Wesco International, Inc. · NYSE:WCC
Wesco International — Investor Day (March 2016)
105 slides from Wesco International's investor day presentation, Mar 2, 2016
Slide 1: 2016 Investor Day
2016 INVESTOR DAY WESCO International 2016 Investor Day
Slide 2: Safe Harbor Statement
2 2016 WESCO INVESTOR DAY ID16 ALL 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, uncertai
Slide 3: John Engel, Chairman, President and CEO
2016 INVESTOR DAY John Engel Chairman, President and Chief Executive Officer WESCO International
Slide 4: 2016 WESCO Investor Day Agenda
4 2016 WESCO INVESTOR DAY ID16 ALL Investor Day begins at 1:00 p.m. Welcome and WESCO Overview John Engel Chairman, President, and Chief Executive Officer Sales & Marketing David Bemoras Vice President, Global Sales and Marketing Supply Chain and Operations Hemant Porwal Vice President, Global Suppl
Slide 5: WESCO Overview
5 2016 WESCO INVESTOR DAY ID16 ALL Competitive Differentiators Performance Goals The global leader of supply chain solutions addressing customers’ MRO, OEM and capital project demand streams. Global footprint Service capabilities Product portfolio Free cash flow 90%+ of net income Double digit EPS g
Slide 6: Competitive Differentiator: Product Portfolio
6 2016 WESCO INVESTOR DAY ID16 ALL • Fulfill MRO, OEM, capex customer demand streams • Broaden product portfolio • Improve margin profile • Expand global sourcing • Increase private label • Supplier-optimized value chain …providing world class brands when and where needed 40% 15% 15% 11% 10% 9% Auto
Slide 7: Competitive Differentiator: Service Capabilities
7 2016 WESCO INVESTOR DAY ID16 ALL Expand service offerings: • Storeroom services • Inventory management • Logistics • Warehousing • Kitting/pre-assembly • Labor and supply chain outsourcing • Capital project management • IT procurement solutions Value Drivers …providing a comprehensive service valu
Slide 8: Competitive Differentiator: Global Footprint
8 2016 WESCO INVESTOR DAY ID16 ALL • Accelerate One WESCO growth strategy with blue- chip customers • Extend service capabilities • Grow organically through local presence • Further expand through bolt-on acquisitions …expanding globally with blue-chip customers Value Drivers 7 17 2004 2015 Countrie
Slide 9: Competitive Differentiator: Talent Management
9 2016 WESCO INVESTOR DAY ID16 ALL Strategy …talent is our differentiating value creator • Streamline the organization • One U.S. business leader • New Canada business leader • New Global Sales and Marketing organization – End-market leaders – Product category managers – eCommerce development • New
Slide 10: Competitive Differentiator: Continuous Improvement Culture
10 2016 WESCO INVESTOR DAY ID16 ALL Competitive Differentiator: Continuous Improvement Culture …accelerating Lean inside and outside the company Pull system for continuous improvement to drive business results by engaging employees at all levels to be customer focused, process minded, relentless in
Slide 11: WESCO Strategy
11 2016 WESCO INVESTOR DAY ID16 ALL Competitive Differentiators Performance Goals Global footprint Service capabilities Product portfolio Free cash flow 90%+ of net income Double digit EPS growth Grow faster than the market Talent and culture Superior investor returns Accelerate One WESCO Growth Ini
Slide 12: Global Sales and Marketing Priorities
12 2016 WESCO INVESTOR DAY ID16 ALL Global Sales and Marketing Priorities • Integrating all our efforts around customers • Focusing on profitable organic growth opportunities • Branding, demand creation programs, and marketing leverage • Sales and specialist training and solution selling • Refining
Slide 13: Global Supply Chain and Operations Priorities
13 2016 WESCO INVESTOR DAY ID16 ALL Global Supply Chain and Operations Priorities Network Optimization Operations Transportation Safety • Simplify and streamline business − Lean processes − Optimize footprint • Supply chain management − Optimize supply base − Leverage purchasing − Manage inventory •
Slide 14: Acquisitions
14 2016 WESCO INVESTOR DAY ID16 ALL Acquisitions 325 400 1,500 1,600 1,900 2010 2 2011 2 2012 4 2014 3 2015 3 Acquisition Criteria Consistent with WESCO strategy Rate of return greater than WESCO risk-adjusted average cost of capital Accretive in first year of operation Margins higher than WESCO
