Wesco International, Inc. · NYSE:WCC
Wesco International — Q4 2019 Earnings Presentation
22 slides from Wesco International's earnings presentation, Jan 30, 2020
Slide 1: Fourth Quarter & Full Year 2019 Webcast Presentation
Fourth Quarter & Full Year 2019 Webcast Presentation January 30, 2020 1
Slide 2: Additional Information and Where to Find It
Additional Information and Where to Find It This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale
Slide 3: Anixter Acquisition Update
Anixter Acquisition Update • Announced acquisition of Anixter International in early January • Integration planning process is underway • Required filings with the SEC and regulatory approvals are in process • Expect to close transaction in second or third quarter of 2020 3
Slide 4: Fourth Quarter and Full Year 2019 Highlights
Fourth Quarter and Full Year 2019 Highlights Organic Sales Growth versus Prior Year Fourth Quarter • Record fourth quarter sales of $2.1 billion; Organic sales up 3.9% Annual Quarter – Strength in Utility, CIG, and Datacom – Down 1% sequentially, in line with seasonality • Year-over-year growth in a
Slide 5: Fourth Quarter and Full Year 2019 Results
Fourth Quarter and Full Year 2019 Results Fourth Quarter Full Year Versus Implied Versus 2019 $ Millions, except per share amounts 2018 2019 2018 2019 PY Midpoint PY Outlook Sales $2,011 $2,099 4.4% ~3.5% $8,177 $8,359 2.2% 1% - 3% Gross Profit $390 $390 flat $1,567 $1,581 0.9% % of sales 19.4% 18.6
Slide 6: Fourth Quarter Gross Margin Influencers
Fourth Quarter Gross Margin Influencers Mix Impact Summary Q4 2019 vs. Q4 2018 Historical Gross Margin vs. Q4 2019 vs. Q4 2019 vs. (1) Q3 2019 Gross margin down driven by two factors: WESCO Average Q4 2018 Industrial ABOVE 1. Price / Cost CIG AVERAGE • Supplier price increases Headwind Tailwind Cons
Slide 7: Fourth Quarter Diluted EPS and Sales Growth Walk
Fourth Quarter Diluted EPS and Sales Growth Walk Diluted EPS Walk1 Sales Growth Walk Reported Q4 2018 Diluted EPS $1.26 Q4 2018 Sales $2,011 M Core operations $0.05 U.S. 290 bps Foreign exchange rates $(0.01) Canada 30 bps International 70 bps SLS acquisition $(0.08) Organic Growth 3.9% Tax $(0.02)
Slide 8: Full Year 2019 Diluted EPS and Sales Growth Walk
Full Year 2019 Diluted EPS and Sales Growth Walk Diluted EPS Walk1 Sales Growth Walk Reported FY 2018 Diluted EPS $4.82 FY 2018 Sales $8,177 M Core operations $0.12 U.S. 170 bps Canada 60 bps Foreign exchange rates $(0.02) International 30 bps SLS acquisition $(0.11) Organic Growth 2.6% Tax, net of
Slide 9: Industrial End Market Organic Sales Growth
Industrial End Market Organic Sales Growth versus Prior Year Annual Quarter • Q4 2019 organic sales − Up 1% versus prior year − U.S. down 2%; Canada up 6% in local currency − Up 1% sequentially 4.3% − 3rd consecutive quarter of organic growth • FY 2019 organic sales − Up 2% versus prior year − Up 1%
Slide 10: Construction End Market Organic Sales Growth
Construction End Market Organic Sales Growth versus Prior Year • Q4 2019 organic sales Annual Quarter − Up 1% versus prior year − Up 2% in the U.S. and flat in Canada in local currency − Down 1% sequentially − 10th consecutive quarter of organic growth • FY 2019 organic sales 5.1% − Up 2% versus pri
Slide 11: Utility End Market Organic Sales Growth
