- Second quarter net sales down 4.6% YOY, organic sales down
0.8% YOY and up 4.7% sequentially
- Second quarter operating profit of $324 million; operating margin of 5.9%
- Gross margin of 21.9%, up 30 basis points YOY and up 60
basis points sequentially
- Adjusted EBITDA margin of 7.3%, up 90 basis points
sequentially and down 40 basis points YOY
- Divestiture of Wesco Integrated Supply (WIS) completed on
April 1, 2024
- Utilized net proceeds to complete $300 million of share repurchases
- Operating cash flow of $523
million for the first six months of 2024
PITTSBURGH, Aug. 1, 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 second quarter of
2024.
"Our second quarter results were somewhat below our expectations
for a low single-digit decline in reported sales against a
continued mixed and multi-speed economic environment. Results
improved as we moved through the quarter with a return to organic
sales growth in June along with sequential margin expansion. We
continued to benefit from the increase in AI-driven data center
growth with sales in our Wesco Data Center Solutions business up
double-digits. This was more than offset by a significant slowdown
in purchases by our utility customers. While we remain confident in
the long-term growth of our Utility and Broadband Solutions
business, the customer destocking and delay of capital projects
clearly impacted our results in the quarter," said John Engel, Chairman, President and CEO.
Mr. Engel added, "As planned, we executed our capital allocation
strategies and repurchased $300
million of our Wesco stock in the second quarter and closed
on two small but important software-based acquisitions, entroCim
and Storeroom Logix. With our record $500
million of free cash flow generation in the first half, we
are on track to deliver our full year free cash flow outlook of
$800 million to $1 billion and will continue to execute our
capital allocation strategies."
Mr. Engel concluded, "We expect the mixed economic environment
and customer purchasing delays in utility and broadband to continue
through the second half of 2024. Quoting, bid activity levels, and
our backlog remain healthy, supporting our view for sales growth in
the second half against an easier year-over-year comparable, but at
a more modest rate than our previous outlook. As a result, we are
reducing our full-year outlook and now expect organic sales growth
of (1.5)% to 0.5% versus prior year and adjusted EBITDA margin of
7.0% to 7.3%. We plan to build on our improving sequential momentum
in the second half as we continue to benefit from our global
capabilities, leading scale and expanded portfolio."
The following are results for the three months ended
June 30, 2024 compared to the three months ended June 30,
2023:
- Net sales were $5.5 billion for
the second quarter of 2024 compared to $5.7
billion for the second quarter of 2023, a decrease of 4.6%.
On an organic basis, which removes the impact of the WIS
divestiture and differences in foreign exchange rates, sales for
the second quarter of 2024 declined by 0.8%. The decrease in
organic sales reflects volume declines in the EES and UBS segments,
partially offset by a volume increase in the CSS segment and price
inflation in the EES and UBS segments.
- Backlog at the end of the second quarter of 2024 declined by
10% compared to the end of the second quarter of 2023.
Sequentially, backlog declined by approximately 2% in the
quarter.
- Cost of goods sold for the second quarter of 2024 was
$4.3 billion compared to $4.5 billion for the second quarter of 2023, and
gross profit was $1.2 billion for the
second quarter of 2024 and 2023. As a percentage of net sales,
gross profit was 21.9% and 21.6% for the second quarter of 2024 and
2023, respectively. The increase in gross profit as a percentage of
net sales for the second quarter of 2024 primarily reflects the
impact of the divestiture of the WIS business. Sequentially, gross
profit as a percentage of net sales increased 60 basis points from
21.3% in the first quarter of 2024.
- Selling, general and administrative ("SG&A") expenses were
$828.4 million, or 15.1% of net
sales, for the second quarter of 2024, compared to $831.7 million, or 14.5% of net sales, for the
second quarter of 2023. SG&A expenses for the second quarter of
2024 include a $17.8 million loss on
abandonment of assets, $6.1 million
of digital transformation costs, and $0.9
million of restructuring costs. SG&A expenses for the
second quarter of 2023 include $9.8
million of restructuring costs, $7.3
million of digital transformation costs, and $3.6 million of merger-related and integration
costs. Adjusted for these costs, SG&A expenses were
$803.6 million, or 14.7% of net
sales, for the second quarter of 2024 and $811.0 million, or 14.1% of net sales, for the
second quarter of 2023. Adjusted SG&A expenses for the second
quarter of 2024 reflect the impact of the divestiture of the WIS
business and lower payroll-related expenses, partially offset by
higher costs to operate our facilities.
- Depreciation and amortization for the second quarter of 2024
was $46.1 million compared to
$46.9 million for the second quarter
of 2023, a decrease of $0.8
million.
- Operating profit was $323.5
million for the second quarter of 2024 compared to
$363.8 million for the second quarter
of 2023, a decrease of $40.3 million,
or 11.1%. Operating profit as a percentage of net sales was 5.9%
for the current quarter compared to 6.3% for the second quarter of
the prior year. Adjusted for the loss on abandonment of assets,
digital transformation costs, and restructuring costs described
above, operating profit was $348.3
million, or 6.4% of net sales, for the second quarter of
2024. Adjusted for restructuring costs, digital transformation
costs, merger-related and integration costs, and accelerated
trademark amortization expense described above, operating profit
was $385.3 million, or 6.7% of net
sales, for the second quarter of 2023.
- Net interest expense for the second quarter of 2024 and 2023
was $98.8 million.
- Other non-operating income for the second quarter of 2024 was
$95.9 million compared to expense of
$0.8 million for the second quarter
of 2023. In the second quarter of 2024, we completed the
divestiture of our WIS business and recognized a gain from the sale
of $102.9 million. Additionally, in
the second quarter of 2024, we recognized a $3.8 million loss on the termination of a
business arrangement. Adjusted for the gain on the divestiture of
our WIS business and the loss on termination of business
arrangement, other non-operating expense was $3.2 million for the second quarter of 2024.
- The effective tax rate for the second quarter of 2024 was 27.4%
compared to 27.2% for the second quarter of 2023.
- Net income attributable to common stockholders was $217.7 million for the second quarter of 2024
compared to $178.7 million for the
second quarter of 2023. Adjusted for the loss on abandonment of
assets, digital transformation costs, restructuring costs, the gain
recognized on the divestiture of the WIS business, the loss on
termination of business arrangement, and the related income tax
effects, net income attributable to common stockholders was
$163.5 million for the second quarter
of 2024. Adjusted for restructuring costs, digital transformation
costs, merger-related and integration costs, accelerated trademark
amortization expense, and the related income tax effects, net
income attributable to common stockholders was $194.3 million for the second quarter of 2023.
