Wesco International, Inc. · NYSE:WCC
Wesco International — Q1 2018 Earnings Presentation
22 slides from Wesco International's earnings presentation, Apr 26, 2018
Slide 1: Webcast Presentation – Q1 2018 Earnings
Webcast Presentation – April 26, 2018 Q1 2018 Earnings
Slide 2: Safe Harbor Statement
2 Q1 2018 Earnings Webcast 4/26/18 Safe Harbor Statement 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, uncertainties a
Slide 3: Q1 2018 Highlights
3 Q1 2018 Earnings Webcast 4/26/18 Q1 2018 Highlights …performance exceeded outlook • Strong first quarter results ‒ Double digit sales, operating profit and EPS growth versus prior year • Continued positive business momentum and growth across all end markets and geographies • Reported sales were up
Slide 4: Industrial End Market
4 Q1 2018 Earnings Webcast 4/26/18 2017 8.0% Industrial End Market • Q1 2018 Sales − Organic sales were up 10% versus prior year (up 9% in the U.S. and up 17% in Canada in local currency) − Down 1% sequentially • Increasing business momentum with industrial customers • Sales growth was broad-based a
Slide 5: Construction End Market
5 Q1 2018 Earnings Webcast 4/26/18 (3.6%) (4.4%) 6.0% 8.9% 9.4% • Q1 2018 Sales − Organic sales were up 9% versus prior year (up 10% in both the U.S. and in Canada in local currency) − Down 9% sequentially • Increasing business momentum with construction/contractor customers • Sales growth was broad
Slide 6: Utility End Market
6 Q1 2018 Earnings Webcast 4/26/18 Utility End Market Organic Sales Growth versus Prior Year 16% Utility • Investor Owned • Public Power • Utility Contractors • Q1 2018 Sales − Organic sales were up 18% versus prior year (up 21% in the U.S. and down 6% in Canada in local currency) − Down 5% sequenti
Slide 7: CIG End Market
7 Q1 2018 Earnings Webcast 4/26/18 CIG End Market • Q1 2018 Sales − Organic sales were up 9% versus prior year (up 3% in the U.S. and up 5% in Canada in local currency; balance of growth in International) − Up 5% sequentially • Technical expertise and supply chain solutions driving positive momentum
Slide 8: Q1 2018 Results
8 Q1 2018 Earnings Webcast 4/26/18 Q1 2018 Results Outlook Actual YOY Sales 6% to 9% $2.0B Up 12.5% Gross Margin 19.1% Down 60 bps, down 10 bps sequentially (1) SG&A $291M, 14.6% Up 9%, improved 50 bps Operating Profit $73M Up 10% Operating Margin 3.5% to 3.8% 3.7% Down 10 bps Effective Tax Rate ~22
Slide 9: Diluted EPS Walk
9 Q1 2018 Earnings Webcast 4/26/18 Diluted EPS Walk Q1 2017 $0.76 Core operations (Includes the planned restoration of variable compensation versus prior year) 0.07 Foreign exchange 0.01 Tax 0.06 Share count 0.03 2018 $0.93
Slide 10: Free Cash Flow & Leverage
10 Q1 2018 Earnings Webcast 4/26/18 1.5 2 2.5 3 3.5 4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Free Cash Flow & Leverage 43.1 45.3 2017 YTD 2018 YTD Free Cash Flow ($ Millions) Note: See appendix for non-GAAP reconciliations. 105% of net income 114% of net income ~ $1.2B of free cash flow over last 5 years Target
Slide 11: 2018 Outlook
11 Q1 2018 Earnings Webcast 4/26/18 2018 Outlook Q2 FY (Current) FY (Previous) Sales 7% to 10% 5% to 8% 3% to 6% Operating Margin 4.2% to 4.5% 4.2% to 4.6% 4.2% to 4.6% Effective Tax Rate ~ 21% 21% to 23% 21% to 23% Diluted EPS $4.50 to $5.00 $4.40 to $4.90 Free Cash Flow >90% of net income >90% of
Slide 12: Appendix: Non-GAAP Financial Measures
