Wesco International, Inc. · NYSE:WCC
Wesco International — Q4 2013 Earnings Presentation
23 slides from Wesco International's earnings presentation, Jan 30, 2014
Slide 1: Q4 and FY 2013 Earnings Webcast Presentation
Q4 and FY 2013 Earnings Webcast Presentation January 30, 2014
Slide 2: Safe Harbor Statement
2 Q4&FY 2013 Earnings Webcast 1/30/14 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, uncer
Slide 3: 2013 Q4 Highlights
3 Q4&FY 2013 Earnings Webcast 1/30/14 Financial results throughout this presentation reference non-GAAP adjusted results. See Appendix for reconciliation. 2013 Q4 Highlights • Sales of $1.88 billion, up 14.3% YOY ˗ 13.8 points from acquisitions; EECOL sales $251 million ˗ 1.5 points organic growth ˗
Slide 4: Industrial End Market
4 Q4&FY 2013 Earnings Webcast 1/30/14 0.7% (5.4%) (3.2%) Industrial End Market • Q4 2013 Sales − Down 3.2% versus prior year − Down 0.9% sequential • Global Accounts and Integrated Supply opportunity pipeline over $2.5 billion. • Channel inventory levels appear to be in balance with demand. • Biddin
Slide 5: Construction End Market
5 Q4&FY 2013 Earnings Webcast 1/30/14 (4.8%) Construction • Non-Residential • Residential 32% Core Sales Growth versus Prior Year Construction End Market • Q4 2013 Sales − Down 0.3% versus prior year − Down 4.1% sequential • Notable construction wins include infrastructure upgrades, energy, and data
Slide 6: Utility End Market
6 Q4&FY 2013 Earnings Webcast 1/30/14 Utility End Market Core Sales Growth versus Prior Year 13% Utility • Investor Owned • Public Power • Utility Contractors • Q4 2013 Sales − Up 11.1% versus prior year − Down 0.2% sequential • Eleventh consecutive quarter of year- over-year organic sales growth. •
Slide 7: CIG End Market
7 Q4&FY 2013 Earnings Webcast 1/30/14 (3.3%) (8.5%) (4.3%) 5.1% 4.9% CIG End Market • Q4 2013 Sales − Up 4.9% versus prior year − Down 7.5% sequential • Bidding levels remain active in commercial and institutional markets. • Approval of the 2014 Federal Omnibus spending bill provides government agen
Slide 8: Acquisitions
8 Q4&FY 2013 Earnings Webcast 1/30/14 Acquisition Date Estimated Annual Sales at Closing Estimated 1st Year Accretion at Closing Integration Completed Potelcom 6/10 $25M TVC Communications 12/10 $300M $0.30 RECO 3/11 $25M Brews 10/11 $50M $0.04 RS Electronics 1/12 $60M $0.04 Trydor Industries 7/12 $
Slide 9: Q4 2013 Results
9 Q4&FY 2013 Earnings Webcast 1/30/14 Q4 2013 Results Outlook Actual Sales Growth of 14% to 17% 2% to 4% organic Growth of 14.3% 1.5% organic sales Gross Margin ~ 20.5% 20.0% Operating Margin ~ 6.0% 5.9% Effective Tax Rate ~ 26% to 28% 25.5% ~ = Approximately Q4 2012 Core EECOL Q4 2013 1.26 (0.05) 1
Slide 10: FY 2013 Results
10 Q4&FY 2013 Earnings Webcast 1/30/14 FY 2013 Results Outlook Actual Sales Growth of 14% to 15% ~ Flat organic Growth of 14.2% Flat organic sales Gross Margin ~ 20.7% 20.6% Operating Margin ~ 5.9% to 6.0% 5.9% Effective Tax Rate ~ 26% to 27% 26.4% ~ = Approximately FY 2012 Core EECOL FY 2013 5.02 (
Slide 11: Cash Generation and Leverage
11 Q4&FY 2013 Earnings Webcast 1/30/14 128.1 308.4 Q4 2013 FY 2013 Cash Generation Free Cash Flow (1) ($ Millions) (1) Reconciliation of these non-GAAP financial measures is included in the Appendix to this webcast presentation. 2011 2012 (Total Par Debt to TTM EBITDA) Leverage 2013 1.5 2 2.5 3 3.5
Slide 12: FY 2014 Outlook
12 Q4&FY 2013 Earnings Webcast 1/30/14 FY 2014 Outlook Sales 5.1 6.1 6.6 7.5 7.7 2010 2011 2012 2013 2014E EPS 2.50 3.96 4.49 5.02 5.30 2010 2011 2012 2013 2014E ($B) 8.0 5.70 ($) 2012 and 2013 EPS adjusted for non-reoccurring items. See Appendix for reconciliations. Full Year Outlook Sales Growth o
Slide 13: Q1 2014 Outlook
13 Q4&FY 2013 Earnings Webcast 1/30/14 Q1 2014 Outlook Outlook Sales Flat to 3% growth (including LaPrairie) Gross Margin 20.8% to 21.0% Operating Margin 5.3% to 5.5% Effective Tax Rate 26% to 28% Note: Excludes unannounced acquisitions.
