- Net sales of $5.6 billion, up
4% YOY
- Organic sales growth of 3% YOY
- Operating profit of $381
million; operating margin of 6.7%
- Adjusted EBITDA of $457
million; adjusted EBITDA margin of 8.1%, up 40 basis points
sequentially
- Gross margin of 21.6%, flat sequentially
- Earnings per diluted share of $4.20
- Adjusted earnings per diluted share of $4.49, flat YOY
- Operating cash flow of $362
million
- Free cash flow of $357
million; 143% of adjusted net income
- Leverage of 2.7x; at lowest level since the Anixter
merger in June of 2020 and below the midpoint of target
range
PITTSBURGH, Nov. 2, 2023
/PRNewswire/ -- Wesco International (NYSE: WCC), a leading provider
of business-to-business distribution, logistics services and supply
chain solutions, announces its results for the third quarter of
2023.
"We generated very strong free cash flow of $357 million, or 143% of adjusted net income, in
the third quarter highlighting the strength of our B2B distribution
business model. Over the past two years, global supply chain
constraints required us to invest in inventory to service our
customers. With supply chains healing, we are focused on reducing
our inventory and returning to strong and consistent free cash flow
generation. We saw this in the third quarter as we again reduced
inventories and paid down debt, as well as bought back stock. Our
financial leverage now stands at 2.7x, below the mid-point of our
target range, and at the lowest level since the Anixter acquisition
in June 2020. We expect our strong
free cash flow generation to continue, and we remain in an
excellent position to use that cash to invest in above market
growth and increase return of capital to shareholders" said
John Engel, Chairman, President and
CEO.
Mr. Engel continued, "Our industry-leading customer value
proposition, strong cross-sell execution and continued share gains
drove record third quarter sales. Overall results were in line with
our expectations with sequential sales improvement in our EES
business coupled with continued share capture and higher operating
margins in our CSS and UBS businesses. The multi-speed economy has
increased the importance of our internal initiatives and continued
operational excellence as we drive outperformance versus our end
markets. We again exceeded our expectations for cross selling and
are raising our sales synergy target from $2.0 billion to $2.2
billion. Our long-term secular growth drivers remain intact
and our portfolio mix-shift into higher-growth end markets has
driven more consistent financial performance."
Mr. Engel concluded, "The power of Wesco's scale,
industry-leading positions, and expanded portfolio of products,
services and solutions positions us to capture the benefits of
enduring secular growth trends as well as anticipated increased
infrastructure investments in North
America. We remain focused on what we can control as we
continue to invest in our digital transformation plan and work to
deliver game-changing digital capabilities that benefit our
customers and supplier partners. We are confident in delivering our
full year outlook of record sales, record EBITDA and record free
cash flow. And we remain committed to deliver the financial
value-creation objectives presented at our Investor Day including
our long-term margin expansion, profit growth and cash generation
targets."
2023 Outlook Update:
Wesco is now expecting reported net sales growth of
approximately 5%, near the low-end of the prior range of 5%-7%
driven by moderating end market conditions. EBITDA margins are
still forecast to be 7.8%-8.0% and adjusted EBITDA at the mid-point
of the guidance range remains approximately $1.8 billion. Earnings per share is now forecast
to be $15.60-$16.10 versus $15.00-$16.00
previously, primarily due to a lower full-year tax rate. The
company's free cash flow outlook is unchanged at $500-$700
million.
The following are results for the three months ended
September 30, 2023 compared to the three months ended
September 30, 2022:
- Net sales were $5.6 billion for
the third quarter of 2023 compared to $5.4
billion for the third quarter of 2022, an increase of 3.6%.
Organic sales for the third quarter of 2023 grew by 2.8% as the
acquisition of Rahi Systems, which closed in November of 2022,
positively impacted reported net sales by 2.4%, while the number of
workdays negatively impacted reported net sales by 1.6%. Backlog at
the end of the third quarter of 2023 declined by 6% compared to the
end of the third quarter of 2022. Sequentially, backlog declined by
approximately 7%.
