Wesco International, Inc. · NYSE:WCC
Wesco International — Q2 2019 Earnings Presentation
17 slides from Wesco International's earnings presentation, Aug 1, 2019
Slide 1: Q2 2019 Earnings Webcast Presentation
Q2 2019 Earnings Webcast Presentation August 1, 2019 1
Slide 2: Forward Looking Statements
Forward Looking Statements All statements made herein that are not historical facts should be considered as “forward-looking statements” within the meaning of the Private Securities Litigation Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may caus
Slide 3: Q2 2019 Highlights
Q2 2019 Highlights Organic Sales Growth versus Prior Year Annual Quarter Second Quarter • Reported sales up 2.2% – Record sales in Q2 with strength in Canada, Utility, and 9.0% April +1% Datacom May +1% June +5% • Organic sales up 1.9% 6.2% – Up 10.9% on a two year stack basis U.S. +2% Canada +6% –
Slide 4: Q2 2019 Results
Q2 2019 Results Versus Q2 Millions, except per share amounts Q2 2018 Q2 2019 prior year Outlook Sales $2,104 $2,150 2.2% 3% – 6% Gross Profit $400 $409 2.3% % of Sales 19.0% 19.0% flat SG&A $293 $296 1% % of Sales 13.9% 13.8% (10) bps Operating Profit $91 $98 7% % of Sales 4.3% 4.6% 30 bps 4.5% – 4.
Slide 5: Diluted EPS and Sales Growth Walk
Diluted EPS and Sales Growth Walk Diluted EPS Walk Sales Growth Walk Q2 2018 Diluted EPS $1.22 Q2 2018 Sales $2,104 M Core operations $0.13 U.S. 130 bps Canada 110 bps SLS acquisition $0.01 International (50) bps Foreign exchange rates $(0.02) Organic Growth 1.9% Tax $0.00 Foreign exchange rates (10
Slide 6: Industrial End Market
Industrial End Market Organic Sales Growth versus Prior Year • Q2 2019 organic sales Annual Quarter − Up 1% versus prior year − U.S. up 2%; Canada up 6% in local currency − Up 2% sequentially • Industrial growth continues but at a slower pace 8.0% • Year-over-year and sequential strength in metals a
Slide 7: Construction End Market
Construction End Market Organic Sales Growth versus Prior Year • Q2 2019 organic sales Annual Quarter − Up 3% versus prior year − Down 1% in the U.S.; up 9% in Canada in local currency − Up 9% sequentially 7.9% • Backlog at historically strong level but ~7% lower than prior year record level 5.1% •
Slide 8: Utility End Market
Utility End Market Organic Sales Growth versus Prior Year • Q2 2019 organic sales Annual Quarter − Up 3% versus prior year; on top of toughest quarterly comparison 18.8% − Up 6% in the U.S. and down 28% in Canada in local currency due to non-renewal of Canadian contract in Q418 − Up 11% sequentially
Slide 9: CIG End Market
CIG End Market Organic Sales Growth versus Prior Year • Q2 2019 organic sales Annual Quarter − Up 1% versus prior year − Up 1% in the U.S. and 10% in Canada in local currency − Up 14% sequentially 9.4% 9.4% • Supply chain solutions driving results in datacenter and cloud technology projects 7.4% • L
Slide 10: Free Cash Flow & Leverage
Free Cash Flow & Leverage Free Cash Flow Leverage ($ Millions) (Debt, Net of Cash to TTM EBITDA) ~ $1.1B of free cash flow target leverage over last 5 years 4.0x 2.0x – 3.5x $70.4 3.5x 70% of net income 3.0x 3.2x 2.5x $(30.2) 2.0x (29)% of net income 1.5x 2018 YTD 2019 YTD Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Lo
Slide 11: 2019 Outlook
2019 Outlook Q3 Full Year Full Year (current) (prior) Sales 3% to 5% 1% to 4% 3% to 6% Operating Margin 4.3% to 4.7% 4.2% to 4.5% 4.3% to 4.7% Effective Tax Rate ~22% 21% to 23% 22% to 24% Diluted EPS $5.00 to $5.60 $5.10 to $5.70 Free Cash Flow ~ 90% of net income ~ 90% of net income Notes Excludes
Slide 12: Appendix
APPENDIX
Slide 13: Trailing Twelve Month Sales Mix
Trailing Twelve Month Sales Mix 15% 8% 10% 36% 41% 16% End 11% Products Markets 14% 33% 16% Industrial General Supplies Construction Communications & Security Utility Wire, Cable & Conduit CIG Lighting & Sustainability Electrical Distribution & Controls Automation, Controls & Motors 13
Slide 14: Organic Sales Growth
Organic Sales Growth ($ Millions) YEAR OVER YEAR Three Months Ended, Core Less: Less: Organic END MARKET June 30, 2018 June 30, 2019 Growth Fx Impact Workday Impact Growth Industrial core sales 764 764 0.0% (1.0)% 0.0% 1.0% Construction core sales 686 694 1.1% (1.5)% 0.0% 2.6% Utility core sales 338
Slide 15: Capital Structure and Leverage
Capital Structure and Leverage ($ Millions) EBITDA Twelve Months Ended, December 31,2018 June 30, 2019 Income from operations 353 357 Depreciation and amortization 63 62 EBITDA 416 419 DEBT Outstanding as of, Maturity December 31, 2018 June 30, 2019 AR Revolver (variable) 275 495 2020 Inventory Revo
Slide 16: Gross Margin and Free Cash Flow
Gross Margin and Free Cash Flow ($ Millions) GROSS MARGIN Three Months Ended, June 30, 2018 June 30, 2019 Net sales 2,104 2,150 Cost of goods sold1 1,704 1,741 2 Gross profit 400 409 2 Gross margin 19.0% 19.0% FREE CASH FLOW Six Months Ended, June 30, 2018 June 30, 2019 Net cash provided (used) by o
Slide 17: Work Days
Work Days Q1 Q2 Q3 Q4 FY 2017 64 64 63 62 253 2018 64 64 63 62 253 2019 63 64 63 62 252 17