- First quarter net sales down 3% YOY, organic sales down
3%
- First quarter operating profit of $263 million; operating margin of
4.9%
• Adjusted EBITDA
margin of 6.4%, down 60 basis points sequentially and 120
basis points YOY
- Operating cash flow of $746
million
• Free
cash flow of $731 million in the
quarter, $1.4 billion over trailing
twelve months
- Financial leverage of 2.6x, down 0.2x sequentially
PITTSBURGH, May 2, 2024
/PRNewswire/ -- Wesco International (NYSE: WCC), a leading provider
of business-to-business distribution, logistics services and supply
chain solutions, announces its results for the first quarter of
2024.
"Our first quarter sales met our expectations and were
consistent with the outlook we provided during the quarter. Our
performance, compared against the strong first quarter a year ago,
was in line with our typical seasonal pattern and our full year
outlook. Quoting, bid activity levels, and our backlog remain
healthy and support our view for sequential growth as the year
progresses. Our free cash flow generation, something we are acutely
focused on, was a record $731 million
in the first quarter and more than $1.4
billion over the trailing twelve months. As a result, our
financial leverage now stands at 2.6x EBITDA and near our target
range of 1.5 to 2.5x. In addition to our strong cash flow
performance, the after-tax proceeds of approximately $300 million from the sale of our Wesco
Integrated Supply business will allow us to pursue our capital
allocation strategies more aggressively while we continue to pursue
accretive acquisitions," said John
Engel, Chairman, President and CEO.
Mr. Engel added, "We are maintaining our previous full-year
outlook for organic sales growth and adjusted EBITDA margin, and
our outlook for the year has been updated to reflect the
divestiture of our Wesco Integrated Supply business on April 1. We are also maintaining our full-year
outlook for adjusted earnings per share as we expect to upsize our
share repurchase activity using the proceeds received from the
divestiture. Given the record cash performance in the first
quarter, we are increasing our full-year free cash flow outlook to
$800 million to $1 billion. We are focused on continual
improvement and making the internal investments to improve our
performance and capabilities in the future. And I remain confident
that the long-term, secular growth trends are opportunities that
will sustain Wesco's long-term sales growth rate and also
allow us to increase our share because of our unique global
capabilities and scale."
The following are results for the three months ended
March 31, 2024 compared to the three months ended
March 31, 2023:
- Net sales were $5.4 billion for
the first quarter of 2024 compared to $5.5
billion for the first quarter of 2023, a decrease of 3.1%.
Organic sales for the first quarter of 2024 declined by 3.2%, as
fluctuations in foreign exchange rates positively impacted reported
net sales by 0.1%. The decrease in organic sales reflects volume
declines in all three segments, partially offset by price
inflation.
- Backlog at the end of the first quarter of 2024 declined by 10%
compared to the end of the first quarter of 2023. Sequentially,
backlog increased by approximately 1% in the quarter.
- Cost of goods sold for the first quarter of 2024 was
$4.2 billion compared to $4.3 billion for the first quarter of 2023, and
gross profit was $1.1 billion for the
first quarter of 2024 compared to $1.2
billion for the first quarter of 2023. As a percentage of
net sales, gross profit was 21.3% and 21.9% for the first quarter
of 2024 and 2023, respectively. The decline in gross profit as a
percentage of net sales for the first quarter of 2024 primarily
reflects a shift in sales mix and lower supplier volume rebates, as
well as the impact of unfavorable inventory adjustments.
Sequentially, gross profit as a percentage of net sales declined 10
basis points from 21.4% in the fourth quarter of 2023.
- Selling, general and administrative ("SG&A") expenses were
$829.4 million, or 15.5% of net
sales, for the first quarter of 2024, compared to $817.7 million, or 14.8% of net sales, for the
first quarter of 2023. SG&A expenses for the first quarter of
2024 include $8.0 million of
restructuring costs, primarily consisting of severance costs
related to headcount reduction actions taken in March, $6.1 million of digital transformation costs, and
$4.8 million of excise taxes on
excess pension plan assets. SG&A expenses for the first quarter
of 2023 include merger-related and integration costs of
$11.2 million and digital
transformation costs of $8.3 million.
Adjusted for these costs, SG&A expenses were $810.5 million, or 15.1% of net sales, for the
first quarter of 2024 and $798.2
million, or 14.5% of net sales, for the first quarter of
2023. Adjusted SG&A expenses for the first quarter of 2024
reflect higher salaries due to wage inflation, partially offset by
the impact of headcount reductions taken at the end of the second
quarter of 2023. Increased costs to operate our facilities also
contributed to higher SG&A expenses. These increases were
partially offset by decreases in professional service and
consulting fees and transportation costs.
- Depreciation and amortization for the first quarter of 2024 was
$45.5 million compared to
$44.4 million for the first quarter
of 2023, an increase of $1.1
million.
- Operating profit was $263.0
million for the first quarter of 2024 compared to
$346.4 million for the first quarter
of 2023, a decrease of $83.4 million,
or 24.1%. Operating profit as a percentage of net sales was 4.9%
for the current quarter compared to 6.3% for the first quarter of
the prior year. Adjusted for restructuring costs, digital
transformation costs, and excise taxes on excess pension plan
assets, operating profit was $281.9
million, or 5.3% of net sales, for the first quarter of
2024. Adjusted for merger-related and integration costs and digital
transformation costs, operating profit was $365.9 million, or 6.6% of net sales, for the
first quarter of 2023.
