Wesco International, Inc. · NYSE:WCC
Wesco International — Q1 2019 Earnings Presentation
22 slides from Wesco International's earnings presentation, May 2, 2019
Slide 1: Q1 2019 Earnings Webcast Presentation – May 2, 2019
Q1 2019 Earnings Webcast Presentation – May 2, 2019
Slide 2: Safe Harbor Statement
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 and other factors that may cause act
Slide 3: Q1 2019 Highlights
Q1 2019 Highlights Organic Sales Growth versus Prior Year First Quarter Annual Quarter • First quarter within outlook range with sales momentum improving in March and continued in April Jan (1%) Feb (2%) • Reported sales were down 2%, organic sales were up 10.9% Mar 5%) 1% (flat in the U.S., up 3% i
Slide 4: Q1 2019 Results
Q1 2019 Results Outlook Actual YOY Sales (2%) to 2% $1.96B Down 1.6%; Core(1) down 1.9% Gross Margin 19.5% Up 40 bps SG&A $296.6M, 15.1% Core up 1%, up 50 bps Operating Profit $71M Down 3% Operating Margin 3.5% to 3.8% 3.6% Down 10 bps Effective Tax Rate ~23% 21.7% Up 210 bps EPS $0.93 Flat to prior
Slide 5: Diluted EPS Walk
Diluted EPS Walk Q1 2018 $0.93 Core operations (0.01) Acquisitions 0.00) Foreign exchange 0.00) Tax (0.03) Share count 0.04) 2019 $0.93 …flat EPS versus prior year 5 Q1 2019 Earnings Webcast 5/2/19
Slide 6: Industrial End Market
Industrial End Market Organic Sales Growth versus Prior Year • Q1 2019 Sales − Organic sales were flat versus prior year Annual Quarter (flat in the U.S. and Canada in local currency) − Down 2% sequentially 10.4% • Industrial market growth continues, driven by increasing production and capacity util
Slide 7: Construction End Market
Construction End Market Organic Sales Growth versus Prior Year • Q1 2019 Sales Annual Quarter − Organic sales were up 2% versus prior year (down 1% in the U.S. and up 8% in Canada in local currency) 9.4% − Down 8% sequentially • Strong backlog and improving business momentum with construction/contra
Slide 8: Utility End Market
Utility End Market Organic Sales Growth versus Prior Year • Q1 2019 Sales − Organic sales were flat versus prior year (up 3% in Annual Quarter the U.S. and down 38% in Canada in local currency) − Down 1% sequentially 17.9% • Continued scope expansion and value creation with investor owned utility, p
Slide 9: CIG End Market
CIG End Market Organic Sales Growth versus Prior Year • Q1 2019 Sales Annual Quarter − Organic sales were up 2% versus prior year (down 5% in the U.S. and up 22% in Canada in local currency) 9.4% − Down 5% sequentially 8.5% • Technical expertise and supply chain solutions driving results in datacent
Slide 10: Free Cash Flow & Leverage
Free Cash Flow & Leverage Free Cash Flow Leverage ($ Millions) (Total Debt to TTM EBITDA) ~ $1.1B of free 4.0x cash flow over Target last 5 years Leverage 2.0x – 3.5x $45.3 3.5x 3.0x 3.0X 2.5x $18.1 2.0x 105% 43% of net of net 1.5x income income Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2017 2018 2019 2018 YTD 201
Slide 11: 2019 Outlook
2019 Outlook Q2 Full Year Sales 3% to 6% 3% to 6% Operating Margin 4.5% to 4.8% 4.3% to 4.7% Effective Tax Rate ~ 23% 22% to 24% Diluted EPS $5.10 to $5.70 Free Cash Flow ~ 90% of net income Notes Excludes unannounced acquisitions. • Maintaining full year sales outlook as the benefit of the SLS acqu
Slide 12: Appendix: Non-GAAP Financial Measures
