Wesco International, Inc. · NYSE:WCC
Wesco International — Investor Day (August 2012)
117 slides from Wesco International's investor day presentation, Aug 7, 2012
Slide 1: 2012 WESCO Investor Day: Driving Growth. Creating Value.
August 7, 2012 | Hilton New York | New York, New York 2012 WESCO INVESTOR DAY DRIVING GROWTH. CREATING VALUE. 2012 INV ESTOR D AY A U G U ST 7, 2012 2012 INV ESTOR D AY A U G U ST 7, 2012 2012 INV ESTOR D AY A U G U ST 7, 2012 2012 INV ESTOR D AY A U G U ST 7, 2012 2012 INV ESTOR D AY A U G U ST 7,
Slide 2: Investor Day agenda
DRIVI WE Tuesda Registr 1:00 pm 1:05 pm 1:35 pm 2:05 pm 2:25 pm 2:45 pm 3:00 pm 3:20 pm 3:40 pm 4:00 pm 4:30 pm 5:00 pm 6:15 pm NG GROW SCO In y, August 7, ation Introd Dan B Welc John J Sales Steve Canad Haral Utility Andy Break Comm David Globa Kevin Integ Paul J Finan Ken P Q&A John J Appe Cockt
Slide 3: Presenter biographies
David Bemoras Group Vice President and General Manager Mr. Bemoras joined WESCO with the acquisition of Communications Supply Corporation (CSC) in 2006. He is responsible for WESCO’s communications and security business and the midwest region of industrial/construction operations in the U.S. He was
Slide 4: Welcome and WESCO Overview
DRIVING GROWTH > CREATING VALUE John J. Engel Chairman, President, and Chief Executive Officer Welcome and WESCO Overview
Slide 5: Safe Harbor Statement
2 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Engel Overview 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
Slide 6: WESCO Investor Day 2012 Agenda
3 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Engel Overview WESCO Investor Day 2012 Agenda • WESCO Overview − Strategic plan and progress − Business priorities − Value creation opportunity • Sales, Margin and Operations − Growth engines − Acquisition integration − Investment priori
Slide 7: WESCO Profile
4 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Engel Overview WESCO Profile • Fortune 500 Company (NYSE: WCC) − Headquartered in Pittsburgh, PA − Approximately 7,500 employees − Approximately 400 locations in 14 countries • A leading provider of electrical, industrial, and communicat
Slide 8: WESCO International Locations
5 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Engel Overview WESCO International Locations WESCO’s commercial presence outside the U.S. and Canada includes • Angola • Australia • Brazil • China • Czech Republic • England • Mexico • Singapore • Spain • United Arab Emirates …support e
Slide 9: WESCO Growth Strategy
6 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Engel Overview WESCO Growth Strategy Growth strategy launched in 2009 • Established eight growth engines and six operational excellence initiatives • Initiated One WESCO • Increased investments • Provided greater transparency • Developed
Slide 10: WESCO Results
7 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Engel Overview WESCO Results Sales vs. Prior Year Operating Margin (EBIT%) EPS 4.2% 2010 30 Versus prior year (basis points) 2011 5.4% 120 …focused on shareholder value creation $2.50 2010 2% Versus prior year Organic 2010 10% 8% 2011 21
Slide 11: WESCO Portfolio
8 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Engel Overview 35% 15% 18% 13% 9% 10% Products & Services WESCO Portfolio Portfolio strengthened through organic growth and M&A… …diversifying markets, customer base, product lines, and suppliers Controls & Motors Lighting & Controls Gen
Slide 12: Market Opportunity
9 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Engel Overview Market Opportunity …large, fragmented market with trends favorable to WESCO Large, Fragmented Market Value of Distribution Needs ˗ Procurement ˗ Warehousing ˗ Logistics ˗ Supply Chain Management • Increased scale • Outsour
Slide 13: Growth Engines
10 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Engel Overview Growth Engines …support our profitable growth objectives Construction Government International Utility Communications & Security Lighting & Sustainability M&A Agenda END MARKETS PRODUCT CATEGORIES Global Accounts & Integr
Slide 14: Operational Excellence Initiatives
11 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Engel Overview Marketing Leadership • Demand creation programs • Brand management • Dedicated specialists Sales Management • LEAN initiative for sales • Sales, territory and account management • Sales training and solution selling Sourc
Slide 15: One WESCO Product and Services Portfolio
12 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Engel Overview One WESCO Product and Services Portfolio • Automation and Control • Broadband Communications • Data Communications • Electrical • Electromechanical • Electronics • Industrial MRO and Consumables • LEAN and Supply Chain Ma
Slide 16: One WESCO Value Proposition
