Wesco International, Inc. · NYSE:WCC
Wesco International — Investor Day (March 2015)
98 slides from Wesco International's investor day presentation, Mar 5, 2015
Slide 1: WESCO Investor Day 2015
WESCO Investor Day 2015 ONE WORLD. ONE WESCO. John Engel Chairman, President, and Chief Executive Officer WESCO International
Slide 2: Safe Harbor Statement
2 ALL ID15 WESCO Investor Day 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, uncertai
Slide 3: 2015 WESCO Investor Day Agenda
3 ALL ID15 WESCO Investor Day 2015 Investor Day begins at 1:00 p.m. Welcome and WESCO Overview John Engel Chairman, President, and Chief Executive Officer Operations Steve Van Oss Senior Vice President and Chief Operating Officer U.S. Andy Bergdoll Group Vice President and General Manager, United St
Slide 4: WESCO Overview
4 ALL ID15 WESCO Investor Day 2015 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 80%+ of net income Double digit EPS g
Slide 5: Competitive Differentiator: Product Portfolio
5 ALL ID15 WESCO Investor Day 2015 • 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% 14% 16% 11% 10% 9% Auto
Slide 6: Competitive Differentiator: Service Capabilities
6 ALL ID15 WESCO Investor Day 2015 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 7: Competitive Differentiator: Global Footprint
7 ALL ID15 WESCO Investor Day 2015 • 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 19 2004 2014 Countries
Slide 8: Competitive Differentiator: Talent Management
8 ALL ID15 WESCO Investor Day 2015 Strategy …human talent is our differentiating value creator • One U.S. business leader • New Global Sales and Marketing organization – End market sales leaders – Product category managers – Call centers • Added eCommerce and Supply Chain business leaders • Added fi
Slide 9: Competitive Differentiator: Continuous Improvement Culture
9 ALL ID15 WESCO Investor Day 2015 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 w
Slide 10: WESCO Strategy
10 ALL ID15 WESCO Investor Day 2015 Competitive Differentiators Performance Goals Global footprint Service capabilities Product portfolio Free cash flow 80%+ of net income Double digit EPS growth Grow faster than the market Talent and culture Superior investor returns Accelerate One WESCO Growth Str
Slide 11: Accelerate One WESCO Growth Strategy
11 ALL ID15 WESCO Investor Day 2015 Accelerate One WESCO Growth Strategy • Focus on profitable organic growth opportunities • Integrating all our efforts around customers • Branding, demand creation programs, and marketing leverage • New sales and specialist training and solution selling • Refined m
Slide 12: Checkerboard Execution
12 ALL ID15 WESCO Investor Day 2015 Checkerboard Execution …analyzing our customer share opportunities and taking action % Sales Penetration >75% ~ 50% < 25% New business In 2014
Slide 13: Investing in Growth Engines
13 ALL ID15 WESCO Investor Day 2015 Construction Investing in Growth Engines …to strengthen portfolio and drive profitable sales growth Industrial MRO & Safety Communications & Security Lighting & Sustainability Acquisitions Focus End Markets Focus Product Categories Global Accounts & Integrated Sup
Slide 14: Acquisitions
14 ALL ID15 WESCO Investor Day 2015 Acquisitions 325 400 1,500 1,600+ 2010 2 2011 2 2012 4 2014 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 Cumulativ
Slide 15: Key Messages
15 ALL ID15 WESCO Investor Day 2015 Key Messages Operations Business simplification and supply chain focus in 2015 U.S. New business leadership team with positive momentum Canada Seasoned team managing in tough environment Sales and Marketing New integrated front-end producing sales growth results I
Slide 16: Operations
WESCO Investor Day 2015 ONE WORLD. ONE WESCO. Steve Van Oss, Senior Vice President and Chief Operating Officer Operations
Slide 17: WESCO Strategy
17 ALL ID15 WESCO Investor Day 2015 Competitive Differentiators Performance Goals Global footprint Service capabilities Product portfolio Free Cash Flow 80%+ of net income Double digit EPS growth Grow faster than the market Talent and culture Superior investor returns Accelerate One WESCO Growth Str
