- Net sales a record $5.7
billion, up 5% YOY
-
- Organic sales growth of 3% YOY
- Operating profit of $364
million; operating margin of 6.3%
-
- Adjusted EBITDA of $442
million, flat YOY; adjusted EBITDA margin of 7.7%
- Gross margin of 21.6%, down 10 basis points YOY
- Earnings per diluted share of $3.41
-
- Adjusted earnings per diluted share of $3.71, down 11% YOY
- Operating cash flow of $318
million
-
- Free cash flow of $293
million; 141% of adjusted net income
- Leverage of 2.8x; at lowest level since the Anixter merger
in June of 2020
PITTSBURGH, Aug. 3, 2023
/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
2023.
"The power of our portfolio and mix-shift into higher-growth
markets is clear in our record second quarter sales.
Continued strong growth and record sales in our CSS and UBS
businesses more than offset a quarterly drop in our EES business
that was largely the result of unprecedented supply chain
rebalancing in the electrical industry and select weakness in
certain sectors including commercial construction and manufactured
structures. Our long-term secular growth drivers remain
intact and are reflected in the continued sales growth in utility,
data centers, security, and industrial sectors. On the
strength of our industry leading customer value proposition, strong
cross-sell execution continued in the quarter, and we're raising
our sales synergy target from $1.8
billion to $2.0 billion," said
John Engel, Chairman, President and
CEO.
Mr. Engel continued, "Lead times for most product categories
have returned to 2019 levels. The extraordinary supply chain
disruptions and customer purchase patterns driven by the pandemic
over the last few years are now correcting with the rapid reduction
in supplier lead times. Against these supply chain
rebalancing conditions, our gross margins remain healthy and
stable. While economic conditions remain positive, we did see
pockets of underperformance in certain end markets served by our
EES business."
Mr. Engel added, "Even with increased overall sales in the
second quarter, our free cash flow generation of $293 million was strong and brought us into
positive territory for the half of fiscal 2023 - back in line with
our expectations. During the second quarter we reduced
inventories and paid down debt. Our financial leverage now
stands at 2.8x, near the mid-point of our target range and at the
lowest level since the Anixter acquisition in June 2020.
Given our anticipated free cash flow generation in the second half
of fiscal 2023, we stand in a good position to use that cash flow
to increase value to our shareholders."
Mr. Engel concluded, "We remain confident in and focused on the
transformational steps we are taking to improve our digital
capabilities, capture market share, and create value for all our
stakeholders. We continue to invest in our digital
transformation plan, and we are working to deliver digital
capabilities to benefit our customers and supplier partners that
will be game-changing. We have already taken steps to address
the supply chain re-balancing in our EES business through a
$25 million annualized cost reduction
set of actions, taken in June that will begin to benefit our second
half. Given EES results in the second quarter, we are
revising our full year outlook, that still delivers record sales,
EBITDA and free cash flow at the midpoint. The power of
Wesco's scale, industry-leading positions, and expanded portfolio
of products, services and solutions positions us to capture the
benefits of enduring secular growth trends as well anticipated
increased infrastructure investments in North America. We are
committed to and remain confident in our ability to deliver the
financial objectives presented at our Investor Day including
long-term margin expansion, profit growth and cash generation
targets."
2023 Outlook Update:
Wesco is now expecting reported net sales growth of 5%-7% versus
6%-9% prior largely driven by market weakness in certain sectors of
the Electrical and Electronic Solutions business unit. EBITDA
margins are forecast to be 7.8%-8.0% versus 8.1%-8.4% prior
primarily due to the lower sales range. At the mid-point of the
guidance range, adjusted EBITDA is approximately $1.8 billion versus $1.9
billion prior. Earnings per share is now forecast to be
$15.00-$16.00. The company's free cash flow outlook is
$500-$700
million.
The following are results for the three months ended
June 30, 2023 compared to the three months ended June 30,
2022:
- Net sales were $5.7 billion for
the second quarter of 2023 compared to $5.5
billion for the second quarter of 2022, an increase of 4.8%,
reflecting price inflation, volume growth (driven in part by
secular demand trends and the execution of our cross-sell program),
and an improving supply chain. Organic sales for the second quarter
of 2023 grew by 2.8% as the acquisition of Rahi Systems, which
closed in November of 2022, positively impacted reported net sales
by 2.7%, while fluctuations in foreign exchange rates negatively
impacted reported net sales by 0.7%. Backlog at the end of the
second quarter of 2023 increased 6% compared to the end of the
second quarter of 2022. Sequentially, backlog declined slightly by
approximately 2%.
- Cost of goods sold for the second quarter of 2023 was
$4.5 billion compared to $4.3 billion for the second quarter of 2022, and
gross profit was $1.2 billion for
both periods. As a percentage of net sales, gross profit was 21.6%
and 21.7% for the second quarter of 2023 and 2022, respectively.
The slight decline in gross profit as a percentage of net sales for
the second quarter of 2023 primarily reflects a shift in sales mix.
The negative impact of the shift in sales mix was partially offset
by our continued focus on a strategy of pricing products and
services to realize the value that we provide to our customers as a
result of our broad portfolio of product and service offerings,
global footprint and capabilities ("value-driven pricing").
- Selling, general and administrative ("SG&A") expenses were
$831.7 million, or 14.5% of net
sales, for the second quarter of 2023, compared to $772.9 million, or 14.1% of net sales, for the
second quarter of 2022. SG&A expenses for the second quarter of
2023 and 2022 include merger-related and integration costs of
$10.9 million and $13.4 million, respectively. SG&A expenses
for the second quarter of 2023 also include $9.8 million of restructuring costs. Adjusted for
merger-related and integration costs and restructuring costs,
SG&A expenses were $811.0
million, or 14.1% of net sales, for the second quarter of
2023 and $759.5 million, or 13.9% of
net sales, for the second quarter of 2022. Adjusted SG&A
expenses for the second quarter of 2023 reflect higher salaries and
benefits due to wage inflation and increased headcount, including
the impact of the Rahi Systems acquisition, as well as an increase
in volume-related costs such as commissions and transportation.