13 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Engel Overview One WESCO Value Proposition • Customers: full range of WESCO products, services, and solutions for their supply chain needs • Suppliers: increased sales through partnering with WESCO • Employees: increased employee engage
Slide 17: WESCO's LEAN Journey
14 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Engel Overview WESCO’s LEAN Journey …building a continuous improvement culture founded on LEAN Customer Focus Solution Categories WESCO LEAN Journey – The first decade • Centralized LEAN team with additional field resources • 6,000+ Kai
Slide 18: LEAN Evolution
15 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Engel Overview LEAN Evolution • LEAN initiatives “pushed” from the top • Created industry-leading LEAN business model • Built a corporate LEAN organization • Focused on “low hanging fruit” driven by business priorities • Select key init
Slide 19: WESCO's Acquisition Strategy
16 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Engel Overview WESCO’s Acquisition Strategy …adds capabilities, revenues, and profits Current Acquisition Environment • Highly fragmented industry • Many profitable niches • Primarily privately owned • Generational change underway We ar
Slide 20: Business Priorities and Financial Objectives
17 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Engel Overview Business Priorities and Financial Objectives • Grow faster than the market and strengthen business through acquisitions • Maintain industry leading cost structure • Expand operating profit and margins • Generate strong op
Slide 21: Vision and Current WESCO Evolution
18 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Engel Overview VisionCurrent WESCO Evolution Customers and Markets • End Markets • Industry Leadership • Geographic Footprint • Customer Satisfaction “Expanding Blue Chip Customer Base” Industrial, Construction, Utility, CIG North Ameri
Slide 22: WESCO Strategic Plan – Key Initiatives
19 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Engel Overview WESCO Strategic Plan – Key Initiatives Growth Engines Operational Excellence Initiatives Communications & Security Global Accounts & Integrated Supply Government Utility Construction International Lighting & Sustainabilit
Slide 23: Sales, Margin, and Operations
DRIVING GROWTH > CREATING VALUE Steve Van Oss Senior Vice President and Chief Operating Officer Sales, Margin, and Operations
Slide 24: Operating Priorities
2 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Van Oss Operations Sales Growth • Organic ˗ Execution of growth engines ˗ Capacity and capability expansion • Acquisitions ˗ Product and service expansion ˗ Geographic strengthening Gross Margin Expansion • Pricing initiatives • Sourcing
Slide 25: Growth Engines – Global Accounts & Integrated Supply
3 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Van Oss Operations Growth Engines – Global Accounts & Integrated Supply …focus on above market sales growth Strategic Priorities • Fortune 1000 focus • Application oriented value creation solutions • One WESCO emphasis • Expand with curr
Slide 26: Growth Engines – Communications & Security
4 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Van Oss Operations Growth Engines – Communications & Security …focus on above market sales growth Strategic Priorities • Leverage Global Accounts customer relationships • Data centers (data plus electrical products) • Address security an
Slide 27: Growth Engines – Utility
5 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Van Oss Operations Growth Engines – Utility …focus on above market sales growth Strategic Priorities • Expand scope of supply to Investor Owned Utilities and Public Power customers • Comprehensive offerings for transmission, substation a
Slide 28: Growth Engines – Construction
6 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Van Oss Operations Growth Engines – Construction …focus on above market sales growth Strategic Priorities • Apply Global Accounts model to EPCs and contractors • Capitalize on existing customer relationships to sell and service the compl
Slide 29: Growth Engines – Government
7 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Van Oss Operations Growth Engines – Government …focus on above market sales growth Status • Large fragmented government market (federal, state, local) still provides growth opportunities for WESCO • $0.5B+ run rate Strategic Priorities •
Slide 30: Growth Engines – Lighting & Sustainability
8 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Van Oss Operations Growth Engines – Lighting & Sustainability …focus on above market sales growth Strategic Priorities • Marketing initiatives centered on lighting and sustainability solutions • Dedicated resources with lighting focused
Slide 31: Growth Engines – International
9 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Van Oss Operations Growth Engines – International …investing in key global markets Strategic Priorities • Expand global footprint in conjunction with customer opportunities • Leverage globally enabled product and service platforms (globa
