First quarter summary:
- Net sales of $4.0 billion, up more than double due to the
Anixter merger
- Up 3.2% on a pro forma workday-adjusted basis
- Operating profit of $133.3 million; operating margin of 3.3%
- Gross margin of 20.1%, up 100 basis points year-over-year and
50 bps basis points sequentially
- Adjusted operating profit of $170.6 million; adjusted operating
margin of 4.2%, up 90 basis points
- Adjusted EBITDA of $216.5 million; adjusted EBITDA margin of
5.4%, up 100 basis points
- Earnings per diluted share of $0.87
- Adjusted earnings per diluted share of $1.43
- Operating cash flow of $120.5 million
- Free cash flow of $124.8 million, 141% of adjusted net
income
- Leverage of 4.9x; improvement of 0.4x sequentially and 0.8x
since Anixter merger
- Net debt reduction of $144 million in the first quarter, and
$534 million since the Anixter merger
- Raising 2021 outlook for adjusted earnings per diluted share to
a range of $6.80 to $7.30
WESCO International, Inc. (NYSE: WCC), a leading provider of
business-to-business distribution, logistics services and supply
chain solutions, announces its results for the first quarter of
2021.
“We’re off to a great start to the year and delivered excellent
results across the board that exceeded our expectations. I am very
proud of our team and the work that they are doing in executing our
integration plan, delivering the synergies, and capturing the value
of the transformational combination of WESCO and Anixter,” said
John Engel, Chairman, President and CEO. “We’re outperforming our
markets, delivering significant margin expansion, and generating
very strong free cash flow. With over $500 million of debt
reduction over the last three quarters, our financial leverage is
now below 5.0X, showing the power of our business model. The first
quarter is another strong proof point of the substantial value
creation potential of WESCO plus Anixter.”
“We are seeing positive sales and margin momentum across each of
our three global business units. Backlog has reached a new all-time
record level, our margin improvement programs are generating
results, and structural cost takeout has increased our operating
leverage. As a result of our strong first quarter results and
accelerated synergy realization to start the year, we are raising
our full-year 2021 outlook for sales, synergies, and profitability.
We now expect sales to increase 4.5% to 7.5%, adjusted EBITDA
margin to expand to 5.8% to 6.1%, and adjusted EPS to grow to $6.80
to $7.30.”
“The strength of our franchise, power of our industry-leading
value proposition, and benefits of our increased scale, is now more
evident than ever. As the economic recovery accelerates, we are
exceptionally well positioned to capitalize on the secular growth
trends of electrification, automation, communications and
security.”
The following are results for the three months ended March 31,
2021 compared to the three months ended March 31, 2020:
- Net sales were $4.0 billion for the first quarter of 2021
compared to $2.0 billion for the first quarter of 2020, an increase
of 105.3% due to the merger with Anixter that was completed on June
22, 2020. On a pro forma basis, and adjusted for two fewer
workdays, net sales for the first quarter of 2021 were up 3.2%
compared to the first quarter of the prior year. This increase
reflects growth across all segments. At the end of the first
quarter of 2021, WESCO's book-to-bill ratio was above 1.0 and
backlog has grown double digits since the end of the fourth quarter
of 2020.
- Cost of goods sold for the first quarter of 2021 was $3.2
billion compared to $1.6 billion for the first quarter of 2020, and
gross profit was $811.0 million and $376.4 million, respectively.
As a percentage of net sales, gross profit was 20.1% for the first
quarter of 2021, an increase of 100 basis points compared to 19.1%
for the first quarter of 2020. Gross profit as a percentage of
sales for the first quarter of 2021 reflects the favorable impact
of margin improvement initiatives, partially offset by a write-down
to the carrying value of certain personal protective equipment
products, which had a negative impact of 20 basis points.
Sequentially, gross profit as a percentage of net sales increased
50 basis points from 19.6% for the fourth quarter of 2020, as
adjusted for merger-related fair value adjustments of $15.7
million, as well as an out-of-period adjustment of $23.3 million
related to inventory absorption accounting.
