Ken Parks Senior Vice President and Chief Financial Officer. Vertical Research Partners Conference Westbrook, CT September 3, 2014

Transcription

1 Ken Parks Senior Vice President and Chief Financial Officer Vertical Research Partners Conference Westbrook, CT September 3, 2014

2 Safe Harbor Statement Note: All statements made herein that are not historical facts should be considered as forwardlooking statements within the meaning of the Private Securities Litigation Act of Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. Such risks, uncertainties and other factors include, but are not limited to: adverse economic conditions; increase in competition; debt levels, terms, financial market conditions or interest rate fluctuations; risks related to acquisitions, including the integration of EECOL; disruptions in operations or information technology systems; expansion of business activities; litigation, contingencies or claims; product, labor or other cost fluctuations; exchange rate fluctuations; and other factors described in detail in the Form 10-K for WESCO International, Inc. for the year ended December 31, 2013 and any subsequent filings with the Securities & Exchange Commission. Any numerical or other representations in this presentation do not represent guidance by management and should not be construed as such. The following presentation includes a discussion of certain non-gaap financial measures. Information required by Regulation G with respect to such non-gaap financial measures can be obtained via WESCO s website, 2 VRP Conference 9/3.2014

3 WESCO International WESCO is a leading provider of electrical, industrial, and communications MRO and OEM products, construction materials, and advanced supply chain management and logistics services. Vision Global Leader of Supply Chain Solutions that consistently delivers superior customer value and shareholder returns Known for the best customer service and the best people Value Proposition Providing customers the products and supply chain services they need for MRO, OEM, and Capital Projects an industry leader 3 VRP Conference 9/3.2014

4 Global Reach Headquartered in Pittsburgh, PA 9,200+ employees 475+ locations in 19 countries WESCO locations Delivery locations beyond our footprint Over $400M annual sales outside U.S. and Canada delivering solutions far beyond our physical locations 4 VRP Conference 9/3.2014

5 WESCO Profile Markets & Customers Products & Services Geography 13% 13% 43% 10% 12% 9% 39% 25% 6% 69% 31% 16% 14% Industrial Global Accounts Integrated Supply OEM General Industrial Construction Non-Residential Residential Utility Investor Owned Public Power Utility Contractors CIG Commercial Institutional Government General Supplies Data & Broadband Communications Wire, Cable & Conduit Distribution Equipment Lighting & Controls Controls & Motors Canada 5 Note: Pie charts reflect TTM Q consolidated sales. VRP Conference 9/ U.S. ROW Sales 1994 $1.6B at LBO 2003 $3.3B 2013 $7.5B Q2 14 TTM $7.6B portfolio diversified and strengthened over last decade

6 Growth Strategy Build Scale + Strengthen Portfolio + Operational Excellence through Lean and One WESCO Growth strategy launched 5 years ago Strong results delivered Market position Global capabilities Value creation Significant organization changes in 2014 Accelerate One WESCO Increase investments Leverage talent focused on driving profitable organic growth supplemented with acquisitions 6 VRP Conference 9/3.2014

7 2014 Organizational Changes New Global Sales and Marketing Strategic Priorities 1. Marketing leadership through demand creation programs 2. Sales management and productivity 3. Product category management focused on pricing and sourcing initiatives New U. S. Organization Strategic Priorities 1. Drive One WESCO growth initiatives 2. Operations integration and branch optimization 3. Increase geographic scale and strengthen core electrical 4. Expand into adjacent industrial categories Strengthened Canadian Organization Strategic Priorities 1. Drive WESCO and EECOL growth initiatives 2. Lean enterprise and supply chain applications 3. Integrate Hazmasters and expand safety 4. Integrate acquisitions and build utility business focused on accelerating One WESCO 7 VRP Conference 9/3.2014

8 Growth Engines Business Models End Markets Product Categories Global Accounts & Integrated Supply Global Accounts Provides comprehensive supply chain solutions to Fortune 1000 and other multi-site companies for their MRO, OEM, and capital expenditure needs Integrated Supply Provides turnkey outsourcing solutions for MRO and OEM procurement and other supply chain needs 3 4 Construction Utility International Communications & Security Lighting & Sustainability Industrial MRO & Safety Key Capabilities Acquisitions New in 2014 support our profitable growth objectives 8 VRP Conference 9/3.2014