Slide 32: WESCO's Acquisition Program
10 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Van Oss Operations WESCO’s Acquisition Program Acquisition Targets $305 $175 $65 $35 CIG Industrial Utility Construction Primary product categories • Broadband Communications • Electrical and Electronics • Safety and MRO $Millions Last
Slide 33: Acquisition Integration
11 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Van Oss Operations Acquisition Integration RS Electronics • $60M distributor of electrical and electronic products • Expands OEM applications for industrial customers Integration Status and Results • Combined with Carlton-Bates and AA E
Slide 34: Marketing and Business Development
12 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Van Oss Operations Marketing and Business Development …focus on demand creation and consistent customer growth Marketing Capabilities 1. Value Creation 2. Commercial Activation 3. Sales Force Effectiveness 4. New Technologies 5. Strateg
Slide 35: Sales Capability and Capacity Expansion
13 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Van Oss Operations Sales Capability and Capacity Expansion • 3,200+ sales and sales management personnel, an increase of 4% over the second quarter of last year • Highly productive sales force • Capacity expansion to support above marke
Slide 36: Gross Margin Expansion
14 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Van Oss Operations Gross Margin Expansion Expansion Drivers Pricing initiatives 50 to 100 bpts Sourcing and purchasing 50 to 100 bpts initiatives Acquisitions ~10 bpts per year 19.5% 20.2% 22% 10 12 14 16 18 20 22 24 26 28 30 2009 2011
Slide 37: Pricing Initiatives
15 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Van Oss Operations $235M $325M 2009 2011 Pricing Initiatives Key Initiatives Inside sales incentive program Customer class price points List pricing with specific discounting Special pricing arrangements Enhanced freight recovery Variab
Slide 38: Sourcing and Purchasing Initiatives
16 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Van Oss Operations Sourcing and Purchasing Initiatives Regional procurement coordination Category management Special pricing arrangements Supplier rebate expansion Supplier rationalization Private label products …focused on gross margin
Slide 39: Acquisitions Supporting Gross Margin Expansion
17 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Van Oss Operations Acquisitions …support our gross margin expansion objectives Gross Margin Accretive Potelcom 2010 TVC Communications 2010 RECO 2011 Brews 2011 RS Electronics 2012 Trydor Industries 2012 Conney Safety 2012
Slide 40: Operational Improvements
18 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Van Oss Operations Operational Improvements Transportation Customer Service • Continuous evolution since launch in 2003 • Focus on productivity, capacity, organization and customer service • Hands-on application of LEAN tools • Enterpri
Slide 41: Summary
19 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Van Oss Operations Summary • Execution of our growth engines and increased investments in sales and marketing have resulted in profitable above market results • Gross margin expansion initiatives are expected to translate to higher oper
Slide 42: Canada
DRIVING GROWTH > CREATING VALUE Harald Henze Group Vice President and General Manager Canada
Slide 43: WESCO Canada Business Profile
2 ID12 Canada DRIVING GROWTH > CREATING VALUE WESCO Investor Day 2012 WESCO Canada • WESCO Canada is headquartered in Toronto. • WESCO has been operating in Canada since 1922. • $900M annual sales in 2011, with a first half 2012 annualized sales run rate of approximately $1B • Approximately 1,100 em
Slide 44: WESCO Canada Market Dynamics
3 ID12 Canada DRIVING GROWTH > CREATING VALUE WESCO Investor Day 2012 WESCO Canada …attractive long-term growth prospects Market Dynamics 1. Canadian market is buoyed by natural resource sectors. 2. Long-term growth prospects for oil, gas, and mining are very attractive. 3. Construction is one of Ca
Slide 45: Extensive Geographic Footprint
4 ID12 Canada DRIVING GROWTH > CREATING VALUE Extensive Geographic Footprint British Columbia Abbotsford Burnaby Castlegar Kamloops Kelowna Nanaimo Port Coquitlam Prince George Richmond Surrey Vancouver Victoria Fort St. John Alberta Edmonton Edmonton SE Red Deer Calgary Calgary N-new Calgary NE For
Slide 46: Investing for Growth
5 ID12 Canada DRIVING GROWTH > CREATING VALUE WESCO Investor Day 2012 Investing for Growth Organic 1. Edmonton Distribution Center opened in 2009, with significant expansion in 2012 2. Toronto Distribution Center opened in 2012 (WESCO’s largest) 3. Additional branches planned in 2012 Acquisitions 1.