- Selling, general and administrative expenses were $636.6
million, or 15.8% of net sales, for the first quarter of 2021,
compared to $299.4 million, or 15.2% of net sales, for the first
quarter of 2020. SG&A expenses for the first quarter of 2021
include merger-related costs of $46.3 million, as well as a net
gain of $8.9 million resulting from the sale of WESCO's legacy
utility and data communications businesses in Canada, which were
divested in connection with the merger. Adjusted for these amounts,
SG&A expenses were $599.2 million, or 14.8% of net sales, for
the first quarter of 2021. SG&A expenses for the first quarter
of 2020 include $4.6 million of merger-related costs. Adjusted for
these costs, SG&A expenses were $294.8 million, or 15.0% of net
sales for the first quarter of 2020.
- Operating profit was $133.3 million for the first quarter of
2021, compared to $60.9 million for the first quarter of 2020.
Operating profit as a percentage of net sales was 3.3% for the
current quarter, compared to 3.1% for the first quarter of the
prior year. Operating profit for the first quarter of 2021 includes
merger-related costs and the net gain on the Canadian divestitures,
as described above. Adjusted for these amounts, operating profit
was $170.6 million, or 4.2% of net sales. Adjusted for
merger-related costs of $4.6 million, operating profit was $65.5
million for the first quarter of 2020, or 3.3% of net sales.
Adjusted operating margin was up 90 basis points compared to the
prior year.
- Net interest expense for the first quarter of 2021 was $70.4
million, compared to $16.6 million for the first quarter of 2020.
The increase in interest expense was driven by financing activity
related to the Anixter merger.
- The effective tax rate for the first quarter of 2021 was 9.9%,
compared to 23.1% for the first quarter of 2020. The lower
effective tax rate in the current quarter was primarily due to a
discrete income tax benefit associated with a change in valuation
allowance related to foreign tax credit carryforwards, which
impacted the effective tax rate by approximately 12.7 percentage
points.
- Net income attributable to common stockholders was $44.8
million for the first quarter of 2021, compared to $34.4 million
for the first quarter of 2020. Adjusted for merger-related costs
and interest, the net gain on the Canadian divestitures, and the
related income tax effects, net income attributable to common
stockholders was $74.1 million and $38.3 million for the first
quarter of 2021 and 2020, respectively, an increase of 93.2%.
- Earnings per diluted share for the first quarter of 2021 was
$0.87, based on 51.7 million diluted shares, compared to $0.82 for
the first quarter of 2020, based on 42.1 million diluted shares.
Adjusted for merger-related costs and interest, the net gain on the
Canadian divestitures, and the related income tax effects, earnings
per diluted share for the first quarter of 2021 and 2020 was $1.43
and $0.91, respectively, an increase of 57.1%.
- Operating cash flow for the first quarter of 2021 was $120.5
million, compared to $31.5 million for the first quarter of 2020.
Free cash flow for the first quarter of 2021 was $124.8 million, or
141% of adjusted net income, compared to $15.8 million, or 41% of
adjusted net income, for the first quarter of 2020.
Segment Results
The Company has operating segments that are organized around
three strategic business units consisting of Electrical &
Electronic Solutions ("EES"), Communications & Security
Solutions ("CSS") and Utility & Broadband Solutions
("UBS").
Corporate expenses are incurred to obtain and coordinate
financing, tax, information technology, legal and other related
services. Segment results include depreciation expense or other
allocations related to various corporate assets. Interest expense
and other non-operating items are not allocated to the segments or
reviewed on a segment basis. Corporate expenses are not directly
identifiable with our reportable segments and 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
March 31, 2021 compared to the three months ended March 31, 2020,
which primarily reflect the impact of the merger with Anixter. For
the first quarter of 2021, adjusted EBITDA margin improved for all
segments (EES, CSS and UBS) and reflects the favorable impact of
margin improvement initiatives, as well as lower operating expenses
due to cost reduction actions, synergy capture and integration
initiatives.