Slide 15: Atlanta Electrical Distributors Acquisition
15 2016 WESCO INVESTOR DAY ID16 ALL • Fast growing, well-established electrical distributor serving the construction and MRO segments • Founded in 2006 • Annual revenue of ~$85 million • 93 employees • 5 locations in northern Georgia • Expecting ~$0.03 full-year EPS accretion • Closing is expected t
Slide 16: Summary
16 2016 WESCO INVESTOR DAY ID16 ALL Summary • Increased economic and end market headwinds (oil & gas, metals & mining, industrial, foreign exchange) • One WESCO successes • Cost reduction and SG&A leverage • Strong free cash flow • Completed Hill Country, Lumigent/Aelux, and Needham Electric acquisi
Slide 17: Key Messages
17 2016 WESCO INVESTOR DAY ID16 ALL Key Messages Sales & Marketing Developing a high-performance sales organization to drive profitable growth Supply Chain & Operations Streamlining the business and leveraging the supply chain to expand profitability U.S. Accelerating One WESCO initiatives with stre
Slide 18: Sales and Marketing
2016 INVESTOR DAY David Bemoras Vice President, Global Sales and Marketing Sales and Marketing
Slide 19: WESCO Strategy
19 2016 WESCO INVESTOR DAY ID16 ALL Competitive Differentiators Performance Goals Global footprint Service capabilities Product portfolio Free cash flow 90%+ of net income Double digit EPS growth Grow faster than the market Talent and culture Superior investor returns Accelerate One WESCO Growth Ini
Slide 20: Driving Sales Growth
20 2016 WESCO INVESTOR DAY ID16 ALL Driving Sales Growth 1. Recruit, retain, and develop top sales and marketing talent 2. Fully utilize WESCO customer relationship management (CRM) tool 3. Implement effective sales planning and goal setting 4. Coach, inspire, and recognize goal achievement 5. Spons
Slide 21: High-Performance Sales Culture
21 2016 WESCO INVESTOR DAY ID16 ALL High-Performance Sales Culture …building a foundation to deliver long-term organic sales growth 2014 and 2015 Key Accomplishments Implemented CRM platform Developed sales planning and performance management process Built category management team Expanded s
Slide 22: Salesbook CRM Platform
22 2016 WESCO INVESTOR DAY ID16 ALL Salesbook CRM Platform SUPPLIER PLANNING • Branch supplier plan management • Joint sales call tracking/reporting • Pipeline by suppler and category ANNUAL SALES PLANNING • OSR plans by account/supplier • OSR action plans by supplier • Monthly forecasting • Sales p
Slide 23: Sales Planning and Performance Management
23 2016 WESCO INVESTOR DAY ID16 ALL Sales Planning and Performance Management • Objectives • Create a uniform planning process across the organization • Develop strategic account assignments by sales person • Establish sales and margin targets • Establish core supplier targets • Measure and track pe
Slide 24: Product Category and Supplier Management
24 2016 WESCO INVESTOR DAY ID16 ALL Product Category and Supplier Management …enabling higher levels of sales productivity and customer service Communications & Security MRO & General Supplies Lighting & Sustainability Electrical
Slide 25: Marketing and Demand Creation
25 2016 WESCO INVESTOR DAY ID16 ALL Marketing and Demand Creation …deliver message, qualify leads, track customers through the pipeline Measure results and refine programs to maximize ROI 6 Research to develop deep segment and value proposition understanding 1 Identify growth opportunities with sale
Slide 26: One WESCO
26 2016 WESCO INVESTOR DAY ID16 ALL One WESCO One WESCO is about integrating our multi-company heritage and capabilities into one operating company, where the whole is greater than the sum of our parts. • Driving better than market growth • Expanding customer relationships and differentiating WESCO
Slide 27: One WESCO Sales Initiatives
27 2016 WESCO INVESTOR DAY ID16 ALL One WESCO Sales Initiatives Cross Selling CheckerboardExecution Two Key Initiatives Established over ten One WESCO initiatives built on • Business unit collaboration • Customer share expansion • Organizational resource utilization …leveraging our portfolio and res
Slide 28: Datacom / Electrical Cross Selling