- Net interest expense for the first quarter of 2024 was
$94.4 million compared to
$95.0 million for the first quarter
of 2023.
- Other non-operating expense for the first quarter of 2024 was
$21.6 million compared to
$10.1 million for the first quarter
of 2023. Due to fluctuations in the U.S. dollar against certain
foreign currencies, we recognized a net foreign currency exchange
loss of $17.4 million for the first
quarter of 2024 compared to a net loss of $9.5 million for the first quarter of 2023. We
recognized net costs of $5.9 million
and net benefits $0.3 million
associated with the non-service cost components of net periodic
pension cost (benefit) for the three months ended March 31, 2024 and 2023, respectively. Net costs
associated with the non-service cost components of net periodic
pension cost (benefit) for the first quarter of 2024 includes
pension settlement cost of $5.5
million to recognize unrealized losses previously reported
as a component of other comprehensive income (loss) related to the
benefit obligation of the Anixter Inc. Pension Plan as a result of
the final settlement of the plan. Adjusted for this amount, other
non-operating expense was $16.1
million for the first quarter of 2024.
- The effective tax rate for the first quarter of 2024 was 21.0%
compared to 18.3% for the first quarter of 2023. The effective tax
rate for the quarter ended March 31,
2024 was higher than the comparable period due to lower
discrete income tax benefits resulting from the exercise and
vesting of stock-based awards as compared to the prior year
period.
- Net income attributable to common stockholders was $101.4 million for the first quarter of 2024
compared to $182.7 million for the
first quarter of 2023. Adjusted for restructuring costs, digital
transformation costs, excise taxes on excess pension plan assets,
and the related income tax effects, net income attributable to
common stockholders was $119.2
million for the first quarter of 2024. Adjusted for
merger-related and integration costs, digital transformation costs,
and the related income tax effects, net income attributable to
common stockholders was $196.9
million for the first quarter of 2023.
- Earnings per diluted share for the first quarter of 2024 was
$1.95, based on 51.9 million diluted
shares, compared to $3.48 for the
first quarter of 2023, based on 52.5 million diluted shares.
Adjusted for restructuring costs, digital transformation costs,
excise taxes on excess pension plan assets, pension settlement
cost, and the related income tax effects, earnings per diluted
share for the first quarter of 2024 was $2.30. Adjusted for merger-related and
integration costs, digital transformation costs, and the related
income tax effects, earnings per diluted share for the first
quarter of 2023 was $3.75.
- Operating cash flow for the first quarter of 2024 was an inflow
of $746.3 million compared to an
outflow of $255.4 million for the
first quarter of 2023. Free cash flow for the first quarter of 2024
was $731.4 million, or 546% of
adjusted net income. The net cash inflow in the first quarter of
2024 was primarily driven by net income of $116.1 million and changes in net working
capital. Fluctuations in accounts payable resulted in a source of
cash of $620.9 million for the first
quarter of 2024 compared to a use of cash of $319.7 million for the year ended December 31, 2023. The increase for the first
quarter of 2024 was driven primarily by the impact of a system
conversion, the timing of inventory purchases, and a bank holiday
at the end of the quarter that delayed payments. An increase in
trade accounts receivable resulted in a use of cash of $116.1 million due to the timing of receipts from
customers. Additionally, a decrease in other accounts receivable of
$78.9 million, due primarily to the
collection of supplier volume rebates earned in 2023 in excess of
income accrued during the current period, partially offset by an
increase in sales tax and value-added tax receivables, and an
increase in other current and noncurrent liabilities of
$75.0 million, due to increases in
accrued interest payable and deferred revenue, partially offset by
a decrease in federal taxes payable, contributed to the net
operating cash inflow.
Webcast and Teleconference Access
Wesco will conduct a webcast and teleconference to discuss the
first quarter of 2024 earnings as described in this News Release on
Thursday, May 2, 2024, at 10:00 a.m.
E.T. The call will be broadcast live over the internet and
can be accessed from the Investor Relations page of the Company's
website at https://investors.wesco.com. The call will be archived
on this internet site for seven days.
Wesco International (NYSE: WCC) builds, connects, powers and
protects the world. Headquartered in Pittsburgh, Pennsylvania, Wesco is a FORTUNE
500® company with more than $22
billion in annual sales and a leading provider of
business-to-business distribution, logistics services and supply
chain solutions. Wesco offers a best-in-class product and services
portfolio of Electrical and Electronic Solutions, Communications
and Security Solutions, and Utility and Broadband Solutions. The
Company employs approximately 20,000 people, partners with the
industry's premier suppliers, and serves thousands of customers
around the world. With millions of products, end-to-end supply
chain services, and leading digital capabilities, Wesco provides
innovative solutions to meet customer needs across commercial and
industrial businesses, contractors, government agencies,
educational institutions, telecommunications providers, and
utilities. Wesco operates nearly 800 branches, warehouses and sales
offices in more than 50 countries, providing a local presence for
customers and a global network to serve multi-location businesses
and global corporations.
