- Fourth quarter net sales down 2% YOY, organic sales down
3%
- Fourth quarter operating profit of $316 million; operating margin of 5.8%
- Adjusted EBITDA margin of 7.0%, down 110 basis points
sequentially and YOY
- Full-year record net sales up 5% YOY, organic sales up
3%
- Full-year operating profit of $1.4
billion; operating margin of 6.3%
- Adjusted EBITDA margin of 7.6%, down 50 basis points
YOY
- Effectively managing financial leverage and revising target
range to 1.5x-2.5x
- 2024 outlook is for sales growth of 1% to 4% and adjusted
EBITDA margin of 7.5% to 7.9%
- Free cash flow of $600 -
$800 million
PITTSBURGH, Feb. 13,
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
fourth quarter and full year 2023.
"Fourth quarter results were below our expectations, capping off
a year that was unique in my time as Wesco's CEO. On a full year
basis, certain sectors including utility, data center, industrial,
security, and network infrastructure continued to grow, while
others underperformed including broadband, specific-OEM and
construction related sectors. As a leading global provider of
business-to-business supply chain solutions, Wesco navigated
through this mixed economic environment while managing changing
customer buying patterns as supply chains healed. I'm proud that
our team delivered approximately 5% revenue growth in 2023
following two years of double-digit increases. The fourth quarter
was disappointing as our stock and flow sales were below our
expectations and we saw delays in certain projects that were
anticipated to ship in December. Fourth quarter sales declined by
2%, noting the strong 2022 base period with sales up 15%. That
said, our quoting and bid levels were very healthy during the
fourth quarter, with total backlog stable compared to the end of
September," said John Engel,
Chairman, President and CEO.
Mr. Engel continued, "The long-term secular growth trends that
we have consistently described will continue to provide Wesco with
the opportunity to outperform the market and our competition. While
we view the general economic conditions in 2024 as favorable, we
are mindful of the uncertain backdrop the election cycle, easing
inflation, geopolitical upheaval, and short-term borrowing rates
may have on demand. Regardless of these near-term impacts, as a
market leader, we expect to benefit from our global capabilities,
leading scale and expanded portfolio."
Mr. Engel added, "Our substantial investment and commitment to
our digital transformation are expected to magnify those benefits
as we roll out that program over the next 36 months. The
substantial cash flow that Wesco generates has supported that
investment over the last two years while allowing us to return
capital to our shareholders. In 2024, we expect to grow our sales
by 1% to 4% as continued growth in several of the markets we serve
is partially offset by underperforming sectors. We expect to
generate approximately $700 million
of free cash flow and I am pleased to announce we plan to increase
our common stock dividend by 10% to $1.65 per year while continuing our share
repurchase program. Importantly, we are also reducing our long-term
targeted financial leverage range to 1.5 to 2.5 times net debt to
adjusted EBITDA. I am confident that Wesco will outperform our
markets this year, and we are positioned to deliver sales growth
and continue toward our long-term EBITDA margin expansion
goal."
Mr. Engel concluded, "I want to finish with a brief word about
the successful completion of our three-year integration of Anixter.
The acquisition of Anixter literally transformed Wesco. This
transaction not only established Wesco as the clear leader in
several of our business segments, but it also mix-shifted our
business to higher growth and higher margin end-markets, reducing
our cyclicality and increasing our resilience across all phases of
the economic cycle. Looking at our performance metrics since the
acquisition underscores the extraordinary performance and
commitment of the entire Wesco team. Sales increased 30% and
adjusted EBITDA increased 89% versus the 2019 performance of the
standalone companies with EBITDA margin expansion of 240 basis
points. Since closing the Anixter merger in June 2020 to the end of 2023, total shareholder
return was 353% compared to 62% for the S&P 500. Today, Wesco
is much more than a traditional distributor. We are a critical
partner to both our supplier partners and to our global set of
customers. The combination of Wesco and Anixter has created a new
paradigm. The digital transformation that we committed to at the
time of the acquisition is designed to take that new paradigm and
create the Wesco of tomorrow, empowering us to capitalize on the
long-term secular trends from which we are uniquely positioned to
benefit compared to our competitors."
The following are results for the three months ended
December 31, 2023 compared to the three months ended
December 31, 2022:
- Net sales were $5.5 billion for
the fourth quarter of 2023 compared to $5.6
billion for the fourth quarter of 2022, a decrease of 1.5%.
Organic sales for the fourth quarter of 2023 declined 2.6%, as the
acquisition of Rahi Systems, which closed in November of 2022, and
fluctuations in foreign exchange rates positively impacted reported
net sales by 0.7% and 0.4%, respectively. The decrease in organic
sales reflects volume declines in certain businesses, partially
offset by growth in industrial, utility, data center and network
infrastructure and price inflation. Backlog at the end of the
fourth quarter of 2023 declined by 10% compared to the end of the
fourth quarter of 2022. Sequentially, backlog declined by
approximately 1% in the quarter.
- Cost of goods sold was $4.3
billion for the fourth quarter of 2023 and 2022, and gross
profit was $1.2 billion for both
periods. As a percentage of net sales, gross profit was 21.4% and
21.9% for the fourth quarter of 2023 and 2022, respectively. The
decline in gross profit as a percentage of net sales for the fourth
quarter of 2023 primarily reflects lower supplier volume rebates
and a shift in sales mix.
- Selling, general and administrative ("SG&A") expenses were
$810.1 million, or 14.8% of net
sales, for the fourth quarter of 2023 compared to $793.1 million, or 14.3% of net sales, for the
fourth quarter of 2022. SG&A expenses for the fourth quarter of
2023 and 2022 include merger-related and integration costs of
$10.0 million and $15.2 million, respectively. SG&A expenses
for the fourth quarter of 2023 also includes $1.3 million of restructuring costs. Adjusted for
merger-related and integration costs, and restructuring costs,
SG&A expenses were $798.8
million, or 14.6% of net sales, for the fourth quarter of
2023 and $777.8 million, or 14.0% of
net sales, for the fourth quarter of 2022. Adjusted SG&A
expenses for the fourth quarter of 2023 reflect higher salaries and
benefits due to wage inflation, including the impact of the Rahi
Systems acquisition, partially offset by the impact of headcount
reductions taken at the end of the second quarter of 2023.
Increased costs to operate our facilities also contributed to
higher SG&A expenses. In addition, digital transformation
initiatives contributed to higher expenses in the fourth 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 fourth quarter of 2023
was $44.8 million compared to
$43.4 million for the fourth quarter
of 2022, an increase of $1.4
million.