Adjusted net income attributable to common stockholders decreased
15.9% year-over-year.
- Earnings per diluted share for the second quarter of 2024 was
$4.28, based on 50.9 million diluted
shares, compared to $3.41 for the
second quarter of 2023, based on 52.4 million diluted shares.
Adjusted for the loss on abandonment of assets, digital
transformation costs, restructuring costs, the gain recognized on
the divestiture of our WIS business, the loss on termination of
business arrangement, and the related income tax effects, earnings
per diluted share for the second quarter of 2024 was $3.21. Adjusted for restructuring costs, digital
transformation costs, merger-related and integration costs,
accelerated trademark amortization expense, and the related income
tax effects, earnings per diluted share for the second quarter of
2023 was $3.71. Adjusted earnings per
diluted share decreased 13.5% year-over-year.
- Operating cash flow for the second quarter of 2024 was an
outflow of $223.8 million compared to
an inflow of $317.6 million for the
second quarter of 2023. The net cash outflow in the second quarter
of 2024 was primarily driven by changes in net working capital,
partially offset by net income of $232.8
million. Fluctuations in accounts payable resulted in a cash
out flow of $279.0 million for the
second quarter of 2024, primarily due to the timing of inventory
purchases and payments to suppliers. An increase in trade accounts
receivable resulted in a use of cash of $142.7 million due to the timing of receipts from
customers.
The following are results for the six months ended June 30,
2024 compared to the six months ended June 30, 2023:
- Net sales were $10.8 billion for
the first six months of 2024 compared to $11.3 billion for the first six months of 2023, a
decrease of 3.9%. Organic sales for the first six months of 2024
declined by 2.0%, as the divestiture of the WIS business and
fluctuations in foreign exchange rates negatively impacted reported
net sales by 1.8% and 0.1%, respectively. The decrease in organic
sales reflects volume declines in all three segments, partially
offset by price inflation.
- Cost of goods sold for the first six months of 2024 was
$8.5 billion compared to $8.8 billion for the first six months of 2023,
and gross profit was $2.3 billion and
$2.5 billion, respectively. As a
percentage of net sales, gross profit was 21.6% and 21.8% for the
first six months of 2024 and 2023, respectively. The unfavorable
decrease of 20 basis points reflects a shift in sales mix, lower
supplier volume rebates, higher inventory adjustments, and lower
cash discounts.
- SG&A expenses were $1,657.8
million, or 15.3% of net sales, for the first six months of
2024, compared to $1,649.4 million,
or 14.6% of net sales, for the first six months of 2023. SG&A
expenses for the first six months of 2024 include a $17.8 million loss on abandonment of assets,
$12.1 million of digital
transformation costs, $9.0 million of
restructuring costs, and $4.8 million
of excise taxes on excess pension plan assets. SG&A expenses
for first six months of 2023 include $15.6
million of digital transformation costs, $14.8 million of merger-related and integration
costs, and $9.8 million of
restructuring costs. Adjusted for the loss on abandonment of
assets, digital transformation costs, restructuring costs, and
excise taxes on excess pension plan assets, SG&A expenses were
$1,614.1 million, or 14.9% of net
sales, for the first six months of 2024. Adjusted for digital
transformation costs, merger-related and integration costs, and
restructuring costs, SG&A expenses were $1,609.2 million, or 14.3% of net sales for the
first six months of 2023. The increase in adjusted SG&A
expenses for the first six months of 2024 compared to the first six
months of 2023 reflects higher costs to operate our facilities, an
increase in IT costs, and an increase in taxes. These increases
were partially offset by a decrease in transportation costs and
lower payroll related expenses.
- Depreciation and amortization for the first six months of 2024
was $91.6 million compared to
$91.3 million for the first six
months of 2023, an increase of $0.3
million.
- Operating profit was $586.5
million for the first six months of 2024 compared to
$710.2 million for the first six
months of 2023, a decrease of $123.7
million, or 17.4%. Operating profit as a percentage of net
sales was 5.4% for the current six-month period compared to 6.3%
for the first six months of the prior year. Adjusted for the loss
on abandonment of assets, digital transformation costs,
restructuring costs, and excise taxes on excess pension plan assets
described above, operating profit was $630.2
million, or 5.8% of net sales, for the first six months of
2024. Adjusted for digital transformation costs, merger-related and
integration costs, restructuring costs, and accelerated trademark
amortization expense described above, operating profit was
$751.2 million, or 6.7% of net sales,
for the first six months of 2023.
- Net interest expense for the first six months of 2024 was
$193.2 million compared to
$193.8 million for the first six
months of 2023.
- Other non-operating income for the first six months of 2024 was
$74.3 million compared to expense of
$10.9 million for the first six
months of 2023. In the first six months of 2024, we completed the
divestiture of our WIS business and recognized a gain from the sale
of $102.9 million. Additionally, in
the first six months of 2024, we recognized a $3.8 million loss on termination of business
arrangement. Due to fluctuations in the U.S. dollar against certain
foreign currencies, a net foreign currency exchange loss of
$20.7 million was recognized for the
first six months of 2024 compared to a net loss of $13.2 million for the first six months of 2023.
Net costs of $5.5 million, comprising
pension settlement cost, and net benefits of $0.7 million associated with the non-service cost
components of net periodic pension (benefit) cost were recognized
for the six months ended June 30,
2024 and 2023, respectively. Adjusted for the gain on
divestiture of our WIS business, the loss on termination of
business arrangement, and pension settlement cost described above,
other non-operating expense was $19.3
million for the first six months of 2024.
- The effective tax rate for the first six months of 2024 was
25.4% compared to 22.9% for the first six months of 2023. The
effective tax rate for the first six months of 2024 was higher than
the comparable prior year 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 $319.2 million for the first six months of 2024
compared to $361.5 million for the
first six months of 2023. Adjusted for the loss on abandonment of
assets, digital transformation costs, restructuring costs, excise
taxes on excess pension plan assets, the gain recognized on the
divestiture of the WIS business, the loss on termination of
business arrangement, pension settlement cost, and the related
income tax effects, net income attributable to common stockholders
was $282.9 million for the first six
months of 2024. Adjusted for digital transformation costs,
merger-related and integration costs, restructuring costs,
accelerated trademark amortization expense, and the related income
tax effects, net income attributable to common stockholders for the
first six months of 2023 was $391.3
million. Adjusted net income attributable to common
stockholders decreased 27.7% year-over-year.
