Wesco International, Inc. · NYSE:WCC
Wesco International — Q1 2024 Earnings Presentation
29 slides from Wesco International's earnings presentation, May 2, 2024
Slide 1: First Quarter 2024 Webcast Presentation
NYSE: WCC First Quarter 2024 Webcast Presentation May 2, 2024
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 Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that m
Slide 3: First Quarter Highlights and Outlook
First Quarter Highlights and Outlook First quarter sales in-line with quarterly commentary and our full year 2024 outlook ― Sales in-line with expectations against toughest comparison of the year (sales growth of 12% in Q1 2023) ― Sales rebounded in February with sequential increase in March ― Backl
Slide 4: First Quarter YOY Results
First Quarter YOY Results Sales in-line with expectations; EBITDA in-line with typical seasonality Net Sales1 $ millions $5,522 $5,350 • Organic and reported sales down 3% • Estimated growth from price of ~1% (3)% organic • Sales volume lower year-over-year due to a difficult comparison and choppy e
Slide 5: First Quarter Sequential Results
First Quarter Sequential Results Sales in-line with expectations; EBITDA in-line with typical seasonality Net Sales1 $ millions $5,473 $5,350 • Lower sequential sales as expected due to the soft start in January (4)% organic Q4 2023 Price Volume Other 2 Q1 2024 Sales Sales Adjusted EBITDA • Billing
Slide 6: Wesco Has Outgrown Suppliers and Peers
Wesco Has Outgrown Suppliers and Peers Growth versus Wesco’s Top 10 Growth versus Distribution Peers 30% Publicly-Traded Suppliers 30% 20% 20% 10% 10% 0% 0% (10)% (10%) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2021 2021 2021 2021 2022 2022 2022 2022 2023 2023 202
Slide 7: Electrical & Electronic Solutions (EES)
Electrical & Electronic Solutions (EES) First Quarter Drivers $ millions • Organic and reported sales down 2% YOY Q1 Q1 YOY – Construction flat as growth from large project shipments offset by 2024 2023 lower solar sales Sales $2,099 $2,135 (2)%1 – Industrial up LSD driven by growth in automation, e
Slide 8: Communications & Security Solutions (CSS)
Communications & Security Solutions (CSS) First Quarter Drivers $ millions • Organic and reported sales down 4% YOY Q1 Q1 YOY – Enterprise Network Infrastructure down LSD due to continued 2024 2023 softness in the service provider market Sales $1,670 $1,732 (4)%1 – Security down HSD due to difficult
Slide 9: Utility & Broadband Solutions (UBS)
Utility & Broadband Solutions (UBS) First Quarter Drivers $ millions • Organic and reported sales down 5% YOY Q1 Q1 YOY – Utility sales down LSD on prior year growth of more than 20% 2024 2023 – Broadband sales down DD due to continued demand weakness Sales $1,581 $1,655 (5)%1 • Backlog down 7% YOY
Slide 10: Highlighting ~$200M of Recent Large Project Wins
Highlighting ~$200M of Recent Large Project Wins EES CSS UBS Customer Customer Customer Chemical and materials science company Major financial services firm National renewable contractor Summary Summary Summary Awarded a $30 million contract over four $40+ million win with a leading North Secured $1
Slide 11: Free Cash Flow
Free Cash Flow Greater than $1.4B in TTM Free Cash Flow (as of 3/31/2024) $99 194% of $ millions $388 $1,441 Adjusted Net Income $70 $161 $177 $744 Adjusted D&A Accounts Inventory Accounts Capex Free Net Income and Other Receivable Payable Cash Flow See appendix for non-GAAP definitions and reconcil
Slide 12: Upsized Cash Generation Driving Increased Return of Capital
Upsized Cash Generation Driving Increased Return of Capital Capital Allocation 2021 – 2024E 2024 Priorities • Expect to fully utilize Integrated Supply divestiture net Preferred Dividends proceeds of ~$300 million to significantly increase return of Common Dividends capital to shareholders via share
Slide 13: 2024 Strategic Business Unit Sales Growth Drivers
2024 Strategic Business Unit Sales Growth Drivers % of Wesco SBU Sales 2023 Sales1 2024 Outlook Breakdown 2 2023 2024 Construction Electrical & Electronic Solutions 40% Industrial Flat-to-Up LSD OEM Enterprise Network Infrastructure Communications & Security Solutions 33% Security Up LSD-to-MSD WDCS
Slide 14: 2024 Outlook
2024 Outlook 2024 Outlook Divestiture 2024 Outlook February Impact (Q2-Q4)1 May Organic sales Flat to 3% Flat to 3% Plus: impact of two additional 1% 1% workdays in 2024 Sales Divestiture Impact ~(3)% Reported sales growth 1% to 4% ~(3)% (2)% to 1% Reported sales $22.6 – $23.3 billion ~$700 million
Slide 15: Second Quarter Outlook
