Wesco International, Inc. · NYSE:WCC
Wesco International — Q1 2016 Earnings Presentation
23 slides from Wesco International's earnings presentation, Apr 28, 2016
Slide 1: Webcast Presentation Q1 2016 Earnings
Webcast Presentation April 28, 2016 Q1 2016 Earnings
Slide 2: Safe Harbor Statement
2 Q1 2016 Earnings Webcast, 4/28/16 Safe Harbor Statement Note: 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, uncerta
Slide 3: Q1 2016 Highlights
3 Q1 2016 Earnings Webcast, 4/28/16 Q1 2016 Highlights …performance in line with outlook • Reported sales were down 2% • Workday adjusted organic sales were down 6% in the US and down 11% in Canada • Adjusting for Easter holiday, March organic sales were down 5% • Oil & gas sales down ~25% • April o
Slide 4: Industrial End Market
4 Q1 2016 Earnings Webcast, 4/28/16 Industrial End Market • Q1 2016 Sales − Workday adjusted organic sales down 14% versus prior year (down 14% in the U.S. and down 21% in Canada in local currency) − Down 7% sequentially − Sales declines driven by oil and gas, metals and mining, and OEM customers •
Slide 5: Construction End Market
5 Q1 2016 Earnings Webcast, 4/28/16 • Q1 2016 Sales − Workday adjusted organic sales down 4% versus prior year (down 4% in U.S. and down 6% in Canada in local currency) − Down 9% sequentially − Sales declines driven by weakness with contractors serving industrial market partially offset by growth wi
Slide 6: Utility End Market
6 Q1 2016 Earnings Webcast, 4/28/16 Utility End Market Core Sales Growth versus Prior Year 16% Utility • Investor Owned • Public Power • Utility Contractors • Q1 2016 Sales − Workday adjusted organic sales up 1% versus prior year (up 1% in U.S. and down 5% in Canada in local currency) − Down 6% sequ
Slide 7: CIG End Market
7 Q1 2016 Earnings Webcast, 4/28/16 CIG End Market • Q1 2016 Sales − Workday adjusted organic sales flat versus prior year (up 2% in US and down 10% in Canada in local currency) − Down 2% sequentially • Growth in communications and security category continues and bidding activity levels remain high.
Slide 8: Q1 2016 Results
8 Q1 2016 Earnings Webcast, 4/28/16 Q1 2016 Results Outlook Actual YOY Sales (4)% to (1)% $1.78B (2.2)% growth Gross Margin 20.0% Down 20 bps SG&A $269M, 15.2% Up 2%, up 60 bps; core down 2% Operating Profit $70M Down 20% Operating Margin 3.8% to 4.1% 3.9% Down 90 bps Effective Tax Rate ~30% 31.9% U
Slide 9: EPS Walk
9 Q1 2016 Earnings Webcast, 4/28/16 EPS Walk Q1 2015 $0.90) Core Operations (0.13) Acquisitions 0.04) Foreign Exchange Impact (0.09) Tax (0.03) Share Count 0.08) 2016 $0.77)
Slide 10: Cash Generation and Leverage
10 Q1 2016 Earnings Webcast, 4/28/16 1.5 2 2.5 3 3.5 4 4.5 5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 85.1 75.0 Q1 2015 Q1 2016 Cash Generation Free Cash Flow ($ Millions) See appendix for non-GAAP reconciliations. 217% of net income 182% of net income > $1B of free cash flow over last 4 years 2014 Target Leverag
Slide 11: 2016 Outlook
11 Q1 2016 Earnings Webcast, 4/28/16 2016 Outlook Q2 FY Sales (3)% to (1)% Flat to (5)% Operating Margin 4.5% to 4.9% 4.8% to 5.0% Effective Tax Rate ~30% ~ 30% EPS $3.75 to $4.20 Free Cash Flow >90% of net income Notes: Excludes unannounced acquisitions. Assumes a CAD/USD exchange rate of 0.77 in Q
Slide 12: Appendix
12 Q1 2016 Earnings Webcast, 4/28/16 Appendix
Slide 13: WESCO Profile 2016