Slide 18: Operations Agenda
18 ALL ID15 WESCO Investor Day 2015 Operations Agenda Network Optimization Operations Transportation Safety • Simplify and streamline business − Lean − Footprint − eCommerce • Supply chain management −Optimize supply base − Purchasing leverage − Inventory management • Pricing improvement Strategy
Slide 19: Operations KPIs
19 ALL ID15 WESCO Investor Day 2015 Operations KPIs Initiatives • Health and Safety Training • Kaizen events • Branch audits • Claims management Initiatives • Lean • Transportation • Network optimization Initiatives • Voice of the customer • Order fulfillment • Warehouse kaizens • Truck routing auto
Slide 20: Simplify and Streamline Business: Lean
20 ALL ID15 WESCO Investor Day 2015 Simplify and Streamline Business: Lean Leader: Robert Allsop Joined WESCO in September 2014 • Improve customer service and experience − Voice of customer process (VOC) − Kaizen events targeting quality and delivery KPIs • Improve cost − Branch daily management sco
Slide 21: Simplify and Streamline Business: Footprint
21 ALL ID15 WESCO Investor Day 2015 Simplify and Streamline Business: Footprint Houston 2008 …accelerating sales growth through One WESCO locations Kansas City 2014 Charlotte 2010 Dallas 2011 Los Angeles 2013 Chicago 2012 Seattle Pittsburgh Pittsburgh 2015 Opening 2015 35 63 New Merged/ Closed Branc
Slide 22: Network Optimization
22 ALL ID15 WESCO Investor Day 2015 Network Optimization • >$1B addressable market • Expanding distribution center coverage for local market • Consolidating branches from 7 to 3 • Leveraging capabilities and technology to support direct fulfillment and improve customer service Implemented consolidat
Slide 23: Simplify and Streamline Business: eCommerce
23 ALL ID15 WESCO Investor Day 2015 Simplify and Streamline Business: eCommerce • Reduce costs and expand profitability • Grow customer revenues • Retain and acquire new customers • Develop strategic plan • Enhance platform and build program capabilities • Build eCommerce team • Upgrade digital mark
Slide 24: Supply Chain Management
24 ALL ID15 WESCO Investor Day 2015 Supply Chain Management • Consolidate and coordinate procurement functions • Develop, implement, and sustain global best practices • Leverage $6B spend • Expand operating margins • Optimize supplier base • Coordinate product category pricing and procurement region
Slide 25: Supply Chain Management
25 ALL ID15 WESCO Investor Day 2015 Supply Chain Management < $50,000 $50,000 to < $10,000,000 > $10,000,000 Annual Purchases ~25,000 Suppliers Optimize Leverage Strategic …leveraging scale and scope to improve profitability % of spend: ~5% ~35% ~60%
Slide 26: Supply Chain Management: Products
26 ALL ID15 WESCO Investor Day 2015 Supply Chain Management: Products …building stronger relationships with blue chip suppliers 0% 20% 40% 60% 80% 100% C B A 0% 20% 40% 60% 80% 100% C B A Product SKU “A” Product SKU “B” W E S C O L o c a t i o n List Price DiscountList Price Discount Opportunity to
Slide 27: Supply Chain Management: Suppliers
27 ALL ID15 WESCO Investor Day 2015 Supply Chain Management: Suppliers …leveraging scale and scope to improve profitability 0% 20% 40% 60% 80% 100% 4 3 2 1 Supplier Discount Range S u p p l i e r List Price Discount Use purchase volume leverage to reduce product cost = Average Discount
Slide 28: Pricing Improvement
28 ALL ID15 WESCO Investor Day 2015 Pricing Improvement Dynamic Floor Pricing • Price set at margin expansion level • Utilizes market data • Limited downward price authority Price Bump • Leverage off announced price increases • Percentage added to supplier price sheets • Coordinated across multiple
Slide 29: Operations Summary
29 ALL ID15 WESCO Investor Day 2015 Operations Summary • Expanded leadership team in place • One WESCO location expansion to improve operational capabilities and performance, customer service, and cost • Execute on supply chain management and pricing initiatives to improve order fulfillment, optimiz