28 2016 WESCO INVESTOR DAY ID16 ALL Datacom / Electrical Cross Selling …generating incremental organic sales growth Servicing Branch Servicing Branch Specialized support for OSRs and customers across all product categories Existing Datacom Customer Datacom OSR Electrical OSR Existing Electrical Cust
Slide 29: Checkerboard product categories
29 2016 WESCO INVESTOR DAY ID16 ALL OEM Lighting D A T A C O M M U N I C A T I O N S W I R E D A T A C O M M U N I C A T I O N S C O N D U I T ‐ M E T A L C O N D U I T ‐ N O N M E T A L L I C C O N D U I T & C A B L E F I T T I N G S R A C E W A Y S , W I R E W A Y S , S T R U T , C A B L E T R A Y
Slide 30: Checkerboard Execution
30 2016 WESCO INVESTOR DAY ID16 ALL Strategy Scope Results Checkerboard Execution …targeting key global account sites to unlock untapped sales opportunities Data Analysis Across 27 product segments Discovery Validate opportunities Execution Execute sales plan Supply Chain Solution • One WESCO • Prod
Slide 31: 2015 Global Accounts: New Contracts and Renewals
31 2016 WESCO INVESTOR DAY ID16 ALL Oil and Gas Health GeneralOEM Retail Food Paper Transportation Technology Metals and Mining Solar Electrical Finance Aerospace 2015 Global Accounts Food OEM Electrical Metals Oil and Gas Transportation Aerospace Paper General 95% Renewal Rate $875M Total Value*Ove
Slide 32: WESCO Supply Chain Solutions
32 2016 WESCO INVESTOR DAY ID16 ALL …providing customized and scalable solutions WESCO Supply Chain Solutions 4-Step Value Creation Process 1. Understand the customer’s business 2. Match WESCO’s capabilities to customer needs 3. Uncover additional opportunities to create value 4. Deliver measurable
Slide 33: Supply Chain Solution Success Story
33 2016 WESCO INVESTOR DAY ID16 ALL Supply Chain Solution Success Story • WESCO developed a procurement and material management program for this customer, including: − A commodity procurement program delivering commodity price stability − A customized e-Commerce solution − Jobsite material managemen
Slide 34: Capitalize on Growth Markets
34 2016 WESCO INVESTOR DAY ID16 ALL Capitalize on Growth Markets Cloud Computing Critical Infrastructure Protection Intelligent Buildings LED Lighting Retrofit Alternative Energy Physical Security Broadband Communications Industrial Networking …developing core competencies and resources in growth ma
Slide 35: eCommerce Objectives
35 2016 WESCO INVESTOR DAY ID16 ALL Secondary Win incremental business Primary Selectively shift existing customer orders to digital channels Supporting eBusiness Requirements eCommerce Objectives …driving cost reduction and supporting customer retention – Reduce costs and expand profitability – Exp
Slide 36: Summary
36 2016 WESCO INVESTOR DAY ID16 ALL Summary • Organizational alignment driving improved levels of execution • Sales leadership driving higher performance sales culture • Operationalizing One WESCO sales initiatives • Collaborating more effectively with our key suppliers • Creating solutions to provi
Slide 37: Supply Chain and Operations
2016 INVESTOR DAY Hemant Porwal Vice President, Global Supply Chain and Operations Supply Chain and Operations
Slide 38: WESCO Strategy
38 2016 WESCO INVESTOR DAY ID16 ALL Competitive Differentiators Performance Goals Global footprint Service capabilities Product portfolio Free cash flow 90%+ of net income Double digit EPS growth Grow faster than the market Talent and culture Superior investor returns Accelerate One WESCO Growth Ini
Slide 39: Supply Chain and Operations Mandate
39 2016 WESCO INVESTOR DAY ID16 ALL Supply Chain and Operations Our Mandate Deliver growth and increase profitability by leveraging the value chain from sourcing to customer fulfillment with the right people, process, infrastructure and technology. Our Values • Feel the heat of the businesses • Supp
Slide 40: Supply Chain and Operations organization
40 2016 WESCO INVESTOR DAY ID16 ALL Organization designed for efficiency and effectiveness in sync with marketing demand creation, sales operations, and category management Supply Chain and Operations Sourcing $6B+ spend 12,000+ Special Pricing Agreements Pricing 80,000+ customers Inventory $800M+ i
Slide 41: Roadmap to Deliver Step-Change Performance