Utility End Market Organic Sales Growth versus Prior Year • Q4 2019 organic sales Annual Quarter − Up 10% versus prior year − Up 11% in the U.S.; down 7% in Canada in local currency − Down 5% sequentially 10.2% 9.8% • FY 2019 organic sales − Up 4% versus prior year − 9th consecutive year of organic
Slide 12: CIG End Market Organic Sales Growth
CIG End Market Organic Sales Growth versus Prior Year Annual Quarter • Q4 2019 organic sales − Up 11% versus prior year − Up 15% in the U.S.; up 5% in Canada in local currency 12.1% − Up 4% sequentially − 11th consecutive quarter of organic growth 10.6% 9.4% • FY 2019 organic sales − Up 4% versus pr
Slide 13: Free Cash Flow & Leverage
Free Cash Flow & Leverage Free Cash Flow Leverage ($ Millions) (Debt, Net of Cash, to TTM EBITDA) target leverage ~ $1.1B of free cash flow over the last 5 years 4.0x 2.0x – 3.5x $94 million and 178% of net 3.5x income in Q4 $260.5 3.0x 116% of net income 2.8x $180.3 2.5x 81% of net income 2.0x 1.5x
Slide 14: 2020 Outlook
2020 Outlook Full Year Sales Outlook First Quarter and Full Year Outlook (unchanged from outlook provided on 10/31/19) End Market Range First Quarter Full Year Industrial (LSD) to LSD Sales 2% to 5% 0% to 4% Construction (LSD) to LSD Operating Margin 3.4% to 3.6% 4.1% to 4.4% Utility LSD CIG Flat to
Slide 15: Appendix
APPENDIX
Slide 16: Trailing Twelve Month Sales Mix
Trailing Twelve Month Sales Mix 15% 8% 10% 36% 41% 16% End 11% Products Markets 14% 33% 16% Industrial General Supplies Construction Communications & Security Utility Wire, Cable & Conduit CIG Lighting & Sustainability Electrical Distribution & Controls Automation, Controls & Motors 16
Slide 17: Adjusted Results
Adjusted Results Q4 2019 YTD 2019 Reported Adjusted Reported Adjusted Results Adjustments (1) Results Results Adjustments (1) Results (in millions, except for EPS) Income from operations $ 83.8 $ 3.1 $ 86.9 $ 346.2 $ 3.1 $ 349.4 Net interest and other 16.2 - 16.2 64.2 - 64.2 Income before income tax
Slide 18: Fourth Quarter Organic Sales Growth
Fourth Quarter Organic Sales Growth ($ Millions) Year-over-Year Three Months Ended, Core Less: Less: Organic December 31, 2018 December 31, 2019 Growth FX Impact Workday Growth Industrial core sales 739 746 0.9% (0.4)% 0.0% 1.3% Construction core sales 677 684 1.0% (0.4)% 0.0% 1.4% Utility core sale
Slide 19: Full Year Organic Sales Growth
Full Year Organic Sales Growth ($ Millions) Year-over-Year Twelve Months Ended, Core Less: Less: Organic December 31, 2018 December 31, 2019 Growth FX Impact Workday Growth Industrial core sales 2,983 2,999 0.5% (0.7)% (0.4)% 1.6% Construction core sales 2,685 2,712 1.0% (1.2)% (0.4)% 2.5% Utility c
Slide 20: Capital Structure and Leverage
Capital Structure and Leverage ($ Millions) EBITDA Twelve Months Ended, December 31,2018 December 31,2019 Income from operations 352 346 Depreciation and amortization 63 62 EBITDA 415 408 Debt As of, Maturity December 31, 2018 December 31, 2019 AR Revolver (variable) 275 415 2022 Inventory Revolver
Slide 21: Gross Profit and Free Cash Flow
Gross Profit and Free Cash Flow ($ Millions) Gross Profit Three Months Ended, December 31, 2018 December 31, 2019 Net sales 2,011 2,099 Cost of goods sold1 1,621 1,710 Gross profit2 390 390 Gross margin 2 19.4% 18.6% Free Cash Flow Twelve Months Ended, December 31, 2018 December 31, 2019 Net cash pr
Slide 22: Work Days
Work Days Q1 Q2 Q3 Q4 FY 2017 64 64 63 62 253 2018 64 64 63 62 253 2019 63 64 63 62 252 2020 64 64 64 61 253 22