- Earnings per diluted share for the first six months of 2024 was
$6.22, based on 51.3 million diluted
shares, compared to $6.90 for the
first six months of 2023, based on 52.4 million diluted shares.
Adjusted for the loss on abandonment of assets, digital
transformation costs, restructuring costs, excise taxes on excess
pension plan assets, the gain recognized on the divestiture of the
WIS business, the loss on termination of business arrangement,
pension settlement cost, and the related income tax effects,
earnings per diluted share for the first six months of 2024 was
$5.51. Adjusted for digital
transformation costs, merger-related and integration costs,
restructuring costs, accelerated trademark amortization expense,
and the related income tax effects, earnings per diluted share for
the first six months of 2023 was $7.47. Adjusted earnings per diluted share
decreased 26.2% year-over-year.
- Operating cash flow for the first six months of 2024 was an
inflow of $522.5 million compared to
$62.2 million for the first six
months of 2023. Free cash flow for the first six months of 2024 was
$497.3 million, or 159.1% of adjusted
net income. The net cash inflow in the first six months of 2024 was
primarily driven by net income of $348.9
million and non-cash adjustments to net income totaling
$32.1 million. Operating cash flow
was positively impacted by net changes in assets and liabilities of
$141.6 million, which primarily
comprised an increase in accounts payable of $341.9 million, primarily due to the timing of
inventory purchases and payments to suppliers, and a decrease in
inventories of $18.9 million,
partially offset by an increase in trade accounts receivable of
$258.8 million due to the timing of
receipts from customers.
Webcast and Teleconference Access
Wesco will conduct a webcast and teleconference to discuss the
second quarter of 2024 earnings as described in this News Release
on Thursday, August 1, 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
|
|
|
June 30,
2024
|
|
|
June 30,
2023
|
|
|
Net sales
|
$
5,479.7
|
|
|
$
5,745.5
|
|
|
Cost of goods sold
(excluding depreciation and amortization)
|
4,281.7
|
78.1 %
|
|
4,503.1
|
78.4 %
|
|
Selling, general and
administrative expenses
|
828.4
|
15.1 %
|
|
831.7
|
14.5 %
|
|
Depreciation and
amortization
|
46.1
|
|
|
46.9
|
|
|
Income from
operations
|
323.5
|
5.9 %
|
|
363.8
|
6.3 %
|
|
Interest expense,
net
|
98.8
|
|
|
98.8
|
|
|
Other (income) expense,
net
|
(95.9)
|
|
|
0.8
|
|
|
Income before income
taxes
|
320.6
|
5.9 %
|
|
264.2
|
4.6 %
|
|
Provision for income
taxes
|
87.8
|
|
|
71.8
|
|
|
Net income
|
232.8
|
4.2 %
|
|
192.4
|
3.3 %
|
|
Net income (loss)
attributable to noncontrolling interests
|
0.7
|
|
|
(0.7)
|
|
|
Net income attributable
to WESCO International, Inc.
|
232.1
|
4.2 %
|
|
193.1
|
3.4 %
|
|
Preferred stock
dividends
|
14.4
|
|
|
14.4
|
|
|
Net income attributable
to common stockholders
|
$
217.7
|
4.0 %
|
|
$
178.7
|
3.1 %
|
|
|
|
|
|
|
|
Earnings per diluted
share attributable to common stockholders
|
$
4.28
|
|
|
$
3.41
|
|
|
Weighted-average common
shares outstanding and common share
equivalents used in computing earnings per diluted common
share
|
50.9
|
|
|
52.4
|
|
|
WESCO INTERNATIONAL,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(in millions, except
per share amounts)
(Unaudited)
|
|
|
Six Months
Ended
|
|
|
June 30,
2024
|
|
|
June 30,
2023
|
|
|
Net sales
|
$
10,829.7
|
|
|
$
11,267.4
|
|
|
Cost of goods sold
(excluding depreciation and amortization)
|
8,493.8
|
78.4 %
|
|
8,816.5
|
78.2 %
|
|
Selling, general and
administrative expenses
|
1,657.8
|
15.3 %
|
|
1,649.4
|
14.6 %
|
|
Depreciation and
amortization
|
91.6
|
|
|
91.3
|
|
|
Income from
operations
|
586.5
|
5.4 %
|
|
710.2
|
6.3 %
|
|
Interest expense,
net
|
193.2
|
|
|
193.8
|
|
|
Other (income) expense,
net
|
(74.3)
|
|
|
10.9
|
|
|
Income before income
taxes
|
467.6
|
4.3 %
|
|
505.5
|
4.5 %
|
|
Provision for income
taxes
|
118.7
|
|
|
115.9
|
|
|
Net income
|
348.9
|
3.2 %
|
|
389.6
|
3.5 %
|
|
Net income (loss)
attributable to noncontrolling interests
|
1.0
|
|
|
(0.6)
|
|
|
Net income attributable
to WESCO International, Inc.
