Wesco International, Inc. · NYSE:WCC
Wesco International — Q3 2024 Earnings Presentation
29 slides from Wesco International's earnings presentation, Oct 31, 2024
Slide 1: Third Quarter 2024 Webcast Presentation
NYSE: WCC Third Quarter 2024 Webcast Presentation October 31, 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: Third Quarter Summary and Outlook
Third Quarter Summary and Outlook Sales and profitability within the outlook range; continue to operate in a mixed and multi-speed economy ― Reported sales flat sequentially and at the high-end of the outlook range for flat-to-down LSD ― Strong and accelerating growth in data centers, offset by a co
Slide 4: Third Quarter YOY Results
Third Quarter YOY Results Solid quarter against continued mixed and multi-speed economy Net Sales1 $ millions $5,644 $5,489 • Organic sales down 1%, reported sales down 3% • Divestiture of Integrated Supply and differences in foreign exchange rates partially offset by higher number of workdays • Est
Slide 5: Third Quarter Sequential Results
Third Quarter Sequential Results Sales and adjusted EBITDA margin in line with second quarter and outlook Net Sales1 $ millions $5,480 $5,489 • Organic and reported sales flat − EES organic and reported sales down 1% − CSS organic and reported sales up 5% − UBS organic and reported sales down 4% Q2
Slide 6: Wesco Has Outgrown Suppliers and Peers Over Multi-Year Period
Wesco Has Outgrown Suppliers and Peers Over Multi-Year Period Growth versus Wesco’s Top 10 Growth versus Distribution Peers 30% Publicly-Traded Suppliers 30% 20% 20% CSS up 8% Baird Datacom up 7% 10% 10% 0% 0% (10)% (10%) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Slide 7: Electrical & Electronic Solutions (EES)
Electrical & Electronic Solutions (EES) Adjusted EBITDA margin flat with prior year on lower sales Third Quarter Drivers $ millions • Organic sales down 3%, reported sales down 2% YOY Q3 Q3 – Construction flat as growth in Canada offset by continued YOY 2024 2023 weakness in solar and project timing
Slide 8: Communications & Security Solutions (CSS)
Communications & Security Solutions (CSS) Strong and accelerating data center growth Third Quarter Drivers $ millions • Organic sales up 8%, reported sales up 10% YOY Q3 Q3 – Wesco Data Center Solutions (WDCS) up more than 40% driven by YOY 2024 2023 growth in hyperscale, multi-tenant data center an
Slide 9: Utility & Broadband Solutions (UBS)
Utility & Broadband Solutions (UBS) Utility and broadband softness continued in Q3 Third Quarter Drivers $ millions • Organic sales down 7%, reported sales down 18% YOY due to the Q3 Q3 Integrated Supply divestiture YOY 2024 2023 – Utility sales down MSD due to continued customer purchasing delays S
Slide 10: Highlighting Recent Large Wins
Highlighting Recent Large Wins EES CSS UBS Customer Customer Customer Global EPC and Construction Services Global Technology Company Investor-Owned Utility Provider $50M+ $200M+ $2B+ Summary Summary Summary Awarded a ~$50 million contract to support Awarded a four-year contract worth over Awarded a
Slide 11: Free Cash Flow
Free Cash Flow 127% free cash flow conversion on a trailing 12-month basis (through 9/30/24) Trailing Twelve Months $ millions $(99) $245 $155 $836 $(32) $(91) 127% of $658 Adjusted Net Income Adjusted D&A Accounts Inventory Accounts Capex Free Net Income and Other Receivable Payable Cash Flow ~$280
Slide 12: Capital Allocation Framework
Capital allocation framework Operating Cash Flow Leveraging strong cash ORGANIC INVESTMENT FREE CASH FLOW generation to drive Investment in capex and Acquisitions, return of cash to operational performance, opex to drive organic growth shareholders and debt paydown portfolio transformation and retur
Slide 13: Fourth Quarter Outlook
Fourth Quarter Outlook Sales momentum stabilized in Q3 YOY Organic Sales Trends 20% Q1-23 Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 +11% +3% +3% (3)% (3)% (1)% (1)% Q4 Outlook Reported Flat-to-down LSD Sales sequentially 0% ~In-line/slightly lower EBITDA % sequentially (10)% Jan Feb Mar Apr May Jun Jul Au
Slide 14: 2024 Strategic Business Unit Sales Growth Drivers