Increased costs to operate our facilities and higher employee
expenses due to increased headcount also contributed to higher
SG&A expenses. In addition, digital transformation initiatives
contributed to higher expenses in the second quarter of 2023,
including those related to professional services and consulting
fees. These increases were partially offset by the realization of
integration cost synergies and a reduction to incentive
compensation expense.
- Depreciation and amortization for the second quarter of 2023
was $46.9 million compared to
$45.8 million for the second quarter
of 2022, an increase of $1.1 million.
In connection with an integration initiative to review the
Company's brand strategy, certain legacy trademarks are migrating
to a master brand architecture, which resulted in $0.8 million and $3.7
million of accelerated amortization expense for the second
quarter of 2023 and 2022, respectively.
- Operating profit was $363.8
million for the second quarter of 2023 compared to
$370.7 million for the second quarter
of 2022, a decrease of $6.9 million,
or 1.9%. Operating profit as a percentage of net sales was 6.3% for
the current quarter compared to 6.8% for the second quarter of the
prior year. Adjusted for the merger-related and integration costs,
restructuring costs, and accelerated trademark amortization
described above, operating profit was $385.3
million, or 6.7% of net sales, for the second quarter of
2023. Adjusted for merger-related and integration costs, and
accelerated trademark amortization, operating profit was
$387.8 million, or 7.1% of net sales,
for the second quarter of 2022.
- Net interest expense for the second quarter of 2023 was
$98.8 million compared to
$68.5 million for the second quarter
of 2022. The increase reflects higher borrowings and an increase in
variable interest rates.
- Other non-operating expense for the second quarter of 2023 was
$0.8 million compared to $1.2 million for the second quarter of 2022.
- The effective tax rate for the second quarter of 2023 was 27.2%
compared to 26.5% for the second quarter of 2022. The current
quarter and the comparable prior year period both reflect discrete
income tax benefits resulting from the exercise and vesting of
stock-based awards.
- Net income attributable to common stockholders was $178.7 million for the second quarter of 2023
compared to $206.3 million for the
second quarter of 2022. Adjusted for merger-related and integration
costs, restructuring 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 for merger-related and integration costs, accelerated
trademark amortization expense, and the related income tax effects,
net income attributable to common stockholders was $218.9 million for the second quarter of 2022.
Adjusted net income attributable to common stockholders decreased
11.2% year-over-year.
- Earnings per diluted share for the second quarter of 2023 was
$3.41, based on 52.4 million diluted
shares, compared to $3.95 for the
second quarter of 2022, based on 52.2 million diluted shares.
Adjusted for merger-related and integration costs, restructuring
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
for merger-related and integration costs, accelerated trademark
amortization expense, and the related income tax effects, earnings
per diluted share for the second quarter of 2022 was $4.19. Adjusted earnings per diluted share
decreased 11.5% year-over-year.
- Operating cash flow for the second quarter of 2023 was an
inflow of $317.6 million compared to
an outflow of $132.6 million for the
second quarter of 2022. Free cash flow for the second quarter of
2023 was $293.2 million, or 141% of
adjusted net income. The net cash inflow in the second quarter of
2023 was primarily driven by changes in working capital, including
a decrease in inventories of $149.9
million, partially offset by an increase in trade accounts
receivable of $29.4 million, due to
the sequential increase in net sales compared to the prior
quarter.
- Financial leverage ratio was 2.8 as of June 30, 2023, an improvement of 2.9 and at the
lowest level since the Anixter merger in June of 2020.
The following are results for the six months ended June 30,
2023 compared to the six months ended June 30, 2022:
- Net sales were $11.3 billion for
the first six months of 2023 compared to $10.4 billion for the first six months of 2022,
an increase of 8.2%, reflecting price inflation, volume growth
(driven in part by secular demand trends and the execution of our
cross-sell program), and an improving supply chain. Organic sales
for the first six months of 2023 grew by 6.6% as the acquisition of
Rahi Systems positively impacted reported net sales by 2.7%, while
fluctuations in foreign exchange rates negatively impacted reported
net sales by 1.1%.
- Cost of goods sold for the first six months of 2023 was
$8.8 billion compared to $8.2 billion for the first six months of 2022,
and gross profit was $2.5 billion and
$2.2 billion, respectively. As a
percentage of net sales, gross profit was 21.8% and 21.5% for the
first six months of 2023 and 2022, respectively. Gross profit as a
percentage of net sales for the first six months of 2023 reflects
our continued focus on value-driven pricing. Additionally,
pass-through of inflationary costs, along with the continued
momentum of our gross margin improvement program, contributed to
the increase in gross profit as a percentage of net sales.
- SG&A expenses were $1,649.4
million, or 14.6% of net sales, for the first six months of
2023, compared to $1,491.0 million,
or 14.3% of net sales, for the first six months of 2022. SG&A
expenses for the first six months of 2023 and 2022 include
merger-related and integration costs of $30.4 million and $39.0
million, respectively. SG&A expenses for first six
months of 2023 also include $9.8
million of restructuring costs. Adjusted for 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 and $1,452.0 million, or 13.9% of net sales for the
first six months of 2022. The increase in adjusted SG&A
expenses for the first six months of 2023 compared to the first six
months of 2022 reflects the same factors discussed above.
- Depreciation and amortization for the first six months of 2023
was $91.3 million compared to
$92.8 million for the first six
months of 2022, a decrease of $1.5
million. In connection with an integration initiative to
review the Company's brand strategy, certain legacy trademarks are
migrating to a master brand architecture, which resulted in
$0.8 million and $9.0 million of accelerated amortization expense
for the first six months of 2023 and 2022, respectively.
- Operating profit was $710.2
million for the first six months of 2023 compared to
$654.7 million for the first six
months of 2022, an increase of $55.5
million, or 8.5%. Operating profit as a percentage of net
sales was 6.3% for the first six months of 2023 and 2022. Adjusted
for the merger-related and integration costs, restructuring costs,
and accelerated trademark amortization described above, operating
profit was $751.2 million, or 6.7% of
net sales, for the first six months of 2023. Adjusted for
merger-related and integration costs, and accelerated trademark
amortization, operating profit was $702.7
million, or 6.7% of net sales, for the first six months of
2022.
