Wesco International, Inc. · NYSE:WCC
Wesco International — Q3 2015 Earnings Presentation
22 slides from Wesco International's earnings presentation, Oct 22, 2015
Slide 1: Q3 2015 Earnings Webcast Presentation
Webcast Presentation October 22, 2015 Q3 2015 Earnings
Slide 2: Safe Harbor Statement
2 Q3 2015 Earnings Webcast, 10/22/2015 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: Q3 2015 Highlights
3 Q3 2015 Earnings Webcast, 10/22/2015 (1.8) (1.2) 1.6 1.5 1.6 6.0 6.7 8.1 3.2 (3.0) (5.3) Q1 Q2 Q3 Q4 2013 2014 2015 Q3 2015 Highlights Organic Growth (%) …challenging quarter, driven by industrial, Canada & foreign exchange • Organic sales were down 4% in the U.S. and down 10% in Canada • Oil and
Slide 4: Industrial End Market
4 Q3 2015 Earnings Webcast, 10/22/2015 2.1% 5.0% 7.0% 5.8% (4.1)% (10.2)% (14.2)% Industrial End Market • Q3 2015 Sales − Down 14% versus prior year − Down 4% sequentially − Sales declines driven by oil and gas, metals and mining, and OEM customers • Reduced demand outlook, weak commodity prices and
Slide 5: Construction End Market
5 Q3 2015 Earnings Webcast, 10/22/2015 • Q3 2015 Sales − Down 10% versus prior year (down 5% in both U.S. and Canada in local currency) − Up 4% sequentially − Sales declines driven by weakness with contractors serving industrial market partially offset by growth with commercial construction contract
Slide 6: Utility End Market
6 Q3 2015 Earnings Webcast, 10/22/2015 Utility End Market Core Sales Growth versus Prior Year 15% Utility • Investor Owned • Public Power • Utility Contractors • Q3 2015 Sales − Up 2% versus prior year (up 6% in U.S. and down 12% in Canada in local currency) − Flat sequentially • Eighteenth consecut
Slide 7: CIG End Market
7 Q3 2015 Earnings Webcast, 10/22/2015 CIG End Market • Q3 2015 Sales − Down 3% versus prior year − Down 1% sequentially • Solid growth with government customers and bidding activity levels remain high. • Customer focus remains on energy efficiency (lighting, automation, metering) and security. • Op
Slide 8: Q3 2015 Results
8 Q3 2015 Earnings Webcast, 10/22/2015 Q3 2015 Results Outlook Actual YOY Sales (3)% growth to flat $1.92B (7.4)% growth (5.3)% organic Gross Margin 19.8% Down 50 bps SG&A $258M, 13.4% Down 5%, Up 30 bps Operating Profit $106M Down 20% Operating Margin 5.7% to 5.9% 5.5% Down 90 bps Effective Tax Rat
Slide 9: EPS Walk
9 Q3 2015 Earnings Webcast, 10/22/2015 EPS Walk Q3 2014 $1.52 Core Operations ~(0.26) Acquisitions 0.02 Foreign Exchange Impact (0.09) Tax Rate 0.01 Share Count 0.08 Q3 2015 $1.28
Slide 10: Cash Generation and Leverage
10 Q3 2015 Earnings Webcast, 10/22/2015 1.5 2 2.5 3 3.5 4 4.5 5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 123.8 159.8 YTD Q3 2014 YTD Q3 2015 Cash Generation Free Cash Flow ($ Millions) See appendix for non-GAAP reconciliations. 100% of net income 61% of net income ~ $1B of free cash flow over last 5 years 2
Slide 11: 2015 Outlook
11 Q3 2015 Earnings Webcast, 10/22/2015 2015 Outlook Q4 FY Sales (5)% to (8)% (4)% to (5)% Operating Margin 5.0% to 5.2% ~ 5.0% Effective Tax Rate 29% to 30% ~ 29% EPS $4.15 to $4.30 Free Cash Flow ~100% of net income Notes: Excludes unannounced acquisitions. Assumes a CAD/USD exchange rate of 0.75
Slide 12: Appendix
12 Q3 2015 Earnings Webcast, 10/22/2015 Appendix
Slide 13: WESCO Profile 2015
13 Q3 2015 Earnings Webcast, 10/22/2015 WESCO Profile 2015 40% 32% 15% 13% 40% 15% 15% 11% 10% 9% Controls & Motors Lighting & Controls General Supplies Data & Broadband Communications Wire, Cable & Conduit Distribution Equipment Note: Markets & Customers and Products & Services percentages reported
Slide 14: Sales Growth
14 Q3 2015 Earnings Webcast, 10/22/2015 Sales Growth 2013 2014 2015 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Consolidated 12.6 13.2 16.6 14.3 14.2 0.2 5.9 7.6 6.1 5.0 0.3 (4.4) (7.4) Acquisition Impact 16.0 14.6 14.1 13.8 14.6 0.5 1.6 1.8 1.6 1.4 1.2 1.6 2.0 Core (3.4) (1.4) 2.5 0.5 (0.4) (0.3) 4.3 5.
