Wesco International, Inc. · NYSE:WCC
Wesco International — Investor Day (June 2012)
55 slides from Wesco International's investor day presentation, Jun 7, 2012
Slide 1: WESCO Canada Investor Day
DRIVING GROWTH > CREATING VALUE WESCO Canada Investor Day June 7, 2012 1
Slide 2: Safe Harbor Statement
2 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE 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 unknow
Slide 3: WESCO Canadian Investor Day, June 2012
3 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE WESCO Canadian Investor Day, June 2012 • WESCO Overview – John Engel • Canadian Electrical Distribution Market – Jim Taggart • WESCO Canada Overview – Harald Henze • Construction Growth Engine – Todd Walford • Communications Growth Engine – Dan Dra
Slide 4: Welcome and WESCO Overview
DRIVING GROWTH > CREATING VALUE Welcome and WESCO Overview John Engel Chairman, President, and Chief Executive Officer June 7, 2012 4
Slide 5: WESCO Profile
5 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE WESCO Profile • Fortune 500 Company (NYSE: WCC) − Headquartered in Pittsburgh, PA − Approximately 7,300 employees − Approximately 400 locations in 14 countries • A leading provider of electrical, industrial, and communications MRO and OEM products,
Slide 6: WESCO Growth Strategy
6 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE WESCO Growth Strategy Growth strategy launched in 2009 • Established eight growth engines and six operational excellence initiatives • Initiated One WESCO • Increased investments • Provided greater transparency • Developed leaders and organization
Slide 7: WESCO Results – 2010 through Q1 2012
7 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE WESCO Results – 2010 through Q1 2012 Sales vs. Prior Year Operating Margin (EBIT%) EPS 4.2% 2010 30 Versus prior year (basis points) Q1 ‘11 4.5% 120 Q2 ‘11 5.6% 150 …reflect positive business momentum $0.72 Q4 ‘10 +42% $0.74 Q3 ‘10 -6% $0.60 Q2 ‘10
Slide 8: Growth Engines
8 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE Growth Engines Expand Geographies 1 Customers 2 Focus Markets 3 I Enrich New Markets 5 Products and Services 4 II Drive M&A Agenda 6 III …improve our market position while expanding through acquisitions Construction Government International Utility
Slide 9: Operational Excellence Initiatives
9 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE Marketing Leadership • Demand creation programs • Brand management • Dedicated specialists Sales Management • LEAN initiative for sales • Sales, territory and account management • Solution selling and sales training Sourcing Effectiveness • Categor
Slide 10: WESCO's Acquisition Strategy
10 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE WESCO’s Acquisition Strategy …adds capabilities, revenues, and profits Current Acquisition Environment • Highly fragmented industry • Many profitable niches • Primarily privately owned • Generational change We are building on our track record of 3
Slide 11: Trydor Industries
11 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE Trydor Industries WESCO Announces Definitive Agreement to Acquire Trydor Industries (Canada), Ltd. • A full-line distributor of high-voltage electrical products and services addressing the transmission, substation and distribution network needs fo
Slide 12: WESCO Acquisition Scorecard
12 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE WESCO Acquisition Scorecard Acquisition Priorities Acquisition Summary Consistent with WESCO strategy Strengthens utility growth engine in Canada. Trydor is a full-line distributor of high-voltage electrical products and services addressing the tr
Slide 13: Business Priorities and Financial Objectives
13 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE Business Priorities and Financial Objectives • Grow faster than the market and strengthen business through acquisitions • Maintain industry-leading cost structure • Expand operating profit and margins • Generate strong operating cash flow through
Slide 14: Canadian Electrical Distribution Market
Electro-Federation Canada Canadian Electrical Distribution Market Jim Taggart
Slide 15: Electro-Federation Canada Vision
Electro-Federation Canada Vision “EFC is the organization of choice to represent and champion the needs of the Canadian Electrical and Electronics market.” 15
Slide 16: Electro-Federation Canada (EFC)
Electro-Federation Canada Electro-Federation Canada (EFC) EFC is a national, not-for-profit industry association • Representing 300+ member companies that manufacture, distribute and service electrical and electronic products in Canada • Contributing more than C$50B to the Canadian economy • Employi
Slide 17: Electro-Federation Canada
Electro-Federation Canada 17
Slide 18: Key Electrical Industry Issues
Electro-Federation Canada Key Electrical Industry Issues • Sustainability – Extended Producer Responsibility – Renewable Energy (solar/wind) – Energy Efficiency • Electrical Safety • Counterfeit and Unsafe Products • Trade Policies and Regulations • Workforce Development • Technology Change • Intell
Slide 19: Canadian Electrical Distribution Market
Electro-Federation Canada Canadian Electrical Distribution Market 0.0 200.0 400.0 600.0 800.0 1000.0 1200.0 1400.0 1600.0 1800.0 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 10 Q3 11 Q411 Q1 12 Q2 12 Q3 12 926.3 1015.1 1054.2 1136.0 1111.3 1148.5 1202.1 1236.1 1173.9 366.9 401.9 418.5 451.4 442.3 457.1 478.0 49