- Net interest expense for the first six months of 2023 was
$193.8 million compared to
$132.1 million for the first six
months of 2022. The increase reflects higher borrowings and an
increase in variable interest rates.
- Other non-operating expense for the first six months of 2023
was $10.9 million compared to
$2.3 million for the first six months
of 2022. Net benefits of $0.7 million
and $7.1 million associated with the
non-service cost components of net periodic pension (benefit) cost
were recognized for the six months ended June 30, 2023 and 2022, respectively. Due to
fluctuations in the U.S. dollar against certain foreign currencies,
a net foreign currency exchange loss of $13.2 million was recognized for the first six
months of 2023 compared to a net loss of $7.1 million for the first six months of
2022.
- The effective tax rate for the first six months of 2023 was
22.9% compared to 22.6% for the first six months of 2022. The
current six month period and the comparable prior year period both
reflect discrete income tax benefits resulting from the exercise
and vesting of stock-based awards. The first six months of 2022
also reflects a discrete income tax benefit resulting from a
reduction to the valuation allowance recorded against foreign tax
credit carryforwards.
- Net income attributable to common stockholders was $361.5 million for the first six months of 2023
compared to $373.2 million for the
first six months of 2022. Adjusted for merger-related and
integration costs, restructuring costs, accelerated trademark
amortization expense, and the related income tax effects, net
income attributable to common stockholders was $391.3 million for the first six months of 2023.
Adjusted for merger-related and integration costs, accelerated
trademark amortization expense, and the related income tax effects,
net income attributable to common stockholders for the first six
months of 2022 was $408.6 million.
Adjusted net income attributable to common stockholders decreased
4.2% year-over-year.
- Earnings per diluted share for the first six months of 2023 was
$6.90, based on 52.4 million diluted
shares, compared to $7.15 for the
first six months of 2022, based on 52.2 million diluted shares.
Adjusted for 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
for merger-related and integration costs, accelerated trademark
amortization expense, and the related income tax effects, earnings
per diluted share for the first six months of 2022 was $7.82. Adjusted earnings per diluted share
decreased 4.5% year-over-year.
- Operating cash flow for the first six months of 2023 was an
inflow of $62.2 million compared to
an outflow of $304.5 million for the
first six months of 2022. Free cash flow for the first six months
of 2023 was $27.3 million, or 7% of
adjusted net income. The net cash inflow in the first six months of
2023 was primarily driven by net income of $389.6 million and non-cash adjustments to net
income totaling $139.8 million, which
were primarily comprised of depreciation and amortization,
stock-based compensation expense, and deferred income taxes.
Operating cash flow was negatively impacted by net changes in
assets and liabilities of $467.2
million, which were primarily comprised of an increase in
trade accounts receivable of $162.9
million and a decrease in accounts payable of $78.6 million due to the timing of receipts from
customers and payments to suppliers, respectively. Net operating
cash flow was also negatively impacted by $73.9 million from an increase in inventories.
Additionally, the payment of management incentive compensation
earned in 2022 resulted in a cash outflow in the first six months
of 2023, which was partially offset by the accrual of management
incentive compensation earned in the current year.
Segment Results
The Company has operating segments comprising three strategic
business units consisting of Electrical & Electronic Solutions
("EES"), Communications & Security Solutions ("CSS") and
Utility & Broadband Solutions ("UBS").
The Company incurs corporate costs primarily related to
treasury, tax, information technology, legal and other centralized
functions. Segment results include depreciation expense or other
allocations related to various corporate assets. Interest expense
and other non-operating items are either not allocated to the
segments or reviewed on a segment basis. Corporate expenses not
directly identifiable with our reportable segments are reported in
the tables below to reconcile the reportable segments to the
consolidated financial statements.
The following are results by segment for the three months ended
June 30, 2023 compared to the three months ended June 30,
2022:
- EES reported net sales of $2,200.3
million for the second quarter of 2023 compared to
$2,330.1 million for the second
quarter of 2022, a decrease of 5.6%. Organic sales for the second
quarter of 2023 declined by 4.7% as fluctuations in foreign
exchange rates negatively impacted reported net sales by 0.9%. The
decrease in organic sales compared to the prior year quarter
reflects downturns in the construction and manufactured structures
businesses, partially offset by price inflation and continued
momentum in our industrial business. In addition, a transfer of
certain customer accounts to the CSS segment negatively impacted
reported net sales for EES by approximately two percentage points.
Adjusted EBITDA was $189.0 million
for the second quarter of 2023, or 8.6% of net sales, compared to
$235.4 million for the second quarter
of 2022, or 10.1% of net sales. Adjusted EBITDA decreased
$46.4 million, or 19.7%
year-over-year, primarily due to the decline in sales, a shift in
sales mix to lower margin business, and an increase in SG&A
expenses.
- CSS reported net sales of $1,850.9
million for the second quarter of 2023 compared to
$1,602.0 million for the second
quarter of 2022, an increase of 15.5%. Organic sales for the second
quarter of 2023 grew by 6.9% as the acquisition of Rahi Systems in
the fourth quarter of 2022 positively impacted reported net sales
by 9.4%, while fluctuations in foreign exchange rates negatively
impacted reported net sales by 0.8%. The increase in organic sales
compared to the prior year quarter reflects strong growth in our
network infrastructure and security solutions businesses, as well
as improvements in the global supply chain. The transfer of certain
customer accounts from the EES segment also positively impacted
reported net sales for CSS by approximately 3%. Adjusted EBITDA was
$179.5 million for the second quarter
of 2023, or 9.7% of net sales, compared to $150.0 million for the second quarter of 2022, or
9.4% of net sales. Adjusted EBITDA increased $29.5 million, or 19.7% year-over-year. The
increase is primarily driven by sales growth and operating cost
leverage.
