Slide 1: Q3 2016 Earnings Webcast Presentation
Webcast Presentation October 27, 2016 Q3 2016 Earnings
Slide 2: Safe Harbor Statement
2 Q3 2016 Earnings Webcast, 10/27/16 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, uncert
Slide 3: Q3 2016 Highlights
3 Q3 2016 Earnings Webcast, 10/27/16 Q3 2016 Highlights …operating margin in-line with outlook • Reported sales were down 3.6% • Organic sales were down 5% in the US and down 7% in Canada • Oil & gas sales down over 20% • Operating margin was in-line with expectations, driven by cost management acti
Slide 4: Industrial End Market
4 Q3 2016 Earnings Webcast, 10/27/16 Industrial End Market • Q3 2016 Sales − Organic sales down 10% versus prior year (down 7% in the U.S. and down 20% in Canada in local currency) − Down 3% sequentially − Sales declines driven by oil and gas, metals and mining, and OEM customers • Reduced demand ou
Slide 5: Construction End Market
5 Q3 2016 Earnings Webcast, 10/27/16 • Q3 2016 Sales − Organic sales down 6% versus prior year (down 6% in U.S. and down 4% in Canada in local currency) − Down 3% sequentially − Continued weakness with contractors serving the industrial market • Core backlog declined 3% versus prior year, but is up
Slide 6: Utility End Market
6 Q3 2016 Earnings Webcast, 10/27/16 Utility End Market Organic Sales Growth versus Prior Year 16% Utility • Investor Owned • Public Power • Utility Contractors • Q3 2016 Sales − Organic sales down 2% versus prior year (down 2% in U.S. and up 5% in Canada in local currency) − Down 2% sequentially •
Slide 7: CIG End Market
7 Q3 2016 Earnings Webcast, 10/27/16 CIG End Market • Q3 2016 Sales − Organic sales down 2% versus prior year (down 2% in US and up 9% in Canada in local currency) − Down 2% sequentially • Customer focus remains on energy efficiency (lighting, automation, metering), security and FTTX (fiber-to-the-x
Slide 8: Q3 2016 Results
8 Q3 2016 Earnings Webcast, 10/27/16 Q3 2016 Results Outlook Actual YOY Sales (3)% to Flat $1.86B (3.6)% growth Gross Margin 19.7% Down 10 bps SG&A $256M, 13.8% Down 1%, Up 40 bps; core down 4% Operating Profit $93M Down 13% Operating Margin 4.9% to 5.3% 5.0% Down 50 bps Effective Tax Rate ~29% 28.0
Slide 9: Diluted EPS Walk
9 Q3 2016 Earnings Webcast, 10/27/16 Diluted EPS Walk Q3 2015 $1.28) Core operations (0.30) Acquisitions 0.05) Foreign exchange impact 0.01) Tax (0.01) Share count 0.02) After tax loss on debt redemption (1.70) 2016 $(0.65) Pretax loss on debt redemption 2.54) Tax effect of loss debt on redemption (
Slide 10: Cash Generation and Free Cash Flow
10 Q3 2016 Earnings Webcast, 10/27/16 1.5 2 2.5 3 3.5 4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 159.8 204.0 YTD 2015 YTD 2016 Cash Generation Free Cash Flow ($ Millions) See appendix for non-GAAP reconciliations. 150% of adjusted net income 100% of net income > $1B of free cash flow over last 4 years 2014
Slide 11: 2016 Outlook
11 Q3 2016 Earnings Webcast, 10/27/16 2016 Outlook Q4 FY (Current) FY (Previous) Sales (1)% to (4)% (2)% to (3)% Flat to (2)% Operating Margin 4.5% to 4.8% 4.5% to 4.6% 4.6% to 4.8% Effective Tax Rate ~ 30% ~ 29% ~ 29% Adjusted Diluted EPS $3.75 to $3.90 $3.85 to $4.10 Free Cash Flow >125% of adjust
Slide 12: Appendix: Non-GAAP Financial Measures
12 Q3 2016 Earnings Webcast, 10/27/16 Appendix NON-GAAP FINANCIAL MEASURES This earnings release includes certain non-GAAP financial measures. These financial measures include normalized organic sales growth, gross profit, financial leverage, free cash flow, adjusted net income and adjusted earnings