13 Q1 2016 Earnings Webcast, 4/28/16 WESCO Profile 2016 38% 32% 16% 14% 40% 15% 15% 11% 11% 8% Controls & Motors Lighting & Controls General Supplies Data & Broadband Communications Wire, Cable & Conduit Distribution Equipment Note: Markets & Customers and Products & Services percentages reported on
Slide 14: Sales Growth
14 Q1 2016 Earnings Webcast, 4/28/16 Sales Growth 2014 2015 2016 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Consolidated 0.2 5.9 7.6 6.1 5.0 0.3 (4.4) (7.4) (6.7) (4.7) (2.2) Acquisition Impact 0.5 1.6 1.8 1.6 1.4 1.2 1.6 2.0 3.0 2.0 3.9 Core (0.3) 4.3 5.8 4.5 3.6 (0.9) (6.0) (9.4) (9.7) (6.7) (6.1) FX Impact
Slide 15: Q1 2016 Sales Growth – Geography
15 Q1 2016 Earnings Webcast, 4/28/16 Q1 2016 Sales Growth – Geography U.S. Canada International Total Change in net sales 2.1 (18.0) 2.2 (2.2) Impact from acquisitions 5.2 - - 3.9 Impact from foreign exchange rates - (10.0) (7.6) (2.6) Impact from number of workdays 3.2 3.2 3.2 3.2 Normalized organi
Slide 16: Sales Growth-End Markets
16 Q1 2016 Earnings Webcast, 4/28/16 Note: The prior period end market amounts noted above may contain reclassifications to conform to current period presentation. ($ Millions) Sales Growth-End Markets Q1 2016 vs. Q1 2015 Q1 2016 vs. Q4 2015 Q1 Q1 Q1 Q4 2016 2015 % Growth 2016 2015 % Growth Industri
Slide 17: Q1 2016 Organic Sales by End Market
17 Q1 2016 Earnings Webcast, 4/28/16 Q1 2016 Organic Sales by End Market Industrial Construction Utility CIG WESCO Core Sales Growth (12.6) (4.7) 2.6 1.6 (6.1) Workday Impact 3.2 3.2 3.2 3.2 3.2 Workday Adjusted Core Growth (15.8) (7.9) (0.6) (1.6) (9.3) FX Impact (2.1) (4.3) (1.2) (2.0) (2.6) Workd
Slide 18: Debt Maturity Schedule and Capital Structure
18 Q1 2016 Earnings Webcast, 4/28/16 Outstanding at December 31, 2015 Outstanding at March 31, 2016 Debt Maturity Schedule AR Revolver (V) 525 495 2018 Inventory Revolver (V) 75 55 2020 Senior Notes (F) 500 500 2021 2019 Term Loans (V) 175 175 2019 2029 Convertible Bonds (F) 345 345 2029 (1) Other (
Slide 19: Financial Leverage
19 Q1 2016 Earnings Webcast, 4/28/16 Financial Leverage Twelve Months Ended March 31, 2016 Financial leverage ratio: Income from operations $ 356 Depreciation and amortization 65 EBITDA $ 421 March 31, 2016 Current debt and short-term borrowings $ 50 Long-term debt 1,391 Debt discount and deferred f
Slide 20: Convertible Debt and Non-Cash Interest
20 Q1 2016 Earnings Webcast, 4/28/16 ($ Millions) Maturity Par Value of Debt Debt Discount Debt per Balance Sheet 2029 344.9 (162.3) 182.6 Convertible Debt At March 31, 2016 Non-Cash Interest Expense ($ Millions) 2014 2015 Q1 2016 Convertible Debt 4.1 6.1 1.2 Amortization of Deferred Financing Fees
Slide 21: EPS Dilution
21 Q1 2016 Earnings Webcast, 4/28/16 EPS Dilution Weighted Average Quarterly Share Count Stock Price Incremental Shares from 2029 Convertible Debt (in millions)3 Incremental Shares from Equity Awards (in millions) Total Diluted Share Count (in millions)4 $20.00 - 0.10 42.31 $30.00 0.45 0.18 42.85 $4
Slide 22: Free Cash Flow Reconciliation
22 Q1 2016 Earnings Webcast, 4/28/16 Free Cash Flow Reconciliation Q1 2015 Q1 2016 Cash flow provided by operations 90.1 78.6 Less: Capital expenditures (5.0) (3.6) Free Cash Flow 85.1 75.0 Note: Free cash flow is provided by the Company as an additional liquidity measure. Capital expenditures are d
Slide 23: Work Days
23 Q1 2016 Earnings Webcast, 4/28/16 Work Days Q1 Q2 Q3 Q4 FY 2014 63 64 64 62 253 2015 62 64 64 63 253 2016 64 64 64 62 254