- EES reported net sales of $1.7 billion for the first quarter of
2021, compared to $1.1 billion for the first quarter of 2020, an
increase of 54.4%. In addition to the impact from the merger, the
increase reflects sales growth in our construction and original
equipment manufacturer businesses. Operating profit was $100.1
million for the first quarter of 2021, compared to $43.3 million
for the first quarter of 2020. Adjusted EBITDA was $112.0 million
for the first quarter of 2021, or 6.5% of net sales, compared to
$51.0 million for the first quarter of 2020, or 4.6% of net
sales.
- CSS reported net sales of $1.3 billion for the first quarter of
2021, compared to $223.7 million for the first quarter of 2020, an
increase of 459.0%. The increase reflects the impact of the merger.
Operating profit was $74.0 million for the first quarter of 2021,
compared to $9.9 million for the first quarter of 2020. The
inventory write-down described above negatively impacted the
operating profit of the CSS segment for the first quarter of 2021.
Adjusted EBITDA was $90.7 million for the first quarter of 2021, or
7.3% of net sales, compared to $11.9 million for the first quarter
of 2020, or 5.3% of net sales.
- UBS reported net sales of $1.1 billion for the first quarter of
2021, compared to $630.5 million for the first quarter of 2020, an
increase of 69.7%. Along with the impact of the merger, the
increase reflects sales growth in our utility and broadband
businesses, partially offset by lower sales from integrated supply
programs due to the disruption caused by the COVID-19 pandemic.
Operating profit was $87.0 million for the first quarter of 2021,
compared to $41.8 million for the first quarter of 2020. Operating
profit for the first quarter of 2021 includes the benefit from the
Canadian divestitures, as described above. Adjusted EBITDA was
$83.7 million for the first quarter of 2021, or 7.8% of net sales,
compared to $45.6 million for the first quarter of 2020, or 7.2% of
net sales.
Webcast and
Teleconference Access
WESCO will conduct a webcast and teleconference to discuss the
first quarter of 2021 earnings as described in this News Release on
Thursday, May 6, 2021, 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
www.wesco.investorroom.com. The call will be archived on this
internet site for seven days.
WESCO International, Inc. (NYSE: WCC), a publicly traded FORTUNE
500® company headquartered in Pittsburgh, Pennsylvania, is a
leading provider of business-to-business distribution, logistics
services and supply chain solutions. Pro forma 2020 annual sales
were over $16 billion, including Anixter International Inc., which
it acquired in June 2020. 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 nearly 18,000 people, maintains
relationships with approximately 30,000 suppliers, and serves more
than 125,000 customers worldwide. With nearly 1,500,000 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
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, expectations
and intentions, statements that address the combined company's
expected future business and financial performance, and other
statements identified by words such as "anticipate," "plan,"
"believe," "estimate," "intend," "expect," "project," "will" and
similar words, phrases or expressions. 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.
Those risks, uncertainties and assumptions include the risk of
any unexpected costs or expenses resulting from the transaction,
the risk of any litigation or post-closing regulatory action
relating to the transaction, the risk that the transaction could
have an adverse effect on the ability of the combined company to
retain customers and retain and hire key personnel and maintain
relationships with its suppliers, customers and other business
relationships and on its operating results and business generally,
or the risk that problems may arise in successfully integrating the
businesses of the companies, which may result in the combined
company not operating as effectively and efficiently as expected,
the risk that the combined company may be unable to achieve
synergies or other anticipated benefits of the proposed transaction
or it may take longer than expected to achieve those synergies or
benefits, the risk that the leverage of the company may be higher
than anticipated, the impact of natural disasters, health epidemics
and other outbreaks, especially the outbreak of COVID-19 since
December 2019, which may have a material adverse effect on the
combined company's business, results of operations and financial
conditions, and other important factors that could cause actual
results to differ materially from those projected. All such factors
are difficult to predict and are beyond each 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, 2020 and WESCO's
other reports filed with the U.S. Securities and Exchange
Commission ("SEC").