Slide 47: Distribution Center Evolution
6 ID12 Canada DRIVING GROWTH > CREATING VALUE Distribution Center Evolution • Custom Warehouse Management System (WMS) directs and controls all transactions in real time • “Paperless” processing via RF scanners, scanning and bar-code technology applications • Automated weight auditing quality check
Slide 48: Construction Cycle Time
7 ID12 Canada DRIVING GROWTH > CREATING VALUE Construction Cycle Time Construction Cycle ABI Inquiries ABI Construction Starts Construction Put-In Place 1) Design • Project formulation • Architect / Engineer selection • Final building plans 2) Bidding • General Contractor selection • Bids received,
Slide 49: Construction Success Stories
8 ID12 Canada DRIVING GROWTH > CREATING VALUE WESCO Investor Day 2012 Construction Success Stories Property Management / Retail Healthcare Hospital Expansion • $20M construction project over 3 years • Comprehensive construction project management required (procurement, staging, packaging, and delive
Slide 50: Addressing Utility Power Chain in Canada
9 ID12 Canada DRIVING GROWTH > CREATING VALUE WESCO Investor Day 2012 Addressing Utility Power Chain in Canada Brews Supply • Founded in 1927 in Alberta • Acquired by WESCO (October 2011) • End markets: Industrial and electrical utility • Key customers: − Oil and gas − Mining − Utilities − Industria
Slide 51: One WESCO Success Stories in Canada
10 ID12 Canada DRIVING GROWTH > CREATING VALUE WESCO Investor Day 2012 One WESCO Success Stories in Canada Global Specialized Chemicals Global Diversified Industrial • Fortune 500 company with operations in more than 25 countries • WESCO revenues of more than $30 million • WESCO integrated supply pe
Slide 52: Summary
11 ID12 Canada DRIVING GROWTH > CREATING VALUE Summary • Long term growth prospects for oil, gas, and mining in Canada are very attractive. • Investing for growth and delivering strong results in Canada. • One WESCO provides additional opportunities for profitable sales growth with customers.
Slide 53: Utility
DRIVING GROWTH > CREATING VALUE Andy Bergdoll Group Vice President and General Manager Utility
Slide 54: Utility Market Overview
ID12 Utility2 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE Utility Market Overview Utility Power Chain Segments DistributionSubstationTransmissionGeneration Over $110B annual spend in U.S. and Canada _________ 12-15% is addressable by WESCO …attractive growth prospect over long term
Slide 55: Utility Power Chain: Generation and Transmission
ID12 Utility3 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE Utility Power Chain: Generation and Transmission Overview • Approximately $50B annual spend in U.S. • Over 1.0M MW capacity ~700 major sites Coal / oil ~50% Gas ~25% Nuclear ~20% Renewables ~5% • Owned by IOUs (70%), non-u
Slide 56: Utility Power: Substation and Distribution
ID12 Utility4 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE Utility Power: Substation and Distribution Overview • Approximately $5B annual spend in U.S. • Decentralized infrastructure 450K high voltage stations (transmission) 1M medium voltage stations (distribution) • Owned by IOU (85
Slide 57: WESCO Utility Scope of Supply Expansion
ID12 Utility5 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE WESCO Utility Scope of Supply Expansion Service CategoriesProduct Categories Gen Trans Sub/Dist 1 T&D Components 2 Wire/Cable/Conduit 3 Equipment and Apparatus 4 Electrical MRO 5 Communication and Security 6 Outdoo
Slide 58: Category Management and Utility Integrated Supply Program
ID12 Utility6 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE Category Management Utility Integrated Supply Program Inventory Management Procurement Expediting Transaction Management Warehouse Operations • Strategic Sourcing • Category Strategies • Bid Management • TCO Evaluation • Product S
Slide 59: WESCO Utility Supply Chain Solutions
ID12 Utility7 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE WESCO Utility Supply Chain Solutions • Utility Challenge: Shift in spending to major projects, supply chain constraints, material control and cost on EPC projects, supplier capacity constraints. • WESCO Solution: High Voltage team
Slide 60: Generation Investments
ID12 Utility8 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE Generation Investments Coal: Environmental Investments • New EPA regulations in 2011 • 35 -70 GWs of coal will be retired due to cost of compliance • Compliance investment on the retained fleet is a $500M addressable spend for WES