Slide 30: United States
WESCO Investor Day 2015 ONE WORLD. ONE WESCO. Andy Bergdoll Group VP & GM, US Operations United States
Slide 31: U.S. Business Sales Profile
31 ALL ID15 WESCO Investor Day 2015 Sales Profile • Value Proposition Create competitive advantage as premier supply chain solutions provider • Business models to manage MRO, OEM, capital project demand streams • Service, cost savings, and risk management for customers • Long-term customer and suppl
Slide 32: Key U.S. Business Trends
32 ALL ID15 WESCO Investor Day 2015 Key U.S. Business Trends Energy Development • Domestic energy production • Energy infrastructure investments • Renaissance in energy intensive industries Product and Technology Changes • Solid state lighting adoption • Data consumption boom (broadband, security, i
Slide 33: U.S. Growth
33 ALL ID15 WESCO Investor Day 2015 U.S. Growth …successful first year transition 4.2 4.9 5.2 5.2 5.6 2010 2011 2012 2013 2014 Sales ($B) Growth Drivers • One WESCO operating model • End market focused sales force • Product category management • Service model expansion • Empowered business leadershi
Slide 34: U.S. Growth Model
34 ALL ID15 WESCO Investor Day 2015 Supply Chain Services Project Services Business Model Development Operational Excellence Homebuilder Customer segment focus Resource allocation Sales productivity Local market relevance Account management Product segment focus Scope management Customer operations
Slide 35: New U.S. Structure
35 ALL ID15 WESCO Investor Day 2015 New U.S. Structure New organization/position U.S. Group VP & GM HRCFO West Central East Utility Structures EESCO Broadband Safety Electronics REGIONS PLATFORMS New leader …implemented in January 2014
Slide 36: U.S. Strategic Priorities
36 ALL ID15 WESCO Investor Day 2015 U.S. Strategic Priorities • Expand Enterprise and Construction sales force • Further execute One WESCO product expansion strategy (“checkerboard”) • Optimize branch and distribution center service network • Leverage Platform capabilities • Accelerate growth in pro
Slide 37: One WESCO Success Stories
37 ALL ID15 WESCO Investor Day 2015 One WESCO Success Stories Oil & Gas Downstream Electrical MRO • Existing relationship with upstream procurement management team • Developed customized service model to address downstream opportunities • Awarded 5 year contract plus potential access to new project
Slide 38: U.S. Summary
38 ALL ID15 WESCO Investor Day 2015 U.S. Summary • U.S. market provides attractive growth prospects • WESCO has strong capabilities, extensive infrastructure, a broad product and services portfolio, and a competitive advantage across U.S. • Long-term competitive advantage in the U.S. being developed
Slide 39: Canada
WESCO Investor Day 2015 ONE WORLD. ONE WESCO. Harald Henze, Group Vice President and General Manager Canada
Slide 40: Canada Business Sales Profile
40 ALL ID15 WESCO Investor Day 2015 Sales Profile • Value Proposition • WESCO and EECOL – dual channel strategy • Maximizing world class supplier relationships • Leveraging safety across both channels • Lean for continuous improvement and customer value creation …an important geographic market Canad
Slide 41: WESCO Canada
41 ALL ID15 WESCO Investor Day 2015 WESCO Canada …strong presence across all provinces Branch Locations WESCO 63 EECOL 57 Distribution Centers
Slide 42: Canadian Market
42 ALL ID15 WESCO Investor Day 2015 Canadian Market • Driven by natural resource sectors • Long term growth prospects for oil, gas, and mining remain attractive • Construction is one of Canada’s largest industries • Utility provides long-term growth prospects, while challenging in the near-term • Gr
Slide 43: Anticipated Business Environment
43 ALL ID15 WESCO Investor Day 2015 Anticipated Business Environment Alberta • Commercial Construction • Utility • Oil and Gas • Residential • Government Saskatchewan / Manitoba • Commercial Construction • Utility • Mining • Government • Oil and Gas • Residential Ontario • Manufacturing • Transporta