- UBS reported net sales of $1,694.3
million for the second quarter of 2023 compared to
$1,551.4 million for the second
quarter of 2022, an increase of 9.2%. Organic sales for the second
quarter of 2023 grew by 9.6% as fluctuations in foreign exchange
rates negatively impacted reported net sales by 0.4%. The increase
in organic sales compared to the prior year quarter reflects
significant price inflation, secular trends in the utility business
that are driving growth, and expansion in our integrated supply
business, partially offset by lower sales in our broadband business
due to certain customers depleting existing inventories and an
overall downturn in the broadband business, particularly in
Canada. Adjusted EBITDA was
$188.6 million for the second quarter
of 2023, or 11.1% of net sales, compared to $169.0 million for the second quarter of 2022, or
10.9% of net sales. Adjusted EBITDA increased $19.6 million, or 11.6% year-over-year. The
increase is primarily driven by sales growth and gross margin
improvement.
The following are results by segment for the six months ended
June 30, 2023 compared to the six months ended June 30,
2022:
- EES reported net sales of $4,335.4
million for the first six months of 2023 compared to
$4,420.1 million for the first six
months of 2022, a decrease of 1.9%. Organic sales for the first six
months of 2023 declined by 0.6% as fluctuations in foreign exchange
rates negatively impacted reported net sales by 1.3%. The decrease
in organic sales reflects downturns in the construction and
manufactured structures businesses, partially offset by price
inflation and continued momentum in our industrial business. In
addition, a transfer of certain customer accounts to the CSS
segment negatively impacted reported net sales for EES by
approximately two percentage points. Adjusted EBITDA was
$372.0 million for the first six
months of 2023, or 8.6% of net sales, compared to $427.9 million for the first six months of 2022,
or 9.7% of net sales. Adjusted EBITDA decreased $55.9 million, or 13.1% year-over-year, primarily
due to the decline in sales, a shift in sales mix to lower margin
business, and an increase in SG&A expenses.
- CSS reported net sales of $3,582.9
million for the first six months of 2023 compared to
$3,036.2 million for the first six
months of 2022, an increase of 18.0%. Organic sales for the first
six months of 2023 grew by 9.9% as the acquisition of Rahi Systems
positively impacted reported net sales by 9.4%, while fluctuations
in foreign exchange rates negatively impacted reported net sales by
1.3%. The increase in organic sales reflects strong growth in our
network infrastructure and security solutions businesses, as well
as the benefits of cross selling and improvements in supply chain
constraints. The transfer of certain customer accounts from the EES
segment also positively impacted reported net sales for CSS by
approximately 3%. Adjusted EBITDA was $335.0
million for the first six months of 2023, or 9.3% of net
sales, compared to $273.1 million for
the first six months of 2022, or 9.0% of net sales. Adjusted EBITDA
increased $61.9 million, or 22.7%
year-over-year. The increase primarily reflects the factors
impacting the overall business, as described above.
- UBS reported net sales of $3,349.1
million for the first six months of 2023 compared to
$2,959.4 million for the first six
months of 2022, an increase of 13.2%. Organic sales for the first
six months of 2023 grew by 13.7% as fluctuations in foreign
exchange rates negatively impacted reported net sales by 0.5%. The
increase in organic sales reflects significant price inflation,
secular trends in the utility business that are driving growth, and
expansion in our integrated supply business, partially offset by
lower sales in our broadband business due to certain customers
depleting existing inventories and an overall downturn in the
broadband business, particularly in Canada. Adjusted EBITDA was $376.3 million for the first six months of 2023,
or 11.2% of net sales, compared to $305.4
million for the first six months of 2022, or 10.3% of net
sales. Adjusted EBITDA increased $70.9
million, or 23.2% year-over-year. The increase is primarily
driven by sales growth and gross margin improvement.
Webcast and Teleconference Access
Wesco will conduct a webcast and teleconference to discuss the
second quarter of 2023 earnings as described in this News Release
on Thursday, August 3, 2023, 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 $21
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,
institutions, telecommunications providers, and utilities. Wesco
operates approximately 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
multi-national 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, as well as statements regarding the expected benefits
and costs of the transaction between Wesco and Anixter
International Inc., including anticipated future financial and
operating results, synergies, accretion and growth rates, and the
combined company's plans, objectives and expectations. Such
statements can generally be identified by the use of words such as
"anticipate," "plan," "believe," "estimate," "intend," "expect,"
"project," and similar words, phrases or expressions or future or
conditional verbs such as "could," "may," "should," "will," and
"would," although not all forward-looking statements contain such
words. These forward-looking statements are based on current
expectations and beliefs of Wesco's management, as well as
assumptions made by, and information currently available to,
Wesco's management, current market trends and market conditions and
involve risks and uncertainties, many of which are outside of
Wesco's and Wesco's management's control, and which may cause
actual results to differ materially from those contained in
forward-looking statements. Accordingly, you should not place undue
reliance on such statements.
