WESCO International, Inc. B. Riley 10 th Annual Las Vegas Investor Conference March 18, 2009 Presenting: John J. Engel Senior Vice President, Chief Operating Officer Daniel A. Brailer Vice President, Treasurer
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 1995. 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, debt level, changes in general economic conditions, fluctuations in interest rates, increases in raw materials and labor costs, levels of competition and other factors described in detail in Form 10-K for WESCO International, Inc. for the year ended December 31, 2007 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. 2
WESCO Profile 1922 Founded as the distribution arm of Westinghouse Electric Corporation Leveraged buyout by management and Clayton, Dubilier & Rice 1994 Acquisition Program National Accounts Program Leveraged recapitalization by the Cypress Group Integrated Supply Capital Structure Improvements 1998 1999 2004 2006 2007 Listed on the New York Stock Exchange LEAN Organic Sales Growth and Acquisitions Record Financial Performance Sales force expansion 2008 Extra-Effort Company Fortune 500 Company headquartered in Pittsburgh, PA Over 7,000 employees including 2,700 outside and inside sales personnel Consistent growth strategy of: Local market penetration with coordinated national programs Accretive acquisitions Operational excellence and enterprisewide LEAN initiatives Market Leader Leading Market Positions: National Account programs Integrated Supply Services OEM Direct materials Electric Utility Distribution Grid Low cost operator International operations and global sourcing capabilities North American Branch Network 3 with industry-leading positions
WESCO - A strategic supply chain solutions provider Providing Broad Solutions To Large & Sophisticated Customers Multiple products and services Broad geographic coverage Deep penetration into customer processes Difficult to disintermediate 4
WESCO - Serving large, fragmented markets Significant Opportunities in Large Markets MRO Market $400 Billion $600 Billion Total Addressable Construction, MRO and OEM Markets Electrical is $95 Billion Subset Fragmented Supply Chain Thousands of electrical and industrial products manufacturers Over 10,000 electrical and industrial distributors Top five distributors 26% share of electrical distribution industry 75% + of electrical products get to market through distribution Continuing industry consolidation Attractive Historical Growth 5 5-6 % Growth (GDP + 2-3%) for over 20 years
Major End Markets End Market 2008 End Market Composition Key Market Drivers / Indicators Competitive Differentiators Industrial 39% National Accounts OEM Integrated Supply General Industry Capacity Utilization Industrial Production Manufacturing Employment ISM Purchasing Managers Index Blue Chip Customers National Accounts Construction 39% Utility 16% CIG 6% Non-Residential Data Communications Pre-Fabricated Structures Residential Investor Owned Utilities Public Power Utility Contractors Government Education Healthcare Construction starts/square footage Renovations Architecture Billings Index McGraw Hill / Reed / US Census New starts / installed meters T&D line extension T&D grid maintenance Generation MRO, upgrades, expansions Projects and macro spend Government spending in technology and renovation Integrated Supply OEM Direct Material Network Product Breadth Utility Programs Global Capabilities 400 Branch Footprint Low Cost Model Integrated IT Platform LEAN Initiatives Industrial Construction Utility 6 6
WESCO s Product Mix and Leading Suppliers Leading Suppliers ABB Burndy Cooper General Cable Legrand Okonite Phillips Southwire Belden Comm Scope Eaton Hubbell Lithonia Panduit Rockwell Thomas & Betts 7
WESCO s Organic Growth Business Model Extensive Local Market Penetration Local Market Growth Rate More than 400 Full Service Branches Multiple Market Segments Over 110,000 Customers National Accounts Program 10% CAGR Over Past 7 Years Fortune 1000 Companies with Multiple Sites Coordinated MRO and Project Procurement Activities Single Contract; Standardized Purchasing and Pricing Integrated Supply Double-Digit Growth Over Past 5 Years Fortune 100 Focus Outsourced MRO Procurement Functions Integrating Supply Chain Processes 8 high barriers to entry
Driving Growth Faster Than The Market - Acquisitions supplement organic growth, profitability & diversification Acquisitions Since June 2005 Annual Sales When Acquired End Market Rationale Communication Supply $630 DataCom National leadership platform Carlton Bates $300 Industrial OEM Diversify industrial base into electronic and value added assemblies Fastec / J-Mark $95 Manufactured Structures Consolidate leadership position; Asian sourcing Monti Electric $20 Commercial Construction Participate in rebuild of gulf coast region Cascade $11 Industrial OEM Strengthen industrial automation and control AA-Electric $20 Industrial OEM Geographic expansion 9
End Market Momentum End Market Q4 2008 Sales Growth Comments WESCO Consolidated - 2% Industrial - 3% Construction/CIG - 5% Data Communications - 2% Utility + 7% Sequential gross margin expansion Cost reduction actions taken/being taken Strong free cash flow and capital structure National Accounts and Integrated Supply sales up 2% National Accounts opportunity pipeline at record level High renewal rate continues Backlog flat from 2007 year-end Seeing increased delays with some cancellations Economists forecast 10-15% decline Growth in government and enterprise customers Low voltage, A/V and industrial wire markets down Seven new markets entered; co-located in existing branches Sales to investor owned utilities up double digits Public power market flat, contractor market down 10
WESCO s Focus on Value Drivers yields superior results $1.8 $1.6 $1.4 $1.2 $1.0 $0.8 $0.6 Quarterly Sales Growth ($ Billions) $6.1 Billion Sales Earnings Per Share 2004 Q1 2004 Q2 2004 Q3 2004 Q4 2005 Q1 2005 Q2 2005 Q3 2005 Q4 2006 Q1 2006 Q2 2006 Q3 2006 Q4 2007 Q1 2007 Q2 2007 Q3 2007 Q4 2008 Q1 2008 Q2 2008 Q3 2008 Q4 Increasing Free Cash Flow ($ Millions) ROIC (2) 11 (1) Cash from operating activities CAPEX/shares outstanding (2) Tax Adjusted EBIT / Total Debt + Equity
Capital Structure ($Millions) Outstanding at December 31, 2008 Maturity AR Securitization $295 2010 Inventory Revolver $198 2013 Real Estate Mortgage $42 2013 High Yield Bonds $150 2017 Convertible Bonds $450 2025 / 2026 Other $6 N/A Total Debt $1,141 Fourth Quarter 2008 Key Financial Metrics Liquidity $382 million Financial Leverage 3.1x Interest Coverage 7.4x Fixed Rate/ Total Debt 57% Weighted Interest Rate 3% 12
WESCO A Solid Foundation How is WESCO different from the last downturn? 2008 2001-2003 (Average) Better End Market Diversification Industrial 40% Industrial 42% Construction 25% Construction 37% Data Communications 13% Utility 15% Utility 16% CIG 6% CIG 6% Improved Operating Margins 5.7% 2.5% Seven Accretive Acquisitions $1+ B Sales N/A $1.00 + EPS LEAN - Continuous Improvement Launched Spring 2003 N/A Experienced Management Team Improved Good Excellent IT System Capabilities Enhanced Good 13 Solid Capital Structure 3.1x 5.5x Leverage bigger, more diversified, more profitable with a stronger capital structure
Financial Objectives Deliver organic sales performance greater than the industry supplemented with accretive acquisitions Protect operating margins Provide superior return on invested capital Manage financial leverage 14
Invest in WESCO Market leader with low business risk profile Organic sales growth faster than market Proven business model uniquely positioned in large, fragmented growth market Solid ROIC performance Proven acquirer Low cost operator with LEAN mentality 15