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. 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 anticipated benefits of, and other risks associated
with, acquisitions, joint ventures, divestitures and other
corporate transactions; the inability to successfully integrate
acquired businesses; the impact of increased interest rates or
borrowing costs; fluctuations in currency exchange rates; failure
to adequately protect Wesco's intellectual property or successfully
defend against infringement claims; the inability to successfully
deploy new technologies, digital products and information systems
or to otherwise adapt to emerging technologies in the marketplace,
such as those incorporating artificial intelligence; failure to
execute on our efforts and programs related to environmental,
social and governance (ESG) matters; unanticipated expenditures or
other adverse developments related to compliance with new or
stricter government policies, laws or regulations, including those
relating to data privacy, sustainability and environmental
protection; the inability to successfully develop, manage or
implement new technology initiatives or business strategies,
including with respect to the expansion of e-commerce capabilities
and other digital solutions and digitalization initiatives;
disruption of information technology systems or operations; natural
disasters (including as a result of climate change), health
epidemics, pandemics and other outbreaks; supply chain disruptions;
geopolitical issues, including the impact of the evolving conflicts
in the Middle East and
Russia/Ukraine; the impact of sanctions imposed on,
or other actions taken by the U.S. or other countries against,
Russia or China; the failure to manage the increased
risks and impacts of cyber incidents or data breaches; and
exacerbation of key materials shortages, inflationary cost
pressures, material cost increases, demand volatility, and
logistics and capacity constraints, any of which may have a
material adverse effect on the 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 most recent Annual Report on Form
10-K and other periodic reports filed with the U.S. Securities and
Exchange Commission.
|
Contact
Information
|
|
Investor
Relations
|
Corporate
Communications
|
|
Will
Ruthrauff
Director, Investor
Relations
484-885-5648
|
Jennifer
Sniderman
Vice President,
Corporate Communications
717-579-6603
|
|
http://www.wesco.com
|
|
WESCO INTERNATIONAL, INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
|
(in millions, except
per share amounts)
|
|
(Unaudited)
|
|
|
Three Months
Ended
|
|
|
March 31,
2024
|
|
|
March 31,
2023
|
|
|
Net sales
|
$
5,350.0
|
|
|
$
5,521.9
|
|
|
Cost of goods sold
(excluding depreciation and amortization)
|
4,212.1
|
78.7 %
|
|
4,313.4
|
78.1 %
|
|
Selling, general and
administrative expenses
|
829.4
|
15.5 %
|
|
817.7
|
14.8 %
|
|
Depreciation and
amortization
|
45.5
|
|
|
44.4
|
|
|
Income from
operations
|
263.0
|
4.9 %
|
|
346.4
|
6.3 %
|
|
Interest expense,
net
|
94.4
|
|
|
95.0
|
|
|
Other expense,
net
|
21.6
|
|
|
10.1
|
|
|
Income before income
taxes
|
147.0
|
2.7 %
|
|
241.3
|
4.4 %
|
|
Provision for income
taxes
|
30.9
|
|
|
44.1
|
|
|
Net income
|
116.1
|
2.2 %
|
|
197.2
|
3.6 %
|
|
Net income attributable
to noncontrolling interests
|
0.3
|
|
|
0.1
|
|
|
Net income attributable
to WESCO International, Inc.
|
115.8
|
2.2 %
|
|
197.1
|
3.6 %
|
|
Preferred stock
dividends
|
14.4
|
|
|
14.4
|
|
|
Net income attributable
to common stockholders
|
$
101.4
|
1.9 %
|
|
$
182.7
|
3.3 %
|
|
|
|
|
|
|
|
Earnings per diluted
share attributable to common stockholders
|
$
1.95
|
|
|
$
3.48
|
|
|
Weighted-average common
shares outstanding and common share equivalents used in computing
earnings per diluted common share
|
51.9
|
|
|
52.5
|
|
|
WESCO INTERNATIONAL, INC.
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(dollar amounts in
millions)
|
|
(Unaudited)
|
|
|
As of
|
|
March 31,
2024
|
|
December 31,
2023
|
|
Assets
|
|
|
|
|
Current
Assets
|
|
|
|
|
Cash and cash
equivalents
|
$
984.1
|
|
$
524.1
|
|
Trade accounts
receivable, net
|
3,526.7
|
|
3,639.5
|
|
Inventories
|
3,525.4
|
|
3,572.1
|
|
Current assets held for
sale
|
243.6
|
|
—
|
|
Other current
assets
|
633.0
|
|
655.9
|
|
Total current assets
|
8,912.8
|
|
8,391.6
|
|
|
|
|
|
Goodwill and intangible
assets
|
5,013.5
|
|
5,119.9
|
|
Noncurrent assets held
for sale
|
65.6
|
|
—
|
|
Other assets
|
1,547.1
|
|
1,549.4
|
|
Total assets
|
$
15,539.0
|
|
$
15,060.9
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Accounts
payable
|
$
2,974.3