WESCO INTERNATIONAL,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(dollar amounts in thousands,
except per share amounts)
(Unaudited)
Three Months Ended
March 31, 2021
March 31, 2020
Net sales
$
4,041,477
$
1,968,647
Cost of goods sold (excluding depreciation
and amortization)
3,230,441
79.9
%
1,592,249
80.9
%
Selling, general and administrative
expenses
636,576
15.8
%
299,392
15.2
%
Depreciation and amortization
41,209
16,093
Income from operations
133,251
3.3
%
60,913
3.1
%
Interest expense, net
70,373
16,592
Other, net
(2,807
)
(120
)
Income before income taxes
65,685
1.6
%
44,441
2.3
%
Provision for income taxes
6,531
10,266
Net income
59,154
1.5
%
34,175
1.7
%
Net loss attributable to noncontrolling
interests
(24
)
(232
)
Net income attributable to WESCO
International, Inc.
59,178
1.5
%
34,407
1.7
%
Preferred stock dividends
14,352
—
Net income attributable to common
stockholders
$
44,826
1.1
%
$
34,407
1.7
%
Earnings per diluted share attributable to
common stockholders
$
0.87
$
0.82
Weighted-average common shares outstanding
and common share equivalents used in computing earnings per diluted
common share (in thousands)
51,708
42,075
Reportable Segments
Net sales:
Electrical & Electronic Solutions
$
1,720,813
$
1,114,456
Communications & Security
Solutions
1,250,615
223,726
Utility & Broadband Solutions
1,070,049
630,465
$
4,041,477
$
1,968,647
Income from operations:
Electrical & Electronic Solutions
$
100,111
$
43,326
Communications & Security
Solutions
73,964
9,946
Utility & Broadband Solutions
87,030
41,785
Corporate
(127,854
)
(34,144
)
$
133,251
$
60,913
WESCO INTERNATIONAL,
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(dollar amounts in thousands)
(Unaudited)
March 31, 2021
December 31, 2020
Assets
Current Assets
Cash and cash equivalents
$
303,887
$
449,135
Trade accounts receivable, net
2,574,803
2,466,903
Inventories
2,290,453
2,163,831
Other current assets
405,997
427,109
Total current assets
5,575,140
5,506,978
Goodwill and intangible assets
5,245,486
5,252,664
Other assets
1,057,644
1,120,572
Total assets
$
11,878,270
$
11,880,214
Liabilities and Stockholders'
Equity
Current Liabilities
Accounts payable
$
1,955,365
$
1,707,329
Short-term borrowings and current portion
of long-term debt(1)
20,802
528,830
Other current liabilities
749,844
750,836
Total current liabilities
2,726,011
2,986,995
Long-term debt, net
4,592,734
4,369,953
Other noncurrent liabilities
1,159,822
1,186,877
Total liabilities
8,478,567
8,543,825
Stockholders' Equity
Total stockholders' equity
3,399,703
3,336,389
Total liabilities and stockholders'
equity
$
11,878,270
$
11,880,214
(1)
On January 14, 2021, the Company
redeemed its $500.0 million aggregate principal amount of 5.375%
Senior Notes due 2021 (the "2021 Notes").
WESCO INTERNATIONAL,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(dollar amounts in thousands)
(Unaudited)
Three Months Ended
March 31, 2021
March 31, 2020
Operating Activities:
Net income
$
59,154
$
34,175
Add back (deduct):
Depreciation and amortization
41,209
16,093
Deferred income taxes
(13,074
)
1,979
Change in trade receivables, net
(117,412
)
(53,944
)
Change in inventories
(124,772
)
37,807
Change in accounts payable
250,987
(10,858
)
Other, net
24,398
6,276
Net cash provided by operating
activities
120,490
31,528
Investing Activities:
Capital expenditures
(10,211
)
(15,762
)
Other, net(1)
54,753
(94,503
)
Net cash provided by (used in) investing
activities
44,542
(110,265
)
Financing Activities:
Debt borrowings, net(2)
(288,499
)
284,617
Equity activity, net
(4,342
)
(1,566
)
Other, net(3)
(19,332
)
(4,360
)
Net cash (used in) provided by financing
activities
(312,173
)
278,691
Effect of exchange rate changes on cash
and cash equivalents
1,893
(8,296
)
Net change in cash and cash
equivalents
(145,248
)
191,658
Cash and cash equivalents at the beginning
of the period
449,135
150,902
Cash and cash equivalents at the end of
the period
$
303,887
$
342,560
(1)
For the three months ended March
31, 2021, other investing activities includes cash consideration
totaling approximately $54.1 million from the sale of WESCO's
legacy utility and data communications businesses in Canada. The
Company used the net proceeds from the divestitures to repay
indebtedness. Other investing activities for the three months ended
March 31, 2020 includes a $100.0 million termination fee that was
required to terminate Anixter's then-existing merger agreement with
Clayton, Dubilier & Rice, LLC.