Slide 61: Smart Grid Projects
ID12 Utility9 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE Smart Grid Projects Investments Market Adoptio n …provide substantial opportunities for WESCO Advanced Metering Infrastructure Source: Utilimetrics
Slide 62: Recent Success Stories
ID12 Utility10 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE Recent Success Stories Generation and Distribution Supply Chain Services • Utility merger led to customer sourcing event to capture integration savings for combined spend of over $90M • WESCO introduced an integrated supply busin
Slide 63: Summary
ID12 Utility11 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE • The utility market is large and undergoing significant changes which are creating excellent growth opportunities for WESCO. • WESCO’s core competencies are closely aligned with our customers’ investment priorities. • WESCO has
Slide 64: Communications and Security
DRIVING GROWTH > CREATING VALUE David Bemoras Group Vice President and General Manager Communications and Security
Slide 65: One-Stop Shop for Communications and Security
2 ID12 Communications DRIVING GROWTH > CREATING VALUE WESCO is a “One-Stop Shop” for a wide variety of data communications, security, broadband, and electrical products and general supplies Communications and Security Customer Value PropositionAddressable Market A wide range of customer communicatio
Slide 66: Extensive Communications Portfolio
3 ID12 Communications DRIVING GROWTH > CREATING VALUE Extensive Communications Portfolio Broadband Communications Data Communications & Security Product Category & Description Products Signal Origination Head-end and central office equipment used to receive and process signals for transmission Plant
Slide 67: Key Market Trends Favor WESCO
4 ID12 Communications DRIVING GROWTH > CREATING VALUE Key Market Trends Favor WESCO 1. Data center consolidation in the public and federal spaces 2. Cloud computing driving growth of collocation data centers 3. Federal government investing in broadband networks 4. Enterprise in-building wireless sys
Slide 68: IP Security Growth Continues
5 ID12 Communications DRIVING GROWTH > CREATING VALUE Market Trends Highlight: IP Security Growth Continues, Shifting to Indirect Model • Market continues aggressive transition from analog to IP technologies • Manufacturer movement from dealer direct model to distribution • Cabling installers gettin
Slide 69: One WESCO Communications Opportunities
6 ID12 Communications DRIVING GROWTH > CREATING VALUE One WESCO Communications Opportunities Government Energy Commercial Education Automotive Healthcare …exist in all of WESCO’s addressable markets Data Communications Broadband Security Industrial OEMResidential
Slide 70: Utilizing the Power of One WESCO
7 ID12 Communications DRIVING GROWTH > CREATING VALUE Utilizing the Power of One WESCO Government • Core WESCO competency • Growth slowing, but significant opportunities exist with Federal Data Center Consolidation Initiative (FDCCI) • One WESCO sales force International & Global Accounts Security •
Slide 71: Key Strategic Initiatives
8 ID12 Communications DRIVING GROWTH > CREATING VALUE Key Strategic Initiatives Communications and Security Everywhere End-User Specification Selling Team Target Selling Global Accounts and International • Core offering in all WESCO locations • Global footprint • One WESCO • Win the “race” to the en
Slide 72: Success Stories
9 ID12 Communications DRIVING GROWTH > CREATING VALUE Success Stories IP Security National Political Convention Global Accounts Financial Services Conglomerate • Leveraged existing relationship with local security integrator partner • Created win-win partnership that captured entire security build-o
Slide 73: Summary
10 ID12 Communications DRIVING GROWTH > CREATING VALUE Summary • Market trends are favorable for growth over long term • One WESCO approach creating synergies across the business • Industry’s most extensive product offering • Go-to-market model compelling for Fortune 1000 companies • WESCO well-posi
Slide 74: Global Accounts
DRIVING GROWTH > CREATING VALUE Kevin Kerby Vice President Global Accounts
Slide 75: Global Accounts and Integrated Supply