- Cost of goods sold for the third quarter of 2023 was
$4.4 billion compared to $4.2 billion for the third quarter of 2022, and
gross profit was $1.2 billion for
both periods. As a percentage of net sales, gross profit was 21.6%
and 22.1% for the third quarter of 2023 and 2022, respectively. The
decline in gross profit as a percentage of net sales for the third
quarter of 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"). The impact of supplier volume rebates on
gross profit reflects favorable adjustments in the prior year
period; the third quarter of 2023 reflects a sequential decrease in
supplier volume rebates as a percentage of net sales. Sequentially,
gross margin as a percentage of net sales remained flat.
- Selling, general and administrative ("SG&A") expenses were
$796.4 million, or 14.1% of net
sales, for the third quarter of 2023, compared to $760.2 million, or 14.0% of net sales, for the
third quarter of 2022. SG&A expenses for the third quarter of
2023 and 2022 include merger-related and integration costs of
$15.0 million and $13.2 million, respectively. SG&A expenses
for the third quarter of 2023 also include $5.6 million of restructuring costs. Adjusted for
merger-related and integration costs and restructuring costs,
SG&A expenses were $775.8
million, or 13.7% of net sales, for the third quarter of
2023 and $747.0 million, or 13.7% of
net sales, for the third quarter of 2022. Adjusted SG&A
expenses for the third quarter of 2023 reflect higher salaries and
benefits due to wage inflation and increased headcount, 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
third 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. Sequentially, SG&A expenses,
adjusted for merger-related and integration costs and restructuring
costs, decreased $35.2 million and,
as a percentage of net sales, decreased 40 basis points.
- Depreciation and amortization for the third quarter of 2023 was
$45.1 million compared to
$42.7 million for the third quarter
of 2022, an increase of $2.4
million.
- Operating profit was $380.5
million for the third quarter of 2023 compared to
$401.6 million for the third quarter
of 2022, a decrease of $21.1 million,
or 5.3%. Operating profit as a percentage of net sales was 6.7% for
the current quarter compared to 7.4% for the third quarter of the
prior year. Adjusted for the merger-related and integration costs,
restructuring costs, and accelerated trademark amortization,
operating profit was $401.5 million,
or 7.1% of net sales, for the third quarter of 2023. Adjusted for
merger-related and integration costs and accelerated trademark
amortization, operating profit was $415.2
million, or 7.6% of net sales, for the third quarter of
2022. Sequentially, operating profit, adjusted for merger-related
and integration costs and accelerated trademark amortization,
increased $16.2 million and, as a
percentage of net sales, increased 40 basis points.
- Net interest expense for the third quarter of 2023 was
$98.5 million compared to
$75.1 million for the third quarter
of 2022. The increase reflects higher borrowings and an increase in
variable interest rates.
- Other non-operating expense for the third quarter of 2023 was
$3.7 million compared to $0.7 million for the third quarter of 2022.
- The effective tax rate for the third quarter of 2023 was 15.9%
compared to 26.3% for the third quarter of 2022. The effective tax
rate for the quarter ended September 30,
2023 was lower than the comparable period due to the
favorable tax rate impact from the reversal of the valuation
allowance against Brazilian deferred tax assets, larger tax
benefits from the exercise and vesting of stock-based awards in the
current year period versus prior year, and return to provision
adjustments, primarily attributable to increased U.S. foreign tax
credit utilization in the current year period.
- Net income attributable to common stockholders was $219.0 million for the third quarter of 2023
compared to $225.2 million for the
third quarter of 2022. Adjusted for merger-related and integration
costs, restructuring costs, accelerated trademark amortization
expense, and the related income tax effects, net income
attributable to common stockholders was $234.4 million for the third 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 $235.1 million for the third quarter of 2022.
Adjusted net income attributable to common stockholders decreased
0.3% year-over-year.
- Earnings per diluted share for the third quarter of 2023 was
$4.20, based on 52.2 million diluted
shares, compared to $4.30 for the
third quarter of 2022, based on 52.4 million diluted shares.
Adjusted for merger-related and integration costs, restructuring
costs, accelerated trademark amortization expense, and the related
income tax effects, earnings per diluted share for the third
quarter of 2023 was $4.49. Adjusted
for merger-related and integration costs, accelerated trademark
amortization expense, and the related income tax effects, earnings
per diluted share for the third quarter of 2022 was $4.49.