|
|
$
2,431.5
|
|
Short-term debt and
current portion of long-term debt, net
|
11.1
|
|
8.6
|
|
Current liabilities
held for sale
|
68.7
|
|
—
|
|
Other current
liabilities
|
981.8
|
|
948.3
|
|
Total current liabilities
|
4,035.9
|
|
3,388.4
|
|
|
|
|
|
Long-term debt,
net
|
5,183.8
|
|
5,313.1
|
|
Noncurrent liabilities
held for sale
|
3.1
|
|
—
|
|
Other noncurrent
liabilities
|
1,338.4
|
|
1,327.5
|
|
Total liabilities
|
10,561.2
|
|
10,029.0
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
Total stockholders' equity
|
4,977.8
|
|
5,031.9
|
|
Total liabilities and stockholders' equity
|
$
15,539.0
|
|
$
15,060.9
|
|
|
WESCO INTERNATIONAL, INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(dollar amounts in
millions)
|
|
(Unaudited)
|
|
Three Months
Ended
|
|
March 31,
2024
|
|
March 31,
2023
|
|
Operating
Activities:
|
|
|
|
|
Net income
|
$
116.1
|
|
$
197.2
|
|
Add back
(deduct):
|
|
|
|
|
Depreciation and
amortization
|
45.5
|
|
44.4
|
|
Deferred income
taxes
|
5.2
|
|
11.6
|
|
Change in trade
receivables, net
|
(116.1)
|
|
(133.5)
|
|
Change in
inventories
|
5.5
|
|
(223.8)
|
|
Change in accounts
payable
|
620.9
|
|
(86.5)
|
|
Other, net
|
69.2
|
|
(64.8)
|
|
Net cash provided by
(used in) operating activities
|
746.3
|
|
(255.4)
|
|
|
|
|
|
Investing
Activities:
|
|
|
|
|
Capital
expenditures
|
(20.4)
|
|
(13.9)
|
|
Other, net
|
3.9
|
|
1.3
|
|
Net cash used in
investing activities
|
(16.5)
|
|
(12.6)
|
|
|
|
|
|
Financing
Activities:
|
|
|
|
|
Debt borrowings,
net
|
(115.1)
|
|
181.0
|
|
Payments for taxes
related to net-share settlement of equity awards
|
(25.2)
|
|
(51.6)
|
|
Repurchases of common
stock
|
(50.0)
|
|
—
|
|
Payment of common
stock dividends
|
(20.9)
|
|
(19.2)
|
|
Payment of preferred
stock dividends
|
(14.4)
|
|
(14.4)
|
|
Debt issuance
costs
|
(26.6)
|
|
—
|
|
Other, net
|
(2.3)
|
|
(7.2)
|
|
Net cash (used in)
provided by financing activities
|
(254.5)
|
|
88.6
|
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents
|
(13.9)
|
|
1.2
|
|
|
|
|
|
Net change in cash and
cash equivalents
|
461.4
|
|
(178.2)
|
|
Cash and cash
equivalents at the beginning of the period
|
524.1
|
|
527.3
|
|
Cash and cash
equivalents at the end of the period(1)
|
$
985.5
|
|
$
349.1
|
|
|
|
(1)
|
Cash and cash
equivalents as of March 31, 2024 includes $984.1 million of
cash and cash equivalents and $1.4 million of cash included in
current assets held for sale.
|
NON-GAAP FINANCIAL MEASURES
In addition to the results provided in accordance with U.S.
Generally Accepted Accounting Principles ("U.S. GAAP") above, this
earnings release 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 expenses, adjusted income from
operations, adjusted operating margin, adjusted other non-operating
expense (income), 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, digital
transformation costs, restructuring costs, cloud computing
arrangement amortization, pension settlement cost and excise taxes
on excess pension plan assets related to the final settlement of
the Anixter Inc. Pension Plan, and the related income tax effects,
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.
|
WESCO INTERNATIONAL,
INC.
|
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
|
|
(in millions, except
per share amounts)
|
|
(Unaudited)
|
|
|
Organic Sales Growth
by Segment - Three Months Ended:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Growth/(Decline)
|
|
March 31,
2024
|
|
March 31,
2023
|
|
Reported
|
|
Acquisition
|
|
Foreign
Exchange
|
|
Workday
|
|
Organic
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EES
|
$
2,099.0
|
|
$
2,135.1
|
|
(1.7) %
|
|
— %
|
|
0.1 %
|
|
— %
|
|
(1.8) %
|
|
CSS
|
1,670.1
|
|
1,732.0
|
|
(3.6) %
|
|
— %
|
|
0.1 %
|
|
— %
|
|
(3.7) %
|
|
UBS
|
1,580.9
|
|
1,654.8
|
|
(4.5) %
|
|
— %
|
|
0.1 %
|
|
— %
|
|
(4.6) %
|
|
Total net
sales
|
$
5,350.0
|
|
$
5,521.9
|
|
(3.1) %
|
|
— %
|
|
0.1 %
|
|
— %
|
|
(3.2) %
|
|
|
Note: Organic sales
growth is a non-GAAP financial measure of sales performance.
Organic sales growth is calculated by deducting the percentage
impact from acquisitions and divestitures for one year following
the respective transaction, fluctuations in foreign exchange rates
and number of workdays from the reported percentage change in
consolidated net sales. Workday impact represents the change in the
number of operating days period-over-period after adjusting for
weekends and public holidays in the United States; there was no
change in the number of workdays in the first quarter of 2024
compared to the first quarter of 2023.
|
|
WESCO INTERNATIONAL, INC.