- Operating profit was $315.8
million for the fourth quarter of 2023 compared to
$381.8 million for the fourth quarter
of 2022, a decrease of $66.0 million,
or 17.3%. Operating profit as a percentage of net sales was 5.8%
for the current quarter, compared to 6.9% for the fourth quarter of
the prior year. Adjusted for merger-related and integration costs,
restructuring costs, and accelerated trademark amortization,
operating profit was $327.5 million,
or 6.0% of net sales, for the fourth quarter of 2023. Adjusted for
merger-related and integration costs and accelerated trademark
amortization, operating profit was $397.4
million, or 7.1% of net sales, for the fourth quarter of
2022.
- Net interest expense for the fourth quarter of 2023 was
$97.0 million compared to
$87.3 million for the fourth quarter
of 2022. The increase reflects an increase in variable interest
rates and higher borrowings.
- Other non-operating expense for the fourth quarter of 2023 was
$10.5 million compared to
$4.0 million for the fourth quarter
of 2022. Due to fluctuations in the U.S. dollar against certain
foreign currencies, a net foreign currency exchange loss of
$8.3 million was recognized in the
fourth quarter of 2023 compared to a net loss of $8.4 million in the fourth quarter of 2022. Net
costs of $1.1 million and net
benefits of $4.3 million associated
with the non-service cost components of net periodic pension cost
(benefit) were recognized in the fourth quarter of 2023 and 2022,
respectively. The year-over-year change was primarily due to a
decrease in expected return on plan assets and an increase in
interest cost. Other non-operating expense for the fourth quarter
of 2023 includes net pension settlement cost of $2.8 million related to the settlement of certain
pension plans. Adjusted for this amount, other non-operating
expense was $7.7 million for the
fourth quarter of 2023.
- The effective tax rate for the fourth quarter of 2023 was 31.5%
compared to 24.6% for the fourth quarter of 2022. The effective tax
rate for the quarter ended December 31,
2023 was higher than the comparable period due to the
unfavorable impact of foreign adjustments and an increase in
valuation allowances recorded against certain foreign deferred tax
assets.
- Net income attributable to common stockholders was $127.6 million for the fourth quarter of 2023
compared to $204.6 million for the
fourth quarter of 2022. Adjusted for merger-related and integration
costs, restructuring costs, accelerated trademark amortization
expense, net pension settlement cost, and the related income tax
effects, net income attributable to common stockholders was
$137.9 million for the fourth 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
$216.3 million for the fourth quarter
of 2022. Adjusted net income attributable to common stockholders
decreased 36.2% year-over-year.
- Earnings per diluted share for the fourth quarter of 2023 was
$2.45, based on 52.0 million diluted
shares, compared to $3.90 for the
fourth quarter of 2022, based on 52.4 million diluted shares.
Adjusted for merger-related and integration costs, restructuring
costs, accelerated trademark amortization expense, net pension
settlement cost, and the related income tax effects, earnings per
diluted share for the fourth quarter of 2023 was $2.65. Adjusted for merger-related and
integration costs, accelerated trademark amortization expense, and
the related income tax effects, earnings per diluted share for the
fourth quarter of 2022 was $4.13.
- Operating cash flow for the fourth quarter of 2023 was an
inflow of $69.3 million compared to
$421.7 million for the fourth quarter
of 2022. Free cash flow for the fourth quarter of 2023 was
$59.2 million, or 38.7% of adjusted
net income. The net cash inflow in the fourth quarter of 2023 was
primarily driven by net income of $142.6
million. Changes in net working capital resulted in a use of
cash, including a decrease in accounts payable of $233.2 million due to a reduction in inventory
purchases, and a decrease in trade accounts receivable of
$185.6 million, due to the timing of
receipts from customers and the sequential decrease in net sales
compared to the prior quarter.
The following are results for the year ended December 31,
2023 compared to the year ended December 31, 2022:
- Net sales were $22.4 billion for
2023 compared to $21.4 billion for
2022, an increase of 4.5%, primarily reflecting price inflation.
Organic sales for 2023 grew by 3.2% as the acquisition of Rahi
Systems positively impacted reported net sales by 2.1%, while
fluctuations in foreign exchange rates and the number of workdays
negatively impacted reported net sales by 0.4% and 0.4%,
respectively.
- Cost of goods sold for 2023 was $17.5
billion compared to $16.8
billion for 2022, and gross profit was $4.8 billion and $4.7
billion, respectively. As a percentage of net sales, gross
profit was 21.6% and 21.8% for 2023 and 2022, respectively. Gross
profit as a percentage of net sales for 2023 primarily reflects a
shift in sales mix and lower supplier volume rebates, 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").
- SG&A expenses were $3.3
billion, or 14.5% of net sales, for 2023 compared to
$3.0 billion, or 14.2% of net sales,
for 2022. SG&A expenses for 2023 and 2022 include
merger-related and integration costs of $55.4 million and $67.4
million, respectively. SG&A expenses for 2023 also
include $16.7 million of
restructuring costs. Adjusted for merger-related and integration
costs and restructuring costs, SG&A expenses were 14.2% of net
sales for 2023 and 13.9% of net sales for 2022. The increase in
adjusted SG&A expenses for 2023 compared to 2022 primarily
reflects the same factors discussed above.
- Depreciation and amortization for 2023 was $181.3 million compared to $179.0 million for 2022, an increase of
$2.3 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 $1.6
million and $9.8 million of
accelerated amortization expense for 2023 and 2022,
respectively.
- Operating profit was $1,406.4
million for 2023 compared to $1,438.1
million for 2022, a decrease of $31.7
million, or 2.2%. Operating profit as a percentage of net
sales was 6.3% for the current year, compared to 6.7% for the prior
year. Adjusted for merger-related and integration costs,
restructuring costs, and accelerated trademark amortization
described above, operating profit was $1,480.1 million, or 6.6% of net sales, for 2023.
Adjusted for merger-related and integration costs and accelerated
trademark amortization, operating profit was $1,515.3 million, or 7.1% of net sales, for
2022.
- Net interest expense for 2023 was $389.3
million compared to $294.4
million for 2022. The increase reflects higher borrowings
and an increase in variable interest rates.
