Wesco International, Inc. · NYSE:WCC
Wesco International — Q4 2020 Earnings Presentation
22 slides from Wesco International's earnings presentation, Feb 9, 2021
Slide 1: Fourth Quarter 2020 Webcast Presentation
NYSE: WCC Fourth Quarter 2020 Webcast Presentation February 9, 2021 1
Slide 2: Forward-Looking Statements
Forward-Looking Statements All statements made herein that are not historical facts should be considered as forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may
Slide 3: Agenda
Agenda Business Overview Financial Results Overview John Engel Dave Schulz Chairman, President & CEO Executive Vice President & CFO 3
Slide 4: 2020 Summary
2020 Summary Exceeding Our Expectations Outperforming The Markets • Successfully closed Anixter transaction; integration is going • Leading scale and diversified portfolio exceptionally well • Service differentiation and complete supply – Synergy capture exceeding expectations, raised external chain
Slide 5: Second Half Priorities and Achievements
Second Half Priorities and Achievements Take share Workday-adjusted sales up 4% sequentially in Q4 versus typical seasonal decline Cross selling initiatives underway with new wins captured in each business Entered 2021 with record year-end backlog Return to growth in January 2021 with sales per work
Slide 6: Fourth Quarter Results Overview
Dave Schulz Executive Vice President & Chief Financial Officer Fourth Quarter Results Overview 6
Slide 7: Cost Synergy Target Timeline
Cost Synergy Target Timeline Cumulative Realized Cost Synergy Target Target Cost Synergy Mix $M $250 $200 COGS 20% $130 $39 OPEX 80% 2H 2020 FY 2021 FY 2022 TTM 1H 2023 Cumulative one-time operating $37 $115 $160 $175 expenses •Introducing calendar year targets 7
Slide 8: Free Cash Flow & Liquidity
Free Cash Flow & Liquidity Free Cash Flow Capital Deployment $M • Strong free cash flow in Q4 and FY 2020 251% • Net debt reduction of $109 million in Q4 and of adjusted net income $389 million in 2H 2020 80% of adjusted net income • Leverage reduced 0.4x since Anixter acquisition $586 closed in Jun
Slide 9: Fourth Quarter Results Overview
Fourth Quarter Results Overview $M Except per share amounts Q4 2019 Versus Versus Q3 2020 Q4 2020 Pro Forma1 Q4 2019 Q3 2020 Sales $4,352 $4,142 $4,129 (5)% flat Adjusted Gross Profit2 850 814 811 (5)% flat • Sequential sales +4% on comparable workday basis % of sales 19.5% 19.6% 19.6% +10 bps flat
Slide 10: WESCO's Three Strategic Business Units (SBUs)
WESCO’s Three Strategic Business Units (SBUs) Legend Legacy WESCO Legacy Anixter Electrical & Electronic Communications & Utility & Broadband Solutions (EES) Security Solutions (CSS) Solutions (UBS) % of SALES (2020 Pro Forma) 40% 33% 27% of total company sales of total company sales of total compan
Slide 11: Electrical & Electronic Solutions (EES)
Electrical & Electronic Solutions (EES) $M Sequential Performance Drivers Sales Sequential • Strong sequential sales improvement in 2nd half; initial Reported WD adjusted cross-sell wins offering complete electrical package +1% +6% • Construction demand improving $1,833 – Record year-end backlog $1,
Slide 12: Communications & Security Solutions (CSS)
Communications & Security Solutions (CSS) $M Sequential Performance Drivers Sales Sequential • Improving sales momentum in Q4 to close out a strong Reported WD adjusted 2020 with continued share gains (1)% +3% • Network infrastructure growth driven by increasing $1,433 $1,389 $1,369 global enterpris
Slide 13: Utility & Broadband Solutions (UBS)
Utility & Broadband Solutions (UBS) $M Sales Sequential Performance Drivers Sequential Reported WD adjusted • Strong results in 2020 with continued share gains (1)% +4% • Utility strength continues with grid modernization activities, $1,086 $1,099 $1,091 project backlog, lighting and automation driv
Slide 14: 2021 Outlook
2021 Outlook FY 2021 2021 Adjusted EBITDA Margin Outlook2 Outlook 2020 Pro Forma Adjusted EBITDA Margin 5.3% 2020 Pro Forma Sales1 $16.0B Plus: improving mix, market outperformance, and operating leverage 50 – 80 bps 2021 Outlook: Less: COVID restoration, incentive compensation, and benefits ~(90) b
Slide 15: Summary
Summary • Excellent performance against a COVID-driven environment in 2020 • Strong execution, substantial progress made on integration in first six months – Delivering integration commitments while maintaining momentum in base business – New organization structure and strengthened management team i
Slide 16: Appendix
APPENDIX
Slide 17: Glossary
Glossary Abbreviations 1H: First half of fiscal year MRO: Maintenance, repair, and operating 2H: Second half of fiscal year MSD: Mid-single digit A/V: Audio/visual PF: Pro Forma COGS: Cost of goods sold OEM: Original equipment manufacturer CIG: Commercial, Institutional, and Government OPEX: Operati
Slide 18: Workdays
Workdays Q1 Q2 Q3 Q4 FY 2019 63 64 63 62 252 2020 64 64 64 61 253 2021 62 64 64 62 252 18
Slide 19: Adjusted EPS
Adjusted EPS Q4 2020 YTD 2020 Reported Adjusted Reported Adjusted Results Adjustments (1) Results Results Adjustments (1) Results ($M, except for EPS) Income from operations $ 92.8 $ 79.0 $ 171.8 $ 347.0 $ 175.0 $ 522.0 Interest expense, net 74.3 - 74.3 226.6 - 226.6 Other, net (0.9) - (0.9) (2.4) -
Slide 20: Adjusted EBITDA
Adjusted EBITDA $M EBITDA, Adjusted EBITDA and Adjusted Three Months Ended December 31, 2020 EBITDA margin % by Segment EES CSS UBS Corporate Total Net income attributable to common stockholders $ 66 $ 89 $ 64 $ (213) $ 6 Preferred stock dividends - - - 14 14 Provision for income taxes - - - (1) (1)
Slide 21: Gross Profit and Free Cash Flow
Gross Profit and Free Cash Flow $M Gross Profit Three Months Ended, December 31, December 31, 2020 2019 Net sales $ 4,129 $ 2,099 Cost of goods sold(1) 3,357 1,709 Gross profit $ 772 $ 390 Adjustments(2) 39 - Adjusted gross profit $ 811 $ 390 Gross margin 18.7% 18.6% Adjusted gross margin 19.6% 18.6
Slide 22: Capital Structure and Leverage
Capital Structure and Leverage $M Pro Forma Reported Twelve Months Ended, Financial Leverage December 31, December 31, 2020 2019 Net income attributable to common stockholders $ 116 $ 223 Net loss attributable to noncontrolling interests (1) (1) Preferred stock dividends 30 - Provision for income ta