|
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
|
|
(in millions, except
per share amounts)
|
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
Gross
Profit:
|
|
March 31,
2024
|
|
March 31,
2023
|
|
|
|
|
|
|
Net sales
|
|
$
5,350.0
|
|
$
5,521.9
|
|
Cost of goods sold
(excluding depreciation and amortization)
|
|
4,212.1
|
|
4,313.4
|
|
Gross profit
|
|
$
1,137.9
|
|
$
1,208.5
|
|
Gross margin
|
|
21.3 %
|
|
21.9 %
|
|
|
Three Months
Ended
|
|
Gross
Profit:
|
|
December 31,
2023
|
|
|
|
|
Net sales
|
|
$
5,473.4
|
|
Cost of goods sold
(excluding depreciation and amortization)
|
|
4,302.7
|
|
Gross profit
|
|
$
1,170.7
|
|
Gross margin
|
|
21.4 %
|
|
|
Note: Gross profit is a
financial measure commonly used in the distribution industry. Gross
profit is calculated by deducting cost of goods sold, excluding
depreciation and amortization, from net sales. Gross margin is
calculated by dividing gross profit by net sales.
|
|
WESCO INTERNATIONAL, INC.
|
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
|
|
(in millions, except
per share amounts)
|
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
March 31,
2024
|
|
March 31,
2023
|
|
Adjusted SG&A
Expenses:
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
$
829.4
|
|
$
817.7
|
|
Merger-related and
integration costs(1)
|
|
—
|
|
(11.2)
|
|
Restructuring
costs(2)
|
|
(8.0)
|
|
—
|
|
Digital transformation
costs(3)
|
|
(6.1)
|
|
(8.3)
|
|
Excise taxes on excess
pension plan assets(4)
|
|
(4.8)
|
|
—
|
|
Adjusted selling,
general and administrative expenses
|
|
$
810.5
|
|
$
798.2
|
|
Percentage of net
sales
|
|
15.1 %
|
|
14.5 %
|
|
|
|
|
|
|
Adjusted Income from
Operations:
|
|
|
|
|
|
Income from
operations
|
|
$
263.0
|
|
$
346.4
|
|
Merger-related and
integration costs(1)
|
|
—
|
|
11.2
|
|
Restructuring
costs(2)
|
|
8.0
|
|
—
|
|
Digital transformation
costs(3)
|
|
6.1
|
|
8.3
|
|
Excise taxes on excess
pension plan assets(4)
|
|
4.8
|
|
—
|
|
Adjusted income from
operations
|
|
$
281.9
|
|
$
365.9
|
|
Adjusted income from
operations margin %
|
|
5.3 %
|
|
6.6 %
|
|
|
|
|
|
|
Adjusted Other
Expense, net:
|
|
|
|
|
|
Other expense,
net
|
|
$
21.6
|
|
$
10.1
|
|
Pension settlement
cost(5)
|
|
(5.5)
|
|
—
|
|
Adjusted other expense,
net
|
|
$
16.1
|
|
$
10.1
|
|
|
|
|
|
|
Adjusted Provision
for Income Taxes:
|
|
|
|
|
|
Provision for income
taxes
|
|
$
30.9
|
|
$
44.1
|
|
Income tax effect of
adjustments to income from operations(6)
|
|
6.6
|
|
5.3
|
|
Adjusted provision for
income taxes
|
|
$
37.5
|
|
$
49.4
|
|
|
|
(1)
|
Merger-related and
integration costs include integration and professional fees
associated with the integration of Wesco and Anixter, as well as
advisory, legal, and separation costs associated with the merger
between the two companies.
|
|
(2)
|
Restructuring costs
include severance costs incurred pursuant to an ongoing
restructuring plan.
|
|
(3)
|
Digital transformation
costs include costs associated with certain digital transformation
initiatives.
|
|
(4)
|
Excise taxes on excess
pension plan assets represent the excise taxes applicable to the
excess pension plan assets following the final settlement of the
Company's U.S. pension plan.
|
|
(5)
|
Pension settlement cost
represents expense related to the final settlement of the Company's
U.S. pension plan.
|
|
(6)
|
The adjustments to
income from operations have been tax effected at a rate of
approximately 27% for the three months ended March 31, 2024 and
2023.
|
|
WESCO INTERNATIONAL, INC.
|
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
|
|
(in millions, except
per share amounts)
|
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
Adjusted Earnings
per Diluted Share:
|
|
March 31,
2024
|
|
March 31,
2023
|
|
|
|
|
|
|
Adjusted income from
operations
|
|
$
281.9
|
|
$
365.9
|
|
Interest expense,
net
|
|
94.4
|
|
95.0
|
|
Adjusted other
expense, net
|
|
16.1
|
|
10.1
|
|
Adjusted income before
income taxes
|
|
171.4
|
|
260.8
|
|
Adjusted provision for
income taxes
|
|
37.5
|
|
49.4
|
|
Adjusted net
income
|
|
133.9
|
|
211.4
|
|
Net income
attributable to noncontrolling interests
|
|
0.3
|
|
0.1
|
|
Adjusted net income
attributable to WESCO International, Inc.
|
|
133.6
|
|
211.3
|
|
Preferred stock
dividends
|
|
14.4
|
|
14.4
|
|
Adjusted net income
attributable to common stockholders
|
|
$
119.2
|
|
$
196.9
|
|
|
|
|
|
|
Diluted
shares
|
|
51.9
|
|
52.5
|
|
Adjusted earnings per
diluted share
|
|
$
2.30
|
|
$
3.75
|
|
|
Note: For the three
months ended March 31, 2024, SG&A expenses, income from
operations, other non-operating expense, the provision for income
taxes and earnings per diluted share have been adjusted to exclude
digital transformation costs, restructuring costs, pension
settlement cost and excise taxes on excess pension plan assets
related to the final settlement of the Anixter Inc. Pension Plan,
and the related income tax effects. For the three months ended
March 31, 2023, SG&A expenses, income from operations, the
provision for income taxes and earnings per diluted share have been
adjusted to exclude merger-related and integration costs, digital
transformation costs, and the related income tax effects. These
non-GAAP financial measures provide a better understanding of our
financial results on a comparable basis.