- Other non-operating expense for 2023 was $25.1 million compared to $7.0 million for 2022. Due to fluctuations in the
U.S. dollar against certain foreign currencies, a net foreign
currency exchange loss of $22.9
million was recognized for 2023 compared to a net loss of
$19.9 million for 2022. Net costs of
$0.2 million and net benefits of
$14.8 million associated with the
non-service cost components of net periodic pension cost (benefit)
were recognized for 2023 and 2022, respectively. The year-over-year
change was primarily due to a decrease in expected return on plan
assets and an increase in interest cost. Other non-operating
expense for 2023 includes net pension settlement cost of
$2.8 million related to the
settlement of certain pension plans. Adjusted for this amount,
other non-operating expense was $22.3
million for 2023.
- The effective tax rate for 2023 was 22.8% compared to 24.2% for
2022. The effective tax rate for 2023 was lower than the prior year
primarily due to higher tax benefits from stock-based compensation
deductions and foreign tax credit utilization.
- Net income attributable to common stockholders was $708.1 million for 2023 compared to $803.1 million for 2022. Adjusted for
merger-related and integration costs, restructuring costs,
accelerated trademark amortization expense, net pension settlement
cost, and the related income tax effects, net income attributable
to common stockholders was $763.6
million for 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 $860.1 million for
2022. Adjusted net income attributable to common stockholders
decreased 11.2% year-over-year.
- Earnings per diluted share for 2023 was $13.54, based on 52.3 million diluted shares,
compared to $15.33 for 2022, based on
52.4 million diluted shares. Adjusted for merger-related and
integration costs, restructuring costs, accelerated trademark
amortization expense, net pension settlement cost, and the related
income tax effects, earnings per diluted share for 2023 was
$14.60. Adjusted for merger-related
and integration costs, accelerated trademark amortization expense,
and the related income tax effects, earnings per diluted share for
2022 was $16.42. Adjusted earnings
per diluted share decreased 11.1% year-over-year.
- Operating cash flow for 2023 was an inflow of $493.2 million compared to $11.0 million for 2022. Free cash flow for 2023
was $443.6 million, or 54.0% of
adjusted net income. The net cash inflow in 2023 was primarily
driven by net income of $766.1
million and non-cash adjustments to net income totaling
$235.8 million, which primarily
comprised depreciation and amortization, stock-based compensation
expense, amortization of debt discount and debt issuance costs, and
deferred income taxes. Operating cash flow was negatively impacted
by net changes in assets and liabilities of $508.7 million, which primarily consisted of a
decrease in accounts payable of $319.7
million, primarily due to a reduction in inventory purchases
in the fourth quarter, and an increase in inventories of
$68.4 million. These cash usage
factors were partially offset by cash inflow from a decrease in
trade accounts receivable of $52.2
million. Additionally, the payment of management incentive
compensation earned in 2022 resulted in a cash outflow in 2023,
which was partially offset by the accrual of management incentive
compensation earned in the current year.
- Financial leverage ratio was 2.8x as of December 31, 2023.
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
December 31, 2023 compared to the three months ended
December 31, 2022:
- EES reported net sales of $2,084.2
million for the fourth quarter of 2023 compared to
$2,168.4 million for the fourth
quarter of 2022, a decrease of 3.9%. Organic sales for the fourth
quarter of 2023 declined 4.1% as fluctuations in foreign exchange
rates positively impacted reported net sales by 0.2%. The decrease
in organic sales compared to the prior year quarter reflects
declines in construction and original equipment manufacturers
("OEM"), partially offset by continued positive momentum in
industrial, price inflation, and the benefits of cross selling. 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
$164.0 million for the fourth quarter
of 2023, or 7.9% of net sales, compared to $197.6 million for the fourth quarter of 2022, or
9.1% of net sales. Adjusted EBITDA decreased $33.6 million, or 17.0% year-over-year, primarily
due to the decline in sales, a shift in sales mix, lower supplier
volume rebates, and an increase in SG&A expenses as a
percentage of net sales.
- CSS reported net sales of $1,791.3
million for the fourth quarter of 2023 compared to
$1,762.8 million for the fourth
quarter of 2022, an increase of 1.6%. Organic sales for the fourth
quarter of 2023 declined 1.4% as the acquisition of Rahi Systems in
the fourth quarter of 2022 and fluctuations in foreign exchange
rates positively impacted reported net sales by 2.2% and 0.8%,
respectively. The decrease in organic sales compared to the prior
year quarter reflects volume declines primarily in security
solutions, partially offset by growth in data centers and
enterprise network infrastructure, and price inflation. The
transfer of certain customer accounts from the EES segment also
positively impacted organic net sales for CSS by approximately 3%.
Adjusted EBITDA was $173.3 million
for the fourth quarter of 2023, or 9.7% of net sales, compared to
$169.5 million for the fourth quarter
of 2022, or 9.6% of net sales. Adjusted EBITDA increased
$3.8 million, or 2.2% year-over-year.
The increase is primarily driven by sales growth and lower SG&A
expenses as a percentage of net sales primarily due to a reduction
to incentive compensation expense and cost reduction
activities.
- UBS reported net sales of $1,597.9
million for the fourth quarter of 2023 compared to
$1,627.2 million for the fourth
quarter of 2022, a decrease of 1.8%. Organic sales for the fourth
quarter of 2023 declined 1.9% as fluctuations in foreign exchange
rates positively impacted reported net sales by 0.1%. The decrease
in organic sales compared to the prior year quarter reflects lower
broadband sales, partially offset by price inflation and growth in
utility and integrated supply. Adjusted EBITDA was $166.6 million for the fourth quarter of 2023, or
10.4% of net sales, compared to $185.6
million for the fourth quarter of 2022, or 11.4% of net
sales. Adjusted EBITDA decreased $19.0
million, or 10.2% year-over-year. The decrease is driven by
lower sales, a shift in sales mix, lower supplier volume rebates,
and higher SG&A expenses as a percentage of net sales.
The following are results by segment for the year ended
December 31, 2023 compared to the year ended December 31,
2022:
- EES reported net sales of $8.6
billion for 2023 compared to $8.8
billion for 2022, a decrease of 2.4%. Organic sales for 2023
declined 1.4% as fluctuations in foreign exchange rates and the
number of workdays negatively impacted reported net sales by 0.6%
and 0.4%, respectively. The decrease in organic sales reflects
declines in construction and OEM, partially offset by continued
positive momentum in industrial, price inflation and the benefits
of cross selling. In addition, a transfer of certain customer
accounts to the CSS segment negatively impacted organic net sales
for EES by approximately two percentage points. Adjusted EBITDA was
$727.4 million for 2023, or 8.4% of
net sales, compared to $851.3 million
for 2022, or 9.6% of net sales. Adjusted EBITDA decreased
$123.9 million, or 14.6%
year-over-year, primarily due to the decline in sales, an increase
in SG&A expenses as a percentage of net sales, a shift in sales
mix, and lower supplier volume rebates.