41 2016 WESCO INVESTOR DAY ID16 ALL Sourcing Optimization Pricing Optimization Inventory Optimization Network Optimization Transportation Optimization Roadmap to Deliver Step-Change Performance …new capabilities and ways of working
Slide 42: Sourcing and Inventory Evolution
42 2016 WESCO INVESTOR DAY ID16 ALL • Strategic and diverse supply base • Spend managed by Category • Centralized and automated source to pay transactions • Higher product turns and improved cash conversion cycle • Spend negotiated locally • Costs negotiated at the customer level • Limited strategic
Slide 43: Supplier Spend Overview
43 2016 WESCO INVESTOR DAY ID16 ALL …reducing complexity while improving cost and volume rebates Grow Strategic Suppliers Leverage Spend Reduce Complexity Supplier Spend Overview
Slide 44: Reduce Complexity and Leverage Spend
44 2016 WESCO INVESTOR DAY ID16 ALL Reduce Complexity and Leverage Spend Corrugate • Purchased by all branches • 20+ suppliers to 1 • From 175+ SKUs to <20 SKUs • Bags, Strapping, Tape, Filler • Purchased by all branches • 20+ suppliers to 1 • From 200+ SKUs to <30 SAVINGS 25% total savings achieved
Slide 45: Leverage Spend to Grow Strategic Suppliers
45 2016 WESCO INVESTOR DAY ID16 ALL Leverage Spend to Grow Strategic Suppliers Yesterday • 10+ suppliers • No spend leverage • Inconsistent pricing • Every purchase order negotiated • Today • Commodity Center of Excellence • 4 suppliers • Monthly awards • Same unit cost on every purchase order Steel
Slide 46: Product Categories
46 2016 WESCO INVESTOR DAY ID16 ALL …near term focus is on General Supplies and Wire, Cable & Conduit Product Categories 40% 15% 15% 11% 10% 9% Products Wire, Cable & Conduit Communications & Security Automation Distribution Equipment Lighting & Controls Supplies
Slide 47: Pricing Evolution
47 2016 WESCO INVESTOR DAY ID16 ALL Pricing Evolution • Pricing analytics and optimization tools • Price intelligence spanning product categories, industry verticals and customer size • Pricing established as a Center of Excellence • Prices set primarily by branch, initiating shift to category • Mos
Slide 48: Disciplined Approach to Pricing
48 2016 WESCO INVESTOR DAY ID16 ALL Disciplined Approach to Pricing Analyze Gap to Goal • Top supplier deep dives • Best-in-class analysis • Stale invoice price analysis • Rate / volume analysis • Top SKUs review • Margin clinics • Customer segmentation • General and default price increase • Supplie
Slide 49: Pricing Analytics Results: Eastern Pennsylvania
49 2016 WESCO INVESTOR DAY ID16 ALL …initial results are notable Approach 1. Align customer segmentation 2. Top SKUs review 3. Best-in-class analysis to build confidence on sell side 4. Rate / volume analysis to drive sales growth 200+ bps margin improvement Effective Collaboration – Powered by Pric
Slide 50: Operations and Transportation Evolution
50 2016 WESCO INVESTOR DAY ID16 ALL Operations and Transportation Evolution • Strategically located branches, distribution centers and sales offices worldwide • Transportation is a global function with agile capabilities for the “last mile” • Infrastructure that enables growth, exceeds customer requ
Slide 51: Our Network in North America
51 2016 WESCO INVESTOR DAY ID16 ALL 47 97 New Merged/ Closed Our Network in North America Branch Changes (Since 2010) …meeting customer demands and driving operational synergies
Slide 52: Supply Chain and Operations Summary
52 2016 WESCO INVESTOR DAY ID16 ALL Supply Chain and Operations Summary • Laid the groundwork in 2015 to support operating margin expansion • Early successes have validated our approach • Engaged with both local and global teams • Expecting to deliver at least 20 bps of annual margin improvement thr
Slide 53: United States
2016 INVESTOR DAY Andy Bergdoll Group Vice President & General Manager, United States United States
Slide 54: U.S. Business Profile
54 2016 WESCO INVESTOR DAY ID16 ALL • Leverage our competitive advantage as a premier supply chain solutions provider • Cultivate long-term customer and supplier partnerships which generate superior value • Attract, develop, engage, and retain talent • Return to organic sales growth and profitabilit
Slide 55: U.S. Markets and Products