Important factors that could cause actual results or events
to differ materially from those presented or implied in the
forward-looking statements include, among others, the failure to
achieve the expected benefits of the transaction between Wesco and
Anixter International Inc. or the anticipated benefits of Wesco's
acquisition of Rahi Systems Holdings, Inc. in the expected
timeframe or at all, unexpected costs or problems that may arise in
successfully integrating the businesses of the companies, the
impact of increased interest rates or borrowing costs, failure to
adequately protect Wesco's intellectual property or successfully
defend against infringement claims, failure to execute Wesco's
environmental, social and governance (ESG) programs as planned,
disruption of information technology systems or operations, natural
disasters (including as a result of climate change), health
epidemics, pandemics and other outbreaks (such as the ongoing
COVID-19 pandemic, including any resurgences or new variants),
supply chain disruptions, geopolitical issues, such as the impact
of Russia's invasion of
Ukraine, including the impact of
sanctions or other actions taken by the U.S. or other countries
against Russia (as well as those
imposed on China), the increased
risk of cyber incidents and exacerbation of key materials
shortages, inflationary cost pressures, material cost increases,
demand volatility, and logistics and capacity constraints, which
may have a material adverse effect on the combined company's
business, results of operations and financial condition. All such
factors are difficult to predict and are beyond the company's
control. Additional factors that could cause results to differ
materially from those described above can be found in Wesco's
Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and Wesco's other 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
Senior Director,
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,
2023
|
|
|
June 30,
2022
|
|
|
Net sales
|
$
5,745.5
|
|
|
$
5,483.5
|
|
|
Cost of goods sold
(excluding depreciation and amortization)
|
4,503.1
|
78.4 %
|
|
4,294.1
|
78.3 %
|
|
Selling, general and
administrative expenses
|
831.7
|
14.5 %
|
|
772.9
|
14.1 %
|
|
Depreciation and
amortization
|
46.9
|
|
|
45.8
|
|
|
Income from
operations
|
363.8
|
6.3 %
|
|
370.7
|
6.8 %
|
|
Interest expense,
net
|
98.8
|
|
|
68.5
|
|
|
Other expense,
net
|
0.8
|
|
|
1.2
|
|
|
Income before
income taxes
|
264.2
|
4.6 %
|
|
301.0
|
5.5 %
|
|
Provision for income
taxes
|
71.8
|
|
|
79.9
|
|
|
Net
income
|
192.4
|
3.3 %
|
|
221.1
|
4.0 %
|
|
Net (loss) income
attributable to noncontrolling interests
|
(0.7)
|
|
|
0.4
|
|
|
Net income
attributable to WESCO International, Inc.
|
193.1
|
3.4 %
|
|
220.7
|
4.0 %
|
|
Preferred stock
dividends
|
14.4
|
|
|
14.4
|
|
|
Net income
attributable to common stockholders
|
$
178.7
|
3.1 %
|
|
$
206.3
|
3.8 %
|
|
|
|
|
|
|
|
Earnings per diluted
share attributable to common stockholders
|
$
3.41
|
|
|
$
3.95
|
|
|
Weighted-average common
shares outstanding and common
share equivalents used in computing earnings
per diluted
common share
|
52.4
|
|
|
52.2
|
|
|
WESCO INTERNATIONAL,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(in millions, except
per share amounts)
(Unaudited)
|
|
|
Six Months
Ended
|
|
|
June 30,
2023
|
|
|
June 30,
2022
|
|
|
Net sales
|
$
11,267.4
|
|
|
$
10,415.7
|
|
|
Cost of goods sold
(excluding depreciation and amortization)
|
8,816.5
|
78.2 %
|
|
8,177.2
|
78.5 %
|
|
Selling, general and
administrative expenses
|
1,649.4
|
14.6 %
|
|
1,491.0
|
14.3 %
|
|
Depreciation and
amortization
|
91.3
|
|
|
92.8
|
|
|
Income from
operations
|
710.2
|
6.3 %
|
|
654.7
|
6.3 %
|
|
Interest expense,
net
|
193.8
|
|
|
132.1
|
|
|
Other expense,
net
|
10.9
|
|
|
2.3
|
|
|
Income before
income taxes
|
505.5
|
4.5 %
|
|
520.3
|
5.0 %
|
|
Provision for income
taxes
|
115.9
|
|
|
117.6
|
|
|
Net
income
|
389.6
|
3.5 %
|
|
402.7
|
3.9 %
|
|
Net (loss) income
attributable to noncontrolling interests
|
(0.6)
|
|
|
0.8
|
|
|
Net income
attributable to WESCO International, Inc.
|
390.2
|
3.5 %
|
|
401.9
|
3.9 %
|
|
Preferred stock
dividends
|
28.7
|
|
|
28.7
|
|
|
Net income
attributable to common stockholders
|
$
361.5
|
3.2 %
|
|
$
373.2
|
3.6 %
|
|
|
|
|
|
|
|
Earnings per diluted
share attributable to common stockholders
|
$
6.90
|
|
|
$
7.15
|
|
|
Weighted-average common
shares outstanding and common
share equivalents used in computing earnings
per diluted
common share
|
52.4
|
|
|
52.2
|
|
|
WESCO INTERNATIONAL,
INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(dollar amounts in
millions)
(Unaudited)
|
|
|
As of
|
|
June 30,
2023
|
|
December 31,
2022
|
|
Assets
|
|
|
|
|
Current
Assets
|
|
|
|
|
Cash and cash
equivalents
|
$
529.0
|
|
$
527.3
|
|
Trade accounts
receivable, net
|
3,850.7
|
|
3,662.7
|
|
Inventories
|
3,584.3
|
|
3,498.8
|
|
Other current
assets
|
619.4
|
|
641.7
|
|
Total current assets
|
8,583.4
|
|
8,330.5
|
|
|
|
|
|
Goodwill and intangible
assets
|
5,168.6
|
|
5,184.3
|
|
Other assets
|
1,410.7
|
|
1,296.9
|
|
Total assets
|
$
15,162.7
|
|
$
14,811.7
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Accounts
payable
|
$
2,662.7
|
|
$
2,728.2
|
|
Short-term debt and
current portion of long-term debt, net
|
9.2
|
|
70.5
|
|
Other current
liabilities
|
909.8
|
|
1,018.6
|
|
Total current liabilities
|
3,581.7
|
|
3,817.3
|
|
|
|
|
|
Long-term debt,
net
|
5,523.1
|
|
5,346.0
|
|
Other noncurrent
liabilities
|
1,257.6
|
|
1,198.8
|
|
Total liabilities
|
10,362.4
|
|
10,362.1