ID12 Global Accounts2 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE Global Accounts and Integrated Supply • Fortune 1000 focus • Application oriented value creation solutions • One WESCO emphasis • Expand with current customers • Capture new customers in target verticals Global Accounts &
Slide 76: Opportunity Pipeline
ID12 Global Accounts3 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE Opportunity Pipeline Target Identification Discovery Meetings Proposals Negotiations WESCO Wins Current Customers (Expansion) New Customers (Prospects) Target Identification Discovery Meetings Proposals Negotiations $760M+
Slide 77: Significant Growth Potential
ID12 Global Accounts4 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE Significant Growth Potential 1. Petrochemical 2. Government 3. OEM materials 4. Contractors 5. Utilities 6. Metals and Mining 7. Food Processing 8. Aerospace and Defense 9. Pulp and Paper 10. Healthcare and Education 11. E
Slide 78: Customer Engagement
ID12 Global Accounts5 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE Customer Engagement Extending our lead through… Target Audience Objective Centralized lead generation and qualification CPO, CIO New customer acquisition Global account managers with vertical market and key customer accoun
Slide 79: Four Primary WESCO Solution Sets
ID12 Global Accounts6 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE Four Primary WESCO Solution Sets Integrated Supply • Turnkey outsourcing solutions • Provides staff • Proprietary technology • Best in class procurement processes Global Capital Project Management • Upgrades and retrofits
Slide 80: Global Supply Chain Capabilities
ID12 Global Accounts7 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE Global Supply Chain Capabilities …enable WESCO to support customer locations anywhere in the world Chevron ExxonMobil Afghanistan Angola Angola Argentina Bangladesh Australia Brazil Cameroon China Canada Guam Chad Kazakhst
Slide 81: One WESCO Success Story
ID12 Global Accounts8 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE One WESCO Success Story • Built successful relationship with top petrochemical company in several states in U.S., centered on electrical MRO • Expanded relationship to include capital projects for off-shore oil platforms.
Slide 82: Summary
ID12 Global Accounts9 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE Summary • The addressable market is very large and fragmented, creating excellent growth opportunities for WESCO. • WESCO’s supply chain management capabilities are closely aligned with our customers’ investment priorities
Slide 83: Integrated Supply
DRIVING GROWTH > CREATING VALUE Paul Jeffries Group Vice President and General Manager Integrated Supply
Slide 84: WESCO Integrated Supply Core Capabilities
2 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Integrated Supply WESCO Integrated Supply Core Capabilities A leading outsourcing company for maintenance, repairs, and operations materials, low-value direct materials, and supply chain services • Programs range up to more than $200 mil
Slide 85: MRO Value Proposition
3 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Integrated Supply MRO Value Proposition Tail Spend from Customer 1 + Tail Spend from Customer 3 + Tail Spend from Customer 2 + Tail Spend from Customer 4 + Tail Spend from Customer 5 …outsourcing to WESCO allows customers to concentrate
Slide 86: WESCO Integrated Supply Offerings
4 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Integrated Supply WESCO Integrated Supply Offerings WESCO’s integrated supply services range from a one-off solution managed by a local branch for a single customer location to a turnkey outsourcing program in which WESCO manages the ent
Slide 87: WESCO Supply Chain Technology Platforms
5 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Integrated Supply Crib management systems capable of: • Warranty Tracking • Inventory Management • Customized e-Catalogs • Limit of Authority Hierarchy …and more Kanban Point of Use Tools Vending Solutions Bar Code Scanning WESCO Supply
Slide 88: WESCO e-Crib Applications
6 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Integrated Supply WESCO e-Crib Applications …provide master inventory control and part ordering system e-Crib is your total solution for: • Inventory management • Warranty tracking • Universal part numbers • Worldwide reporting • Customi
