Wesco International, Inc. · NYSE:WCC
Wesco International — Q3 2013 Earnings Presentation
21 slides from Wesco International's earnings presentation, Oct 24, 2013
Slide 1: Q3 2013 Earnings Webcast Presentation
Q3 2013 Earnings Webcast Presentation October 24, 2013
Slide 2: Safe Harbor Statement
2 Q3 2013 Earnings Webcast 10/24/2013 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, uncer
Slide 3: Q3 2013 Highlights
3 Q3 2013 Earnings Webcast 10/24/2013 Financial results throughout this presentation reference adjusted results. See Appendix for reconciliation. Q3 2013 Highlights • Sales of $1.93 billion, up 16.6% YOY − Achieved record quarterly sales − 14.1 points from acquisitions; EECOL sales of $233 million −
Slide 4: Industrial End Market
4 Q3 2013 Earnings Webcast 10/24/2013 7.7% 0.8% (2.7%) 0.2% Industrial End Market • Q3 2013 Sales − Up 0.2% versus prior year − Flat sequentially • Conney Safety up over 10% versus prior year in the third quarter after growing 5% in the first half. • Channel inventory levels appear to be in balance
Slide 5: Construction End Market
5 Q3 2013 Earnings Webcast 10/24/2013 3.8% 0.0% 1.1% Construction • Non-Residential • Residential 31% Core Sales Growth versus Prior Year Construction End Market • Q3 2013 Sales − Up 1.1% versus prior year − Up 4.0% sequential • Backlog grew sequentially in the quarter and is up approximately 8% ver
Slide 6: Utility End Market
6 Q3 2013 Earnings Webcast 10/24/2013 Utility End Market Core Sales Growth versus Prior Year 14% Utility • Investor Owned • Public Power • Utility Contractors • Q3 2013 Sales − Up 11.1% versus prior year − Up 1.0% sequential • Tenth consecutive quarter of year-over- year organic sales growth. • Impl
Slide 7: CIG End Market
7 Q3 2013 Earnings Webcast 10/24/2013 14.3% 0.0% (3.3%) (8.5%) (4.3%) 5.1% CIG End Market • Q3 2013 Sales − Up 5.1% versus prior year − Up 5.5% sequential • Bidding activity remains active in commercial and institutional markets, particularly in education. • Federal contracts continue but awards hav
Slide 8: Q3 2013 Results versus Outlook
8 Q3 2013 Earnings Webcast 10/24/2013 Q3 2013 Results versus Outlook Q3 Outlook Q3 Actual Sales Growth of 17% to 19% 2% to 4% organic Growth of 16.6% 1.6% normalized organic sales Gross Margin Approximately 20.8% 20.5% Operating Margin Approximately 6.2% 6.4% Effective Tax Rate Approximately 26% to
Slide 9: EPS Roadmap
9 Q3 2013 Earnings Webcast 10/24/2013 Q3 2012 Core EECOL Q3 2013 (0.16) 1.25 0.33 1.42 EPS Roadmap ($) 2% organic (90) bps GM Flat SG&A $ Share count growth +14%
Slide 10: Cash Generation and Leverage
10 Q3 2013 Earnings Webcast 10/24/2013 170.1 180.3 YTD 2012 YTD 2013 Cash Generation Free Cash Flow (1) ($ Millions) 91% of adjusted net Income (1) 98% of adjusted net income (1) (1) Reconciliation of these non-GAAP financial measures is included in the Appendix to this webcast presentation. 2011 20
Slide 11: 2013 Outlook
