Wesco International, Inc. · NYSE:WCC
Wesco International — Investor Presentation (June 2018)
36 slides from Wesco International's investor presentation, Jun 11, 2018
Slide 1: WESCO International Second Quarter 2018 Marketing Presentation
WESCO International Second Quarter 2018 Marketing Presentation
Slide 2: Safe Harbor Statement
Second Quarter 2018 Marketing Presentation Safe Harbor Statement 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, uncerta
Slide 3: WESCO: A Leading Global Supply Chain Solutions Provider
Second Quarter 2018 Marketing Presentation WESCO: A Leading Global Supply Chain Solutions Provider Capital Projects MRO OEM Including new construction and retrofits, renovations, and upgrades Founded One of the world’s largest distributors $7.7 Billion in #370 of the 9,100 1922 in of electrical, ind
Slide 4: Financial Performance
Second Quarter 2018 Marketing Presentation Financial Performance Sales 5% Adjusted Diluted EPS 10% CAGR CAGR ($ Billions) ($) 7.7 3.93 4.6 2.46 3.4 3.3 0.75 0.49 1999 2002 2009 2017 1999 2002 2009 2017 Free Cash Flow 5% Total Shareholder Return CAGR 12% CAGR ($ Millions) CAGR 279 2017 was 26% impact
Slide 5: Q1 and YTD 2018 Highlights
Second Quarter 2018 Marketing Presentation Q1 and YTD 2018 Highlights Jan 9% Feb 14% • Double digit sales, operating profit and EPS growth Organic Growth Mar 11% versus prior year (%) • Continued positive business momentum and growth 10.9 10.1 across all end markets and geographies 8.6 • Reported sa
Slide 6: WESCO's Value Proposition
Second Quarter 2018 Marketing Presentation WESCO’s Value Proposition Combining our competitive …into customized supply …that result in: differentiators… chain solutions • Long-term customer relationships and • A broad product portfolio deep familiarity with their operations • Technical expertise and
Slide 7: Competitive Differentiator: Service Capabilities
Second Quarter 2018 Marketing Presentation Competitive Differentiator: Service Capabilities 2017 Sales: $7.7B Capital Project Solutions Supply Chain Solutions Our services and technical expertise Technical Expert Solutions drive the majority of our product sales Customized Product Solutions All Othe
Slide 8: Example of Services Provided to a Key Utility Customer
Second Quarter 2018 Marketing Presentation Example of Services Provided to a Key Utility Customer WESCO Integrated Supply Services Inventory Warehousing Transaction Strategic Sourcing Purchasing Management & Logistics Management • Define market basket • Spot purchases • Evaluate inventory • Staff au
Slide 9: Three Demand Streams, Four End Markets
Second Quarter 2018 Marketing Presentation Three Demand Streams, Four End Markets Sales by demand stream Quarterly Sales Growth by End Market(1): Longer 5 quarters Industrial 3 quarters Construction of growth of growth Capital ~50% of Projects sales 5+ years 4 quarters Utility(2) of full-year of gro
Slide 10: North America – Large and Growing Market for Capital Projects
North America – Second Quarter 2018 Marketing Presentation Large (~$600B) and Growing Market for Capital Projects Favorable Conditions for Growth: • Industrial recovery is only five quarters old, with multiple sources of support: ─ U.S. tax reform ─ Continued economic growth and potential re-shoring
Slide 11: 2018 Priorities
Second Quarter 2018 Marketing Presentation 2018 Priorities Outperform the end markets Sustain and expand Maintain strong free cash operating margin to drive • Execute One WESCO sales flow generation and flexible growth initiatives double-digit EPS growth capital structure • Maintain focus on sales •
Slide 12: 2018 Financial Outlook
Second Quarter 2018 Marketing Presentation 2018 Financial Outlook Sales Operating Margin Adjusted Diluted EPS(1)(2) ($B) ($) (%) ~5.00 ~8.3 ~4.6% ~4.50 ~8.1 7.7 4.2% ~4.2% 3.93 2017 2018E 2017 2018E 2017 2018E Sales growth +5% to 8% Margin improvement +30 to 50 bps EPS growth +15% to 27% • End marke