- CSS reported net sales of $7.2
billion for 2023 compared to $6.4
billion for 2022, an increase of 11.7%. Organic sales for
2023 grew 5.4% as the acquisition of Rahi Systems positively
impacted reported net sales by 7.1%, while fluctuations in foreign
exchange rates and the number of workdays negatively impacted
reported net sales by 0.4% and 0.4%, respectively. The increase in
organic sales reflects price inflation, growth in data center,
security solutions and enterprise network infrastructure, and the
benefits of cross selling. The transfer of certain customer
accounts from the EES segment also positively impacted organic net
sales for CSS by approximately 3%. Adjusted EBITDA was $683.8 million for 2023, or 9.6% of net sales,
compared to $599.0 million for 2022,
or 9.4% of net sales. Adjusted EBITDA increased $84.8 million or 14.2% year-over-year. The
increase is primarily driven by sales growth and slightly lower
SG&A expenses as a percentage of net sales.
- UBS reported net sales of $6.6
billion for 2023 compared to $6.2
billion for 2022, an increase of 6.9%. Organic sales for
2023 grew 7.5% as fluctuations in foreign exchange rates and the
number of workdays negatively impacted reported net sales by 0.2%
and 0.4%, respectively. The increase in organic sales reflects
price inflation, growth in utility and integrated supply, and the
benefits of cross selling, partially offset by lower sales in
broadband, particularly in Canada.
Adjusted EBITDA was $739.3 million
for 2023, or 11.2% of net sales, compared to $677.3 million for 2022, or 10.9% of net sales.
Adjusted EBITDA increased $62.0
million, or 9.2% year-over-year. The increase is driven by
sales growth and gross margin improvement.
Webcast and Teleconference Access
Wesco will conduct a webcast and teleconference to discuss the
fourth quarter and full year 2023 earnings as described in this
News Release on Tuesday, February 13, 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
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
|
|
|
December 31,
2023
|
|
|
December 31,
2022
|
|
|
Net sales
|
$
5,473.4
|
|
|
$
5,558.5
|
|
|
Cost of goods sold
(excluding depreciation and amortization)
|
4,302.7
|
78.6 %
|
|
4,340.2
|
78.1 %
|
|
Selling, general and
administrative expenses
|
810.1
|
14.8 %
|
|
793.1
|
14.3 %
|
|
Depreciation and
amortization
|
44.8
|
|
|
43.4
|
|
|
Income from
operations
|
315.8
|
5.8 %
|
|
381.8
|
6.9 %
|
|
Interest expense,
net
|
97.0
|
|
|
87.3
|
|
|
Other expense,
net
|
10.5
|
|
|
4.0
|
|
|
Income before income
taxes
|
208.3
|
3.8 %
|
|
290.5
|
5.2 %
|
|
Provision for income
taxes
|
65.7
|
|
|
71.4
|
|
|
Net income
|
142.6
|
2.6 %
|
|
219.1
|
3.9 %
|
|
Net income attributable
to noncontrolling interests
|
0.6
|
|
|
0.2
|
|
|
Net income attributable
to WESCO International, Inc.
|
142.0
|
2.6 %
|
|
218.9
|
3.9 %
|
|
Preferred stock
dividends
|
14.4
|
|
|
14.4
|
|
|
Net income attributable
to common stockholders
|
$
127.6
|
2.3 %
|
|
$
204.6
|
3.7 %
|
|
|
|
|
|
|
|
Earnings per diluted
share attributable to common stockholders
|
$
2.45
|
|
|
$
3.90
|
|
|
Weighted-average common
shares outstanding and common
share equivalents used in computing earnings per diluted common
share
|
52.0
|
|
|
52.4
|
|
|
WESCO INTERNATIONAL,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(in millions, except
per share amounts)
(Unaudited)
|
|
|
Twelve Months
Ended
|
|
|
December 31,
2023
|
|
|
December 31,
2022
|
|
|
Net sales
|
$
22,385.2
|
|
|
$
21,420.1
|
|
|
Cost of goods sold
(excluding depreciation and amortization)
|
17,541.5
|
78.4 %
|
|
16,758.8
|
78.2 %
|
|
Selling, general and
administrative expenses
|
3,256.0
|
14.5 %
|
|
3,044.2
|
14.2 %
|
|
Depreciation and
amortization
|
181.3
|
|
|
179.0
|
|
|
Income from
operations
|
1,406.4
|
6.3 %
|
|
1,438.1
|
6.7 %
|
|
Interest expense,
net
|
389.3
|
|
|
294.4
|
|
|
Other expense,
net
|
25.1
|
|
|
7.0
|
|
|
Income before income
taxes
|
992.0
|
4.4 %
|
|
1,136.7
|
5.3 %
|
|
Provision for income
taxes
|
225.9
|
|
|
274.5
|
|
|
Net income
|
766.1
|
3.4 %
|
|
862.1
|
4.0 %
|
|
Net income attributable
to noncontrolling interests
|
0.6
|
|
|
1.7
|
|
|
Net income attributable
to WESCO International, Inc.