11 Q3 2013 Earnings Webcast 10/24/2013 Outlook 2013 Outlook Q4 Full Year Sales Growth of 14% to 17%; 2% to 4% organic Growth of 14% to 15%; Approximately flat organic Gross Margin Approximately 20.5% Approximately 20.7% Operating Margin Approximately 6.0% Approximately 5.9% - 6.0% Effective Tax Rate
Slide 12: Appendix
12 Q3 2013 Earnings Webcast 10/24/2013 Appendix
Slide 13: Adjusted Results Q3 2013 and YTD
13 Q3 2013 Earnings Webcast 10/24/2013 Adjusted Results Q3 2013 Q3 2013 YTD Reported Results Non-recurring Item Adjusted Results Reported Results Non-recurring Items Adjusted Results Net Sales 1,931.3 - 1,931.3 5,633.3 - 5,633.3 Gross Profit 395.7 - 395.7 1,169.3 - 1,169.3 Gross margin 20.5% 20.5% 2
Slide 14: WESCO Profile Q3 2013 YTD
14 Q3 2013 Earnings Webcast 10/24/2013 WESCO Profile Q3 2013 YTD 43% 31% 14% 12% 40% 14% 16% 11% 10% 9% Controls & Motors Lighting & Controls General Supplies Data & Broadband Communications Wire, Cable & Conduit Distribution Equipment Note: Markets & Customers and Products & Services percentages re
Slide 15: Sales Growth
15 Q3 2013 Earnings Webcast 10/24/2013 Sales Growth 2011 2012 2013 Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 Organic Sales Growth (%) 16.5 12.7 11.3 13.2 13.4 9.8 8.2 1.4 (1.3) 4.4 (3.4) (1.2) 3.2 Acquisitions (%) 7.0 7.4 6.9 6.2 6.8 2.6 2.2 4.0 4.3 3.3 16.0 14.6 14.1 FX (%) 1.1 1.0 1.1 0
Slide 16: Debt Maturity Schedule, Capital Structure and Key Financial Metrics
16 Q3 2013 Earnings Webcast 10/24/2013 Outstanding at December 31, 2012 Outstanding at September 30, 2013 Debt Maturity Schedule AR Revolver (V) 445 500 2016 Inventory Revolver (V) 218 58 2016 Real Estate Mortgage (F) 26 - 2019 Term Loans (V) 850 820 2019 2029 Convertible Bonds (F) 345 345 2029 (No
Slide 17: Reconciliation of Non-GAAP Financial Measures
17 Q3 2013 Earnings Webcast 10/24/2013 Note: The prior period end market amounts noted above may contain reclassifications to conform to current period presentation. Reconciliation of Non-GAAP Financial Measures ($ Millions) Unaudited Sales Full Year 2012 vs. 2011 Q3 2013 vs. Q3 2012 Q3 2013 vs. Q2
Slide 18: Convertible Debt and Non-Cash Interest
18 Q3 2013 Earnings Webcast 10/24/2013 ($ Millions) Maturity Par Value of Debt Debt Discount Debt per Balance Sheet 2029 344.9 (171.5) 173.4 Convertible Debt At September, 30, 2013 Non-Cash Interest Expense ($ Millions) 2011 2012 Q3 YTD 2013 Convertible Debt 2.5 2.3 3.2 Amortization of Deferred Fina
Slide 19: EPS Dilution and 2029 Convertible Debt Details
19 Q3 2013 Earnings Webcast 10/24/2013 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 $50.00 5.05 0.66 49.89 $60.00 6.20 0.76 51.
Slide 20: Work Days
20 Q3 2013 Earnings Webcast 10/24/2013 Work Days Q1 Q2 Q3 Q4 FY 2012 64 64 63 63 254 2013 63 64 64 63 254 2014 63 64 64 62 253
Slide 21: Free Cash Flow Reconciliation
21 Q3 2013 Earnings Webcast 10/24/2013 Free Cash Flow Reconciliation Q3 2012 Q3 2013 Q3 YTD 2012 Q3 YTD 2013 Cash flow provided by operations 74.4 59.9 189.6 179.7 Less: Capital expenditures (7.2) (8.7) (19.5) (20.5) Add: Non-recurring pension contribution - 21.1 - 21.1 Free Cash Flow 67.2 72.3 170.