Slide 20: WESCO Canada Overview
DRIVING GROWTH > CREATING VALUE Harald Henze Group Vice President and General Manager WESCO Canada June 7, 2012 WESCO Canada Overview 20
Slide 21: WESCO Canada Business Profile
21 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE WESCO Canada • WESCO Canada is headquartered in Toronto • WESCO has been operating in Canada since 1922 • $900M annual sales in 2011, with a Q1 2012 annualized sales run rate of approximately $1B • Approximately 1,100 employees • Extensive footpri
Slide 22: WESCO Canada Market Dynamics and Competition
22 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE WESCO Canada 1. Canadian market buoyed by natural resource sectors 2. Long-term growth prospects for oil, gas, and mining are very attractive 3. Utility market is seeing increased investment 4. Green and sustainability initiatives are creating opp
Slide 23: Extensive Geographic Footprint
23 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE Extensive Geographic Footprint British Columbia Abbotsford Burnaby Castlegar Kamloops Kelowna Nanaimo Port Coquitlam Prince George Richmond Surrey Vancouver Victoria Fort St. John Alberta Edmonton Edmonton SE Red Deer Calgary Calgary NE Fort McMur
Slide 24: Investing for Growth
24 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE Investing for Growth Organic 1. New Edmonton distribution centre in 2009, with significant expansion in 2011 2. New Toronto distribution centre in 2012 (WESCO’s largest) 3. Additional branches planned in 2012 Acquisitions 1. TVC Communications in
Slide 25: One WESCO Success Stories
25 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE One WESCO Success Stories Global Specialized Chemicals Global Diversified Industrial • Fortune 500 company with operations in more than 25 companies • WESCO revenues of more than $30 million • WESCO integrated supply personnel responsible for mana
Slide 26: Construction Growth Engine
DRIVING GROWTH > CREATING VALUE Todd Walford Region Vice President June 7, 2012 Construction Growth Engine 26
Slide 27: Canadian Construction Market
27 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE Canadian Construction Market Market Overview • Construction is one of Canada's largest industries • Total value of new construction starts in 2011 was more than C$240 billion • Typically 10% of the total construction project value is electrical (4
Slide 28: Construction Cycle Time
28 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE Construction Cycle Time Construction Cycle ABI Inquiries ABI Construction Starts Construction Put-In Place 1) Design • Project formulation • Architect / Engineer selection • Final building plans 2) Bidding • General Contractor selection • Bids rec
Slide 29: Construction Growth Engine
29 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE Construction Growth Engine Construction Strategy • Capitalize on existing customer relationships to sell and service the complete WESCO portfolio • Focus on providing effective program management and supply chain services for entire project life c
Slide 30: One WESCO Success Stories
30 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE One WESCO Success Stories Property Management / Retail Healthcare Hospital Expansion • $20M construction project over 3 years • Comprehensive construction project management required (procurement, staging, packaging, and delivery) • Toronto distri
Slide 31: Communications Growth Engine
DRIVING GROWTH > CREATING VALUE Dan Drazilov Director of Operations June 7, 2012 Communications Growth Engine 31
Slide 32: Data and Broadband Communications
32 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE Data and Broadband Communications Customer Value Proposition WESCO is a single destination for a wide variety of data communications, security, broadband, and electrical products Communications Solutions A wide range of customer applications are s
Slide 33: Canadian Market Trends
33 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE Canadian Market Trends 1. Global customers looking to consolidate spend 2. Data centre growth still solid in Canada, but at lower rate 3. Federal government spending in Canada remains strong 4. Outside plant fiber networks expand to support high-s
Slide 34: Extensive Communications Product Portfolio
34 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE Extensive Communications Product Portfolio Broadband Communications Data & Security Communications Product Category & Description Products Signal Origination Head-end and central office equipment used to receive and process signals for transmissio
Slide 35: Executing the Growth Plan
35 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE Executing the Growth Plan • Specialized resources (global accounts, government, utility, security, data centres) • Dedicated end-user, specification-driven sales teams • Centralized lead generation and qualification team • Developing and promoting
Slide 36: Utility Growth Engine and Brews Supply
DRIVING GROWTH > CREATING VALUE Dale Berstad Director, Brews Supply June 7, 2012 Utility Growth Engine and Brews Supply 36
Slide 37: Brews Overview