Appendix NON-GAAP FINANCIAL MEASURES This presentation includes certain non-GAAP financial measures. These financial measures include organic sales growth, gross profit, financial leverage, earnings before interest, taxes, depreciation and amortization (EBITDA), and free cash flow. The Company belie
Slide 13: WESCO Profile 2019
WESCO Profile 2019 Markets & Customers Products & Services 8% 15% 11% 40% 16% 36% 11% 33% 14% 16% Industrial Global Accounts | Integrated Supply General Supplies OEM | General Industrial Communications & Security Construction Wire, Cable & Conduit Non-Residential | Contractors Utility Lighting & Sus
Slide 14: Sales Growth (%)
Sales Growth (%) 2017 2018 2019 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Change in Net Sales (0.2) (0.1) 7.8 11.3 4.7 12.5 10.2 3.4 0.7 6.5 (1.6) Acquisition Impact 0.9 0.2 0.3 Core (1.1) (0.1) 7.8 11.3 4.5 12.5 10.2 3.4 0.7 6.5 (1.9) FX Impact 0.6 (1.1) 0.8 1.2 0.4 1.6 1.2 (0.8) (0.8) 0.3 (1.3) Workday Imp
Slide 15: Q1 2019 Organic Sales Growth by Geography (%)
Q1 2019 Organic Sales Growth by Geography (%) U.S. Canada International WESCO Change in net sales (USD) (1.5) (3.6) 2.8 (1.6) Impact from acquisitions 0.4 - - 0.3 Impact from foreign exchange rates - (5.5) (4.0) (1.3) Impact from number of workdays (1.6) (1.6) (1.6) (1.6) Organic sales growth (0.3)
Slide 16: Sales Growth by End Market ($ Millions)
Sales Growth by End Market ($ Millions) Q1 2019 vs. Q1 2018 Q1 2019 vs. Q4 2018 Q1 2019 Q1 2018 % Growth Q1 2019 Q4 2018 % Growth Industrial Core $740 $762 (2.9%) $740 $742 (0.3%) Construction Core 633 640 (1.2%) 633 680 (7.0%) Utility Core 309 317 (2.3%) 309 306 1.1% CIG Core 281 283 (0.7%) 281 291
Slide 17: Q1 2019 Organic Sales by End Market (%)
Q1 2019 Organic Sales by End Market (%) Industrial Construction Utility CIG WESCO Core Sales Growth (2.9) (1.2) (2.3) (0.7) (1.9) FX Impact (1.0) (2.0) (0.3) (1.3) (1.3) Workday Impact (1.6) (1.6) (1.6) (1.6) (1.6) Organic Growth (0.3) 2.4 (0.4) 2.2 1.0 17 Q1 2019 Earnings Webcast 5/2/19
Slide 18: Gross Margin ($ Millions)
Gross Margin ($ Millions) Three Months Ended March 31, March 31, 2019 2018 Net sales $1,961 $1,994 Cost of goods sold (excluding depreciation and amortization) 1,579 1,614 Gross profit (1) $382 $380 Gross margin (1) 19.5% 19.1% (1) Gross profit is calculated by deducting cost of goods sold, excludin
Slide 19: Capital Structure ($ Millions)
Capital Structure ($ Millions) Outstanding at Outstanding at Debt December 31, 2018 March 31, 2019 Maturity Schedule AR Revolver (V) 275 340 2020 Inventory Revolver (V) 52 33 2020 2019 Term Loans (V) 25 - 2019 2021 Senior Notes (F) 500 500 2021 2024 Senior Notes (F) 350 350 2024 Other (V) 31 28 N/A
Slide 20: Financial Leverage ($ Millions)
Financial Leverage ($ Millions) Twelve Months Ended March 31, 2019 Income from operations $350 Depreciation and amortization 62 EBITDA $412 March 31, 2019 Short-term borrowings and current debt $29 Long-term debt 1,214 Debt discount and debt issuance costs (1) 9 Total debt $1,251 Less: cash and cash
Slide 21: Free Cash Flow Reconciliation ($ Millions)
Free Cash Flow Reconciliation ($ Millions) Q1 Q1 2018 2019 Cash flow provided by operations $53.0 $28.9 Less: Capital expenditures (7.7) (10.8) Free cash flow 45.3 18.1 Net income $42.9 $42.0 Percentage of net income 105% 43% Note: Free cash flow is provided by the Company as an additional liquidity
Slide 22: Work Days
Work Days Q1 Q2 Q3 Q4 FY 2017 64 64 63 62 253 2018 64 64 63 62 253 2019 63 64 63 62 252 22 Q1 2019 Earnings Webcast 5/2/19