|
|
WESCO INTERNATIONAL, INC.
|
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
|
|
(in millions, except
per share amounts)
|
|
(Unaudited)
|
|
|
|
Three Months Ended
March 31, 2024
|
|
EBITDA and Adjusted
EBITDA by Segment:
|
|
EES
|
|
CSS
|
|
UBS
|
|
Corporate
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
|
$
148.2
|
|
$
88.4
|
|
$
160.8
|
|
$ (296.0)
|
|
$
101.4
|
|
Net income (loss)
attributable to noncontrolling interests
|
|
(0.4)
|
|
0.4
|
|
—
|
|
0.3
|
|
0.3
|
|
Preferred stock
dividends
|
|
—
|
|
—
|
|
—
|
|
14.4
|
|
14.4
|
|
Provision for income
taxes(1)
|
|
—
|
|
—
|
|
—
|
|
30.9
|
|
30.9
|
|
Interest expense,
net(1)
|
|
—
|
|
—
|
|
—
|
|
94.4
|
|
94.4
|
|
Depreciation and
amortization
|
|
11.2
|
|
18.0
|
|
7.0
|
|
9.3
|
|
45.5
|
|
EBITDA
|
|
$
159.0
|
|
$
106.8
|
|
$
167.8
|
|
$
(146.8)
|
|
$
286.9
|
|
Other expense
(income), net
|
|
5.7
|
|
18.8
|
|
0.8
|
|
(3.7)
|
|
21.6
|
|
Stock-based
compensation expense
|
|
1.1
|
|
1.6
|
|
0.8
|
|
6.6
|
|
10.1
|
|
Restructuring
costs(2)
|
|
—
|
|
—
|
|
—
|
|
8.0
|
|
8.0
|
|
Digital transformation
costs(3)
|
|
—
|
|
—
|
|
—
|
|
6.1
|
|
6.1
|
|
Excise taxes on excess
pension plan assets(4)
|
|
—
|
|
—
|
|
—
|
|
4.8
|
|
4.8
|
|
Cloud computing
arrangement amortization(5)
|
|
—
|
|
—
|
|
—
|
|
2.9
|
|
2.9
|
|
Adjusted
EBITDA
|
|
$
165.8
|
|
$
127.2
|
|
$
169.4
|
|
$
(122.1)
|
|
$
340.4
|
|
Adjusted EBITDA
margin %
|
|
7.9 %
|
|
7.6 %
|
|
10.7 %
|
|
|
|
6.4 %
|
|
|
|
(1)
|
The reportable segments
do not incur income taxes and interest expense as these costs are
centrally controlled through the Corporate tax and treasury
functions.
|
|
(2)
|
Restructuring costs
include severance costs incurred pursuant to an ongoing
restructuring plan.
|
|
(3)
|
Digital transformation
costs include costs associated with certain digital transformation
initiatives.
|
|
(4)
|
Excise taxes on excess
pension plan assets represent the excise taxes applicable to the
excess pension plan assets following the final settlement of the
Company's U.S. pension plan.
|
|
(5)
|
Cloud computing
arrangement amortization consists of expense recognized in selling,
general and administrative expenses for capitalized implementation
costs for cloud computing arrangements to support our digital
transformation initiatives.
|
|
|
|
|
Three Months Ended
March 31, 2023
|
|
EBITDA and Adjusted
EBITDA by Segment:
|
|
EES
|
|
CSS
|
|
UBS
|
|
Corporate
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
|
$
171.3
|
|
$
135.4
|
|
$
180.3
|
|
$ (304.3)
|
|
$
182.7
|
|
Net income (loss)
attributable to noncontrolling interests
|
|
(0.1)
|
|
0.2
|
|
—
|
|
—
|
|
0.1
|
|
Preferred stock
dividends
|
|
—
|
|
—
|
|
—
|
|
14.4
|
|
14.4
|
|
Provision for income
taxes(1)
|
|
—
|
|
—
|
|
—
|
|
44.1
|
|
44.1
|
|
Interest expense,
net(1)
|
|
—
|
|
—
|
|
—
|
|
95.0
|
|
95.0
|
|
Depreciation and
amortization
|
|
9.9
|
|
18.0
|
|
6.0
|
|
10.5
|
|
44.4
|
|
EBITDA
|
|
$
181.1
|
|
$
153.6
|
|
$
186.3
|
|
$
(140.3)
|
|
$
380.7
|
|
Other expense,
net
|
|
0.5
|
|
0.8
|
|
0.6
|
|
8.2
|
|
10.1
|
|
Stock-based
compensation expense(2)
|
|
1.4
|
|
1.1
|
|
0.8
|
|
7.1
|
|
10.4
|
|
Merger-related and
integration costs(3)
|
|
—
|
|
—
|
|
—
|
|
11.2
|
|
11.2
|
|
Digital transformation
costs(4)
|
|
—
|
|
—
|
|
—
|
|
8.3
|
|
8.3
|
|
Adjusted
EBITDA
|
|
$
183.0
|
|
$
155.5
|
|
$
187.7
|
|
$
(105.5)
|
|
$
420.7
|
|
Adjusted EBITDA
margin %
|
|
8.6 %
|
|
9.0 %
|
|
11.3 %
|
|
|
|
7.6 %
|
|
|
|
(1)
|
The reportable segments
do not incur income taxes and interest expense as these costs are
centrally controlled through the Corporate tax and treasury
functions.