(2)
The three months ended March 31,
2021 includes the redemption of the Company's $500.0 million
aggregate principal amount of 2021 Notes. The redemption of the
2021 Notes was funded with excess cash, as well as borrowings under
the Company's accounts receivable securitization and revolving
credit facilities.
(3)
Includes $14.4 million of
dividends paid to holders of Series A preferred stock.
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 pro forma workday-adjusted net
sales, gross profit, adjusted gross profit, gross margin, adjusted
gross margin, earnings before interest, taxes, depreciation and
amortization (EBITDA), adjusted EBITDA, adjusted EBITDA margin, pro
forma adjusted EBITDA, financial leverage, pro forma financial
leverage, free cash flow, adjusted income from operations, adjusted
operating margin, adjusted interest expense, net, adjusted
provision for 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 sales performance, and the use of debt and
liquidity on a comparable basis. Additionally, certain non-GAAP
measures either focus on or exclude items impacting comparability
of results such as merger-related 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
(dollar amounts in thousands,
except per share data)
(Unaudited)
Pro Forma Workday-Adjusted Net
Sales:
Three Months Ended
March 31, 2021
March 31, 2020
Growth
Reported
Reported
Anixter(1)
Pro Forma
Reported
Pro Forma
Adjusted(2)
Net sales
$
4,041,477
$
1,968,647
$
2,071,662
$
4,040,309
105.3%
—%
3.2%
(1)
Represents Anixter’s reported
results for the period from January 4, 2020 to April 3, 2020, as
previously filed in an exhibit to Form 8-K on November 4, 2020.
(2)
Represents the percentage impact
of 62 workdays in the three months ended March 31, 2021 compared to
64 workdays in the three months ended March 31, 2020.
Note: Pro forma workday-adjusted net sales is a non-GAAP
financial measure of sales performance. Pro forma workday-adjusted
net sales gives effect to the combination of WESCO and Anixter as
if it had occurred at the beginning of the prior quarterly period,
and adjusts for the percentage impact from the number of workdays
in the comparable periods.
Three Months Ended
Gross Profit:
March 31, 2021
March 31, 2020
Net sales
$
4,041,477
$
1,968,647
Cost of goods sold (excluding depreciation
and amortization)
3,230,441
1,592,249
Gross profit
$
811,036
$
376,398
Gross margin
20.1
%
19.1
%
Three Months Ended
Gross Profit:
December 31, 2020
Net sales
$
4,128,841
Cost of goods sold (excluding depreciation
and amortization)
3,356,890
Gross profit
$
771,951
Adjusted gross profit(1)
$
810,909
Gross margin
18.7
%
Adjusted gross margin(1)
19.6
%
Note: Gross profit is a financial measure commonly used within
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.
(1)
Adjusted gross profit and
adjusted gross margin exclude the effect of merger-related fair
value adjustments to inventory, and an out-of-period adjustment
related to inventory absorption accounting totaling $39.0 million
for the three months ended December 31, 2020.
WESCO INTERNATIONAL,
INC.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
(dollar amounts in thousands,
except per share data)
(Unaudited)
Three Months Ended
Adjusted Income from
Operations:
March 31, 2021
March 31, 2020
Income from operations
$
133,251
$
60,913
Merger-related costs
46,322
4,608
Net gain on Canadian divestitures
(8,927
)
—
Adjusted income from operations
$
170,646
$
65,521
Adjusted income from operations margin
%
4.2
%
3.3
%
Three Months Ended
Adjusted Interest Expense, Net:
March 31, 2021
March 31, 2020
Interest expense, net
$
70,373
$
16,592
Merger-related interest expense(1)
—
(515
)
Adjusted interest expense, net
$
70,373
$
16,077
(1)
The adjustment for the three
months ended March 31, 2020 represents interest for borrowings
against our prior accounts receivable securitization facility to
fund the $100.0 million termination fee described above.