12 Q1 2018 Earnings Webcast 4/26/18 Appendix NON-GAAP FINANCIAL MEASURES This presentation includes certain non-GAAP financial measures. These financial measures include organic sales growth, gross profit, financial leverage, earnings before interest, taxes, depreciation and amortization (EBITDA), a
Slide 13: WESCO Profile 2018
13 Q1 2018 Earnings Webcast 4/26/18 WESCO Profile 2018 37% 33% 16% 14% 40% 15% 15% 12% 10% 8% Note: Markets & Customers and Products & Services percentages reported on a TTM consolidated basis. Products & ServicesMarkets & Customers Utility CIG Industrial Construction Investor Owned | Public Power U
Slide 14: Sales Growth
14 Q1 2018 Earnings Webcast 4/26/18 Sales Growth 2016 2017 2018 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Change in Net Sales (2.2) (0.3) (3.6) (3.7) (2.4) (0.2) (0.1) 7.8 11.3 4.7 12.5 Acquisition Impact 3.9 3.7 2.9 1.8 3.1 0.9 0.2 Core (6.1) (4.0) (6.5) (5.5) (5.5) (1.1) (0.1) 7.8 11.3 4.5 12.5 FX Impact (
Slide 15: Q1 2018 Organic Sales Growth by Geography
15 Q1 2018 Earnings Webcast 4/26/18 Q1 2018 Organic Sales Growth by Geography U.S. Canada International WESCO Change in net sales (USD) 10.4 15.6 32.7 12.5 Impact from acquisitions - - - - Impact from foreign exchange rates - 5.7 9.2 1.6 Impact from number of workdays - - - - Organic sales growth 10
Slide 16: Sales Growth-End Markets
16 Q1 2018 Earnings Webcast 4/26/18 Note: The prior period end market amounts noted above may contain reclassifications to conform to current period presentation. ($ Millions) Sales Growth-End Markets Q1 2018 vs. Q1 2017 Q1 2018 vs. Q4 2017 Q1 Q1 Q1 Q4 2018 2017 % Growth 2018 2017 % Growth Industria
Slide 17: Q1 2018 Organic Sales by End Market
17 Q1 2018 Earnings Webcast 4/26/18 Q1 2018 Organic Sales by End Market Industrial Construction Utility CIG WESCO Core Sales Growth 11.9 11.5 18.5 9.8 12.5 FX Impact 1.5 2.1 0.6 1.3 1.6 Workday Impact - - - - - Organic Growth 10.4 9.4 17.9 8.5 10.9 (%)
Slide 18: Gross Margin
18 Q1 2018 Earnings Webcast 4/26/18 Gross Margin ($ Millions) Three Months Ended March 31, 2018 March 31, 2017 Net sales $1,994 $1,773 Cost of goods sold (excluding depreciation and amortization) 1,614 1,423 Gross profit $380 $350 Gross margin 19.1% 19.7%
Slide 19: Debt Maturity Schedule and Capital Structure
19 Q1 2018 Earnings Webcast 4/26/18 Outstanding at December 31, 2017 Outstanding at March 31, 2018 Debt Maturity Schedule AR Revolver (V) 380 390 2020 Inventory Revolver (V) 12 0 2020 2019 Term Loans (V) 85 65 2019 2021 Senior Notes (F) 500 500 2021 2024 Senior Notes (F) 350 350 2024 Other (V) 36 43
Slide 20: Financial Leverage
20 Q1 2018 Earnings Webcast 4/26/18 Financial Leverage Twelve Months Ended March 31, 2018 Income from operations (1) $ 326 Depreciation and amortization 64 EBITDA $ 390 March 31, 2018 Short-term borrowings and current debt $ 43 Long-term debt 1,292 Debt discount and debt issuance costs (2) 13 Total
Slide 21: Free Cash Flow Reconciliation
21 Q1 2018 Earnings Webcast 4/26/18 Free Cash Flow Reconciliation Q1 2017 Q1 2018 Cash flow provided by operations 47.6 53.0 Less: Capital expenditures (4.5) (7.7) Free cash flow 43.1 45.3 Net income 37.8 42.9 Percentage of net income 114% 105% Note: Free cash flow is provided by the Company as an a
Slide 22: Work Days
22 Q1 2018 Earnings Webcast 4/26/18 Work Days Q1 Q2 Q3 Q4 FY 2016 64 64 64 62 254 2017 64 64 63 62 253 2018 64 64 63 62 253