|
347.9
|
3.2 %
|
|
390.2
|
3.5 %
|
|
Preferred stock
dividends
|
28.7
|
|
|
28.7
|
|
|
Net income attributable
to common stockholders
|
$
319.2
|
2.9 %
|
|
$
361.5
|
3.2 %
|
|
|
|
|
|
|
|
Earnings per diluted
share attributable to common stockholders
|
$
6.22
|
|
|
$
6.90
|
|
|
Weighted-average common
shares outstanding and common share
equivalents used in computing earnings per diluted common
share
|
51.3
|
|
|
52.4
|
|
|
WESCO INTERNATIONAL,
INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(dollar amounts in
millions)
(Unaudited)
|
|
|
As of
|
|
June 30,
2024
|
|
December 31,
2023
|
|
Assets
|
|
|
|
|
Current
Assets
|
|
|
|
|
Cash and cash
equivalents
|
$
716.5
|
|
$
524.1
|
|
Trade accounts
receivable, net
|
3,654.6
|
|
3,639.5
|
|
Inventories
|
3,505.8
|
|
3,572.1
|
|
Other current
assets
|
659.2
|
|
655.9
|
|
Total current assets
|
8,536.1
|
|
8,391.6
|
|
|
|
|
|
Goodwill and intangible
assets
|
5,019.5
|
|
5,119.9
|
|
Other assets
|
1,552.9
|
|
1,549.4
|
|
Total assets
|
$
15,108.5
|
|
$
15,060.9
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Accounts
payable
|
$
2,688.9
|
|
$
2,431.5
|
|
Short-term debt and
current portion of long-term debt, net
|
13.8
|
|
8.6
|
|
Other current
liabilities
|
1,045.6
|
|
948.3
|
|
Total current liabilities
|
3,748.3
|
|
3,388.4
|
|
|
|
|
|
Long-term debt,
net
|
5,203.4
|
|
5,313.1
|
|
Other noncurrent
liabilities
|
1,305.5
|
|
1,327.5
|
|
Total liabilities
|
10,257.2
|
|
10,029.0
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
Total stockholders' equity
|
4,851.3
|
|
5,031.9
|
|
Total liabilities and stockholders' equity
|
$
15,108.5
|
|
$
15,060.9
|
|
WESCO INTERNATIONAL,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollar amounts in
millions)
(Unaudited)
|
|
|
Six Months
Ended
|
|
June 30,
2024
|
|
June 30,
2023
|
|
Operating
Activities:
|
|
|
|
|
Net income
|
$
348.9
|
|
$
389.6
|
|
Add back
(deduct):
|
|
|
|
|
Depreciation and
amortization
|
91.6
|
|
91.3
|
|
Deferred income
taxes
|
(7.2)
|
|
16.2
|
|
Gain on
divestiture
|
(102.9)
|
|
—
|
|
Loss on abandonment of
assets
|
17.8
|
|
—
|
|
Change in trade
receivables, net
|
(258.8)
|
|
(162.9)
|
|
Change in
inventories
|
18.9
|
|
(73.9)
|
|
Change in accounts
payable
|
341.9
|
|
(78.6)
|
|
Other, net
|
72.3
|
|
(119.5)
|
|
Net cash provided by
operating activities
|
522.5
|
|
62.2
|
|
|
|
|
|
Investing
Activities:
|
|
|
|
|
Capital
expenditures
|
(41.2)
|
|
(44.3)
|
|
Acquisition
payments
|
(30.1)
|
|
—
|
|
Proceeds from
divestiture, net of cash transferred
|
334.2
|
|
—
|
|
Other, net
|
6.2
|
|
0.6
|
|
Net cash provided by
(used in) investing activities
|
269.1
|
|
(43.7)
|
|
|
|
|
|
Financing
Activities:
|
|
|
|
|
Debt (repayments)
borrowings, net(1)
|
(118.3)
|
|
104.2
|
|
Payments for taxes
related to net-share settlement of equity awards
|
(26.0)
|
|
(54.2)
|
|
Repurchases of common
stock
|
(350.0)
|
|
—
|
|
Payment of common
stock dividends
|
(41.2)
|
|
(38.4)
|
|
Payment of preferred
stock dividends
|
(28.7)
|
|
(28.7)
|
|
Debt issuance
costs
|
(26.6)
|
|
—
|
|
Other, net
|
9.4
|
|
(3.3)
|
|
Net cash used in
financing activities
|
(581.4)
|
|
(20.4)
|
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents
|
(17.8)
|
|
3.6
|
|
|
|
|
|
Net change in cash and
cash equivalents
|
192.4
|
|
1.7
|
|
Cash and cash
equivalents at the beginning of the period
|
524.1
|
|
527.3
|
|
Cash and cash
equivalents at the end of the period
|
$
716.5
|
|
$
529.0
|
|
|
|
(1)
|
The six months ended
June 30, 2024 includes the issuance of the Company's $900.0
million aggregate principal amount of 6.375% Senior Notes due 2029
and (the "2029 Notes") and the Company's $850.0 million aggregate
principal amount of 6.625% Senior Notes due 2032 (the "2032 Notes"
and, together with the 2029 Notes, the "2029 and 2032 Notes"). The
proceeds from the issuance of the 2029 and 2032 Notes were used for
the redemption of the Company's $1,500.0 million aggregate
principal amount of 7.125% Senior Notes due 2025 (the "2025
Notes"). The six months ended June 30, 2023 includes the
repayment of the Company's $58.6 million aggregate principal amount
of 5.50% Anixter Senior Notes due 2023 (the "Anixter 2023 Senior
Notes"). The repayment of the Anixter 2023 Senior Notes was funded
with borrowings under the Company's revolving credit
facility.
|
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, loss on abandonment of assets, the
gain recognized on the divestiture of the WIS business, the loss on
termination of business arrangement, 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)
|
|
June 30,
2024
|
|
June 30,
2023
|
|
Reported
|
|
Divestiture
|
|
Foreign
Exchange
|
|
Workday
|
|
Organic
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EES
|
$
2,172.9
|
|
$
2,200.3
|
|
(1.2) %
|
|
— %
|
|
(0.6) %
|
|
— %
|
|
(0.6) %
|
|
CSS
|
1,865.9
|
|
1,850.9
|
|
0.8 %
|
|
— %
|
|
(0.3) %
|
|
— %
|
|
1.1 %
|
|
UBS
|
1,440.9
|
|
1,694.3
|
|
(15.0) %
|
|
(11.9) %
|
|
(0.1) %
|
|
— %
|
|
(3.0) %
|
|
Total net
sales
|
$
5,479.7
|
|
$
5,745.5
|
|
(4.6) %
|
|
(3.5) %
|
|
(0.3) %
|
|
— %
|
|
(0.8) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic Sales Growth
by Segment - Six Months Ended:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
Growth/(Decline)
|
|
June 30,
2024
|
|
June 30,
2023
|
|
Reported
|
|
Divestiture
|
|
Foreign
Exchange
|
|
Workday
|
|
Organic
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EES
|
$
4,271.9
|
|
$
4,335.4
|
|
(1.5) %
|
|
— %
|
|
(0.3) %
|
|
— %
|
|
(1.2) %
|
|
CSS
|
3,536.0
|
|
3,582.9
|
|
(1.3) %
|
|
— %
|
|
(0.1) %
|
|
— %
|
|
(1.2) %
|
|
UBS
|
3,021.8
|
|
3,349.1
|
|
(9.8) %
|
|
(6.0) %
|
|
— %
|
|
— %
|
|
(3.8) %
|
|
Total net
sales
|
$
10,829.7
|
|
$
11,267.4
|
|
(3.9) %
|
|
(1.8) %
|
|
(0.1) %
|
|
— %
|
|
(2.0) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic Sales Growth
by Segment - Sequential:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Growth/(Decline)
|
|
June 30,
2024
|
|
March 31,
2024
|
|
Reported
|
|
Divestiture
|
|
Foreign
Exchange
|
|
Workday
|
|
Organic
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EES
|
$
2,172.9
|
|
$
2,099.0
|
|
3.5 %
|
|
— %
|
|
(0.4) %
|
|
1.6 %
|
|
2.3 %
|
|
CSS
|
1,865.9
|
|
1,670.1
|
|
11.7 %
|
|
— %
|
|
(0.3) %
|
|
1.6 %
|
|
10.4 %
|
|
UBS
|
1,440.9
|
|
1,580.9
|
|
(8.9) %
|
|
(12.1) %
|
|
(0.2) %
|
|
1.6 %
|
|
1.8 %
|
|
Total net
sales
|
$
5,479.7
|
|
$
5,350.0
|
|
2.4 %
|
|
(3.6) %
|
|
(0.3) %
|
|
1.6 %
|
|
4.7 %
|
|
|
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 second quarter and first
six months of 2024 compared to the second quarter and first six
months of 2023. The second quarter of 2024 had one additional
workday compared to the first quarter of 2024.