Three Months Ended
Adjusted Provision for Income
Taxes:
March 31, 2021
March 31, 2020
Provision for income taxes
$
6,531
$
10,266
Income tax effect of adjustments to income
from operations and net interest(1)
8,145
1,183
Adjusted provision for income taxes
$
14,676
$
11,449
(1)
The adjustments to income from
operations and net interest expense have been tax effected at rates
of 21.8% and 23.1% for the three months ended March 31, 2021 and
2020, respectively.
WESCO INTERNATIONAL,
INC.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
(dollar amounts in thousands,
except per share data)
(Unaudited)
Three Months Ended
Adjusted Earnings per Diluted
Share:
March 31, 2021
March 31, 2020
Adjusted income from operations
$
170,646
$
65,521
Adjusted interest expense, net
70,373
16,077
Other, net
(2,807
)
(120
)
Adjusted income before income taxes
103,080
49,564
Adjusted provision for income taxes
14,676
11,449
Adjusted net income
88,404
38,115
Net loss attributable to noncontrolling
interests
(24
)
(232
)
Adjusted net income attributable to WESCO
International, Inc.
88,428
38,347
Preferred stock dividends
14,352
—
Adjusted net income attributable to common
stockholders
$
74,076
$
38,347
Diluted shares
51,708
42,075
Adjusted earnings per diluted share
$
1.43
$
0.91
Note: For the three months ended March 31, 2021, income from
operations, the provision for income taxes and earnings per diluted
share have been adjusted to exclude merger-related costs, a net
gain on the sale of WESCO's legacy utility and data communications
businesses in Canada, and the related income tax effects. For the
three months ended March 31, 2020, income from operations, net
interest expense, the provision for income taxes and earnings per
diluted share have been adjusted to exclude merger-related costs
and interest, 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
(dollar amounts in thousands,
except per share data)
(Unaudited)
Three Months Ended March 31,
2021
EBITDA and Adjusted EBITDA by
Segment:
EES
CSS
UBS
Corporate
Total
Net income attributable to common
stockholders
$
100,629
$
73,594
$
87,013
$
(216,410
)
$
44,826
Net loss attributable to noncontrolling
interests
(75
)
—
—
51
(24
)
Preferred stock dividends
—
—
—
14,352
14,352
Provision for income taxes
—
—
—
6,531
6,531
Interest expense, net
—
—
—
70,373
70,373
Depreciation and amortization
10,563
16,293
5,210
9,143
41,209
EBITDA
$
111,117
$
89,887
$
92,223
$
(115,960
)
$
177,267
Other, net
(443
)
370
17
(2,751
)
(2,807
)
Stock-based compensation expense(1)
1,351
425
340
2,577
4,693
Merger-related costs
—
—
—
46,322
46,322
Net gain on Canadian divestitures
—
—
(8,927
)
—
(8,927
)
Adjusted EBITDA
$
112,025
$
90,682
$
83,653
$
(69,812
)
$
216,548
Adjusted EBITDA margin %
6.5
%
7.3
%
7.8
%
5.4
%
(1) Stock-based compensation expense in
the calculation of adjusted EBITDA for the three months ended March
31, 2021 excludes $1.3 million as such amount is included in
merger-related costs.