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
Total stockholders' equity
|
4,800.3
|
|
4,449.6
|
|
Total liabilities and stockholders' equity
|
$
15,162.7
|
|
$
14,811.7
|
|
WESCO INTERNATIONAL,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollar amounts in
millions)
(Unaudited)
|
|
|
Six Months
Ended
|
|
June 30,
2023
|
|
June 30,
2022
|
|
Operating
Activities:
|
|
|
|
|
Net income
|
$
389.6
|
|
$
402.7
|
|
Add back
(deduct):
|
|
|
|
|
Depreciation and
amortization
|
91.3
|
|
92.8
|
|
Deferred income
taxes
|
16.2
|
|
1.3
|
|
Change in trade
receivables, net
|
(162.9)
|
|
(716.8)
|
|
Change in
inventories
|
(73.9)
|
|
(530.8)
|
|
Change in accounts
payable
|
(78.6)
|
|
534.3
|
|
Other, net
|
(119.5)
|
|
(88.0)
|
|
Net cash provided by
(used in) operating activities
|
62.2
|
|
(304.5)
|
|
|
|
|
|
Investing
Activities:
|
|
|
|
|
Capital
expenditures
|
(44.3)
|
|
(31.6)
|
|
Other, net
|
0.6
|
|
0.6
|
|
Net cash used in
investing activities
|
(43.7)
|
|
(31.0)
|
|
|
|
|
|
Financing
Activities:
|
|
|
|
|
Debt borrowings,
net(1)
|
104.2
|
|
394.5
|
|
Payments for taxes
related to net-share settlement of equity awards
|
(54.2)
|
|
(17.2)
|
|
Payment of common
stock dividends
|
(38.4)
|
|
—
|
|
Payment of preferred
stock dividends
|
(28.7)
|
|
(28.7)
|
|
Other, net
|
(3.3)
|
|
(8.1)
|
|
Net cash (used in)
provided by financing activities
|
(20.4)
|
|
340.5
|
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents
|
3.6
|
|
19.2
|
|
|
|
|
|
Net change in cash and
cash equivalents
|
1.7
|
|
24.2
|
|
Cash and cash
equivalents at the beginning of the period
|
527.3
|
|
212.6
|
|
Cash and cash
equivalents at the end of the period
|
$
529.0
|
|
$
236.8
|
|
|
|
(1)
|
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 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,
restructuring costs, and the related income tax effect of such
items, allowing investors to more easily compare the Company's
financial performance from period to period. Management does not
use these non-GAAP financial measures for any purpose other than
the reasons stated above.
|
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,
2023
|
|
June 30,
2022
|
|
Reported
|
|
Acquisition
Impact
|
|
Foreign
Exchange
Impact
|
|
Workday
Impact
|
|
Organic
Growth
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EES
|
$
2,200.3
|
|
$
2,330.1
|
|
(5.6) %
|
|
— %
|
|
(0.9) %
|
|
— %
|
|
(4.7) %
|
|
CSS
|
1,850.9
|
|
1,602.0
|
|
15.5 %
|
|
9.4 %
|
|
(0.8) %
|
|
— %
|
|
6.9 %
|
|
UBS
|
1,694.3
|
|
1,551.4
|
|
9.2 %
|
|
— %
|
|
(0.4) %
|
|
— %
|
|
9.6 %
|
|
Total net
sales
|
$
5,745.5
|
|
$
5,483.5
|
|
4.8 %
|
|
2.7 %
|
|
(0.7) %
|
|
— %
|
|
2.8 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic Sales Growth
by Segment - Six Months Ended:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
Growth/(Decline)
|
|
June 30,
2023
|
|
June 30,
2022
|
|
Reported
|
|
Acquisition
Impact
|
|
Foreign
Exchange
Impact
|
|
Workday
Impact
|
|
Organic
Growth
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EES
|
$
4,335.4
|
|
$
4,420.1
|
|
(1.9) %
|
|
— %
|
|
(1.3) %
|
|
— %
|
|
(0.6) %
|
|
CSS
|
3,582.9
|
|
3,036.2
|
|
18.0 %
|
|
9.4 %
|
|
(1.3) %
|
|
— %
|
|
9.9 %
|
|
UBS
|
3,349.1
|
|
2,959.4
|
|
13.2 %
|
|
— %
|
|
(0.5) %
|
|
— %
|
|
13.7 %
|
|
Total net
sales
|
$
11,267.4
|
|
$
10,415.7
|
|
8.2 %
|
|
2.7 %
|
|
(1.1) %
|
|
— %
|
|
6.6 %
|
|
|
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 2023 compared to the second quarter and first six
months of 2022.
|
|
WESCO
INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(in millions, except
per share amounts)
(Unaudited)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
Gross
Profit:
|
June 30,
2023
|
|
June 30,
2022
|
|
June 30,
2023
|
|
June 30,
2022
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
5,745.5
|
|
$
5,483.5
|
|
$ 11,267.4
|
|
$ 10,415.7
|
|
Cost of goods sold
(excluding depreciation and amortization)
|
4,503.1
|
|
4,294.1
|
|
8,816.5
|
|
8,177.2
|
|
Gross profit
|
$
1,242.4
|
|
$
1,189.4
|
|
$
2,450.9
|
|
$
2,238.5
|
|
Gross margin
|
21.6 %
|
|
21.7 %
|
|
21.8 %
|
|
21.5 %
|
|
|
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,
2023
|
|
June 30,
2022
|
|
June 30,
2023
|
|
June 30,
2022
|
|
Adjusted SG&A
Expenses:
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
$
831.7
|
|
$
772.9
|
|
$
1,649.4
|
|
$
1,491.0
|
|
Merger-related and
integration costs(1)
|
(10.9)
|
|
(13.4)
|
|
(30.4)
|
|
(39.0)
|
|
Restructuring
costs(2)
|
(9.8)
|
|
—
|
|
(9.8)
|
|
—
|
|
Adjusted selling,
general and administrative expenses
|
$
811.0
|
|
$
759.5
|
|
$
1,609.2
|
|
$
1,452.0
|
|
Percentage of net
sales
|
14.1 %
|
|
13.9 %
|
|
14.3 %
|
|
13.9 %
|
|
|
|
|
|
|
|
|
|
Adjusted Income from
Operations:
|
|
|
|
|
|
|
|
|
Income from
operations
|
$
363.8
|
|
$
370.7
|
|
$
710.2
|
|
$
654.7
|
|
Merger-related and
integration costs(1)
|
10.9
|
|
13.4
|
|
30.4
|
|
39.0
|
|
Restructuring
costs(2)
|
9.8
|
|
—
|
|
9.8
|
|
—
|
|
Accelerated trademark
amortization(3)
|
0.8
|
|
3.7
|
|
0.8
|
|
9.0
|
|
Adjusted income from
operations
|
$
385.3
|
|
$
387.8
|
|
$
751.2
|
|
$
702.7
|
|
Adjusted income from
operations margin %
|
6.7 %
|
|
7.1 %
|
|
6.7 %
|
|
6.7 %
|
|
|
|
|
|
|
|
|
|
Adjusted Provision
for Income Taxes:
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
$
71.8
|
|
$
79.9
|
|
$
115.9
|
|
$
117.6
|
|
Income tax effect of
adjustments to income from operations(4)
|
5.9
|
|
4.5
|
|
11.2
|
|
12.6
|
|
Adjusted provision for
income taxes
|
$
77.7
|
|
$
84.4
|
|
$
127.1
|
|
$
130.2
|
|
|
|
(1)
|
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.