9 Global Accounts Value Proposition Standardizing products, pricing, terms, and service across multiple customer facilities Industrial & Electrical Distribution Direct Material Solutions Global Capital Project Management Integrated Supply address key customer needs and applications 9 VRP Conference 9/3.2014

10 One WESCO Checkerboard Application An example Global Accounts customer PRODUCT CATEGORY PENETRATION % Sales Penetration >80% ~ 50% < 20% BALLASTS BOXES METALLIC & NON-METALLIC CIRCUIT BREAKERS CONDUIT & CABLE FITTINGS CONDUIT-METAL CONDUIT-NON METALLIC CONTROL - OPEN & CLOSED CUTOUT, ARRESTOR, CAPACITORS & H.V. SWITCHES DATA COMMUNICATIONS ELECTRICAL SUPPLIES ENCLOSURES ENGINEER SERVICES & (W) RENEWAL PARTS FACTORY PRODUCTS FANS,HEATERS,VENTING EQUIP. FUSES, FUSE BLOCKS & FUSE HOLDERS INDUSTRIAL MAINTENANCE LAMPS LIGHTING LOADCENTERS/BREAKERS/METER CENTER METERING/INSTRUMENT TRANSFORMERS MISC ELECTRICAL MOTOR CONTROL CENTERS MOTORS & DRIVES PANELBOARDS/SWITCHGEAR/BUSDUCT PROGRAMMABLE CONTROLLERS RACEWAYS, WIREWAYS,STRUT,CABLE TRAY SAFETY SWITCHES T&D UTILITY PRODUCTS TAPE,INSULATING MATERIAL,HEAT SHRINK TUBING,SEALANTS & ADHESIVES TERMINATIONS,LUGS,CONNECTORS & ACCESSORIES TOOLS TRANSFORMERS TRANSFORMERS:DISTRIBUTION TRANSFORMERS:POWER WATERCOOLERS WIRE DATA COMMUNICATIONS WIRE, POWER, CORDS & BUILDING WIRING DEVICES LOCATION 1 LOCATION 2 LOCATION 3 LOCATIONS LOCATION 4 LOCATION 5 LOCATION 6 LOCATION 7 LOCATION 8 LOCATION 9 LOCATION 10 LOCATION 11 LOCATION 12 significant opportunity for increased customer share capture 10 VRP Conference 9/3.2014

11 Growth Engine Product Categories Communications & Security $20B Global Market Lighting & Sustainability WESCO Lighting Mix Industrial MRO & Safety New growth engine Anixter Graybar WESCO Utility CIG Industrial Acquired Conney Safety in 2012 and Hazmasters in 2014 ($165 million sales) Construction North American Industrial MRO market exceeds $580 billion ~ $1 billion WESCO sales ~ $750 million WESCO sales support our One WESCO initiatives 11 VRP Conference 9/3.2014

12 Cumulative Acquisitions Since 2010 Acquisition Strategy Framework Markets & Customers Geographies Acquired Sales ($ Millions) 1,500 1, # Core Products & Suppliers Acquisition Priorities Consistent with WESCO strategy Rate of return greater than WESCO risk-adjusted average cost of capital Accretive in first year of operation Margins higher than WESCO driving strategic growth and shareholder value 12 VRP Conference 9/3.2014

13 Long-Term Financial Objectives 1 Grow sales faster than the market and strengthen business through acquisitions CORE GROWTH ACQ GROWTH (%) (%) Flat 3 2 Maintain industry-leading cost structure SG&A% SG&A% COMP % WCC Graybar Rexel NAED EBIT ($M) EBIT% 3 Expand operating profit and margins Generate strong operating cash flow through the cycle FCF ($M) FCF% OF NI Provide superior investor returns All periods are 2012, 2013 and TTM June 2014 unless otherwise noted and 2013 exclude the impact of externally disclosed non-recurring items. focused on shareholder value creation 13 VRP Conference 9/ TSR (1/1/2010 to 12/31/2013) 76 WCC S&P 500 Russell GWW FAST AXE

14 Long-Term Focus on Profitable Growth EBIT 2.5x TOTAL SALES 1.7x HEADCOUNT 1.5x TTM operating profit pull through delivering results 14 VRP Conference 9/3.2014