|
765.5
|
3.4 %
|
|
860.5
|
4.0 %
|
|
Preferred stock
dividends
|
57.4
|
|
|
57.4
|
|
|
Net income attributable
to common stockholders
|
$
708.1
|
3.2 %
|
|
$
803.1
|
3.7 %
|
|
|
|
|
|
|
|
Earnings per diluted
share attributable to common stockholders
|
$
13.54
|
|
|
$
15.33
|
|
|
Weighted-average common
shares outstanding and common
share equivalents used in computing earnings per diluted common
share
|
52.3
|
|
|
52.4
|
|
|
WESCO INTERNATIONAL,
INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(in
millions)
(Unaudited)
|
|
|
As of
|
|
December 31,
2023
|
|
December 31,
2022
|
|
Assets
|
|
|
|
|
Current
Assets
|
|
|
|
|
Cash and cash
equivalents
|
$
524.1
|
|
$
527.3
|
|
Trade accounts
receivable, net
|
3,639.5
|
|
3,662.7
|
|
Inventories
|
3,572.1
|
|
3,498.8
|
|
Other current
assets
|
655.9
|
|
641.7
|
|
Total current assets
|
8,391.6
|
|
8,330.5
|
|
|
|
|
|
Goodwill and intangible
assets
|
5,119.9
|
|
5,184.3
|
|
Other assets
|
1,549.4
|
|
1,296.8
|
|
Total assets
|
$
15,060.9
|
|
$
14,811.7
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Accounts
payable
|
$
2,431.5
|
|
$
2,728.2
|
|
Short-term debt and
current portion of long-term debt, net
|
8.6
|
|
70.5
|
|
Other current
liabilities
|
948.3
|
|
1,018.7
|
|
Total current liabilities
|
3,388.4
|
|
3,817.3
|
|
|
|
|
|
Long-term debt,
net
|
5,313.1
|
|
5,346.0
|
|
Other noncurrent
liabilities
|
1,327.5
|
|
1,198.8
|
|
Total liabilities
|
10,029.0
|
|
10,362.1
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
Total stockholders' equity
|
5,031.9
|
|
4,449.6
|
|
Total liabilities and stockholders' equity
|
$
15,060.9
|
|
$
14,811.7
|
|
WESCO INTERNATIONAL,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in
millions)
(Unaudited)
|
|
|
Twelve Months
Ended
|
|
December 31,
2023
|
|
December 31,
2022
|
|
Operating
Activities:
|
|
|
|
|
Net income
|
$
766.1
|
|
$
862.1
|
|
Add back
(deduct):
|
|
|
|
|
Depreciation and
amortization
|
181.3
|
|
179.0
|
|
Deferred income
taxes
|
(7.9)
|
|
(1.2)
|
|
Change in trade
receivables, net
|
52.2
|
|
(690.6)
|
|
Change in
inventories
|
(68.4)
|
|
(817.0)
|
|
Change in accounts
payable
|
(319.7)
|
|
552.9
|
|
Other, net
|
(110.4)
|
|
(74.2)
|
|
Net cash provided by
operating activities
|
493.2
|
|
11.0
|
|
|
|
|
|
Investing
Activities:
|
|
|
|
|
Capital
expenditures
|
(92.3)
|
|
(99.4)
|
|
Acquisition payments,
net of cash acquired
|
—
|
|
(186.8)
|
|
Other, net
|
2.7
|
|
2.6
|
|
Net cash used in
investing activities
|
(89.6)
|
|
(283.6)
|
|
|
|
|
|
Financing
Activities:
|
|
|
|
|
Debt borrowings
(repayments), net(1)
|
(120.0)
|
|
697.7
|
|
Payments for taxes
related to net-share settlement of equity awards
|
(68.3)
|
|
(25.8)
|
|
Repurchases of common
stock
|
(75.0)
|
|
(11.1)
|
|
Payment of common
stock dividends
|
(76.6)
|
|
—
|
|
Payment of preferred
stock dividends
|
(57.4)
|
|
(57.4)
|
|
Other, net
|
(6.6)
|
|
(19.5)
|
|
Net cash (used in)
provided by financing activities
|
(403.9)
|
|
584.0
|
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents
|
(2.9)
|
|
3.3
|
|
|
|
|
|
Net change in cash and
cash equivalents
|
(3.2)
|
|
314.8
|
|
Cash and cash
equivalents at the beginning of the period
|
527.3
|
|
212.6
|
|
Cash and cash
equivalents at the end of the period
|
$
524.1
|
|
$
527.3
|
|
|
|
(1) The year ended December 31, 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. The
year ended December 31, 2022 includes borrowings under the
Company's accounts receivable securitization and revolving credit
facilities that were used to partially fund the acquisition of Rahi
Systems.
|
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, restructuring costs,
pension settlement cost, 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)
|
|
December 31,
2023
|
|
December 31,
2022
|
|
Reported
|
|
Acquisition
|
|
Foreign
Exchange
|
|
Workday
|
|
Organic
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EES
|
$
2,084.2
|
|
$
2,168.4
|
|
(3.9) %
|
|
— %
|
|
0.2 %
|
|
— %
|
|
(4.1) %
|
|
CSS
|
1,791.3
|
|
1,762.8
|
|
1.6 %
|
|
2.2 %
|
|
0.8 %
|
|
— %
|
|
(1.4) %
|
|
UBS
|
1,597.9
|
|
1,627.2
|
|
(1.8) %
|
|
— %
|
|
0.1 %
|
|
— %
|
|
(1.9) %
|
|
Total net
sales
|
$
5,473.4
|
|
$
5,558.5
|
|
(1.5) %
|
|
0.7 %
|
|
0.4 %
|
|
— %
|
|
(2.6) %
|
|
|
Organic Sales Growth
by Segment - Twelve Months Ended:
|
|
|
Twelve Months
Ended
|
|
Growth/(Decline)
|
|
December 31,
2023
|
|
December 31,
2022
|
|
Reported
|
|
Acquisition
|
|
Foreign
Exchange
|
|
Workday
|
|
Organic
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EES
|
$
8,610.3
|
|
$
8,823.3
|
|
(2.4) %
|
|
— %
|
|
(0.6) %
|
|
(0.4) %
|
|
(1.4) %
|
|
CSS
|
7,152.2
|
|
6,401.5
|
|
11.7 %
|
|
7.1 %
|
|
(0.4) %
|
|
(0.4) %
|
|
5.4 %
|
|
UBS
|
6,622.7
|
|
6,195.3
|
|
6.9 %
|
|
— %
|
|
(0.2) %
|
|
(0.4) %
|
|
7.5 %
|
|
Total net
sales
|
$
22,385.2
|
|
$
21,420.1
|
|
4.5 %
|
|
2.1 %
|
|
(0.4) %
|
|
(0.4) %
|
|
3.2 %
|
|
|
Note: Organic sales
growth is a non-GAAP financial measure of sales performance.