Slide 13: Long-Term Growth Algorithm
Second Quarter 2018 Marketing Presentation Long-Term Growth Algorithm Annual Expectations over the Long-Term Sales EPS Free Cash Flow • Market growth • ~50% operating profit • Greater than 90% of pull-through on organic net income • 1% to 2% from market growth outperformance − gross margin • 1% to 3
Slide 14: Invest in WESCO
Second Quarter 2018 Marketing Presentation Invest in WESCO • Industry leader with deep domain expertise in electrical, industrial, construction, and utility • Proven business model and well positioned in large, fragmented markets • Blue-chip customer and supplier base • Proven acquirer and integrato
Slide 15: Q1 2018 Earnings Webcast Presentation – April 26, 2018
Q1 2018 Earnings Webcast Presentation – April 26, 2018
Slide 16: Q1 2018 Highlights
Second Quarter 2018 Marketing Presentation Q1 2018 Highlights Jan 9% Feb 14% • Strong first quarter results Organic Growth Mar 11% ‒ Double digit sales, operating profit and EPS growth (%) versus prior year 10.1 10.9 • Continued positive business momentum and growth 8.6 across all end markets and ge
Slide 17: Industrial End Market Organic Sales Growth
Second Quarter 2018 Marketing Presentation Industrial End Market Organic Sales Growth versus Prior Year • Q1 2018 Sales − Organic sales were up 10% versus prior year • Global Accounts (up 9% in the U.S. and up 17% in Canada in local 37% • Integrated Supply • OEM currency) • General Industrial Indust
Slide 18: Construction End Market Organic Sales Growth
Second Quarter 2018 Marketing Presentation Construction End Market Organic Sales Growth versus Prior Year • Q1 2018 Sales − Organic sales were up 9% versus prior year 33% • Non-Residential (up 10% in both the U.S. and in Canada in local Contractors • currency) Construction 8.9% 9.4% 6.0% − Down 9% s
Slide 19: Utility End Market Organic Sales Growth
Second Quarter 2018 Marketing Presentation Utility End Market Organic Sales Growth versus Prior Year • Q1 2018 Sales − Organic sales were up 18% versus prior year (up 21% in the U.S. and down 6% in Canada in local currency) • Investor Owned 17.9% 16% • Public Power − Down 5% sequentially • Utility C
Slide 20: CIG End Market Organic Sales Growth
Second Quarter 2018 Marketing Presentation CIG End Market • Q1 2018 Sales Organic Sales Growth versus Prior Year − Organic sales were up 9% versus prior year (up 3% in the U.S. and up 5% in Canada in local • Commercial 14% • Institutional currency; balance of growth in International) • Government CI
Slide 21: Q1 2018 Results
Second Quarter 2018 Marketing Presentation Q1 2018 Results Outlook Actual YOY Sales 6% to 9% $2.0B Up 12.5% Gross Margin 19.1% Down 60 bps, down 10 bps sequentially (1) SG&A $291M, 14.6% Up 9%, improved 50 bps Operating Profit $73M Up 10% Operating Margin 3.5% to 3.8% 3.7% Down 10 bps Effective Tax
Slide 22: Diluted EPS Walk
Second Quarter 2018 Marketing Presentation Diluted EPS Walk Q1 2017 $0.76 Core operations (Includes the planned restoration of variable compensation versus prior year) 0.07 Foreign exchange 0.01 Tax 0.06 Share count 0.03 2018 $0.93 22
Slide 23: Free Cash Flow & Leverage
Second Quarter 2018 Marketing Presentation Free Cash Flow & Leverage Free Cash Flow Leverage ($ Millions) (Total Debt to TTM EBITDA) ~ $1.2B of free 4 cash flow over Target last 5 years Leverage 2.0x – 3.5x 3.5 3.5X 45.3 43.1 3 2.5 2 114% 105% of net of net 1.5 income income Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Slide 24: 2018 Outlook
Second Quarter 2018 Marketing Presentation 2018 Outlook FY FY Q2 (Current) (Previous) Sales 7% to 10% 5% to 8% 3% to 6% Operating Margin 4.2% to 4.5% 4.2% to 4.6% 4.2% to 4.6% Effective Tax Rate ~ 21% 21% to 23% 21% to 23% Diluted EPS $4.50 to $5.00 $4.40 to $4.90 Free Cash Flow >90% of net income >