|
|
(2)
|
Stock-based
compensation expense in the calculation of adjusted EBITDA for the
three months ended March 31, 2023 excludes $1.3 million that is
included in merger-related and integration costs.
|
|
(3)
|
Merger-related and
integration costs include integration and professional fees
associated with the integration of Wesco and Anixter, legal,
and separation costs associated with the merger between the two
companies.
|
|
(4)
|
Digital transformation
costs include costs associated with certain digital transformation
initiatives.
|
|
|
|
|
Three Months Ended
December 31, 2023
|
|
EBITDA and Adjusted
EBITDA by Segment:
|
|
EES
|
|
CSS
|
|
UBS
|
|
Corporate
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
|
$
152.4
|
|
$
117.4
|
|
$
160.4
|
|
$ (302.6)
|
|
$
127.6
|
|
Net income (loss)
attributable to noncontrolling interests
|
|
0.3
|
|
0.6
|
|
—
|
|
(0.3)
|
|
0.6
|
|
Preferred stock
dividends
|
|
—
|
|
—
|
|
—
|
|
14.4
|
|
14.4
|
|
Provision for income
taxes(1)
|
|
—
|
|
—
|
|
—
|
|
65.7
|
|
65.7
|
|
Interest expense,
net(1)
|
|
—
|
|
—
|
|
—
|
|
97.0
|
|
97.0
|
|
Depreciation and
amortization
|
|
11.0
|
|
17.8
|
|
6.3
|
|
9.7
|
|
44.8
|
|
EBITDA
|
|
$
163.7
|
|
$
135.8
|
|
$
166.7
|
|
$
(116.1)
|
|
$
350.1
|
|
Other (income)
expense, net
|
|
(1.8)
|
|
36.1
|
|
(0.9)
|
|
(22.9)
|
|
10.5
|
|
Stock-based
compensation expense
|
|
2.1
|
|
1.4
|
|
0.8
|
|
9.1
|
|
13.4
|
|
Digital transformation
costs(2)
|
|
—
|
|
—
|
|
—
|
|
7.6
|
|
7.6
|
|
Merger-related and
integration costs(3)
|
|
—
|
|
—
|
|
—
|
|
2.4
|
|
2.4
|
|
Restructuring
costs(4)
|
|
—
|
|
—
|
|
—
|
|
1.3
|
|
1.3
|
|
Adjusted
EBITDA
|
|
$
164.0
|
|
$
173.3
|
|
$
166.6
|
|
$
(118.6)
|
|
$
385.3
|
|
Adjusted EBITDA
margin %
|
|
7.9 %
|
|
9.7 %
|
|
10.4 %
|
|
|
|
7.0 %
|
|
|
|
(1)
|
The reportable segments
do not incur income taxes and interest expense as these costs are
centrally controlled through the Corporate tax and treasury
functions.
|
|
(2)
|
Digital transformation
costs include costs associated with certain digital transformation
initiatives.
|
|
(3)
|
Merger-related and
integration costs include integration and professional fees
associated with the integration of Wesco and Anixter,
including digital transformation costs, as well as advisory, legal,
and separation costs associated with the merger between the two
companies.
|
|
(4)
|
Restructuring costs
include severance costs incurred pursuant to an ongoing
restructuring plan.
|
|
|
Note: EBITDA, Adjusted
EBITDA and Adjusted EBITDA margin % are non-GAAP financial measures
that provide indicators of the Company's performance and its
ability to meet debt service requirements. For the three months
ended March 31, 2024, Adjusted EBITDA is defined as earnings before
interest, taxes, depreciation and amortization before other
non-operating expenses (income), non-cash stock-based compensation
expense, digital transformation costs, restructuring costs, cloud
computing arrangement amortization, and excise taxes on excess
pension plan assets related to the final settlement of
the Anixter Inc. Pension Plan. For the three months ended
March 31, 2023, Adjusted EBITDA is defined as earnings before
interest, taxes, depreciation and amortization before other
non-operating expenses (income), non-cash stock-based compensation
expense, digital transformation costs, and merger-related and
integration costs. For the three months ended December 31,
2023, Adjusted EBITDA is defined as earnings before interest,
taxes, depreciation and amortization before other non-operating
expenses (income), non-cash stock-based compensation expense,
digital transformation costs, merger-related and integration costs,
and restructuring costs. Adjusted EBITDA margin % is calculated by
dividing Adjusted EBITDA by net sales. Adjusted EBITDA and Adjusted
EBITDA margin % are non-GAAP financial measures that provide
indicators of the Company's performance and its ability to meet
debt service requirements.
|
|
WESCO INTERNATIONAL, INC.