Slide 44: Canada Growth
44 ALL ID15 WESCO Investor Day 2015 Canada Growth …solid track record of results 0.7 0.9 1.1 1.9 1.9 2010 2011 2012 2013 2014 Sales ($B) Growth Drivers • Dual brand operating model • End market focused sales force and expand customer base • Product category management • Geographic expansion of recen
Slide 45: Canadian Investments
45 ALL ID15 WESCO Investor Day 2015 Canadian Investments 6 new branches opened since 2012 …strengthen our leadership position in the market Acquisitions since 2010Organic Toronto Distribution Center Opened 2012 Edmonton Distribution Center Opened 2009; expanded 2012 Montreal Distribution Center Open
Slide 46: Success Stories
46 ALL ID15 WESCO Investor Day 2015 Success Stories Commercial Contractors Project & Warehouse • Partnered with a 3rd party service provider to serve small to medium contractors • New marketing channel • Utilized WESCO’s branch footprint and DC network • Extensive project management capabilities sha
Slide 47: Canada Summary
47 ALL ID15 WESCO Investor Day 2015 Canada Summary • Challenging environment expected in short term, but attractive growth prospects over mid to long term • WESCO has established strong leadership position in Canada • Longer term competitive advantage in Canada being developed through execution of d
Slide 48: Global Sales & Marketing
WESCO Investor Day 2015 ONE WORLD. ONE WESCO. David Bemoras Vice President, Global Sales and Marketing Global Sales & Marketing
Slide 49: Sales and Marketing Mission Statement
49 ALL ID15 WESCO Investor Day 2015 Sales and Marketing Mission Statement To deliver world-class value creation services that position the industry’s broadest product portfolio addressing MRO, OEM and capital project requirements in order to profitably defend, grow, and develop outstanding customers
Slide 50: Driving a High Performance Sales Culture
50 ALL ID15 WESCO Investor Day 2015 Driving a High Performance Sales Culture • One WESCO execution • Margin improvement • Sales planning and goal setting • Coach, inspire, and recognize goal achievement • WESCO CRM utilization • “Checkerboard” execution • Supplier ecosystem management • Recruit, ret
Slide 51: Precision Selling Strategy
51 ALL ID15 WESCO Investor Day 2015 Defining how we focus our sales, marketing and support resources… Strategic / Global Accounts Over-serve, protect, defend, grow and create “raving fans” Managed Accounts Outside sales and inside sales engagement teams Developmental / Target Accounts High-value cus
Slide 52: End Market Focused Sales Force
52 ALL ID15 WESCO Investor Day 2015 End Market Focused Sales Force Industrial • MRO • Capital Projects • OEM • Industrial Integrators Enterprise (CI) • Commercial End-Users • Healthcare • Service Providers • Capital Projects • Low Voltage Contractors and Integrators Government • Federal • State • Lo
Slide 53: Global Accounts Value Proposition
53 ALL ID15 WESCO Investor Day 2015 Global Accounts Value Proposition Integrated Supply Global Capital Project Management Direct Material Solutions Industrial & Electrical Distribution Standardizing products, pricing, terms, and service across multiple customer facilities …achieving market share gai
Slide 54: Value Creation
54 ALL ID15 WESCO Investor Day 2015 Value Creation • Understand customer challenges and business requirements • Leverage the entire WESCO toolkit to deliver standard and customized supply-chain solutions • World-class implementation and execution Differentiating WESCO by delivering supply-chain solu
Slide 55: Product Expertise and Capability
55 ALL ID15 WESCO Investor Day 2015 Product Expertise and Capability …enabling One WESCO checkerboard execution Market Analysis Supplier Advocacy New Product Introductions Competitive Intelligence One WESCO Support Inventory and Pricing Strategies Tech Support and Field Specialists Sales Tools and T
Slide 56: Checkerboard Execution
56 ALL ID15 WESCO Investor Day 2015 Checkerboard Execution % Sales Penetration >75% ~ 50% < 25% New business In 2014 …analyzing our customer share opportunities and taking action
