Wesco International, Inc. · NYSE:WCC
Wesco International — Q3 2021 Earnings Presentation
24 slides from Wesco International's earnings presentation, Nov 4, 2021
Slide 1: Third Quarter 2021 Webcast Presentation
1 Third Quarter 2021 Webcast Presentation November 4, 2021 NYSE: WCC
Slide 2: Forward-Looking Statements
2 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 m
Slide 3: Agenda
3 Agenda Business Overview Financial Results Overview John Engel Chairman, President & CEO Executive Vice President & CFO Dave Schulz
Slide 4: Strong Results Across The Board in Q3
4 Strong Results Across The Board in Q3 Raised 2021 outlook on sales and margin growth momentum and accelerated synergy realization Sales up 14% YOY and 3% sequentially on an organic basis – Leveraging increased scale, expanded product and services portfolio, and global supplier relationships – Seei
Slide 5: Cross-Sell Momentum Building
5 Cross-Sell Momentum Building •On track to deliver $500 million in cross-sell synergies by 2023 • Expanding pipeline of cross-sell opportunities • Strong customer relationships and global supplier partnerships • Minimal overlap between legacy WESCO and Anixter customers • Highly complementary produ
Slide 6: Third Quarter Results Overview
6 Third Quarter Results Overview Dave Schulz Executive Vice President & Chief Financial Officer
Slide 7: Third Quarter Results Overview
7 Q3 2021 Q3 2020 YOY Sales $4,728 $4,142 14% Gross Profit1 1,008 814 24% % of sales 21.3% 19.6% +170 bps Adjusted Income from Operations2 280 200 40% % of sales 5.9% 4.8% +110 bps Adjusted EBITDA3 330 252 31% % of sales 7.0% 6.1% +90 bps Adjusted Diluted EPS2 $2.74 $1.66 65% Third Quarter Results O
Slide 8: Adjusted EBITDA Bridge
8 Adjusted EBITDA Bridge • Sales Strength + Margin Expansion + Accelerated Synergy Capture = Strong EBITDA Growth 2020 Q3 Adjusted EBITDA Sales Gross Margin Cost Synergies Volume-Related, Variable Compensation and Other Benefit Costs Reversal of COVID Cost Actions, Other 2021 Q3 Adjusted EBITDA $252
Slide 9: Electrical & Electronic Solutions (EES)
9 $1,654 $1,982 Q3 2020 Q3 2021 $109 $174 Q3 2020 Q3 2021 Electrical & Electronic Solutions (EES) •Ability to offer complete electrical package driving share gains and strong growth See appendix for non-GAAP reconciliations. Organic sales growth represents reported sales growth adjusted to remove th
Slide 10: Communications & Security Solutions (CSS)
10 $1,389 $1,489 Q3 2020 Q3 2021 Communications & Security Solutions (CSS) Industry leading value proposition driving global growth • Sales growth in all operating groups – Network infrastructure growth led by data center and hyperscale projects – Continued strength in cloud and professional audio/v
Slide 11: Utility & Broadband Solutions (UBS)
11 Utility & Broadband Solutions (UBS) Leadership and scale driving share gains and strong growth See appendix for non-GAAP reconciliations. Organic sales growth represents reported sales growth adjusted to remove the effect of acquisitions, divestitures, changes in foreign currency exchange rates,
Slide 12: Accelerating Cost Synergy Realization in 2021 and 2022
12 Accelerating Cost Synergy Realization in 2021 and 2022 Increased outlook due to execution timing and new opportunities $ millions Cumulative Realized Synergies 2021 (to date) Supply Chain $105 million G&A $90 million Corporate Overhead $45 million Cumulative Realized Synergies By Type $128 (to da
Slide 13: Leverage Improved 1.6x Since Anixter Merger
13 Leverage Improved 1.6x Since Anixter Merger 15 Months Ago Remain on track to return to target leverage range of 2.0-3.5x during second half of 2022 • Leverage reduced 0.4x in Q3; 1.6x since Anixter merger closed • Working capital improved 3 days sequentially while investing in inventory to suppor
Slide 14: 2021 Outlook
14 2021 Outlook Accelerated execution and market recovery drives increased outlook for 2021 2020 Pro Forma Sales $16.0 billion Adjusted EBITDA $858 million 2021 Outlook Prior (8/5/21) Revised (11/4/21) Market growth 9% - 10% ~10% Plus: share gain/cross-sell 2% - 4% 2% - 4% Less: impact of one fewer
Slide 15: Summary
15 Summary •Our performance and improving macro environment again drive stronger 2021 outlook • Very strong results across the board again in Q3 – Strong sales and backlog growth in all businesses – Generating growth from cross-sell benefits, market recovery, and differentiated offering – Delivering
Slide 16: Appendix
APPENDIX
Slide 17: Growth Opportunity Amplified by Attractive Secular Growth Trends
Growth Opportunity Amplified by Attractive Secular Growth Trends Supply chain consolidation and relocation to North America Exceptionally well-positioned across all business units Electrification Automation and IoT Green Energy and Grid Modernization 24/7 Connectivity and Security Digitalization
Slide 18: Glossary
18 Glossary 1H: First half of fiscal year 2H: Second half of fiscal year A/V: Audio/visual COGS: Cost of goods sold CIG: Commercial, Institutional, and Government CSS: Communications & Security Solutions (business unit) EES: Electrical & Electronic Solutions (business unit) ETR: Effective tax rate F
Slide 19: Workdays
19 Q1 Q2 Q3 Q4 FY 2019 63 64 63 62 252 2020 64 64 64 61 253 2021 62 64 64 62 252 Workdays 2022 63 64 64 62 253
Slide 20: Gross Profit and Free Cash Flow
20 Gross Profit and Free Cash Flow $ in millions Gross Profit: Three Months Ended September 30, 2021 September 30, 2020 Net sales $ 4,728 $ 4,142 Cost of goods sold (excluding depreciation and amortization) 3,720 3,356 Gross profit $ 1,008 $ 786 Merger-related fair value adjustment to inventory — 28
Slide 21: Adjusted EBITDA
21 Adjusted EBITDA EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin % by Segment Three Months Ended September 30, 2021 EES CSS UBS Corporate Total Net income applicable to common stockholders 156 108 108 (266) $ 106 Preferred stock dividends — — — 14 14 Provision for income taxes — — — 45 45 Inte
Slide 22: Adjusted EPS
22 Adjusted EPS Q3 2021 (in millions, except for EPS) Reported Results Adjustments 1 Adjusted Results Income from operations $ 229.5 $ 250.9 $ 280.4 Net interest 69.7 — 69.7 Other income, net (5.3) — (5.3) Income before income taxes 165.1 50.9 216.0 Provision for income taxes2 44.9 13.5 58.4 Effecti
Slide 23: Financial Leverage and Debt
23 $ in millions Twelve Months Ended Financial Leverage: September 30, 2021 December 31, 2020 Reported Proforma(1) Net income attributable to common stockholders $ 261 $ 116 Net income (loss) attributable to noncontrolling interests 1 (1) Preferred stock dividends 57 30 Provision for income taxes 83
Slide 24: Organic Sales Growth by Segment
24 Organic Sales Growth by Segment $ in millions Year-over-Year: Three Months Ended Growth/(Decline) September 30, 2021 September 30, 2020 Reported Divestiture Impact Foreign Exchange Impact Organic Growth EES $ 1,982 $ 1,654 19.9% (1.1)% 2.0 % 19.0 % CSS 1,489 1,389 7.2% — % 1.0 % 6.2 % UBS 1,257 1