Slide 13: WESCO Profile 2016
13 Q3 2016 Earnings Webcast, 10/27/16 WESCO Profile 2016 36% 34% 16% 14% 40% 15% 14% 12% 11% 8% Note: Markets & Customers and Products & Services percentages reported on a TTM consolidated basis. Products & Services Markets & Customers Utility CIG Industrial Construction Investor Owned | Public Powe
Slide 14: Sales Growth
14 Q3 2016 Earnings Webcast, 10/27/16 Sales Growth 2014 2015 2016 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Change in Net Sales 0.2 5.9 7.6 6.1 5.0 0.3 (4.4) (7.4) (6.7) (4.7) (2.2) (0.3) (3.6) Acquisition Impact 0.5 1.6 1.8 1.6 1.4 1.2 1.6 2.0 3.0 2.0 3.9 3.7 2.9 Core (0.3) 4.3 5.8 4.5 3.6 (0.9) (6.0)
Slide 15: Q3 2016 Sales Growth – Geography
15 Q3 2016 Earnings Webcast, 10/27/16 Q3 2016 Sales Growth – Geography U.S. Canada International Total Change in net sales (USD) (1.2) (7.9) (20.6) (3.6) Impact from acquisitions 3.9 - - 2.9 Impact from foreign exchange rates - (1.0) (2.9) (0.3) Impact from number of workdays - - - - Normalized orga
Slide 16: Sales Growth-End Markets
16 Q3 2016 Earnings Webcast, 10/27/16 Note: The prior period end market amounts noted above may contain reclassifications to conform to current period presentation. ($ Millions) Sales Growth-End Markets Q3 2016 vs. Q3 2015 Q3 2016 vs. Q2 2016 Q3 Q3 Q3 Q2 2016 2015 % Growth 2016 2016 % Growth Industr
Slide 17: Q3 2016 Organic Sales by End Market
17 Q3 2016 Earnings Webcast, 10/27/16 Q3 2016 Organic Sales by End Market Industrial Construction Utility CIG WESCO Core Sales Growth (10.5) (6.0) (1.8) (2.0) (6.5) Workday Impact - - - - - Workday Adjusted Core Growth (10.5) (6.0) (1.8) (2.0) (6.5) FX Impact (0.4) (0.5) (0.1) (0.4) (0.3) Workday Ad
Slide 18: 2029 Debentures Loss Non-GAAP Reconciliation
18 Q3 2016 Earnings Webcast, 10/27/16 2029 Debentures Loss Non-GAAP Reconciliation (in millions, except for EPS) Q3 2016 YTD 2016 Reported Results Adjustments (1) Adjusted Results Reported Results Adjustments (1) Adjusted Results Operating profit $ 92.6 - $ 92.6 $ 250.0 - $ 250.0 Interest 20.8 - 20.
Slide 19: Debt Maturity Schedule and Capital Structure
19 Q3 2016 Earnings Webcast, 10/27/16 Outstanding at December 31, 2015 Outstanding at September 30, 2016 Debt Maturity Schedule AR Revolver (V) 525 426 2018 Inventory Revolver (V) 75 - 2020 2019 Term Loans (V) 175 160 2019 2021 Senior Notes (F) 500 500 2021 2024 Senior Notes (F) - 350 2024 2029 Conv
Slide 20: Financial Leverage
20 Q3 2016 Earnings Webcast, 10/27/16 Financial Leverage Twelve Months Ended September 30, 2016 Financial leverage ratio: Income from operations $ 340 Depreciation and amortization 67 EBITDA $ 407 September 30, 2016 Current debt and short-term borrowings $ 37 Long-term debt 1,419 Debt discount and d
Slide 21: Non-Cash Interest Expense
21 Q3 2016 Earnings Webcast, 10/27/16 ($ Millions) 2014 2015 YTD 2016 Amortization of Debt Discount* 4.1 6.1 3.0 Amortization of Deferred Financing Fees 4.4 6.1 2.7 FIN 48 1.0 (8.7) 0.4 Accrued Interest (1.4) - 5.9 Total 8.1 3.5 12.0 Non-Cash Interest Expense * Includes convertible debt and term loa
Slide 22: Free Cash Flow Reconciliation
22 Q3 2016 Earnings Webcast, 10/27/16 Free Cash Flow Reconciliation Q3 2015 Q3 2016 YTD 2015 YTD 2016 Cash flow provided by operations 43.3 78.6 176.0 217.2 Less: Capital expenditures (3.6) (6.1) (16.2) (13.2) Free Cash Flow 39.7 72.5 159.8 204.0 Note: Free cash flow is provided by the Company as an
Slide 23: Work Days
23 Q3 2016 Earnings Webcast, 10/27/16 Work Days Q1 Q2 Q3 Q4 FY 2014 63 64 64 62 253 2015 62 64 64 63 253 2016 64 64 64 62 254 2017 64 64 63 62 253