Slide 57: WESCO Lighting and Controls Team
57 ALL ID15 WESCO Investor Day 2015 WESCO Lighting and Controls Team • 100+ field based resources • Retrofit and renovation focus • Construction focus • MRO and lighting stock • Comprehensive training and value creation services platform …enabling one WESCO execution across all customer segments 40%
Slide 58: Supported by a World-Class Supply Base
58 ALL ID15 WESCO Investor Day 2015 Supported by a World-Class Supply Base …creating differentiated advocacy and support General Supplies Automation, Controls & Motors Communications & Security Electrical Distribution & Controls Lighting & Sustainability OEM & Direct Materials Wire, Cable & Conduit
Slide 59: Deliver World Class Supply Chain Services
59 ALL ID15 WESCO Investor Day 2015 Deliver World Class Supply Chain Services Powered by One WESCO Opportunity Identification Leverage WESCO Resources Value Creation Selling Leveraging our resources and capabilities… …with every WESCO customer Checkerboard Implementation
Slide 60: Summary
60 ALL ID15 WESCO Investor Day 2015 Summary • Sales culture focused on increasing accountability, improving sales growth and margin expansion • Executing “Precision Selling” strategy to drive productivity gains • Sales and support specialization across a diverse set of end markets • Value Creation s
Slide 61: International
WESCO Investor Day 2015 ONE WORLD. ONE WESCO. Les Kebler Group Vice President and GM, International International
Slide 62: International Strategy
62 ALL ID15 WESCO Investor Day 2015 Strategy •Business Priorities Providing a comprehensive product and service offering to companies across the globe. • Global supply chain services • Focus on large, growing regions • In-country business development • Expand global platforms …growing globally to me
Slide 63: International Footprint
63 ALL ID15 WESCO Investor Day 2015 WESCO Locations AMERICAS EMEA ASIA PACIFIC International Footprint …target markets that fit the WESCO value proposition 5 17 2004 2014 Countries 225 ~900 2004 2014 Employees (Excludes U.S. & Canada)
Slide 64: International Growth
64 ALL ID15 WESCO Investor Day 2015 International Growth …building a solid business with blue chip customers 190 302 332 433 456 2010 2011 2012 2013 2014 Sales ($M) Growth Drivers • Customers and suppliers seeking global partners • Locations in attractive markets • Highly fragmented markets • Global
Slide 65: International Growth Drivers
65 ALL ID15 WESCO Investor Day 2015 • Growing population and wealth • Infrastructure and commodity demand • Connectivity • Commitment to key geographies • Focus on high growth verticals • Local value proposition • Datacom, Capex, Integrated Supply • Complete product and service portfolio • Growth ac
Slide 66: International Business 2015 Outlook
66 ALL ID15 WESCO Investor Day 2015 International Business 2015 Outlook U.S. Export Mexico South America Europe MEA China S.E. Asia Australia • Large market opportunity • Strong USD impacts competiveness • New WESCO organizational structure • U.S. market and government reforms • Mining slowdown cont
Slide 67: International Operating Model
67 ALL ID15 WESCO Investor Day 2015 International Operating Model Global Platforms Localized Business Management Centralized Leadership …provides value for customers and suppliers • Full distribution capabilities • Complete range of services • Local management teams • Expand customer base • Global c
Slide 68: Global Product and Service Platforms
68 ALL ID15 WESCO Investor Day 2015 Global Product and Service Platforms …accelerate growth in local markets around the world OEM Capital Projects Communications & Security Integrated Supply Global Accounts Global Sourcing WESCO International
Slide 69: WESCO de Mexico
69 ALL ID15 WESCO Investor Day 2015 WESCO de Mexico 6 Branches and Distribution Centers 5 Sales Offices • U.S. export and government reforms • Reorganized commercial team • Improved service level through hub and spoke distribution • Key end market focused – Border (Maquilas) – Monterrey and San Luis