55 2016 WESCO INVESTOR DAY ID16 ALL U.S. Markets and Products 42% 16% 15% 9% 9% 9% 27% 40% 18% 15% Markets Products …diversified customer base and product lines Wire, Cable & Conduit Communications & Security Automation Distribution Equipment Lighting & Controls Supplies Utility Industrial CIG Const
Slide 56: U.S. Growth
56 2016 WESCO INVESTOR DAY ID16 ALL U.S. Growth 4.2 4.9 5.2 5.2 5.6 5.6 2010 2011 2012 2013 2014 2015 Sales ($B) • Organic sales down 2% • Industrial sales decline partially offset by solid growth in utility and CIG • Completed three acquisitions …execution and acquisitions mitigated by end market h
Slide 57: 2016 U.S. Sales Outlook
57 2016 WESCO INVESTOR DAY ID16 ALL …improved execution and acquisitions partially mitigated by continued end market headwinds in 2016 2016 U.S. Sales Outlook 2015 Actual Growth Initiatives Acquisitions End Markets 2016 Outlook 2% to 3%$5.6B (2)% to (4)% • Sales management effectiveness • Sales forc
Slide 58: 2016 U.S. End Market Expectations
58 2016 WESCO INVESTOR DAY ID16 ALL 2016 U.S. End Market Expectations Industrial • Upstream Oil & Gas • Metals & Mining • Manufacturing • Chemical Processing • Food • Pharmaceutical • Downstream Oil & Gas Construction • Industrial • Infrastructure • Commercial • Residential Utility • Generation • Di
Slide 59: 2016 U.S. Profitability Outlook
59 2016 WESCO INVESTOR DAY ID16 ALL 2016 U.S. Profitability Outlook Operating Margin • Stable billing margins • Supplier volume rebate management • Carry-over benefit from 2015 structural cost reduction actions • Continued Lean productivity initiatives • Continued organizational streamlining and net
Slide 60: U.S. Investments
60 2016 WESCO INVESTOR DAY ID16 ALL U.S. Investments …strengthening our leadership position Acquisitions since 2010Organic Seattle One WESCO Facility Opened 2015 Los Angeles One WESCO Facility Opened 2013 Dallas One WESCO Facility Opened 2012 Inside Sales Support Solar Resources Construction Resourc
Slide 61: U.S. Business Structure
61 2016 WESCO INVESTOR DAY ID16 ALL U.S. Business Structure …streamlining and simplifying East Central West EESCO MRO and Safety OEM Broadband Utility East West EESCO MRO and Safety Utilities OEM 20162014 Manufactured Structures WESCO Integrated Supply WESCO Integrated Supply
Slide 62: U.S. Success Stories
62 2016 WESCO INVESTOR DAY ID16 ALL U.S. Success Stories Internet Service Provider Value Creation Services • Existing customer with numerous data center projects • WESCO positioned as a trusted advisor providing technical assistance, design cost analysis, customer inventory management, training and
Slide 63: U.S. Summary
63 2016 WESCO INVESTOR DAY ID16 ALL U.S. Summary • U.S. market provides attractive growth prospects and continued opportunities for industry consolidation • WESCO has strong capabilities, extensive infrastructure, and a broad product and services portfolio across the U.S. • Strengthening our competi
Slide 64: Canada
2016 INVESTOR DAY Nelson Squires Group Vice President and General Manager, Canada Canada
Slide 65: Canada Business Profile
65 2016 WESCO INVESTOR DAY ID16 ALL $1.5B USD Annual Sales Strategic Priorities WESCO is the largest distributor with a strong presence across Canada. • Construction, Industrial, Utility, and CIG • 127 Branches • 4 Distribution Centers•~$7B+ Addressable Market …leadership position through organic gr
Slide 66: Canada Markets and Products
66 2016 WESCO INVESTOR DAY ID16 ALL Canada Markets and Products 35% 7% 15% 17% 19% 7% 54% 30% 8% 8% Markets Products …diversified customer base and product lines Wire, Cable & Conduit Communications & Security Automation Distribution Equipment Lighting & Controls SuppliesUtility Industrial CIG Const
Slide 67: Canada Branch Locations
67 2016 WESCO INVESTOR DAY ID16 ALL Canada …strong national presence Branch Locations WESCO 69 EECOL 58 Distribution Centers
Slide 68: Canada Growth
68 2016 WESCO INVESTOR DAY ID16 ALL Canada Growth …challenging 2015, impacted by foreign exchange and commodity deflation 0.7 0.9 1.1 1.9 1.9 1.5 2010 2011 2012 2013 2014 2015 Sales (U.S. $B) • Sales decreased 19% in 2015 – Down 7% organically – Down 12% due to foreign exchange • Sales decline in th
Slide 69: 2016 Canada Sales Outlook
