Wesco International, Inc. · NYSE:WCC
Wesco International — Q1 2021 Earnings Presentation
23 slides from Wesco International's earnings presentation, May 6, 2021
Slide 1: First Quarter 2021 Webcast Presentation
1 First Quarter 2021 Webcast Presentation May 6, 2021 NYSE: WCC
Slide 2: Forward-Looking Statements
2 Forward-Looking Statements All statements made herein that are not historical facts should be considered as forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that m
Slide 3: Agenda
3 Agenda Business Overview Financial Results Overview John Engel Chairman, President & CEO Executive Vice President & CFO Dave Schulz
Slide 4: 2021 Off to an Excellent Start
4 2021 Off to an Excellent Start Strong integration execution and macro recovery support revised guidance • Sales up 3% YOY on a pro forma workday-adjusted basis – Outperforming market – Economic recovery better than expected and supported by secular growth trends • Adjusted gross margin up 50 basis
Slide 5: WESCO + Anixter a Powerful Combination
5 WESCO + Anixter a Powerful Combination Strengthening our Value Proposition Building and extending our competitive advantage as we transform • Sales Synergies – Cross Selling opportunities captured from complementary products, services, and technologies that enable us to offer more solutions, to mo
Slide 6: First Quarter Results Overview
6 First Quarter Results Overview Dave Schulz Executive Vice President & Chief Financial Officer
Slide 7: First Quarter Results Overview
7 Q1 2020 Pro Forma1 Q1 2021 YOY Sales $4,040 $4,041 flat Gross Profit 793 811 2% % of sales 19.6% 20.1% +50 bps Adjusted Income from Operations2 140 171 22% % of sales 3.5% 4.2% +70 bps Adjusted EBITDA2 182 217 19% % of sales 4.5% 5.4% +90 bps Adjusted Diluted EPS2 $1.43 First Quarter Results Overv
Slide 8: Cost Synergy Update
8 Cost Synergy Update Evaluation of cumulative 3-year synergy target underway FY 2021 FY 2022 Prior Revised Prior Revised $130 $170 $200 $210 FY20 FY20 FY20 FY20 1Q21 1Q211Q21 1Q21 Realized to-date To be realized Increasing cumulative 2021 and 2022 targets due to faster execution On track to meet 20
Slide 9: Adjusted EBITDA Bridge
9 Adjusted EBITDA Bridge • Accelerated Synergy Capture + Market Recovery Drives Margin Growth 2020 Q1 Adjusted EBITDA Gross Margin Cost Synergies Variable Compensation & Benefits Other SG&A 2021 Q1 Adjusted EBITDA $182 $M $217 1 Includes Anixter’s reported results for the period from January 4, 2020
Slide 10: Electrical & Electronic Solutions (EES)
10 $1,657 $1,721 Q1 2020 Pro Forma Q1 2021 $86 $112 Q1 2020 Pro Forma Q1 2021 Construction Industrial / MRO OEM / CIG Electrical & Electronic Solutions (EES) •Record backlog, strong execution and improving end market trends driving momentum See appendix for non-GAAP reconciliations. Sales Adjusted E
Slide 11: Communications & Security Solutions (CSS)
11 $1,304 $1,251 Q1 2020 Pro Forma Q1 2021 Communications & Security Solutions (CSS) Industry-leading value propositions in attractive high-growth markets • Sales down 4% YOY and down 1% on a workday-adjusted basis, outperforming market trends; backlog at record level • Strong growth in security sol
Slide 12: Utility & Broadband Solutions (UBS)
12 • Sales down 1% YOY, up 2% on workday-adjusted basis • Utility’s strong and consistent growth driven by industry-leading value proposition, scope expansion and secular trends around grid hardening and reliability • Broadband growth driven by secular trends of 5G build-out and fiber network expans
Slide 13: Strong Free Cash Flow Supporting Debt Paydown
13 5.7x 5.3x 5.3x 4.9x 4000 4100 4200 4300 4400 4500 4600 4700 4800 4900 5000 4.4 4.6 4.8 5 5.2 5.4 5.6 5.8 6 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Leverage Net Debt Strong Free Cash Flow Supporting Debt Paydown •On track to return to target leverage range of 2.0-3.5x by mid-2023 • Free Cash Flow of $698
Slide 14: 2021 Outlook
14 2021 Outlook Accelerated synergy capture and market growth drive increased outlook for 2021 FY 2021 Outlook Prior (2/9/21) Revised (5/6/21) Reported Sales1 3% - 6% 4.5% - 7.5% 2021 Adjusted EBITDA margin2 5.4% - 5.7% 5.8% - 6.1% Effective Tax Rate ~23% ~22% Adjusted EPS2 $5.50 - $6.00 $6.80 - $7.
Slide 15: Summary
15 Summary •Our performance and improving macro environment drive stronger 2021 outlook • Excellent start to the year with strong results across the board – Capitalized on market leadership and operating leverage as economic recovery accelerated – Continued to outperform market and realizing cross-s
Slide 16: Appendix
APPENDIX
Slide 17: Glossary
17 Glossary 1H: First half of fiscal year 2H: Second half of fiscal year A/V: Audio/visual COGS: Cost of goods sold CIG: Commercial, Institutional, and Government CSS: Communications & Security Solutions (business unit) EES: Electrical & Electronic Solutions (business unit) ETR: Effective tax rate F
Slide 18: Workdays
18 Workdays Q1 Q2 Q3 Q4 FY 2019 63 64 63 62 252 2020 64 64 64 61 253 2021 62 64 64 62 252
Slide 19: Pro Forma and Workday-Adjusted Sales
19 Pro Forma and Workday-Adjusted Sales $ in millions March 31, 2021 Reported Reported Anixter 1 Pro Forma Reported Pro Forma Adjusted 2 Net sales 4,041$ 1,969$ 2,072$ 4,040$ 105% 0% 3% Growth Pro Forma Workday- Adjusted Net Sales 1 Represents Anixter’s reported results for the period from January 4
Slide 20: Gross Profit and Free Cash Flow
20 Gross Profit and Free Cash Flow $ in millions March 31, 2021 March 31, 2020 Net sales 4,041$ 1,969$ Cost of goods sold (1) 3,230 1,592 Gross profit 811$ 377$ Gross margin 20.1% 19.1% March 31, 2021 March 31, 2020 Cash flow provided by operations 120$ 32$ Less: capital expenditures (10) (16) Add:
Slide 21: Adjusted EBITDA
21 Adjusted EBITDA $ in millions EES CSS UBS Corporate Total Net income attributable to common stockholders 101$ 74$ 87$ (216)$ 45$ Net income attributable to noncontrolling interests (1) - - 1 - Preferred stock dividends - - - 14 14 Provision for income taxes - - - 7 7 Interest expense, net - - - 7
Slide 22: Adjusted EPS
22 Adjusted EPS Reported Results Adjusted Results Reported Results Adjusted Results (in millions, except for EPS) Income from operations 133.3$ 37.4$ 170.7$ 60.9$ 4.6$ 65.5$ Interest expense, net 70.4 - 70.4 16.6 (0.5) 16.1 Other, net (2.8) - (2.8) (0.1) - (0.1) Income before income taxes 65.7 37.4
Slide 23: Capital Structure and Leverage
23 Capital Structure and Leverage $ in millions March 31, 2021 December 31, 2020 Net income attributable to common stockholders 90$ 116$ Net loss attributable to noncontrolling interests (0) (1) Preferred stock dividends 44 30 Provision for income taxes 40 56 Interest expense, net 293 256 Depreciati