Slide 70: Success Stories
70 ALL ID15 WESCO Investor Day 2015 Success Stories Resource Company Material Management • Global mining company • $3B investment • Leading EPC firm • Complete range of products • Full material management services • Estimate 20% savings to the customer Global Manufacturing Company MRO & Direct Mater
Slide 71: International Summary
71 ALL ID15 WESCO Investor Day 2015 International Summary • Global growth, but high volatility • Investment in new international talent • Improved WESCO organizational structure • Integrated operating model and global platforms are competitive differentiators • Execution is key – must continue to be
Slide 72: Financials
WESCO Investor Day 2015 ONE WORLD. ONE WESCO. Ken Parks Senior Vice President and Chief Financial Officer Financials
Slide 73: WESCO Strategy
73 ALL ID15 WESCO Investor Day 2015 Competitive Differentiators Performance Goals Global footprint Service capabilities Product portfolio Free cash flow 80%+ of net income Double digit EPS growth Grow faster than the market Talent and culture Superior investor returns Accelerate One WESCO Growth Str
Slide 74: Solid Performance
74 ALL ID15 WESCO Investor Day 2015 Solid Performance EPSSales TSRFree Cash Flow to Net Income ($ Billions) $ 20% CAGR 98% of Net Income …delivering results 12% CAGR 5.1 6.1 6.6 7.5 7.9 2010 2011 2012 2013 2014 2.50 3.96 4.38 5.02 5.18 2010 2011 2012 2013 2014 182 93 186 156 126 WCC Russell 2000 GWW
Slide 75: Organic Sales Growth
75 ALL ID15 WESCO Investor Day 2015 (1.8) (1.2) 1.6 1.5 1.6 6.0 6.7 8.1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2013 2014 Organic Sales Growth Organic Growth (%) …momentum building across end markets Growth Drivers • One WESCO sales execution • Improving end markets • Positive WESCO momentum in U.S. and Canada • Bu
Slide 76: Cost Leverage
76 ALL ID15 WESCO Investor Day 2015 788 860 887 829 843 2010 2011 2012 2013 2014 Cost Leverage Sales per Employee ($ Thousands) SG&A (%) …compares favorably to industry benchmarks 576 NAED NAED: National Association of Electrical Distributors 15.1 14.2 14.1 13.7 13.6 2010 2011 2012 2013 2014 19% NAE
Slide 77: Long-Term Focus on Profitable Growth
77 ALL ID15 WESCO Investor Day 2015 Long-Term Focus on Profitable Growth EBIT 2.6x SALES 1.7x HEADCOUNT 1.5x 2009 2010 2011 2012 2013 2014 …operating profit pull through delivering results
Slide 78: Capital Allocation
78 ALL ID15 WESCO Investor Day 2015 1.5 2 2.5 3 3.5 4 4.5 5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Capital Allocation ______________ 2012 Target Leverage 2.0x – 3.5x 3.0X Leverage (Total Par Debt to TTM EBITDA) …maintaining fiscal discipline while funding growth ______________ 2013 ______________ 2014
Slide 79: Navigating the 2015 Environment
79 ALL ID15 WESCO Investor Day 2015 Navigating the 2015 Environment Oil Prices Foreign Exchange Commodity Prices U.S. GDP Canada GDP RisksOpportunities …maximizing opportunities while mitigating risks Industry Consolidation
Slide 80: 2015 Sales Growth Outlook
80 ALL ID15 WESCO Investor Day 2015 2015 Sales Growth Outlook Previous Current Outlook Outlook U.S MSD – HSD MSD Canada LSD – MSD LSD International MSD LSD – MSD Foreign exchange ~(1.0)% ~(3.0)% 2014 acquisitions ~0.5% ~0.5% Note: Excludes unannounced acquisitions. HSD = high-single digits MSD = mid
Slide 81: Oil and Gas Direct Exposure
81 ALL ID15 WESCO Investor Day 2015 30-35% 25-30% 5-10% ~10% Oil and Gas Sales 10-15% 55-60% 55-60% WESCO Sales Oil and Gas Direct Exposure …expect 10-15% YOY decline in oil and gas sales U.S. International CanadaDownstream Midstream Upstream
Slide 82: Industrial End Market
82 ALL ID15 WESCO Investor Day 2015 Improving Flat Declining (2.6%) 2.1% 5.0% 7.0% 5.8% Q1 2014 Q2 2014 Q3 2014 Q4 2014 Core Sales Growth versus Prior Year42% Key Market Indicators U.S. industrial production ISM Purchasing Managers’ Index Capacity utilization Canadian industrial production • Global
Slide 83: Construction End Market
