Wesco International
Investor Overview
March 2024
1
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 may cause actual results to differ materially. These statements include, but are not limited to, statements regarding business strategy, growth strategy, competitive strengths, productivity and profitability enhancement, competition, new product and service introductions and liquidity and capital resources, as well as statements regarding the expected benefits and costs of the transaction between Wesco and Anixter International Inc., including anticipated future financial and operating results, synergies, accretion and growth rates, and the combined company's plans, objectives and expectations.. Such statements can generally be identified by the use of words such as "anticipate," "plan," "believe," "estimate," "intend," "expect," "project," and similar words, phrases or expressions or future or conditional verbs such as "could," "may," "should," "will," and "would," although not all forward-looking statements contain such words. These forward-looking statements are based on current expectations and beliefs of Wesco's management, as well as assumptions made by, and information currently available to, Wesco's management, current market trends and market conditions and involve risks and uncertainties, many of which are outside of Wesco's and Wesco's management's control, and which may cause actual results to differ materially from those contained in forward-looking statements. Accordingly, you should not place undue reliance on such statements.
Important factors that could cause actual results or events to differ materially from those presented or implied in the forward-looking statements include, among others, the failure to achieve the expected benefits
of the transaction between Wesco and Anixter or the anticipated benefits of Wesco's acquisition of Rahi Systems Holdings, Inc., in the expected timeframe or at all, unexpected costs or problems that may arise in
successfully integrating the businesses of the companies, the impact of increased interest rates or borrowing costs, failure to adequately protect Wesco's intellectual property or successfully defend against infringement claims, failure to execute Wesco's environmental, social and governance (ESG) programs as planned; disruption of information technology systems or operations, natural disasters (including as a result of climate change), health epidemics, pandemics and other outbreaks (such as the ongoing COVID-19 pandemic, including any resurgences or new variants), supply chain disruptions, geopolitical issues, including the impact of the evolving conflicts in the Middle East and Ukraine, the impact of sanctions imposed on, or other actions taken by the U.S. or other countries against, Russia or China, the increased risk of cyber incidents and exacerbation of key materials shortages, inflationary cost pressures, material cost increases, demand volatility, and logistics and capacity constraints, which may have a material adverse effect on the combined company's business, results of operations and financial condition. All such factors are difficult to predict and are beyond the company's control. Additional factors that could cause results to differ materially from those described above can be found in Wesco's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and Wesco's other reports filed with the U.S. Securities and Exchange Commission.
Non-GAAP Measures
In addition to the results provided in accordance with U.S. Generally Accepted Accounting Principles ("U.S. GAAP"), this presentation includes certain non-GAAP financial measures. These financial measures include organic sales growth, gross profit, gross margin, earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted EBITDA, adjusted EBITDA margin, financial leverage, free cash flow, adjusted selling, general and administrative ("SG&A") expenses, adjusted income from operations, adjusted operating margin, adjusted provision for income taxes, adjusted income before income taxes, adjusted net income, adjusted net income attributable to Wesco International, Inc., adjusted net income attributable to common stockholders, and adjusted earnings per diluted share. The Company believes that these non-GAAP measures are useful to investors as they provide a better understanding of our financial condition and results of operations on a comparable basis. Additionally, certain non-GAAP measures either focus on or exclude items impacting comparability of results such as merger-related and integration costs, and the related income tax effect of such items, allowing investors to more easily compare the Company's financial performance from period to period. Management does not use these non-GAAP financial measures for any purpose other than the reasons stated above.
2
Wesco Overview
Leading global provider of business-to-business distribution, logistics services and supply chain solutions
Leading value proposition with millions of products, an expanding portfolio of services, and complete supply chain solutions
Serving majority of Fortune 500 companies as well as commercial and industrial businesses, contractors, government agencies, institutions, utilities, and telecommunications providers
Substantial Scale With
Leading Industry Position and
Global Capabilities
$22.4B 50+ ~800 #1
2023 Sales | Countries | Locations | In North |
America |
Sales
By Business Unit
UBS
30%
CSS
32%
Sales | ROW |
By Geography | 13% |
Canada | |
13% |
EES
38%
U.S.
74%
Source: MDM Top Distributors List | 3 |
Sales amounts as of 12/31/23 | |
Transformational Combination of Wesco + Anixter
Future | ||
Adjusted EBITDA1 ($B) | Wesco + Anixter | Wesco |
and Adjusted EBITDA % | Generating the value of the combined enterprise | 10%+ |
Wesco + Anixter | $1.7 | $1.7 | ~$1.75 | |||
8.1% | 7.7% | |||||
Wesco | (Pro Forma) | 7.6% | ||||
$1.2 | ||||||
Stand-Alone | $0.9 | $0.9 | 6.5% | |||
5.2% | 5.3% | |||||
$0.4 | $0.4 |
- Leading Scale
- Secular Trends
- Cross Sell
- Share Gains
- Margin Improvement
- Cost Synergies
- Lean Practices
- Agile Development
- Digital Transformation
- M&A
5.0% 5.1%
2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 Outlook | Objective |
Midpoint | ||||||||
~17% Adjusted EBITDA CAGR
2019 - 2023
Delivering superior financial results
1 Adjusted EBITDA is defined as EBITDA before other non-operating expenses (income), non-cashstock-based compensation, and merger-related and integration costs. See Appendix for non-GAAP reconciliations.