Slide 89: Strategic Outsourcing Solution for Fortune 500 Company
7 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Integrated Supply Strategic Outsourcing Solution for Fortune 500 Company − 20-year customer relationship of providing global supply chain outsourcing (North America, Europe, and Asia) −WESCO personnel on site at plants − Industrial MRO s
Slide 90: Summary
8 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID12 Integrated Supply Summary • WESCO’s extensive supply chain management experience is being applied to customers’ operations • More than 50 years of integrated supply experience − Robust e-commerce capabilities − Strong supplier relationsh
Slide 91: Financial Results and Expectations
DRIVING GROWTH > CREATING VALUE Ken Parks Vice President and Chief Financial Officer Financial Results and Expectations
Slide 92: Long Term Financial Objectives
2 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID2012 Financials Maintain industry-leading cost structure Expand operating profit and margins Generate strong operating cash flow through the cycle Provide superior investor returns Long Term Financial Objectives …focused on shareholder valu
Slide 93: Long Term Focus on Profitable Growth
3 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID2012 Financials Long Term Focus on Profitable Growth …operating profit pull through delivering results EBIT 4.7x TOTAL SALES 1.9x HEADCOUNT 1.2x 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 TTM 2012
Slide 94: Strong Performance
4 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID2012 Financials Strong Performance Operating ProfitSales Free Cash Flow to Net IncomeEPS ($ Billions) 2009 2010 2011 TTM 2012 2009 2010 2011 TTM 2012 $ 2009 2010 2011 TTM 2012 2009 2010 2011 TTM 2012 32% CAGR 119% of Average Net Income 26%
Slide 95: 2012 Performance and FY 2012 Outlook
5 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID2012 Financials 2012 Performance First Half 2012 FY 2012 Outlook Sales $ 3.3B 10.9% growth including 2.4% from acquisitions 8 - 12% growth including 3% from acquisitions Gross Margins 20.0% Down 10 bpts At or above 20.2% Operating Margins 5
Slide 96: Cost Leverage
6 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID2012 Financials Cost Leverage Sales per Employee ($ Thousands) Operating Profit per Employee ($ Thousands) 2009 2010 2011 TTM 2012 …compares favorably to industry benchmarks 753 788 860 889 561 NAED 29 33 47 50 14 NAED 2009 2010 2011 TTM 20
Slide 97: LEAN for Administration
7 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID2012 Financials LEAN for Administration • Process improvement teams in place to leverage evolution of Oracle financials and WESCO’s IT applications • Focus is on administrative and back office process efficiency and effectiveness Current Fo
Slide 98: Cash Generation
8 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID2012 Financials Cash Generation 236 279 112 134 230 213 105 115 196 221 2008 2009 2010 2011 TTM 2012 64% 33% 3% Cash Redeployment …improving leverage and driving growth Free Cash Flow ($M) Net Income ($M) Debt Reduction Acquisitions Other $
Slide 99: Cash Flow Management
9 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID2012 Financials Cash Flow Management …expect to maintain fiscal discipline while funding growth First Use Support organic growth at greater than market rates Second Use Fund accretive acquisitions to supplement organic growth Third Use Redu
Slide 100: Strong Capital Structure
10 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID2012 Financials 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E Capital Structure • Liquidity in excess of $640M at June 30 • Access to multiple capital markets • Staggered maturities on debt inst
Slide 101: Cumulative Acquisitions Since 2010
11 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID2012 Financials Cumulative Acquisitions Since 2010 325 400 580 0 100 200 300 400 500 600 700 2010 2011 2012 Acquisition Date Annual Sales Estimated 1st Year Accretion Potelcom 6/10 $25M TVC Communications 12/10 $300M $0.30 RECO 3/11 $25M B
Slide 102: End Market Key Indicators
12 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID2012 Financials End Market Key Indicators End Market 2012 Sales Mix Key Market Drivers / Indicators Current Momentum Industrial 44% • Industrial Production • Electrical equipment new orders • ISM Purchasing Managers’ Index • Capacity utili