37 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE Brews Overview • R.L. Brews founded in 1927 in Alberta • Wholesale distributor of: − Industrial and commercial electrical and instrumentation products − Electrical utility products • Acquired by Roynat Capital and Stonebridge Merchant Capital in A
Slide 38: Brews Customers
38 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE Brews Customers • Oil & Gas − Oil Sands − Refineries/Up-graders • Industrial Contractors • Commercial Contractors • Panel Shops • Forestry • Mining • Food Processing • Utility Companies • Engineering Procurement and Consulting Engineering Firms …i
Slide 39: Addressing All Aspects of the Utility Power Chain
39 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE Addressing All Aspects of the Utility Power Chain …Generation, Transmission, and Distribution
Slide 40: Serving Utility Customers
40 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE Serving Utility Customers • Geotek/Pupi (Exclusive Canada-wide) • Dipl.-Ing. Horstmann GmbH. (Exclusive Canada-wide) • Maysteel LLC • Peidmont Bushings & Insulators • Thomas & Betts (part of ABB): − Elastimold − Hi-Tech − Homac − Joslyn Hi-Voltage
Slide 41: Toronto Distribution Centre
DRIVING GROWTH > CREATING VALUE Harald Henze Group Vice President and General Manager WESCO Canada June 7, 2012 Toronto Distribution Centre 41
Slide 42: WESCO Service Excellence Overview
42 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE WESCO Service Excellence Overview What is Service Excellence? Consistently meeting all customer requirements at a minimum and exceeding expectations on their most valued requirements Critical Success Factors • Every employee understanding how thei
Slide 43: Key Elements to Achieve Service Excellence
43 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE Key Elements to Achieve Service Excellence Service Excellence KPIs • Supplier performance – rapid pricing, reliable products, accurate orders and timely deliveries • Seamless supply chain (supplier to WESCO to customer) – nimble, flexible, respons
Slide 44: Customer data indicates service is more important than price
44 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE Customer data indicates that consistent and high-performing service is more important than price Service Dimensions that Drive our Sales Growth and Profitability Service Excellence Survey Data High Importance to Customers: 1. Quotation Speed 2. On
Slide 45: Spotlight on Hybrid DC Expansion
45 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE Spotlight on Hybrid DC Expansion Service Excellence – DC Initiatives • Enhanced market presence and image • Accelerated lead-time (replenishment and fulfillment) • Customized inventory to meet market demands • Expanded product offering (wire, pipe
Slide 46: WESCO Has Eight North American Distribution Centres
46 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE Montreal, Quebec WESCO Has Eight North American Distribution Centres • Four Canadian Distribution Centres − Burnaby, British Columbia (Hybrid) − Dorval, Quebec − Edmonton, Alberta (Hybrid) − Toronto, Ontario (Hybrid) • Four U.S. Distribution Centr
Slide 47: Canadian DC Evolution
47 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE Canadian DC Evolution • Custom Warehouse Management System (WMS) directs and controls all transactions in real-time • “Paperless” processing via RF scanners, scanning and bar-code technology applications • Automated weight auditing quality check •
Slide 48: Toronto Distribution Centre Profile
48 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE Toronto Distribution Centre Profile • Facility size − Warehouse 230,000 sq. ft. − Office 14,000 sq. ft. − Showroom 6,000 sq. ft. Total 250,000 sq. ft. • Inventory value over $10M • Over 100 suppliers and over 10,000 SKUs • Features − Energy effici
Slide 49: Toronto Showroom and Technology Centre
49 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE Toronto Showroom and Technology Centre • Self-service product displays • Supplier technology and new products display area • Warehouse-in-a-Warehouse with customer access to wholesale-style bin stock
Slide 50: Logistics as a Competitive Advantage
50 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE Logistics as a Competitive Advantage The WESCO Distribution Centres provide a competitive advantage that is: The WESCO Distribution Centres are continually being positioned to support and enable WESCO’s growth strategy. Valued by customers Acknowl
Slide 51: Q&A and Closing Remarks
DRIVING GROWTH > CREATING VALUE Q&A and Closing Remarks John Engel Chairman, President, and Chief Executive Officer June 7, 2012 51
Slide 52: Invest in WESCO
52 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE Invest in WESCO • Market leader with low business risk profile • Proven business model well positioned in large, fragmented market • Organic sales growth faster than market • Operational excellence culture founded on LEAN • Excellent margin expans
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Slide 54: Appendix
54 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE APPENDIX
Slide 55: Core Sales Reconciliation of Non-GAAP Financial Measures
55 Toronto DC 201206 DRIVING GROWTH > CREATING VALUE Core Sales Reconciliation of Non-GAAP Financial Measures Unaudited Note: Q1 versus prior year excludes Reco, Brews Supply, and RS Electronics results. Q1 sequential excludes RS Electronics. (dollar amounts in millions) Full Year 2011 vs 2010 Q1 20