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
Gross
Profit:
|
June 30,
2024
|
|
June 30,
2023
|
|
June 30,
2024
|
|
June 30,
2023
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
5,479.7
|
|
$
5,745.5
|
|
$ 10,829.7
|
|
$ 11,267.4
|
|
Cost of goods sold
(excluding depreciation and amortization)
|
4,281.7
|
|
4,503.1
|
|
8,493.8
|
|
8,816.5
|
|
Gross profit
|
$
1,198.0
|
|
$
1,242.4
|
|
$
2,335.9
|
|
$
2,450.9
|
|
Gross margin
|
21.9 %
|
|
21.6 %
|
|
21.6 %
|
|
21.8 %
|
|
WESCO
INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(in millions, except
per share amounts)
(Unaudited)
|
|
|
Three Months
Ended
|
|
Gross
Profit:
|
|
March 31,
2024
|
|
|
|
|
Net sales
|
|
$
5,350.0
|
|
Cost of goods sold
(excluding depreciation and amortization)
|
|
4,212.1
|
|
Gross profit
|
|
$
1,137.9
|
|
Gross margin
|
|
21.3 %
|
|
|
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.
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June 30,
2024
|
|
June 30,
2023
|
|
June 30,
2024
|
|
June 30,
2023
|
|
Adjusted SG&A
Expenses:
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
$
828.4
|
|
$
831.7
|
|
$
1,657.8
|
|
$
1,649.4
|
|
Loss on abandonment of
assets(1)
|
(17.8)
|
|
—
|
|
(17.8)
|
|
—
|
|
Digital transformation
costs(2)
|
(6.1)
|
|
(7.3)
|
|
(12.1)
|
|
(15.6)
|
|
Restructuring
costs(3)
|
(0.9)
|
|
(9.8)
|
|
(9.0)
|
|
(9.8)
|
|
Excise taxes on excess
pension plan assets(4)
|
—
|
|
—
|
|
(4.8)
|
|
—
|
|
Merger-related and
integration costs(5)
|
—
|
|
(3.6)
|
|
—
|
|
(14.8)
|
|
Adjusted selling,
general and administrative expenses
|
$
803.6
|
|
$
811.0
|
|
$
1,614.1
|
|
$
1,609.2
|
|
Percentage of net
sales
|
14.7 %
|
|
14.1 %
|
|
14.9 %
|
|
14.3 %
|
|
|
|
|
|
|
|
|
|
Adjusted Income from
Operations:
|
|
|
|
|
|
|
|
|
Income from
operations
|
$
323.5
|
|
$
363.8
|
|
$
586.5
|
|
$
710.2
|
|
Loss on abandonment of
assets(1)
|
17.8
|
|
—
|
|
17.8
|
|
—
|
|
Digital transformation
costs(2)
|
6.1
|
|
7.3
|
|
12.1
|
|
15.6
|
|
Restructuring
costs(3)
|
0.9
|
|
9.8
|
|
9.0
|
|
9.8
|
|
Excise taxes on excess
pension plan assets(4)
|
—
|
|
—
|
|
4.8
|
|
—
|
|
Merger-related and
integration costs(5)
|
—
|
|
3.6
|
|
—
|
|
14.8
|
|
Accelerated trademark
amortization(6)
|
—
|
|
0.8
|
|
—
|
|
0.8
|
|
Adjusted income from
operations
|
$
348.3
|
|
$
385.3
|
|
$
630.2
|
|
$
751.2
|
|
Adjusted income from
operations margin %
|
6.4 %
|
|
6.7 %
|
|
5.8 %
|
|
6.7 %
|
|
|
|
|
|
|
|
|
|
Adjusted Other
(Income) Expense, net:
|
|
|
|
|
|
|
|
|
Other (income) expense,
net
|
$
(95.9)
|
|
$
0.8
|
|
$
(74.3)
|
|
$
10.9
|
|
Gain on
divestiture
|
102.9
|
|
—
|
|
102.9
|
|
—
|
|
Loss on termination of
business arrangement(7)
|
(3.8)
|
|
—
|
|
(3.8)
|
|
—
|
|
Pension settlement
cost(8)
|
—
|
|
—
|
|
(5.5)
|
|
—
|
|
Adjusted other (income)
expense, net
|
$
3.2
|
|
$
0.8
|
|
$
19.3
|
|
$
10.9
|
|
|
|
|
|
|
|
|
|
Adjusted Provision
for Income Taxes:
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
$
87.8
|
|
$
71.8
|
|
$
118.7
|
|
$
115.9
|
|
Income tax effect of
adjustments to income from operations(9)
|
(20.1)
|
|
5.9
|
|
(13.6)
|
|
11.2
|
|
Adjusted provision for
income taxes
|
$
67.7
|
|
$
77.7
|
|
$
105.1
|
|
$
127.1
|
|
WESCO
INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(in millions, except
per share amounts)
(Unaudited)
|
|
|
|
(1)
|
Loss on abandonment of
assets represents the write-off of certain capitalized cloud
computing arrangement implementation costs relating to a
third-party developed operations management software product in
favor of an application with functionality that better suits the
Company's operations.