4
First Quarter Update
Q1 expected to be down low-to-mid single digits
- January down ~5%1 YOY
- February flat1 YOY
Portfolio Management
- Divestiture of integrated supply
- Accelerates mix-shift to higher margin markets
- Proceeds to be used to reduce debt and repurchase shares
Capital Allocation and Balance Sheet Management
- Repurchased $50 million of stock in Q1
- Announced ~$1.7 billion of senior notes offerings2
- Increased dividend per share by 10%
Sales Trends3 | |||||||
20% | Q1 | Q2 | Q3 | Q4 | |||
+11% | +3% | +3% | (3)% |
0% | ~flat | |||||||||||||||
(5%) | ||||||||||||||||
(10)% | ||||||||||||||||
Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | Jan | Feb | |||
23 | 23 | 23 | 23 | 23 | 23 | 23 | 23 | 23 | 23 | 23 | 23 | 24 | 24 |
2024 outlook: reported sales growth 1% - 4% and free cash flow $600 - $800 million
- Not adjusted for differences in foreign exchange rates
- $900 million of 6.375% senior notes due 2029 and $850 million of 6.625% senior notes due 2032
- Organic sales on a workday adjusted basis; 2024 are preliminary sales per workday results not adjusted for differences in foreign exchange rates
5
Key Messages
Created Fortune 200 Industry Leader with Global Scale
Uniquely Well Positioned for the Next Decade and Beyond
Digital Transformation Enables
Even Faster Share Gain and
Margin Expansion
- Transformational combination of Wesco + Anixter exceeded expectations
- Broadest portfolio in the industry and largest channel partner for our key suppliers
- Step function increase in cash generation and enterprise value creation
- Leading player in a consolidating industry
- Secular growth trends drive above-market growth
- Global scale and improved business mix into faster growth and higher margin end-markets
- Investing in digital to drive competitive advantage
- Unlocking power of our big data to further drive sales and margin
- Digital investments building new capabilities
6
Secular Trends + Share Growth Leads to Market Outperformance
Base Market | + | 1% to 2% | + | 1% to 2% | = | MSD+ Organic |
Growth | Secular Trends | Share Gain | Growth | |||
Strong Secular Growth Trends
- Electrification
- Automation and IoT
- Green Energy and Grid Modernization
- 24/7 Connectivity and Security
- Supply Chain Consolidation and Relocation to North America
- Digitalization
Increasing Public Sector Investment
- $1.2T Infrastructure Investment and Jobs Act (IIJA)
- $369B Inflation Reduction Act (IRA) related to energy and climate investments
- $53B CHIPS and Science Act
- $20B Rural Digital Opportunity Fund (RDOF)
- Canada Broadband Investments
Wesco's Uniquely Strong Position
- Leading Portfolio of Products, Services, and Solutions
- Leading Positions in All Business Units
- Global Footprint and Capabilities
- Digital Investments and Unlocking the Value of Our Big Data
- Accelerating Consolidation Across the Value Chain
7
Our Digital Transformation
Innovating Across Our Entire Technology Landscape
Enterprise Systems
Front Office | Mid Office | Back Office |
Digital Services
and Platform
Big Data
Supplier/OEM/Product | Wesco's | Customer and Industry |
Data Sets | Data Sets | Data Sets |
Data Office
Digitally transforming our company
8
Annual Value Creation Framework
Long-term Growth
MSD+
Organic
Sales Growth
+
Margin Expansion
~14%
Incremental
EBITDA1 Margin
Invest for Above Market Growth
EBITDA Growth | |||
= | |||
2x Sales Growth | |||
Sustainable Cash Flow | |||
Generation Over the Long Term | |||
Increase Return of
Capital to Shareholders and
Reduce Leverage
Virtuous cycle of value creation for Wesco
1 Adjusted EBITDA is defined as EBITDA before other non-operating expenses (income), non-cashstock-based compensation, and merger-related and integration costs.
9
Why Invest in Wesco
- Fortune 200 B2B Supply Chain Solutions Leader
- Global capabilities and leading scale
- Higher growth and higher margin end-markets
- Cross-sellcombined with attractive long-term secular growth trends
- Strategy Delivers Above-Market Growth
- Share gains
- Margin expansion
- Double-digitprofit growth
- Increased Cash Generation and Enterprise Value Creation
- Investments in digitalization to accelerate gains
- Increasing return of capital to shareholders (buyback plus dividend)
- Expanding balance sheet capacity supports M&A ambitions
Focused on delivering superior results and
achieving a premium multiple
10
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Disclaimer
WESCO International Inc. published this content on 04 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 March 2024 11:56:04 UTC.