Slide 103: 2013 Anticipated Business Environment
13 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID2012 Financials 2013 Anticipated Business Environment • Utility spending • Non-residential construction • Electrical equipment orders • Credit availability and low interest rates • Share shift to larger players • Industry consolidation • R
Slide 104: 2013 Financial Outlook
14 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID2012 Financials 2013 Financial Outlook … An Early Look • Sales growth 7 - 11% − Market growth (GDP plus 2-3%) 4 - 6% − Share gain 1 - 2% − Acquisitions 2 - 3% • Operating margin expansion 40 - 60 bpts − Gross margin expansion plus operatin
Slide 105: 2012 to 2015 Sales Targets
15 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID2012 Financials Industrial 2012 to 2015 Sales Targets Balanced Growth Utility CIG Construction $5.1 $6.1 $6.7 7-11% CAGR 2010 2011 2012E 2015E Sales $B …expect continued sales growth momentum 2013E $7.3+
Slide 106: 2012 to 2015 Operating Margin Targets
16 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID2012 Financials 2012 to 2015 Operating Margin Targets Pricing/Sourcing Margin Drivers Portfolio Efficiency …driving to 15% ROIC by 2015 4.2% 5.4% 5.8%+ 40-60 bpts/yr 2010 2011 2012E 2015E Operating Margin % 6.2%+ 2013E
Slide 107: EPS and Stock Price Performance
17 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE ID2012 Financials EPS and Stock Price Performance …solid business results are driving shareholder value EPS Stock Price $0.70 $0.43 $0.49 $0.65 $1.47 $2.09 $4.08 $4.82 $4.71 $2.46 $2.50 $3.96 $4.42 $8.65 $7.57 $5.62 $5.53 $18.80 $33.30 $62.1
Slide 108: Q&A and Closing Remarks
DRIVING GROWTH > CREATING VALUE John J. Engel Chairman, President, and Chief Executive Officer Q&A and Closing Remarks
Slide 109: Invest in WESCO
2 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE 2012ID Engel Q&A Invest in WESCO • Industry leader with low risk business profile • Proven business model and well positioned in large, fragmented markets • Organic sales growth faster than the market • Operational excellence culture founded
Slide 110: Q&A
3 WESCO Investor Day 2012 DRIVING GROWTH > CREATING VALUE 2012ID Engel Q&A
Slide 111: Appendix
Appendix 1) Definitions 2) Regulation G Non‐GAAP Financial Measures
Slide 112: Definitions
DRIVI WES Defi Finan by th amor Free provi Gross depre dividi Liquid Total durin reinv Traili endin NG GROW CO Inte nitions cial levera e trailing t tization (E cash flow ded by op profit is c ciation an ng gross p ity is tota Sharehold g a period estment o ng Twelve g June 30, TH > CREA rnation App
Slide 113: Non-GAAP Financial Measures
This presentation includes certain non‐GAAP financial measures. These financial measures include financial leverage, free cash flow, gross profit and liquidity. The Company believes that these non‐GAAP measures are useful to investors in order to provide a better understanding of the Company's capit
Slide 114: Free cash flow reconciliation
Free cash flow: FY 2010 FY 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 TTM 2012 Cash flow provided by operations 127$ 167$ 49$ 96$ 58$ 57$ 260$ Less: Capital expenditures (15) (33) (8) (9) (5) (8) (30) Free cash flow 112$ 134$ 41$ 87$ 53$ 49$ 230$ Net Income 115$ 196$ 54$ 55$ 53$ 59$ 221$ Free cash flow %
Slide 115: Financial Leverage reconciliation
Twelve Months Ended June 30, 2012 Financial Leverage: Income from operations 362,822$ Depreciation and amortization 32,941 EBITDA 395,763$ June 30, 2012 Short‐term debt 19,409$ Current debt 2,037 Long‐term debt 562,750 Debt discount related to convertible debentures (1) 174,485 Total debt including
Slide 116: Gross Profit reconciliation
Six Months Ended Gross Profit: June 30, FY FY FY 2012 2011 2010 2009 Net Sales 3,279$ 6,126$ 5,064$ 4,624$ Cost of goods sold (excluding depreciation and amortization) 2,623 4,889$ 4,065$ 3,724$ Gross profit 656$ 1,237$ 999$ 900$ Gross margin 20.0% 20.2% 19.7% 19.5% WESCO INTERNATIONAL, INC. RECONCI
Slide 117: Liquidity reconciliation
Liquidity: June 30, 2012 Available borrowing capacity ‐ revolving credit facility 367.5$ Available borrowing capacity ‐ accounts receivable securitization facility 245.0 Invested cash 29.8 Liquidity 642.3$ cash and available borrowing capacity under its debt facilities. WESCO INTERNATIONAL, INC. REC