|
|
(2)
|
Digital transformation
costs include costs associated with certain digital transformation
initiatives.
|
|
(3)
|
Restructuring costs
include severance costs incurred pursuant to an ongoing
restructuring plan.
|
|
(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)
|
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.
|
|
(6)
|
Accelerated trademark
amortization represents additional amortization expense resulting
from changes in the estimated useful lives of certain legacy
trademarks that have migrated to our master brand
architecture.
|
|
(7)
|
Loss on termination of
business arrangement represents the loss recognized as a result of
management's decision to terminate a business arrangement with a
third party.
|
|
(8)
|
Pension settlement cost
represents expense related to the final settlement of the Company's
U.S. pension plan.
|
|
(9)
|
The adjustments to
income from operations have been tax effected at a rate of
approximately 27% for the three and six months ended June 30,
2024, and 2023, respectively.
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
Adjusted Earnings
per Diluted Share:
|
June 30,
2024
|
|
June 30,
2023
|
|
June 30,
2024
|
|
June 30,
2023
|
|
|
|
|
|
|
|
|
|
Adjusted income from
operations
|
$
348.3
|
|
$
385.3
|
|
$
630.2
|
|
$
751.2
|
|
Interest expense,
net
|
98.8
|
|
98.8
|
|
193.2
|
|
193.8
|
|
Adjusted other
expense, net
|
3.2
|
|
0.8
|
|
19.3
|
|
10.9
|
|
Adjusted income before
income taxes
|
246.3
|
|
285.7
|
|
417.7
|
|
546.5
|
|
Adjusted provision for
income taxes
|
67.7
|
|
77.7
|
|
105.1
|
|
127.1
|
|
Adjusted net
income
|
178.6
|
|
208.0
|
|
312.6
|
|
419.4
|
|
Net income (loss)
attributable to noncontrolling interests
|
0.7
|
|
(0.7)
|
|
1.0
|
|
(0.6)
|
|
Adjusted net income
attributable to WESCO International, Inc.
|
177.9
|
|
208.7
|
|
311.6
|
|
420.0
|
|
Preferred stock
dividends
|
14.4
|
|
14.4
|
|
28.7
|
|
28.7
|
|
Adjusted net income
attributable to common stockholders
|
$
163.5
|
|
$
194.3
|
|
$
282.9
|
|
$
391.3
|
|
|
|
|
|
|
|
|
|
Diluted
shares
|
50.9
|
|
52.4
|
|
51.3
|
|
52.4
|
|
Adjusted earnings per
diluted share
|
$
3.21
|
|
$
3.71
|
|
$
5.51
|
|
$
7.47
|
|
|
Note: For the three and
six months ended June 30, 2024, SG&A expenses, income from
operations, other non-operating (income) expense, the provision for
income taxes and earnings per diluted share have been adjusted to
exclude the loss on abandonment of assets, digital transformation
costs, restructuring costs, excise taxes on excess pension plan
assets related to the final settlement of the Anixter Inc. Pension
Plan, the gain recognized on the divestiture of the WIS business,
the loss on termination of business arrangement, pension settlement
cost, and the related income tax effects. For the three and six
months ended June 30, 2023, SG&A expenses, income from
operations, the provision for income taxes and earnings per diluted
share have been adjusted to exclude digital transformation costs,
merger-related and integration costs, restructuring costs,
accelerated amortization expense, 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
June 30, 2024
|
|
EBITDA and Adjusted
EBITDA by Segment:
|
|
EES
|
|
CSS
|
|
UBS
|
|
Corporate
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
|
$
179.3
|
|
$
114.3
|
|
$
268.5
|
|
$ (344.4)
|
|
$
217.7
|
|
Net income (loss)
attributable to noncontrolling interests
|
|
0.1
|
|
0.7
|
|
—
|
|
(0.1)
|
|
0.7
|
|
Preferred stock
dividends
|
|
—
|
|
—
|
|
—
|
|
14.4
|
|
14.4
|
|
Provision for income
taxes(1)
|
|
—
|
|
—
|
|
—
|
|
87.8
|
|
87.8
|
|
Interest expense,
net(1)
|
|
—
|
|
—
|
|
—
|
|
98.8
|
|
98.8
|
|
Depreciation and
amortization
|
|
11.4
|
|
18.2
|
|
7.4
|
|
9.1
|
|
46.1
|
|
EBITDA
|
|
$
190.8
|
|
$
133.2
|
|
$
275.9
|
|
$
(134.4)
|
|
$
465.5
|
|
Other expense
(income), net
|
|
3.0
|
|
16.0
|
|
(103.2)
|
|
(11.7)
|
|
(95.9)
|
|
Stock-based
compensation expense
|
|
1.1
|
|
1.6
|
|
0.8
|
|
(0.8)
|
|
2.7
|
|
Loss on abandonment of
assets(2)
|
|
—
|
|
—
|
|
—
|
|
17.8
|
|
17.8
|
|
Digital transformation
costs(3)
|
|
—
|
|
—
|
|
—
|
|
6.1
|
|
6.1
|
|
Cloud computing
arrangement amortization(4)
|
|
—
|
|
—
|
|
—
|
|
3.0
|
|
3.0
|
|
Restructuring
costs(5)
|
|
—
|
|
—
|
|
—
|
|
0.9
|
|
0.9
|
|
Adjusted
EBITDA
|
|
$
194.9
|
|
$
150.8
|
|
$
173.5
|
|
$
(119.1)
|
|
$
400.1
|
|
Adjusted EBITDA
margin %
|
|
9.0 %
|
|
8.1 %
|
|
12.0 %
|
|
|
|
7.3 %
|
|
|
|
(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)
|
Loss on abandonment of
assets represents the write-off of certain capitalized cloud
computing arrangement implementation costs relating to a
third-party developed operations management software product in
favor of an application with functionality that better suits the
Company's operations.
|
|
(3)
|
Digital transformation
costs include costs associated with certain digital transformation
initiatives.
|
|
(4)
|
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.