2024 Strategic Business Unit Sales Growth Drivers % of Wesco 2024 Outlook 2024 Outlook SBU Sales 2024 Outlook 2024 Outlook 2023 Sales1 (August ’24) (October ’24) Breakdown 2 (August ’24) (October ’24) Construction Electrical & Electronic Solutions 40% Flat-to-up Flat-to-down Industrial LSD slightly
Slide 15: 2024 Outlook Ranges Maintained
2024 Outlook Ranges Maintained Currently tracking toward the lower half of the range for sales and adjusted EBITDA margin 2024 Outlook 2024 Outlook August October Organic sales (1.5)% to 0.5% (1.5)% to 0.5% Plus: impact of two additional workdays in 2024 1% 1% Integrated Supply Divestiture Impact1 ~
Slide 16: Third Quarter Summary and Outlook
Third Quarter Summary and Outlook Sales and profitability within the outlook range; continue to operate in a mixed and multi-speed economy ― Reported sales flat sequentially and at the high-end of the outlook range for flat-to-down LSD ― Strong and accelerating growth in data centers, offset by a co
Slide 17: Appendix
APPENDIX
Slide 18: Glossary
Glossary 1H: First half of fiscal year MTDC: Multi-tenant data center 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 Gove
Slide 19: 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 2025 62 64 64 63 253 19
Slide 20: 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 21: Organic Sales Growth by Segment
Organic Sales Growth by Segment $ millions Organic Sales Growth by Segment - Three Months Ended: Three Months Ended Growth/(Decline) September 30, September 30, Foreign Organic 2024 2023 Reported Divestiture Exchange Workday Sales EES $ 2,151.2 $ 2,190.7 (1.8) % — % (0.5) % 1.6 % (2.9) % CSS 1,955.1
Slide 22: Gross Profit and Free Cash Flow – Quarter
Gross Profit and Free Cash Flow – Quarter $ millions Three Months Ended Gross Profit: September 30, 2024 September 30, 2023 Net sales $ 5,489.4 $ 5,644.4 Cost of goods sold (excluding depreciation and amortization) 4,276.7 4,422.4 Gross profit $ 1,212.7 $ 1,222.0 Gross margin 22.1 % 21.6 % Three Mon
Slide 23: Free Cash Flow – Trailing Twelve Months
Free Cash Flow – Trailing Twelve Months $ millions Twelve Free Cash Flow: Months Ended Q4 2023 Q1 2024 Q2 2024 Q3 2024 September 30, 2024 Cash flow provided by (used in) operations 69.3 746.3 (223.8) 302.1 893.9 Less: Capital expenditures (28.7) (20.4) (20.8) (29.2) (99.1) Add: Other adjustments 18.
Slide 24: Adjusted EBITDA – 3Q 2024
Adjusted EBITDA – 3Q 2024 $ millions Three Months Ended September 30, 2024 EBITDA and Adjusted EBITDA by Segment: EES CSS UBS Corporate Total Net income attributable to common stockholders $ 168.4 $ 150.4 $ 168.5 $ (297.4) $ 189.9 Net (loss) income attributable to noncontrolling interests (1.0) 0.9
Slide 25: Adjusted EBITDA – 3Q 2023
Adjusted EBITDA – 3Q 2023 $ millions Three Months Ended September 30, 2023 EBITDA and Adjusted EBITDA by Segment: EES CSS UBS Corporate Total Net income attributable to common stockholders $ 177.9 $ 146.0 $ 188.7 $ (293.6) $ 219.0 Net income (loss) attributable to noncontrolling interests — 0.7 — (0
Slide 26: Adjusted EBITDA – 2Q 2024
Adjusted EBITDA – 2Q 2024 $ millions Three Months Ended June 30, 2024 EBITDA and Adjusted EBITDA by Segment: EES CSS UBS Corporate Total Net income attributable to common stockholders $ 179.3 $ 114.3 $ 268.5 $ (344.4) $ 217.7 Net income (loss) attributable to noncontrolling interests 0.1 0.7 — (0.1)
Slide 27: Adjusted EPS
Adjusted EPS Three Months Ended $ millions (1) Loss on abandonment of assets represents the write-off of certain capitalized September 30, 2024 September 30, 2023 cloud computing arrangement implementation costs relating to a third-party Adjusted SG&A Expenses: developed operations management softwa
Slide 28: Adjusted Earnings Per Diluted Share
Adjusted Earnings Per Diluted Share $ millions Three Months Ended September 30, September 30, Adjusted Earnings per Diluted Share: 2024 2023 Adjusted income from operations $ 341.5 $ 401.5 Interest expense, net 86.5 98.5 Adjusted other (income) expense, net (3.4) 3.7 Adjusted income before income ta
Slide 29: Capital Structure and Leverage
Capital Structure and Leverage $ millions Twelve Months Ended September 30, December 31, Financial Leverage: 2024 2023 Net income attributable to common stockholders $ 636.8 $ 708.1 Net income attributable to noncontrolling interests 1.9 0.6 (1) Merger-related and integration costs include integrati