Organic sales growth is calculated by deducting the percentage
impact from acquisitions and divestitures for one year following
the respective transaction, fluctuations in foreign exchange rates
and number of workdays from the reported percentage change in
consolidated net sales. Workday impact represents the change in the
number of operating days period-over-period after adjusting for
weekends and public holidays in the United States; there was no
change in the number of workdays in the fourth quarter of 2023
compared to the fourth quarter of 2022; 2023 had one less workday
compared to 2022.
|
|
WESCO
INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(in millions, except
per share amounts)
(Unaudited)
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
Gross
Profit:
|
December 31,
2023
|
|
December 31,
2022
|
|
December 31,
2023
|
|
December 31,
2022
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
5,473.4
|
|
$
5,558.5
|
|
$ 22,385.2
|
|
$ 21,420.1
|
|
Cost of goods sold
(excluding depreciation and amortization)
|
4,302.7
|
|
4,340.2
|
|
17,541.5
|
|
16,758.8
|
|
Gross
profit
|
$
1,170.7
|
|
$
1,218.3
|
|
$
4,843.7
|
|
$
4,661.3
|
|
Gross margin
|
21.4 %
|
|
21.9 %
|
|
21.6 %
|
|
21.8 %
|
|
|
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
|
|
Twelve Months
Ended
|
|
Adjusted SG&A
Expenses:
|
December 31,
2023
|
|
December 31,
2022
|
|
December 31,
2023
|
|
December 31,
2022
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
$
810.1
|
|
$
793.1
|
|
$
3,256.0
|
|
$
3,044.2
|
|
Merger-related and
integration costs(1)
|
(10.0)
|
|
(15.2)
|
|
(55.4)
|
|
(67.4)
|
|
Restructuring
costs(2)
|
(1.3)
|
|
—
|
|
(16.7)
|
|
—
|
|
Adjusted selling,
general and administrative expenses
|
$
798.8
|
|
$
777.8
|
|
$
3,183.9
|
|
$
2,976.8
|
|
Percentage of net
sales
|
14.6 %
|
|
14.0 %
|
|
14.2 %
|
|
13.9 %
|
|
|
|
|
|
|
|
|
|
Adjusted Income from
Operations:
|
|
|
|
|
|
|
|
|
Income from
operations
|
$
315.8
|
|
$
381.8
|
|
$
1,406.4
|
|
$
1,438.1
|
|
Merger-related and
integration costs(1)
|
10.0
|
|
15.2
|
|
55.4
|
|
67.4
|
|
Restructuring
costs(2)
|
1.3
|
|
—
|
|
16.7
|
|
—
|
|
Accelerated trademark
amortization(3)
|
0.4
|
|
0.4
|
|
1.6
|
|
9.8
|
|
Adjusted income from
operations
|
$
327.5
|
|
$
397.4
|
|
$
1,480.1
|
|
$
1,515.3
|
|
Adjusted income from
operations margin %
|
6.0 %
|
|
7.1 %
|
|
6.6 %
|
|
7.1 %
|
|
|
|
|
|
|
|
|
|
Adjusted Other
Expense, net:
|
|
|
|
|
|
|
|
|
Other expense,
net
|
$
10.5
|
|
$
4.0
|
|
$
25.1
|
|
$
7.0
|
|
Pension settlement
cost(4)
|
(2.8)
|
|
—
|
|
(2.8)
|
|
—
|
|
Adjusted other expense,
net
|
$
7.7
|
|
$
4.0
|
|
$
22.3
|
|
$
7.0
|
|
|
|
|
|
|
|
|
|
Adjusted Provision
for Income Taxes:
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
$
65.7
|
|
$
71.4
|
|
$
225.9
|
|
$
274.5
|
|
Income tax effect of
adjustments to income from operations(5)
|
4.2
|
|
3.9
|
|
21.0
|
|
20.2
|
|
Adjusted provision for
income taxes
|
$
69.9
|
|
$
75.2
|
|
$
246.9
|
|
$
294.7
|
|
|
|
(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) Pension settlement cost represents expense related to
the partial settlement of the Company's pension plan in the U.S.,
partially offset by pension settlement gains related to other
plans.
|
|
(5) The adjustments to income from operations have been
tax effected at rates of 29.0% and 27.5% for the three and twelve
months ended December 31, 2023, respectively, and 24.8% and
26.1% for the three and twelve months ended December 31, 2022,
respectively.
|
|
WESCO
INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(in millions, except
per share amounts)
(Unaudited)
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
Adjusted Earnings
per Diluted Share:
|
December 31,
2023
|
|
December 31,
2022
|
|
December 31,
2023
|
|
December 31,
2022
|
|
|
|
|
|
|
|
|
|
Adjusted income from
operations
|
$
327.5
|
|
$
397.4
|
|
$
1,480.1
|
|
$
1,515.3
|
|
Interest expense,
net
|
97.0
|
|
87.3
|
|
389.3
|
|
294.4
|
|
Adjusted other
expense, net
|
7.7
|
|
4.0
|
|
22.3
|
|
7.0
|
|
Adjusted income before
income taxes
|
222.8
|
|
306.1
|
|
1,068.5
|
|
1,213.9
|
|
Adjusted provision for
income taxes
|
69.9
|
|
75.2
|
|
246.9
|
|
294.7
|
|
Adjusted net
income
|
152.9
|
|
230.9
|
|
821.6
|
|
919.2
|
|
Net income attributable
to noncontrolling interests
|
0.6
|
|
0.2
|
|
0.6
|
|
1.7
|
|
Adjusted net income
attributable to WESCO International, Inc.
|
152.3
|
|
230.7
|
|
821.0
|
|
917.5
|
|
Preferred stock
dividends
|
14.4
|
|
14.4
|
|
57.4
|
|
57.4
|
|
Adjusted net income
attributable to common stockholders
|
$
137.9
|
|
$
216.3
|
|
$
763.6
|
|
$
860.1
|
|
|
|
|
|
|
|
|
|
Diluted
shares
|
52.0
|
|
52.4
|
|
52.3
|
|
52.4
|
|
Adjusted earnings per
diluted share
|
$
2.65
|
|
$
4.13
|
|
$
14.60
|
|
$
16.42
|
|
|
Note: For the three and
twelve months ended December 31, 2023, SG&A expenses,
income from operations, other non-operating expense, the provision
for income taxes and earnings per diluted share have been adjusted
to exclude merger-related and integration costs, restructuring
costs, accelerated amortization expense associated with migrating
to the Company's master brand architecture, net pension settlement
cost primarily related to the partial settlement of the Company's
pension plan in the U.S., partially offset by pension settlement
gains related to other plans, and the related income tax effects.
