
total headcount each of the last two quarters. Gross margins, while down from
last year, were in line with this year's second quarter as we are working a
high level of supplier price increases through the channel. The recent drop
off in commodity prices has resulted in a moderation of price increases and we
are confident we will expand margins going forward."
Mr. Van Oss continued, "With regard to the credit market situation, we
have ready access to our low-cost asset-backed credit facilities. During the
quarter our liquidity, defined as available borrowing capacity plus invested
cash, improved by 13% to approximately $350 million. Financial leverage
declined and is well within our targeted range. Our business model is
extremely durable, generates significant free cash flow in periods of growth
and is considered counter-cyclical in that it can generate additional free
cash flow in periods of economic contraction. Free cash flow for the quarter
was $76 million and totals $244 million over the last four quarters. Our free
cash flow was directed primarily to debt reduction, and we made $14 million of
share repurchases during the quarter."
Consolidated net sales for the nine months ended September 30, 2008 were
$4,681 million versus $4,514 million in last year's comparable period, a 3.7%
increase. Consolidated net sales grew 5.5% after adjusting for a previously
announced divestiture. Gross margin in the current nine-month period was 19.7%
versus 20.4% last year and operating income totaled $272 million versus $295
million last year. Depreciation and amortization included in operating income
was $20 million versus $27 million last year. Equity earnings from the
retained 40% interest in our previously announced divestiture totaled $7.7
million year-to-date. Net income for the 2008 year-to-date period was $171
million versus $180 million last year. Diluted earnings per share were $3.92
per share in 2008 versus $3.65 per share in 2007.
Mr. Roy W. Haley, WESCO's Chairman and Chief Executive Officer commented,
"We are very mindful of the extraordinary challenges being experienced in the
financial industry and the anticipated spillover into the commercial end
markets. We have taken a conservative approach to managing our overall cost
structure while investing to expand our sales capacity and service
capabilities. Our customers continue to demand and reward value creating
partners that deliver productivity enhancing programs. Our business model has
significant competitive differentiators that we are using to strengthen our
relationships with a wide variety of large, sophisticated customers. We
continue to add important new customer relationships while gaining share with
our existing customers. I am very proud of our employees for another
exceptional quarter, and in particular, those involved with the challenges
resulting from hurricanes Gustav and Ike."
Teleconference
WESCO will conduct a teleconference to discuss the third quarter earnings
as described in this News Release on Thursday, October 23, 2008, 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. 2007 annual sales were approximately
$6.0 billion. The Company employs approximately 7,300 people, maintains
relationships with over 24,000 suppliers, and serves more than 110,000
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 more than 400 full-service branches in North America and selected
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, 2007, as well as the Company's other reports filed with the Securities and
Exchange Commission.

WESCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollar amounts in millions, except per share amounts)
(Unaudited)

Three Months Three Months
Ended Ended
September 30, 2008 September 30, 2007

Net sales $1,628.1 $1,545.6
Cost of goods sold (excluding
depreciation and amortization
below) 1,311.7 80.6% 1,232.5 79.7%
Selling, general and
administrative expenses 211.3 13.0% 194.8 12.6%
Depreciation and amortization 6.5 9.0
Income from operations 98.6 6.1% 109.3 7.1%
Interest expense, net 12.1 17.6
Other (income) expense (2.2) -
Income before income taxes 88.7 5.4% 91.7 5.9%
Provision for income taxes 22.8 19.9
Net income $65.9 4.0% $71.8 4.6%

Diluted earnings per common share $1.53 $1.54
Weighted average common shares
outstanding and common share
equivalents used in computing
diluted earnings per share
(in millions) 43.1 46.6

Nine Months Nine Months
Ended Ended
September 30, 2008 September 30, 2007

Net sales $4,681.0 $4,514.3
Cost of goods sold (excluding
depreciation and amortization
below) 3,758.7 80.3% 3,594.1 79.6%
Selling, general and
administrative expenses 629.7 13.5% 597.6 13.2%
Depreciation and amortization 20.2 27.2
Income from operations 272.4 5.8% 295.4 6.5%
Interest expense, net 39.2 46.6
Other (income) expense (7.7) -
Income before income taxes 240.9 5.1% 248.8 5.5%
Provision for income taxes 70.1 69.2
Net income $170.8 3.6% $179.6 4.0%

Diluted earnings per common share $3.92 $3.65
Weighted average common shares
outstanding and common share
equivalents used in computing
diluted earnings per share
(in millions) 43.6 49.2

WESCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollar amounts in millions)
(Unaudited)

September 30, December 31,
Assets 2008 2007
Current Assets
Cash and cash equivalents $103.3 $72.3
Trade accounts receivable, net 937.7 844.5
Inventories, net 654.6 666.0
Other current assets 70.3 97.7
Total current assets 1,765.9 1,680.5
Other assets 1,154.9 1,179.4
Total assets $2,920.8 $2,859.9

Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $742.9 $626.3
Current debt and short term borrowings 527.8 505.0
Other current liabilities 140.3 160.6
Total current liabilities 1,411.0 1,291.9

Long-term debt 649.7 811.3
Other noncurrent liabilities 143.1 148.2
Total liabilities 2,203.8 2,251.4

Stockholders' Equity
Total stockholders' equity 717.0 608.5
Total liabilities and stockholders' equity $2,920.8 $2,859.9

WESCO INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited)

Twelve Months Twelve Months
Financial Leverage: Ended Ended
(dollar amounts in thousands) September 30, 2008 September 30, 2007

Income from operations $371,246 $388,589
Depreciation and amortization 29,773 36,565
EBITDA $401,019 $425,154

Short term debt 525,000 500,000
Current debt 2,765 2,654
Long term debt 649,734 801,576
Total debt $1,177,499 $1,304,230
Financial leverage ratio 2.9 3.1

Three Months Twelve Months
Free Cash Flow: Ended Ended
(dollar amounts in millions) September 30, 2008 September 30, 2008

Net Income $65.9 $231.8

Depreciation and amortization 6.5 29.8
Accounts receivable (29.3) (32.7)
Inventory (10.5) (24.3)
Accounts payable 32.9 71.6
Other 17.6 (.1)
Cash flow provided by operations $83.1 $276.1
Less: Capital expenditures (7.3) (31.9)
Free cash flow $75.8 $244.2

Note: Free cash flow is provided by the Company as an additional
liquidity measure. Capital expenditures are deducted from operating cash flow
to determine free cash flow. This amount represents excess funds available to
management to service all of its financing needs.

WESCO INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (CONTINUED)
(dollar amounts in millions)
(Unaudited)

Three Months Three Months
Ended Ended
September 30, September 30,
Gross Profit: 2008 2007

Net sales $1,628.1 $1,545.6
Cost of goods sold (excluding
depreciation and amortization) 1,311.7 1,232.5
Gross profit $316.4 $313.1
Gross margin 19.4% 20.3%

Nine Months Nine Months
Ended Ended
September 30, September 30,
2008 2007

Net sales $4,681.0 $4,514.3
Cost of goods sold (excluding
depreciation and amortization) 3,758.7 3,594.1
Gross profit $922.3 $920.2
Gross margin 19.7% 20.4%

Note: Gross profit is provided by the Company as an additional financial
measure. Gross profit is calculated by deducting cost of goods sold,
excluding depreciation and amortization, from net sales. This amount
represents an important financial measure within the distribution industry.
Gross margin is calculated by dividing gross profit by net sales.
SOURCE WESCO International, Inc.

Stephen A. Van Oss, Senior Vice President and Chief Financial and
Administrative Officer of WESCO International, Inc., +1-412-454-2271, Fax,
+1-412-454-2477