|
|
(2)
|
Restructuring costs
include severance costs incurred pursuant to an ongoing
restructuring plan.
|
|
(3)
|
Accelerated trademark
amortization represents additional amortization expense resulting
from changes in the estimated useful lives of certain legacy
trademarks that are migrating to our master brand
architecture.
|
|
(4)
|
The adjustments to
income from operations have been tax effected at rates of
approximately 27% and 26% for the three and six months ended
June 30, 2023 and 2022, respectively.
|
|
|
|
|
|
WESCO
INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(in millions, except
per share amounts)
(Unaudited)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
Adjusted Earnings
per Diluted Share:
|
June 30,
2023
|
|
June 30,
2022(1)
|
|
June 30,
2023
|
|
June 30,
2022(1)
|
|
|
|
|
|
|
|
|
|
Adjusted income from
operations
|
$
385.3
|
|
$
387.8
|
|
$
751.2
|
|
$
702.7
|
|
Interest expense,
net
|
98.8
|
|
68.5
|
|
193.8
|
|
132.1
|
|
Other expense,
net
|
0.8
|
|
1.2
|
|
10.9
|
|
2.3
|
|
Adjusted income before
income taxes
|
285.7
|
|
318.1
|
|
546.5
|
|
568.3
|
|
Adjusted provision for
income taxes
|
77.7
|
|
84.4
|
|
127.1
|
|
130.2
|
|
Adjusted net
income
|
208.0
|
|
233.7
|
|
419.4
|
|
438.1
|
|
Net (loss) income
attributable to noncontrolling interests
|
(0.7)
|
|
0.4
|
|
(0.6)
|
|
0.8
|
|
Adjusted net income
attributable to WESCO International, Inc.
|
208.7
|
|
233.3
|
|
420.0
|
|
437.3
|
|
Preferred stock
dividends
|
14.4
|
|
14.4
|
|
28.7
|
|
28.7
|
|
Adjusted net income
attributable to common stockholders
|
$
194.3
|
|
$
218.9
|
|
$
391.3
|
|
$
408.6
|
|
|
|
|
|
|
|
|
|
Diluted
shares
|
52.4
|
|
52.2
|
|
52.4
|
|
52.2
|
|
Adjusted earnings per
diluted share
|
$
3.71
|
|
$
4.19
|
|
$
7.47
|
|
$
7.82
|
|
|
|
(1)
|
Basic and diluted
earnings per share for the three and six months ended June 30, 2022
were previously calculated and reported based on amounts as
presented in thousands. As such, certain prior year amounts may not
foot or recalculate based on the amounts as presented in millions
in the current year presentation.
|
|
|
Note: 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 merger-related and integration
costs, restructuring costs, accelerated amortization expense
associated with migrating to the Company's master brand
architecture, and the related income tax effects. For the three and
six months ended June 30, 2022, 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, accelerated amortization expense associated with migrating
to the Company's master brand architecture, and the related income
tax effects. These non-GAAP financial measures provide a better
understanding of the Company's 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, 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
|
|
Merger-related and
integration costs(3)
|
|
—
|
|
—
|
|
—
|
|
10.9
|
|
10.9
|
|
Restructuring
costs(4)
|
|
—
|
|
—
|
|
—
|
|
9.8
|
|
9.8
|
|
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)
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, 2022
|
|
EBITDA and Adjusted
EBITDA by Segment:
|
|
EES
|
|
CSS
|
|
UBS
|
|
Corporate
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
|
$
222.8
|
|
$
130.6
|
|
$
161.8
|
|
$
(308.9)
|
|
$
206.3
|
|
Net income
attributable to noncontrolling interests
|
|
0.1
|
|
—
|
|
—
|
|
0.3
|
|
0.4
|
|
Preferred stock
dividends
|
|
—
|
|
—
|
|
—
|
|
14.4
|
|
14.4
|
|
Provision for income
taxes(1)
|
|
—
|
|
—
|
|
—
|
|
79.9
|
|
79.9
|
|
Interest expense,
net(1)
|
|
—
|
|
—
|
|
—
|
|
68.5
|
|
68.5
|
|
Depreciation and
amortization
|
|
11.2
|
|
17.9
|
|
5.7
|
|
11.0
|
|
45.8
|
|
EBITDA
|
|
$
234.1
|
|
$
148.5
|
|
$
167.5
|
|
$
(134.8)
|
|
$
415.3
|
|
Other (income)
expense, net
|
|
(1.4)
|
|
0.1
|
|
0.6
|
|
1.9
|
|
1.2
|
|
Stock-based
compensation expense(2)
|
|
2.7
|
|
1.4
|
|
0.9
|
|
9.5
|
|
14.5
|
|
Merger-related and
integration costs(3)
|
|
—
|
|
—
|
|
—
|
|
13.4
|
|
13.4
|
|
Adjusted
EBITDA
|
|
$
235.4
|
|
$
150.0
|
|
$
169.0
|
|
$
(110.0)
|
|
$
444.4
|
|
Adjusted EBITDA
margin %
|
|
10.1 %
|
|
9.4 %
|
|
10.9 %
|
|
|
|
8.1 %
|
|
(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, 2022 excludes
$1.4 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, including
digital transformation costs, as well as advisory, legal, and
separation costs associated with the merger between the two
companies.
|
|
|
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. EBITDA is defined as
earnings before interest, taxes, depreciation and amortization.