For the three and twelve months ended December 31, 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
December 31, 2023
|
|
EBITDA and Adjusted
EBITDA by Segment:
|
|
EES
|
|
CSS
|
|
UBS
|
|
Corporate
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
|
$
152.4
|
|
$
117.4
|
|
$
160.4
|
|
$
(302.6)
|
|
$
127.6
|
|
Net income (loss)
attributable to noncontrolling interests
|
|
0.3
|
|
0.6
|
|
—
|
|
(0.3)
|
|
0.6
|
|
Preferred stock
dividends
|
|
—
|
|
—
|
|
—
|
|
14.4
|
|
14.4
|
|
Provision for income
taxes(1)
|
|
—
|
|
—
|
|
—
|
|
65.7
|
|
65.7
|
|
Interest expense,
net(1)
|
|
—
|
|
—
|
|
—
|
|
97.0
|
|
97.0
|
|
Depreciation and
amortization
|
|
11.0
|
|
17.8
|
|
6.3
|
|
9.7
|
|
44.8
|
|
EBITDA
|
|
$
163.7
|
|
$
135.8
|
|
$
166.7
|
|
$
(116.1)
|
|
$
350.1
|
|
Other (income)
expense, net
|
|
(1.8)
|
|
36.1
|
|
(0.9)
|
|
(22.9)
|
|
10.5
|
|
Stock-based
compensation expense
|
|
2.1
|
|
1.4
|
|
0.8
|
|
9.1
|
|
13.4
|
|
Merger-related and
integration costs(2)
|
|
—
|
|
—
|
|
—
|
|
10.0
|
|
10.0
|
|
Restructuring
costs(3)
|
|
—
|
|
—
|
|
—
|
|
1.3
|
|
1.3
|
|
Adjusted
EBITDA
|
|
$
164.0
|
|
$
173.3
|
|
$
166.6
|
|
$
(118.6)
|
|
$
385.3
|
|
Adjusted EBITDA
margin %
|
|
7.9 %
|
|
9.7 %
|
|
10.4 %
|
|
|
|
7.0 %
|
|
|
(1)
The reportable segments do not incur income taxes and interest
expense as these costs are centrally controlled through the
Corporate tax and treasury functions.
|
|
(2)
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.
|
|
(3)
Restructuring costs include severance costs incurred pursuant to an
ongoing restructuring plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31, 2022
|
|
EBITDA and Adjusted
EBITDA by Segment:
|
|
EES
|
|
CSS
|
|
UBS
|
|
Corporate
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
|
$
185.7
|
|
$
153.9
|
|
$
176.4
|
|
$
(311.4)
|
|
$
204.6
|
|
Net (loss) income
attributable to noncontrolling interests
|
|
(0.4)
|
|
—
|
|
—
|
|
0.6
|
|
0.2
|
|
Preferred stock
dividends
|
|
—
|
|
—
|
|
—
|
|
14.4
|
|
14.4
|
|
Provision for income
taxes(1)
|
|
—
|
|
—
|
|
—
|
|
71.4
|
|
71.4
|
|
Interest expense,
net(1)
|
|
—
|
|
—
|
|
—
|
|
87.3
|
|
87.3
|
|
Depreciation and
amortization
|
|
9.8
|
|
16.5
|
|
5.9
|
|
11.2
|
|
43.4
|
|
EBITDA
|
|
$
195.1
|
|
$
170.4
|
|
$
182.3
|
|
$
(126.7)
|
|
$
421.2
|
|
Other expense
(income), net
|
|
0.6
|
|
(2.0)
|
|
2.4
|
|
2.9
|
|
4.0
|
|
Stock-based
compensation expense(2)
|
|
1.9
|
|
1.1
|
|
0.9
|
|
6.8
|
|
10.7
|
|
Merger-related and
integration costs(3)
|
|
—
|
|
—
|
|
—
|
|
15.2
|
|
15.2
|
|
Adjusted
EBITDA
|
|
$
197.6
|
|
$
169.5
|
|
$
185.6
|
|
$ (101.7)
|
|
$
451.1
|
|
Adjusted EBITDA
margin %
|
|
9.1 %
|
|
9.6 %
|
|
11.4 %
|
|
|
|
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 December 31, 2022 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.
|
|
WESCO
INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(in millions, except
per share amounts)
(Unaudited)
|
|
|
|
Three Months Ended
September 30, 2023
|
|
EBITDA and Adjusted
EBITDA by Segment:
|
|
EES
|
|
CSS
|
|
UBS
|
|
Corporate
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
|
$
177.9
|
|
$
146.0
|
|
$
188.7
|
|
$
(293.6)
|
|
$
219.0
|
|
Net income (loss)
attributable to noncontrolling interests
|
|
—
|
|
0.7
|
|
—
|
|
(0.1)
|
|
0.6
|
|
Preferred stock
dividends
|
|
—
|
|
—
|
|
—
|
|
14.4
|
|
14.4
|
|
Provision for income
taxes(1)
|
|
—
|
|
—
|
|
—
|
|
44.3
|
|
44.3
|
|
Interest expense,
net(1)
|
|
—
|
|
—
|
|
—
|
|
98.5
|
|
98.5
|
|
Depreciation and
amortization
|
|
10.9
|
|
18.0
|
|
6.3
|
|
9.9
|
|
45.1
|
|
EBITDA
|
|
$
188.8
|
|
$
164.7
|
|
$
195.0
|
|
$
(126.6)
|
|
$
421.9
|
|
Other expense
(income), net
|
|
1.7
|
|
9.7
|
|
0.6
|
|
(8.3)
|
|
3.7
|
|
Stock-based
compensation expense
|
|
1.0
|
|
1.1
|
|
0.8
|
|
7.9
|
|
10.8
|
|
Merger-related and
integration costs(2)
|
|
—
|
|
—
|
|
—
|
|
15.0
|
|
15.0
|
|
Restructuring
costs(3)
|
|
—
|
|
—
|
|
—
|
|
5.6
|
|
5.6
|
|
Adjusted
EBITDA
|
|
$
191.5
|
|
$
175.5
|
|
$
196.4
|
|
$
(106.4)
|
|
$
457.0
|
|
Adjusted EBITDA
margin %
|
|
8.7 %
|
|
9.9 %
|
|
11.7 %
|
|
|
|
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)
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.