|
|
(5)
|
Restructuring costs
include severance costs incurred pursuant to an ongoing
restructuring plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, 2023
|
|
EBITDA and Adjusted
EBITDA by Segment:
|
|
EES
|
|
CSS
|
|
UBS
|
|
Corporate
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
|
$
167.0
|
|
$
132.2
|
|
$
183.1
|
|
$ (303.6)
|
|
$
178.7
|
|
Net (loss) income
attributable to noncontrolling interests
|
|
(0.7)
|
|
0.1
|
|
—
|
|
(0.1)
|
|
(0.7)
|
|
Preferred stock
dividends
|
|
—
|
|
—
|
|
—
|
|
14.4
|
|
14.4
|
|
Provision for income
taxes(1)
|
|
—
|
|
—
|
|
—
|
|
71.8
|
|
71.8
|
|
Interest expense,
net(1)
|
|
—
|
|
—
|
|
—
|
|
98.8
|
|
98.8
|
|
Depreciation and
amortization
|
|
11.5
|
|
17.9
|
|
6.4
|
|
11.1
|
|
46.9
|
|
EBITDA
|
|
$
177.8
|
|
$
150.2
|
|
$
189.5
|
|
$
(107.6)
|
|
$
409.9
|
|
Other expense
(income), net
|
|
9.8
|
|
27.7
|
|
(1.7)
|
|
(35.0)
|
|
0.8
|
|
Stock-based
compensation expense(2)
|
|
1.4
|
|
1.6
|
|
0.8
|
|
7.1
|
|
10.9
|
|
Restructuring
costs(3)
|
|
—
|
|
—
|
|
—
|
|
9.8
|
|
9.8
|
|
Digital transformation
costs(4)
|
|
—
|
|
—
|
|
—
|
|
7.3
|
|
7.3
|
|
Merger-related and
integration costs(5)
|
|
—
|
|
—
|
|
—
|
|
3.6
|
|
3.6
|
|
Adjusted
EBITDA
|
|
$
189.0
|
|
$
179.5
|
|
$
188.6
|
|
$
(114.8)
|
|
$
442.3
|
|
Adjusted EBITDA
margin %
|
|
8.6 %
|
|
9.7 %
|
|
11.1 %
|
|
|
|
7.7 %
|
|
|
|
(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 June 30, 2023 excludes $1.3 million
that is included in merger-related and integration
costs.
|
|
(3)
|
Restructuring costs
include severance costs incurred pursuant to an ongoing
restructuring plan.
|
|
(4)
|
Digital transformation
costs include costs associated with certain digital transformation
initiatives.
|
|
(5)
|
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.
|
|
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 (loss) income
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.
|
|
|
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 June 30, 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, loss on abandonment of assets, digital transformation
costs, cloud computing arrangement amortization, and restructuring
costs. For the three months ended June 30, 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, restructuring costs, digital
transformation costs, and merger-related and integration costs. 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. Adjusted EBITDA margin % is
calculated by dividing Adjusted EBITDA by net sales.
|
|
WESCO
INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(in millions, except
per share amounts)
(Unaudited)
|
|
|
|
Six Months Ended
June 30, 2024
|
|
EBITDA and Adjusted
EBITDA by Segment:
|
|
EES
|
|
CSS
|
|
UBS
|
|
Corporate
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
|
$
327.5
|
|
$
202.7
|
|
$
429.3
|
|
$
(640.3)
|
|
$
319.2
|
|
Net (loss) income
attributable to noncontrolling interests
|
|
(0.3)
|
|
1.0
|
|
—
|
|
0.3
|
|
1.0
|
|
Preferred stock
dividends
|
|
—
|
|
—
|
|
—
|
|
28.7
|
|
28.7
|
|
Provision for income
taxes(1)
|
|
—
|
|
—
|
|
—
|
|
118.7
|
|
118.7
|
|
Interest expense,
net(1)
|
|
—
|
|
—
|
|
—
|
|
193.2
|
|
193.2
|
|
Depreciation and
amortization
|
|
22.7
|
|
36.2
|
|
14.4
|
|
18.3
|
|
91.6
|
|
EBITDA
|
|
$
349.9
|
|
$
239.9
|
|
$
443.7
|
|
$
(281.1)
|
|
$
752.4
|
|
Other expense
(income), net
|
|
8.7
|
|
34.8
|
|
(102.4)
|
|
(15.4)
|
|
(74.3)
|
|
Stock-based
compensation expense
|
|
2.1
|
|
3.3
|
|
1.6
|
|
5.8
|
|
12.8
|
|
Loss on abandonment of
assets(2)
|
|
—
|
|
—
|
|
—
|
|
17.8
|
|
17.8
|
|
Digital transformation
costs(3)
|
|
—
|
|
—
|
|
—
|
|
12.1
|
|
12.1
|
|
Restructuring
costs(4)
|
|
—
|
|
—
|
|
—
|
|
9.0
|
|
9.0
|
|
Cloud computing
arrangement amortization(5)
|
|
—
|
|
—
|
|
—
|
|
5.9
|
|
5.9
|
|
Excise taxes on excess
pension plan assets(5)
|
|
—
|
|
—
|
|
—
|
|
4.8
|
|
4.8
|
|
Adjusted
EBITDA
|
|
$
360.7
|
|
$
278.0
|
|
$
342.9
|
|
$
(241.1)
|
|
$
740.5
|
|
Adjusted EBITDA
margin %
|
|
8.4 %
|
|
7.9 %
|
|
11.3 %
|
|
|
|
6.8 %
|
|
|
|
(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)
|
Loss on abandonment of
assets represents the write-off of certain capitalized cloud
computing arrangement implementation costs relating to a
third-party developed operations management software product in
favor of an application with functionality that better suits the
Company's operations.
|
|
(3)
|
Digital transformation
costs include costs associated with certain digital transformation
initiatives.