Slide 15: Q3 2015 Sales Growth – Geography
15 Q3 2015 Earnings Webcast, 10/22/2015 Q3 2015 Sales Growth – Geography U.S. Canada International Total Change in net sales (1.2) (24.4) (9.7) (7.4) Impact from acquisitions 2.8 - - 2.0 Impact from foreign exchange rates - (14.5) (8.8) (4.1) Impact from number of workdays - - - - Normalized organic
Slide 16: Sales Growth – End Markets
16 Q3 2015 Earnings Webcast, 10/22/2015 Note: The prior period end market amounts noted above may contain reclassifications to conform to current period presentation. ($ Millions) Sales Growth – End Markets Q3 2015 vs. Q3 2014 Q3 2015 vs. Q2 2015 Q30 Q30 Q30 Q20 2015 2014 %00 Growth 2015 2015 %00 Gr
Slide 17: Debt Maturity Schedule and Capital Structure
17 Q3 2015 Earnings Webcast, 10/22/2015 Outstanding at December 31, 2014 Outstanding at September 30, 2015 Debt Maturity Schedule AR Revolver (V) 430 530 2018 Inventory Revolver (V) 8 56 2020 Senior Notes (F) 500 500 2021 2019 Term Loans (V) 252 189 2019 2029 Convertible Bonds (F) 345 345 2029 (1) O
Slide 18: Financial Leverage
18 Q3 2015 Earnings Webcast, 10/22/2015 Financial Leverage Twelve Months Ended September 30, 2015 Financial leverage ratio: Income from operations $ 408 Depreciation and amortization 65 EBITDA $ 473 September 30, 2015 Current debt and short-term borrowings $ 46 Long-term debt 1,455 Debt discount rel
Slide 19: Convertible Debt and Non-Cash Interest
19 Q3 2015 Earnings Webcast, 10/22/2015 ($ Millions) Maturity Par Value of Debt Debt Discount Debt per Balance Sheet 2029 344.9 (164.4) 180.5 Convertible Debt At September 30, 2015 Non-Cash Interest Expense ($ Millions) 2013 2014 YTD Q3 2015 Convertible Debt 4.3 4.1 4.4 Amortization of Deferred Fina
Slide 20: EPS Dilution
20 Q3 2015 Earnings Webcast, 10/22/2015 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 $30.00 0.45 0.19 43.84 $40.00 3.33 0.34 46
Slide 21: Free Cash Flow Reconciliation
21 Q3 2015 Earnings Webcast, 10/22/2015 Free Cash Flow Reconciliation Q3 2014 Q3 2015 YTD Q3 2014 YTD Q3 2015 Cash flow provided by operations 89.0 43.3 139.8 176.0 Less: Capital expenditures (4.3) (3.6) (16.0) (16.2) Free Cash Flow 84.7 39.7 123.8 159.8 Note: Free cash flow is provided by the Compa
Slide 22: Work Days
22 Q3 2015 Earnings Webcast, 10/22/2015 Work Days Q1 Q2 Q3 Q4 FY 2014 63 64 64 62 253 2015 62 64 64 63 253 2016 64 64 64 62 254