69 2016 WESCO INVESTOR DAY ID16 ALL 2016 Canada Sales Outlook 2015 Actual Growth Initiatives End Markets FX 2016 Outlook $1.5B (6)% to (8)% …improved execution overshadowed by continued end market headwinds and currency impact in 2016 • Territory and account management • Cross-sell safety offering •
Slide 70: 2016 Canada Market Expectations
70 2016 WESCO INVESTOR DAY ID16 ALL …sectors of market opportunity 2016 Canada Market Expectations Alberta • Oil and Gas • Residential (multi-family) • Commercial Construction • Government (P3) • Utility Saskatchewan / Manitoba • Oil and Gas • Commercial Construction • Utility • Mining • Government
Slide 71: 2016 Canada Profitability Outlook
71 2016 WESCO INVESTOR DAY ID16 ALL 2016 Canada Profitability Outlook Operating Margin • Stable billing margins • Improvement in under- performing branches • Carry-over benefit from 2015 structural cost reduction actions • Continued Lean productivity initiatives • Additional 2016 cost actions, as re
Slide 72: Canada Investments
72 2016 WESCO INVESTOR DAY ID16 ALL Canada Investments 5 new branches opened since 2012 …strengthening our leadership position Acquisitions since 2010Organic Toronto Distribution Center Opened 2012 Edmonton Distribution Center Opened 2009; expanded 2012 Montreal Distribution Center Opened 2013 Signi
Slide 73: EECOL Electric Business Profile
73 2016 WESCO INVESTOR DAY ID16 ALL EECOL Electric • EECOL Electric is headquartered in Calgary, Alberta, Canada • EECOL has been operating in Canada since 1919 • Approximately $0.7B in annual sales in Canada • More than 20,000 customers − Commercial and Residential Construction − Industrial − Oil &
Slide 74: Canada Success Stories
74 2016 WESCO INVESTOR DAY ID16 ALL Canada Success Stories Industrial Project and Warehouse • Multi-year, single source agreement on Electrical MRO and Capital Bulks • 11 customer site locations being served • Situated throughout the Provinces of Alberta and Saskatchewan • Incorporated all third par
Slide 75: Canada Summary
75 2016 WESCO INVESTOR DAY ID16 ALL Canada Summary • WESCO is a market leader in Canada − Strong resources and capabilities, the broadest infrastructure and a diverse customer base − Attractive growth opportunities are available across the business − One WESCO provides a strategic advantage to furth
Slide 76: Financials
2016 INVESTOR DAY Ken Parks Senior Vice President and Chief Financial Officer Financials
Slide 77: WESCO Strategy
77 2016 WESCO INVESTOR DAY ID16 ALL Competitive Differentiators Performance Goals Global footprint Service capabilities Product portfolio Free cash flow 90%+ of net income Double digit EPS growth Grow faster than the market Talent and culture Superior investor returns Accelerate One WESCO Growth Ini
Slide 78: Financial Performance
78 2016 WESCO INVESTOR DAY ID16 ALL Financial Performance EPSSales 11% CAGR …solid long-term performance, including a challenging 2015 8% CAGR 2.50 3.96 4.38 5.02 5.18 4.18 2010 2011 2012 2013 2014 2015 5.1 6.1 6.6 7.5 7.9 7.5 2010 2011 2012 2013 2014 2015 112 134 265 308 231 261 2010 2011 2012 2013
Slide 79: 2015 Highlights
79 2016 WESCO INVESTOR DAY ID16 ALL 2015 Highlights • Organic sales down 3% Down 2% in the U.S. Down 7% in Canada • Oil and gas sales down approximately 25% • Cost controls partially mitigated sales and gross margin declines • Completed Hill Country, Lumigent/Aelux and Needham acquisitions • Rep
Slide 80: Cost Leverage
80 2016 WESCO INVESTOR DAY ID16 ALL 788 860 887 829 843 807 2010 2011 2012 2013 2014 2015 Cost Leverage Sales per Employee ($ Thousands) SG&A (%) …compares favorably to industry benchmarks NAED: National Association of Electrical Distributors 15.1 14.2 14.1 13.7 13.6 14.0 2010 2011 2012 2013 2014 20
Slide 81: Cost Actions
81 2016 WESCO INVESTOR DAY ID16 ALL Cost Actions 2015 • Eliminated approximately 460 positions • Eliminated or consolidated 21 branches, including our businesses in Australia and Brazil. • Annual run-rate benefit of ~$50M or ~$0.70 per share • 2016 impact of ~$25M or ~$0.35 per share 2016 • Continue
Slide 82: Operating Margin
82 2016 WESCO INVESTOR DAY ID16 ALL Operating Margin 2.3% 3.9% 5.0% 0% 2% 4% 6% 8% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 …sequentially raising the trough through scale and cost management Note: See appendix for non-GAAP reconciliations.
