Wesco International, Inc. · NYSE:WCC
Wesco International — Q1 2015 Earnings Presentation
22 slides from Wesco International's earnings presentation, Apr 23, 2015
Slide 1: Q1 2015 Earnings Webcast Presentation
Webcast Presentation April 23, 2015 Q1 2015 Earnings
Slide 2: Safe Harbor Statement
2 Q1 2015 Earnings Webcast, 04/23/2015 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: Q1 2015 Highlights
3 Q1 2015 Earnings Webcast, 04/23/2015 (1.8) (1.2) 1.6 1.5 1.6 6.0 6.7 8.1 3.2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2013 2014 2015 Q1 2015 Highlights Organic Growth (%) …A challenging start to the year, driven by industrial and foreign exchange • U.S. and Canada sales each up 4% organic workday adjusted • Oil
Slide 4: Industrial End Market
4 Q1 2015 Earnings Webcast, 04/23/2015 2.1% 5.0% 7.0% 5.8% (4.1%) Q1 2014 Q2 2014 Q3 2014 Q4 2014 Industrial End Market • Q1 2015 Sales − Down 5.7% versus prior year, and down 4.1% workday adjusted − Down 8.0% sequentially − Weather, logistics, U.S. dollar and oil prices are weighing on manufacturin
Slide 5: Construction End Market
5 Q1 2015 Earnings Webcast, 04/23/2015 • Q1 2015 Sales − Up 2.3% versus prior year, and up 3.9% workday adjusted − Down 14.3% sequentially • U.S. and Canada construction sales each up approximately 8% organic workday adjusted • Backlog increased 5% sequentially in the quarter and was flat versus pri
Slide 6: Utility End Market
6 Q1 2015 Earnings Webcast, 04/23/2015 Utility End Market Core Sales Growth versus Prior Year 14% Utility • Investor Owned • Public Power • Utility Contractors • Q1 2015 Sales − Up 4.9% versus prior year, and up 6.5% workday adjusted − Down 5.0% sequentially • Sixteenth consecutive quarter of year-o
Slide 7: CIG End Market
7 Q1 2015 Earnings Webcast, 04/23/2015 CIG End Market • Q1 2015 Sales − Up 2.7% versus prior year, and up 4.3% workday adjusted − Down 3.4% sequentially • Bidding levels remain active in commercial, institutional, and government markets. • Focus remains on energy efficiency (lighting, automation, me
Slide 8: Q1 2015 Results
8 Q1 2015 Earnings Webcast, 04/23/2015 Q1 2015 Results Outlook Actual YOY Sales 5% to 7% growth $1.82B 0.3% growth 3.2% organic workday adjusted Gross Margin 20.2% Down 50 bps (flat sequentially) SG&A 14.6% Down 10 bps Operating Profit $87M Down 6% Operating Margin 5.0% to 5.2% 4.8% Down 30 bps Effe
Slide 9: EPS Walk
9 Q1 2015 Earnings Webcast, 04/23/2015 EPS Walk Q1 2014 $0.97 Core Operations ~0.00 Foreign Exchange Impact (0.07) Share count 0.02 Tax rate (0.02) Q1 2015 $0.90
Slide 10: Cash Generation and Leverage
10 Q1 2015 Earnings Webcast, 04/23/2015 1.5 2 2.5 3 3.5 4 4.5 5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 41.7 85.1 Q1 2014 Q1 2015 Cash Generation Free Cash Flow ($ Millions) See appendix for non-GAAP reconciliations. 181% of net income 80% of net income ~ $1B of free cash flow over last 5 years 2013 2014 Target
Slide 11: 2015 Outlook
11 Q1 2015 Earnings Webcast, 04/23/2015 2015 Outlook Q2 FY Sales (3)% growth to flat (3)% to 3% growth Operating Margin 5.3% to 5.5% 5.8% to 5.9% Effective Tax Rate 29% to 30% ~ 29% EPS $5.00 to $5.40 Free Cash Flow ~ 80% of net income Notes: Excludes unannounced acquisitions. Assumes a CAD/USD exch