|
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
|
|
(in millions, except
per share amounts)
|
|
(Unaudited)
|
|
|
Twelve Months
Ended
|
|
Financial
Leverage:
|
March 31,
2024
|
|
December 31,
2023
|
|
|
|
|
|
Net income
attributable to common stockholders
|
$
626.8
|
|
$
708.1
|
|
Net income
attributable to noncontrolling interests
|
0.8
|
|
0.6
|
|
Preferred stock
dividends
|
57.4
|
|
57.4
|
|
Provision for income
taxes
|
212.6
|
|
225.9
|
|
Interest expense,
net
|
388.7
|
|
389.3
|
|
Depreciation and
amortization
|
182.3
|
|
181.3
|
|
EBITDA
|
$
1,468.6
|
|
$
1,562.6
|
|
Other expense,
net
|
36.6
|
|
25.1
|
|
Stock-based
compensation expense
|
45.2
|
|
45.5
|
|
Merger-related and
integration costs(1)
|
8.1
|
|
19.3
|
|
Restructuring
costs(2)
|
24.8
|
|
16.7
|
|
Digital transformation
costs(3)
|
33.9
|
|
36.1
|
|
Excise taxes on excess
pension plan assets(4)
|
4.8
|
|
—
|
|
Cloud computing
arrangement amortization(5)
|
2.9
|
|
—
|
|
Adjusted
EBITDA
|
$
1,624.9
|
|
$
1,705.3
|
|
|
|
|
|
As of
|
|
March 31,
2024
|
|
December 31,
2023
|
|
Short-term debt and
current portion of long-term debt, net
|
$
11.1
|
|
$
8.6
|
|
Long-term debt,
net
|
5,183.8
|
|
5,313.1
|
|
Debt discount and debt
issuance costs(6)
|
65.5
|
|
43.0
|
|
Fair value adjustments
to Anixter Senior Notes due 2023 and 2025(6)
|
(0.1)
|
|
(0.1)
|
|
Total debt
|
5,260.3
|
|
5,364.6
|
|
Less: Cash and cash
equivalents(7)
|
985.5
|
|
524.1
|
|
Total debt, net of
cash
|
$
4,274.8
|
|
$
4,840.5
|
|
|
|
|
|
Financial leverage
ratio
|
2.6
|
|
2.8
|
|
|
|
(1)
|
Merger-related and
integration costs include integration and professional fees
associated with the integration of Wesco and Anixter, as well as
advisory, legal, and separation costs associated with the merger
between the two companies
|
|
(2)
|
Restructuring costs
include severance costs incurred pursuant to an ongoing
restructuring plan.
|
|
(3)
|
Digital transformation
costs include costs associated with certain digital transformation
initiatives, which have historically been included in
merger-related and integration costs in prior years.
|
|
(4)
|
Excise taxes on excess
pension plan assets represent the excise taxes applicable to the
excess pension plan assets following the final settlement of the
Company's U.S. pension plan.
|
|
(5)
|
Cloud computing
arrangement amortization consists of expense recognized in selling,
general and administrative expenses for capitalized implementation
costs for cloud computing arrangements to support our digital
transformation initiatives.
|
|
(6)
|
Debt is presented in
the condensed consolidated balance sheets net of debt discount and
debt issuance costs, and includes adjustments to record the
long-term debt assumed in the merger with Anixter at its
acquisition date fair value.
|
|
(7)
|
Includes $1.4 million
of cash and cash equivalents classified as held for
sale.
|
|
|
Note: Financial
leverage ratio is a non-GAAP measure of the use of debt. Financial
leverage ratio is calculated by dividing total debt, excluding debt
discount, debt issuance costs and fair value adjustments, net of
cash, by adjusted EBITDA. EBITDA is defined as the trailing twelve
months earnings before interest, taxes, depreciation and
amortization. Adjusted EBITDA is defined as the trailing twelve
months EBITDA before other non-operating expenses (income),
non-cash stock-based compensation expense, merger-related and
integration costs, digital transformation costs, restructuring
costs, cloud computing arrangement amortization, and excise taxes
on excess pension plan assets related to the final settlement of
the Anixter Inc. Pension Plan.
|
|
WESCO INTERNATIONAL, INC.
|
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
|
|
(in millions, except
per share amounts)
|
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
Free Cash
Flow:
|
|
March 31,
2024
|
|
March 31,
2023
|
|
|
|
|
|
|
Cash flow provided by
(used in) operations
|
|
$
746.3
|
|
$
(255.4)
|
|
Less: Capital
expenditures
|
|
(20.4)
|
|
(13.9)
|
|
Add: Other
adjustments
|
|
5.5
|
|
3.4
|
|
Free cash
flow
|
|
$
731.4
|
|
$
(265.9)
|
|
Percentage of adjusted
net income
|
|
546.2 %
|
|
(125.8) %
|
|
|
Note: Free cash flow is
a non-GAAP financial measure of liquidity. Capital expenditures are
deducted from operating cash flow to determine free cash flow. Free
cash flow is available to fund investing and financing activities.
For the three months ended March 31, 2024, the Company paid
for certain costs related to digital transformation and
restructuring. For the three months ended March 31, 2023, the
Company paid for certain costs to integrate the acquired Anixter
business and related to digital transformation. Such expenditures
have been added back to operating cash flow to determine free cash
flow for such periods. Our calculation of free cash flow may not be
comparable to similar measures used by other companies.
|
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SOURCE Wesco International