83 ALL ID15 WESCO Investor Day 2015 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 84: Utility End Market
84 ALL ID15 WESCO Investor Day 2015 13.4% 1.5% 6.1% 10.6% 7.9% FY 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Improving Flat Declining Core Sales Growth versus Prior Year Key Market Indicators Distribution grid maintenance and upgrades Non-residential and residential construction starts Generation MRO, upg
Slide 85: CIG End Market
85 ALL ID15 WESCO Investor Day 2015 (1.0%) 3.3% 5.2% 2.3% 7.4% Q1 2014 Q2 2014 Q3 2014 Q4 2014 Improving Flat Declining Core Sales Growth versus Prior Year42% Key Market Indicators Government spending Communications and security upgrades Education, healthcare, and financial • Commercial • Institutio
Slide 86: 2015 Outlook
86 ALL ID15 WESCO Investor Day 2015 2015 Outlook Outlook Q1 Full Year(previous) Full Year (current) Full Year Revisions Sales Growth 5% to 7% 3% to 6% Flat to 3% Previous Outlook $5.50 to $5.90 Operating Margin 5.0% to 5.2% 6.1% to 6.3% 5.9% to 6.1% Fx @ 0.80/USD ~$(0.20) Effective Tax Rate 29% to 3
Slide 87: Five Year Outlook 2015 to 2019
87 ALL ID15 WESCO Investor Day 2015 Five Year Outlook 2015 to 2019 • Working capital management • Controlled capex • Stable gross margins • Cost structure optimization • Organic growth • Acquisitions • Improving ROIC • Consistent execution Performance Goals Free cash flow 80%+ of net income Double d
Slide 88: 2015-2019 Outlook
88 ALL ID15 WESCO Investor Day 2015 5.1 6.1 6.6 7.5 7.9 7.9 8.2 2010 2011 2012 2013 2014 2015E 2019E 2015-2019 Outlook Sales ($ B) EPS ($) …managing the business for double-digit EPS growth 2012 and 2013 EPS adjusted for non-recurring items 7% to 9% CAGR 2.50 3.96 4.38 5.02 5.18 5.20 5.60 2010 2011
Slide 89: Conclusion
WESCO Investor Day 2015 ONE WORLD. ONE WESCO. John Engel Chairman, President, and Chief Executive Officer Conclusion
Slide 90: Invest in WESCO
90 ALL ID15 WESCO Investor Day 2015 • Industry leader with deep domain expertise in electrical, industrial, construction, and utility • Proven business model and well positioned in large, fragmented markets • Blue chip customer and supplier base • Proven acquirer and integrator in a consolidating in
Slide 91: Q&A
91 ALL ID15 WESCO Investor Day 2015 Q&A
Slide 92: 92 ALL ID15 WESCO Investor Day 2015
92 ALL ID15 WESCO Investor Day 2015
Slide 93: Appendix
WESCO Investor Day 2015 ONE WORLD. ONE WESCO. Appendix
Slide 94: Sales Growth
94 APPENDIX ID15 WESCO Investor Day 2015 Sales Growth 2012 2013 2014 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Consolidated 12.2 9.7 4.8 3.5 7.4 12.6 13.2 16.6 14.3 14.2 0.2 5.9 7.6 6.1 5.0 Acquisition Impact 2.6 2.2 4.0 4.3 3.3 16.0 14.6 14.1 13.8 14.6 0.5 1.6 1.8 1.6 1.4 Core 9.6 7.5 0.8 (0.8)
Slide 95: Sales Growth – Geography
95 APPENDIX ID15 WESCO Investor Day 2015 Sales Growth – Geography U.S. Canada International Total Change in net sales 6.7 0.3 5.4 5.0 Impact from acquisitions 0.4 4.4 - 1.4 Impact from foreign exchange rates - (6.6) - (1.6) Impact from number of workdays (0.4) (0.4) (0.4) (0.4) Normalized organic sa
Slide 96: Sales Growth – End Markets
96 APPENDIX ID15 WESCO Investor Day 2015 ($ Millions) Sales Growth – End Markets Full Year 2013 vs. 2012 Full Year 2014 vs. 2013 2013 2012 % Growth 2014 2013 % Growth Industrial Core 2,798 2,872 (2.6)% 3,304 3,160 4.6% Construction Core 2,026 2,077 (2.5)% 2,432 2,404 1.1% Utility Core 904 797 13.4%
Slide 97: Non-GAAP Reconciliations
97 APPENDIX ID15 WESCO Investor Day 2015 Non-GAAP Reconciliations 2012 2013 2014 (amounts in millions except for diluted EPS) Adjusted Selling, General and Administrative Expenses: Selling, general and administrative expenses $924.8 $996.8 $1,076.8 ArcelorMittal litigation recovery included in SG&A
Slide 98: Free Cash Flow Reconciliation
98 APPENDIX ID15 WESCO Investor Day 2015 Free Cash Flow Reconciliation ($ Millions) 2012 2013 2014 Cash flow provided by operations 288.2 315.1 251.1 Less: Capital expenditures (23.1) (27.8) (20.5) Add: Non-recurring EECOL pension contribution - 21.1 - Free cash flow 265.1 308.4 230.6 Free cash flow