Slide 83: EPS Walk
83 2016 WESCO INVESTOR DAY ID16 ALL EPS Walk FY 2014 $5.18) Core operations (0.95) Foreign exchange impact (0.31) Acquisitions (0.10) Tax (0.06) Share count 0.22) 2015 $4.18) …sales, gross margin, and FX headwinds outweighed cost control and share repurchase activity
Slide 84: Effective Capital Allocation
84 2016 WESCO INVESTOR DAY ID16 ALL 1.5 2 2.5 3 3.5 4 4.5 5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Effective Capital Allocation Leverage (Total Par Debt to TTM EBITDA) …maintaining fiscal discipline while funding growth Cash Deployment • Support organic growth • Fund accretive acquisitions • Reduce fin
Slide 85: 2016 Anticipated Business Environment
85 2016 WESCO INVESTOR DAY ID16 ALL 2016 Anticipated Business Environment …continuation of the protracted economic recovery • Upstream oil and gas spending and impact, particularly on Canadian economy • Foreign currency translation • Metals & Mining • China growth slowing ‒ • Non-residential constru
Slide 86: Industrial End Market
86 2016 WESCO INVESTOR DAY ID16 ALL Improving Flat Declining Core Sales Growth versus Prior Year42% Key Market Indicators U.S. industrial production ISM Purchasing Managers’ Index Capacity utilization Canadian industrial production • Global Accounts • Integrated Supply • OEM • General Industrial …ex
Slide 87: Construction End Market
87 2016 WESCO INVESTOR DAY ID16 ALL Improving Flat Declining Core Sales Growth versus Prior Year42% Key Market Indicators Architectural Billings Index NEMA electroindustry business confidence index Construction starts and put in place Canadian non-residential construction • Non-Residential • Residen
Slide 88: Utility End Market
88 2016 WESCO INVESTOR DAY ID16 ALL Improving Flat Declining Core Sales Growth versus Prior Year Key Market Indicators Distribution grid maintenance and upgrades Generation MRO, upgrades, expansions Transmission line infrastructure build-out Non-residential and residential construction starts • Inve
Slide 89: CIG End Market
89 2016 WESCO INVESTOR DAY ID16 ALL Improving Flat Declining Core Sales Growth versus Prior Year42% Key Market Indicators Government spending Communications and security upgrades Education, healthcare, and financial • Commercial • Institutional • Government …expecting flat to LSD sales growth in 201
Slide 90: 2016 Sales Outlook
90 2016 WESCO INVESTOR DAY ID16 ALL 2016 Sales Outlook Sales Outlook End Market: Range Industrial (HSD) to (MSD) Construction (LSD) to LSD Utility Flat to LSD CIG Flat to LSD End Market Sales Growth (4)% to (1)% Market outperformance ~2% Foreign currency translation (3)% to (2)% Carryover impact of
Slide 91: 2016 Margin Outlook
91 2016 WESCO INVESTOR DAY ID16 ALL 2016 Margin Outlook …expecting to sustain current margin levels Operating Margin 4.2% 5.4% 5.7% 5.9% 5.9% 5.0% 4.8% 2010 2011 2012 2013 2014 2015 2016E Headwinds Strategies to Mitigate ‒ Continued pressure on pricing and mix ‒ Restoring commissions and incentives
Slide 92: 2016 Sales and Operating Profit Outlook
92 2016 WESCO INVESTOR DAY ID16 ALL 2016 Sales and Operating Profit Outlook Sales Change (%) Operating Profit Change ($M) U.S. [a] Flat to LSD 0 to 30 Canada [b] (LDD) to (HSD) (20) to (5) International [b] (MSD) (1) to 0 Cost management 6 to 0 Contingency (2)% to (1)% ~(20) WESCO (5)% to Flat (30)
Slide 93: 2016 Financial Outlook