Slide 14: Appendix
14 Q4&FY 2013 Earnings Webcast 1/30/14 Appendix
Slide 15: Adjusted Results
15 Q4&FY 2013 Earnings Webcast 1/30/14 Adjusted Results Q4 2012 Reported Results Non- recurring items Adjusted Results Q4 2013 Reported Results Non- recurring items Adjusted Results Net Sales 1,644.4 (24.0) 1,620.4 1,880.1 - 1,880.1 Gross Profit 337.3 (7.0) 330.3 376.2 - 376.2 Gross margin 20.5% 20.
Slide 16: WESCO Profile 2013
16 Q4&FY 2013 Earnings Webcast 1/30/14 WESCO Profile 2013 43% 32% 13% 12% 40% 14% 15% 11% 11% 9% Controls & Motors Lighting & Controls General Supplies Data & Broadband Communications Wire, Cable & Conduit Distribution Equipment Note: Markets & Customers and Products & Services percentages reported
Slide 17: Sales Growth
17 Q4&FY 2013 Earnings Webcast 1/30/14 Sales Growth 2011 2012 2013 Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 Q4 Full Year Organic Sales Growth (%) 16.5 12.7 11.3 13.2 13.4 9.8 8.2 1.4 (1.3) 4.4 (3.4) (1.2) 3.2 1.5 0.0 Acquisitions (%) 7.0 7.4 6.9 6.2 6.8 2.6 2.2 4.0 4.3 3.3 16.0 14.6 14.1
Slide 18: Debt Maturity Schedule and Capital Structure
18 Q4&FY 2013 Earnings Webcast 1/30/14 Outstanding at December 31, 2012 Outstanding at December 31, 2013 Debt Maturity Schedule AR Revolver (V) 445 454 2016 Inventory Revolver (V) 218 23 2016 Senior Notes (F) - 500 2021 Real Estate Mortgage (F) 26 - 2019 Term Loans (V) 850 300 2019 2029 Convertible
Slide 19: Reconciliation of Non-GAAP Financial Measures
19 Q4&FY 2013 Earnings Webcast 1/30/14 Note: The prior period end market amounts noted above may contain reclassifications to conform to current period presentation. Reconciliation of Non-GAAP Financial Measures ($ Millions) Unaudited Sales Full Year 2013 vs. 2012 Q4 2013 vs. Q4 2012 Q4 2013 vs. Q3
Slide 20: Convertible Debt and Non-Cash Interest
20 Q4&FY 2013 Earnings Webcast 1/30/14 ($ Millions) Maturity Par Value of Debt Debt Discount Debt per Balance Sheet 2029 344.9 (170.8) 174.1 Convertible Debt At December 31, 2013 Non-Cash Interest Expense ($ Millions) 2011 2012 2013 Convertible Debt 2.5 2.3 4.3 Amortization of Deferred Financing Fee
Slide 21: EPS Dilution
21 Q4&FY 2013 Earnings Webcast 1/30/14 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 $60.00 6.20 0.79 51.20 $70.00 7.02 1.03 52.
Slide 22: Work Days
22 Q4&FY 2013 Earnings Webcast 1/30/14 Work Days Q1 Q2 Q3 Q4 FY 2012 64 64 63 63 254 2013 63 64 64 63 254 2014 63 64 64 62 253
Slide 23: Free Cash Flow Reconciliation
23 Q4&FY 2013 Earnings Webcast 1/30/14 Free Cash Flow Reconciliation Q4 2012 Q4 2013 2012 2013 Cash flow provided by operations 98.6 135.4 288.2 315.1 Less: Capital expenditures (3.6) (7.3) (23.1) (27.8) Add: Non-recurring EECOL pension contribution - - - 21.1 Free Cash Flow 95.0 128.1 265.1 308.4 N