Slide 25: Appendix: Non-GAAP Financial Measures
Second Quarter 2018 Marketing Presentation Appendix NON-GAAP FINANCIAL MEASURES This presentation includes certain non-GAAP financial measures. These financial measures include organic sales growth, gross profit, financial leverage, earnings before interest, taxes, depreciation and amortization (EBI
Slide 26: WESCO Profile 2018
Second Quarter 2018 Marketing Presentation WESCO Profile 2018 Markets & Customers Products & Services 8% 14% 10% 16% 40% 37% 12% 33% 15% 15% Industrial Global Accounts | Integrated Supply General Supplies OEM | General Industrial Communications & Security Construction Wire, Cable & Conduit Non-Resid
Slide 27: Sales Growth (%)
Second Quarter 2018 Marketing Presentation Sales Growth (%) 2016 2017 2018 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Change in Net Sales (2.2) (0.3) (3.6) (3.7) (2.4) (0.2) (0.1) 7.8 11.3 4.7 12.5 Acquisition Impact 3.9 3.7 2.9 1.8 3.1 0.9 0.2 Core (6.1) (4.0) (6.5) (5.5) (5.5) (1.1) (0.1) 7.8 11.3 4.5 12.5
Slide 28: Q1 2018 Organic Sales Growth by Geography
Second Quarter 2018 Marketing Presentation Q1 2018 Organic Sales Growth by Geography (%) U.S. Canada International WESCO Change in net sales (USD) 10.4 15.6 32.7 12.5 Impact from acquisitions - - - - Impact from foreign exchange rates - 5.7 9.2 1.6 Impact from number of workdays - - - - Organic sale
Slide 29: Sales Growth-End Markets
Second Quarter 2018 Marketing Presentation Sales Growth-End Markets ($ Millions) Q1 2018 vs. Q1 2017 Q1 2018 vs. Q4 2017 Q1 Q1 Q1 Q4 % % 2018 2017 Growth 2018 2017 Growth Industrial Core 762 681 11.9% 762 744 2.4% Construction Core 640 574 11.5% 640 679 (5.7)% Utility Core 317 267 18.5% 317 322 (1.6
Slide 30: Q1 2018 Organic Sales by End Market
Second Quarter 2018 Marketing Presentation Q1 2018 Organic Sales by End Market (%) Industrial Construction Utility CIG WESCO Core Sales Growth 11.9 11.5 18.5 9.8 12.5 FX Impact 1.5 2.1 0.6 1.3 1.6 Workday Impact - - - - - Organic Growth 10.4 9.4 17.9 8.5 10.9 30
Slide 31: Gross Margin
Second Quarter 2018 Marketing Presentation Gross Margin ($ Millions) Three Months Ended March 31, March 31, 2018 2017 Net sales $1,994 $1,773 Cost of goods sold (excluding depreciation and amortization) 1,614 1,423 Gross profit $380 $350 Gross margin 19.1% 19.7% 31
Slide 32: Adjusted Diluted EPS
Second Quarter 2018 Marketing Presentation Adjusted Diluted EPS ($ millions, except for EPS) FY 2016 FY 2017 Reported Adjusted Reported Adjusted Results Adjustments Results Results Adjustments Results Income from operations $ 332.0 - $ 332.0 $ 321.0 - $ 321.0 Interest, net 76.6 - 76.6 68.5 - 68.5 Lo
Slide 33: Capital Structure
Second Quarter 2018 Marketing Presentation Capital Structure ($ Millions) Outstanding at Outstanding at Debt December 31, 2017 March 31, 2018 Maturity Schedule AR Revolver (V) 380 390 2020 Inventory Revolver (V) 12 0 2020 2019 Term Loans (V) 85 65 2019 2021 Senior Notes (F) 500 500 2021 2024 Senior
Slide 34: Financial Leverage
Second Quarter 2018 Marketing Presentation Financial Leverage ($ Millions) Twelve Months Ended March 31, 2018 Income from operations (1) $ 326 Depreciation and amortization 64 EBITDA $ 390 March 31, 2018 Short-term borrowings and current debt $ 43 Long-term debt 1,292 Debt discount and debt issuance
Slide 35: Free Cash Flow Reconciliation
Second Quarter 2018 Marketing Presentation Free Cash Flow Reconciliation ($ Millions) Full Year Q1 Q1 2017 2017 2018 Cash flow provided by operations 149.1 47.6 53.0 Less: Capital expenditures (21.5) (4.5) (7.7) Free cash flow 127.6 43.1 45.3 Net income 189.6 37.8 42.9 Percentage of net income 67% 1
Slide 36: Work Days
Second Quarter 2018 Marketing Presentation Work Days Q1 Q2 Q3 Q4 FY 2016 64 64 64 62 254 2017 64 64 63 62 253 2018 64 64 63 62 253 36
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