Slide 12: Appendix
12 Q1 2015 Earnings Webcast, 04/23/2015 Appendix
Slide 13: WESCO Profile 2015
13 Q1 2015 Earnings Webcast, 04/23/2015 WESCO Profile 2015 41% 32% 14% 13% 40% 14% 16% 11% 10% 9% Controls & Motors Lighting & Controls General Supplies Data & Broadband Communications Wire, Cable & Conduit Distribution Equipment Note: Markets & Customers and Products & Services percentages reported
Slide 14: Sales Growth
14 Q1 2015 Earnings Webcast, 04/23/2015 Sales Growth 2013 2014 2015 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Consolidated 12.6 13.2 16.6 14.3 14.2 0.2 5.9 7.6 6.1 5.0 0.3 Acquisition Impact 16.0 14.6 14.1 13.8 14.6 0.5 1.6 1.8 1.6 1.4 1.2 Core (3.4) (1.4) 2.5 0.5 (0.4) (0.3) 4.3 5.8 4.5 3.6 (0.9) FX Impact
Slide 15: Sales Growth – Geography
15 Q1 2015 Earnings Webcast, 04/23/2015 Sales Growth – Geography U.S. Canada International Total Change in net sales 3.1 (5.4) (11.2) 0.3 Impact from acquisitions 0.7 2.9 - 1.2 Impact from foreign exchange rates - (10.8) (5.6) (2.5) Impact from number of workdays (1.6) (1.6) (1.6) (1.6) Normalized o
Slide 16: Sales Growth – End Markets
16 Q1 2015 Earnings Webcast, 04/23/2015 Note: The prior period end market amounts noted above may contain reclassifications to conform to current period presentation. ($ Millions) Sales Growth – End Markets Q1 2015 vs. Q1 2014 Q1 2015 vs. Q4 2014 Q10 Q10 Q10 Q40 2015 2014 %00 Growth 2015 2014 %00 Gr
Slide 17: Debt Maturity Schedule and Capital Structure
17 Q1 2015 Earnings Webcast, 04/23/2015 Outstanding at December 31, 2014 Outstanding at March 31, 2015 Debt Maturity Schedule AR Revolver (V) 430 423 2016 Inventory Revolver (V) 8 11 2016 Senior Notes (F) 500 500 2021 2019 Term Loans (V) 252 226 2019 2029 Convertible Bonds (F) 345 345 2029 (1) Other
Slide 18: Financial Leverage
18 Q1 2015 Earnings Webcast, 04/23/2015 Financial Leverage Twelve Months Ended March 31, 2015 Financial leverage ratio: Income from operations $ 460 Depreciation and amortization 68 EBITDA $ 528 March 31, 2015 Current debt and short-term borrowings $ 52 Long-term debt 1,337 Debt discount related to
Slide 19: Convertible Debt and Non-Cash Interest
19 Q1 2015 Earnings Webcast, 04/23/2015 ($ Millions) Maturity Par Value of Debt Debt Discount Debt per Balance Sheet 2029 344.9 (166.3) 178.6 Convertible Debt At March 31, 2015 Non-Cash Interest Expense ($ Millions) 2013 2014 Q1 2015 Convertible Debt 4.3 4.1 1.7 Amortization of Deferred Financing Fe
Slide 20: EPS Dilution
20 Q1 2015 Earnings Webcast, 04/23/2015 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 $50.00 5.05 0.55 50.00 $60.00 6.20 0.64 51
Slide 21: Work Days
21 Q1 2015 Earnings Webcast, 04/23/2015 Work Days Q1 Q2 Q3 Q4 FY 2014 63 64 64 62 253 2015 62 64 64 63 253
Slide 22: Free Cash Flow Reconciliation
22 Q1 2015 Earnings Webcast, 04/23/2015 Free Cash Flow Reconciliation Q1 2014 Q1 2015 Cash flow provided by operations 46.7 90.1 Less: Capital expenditures (5.0) (5.0) Free Cash Flow 41.7 85.1 Note: Free cash flow is provided by the Company as an additional liquidity measure. Capital expenditures ar