Wesco International, Inc. · NYSE:WCC
Wesco International — Q2 2015 Earnings Presentation
22 slides from Wesco International's earnings presentation, Jul 23, 2015
Slide 1: Webcast Presentation Q2 2015 Earnings
Webcast Presentation July 23, 2015 Q2 2015 Earnings
Slide 2: Safe Harbor Statement
2 Q2 2015 Earnings Webcast, 07/23/2015 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, unce
Slide 3: Q2 2015 Highlights
3 Q2 2015 Earnings Webcast, 07/23/2015 (1.8) (1.2) 1.6 1.5 1.6 6.0 6.7 8.1 3.2 (3.0) Q1 Q2 Q3 Q4 2013 2014 2015 Q2 2015 Highlights Organic Growth (%) …challenging year, driven by industrial, Canada & foreign exchange • Organic sales were flat in the U.S. and down 7% in Canada • Oil and gas sales dow
Slide 4: Industrial End Market
4 Q2 2015 Earnings Webcast, 07/23/2015 2.1% 5.0% 7.0% 5.8% (4.1)% (10.2)% Industrial End Market • Q2 2015 Sales − Down 10.2% versus prior year − Down 0.6% sequentially − Sales declines driven by oil and gas, metals and mining, and OEM customers • Weak commodity prices and strong U.S. dollar weighing
Slide 5: Construction End Market
5 Q2 2015 Earnings Webcast, 07/23/2015 • Q2 2015 Sales − Down 7.7% versus prior year, with U.S. down 4%, and Canada down 3% in C$ − Up 6.4% sequentially − Sales declines driven by weakness with contractors serving industrial market partially offset by growth with commercial construction contractors
Slide 6: Utility End Market
6 Q2 2015 Earnings Webcast, 07/23/2015 Utility End Market Core Sales Growth versus Prior Year 15% Utility • Investor Owned • Public Power • Utility Contractors • Q2 2015 Sales − Up 5.7% versus prior year − Up 9.5% sequentially • Seventeenth consecutive quarter of year-over- year sales growth. • Scop
Slide 7: CIG End Market
7 Q2 2015 Earnings Webcast, 07/23/2015 CIG End Market • Q2 2015 Sales − Down 0.5% versus prior year − Up 7.4% sequentially • Bidding levels remain active in commercial, institutional, and government markets. • Focus remains on energy efficiency (lighting, automation, metering) and security. • Opport
Slide 8: Q2 2015 Results
8 Q2 2015 Earnings Webcast, 07/23/2015 Q2 2015 Results Outlook Actual YOY Sales (3)% growth to flat $1.92B (4.4)% growth (3.0)% organic Gross Margin 19.9% Down 60 bps SG&A $275M, 14.4% Down 1%, Up 50 bps Operating Profit $90M Down 22% Operating Margin 5.3% to 5.5% 4.7% Down 110 bps Effective Tax Rat
Slide 9: EPS Walk
9 Q2 2015 Earnings Webcast, 07/23/2015 EPS Walk Q2 2014 $1.29 Core Operations ~(0.25) Acquisitions 0.02 Foreign Exchange Impact (0.07) Tax Rate (0.02) Share Count 0.03 Q2 2015 $1.00
Slide 10: Cash Generation and Leverage
10 Q2 2015 Earnings Webcast, 07/23/2015 1.5 2 2.5 3 3.5 4 4.5 5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 39.0 120.0 YTD Q2 2014 YTD Q2 2015 Cash Generation Free Cash Flow ($ Millions) See appendix for non-GAAP reconciliations. 122% of net income 32% of net income ~ $1B of free cash flow over last 5 years 2013
Slide 11: 2015 Outlook
11 Q2 2015 Earnings Webcast, 07/23/2015 2015 Outlook Q3 FY Sales (3)% growth to flat (3)% growth to flat Operating Margin 5.7% to 5.9% 5.3% to 5.5% Effective Tax Rate 29% to 30% ~ 29% EPS $4.50 to $4.90 Free Cash Flow >80% of net income Notes: Excludes unannounced acquisitions. Assumes a CAD/USD exc
Slide 12: Appendix
12 Q2 2015 Earnings Webcast, 07/23/2015 Appendix
Slide 13: WESCO Profile 2015
13 Q2 2015 Earnings Webcast, 07/23/2015 WESCO Profile 2015 41% 31% 15% 13% 41% 14% 15% 11% 10% 9% Controls & Motors Lighting & Controls General Supplies Data & Broadband Communications Wire, Cable & Conduit Distribution Equipment Note: Markets & Customers and Products & Services percentages reported
Slide 14: Sales Growth
14 Q2 2015 Earnings Webcast, 07/23/2015 Sales Growth 2013 2014 2015 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Consolidated 12.6 13.2 16.6 14.3 14.2 0.2 5.9 7.6 6.1 5.0 0.3 (4.4) Acquisition Impact 16.0 14.6 14.1 13.8 14.6 0.5 1.6 1.8 1.6 1.4 1.2 1.6 Core (3.4) (1.4) 2.5 0.5 (0.4) (0.3) 4.3 5.8 4.5 3.6 (0.