Second Quarter Outlook Normal seasonality in the second quarter Organic Sales Trends 20% Q1 Q2 Q3 Q4 Q1 +11% +3% +3% (3)% (3)% Q2 Outlook YOY Organic ~Flat Sales YOY Reported 0% Down LSD Sales Gross Margin % Sequential improvement (10)% Sequentially up slightly SG&A $ Jan Feb Mar Apr May Jun Jul Aug
Slide 16: Attractive Long-Term Growth Drivers
Attractive Long-Term Growth Drivers Increasing Public Wesco’s Uniquely Secular Growth Trends Sector Investment Strong Position a U.S. • Leading Portfolio of Products, Infrastructure Services, and Solutions Bills + + Electrification Automation and IoT • Leading Positions in All SBUs Rural Digital Opp
Slide 17: First Quarter Highlights and Outlook
First Quarter Highlights and Outlook First quarter sales in-line with quarterly commentary and our full year 2024 outlook ― Sales in-line with expectations against toughest comparison of the year (sales growth of 12% in Q1 2023) ― Sales rebounded in February with sequential increase in March ― Backl
Slide 18: Appendix
APPENDIX wf wesco
Slide 19: Glossary
Glossary 1H: First half of fiscal year MSD: Mid-single digit 2H: Second half of fiscal year PF: Pro Forma A/V: Audio/visual PY: Prior Year B2B: Business-to-Business OEM: Original equipment manufacturer COGS: Cost of goods sold OPEX: Operating expenses CIG: Commercial, Institutional and Government RO
Slide 20: Workdays
Workdays Q1 Q2 Q3 Q4 FY 2021 62 64 64 62 252 2022 63 64 64 62 253 2023 63 64 63 62 252 2024 63 64 64 63 254 20
Slide 21: Non-GAAP Measure Definitions
Non–GAAP Measure Definitions Organic sales growth is a non-GAAP financial measure of sales performance. Organic sales growth is calculated by deducting the percentage impact from acquisitions and divestitures for one year following the respective transaction, foreign exchange rates, and number of wo
Slide 22: Organic Sales Growth by Segment
Organic Sales Growth by Segment $ millions Organic Sales Growth by Segment - Three Months Ended: Three Months Ended Growth/(Decline) March 31, March 31, Foreign Organic 2024 2023 Reported Acquisition Exchange Workday Sales EES $ 2,099.0 $ 2,135.1 (1.7) % — % (0.1) % — % (1.8) % CSS 1,670.1 1,732.0 (
Slide 23: Gross Profit and Free Cash Flow – Quarter
Gross Profit and Free Cash Flow – Quarter $ millions Three Months Ended March 31, March 31, Gross Profit: 2024 2023 Net sales $ 5,350.0 $ 5,521.9 Cost of goods sold (excluding depreciation and amortization) 4,212.1 4,313.4 Gross profit $ 1,137.9 $ 1,208.5 Gross margin 21.3 % 21.9 % Three Months Ende
Slide 24: Free Cash Flow – Trailing Twelve Months
Free Cash Flow – Trailing Twelve Months Twelve Free Cash Flow: Months Ended Q2 2023 Q3 2023 Q4 2023 Q1 2024 March 31, 2024 Cash flow provided by (used in) operations 317.6 361.7 69.3 746.3 1,494.9 Less: Capital expenditures (30.4) (19.3) (28.7) (20.4) (98.8) Add: Other adjustments 6.0 14.7 18.6 5.5
Slide 25: Adjusted EBITDA – 1Q 2024
Adjusted EBITDA – 1Q 2024 $ millions Three Months Ended March 31, 2024 EBITDA and Adjusted EBITDA by Segment: EES CSS UBS Corporate Total Net income attributable to common stockholders $ 148.2 $ 88.4 $ 160.8 $ (296.0) $ 101.4 Net income (loss) attributable to noncontrolling interests (0.4) 0.4 — 0.3
Slide 26: Adjusted EBITDA – 1Q 2023
Adjusted EBITDA – 1Q 2023 $ millions Three Months Ended March 31, 2023 EBITDA and Adjusted EBITDA by Segment: EES CSS UBS Corporate Total Net income attributable to common stockholders $ 171.3 $ 135.4 $ 180.3 $ (304.3) $ 182.7 Net income (loss) attributable to noncontrolling interests (0.1) 0.2 — —
Slide 27: Adjusted EBITDA – 4Q 2023
Adjusted EBITDA – 4Q 2023 $ millions Three Months Ended December 31, 2023 EBITDA and Adjusted EBITDA by Segment: EES CSS UBS Corporate Total Net income attributable to common stockholders $ 152.4 $ 117.4 $ 160.4 $ (302.6) $ 127.6 Net income (loss) attributable to noncontrolling interests 0.3 0.6 — (
Slide 28: Adjusted EPS
Adjusted EPS $ millions, except per share amounts Three Months Ended March 31, 2024 March 31, 2023 Adjusted SG&A Expenses: Three Months Ended Selling, general and administrative expenses $ 829.4 $ 817.7 March 31, March 31, Merger-related and integration costs(1) — (11.2) Adjusted Earnings per Dilute
Slide 29: Capital Structure and Leverage
Capital Structure and Leverage $ millions Twelve Months Ended March 31, December 31, Financial Leverage: 2024 2023 Net income attributable to common stockholders $ 626.8 $ 708.1 Net income attributable to noncontrolling interests 0.8 0.6 Preferred stock dividends 57.4 57.4 Provision for income taxes