WESCO International, Inc. · NYSE:WCC
WESCO International — Investor Presentation (December 2016)
24 slides from WESCO International's investor presentation, Dec 13, 2016
Slide 1: 2016 Financial Update and 2017 Outlook
Webcast Presentation December 13, 2016 2016 Financial Update and 2017 Outlook
Slide 2: Safe Harbor Statement
2 2017 Outlook Call 12/13/16 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, uncertainties
Slide 3: Reaffirming 2016 Outlook
3 2017 Outlook Call 12/13/16 Reaffirming 2016 Outlook Provided on October 27, 2016 • Sales decrease of 2% to 3% ‒ Includes Q4 sales decrease of 1% to 4% with one fewer workday ‒ Q4 results to date in line with outlook • Adjusted diluted EPS(1) of $3.75 to $3.90 • Free cash flow equal to at least 125
Slide 4: Looking Forward: Potential Economic and Market Changes
4 2017 Outlook Call 12/13/16 Impact 2017 2018 2019 Reduced regulatory environment Increased infrastructure spending • U.S. • Canada Increased inflation Lower corporate tax rate Increased customer confidence and capex spending Looking Forward: Potential Economic and Market Changes …provide positive i
Slide 5: 2017 Priorities
5 2017 Outlook Call 12/13/16 2017 Priorities • Return to sales growth ‒ Outperform end markets with One WESCO sales growth initiatives ‒ Invest in and capitalize on growth markets ‒ Maintain focus on execution and sales effectiveness • Make accretive acquisitions to strengthen portfolio and take mar
Slide 6: Industrial End Market
6 2017 Outlook Call 12/13/16 Industrial End Market Improving Flat Declining (8.6%) (13.7%) (10.1%) (10.1%) Organic Sales Growth versus Prior Year 42% Key Market Indicators U.S. industrial production Institute for Supply Management (ISM) indicators Capacity utilization Canadian industrial production
Slide 7: Construction End Market
7 2017 Outlook Call 12/13/16 See Appendix for non-GAAP reconciliations. (1.7%) (3.6%) 2.3% (5.5%) Construction End Market Improving Flat Declining Organic Sales Growth versus Prior Year 42% Key Market Indicators Architectural Billings Index Capital goods orders growth U.S. construction starts and pu
Slide 8: Utility End Market
8 2017 Outlook Call 12/13/16 5.1% 0.6% 0.6% (1.7%) Utility End Market Improving Flat Declining Organic Sales Growth versus Prior Year 42% Key Market Indicators Distribution grid maintenance and upgrades Generation MRO, upgrades, expansions Transmission line infrastructure build-out Residential and n
Slide 9: CIG End Market
9 2017 Outlook Call 12/13/16 1.6% 0.4% 0.8% (1.6%) CIG End Market Improving Flat Declining Organic Sales Growth versus Prior Year 42% Key Market Indicators Government spending Communications and security upgrades Education, healthcare, and financial • Commercial • Institutional • Government WESCO CI
Slide 10: 2017 Sales Outlook
10 2017 Outlook Call 12/13/16 2017 Sales Outlook Sales Outlook End Market: Range Industrial (LSD) to LSD Construction Flat to LSD Utility Flat to LSD CIG LSD to MSD End Market Sales Growth (1)% to 3% Market Outperformance 1% to 2% Exit Low-Margin Utility Business (1)% Foreign Exchange ~0% Consolidat
Slide 11: 2017 Sales Outlook by Geography
11 2017 Outlook Call 12/13/16 2017 Sales Outlook by Geography U.S. Canada International Flat to low-single-digit growth Flat to low-single-digit growth Low-single-digit decline Sales Outlook …expecting modest US and Canadian growth Excludes unannounced acquisitions.
Slide 12: 2017 Financial Outlook
12 2017 Outlook Call 12/13/16 4.18 ~3.75 ~3.60 2015 2016E 2017E 7.5 ~7.3 ~7.3 2015 2016E 2017E 2017 Financial Outlook Operating Margin 4.7% 5.4% 5.6% ~6.0% 6.2% 2010 2011 2012 2013E 2014E Sales ($B) Adjusted Diluted EPS(1) ($) ~7.7 6.4% ~3.90 Operating margin expansion 20-40 bpts • Gross margin expa
Slide 13: Effective Capital Allocation
13 2017 Outlook Call 12/13/16 Effective Capital Allocation …maintaining fiscal discipline while funding growth Cash Deployment • Support organic growth • Fund accretive acquisitions • Manage financial leverage • Repurchase shares • Pay dividends
Slide 14: Cash Generation
14 2017 Outlook Call 12/13/16 1.5 2 2.5 3 3.5 4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Cash Generation Free Cash Flow ($M) Net Income ($M) ~$800M of Free Cash Flow Reconciliation of these non-GAAP financial measures is included in the Appendix to this presentation. (1) Excludes the third quarter 2016 loss
Slide 15: Long-Term Growth Algorithm
15 2017 Outlook Call 12/13/16 Long-Term Growth Algorithm • Market growth • 1% to 2% from market outperformance • 1% to 3% from acquisitions • ~50% operating profit pull-through - gross margin improvement - operating cost leverage • ~30% effective tax rate Annual Expectations over the Long-Term • Equ
Slide 16: 16 2017 Outlook Call 12/13/16
16 2017 Outlook Call 12/13/16
Slide 17: Appendix
17 2017 Outlook Call 12/13/16 Appendix
Slide 18: Definitions
18 2017 Outlook Call 12/13/16 WESCO International, Inc. Definitions Appendix • Financial leverage ratio is calculated by dividing total debt, including debt discount and deferred financing fees, by EBITDA. EBITDA is defined as the trailing twelve months earnings before interest, taxes, depreciation,
Slide 19: Non-GAAP Financial Measures
19 2017 Outlook Call 12/13/16 This presentation includes certain non-GAAP financial measures. These financial measures include organic sales growth, financial leverage, free cash flow, adjusted net income and adjusted earnings per diluted share. The Company believes that these non-GAAP measures are
Slide 20: Sales Growth - End Markets YTD Q3 2016 vs. YTD Q3 2015
20 2017 Outlook Call 12/13/16 Note: The prior period end market amounts noted above may contain reclassifications to conform to current period presentation. ($ Millions) Sales Growth - End Markets YTD Q3 2016 vs. YTD Q3 2015 YTD Q3 YTD Q3 2016 2015 % Growth Industrial Core 1,996 2,250 (11.3)% Constr
Slide 21: YTD Q3 2016 Organic Sales by End Market
21 2017 Outlook Call 12/13/16 YTD Q3 2016 Organic Sales by End Market Industrial Construction Utility CIG WESCO Core Sales Growth (11.3) (3.3) 0.2 (0.2) (5.5) Workday Impact 1.1 1.1 1.1 1.1 1.1 Workday Adjusted Core Growth (12.4) (4.4) (0.9) (1.3) (6.6) FX Impact (1.0) (2.0) (0.7) (1.1) (1.3) Workda
Slide 22: Free Cash Flow Reconciliation
22 2017 Outlook Call 12/13/16 Free Cash Flow Reconciliation ($ Millions) 2014 2015 TTM Q3 2016 Cash flow provided by operations 251.2 283.1 324.3 Less: Capital expenditures (20.5) (21.7) (18.7) Free cash flow 230.7 261.4 305.6 Free cash flow as a % of adjusted net income(1) 84% 125% 165% Note: Free
Slide 23: Financial Leverage
23 2017 Outlook Call 12/13/16 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 deferred
Slide 24: 24 2017 Outlook Call 12/13/16
24 2017 Outlook Call 12/13/16
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