Slide 15: Q2 2015 Sales Growth – Geography
15 Q2 2015 Earnings Webcast, 07/23/2015 Q2 2015 Sales Growth – Geography U.S. Canada International Total Change in net sales 2.0 (17.8) (25.0) (4.4) Impact from acquisitions 2.3 - - 1.6 Impact from foreign exchange rates - (10.9) (6.2) (3.0) Impact from number of workdays - - - - Normalized organic
Slide 16: Sales Growth – End Markets
16 Q2 2015 Earnings Webcast, 07/23/2015 Note: The prior period end market amounts noted above may contain reclassifications to conform to current period presentation. ($ Millions) Sales Growth – End Markets Q2 2015 vs. Q2 2014 Q2 2015 vs. Q1 2015 Q20 Q20 Q20 Q10 2015 2014 %00 Growth 2015 2015 %00 Gr
Slide 17: Debt Maturity Schedule and Capital Structure
17 Q2 2015 Earnings Webcast, 07/23/2015 Outstanding at December 31, 2014 Outstanding at June 30, 2015 Debt Maturity Schedule AR Revolver (V) 430 478 2016 Inventory Revolver (V) 8 78 2016 Senior Notes (F) 500 500 2021 2019 Term Loans (V) 252 202 2019 2029 Convertible Bonds (F) 345 345 2029 (1) Other
Slide 18: Financial Leverage
18 Q2 2015 Earnings Webcast, 07/23/2015 Financial Leverage Twelve Months Ended June 30, 2015 Financial leverage ratio: Income from operations $ 435 Depreciation and amortization 67 EBITDA $ 502 June 30, 2015 Current debt and short-term borrowings $ 49 Long-term debt 1,437 Debt discount related to co
Slide 19: Convertible Debt and Non-Cash Interest
19 Q2 2015 Earnings Webcast, 07/23/2015 ($ Millions) Maturity Par Value of Debt Debt Discount Debt per Balance Sheet 2029 344.9 (165.4) 179.5 Convertible Debt At June 30, 2015 Non-Cash Interest Expense ($ Millions) 2013 2014 YTD Q2 2015 Convertible Debt 4.3 4.1 3.2 Amortization of Deferred Financing
Slide 20: EPS Dilution
20 Q2 2015 Earnings Webcast, 07/23/2015 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 0.47 49.52 $60.00 6.20 0.55 50
Slide 21: Work Days
21 Q2 2015 Earnings Webcast, 07/23/2015 Work Days Q1 Q2 Q3 Q4 FY 2014 63 64 64 62 253 2015 62 64 64 63 253
Slide 22: Free Cash Flow Reconciliation
22 Q2 2015 Earnings Webcast, 07/23/2015 Free Cash Flow Reconciliation Q2 2014 Q2 2015 YTD Q2 2014 YTD Q2 2015 Cash flow provided by operations 4.1 42.5 50.8 132.6 Less: Capital expenditures (6.8) (7.6) (11.8) (12.6) Free Cash Flow (2.7) 34.9 39.0 120.0 Note: Free cash flow is provided by the Company