Adjusted EBITDA is defined as EBITDA before other non-operating
expenses (income), non-cash stock-based compensation expense,
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)
|
|
|
|
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
|
|
Merger-related and
integration costs(3)
|
|
—
|
|
—
|
|
—
|
|
30.4
|
|
30.4
|
|
Restructuring
costs(4)
|
|
—
|
|
—
|
|
—
|
|
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)
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30, 2022
|
|
EBITDA and Adjusted
EBITDA by Segment:
|
|
EES
|
|
CSS
|
|
UBS
|
|
Corporate
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
|
$
401.5
|
|
$
234.3
|
|
$
291.8
|
|
$
(554.4)
|
|
$
373.2
|
|
Net income
attributable to noncontrolling interests
|
|
0.4
|
|
—
|
|
—
|
|
0.4
|
|
0.8
|
|
Preferred stock
dividends
|
|
—
|
|
—
|
|
—
|
|
28.7
|
|
28.7
|
|
Provision for income
taxes(1)
|
|
—
|
|
—
|
|
—
|
|
117.6
|
|
117.6
|
|
Interest expense,
net(1)
|
|
—
|
|
—
|
|
—
|
|
132.1
|
|
132.1
|
|
Depreciation and
amortization
|
|
23.2
|
|
36.0
|
|
11.5
|
|
22.1
|
|
92.8
|
|
EBITDA
|
|
$
425.1
|
|
$
270.3
|
|
$
303.3
|
|
$
(253.5)
|
|
$
745.2
|
|
Other (income)
expense, net
|
|
(1.6)
|
|
0.5
|
|
0.6
|
|
2.8
|
|
2.3
|
|
Stock-based
compensation expense(2)
|
|
4.4
|
|
2.3
|
|
1.5
|
|
13.8
|
|
22.0
|
|
Merger-related and
integration costs(3)
|
|
—
|
|
—
|
|
—
|
|
39.0
|
|
39.0
|
|
Adjusted
EBITDA
|
|
$
427.9
|
|
$
273.1
|
|
$
305.4
|
|
$
(197.9)
|
|
$
808.5
|
|
Adjusted EBITDA
margin %
|
|
9.7 %
|
|
9.0 %
|
|
10.3 %
|
|
|
|
7.8 %
|
|
(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) Stock-based compensation
expense in the calculation of adjusted EBITDA for the six months
ended June 30, 2022 excludes $2.7 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, including
digital transformation costs, as well as advisory, legal, and
separation costs associated with the merger between the two
companies.
|
|
|
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. EBITDA is defined as
earnings before interest, taxes, depreciation and amortization.
Adjusted EBITDA is defined as EBITDA before other non-operating
expenses (income), non-cash stock-based compensation expense,
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,
2023
|
|
December 31,
2022
|
|
|
|
|
|
Net income
attributable to common stockholders
|
$
791.3
|
|
$
803.1
|
|
Net income
attributable to noncontrolling interests
|
0.2
|
|
1.7
|
|
Preferred stock
dividends
|
57.4
|
|
57.4
|
|
Provision for income
taxes
|
272.9
|
|
274.5
|
|
Interest expense,
net
|
356.1
|
|
294.4
|
|
Depreciation and
amortization
|
177.5
|
|
179.0
|
|
EBITDA
|
$
1,655.4
|
|
$
1,610.1
|
|
Other expense,
net
|
15.6
|
|
7.0
|
|
Stock-based
compensation expense
|
40.3
|
|
41.0
|
|
Merger-related and
integration costs(1)
|
59.0
|
|
67.5
|
|
Restructuring
costs(2)
|
9.8
|
|
—
|
|
Adjusted
EBITDA
|
$
1,780.1
|
|
$
1,725.6
|
|
|
|
|
|
As of
|
|
June 30,
2023
|
|
December 31,
2022
|
|
Short-term debt and
current portion of long-term debt, net
|
$
9.2
|
|
$
70.5
|
|
Long-term debt,
net
|
5,523.1
|
|
5,346.0
|
|
Debt discount and debt
issuance costs(3)
|
50.5
|
|
57.9
|
|
Fair value adjustments
to Anixter Senior Notes due 2023 and 2025(3)
|
(0.1)
|
|
(0.3)
|
|
Total debt
|
5,582.7
|
|
5,474.1
|
|
Less: Cash and cash
equivalents
|
529.0
|
|
527.3
|
|
Total debt, net of
cash
|
$
5,053.7
|
|
$
4,946.8
|
|
|
|
|
|
Financial leverage
ratio
|
2.8
|
|
2.9
|
|
|
|
(1)
|
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.
|
|
(2)
|
Restructuring costs
include severance costs incurred pursuant to an ongoing
restructuring plan.
|
|
(3)
|
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 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, and restructuring costs.
|
|
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,
2023
|
|
June 30,
2022
|
|
June 30,
2023
|
|
June 30,
2022
|
|
|
|
|
|
|
|
|
|
Cash flow provided by
(used in) operations
|
$
317.6
|
|
$
(132.6)
|
|
$
62.2
|
|
$
(304.5)
|
|
Less: Capital
expenditures
|
(30.4)
|
|
(16.4)
|
|
(44.3)
|
|
(31.6)
|
|
Add: Merger-related,
integration and restructuring cash costs
|
6.0
|
|
20.5
|
|
9.4
|
|
43.3
|
|
Free cash
flow
|
$
293.2
|
|
$
(128.5)
|
|
$
27.3
|
|
$
(292.8)
|
|
Percentage of adjusted
net income
|
141 %
|
|
(55) %
|
|
7 %
|
|
(67) %
|
|
|
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, 2023 and 2022, the
Company paid for certain costs to integrate the acquired Anixter
business 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, Inc.