93 2016 WESCO INVESTOR DAY ID16 ALL 2.50 3.96 4.38 5.02 5.18 4.18 3.75 2010 2011 2012 2013 2014 2015 2016E 2016 Financial Outlook Sales 5.1 6.1 6.6 7.5 7.9 7.5 ~7.1 2010 2011 2012 2013 2014 2015 2016E Diluted EPS ($B) ~7.5 Sales Flat to (5)% Free Cash Flow At least 90% of net income ($) Effective ta
Slide 94: Five Year Outlook 2016 to 2020
94 2016 WESCO INVESTOR DAY ID16 ALL Five Year Outlook 2016 to 2020 • Working capital management • Controlled capex • Stable gross margins • Cost structure optimization • Organic growth • Acquisitions • Improving ROIC • Consistent execution Performance Goals Free cash flow 90%+ of net income Double d
Slide 95: 2016-2020 Outlook
95 2016 WESCO INVESTOR DAY ID16 ALL 5.1 6.1 6.6 7.5 7.9 7.5 ~7.1 2010 2011 2012 2013 2014 2015 2016E 2020E 2016-2020 Outlook Sales ($ B) EPS ($) …managing the business for double-digit EPS growth See appendix for non-GAAP reconciliations. 7% to 9% CAGR 2.50 3.96 4.38 5.02 5.18 4.18 3.75 2010 2011 20
Slide 96: John Engel, Chairman, President and CEO
2016 INVESTOR DAY John Engel Chairman, President and Chief Executive Officer WESCO International
Slide 97: Invest in WESCO
97 2016 WESCO INVESTOR DAY ID16 ALL • Industry leader with deep domain expertise in electrical, industrial, construction, and utility • Proven business model and well positioned in large, fragmented markets • Blue chip customer and supplier base • Proven acquirer and integrator in a consolidating in
Slide 98: 98 2016 WESCO INVESTOR DAY ID16 ALL
98 2016 WESCO INVESTOR DAY ID16 ALL
Slide 99: Appendix
a — 3 Appendix WESCO’ 2016 INVESTOR DAY
Slide 100: Sales Growth
100 2016 WESCO INVESTOR DAY ID16 ALL Sales Growth 2013 2014 2015 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Consolidated 12.6 13.2 16.6 14.3 14.2 0.2 5.9 7.6 6.1 5.0 0.3 (4.4) (7.4) (6.7) (4.7) Acquisition Impact 16.0 14.6 14.1 13.8 14.6 0.5 1.6 1.8 1.6 1.4 1.2 1.6 2.0 3.0 2.0 Core (3.4) (1.4) 2.5
Slide 101: 2015 Sales Growth – Geography
101 2016 WESCO INVESTOR DAY ID16 ALL 2015 Sales Growth – Geography U.S. Canada International Total Change in net sales 1.1 (19.0) (15.6) (4.7) Impact from acquisitions 2.6 0.6 - 1.9 Impact from foreign exchange rates - (12.4) (7.4) (3.3) Impact from number of workdays - - - - Normalized organic sale
Slide 102: Sales Growth-End Markets
102 2016 WESCO INVESTOR DAY ID16 ALL Note: The prior period end market amounts noted above may contain reclassifications to conform to current period presentation. ($ Millions) Sales Growth-End Markets Full Year 2015 vs. 2014 2015 2014 % Growth Industrial Core 2,940 3,315 (11.3)% Construction Core 2
Slide 103: Adjusted Income and SG&A reconciliation
103 2016 WESCO INVESTOR DAY ID16 ALL (Dollars in millions, except for EPS) 2012 2013 Adjusted Income from Operations (Adjusted EBIT): Income from operations (EBIT) 333 481 ArcelorMittal litigation charge (recovery) included in SG&A 36 (36) Adjusted income from operations (Adjusted EBIT) 369 445 Perc
Slide 104: Financial Leverage
104 2016 WESCO INVESTOR DAY ID16 ALL Financial Leverage Twelve Months Ended December 31, 2015 Financial leverage ratio: Income from operations $ 374 Depreciation and amortization 65 EBITDA $ 439 December 31, 2015 Current debt and short-term borrowings $ 44 Long-term debt 1,457 Debt discount related
Slide 105: Free Cash Flow Reconciliation
105 2016 WESCO INVESTOR DAY ID16 ALL Free Cash Flow Reconciliation ($ Millions) 2010 2011 2012 2013 2014 2015 Cash flow provided by operations 127.3 167.5 288.2 315.1 251.2 283.1 Less: Capital expenditures (15.1) (33.3) (23.1) (27.8) (20.5) (21.7) Add: Non-recurring EECOL pension contribution - - -