15 Cash Generation Leverage (Total Par Debt to TTM EBITDA) Target Leverage 2.0x 3.5x 3.4X Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Reconciliation of these non-gaap financial measures is included in the Appendix to this presentation VRP Conference 9/3.2014

16 Total Shareholder Return TSR CAGR % year 1 year 3 year 5 year 10 year WESCO Russell GICS Capital Goods Group WCC 12% CAGR Indexed Cumulative TSR% R % CAGR May consistent above market returns 16 VRP Conference 9/3.2014

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18 Appendix 18 VRP Conference 9/3.2014

19 WESCO International, Inc. Definitions Appendix Financial leverage ratio is calculated by dividing total debt, including debt discount, by adjusted EBITDA. Adjusted EBITDA is defined as the trailing twelve months earnings before interest, taxes, depreciation, and amortization excluding the ArcelorMittal litigation recovery. Free cash flow is calculated by deducting capital expenditures from, and adding non-recurring pension contribution to, cash flow provided by operations. Total Shareholder Return (TSR) is the total return of a stock to an investor during a period of time, including capital gains and dividends, assuming reinvestment of dividends. 19 VRP Conference 9/3.2014

20 NON-GAAP Financial Measures This presentation includes certain non-gaap financial measures. These financial measures include adjusted EBIT, adjusted net income, adjusted diluted EPS, financial leverage ratio, free cash flow, 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 capital structure position and liquidity on a comparable basis. Additionally, certain non-gaap measures either focus on or exclude transactions of an unusual nature, 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. 20 VRP Conference 9/3.2014

21 Sales Growth Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 YTD Consolidated Acquisition Impact Core (0.8) 4.1 (3.4) (1.4) (0.4) (0.3) FX Impact (0.2) (0.7) (0.6) 0.5 (0.3) 0.0 (0.2) (0.7) (1.0) (0.4) (1.9) (1.7) (1.8) Organic (1.3) 4.4 (3.4) (1.2) WD Impact 1.6 (1.6) (1.6) 1.6 Normalized Organic (1.3) 4.4 (1.8) (1.2) Estimated Price Impact VRP Conference 9/3.2014

22 Non-GAAP Reconciliations (Dollars in millions except for Diluted EPS) FY 2012 FY 2013 Adjusted Income from operations (Adjusted EBIT): Income from operations (EBIT) ArcelorMittal litigation charge (recovery) included in SG&A 36 (36) Non-recurring acquisition charges and EECOL Electric results 2 - Adjusted income from operations (Adjusted EBIT) Percent of adjusted sales 5.7% 5.9% Adjusted net income attributable to WESCO International, Inc.: Net income attributable to WESCO International, Inc ArcelorMittal litigation charge (recovery) 36 (36) Loss on sale of Argentina business - 2 Loss on debt extinguishment 3 13 Non-recurring acquisition charges and EECOL Electric results 5 - Tax effect of non-recurring items (16) 9 Adjusted net income attributable to WESCO International, Inc Adjusted Diluted EPS: Diluted share count Adjusted Diluted EPS Free Cash Flow: Cash provided by operations Less: capital expenditures (23) (28) Add: non-recurring pension contribution - 21 Free cash flow Free cash flow as a % of adjusted net income 115% 117% 22 VRP Conference 9/3.2014

23 Non-GAAP Reconciliations (Dollars in millions) FY 2012 FY 2013 Adjusted Selling, General and Administrative Expenses: Selling, general and administrative expenses Arcelor/Mittal litigation charge (recovery) included in SG&A (36) 36 Non-recurring acquisition charges and EECOL Electric results (9) - Adjusted selling, general and administrative expenses 916 1,033 Percent of adjusted sales 14.0% 13.7% Twelve Months Ended March 31, 2014 Financial leverage ratio: Income from operations $ 437 Depreciation and amortization 67 Adjusted EBITDA $ 504 March 31, 2014 Current debt $ 45 Long-term debt 1,458 Debt discount related to convertible debentures (1) 174 Total debt including debt discount $ 1,677 Financial leverage ratio 3.3X (1) The convertible debentures and term loan are presented in the consolidated balance sheets in long-term debt net of the unamortized discount. 23 VRP Conference 9/3.2014