|
|
(4)
|
Restructuring costs
include severance costs incurred pursuant to an ongoing
restructuring 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)
|
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30, 2023
|
|
EBITDA and Adjusted
EBITDA by Segment:
|
|
EES
|
|
CSS
|
|
UBS
|
|
Corporate
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
|
$
338.3
|
|
$
267.6
|
|
$
363.4
|
|
$
(607.8)
|
|
$
361.5
|
|
Net (loss)
income attributable to noncontrolling interests
|
|
(0.8)
|
|
0.3
|
|
—
|
|
(0.1)
|
|
(0.6)
|
|
Preferred stock
dividends
|
|
—
|
|
—
|
|
—
|
|
28.7
|
|
28.7
|
|
Provision for income
taxes(1)
|
|
—
|
|
—
|
|
—
|
|
115.9
|
|
115.9
|
|
Interest expense,
net(1)
|
|
—
|
|
—
|
|
—
|
|
193.8
|
|
193.8
|
|
Depreciation and
amortization
|
|
21.4
|
|
35.9
|
|
12.4
|
|
21.6
|
|
91.3
|
|
EBITDA
|
|
$
358.9
|
|
$
303.8
|
|
$
375.8
|
|
$
(247.9)
|
|
$
790.6
|
|
Other expense
(income), net
|
|
10.3
|
|
28.5
|
|
(1.1)
|
|
(26.8)
|
|
10.9
|
|
Stock-based
compensation expense(2)
|
|
2.8
|
|
2.7
|
|
1.6
|
|
14.2
|
|
21.3
|
|
Digital transformation
costs(3)
|
|
—
|
|
—
|
|
—
|
|
15.6
|
|
15.6
|
|
Merger-related and
integration costs(4)
|
|
—
|
|
—
|
|
—
|
|
14.8
|
|
14.8
|
|
Restructuring
costs(5)
|
|
—
|
|
—
|
|
—
|
|
9.8
|
|
9.8
|
|
Adjusted
EBITDA
|
|
$
372.0
|
|
$
335.0
|
|
$
376.3
|
|
$
(220.3)
|
|
$
863.0
|
|
Adjusted EBITDA
margin %
|
|
8.6 %
|
|
9.3 %
|
|
11.2 %
|
|
|
|
7.7 %
|
|
|
|
(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
six months ended June 30, 2023 excludes $2.6 million that
is included in merger-related and integration costs.
|
|
(3)
|
Digital transformation
costs include costs associated with certain digital transformation
initiatives.
|
|
(4)
|
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.
|
|
(5)
|
Restructuring costs
include severance costs incurred pursuant to an ongoing
restructuring plan.
|
|
|
WESCO
INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(in millions, except
per share amounts)
(Unaudited)
|
|
Note: 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 six months ended June 30,
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, loss
on abandonment of assets, 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 six months
ended June 30, 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.
|
|
WESCO
INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(in millions, except
per share amounts)
(Unaudited)
|
|
|
Twelve Months
Ended
|
|
Financial
Leverage:
|
June 30,
2024
|
|
December 31,
2023
|
|
|
|
|
|
Net income
attributable to common stockholders
|
$
665.9
|
|
$
708.1
|
|
Net income
attributable to noncontrolling interests
|
2.2
|
|
0.6
|
|
Preferred stock
dividends
|
57.4
|
|
57.4
|
|
Provision for income
taxes
|
228.7
|
|
225.9
|
|
Interest expense,
net
|
388.7
|
|
389.3
|
|
Depreciation and
amortization
|
181.5
|
|
181.3
|
|
EBITDA
|
$
1,524.4
|
|
$
1,562.6
|
|
Other (income)
expense, net
|
(60.1)
|
|
25.1
|
|
Stock-based
compensation expense
|
36.9
|
|
45.5
|
|
Merger-related and
integration costs(1)
|
4.4
|
|
19.3
|
|
Restructuring
costs(2)
|
15.9
|
|
16.7
|
|
Digital transformation
costs(3)
|
32.6
|
|
36.1
|
|
Excise taxes on excess
pension plan assets(4)
|
4.8
|
|
—
|
|
Loss on abandonment of
assets(5)
|
17.8
|
|
—
|
|
Cloud computing
arrangement amortization(6)
|
5.9
|
|
—
|
|
Adjusted
EBITDA
|
$
1,582.6
|
|
$
1,705.3
|
|
|
|
|
|
As of
|
|
June 30,
2024
|
|
December 31,
2023
|
|
Short-term debt and
current portion of long-term debt, net
|
$
13.8
|
|
$
8.6
|
|
Long-term debt,
net
|
5,203.4
|
|
5,313.1
|
|
Debt discount and debt
issuance costs(7)
|
54.0
|
|
43.0
|
|
Fair value adjustments
to Anixter Senior Notes due 2023 and 2025(7)
|
(0.1)
|
|
(0.1)
|
|
Total debt
|
5,271.1
|
|
5,364.6
|
|
Less: Cash and cash
equivalents
|
716.5
|
|
524.1
|
|
Total debt, net of
cash
|
$
4,554.6
|
|
$
4,840.5
|
|
|
|
|
|
Financial leverage
ratio
|
2.9
|
|
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)
|
Loss on abandonment of
assets represents the write-off of certain capitalized cloud
computing arrangement implementation costs relating to a
third-party developed operations management software product in
favor of an application with functionality that better suits the
Company's operations.
|
|
(6)
|
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.
|
|
(7)
|
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.
|
|
|
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, restructuring costs, digital transformation
costs, excise taxes on excess pension plan assets related to the
final settlement of the Anixter Inc. Pension Plan, loss on
abandonment of assets, and cloud computing arrangement
amortization.
|
|
WESCO
INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(in millions, except
per share amounts)
(Unaudited)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
Free Cash
Flow:
|
June 30,
2024
|
|
June 30,
2023
|
|
June 30,
2024
|
|
June 30,
2023
|
|
|
|
|
|
|
|
|
|
Cash flow (used in)
provided by operations
|
$
(223.8)
|
|
$
317.6
|
|
$
522.5
|
|
$
62.2
|
|
Less: Capital
expenditures
|
(20.8)
|
|
(30.4)
|
|
(41.2)
|
|
(44.3)
|
|
Add: Other
adjustments
|
10.5
|
|
6.0
|
|
16.0
|
|
9.4
|
|
Free cash
flow
|
$
(234.1)
|
|
$
293.2
|
|
$
497.3
|
|
$
27.3
|
|
Percentage of adjusted
net income
|
(131.1) %
|
|
141.0 %
|
|
159.1 %
|
|
6.5 %
|
|
|
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 and six months ended June 30, 2024, the Company paid
for certain costs related to digital transformation and
restructuring. For the three and six months ended June 30, 2023,
the Company paid for certain costs to integrate the acquired
Anixter business and related to digital transformation as well as
certain restructuring costs. 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