Three Months Ended March 31,
2020
EBITDA and Adjusted EBITDA by
Segment:
EES
CSS
UBS
Corporate
Total
Net income attributable to common
stockholders
$
43,446
$
9,946
$
41,785
$
(60,770
)
$
34,407
Net loss attributable to noncontrolling
interests
(232
)
—
—
—
(232
)
Provision for income taxes
—
—
—
10,266
10,266
Interest expense, net
—
—
—
16,592
16,592
Depreciation and amortization
6,876
1,841
3,521
3,855
16,093
EBITDA
$
50,090
$
11,787
$
45,306
$
(30,057
)
$
77,126
Other, net
(120
)
—
—
—
(120
)
Stock-based compensation expense
1,079
156
293
3,098
4,626
Merger-related costs
—
—
—
4,608
4,608
Adjusted EBITDA
$
51,049
$
11,943
$
45,599
$
(22,351
)
$
86,240
Adjusted EBITDA margin %
4.6
%
5.3
%
7.2
%
4.4
%
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, net, non-cash stock-based compensation,
merger-related costs and net gain on the sale of WESCO's legacy
utility and data communications businesses in Canada. Adjusted
EBITDA margin % is calculated by dividing Adjusted EBITDA by net
sales.
WESCO INTERNATIONAL,
INC.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
(dollar amounts in thousands,
except per share data)
(Unaudited)
Pro Forma(1)
Twelve Months Ended
Financial Leverage:
March 31, 2021
December 31, 2020
Net income attributable to common
stockholders
$
90,323
$
115,572
Net loss attributable to noncontrolling
interests
(313
)
(521
)
Preferred stock dividends
44,491
30,139
Provision for income taxes
39,598
55,659
Interest expense, net
292,898
255,842
Depreciation and amortization
161,543
153,499
EBITDA
$
628,540
$
610,190
Other, net
(4,771
)
4,635
Stock-based compensation
30,278
34,733
Merger-related costs and fair value
adjustments
245,556
206,748
Out-of-period adjustment
18,852
18,852
Net gain on sale of asset and Canadian
divestitures
(28,742
)
(19,816
)
Adjusted EBITDA
$
889,713
$
855,342
As of
March 31, 2021
December 31, 2020
Short-term borrowings and current portion
of long-term debt
$
20,802
$
528,830
Long-term debt
4,592,734
4,369,953
Debt discount and debt issuance
costs(2)
83,627
88,181
Fair value adjustments to Anixter Notes
due 2023 and 2025(2)
(1,479
)
(1,650
)
Total debt
4,695,684
4,985,314
Less: cash and cash equivalents
303,887
449,135
Total debt, net of cash
$
4,391,797
$
4,536,179
Financial leverage ratio
4.9
5.3
(1)
Pro forma adjusted EBITDA
includes the financial results of WESCO's legacy utility and data
communications businesses in Canada, which were divested in the
first quarter of 2021 under a Consent Agreement with the
Competition Bureau of Canada.
(2)
Long-term 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 measures 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 foreign exchange and other non-operating
expenses, non-cash stock-based compensation, costs and fair value
adjustments associated with the merger with Anixter, an
out-of-period adjustment related to inventory absorption
accounting, and net gain on the sale of a U.S. operating branch and
WESCO's legacy utility and data communications businesses in
Canada. Pro forma financial leverage ratio is calculated by
dividing total debt, excluding debt discount and debt issuance
costs, net of cash, by pro forma adjusted EBITDA. Pro forma EBITDA
and pro forma adjusted EBITDA gives effect to the combination of
WESCO and Anixter as if it had occurred at the beginning of the
respective trailing twelve month period.
WESCO INTERNATIONAL,
INC.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
(dollar amounts in thousands,
except per share data)
(Unaudited)
Three Months Ended
Free Cash Flow:
March 31, 2021
March 31, 2020
Cash flow provided by operations
$
120,490
$
31,528
Less: Capital expenditures
(10,211
)
(15,762
)
Add: Merger-related expenditures
14,472
—
Free cash flow
$
124,751
$
15,766
Percentage of adjusted net income
141
%
41
%
Note: Free cash flow is a measure of liquidity. Capital
expenditures are deducted from operating cash flow to determine
free cash flow. Free cash flow is available to fund investing and
financing activities. For the three months ended March 31, 2021,
the Company paid certain fees, expenses and other costs related to
the merger with Anixter. Such expenditures have been added back to
cash flow provided by operations to determine free cash flow for
such period.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210506005440/en/
Will Ruthrauff Director, Investor Relations and Corporate
Communications (412) 454-4220 http://www.wesco.com
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