|
|
(3)
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)
|
|
|
|
Year Ended December
31, 2023
|
|
EBITDA and Adjusted
EBITDA by Segment:
|
|
EES
|
|
CSS
|
|
UBS
|
|
Corporate
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
|
$
668.7
|
|
$
531.1
|
|
$
712.5
|
|
$
(1,204.2)
|
|
$
708.1
|
|
Net (loss) income
attributable to noncontrolling interests
|
|
(0.5)
|
|
1.6
|
|
—
|
|
(0.5)
|
|
0.6
|
|
Preferred stock
dividends
|
|
—
|
|
—
|
|
—
|
|
57.4
|
|
57.4
|
|
Provision for income
taxes(1)
|
|
—
|
|
—
|
|
—
|
|
225.9
|
|
225.9
|
|
Interest expense,
net(1)
|
|
—
|
|
—
|
|
—
|
|
389.3
|
|
389.3
|
|
Depreciation and
amortization
|
|
43.3
|
|
71.7
|
|
25.0
|
|
41.3
|
|
181.3
|
|
EBITDA
|
|
$
711.5
|
|
$
604.4
|
|
$
737.5
|
|
$
(490.8)
|
|
$
1,562.6
|
|
Other expense
(income), net
|
|
10.1
|
|
74.2
|
|
(1.4)
|
|
(57.8)
|
|
25.1
|
|
Stock-based
compensation expense(2)
|
|
5.8
|
|
5.2
|
|
3.2
|
|
31.3
|
|
45.5
|
|
Merger-related and
integration costs(3)
|
|
—
|
|
—
|
|
—
|
|
55.4
|
|
55.4
|
|
Restructuring
costs(4)
|
|
—
|
|
—
|
|
—
|
|
16.7
|
|
16.7
|
|
Adjusted
EBITDA
|
|
$
727.4
|
|
$
683.8
|
|
$
739.3
|
|
$
(445.2)
|
|
$
1,705.3
|
|
Adjusted EBITDA
margin %
|
|
8.4 %
|
|
9.6 %
|
|
11.2 %
|
|
|
|
7.6 %
|
|
|
(1)
The reportable segments do not incur income taxes and interest
expense as these costs are centrally controlled through the
Corporate tax and treasury functions.
|
|
(2) Stock-based compensation
expense in the calculation of adjusted EBITDA for the year ended
December 31, 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.
|
|
|
|
Year Ended December
31, 2022
|
|
EBITDA and Adjusted
EBITDA by Segment:
|
|
EES
|
|
CSS
|
|
UBS
|
|
Corporate
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
|
$
801.3
|
|
$
527.0
|
|
$
648.5
|
|
$ (1,173.7)
|
|
$
803.1
|
|
Net income
attributable to noncontrolling interests
|
|
0.2
|
|
—
|
|
—
|
|
1.5
|
|
1.7
|
|
Preferred stock
dividends
|
|
—
|
|
—
|
|
—
|
|
57.4
|
|
57.4
|
|
Provision for income
taxes(1)
|
|
—
|
|
—
|
|
—
|
|
274.5
|
|
274.5
|
|
Interest expense,
net(1)
|
|
—
|
|
—
|
|
—
|
|
294.4
|
|
294.4
|
|
Depreciation and
amortization
|
|
42.6
|
|
68.4
|
|
23.3
|
|
44.7
|
|
179.0
|
|
EBITDA
|
|
$
844.1
|
|
$
595.4
|
|
$
671.7
|
|
$
(501.1)
|
|
$
1,610.1
|
|
Other (income)
expense, net
|
|
(2.0)
|
|
(1.3)
|
|
2.0
|
|
8.3
|
|
7.0
|
|
Stock-based
compensation expense(2)
|
|
9.2
|
|
4.9
|
|
3.5
|
|
23.4
|
|
41.0
|
|
Merger-related and
integration costs(3)
|
|
—
|
|
—
|
|
—
|
|
67.4
|
|
67.4
|
|
Adjusted
EBITDA
|
|
$
851.3
|
|
$
599.0
|
|
$
677.3
|
|
$
(401.9)
|
|
$
1,725.6
|
|
Adjusted EBITDA
margin %
|
|
9.6 %
|
|
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
year ended December 31, 2022 excludes $5.4 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.
|
|
WESCO
INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(in millions, except
per share amounts)
(Unaudited)
|
|
|
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.
|
|
|
Twelve Months
Ended
|
|
Financial
Leverage:
|
December 31,
2023
|
|
December 31,
2022
|
|
|
|
|
|
Net income
attributable to common stockholders
|
$
708.1
|
|
$
803.1
|
|
Net income
attributable to noncontrolling interests
|
0.6
|
|
1.7
|
|
Preferred stock
dividends
|
57.4
|
|
57.4
|
|
Provision for income
taxes
|
225.9
|
|
274.5
|
|
Interest expense,
net
|
389.3
|
|
294.4
|
|
Depreciation and
amortization
|
181.3
|
|
179.0
|
|
EBITDA
|
$
1,562.6
|
|
$
1,610.1
|
|
Other expense,
net
|
25.1
|
|
7.0
|
|
Stock-based
compensation expense
|
45.5
|
|
41.0
|
|
Merger-related and
integration costs(1)
|
55.4
|
|
67.4
|
|
Restructuring
costs(2)
|
16.7
|
|
—
|
|
Adjusted
EBITDA
|
$
1,705.3
|
|
$
1,725.6
|
|
|
|
|
|
As of
|
|
December 31,
2023
|
|
December 31,
2022
|
|
Short-term debt and
current portion of long-term debt, net
|
$
8.6
|
|
$
70.5
|
|
Long-term debt,
net
|
5,313.1
|
|
5,346.0
|
|
Debt discount and debt
issuance costs(3)
|
43.0
|
|
57.9
|
|
Fair value adjustments
to Anixter Senior Notes due 2023 and 2025(3)
|
(0.1)
|
|
(0.3)
|
|
Total debt
|
5,364.6
|
|
5,474.1
|
|
Less: Cash and cash
equivalents
|
524.1
|
|
527.3
|
|
Total debt, net of
cash
|
$
4,840.5
|
|
$
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
|
|
Twelve Months
Ended
|
|
Free Cash
Flow:
|
December 31,
2023
|
|
December 31,
2022
|
|
December 31,
2023
|
|
December 31,
2022
|
|
|
|
|
|
|
|
|
|
Cash flow provided by
operations
|
$
69.3
|
|
$
421.7
|
|
$
493.2
|
|
$
11.0
|
|
Less: Capital
expenditures
|
(28.7)
|
|
(40.0)
|
|
(92.3)
|
|
(99.4)
|
|
Add: Merger-related,
integration and restructuring cash costs
|
18.6
|
|
17.1
|
|
42.7
|
|
66.5
|
|
Free cash
flow
|
$
59.2
|
|
$
398.7
|
|
$
443.6
|
|
$
(21.9)
|
|
Percentage of
adjusted net income
|
38.7 %
|
|
172.7 %
|
|
54.0 %
|
|
(2.4) %
|
|
|
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 twelve months ended December 31, 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.