- Operating cash flow for the third quarter of 2023 was an inflow
of $361.7 million compared to an
outflow of $106.1 million for the
third quarter of 2022. Free cash flow for the third quarter of 2023
was $357.1 million, or 143% of
adjusted net income. The net cash inflow in the third quarter of
2023 was primarily driven by net income of $234.0 million as well as changes in working
capital, including a decrease in trade accounts receivable of
$29.5 million, due to the timing of
receipts from customers and the sequential decrease in net sales
compared to the prior quarter, and a decrease in inventories of
$11.2 million.
- Financial leverage ratio was 2.7 as of September 30, 2023, at the lowest level since the
Anixter merger in June of 2020, now below the midpoint of the
target range.
The following are results for the nine months ended
September 30, 2023 compared to the nine months ended
September 30, 2022:
- Net sales were $16.9 billion for
the first nine months of 2023 compared to $15.9 billion for the first nine months of 2022,
an increase of 6.6%, reflecting price inflation and volume growth
(driven in part by secular demand trends, execution of our
cross-sell program, and an improved supply chain). Organic sales
for the first nine months of 2023 grew by 5.3% as the acquisition
of Rahi Systems positively impacted reported net sales by 2.6%,
while fluctuations in foreign exchange rates and the number of
workdays negatively impacted reported net sales by 0.8% and 0.5%,
respectively.
- Cost of goods sold for the first nine months of 2023 was
$13.2 billion compared to
$12.4 billion for the first nine
months of 2022, and gross profit was $3.7
billion and $3.4 billion,
respectively. As a percentage of net sales, gross profit was 21.7%
for the first nine months of 2023 and 2022.
- SG&A expenses were $2,445.8
million, or 14.5% of net sales, for the first nine months of
2023, compared to $2,251.1 million,
or 14.2% of net sales, for the first nine months of 2022. SG&A
expenses for the first nine months of 2023 and 2022 include
merger-related and integration costs of $45.4 million and $52.2
million, respectively. SG&A expenses for first nine
months of 2023 also include $15.4
million of restructuring costs. Adjusted for merger-related
and integration costs and restructuring costs, SG&A expenses
were $2,385.0 million, or 14.1% of
net sales, for the first nine months of 2023 and $2,198.9 million, or 13.9% of net sales for the
first nine months of 2022. The increase in adjusted SG&A
expenses for the first nine months of 2023 compared to the first
nine months of 2022 reflects the same factors discussed above.
- Depreciation and amortization for the first nine months of 2023
was $136.4 million compared to
$135.6 million for the first nine
months of 2022, an increase of $0.8
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
$1.2 million and $9.4 million of accelerated amortization expense
for the first nine months of 2023 and 2022, respectively.
- Operating profit was $1,090.7
million for the first nine months of 2023 compared to
$1,056.3 million for the first nine
months of 2022, an increase of $34.4
million, or 3.3%. Operating profit as a percentage of net
sales was 6.4% for the current nine-month period compared to 6.7%
for the first nine months of the prior year. Adjusted for the
merger-related and integration costs, restructuring costs, and
accelerated trademark amortization described above, operating
profit was $1,152.7 million, or 6.8%
of net sales, for the first nine months of 2023. Adjusted for
merger-related and integration costs and accelerated trademark
amortization, operating profit was $1,117.9
million, or 7.0% of net sales, for the first nine months of
2022.
- Net interest expense for the first nine months of 2023 was
$292.3 million compared to
$207.1 million for the first nine
months of 2022. The increase reflects higher borrowings and an
increase in variable interest rates.
- Other non-operating expense for the first nine months of 2023
was $14.6 million compared to
$3.0 million for the first nine
months of 2022. Net benefits of $0.9
million and $10.5 million
associated with the non-service cost components of net periodic
pension (benefit) cost were recognized for the nine months ended
September 30, 2023 and 2022,
respectively. The year-over-year decrease in net periodic pension
benefits was due to a decrease in expected return on plan assets
and an increase in interest cost. Due to fluctuations in the U.S.
dollar against certain foreign currencies, a net foreign currency
exchange loss of $14.6 million was
recognized for the first nine months of 2023 compared to a net loss
of $11.5 million for the first nine
months of 2022.
- The effective tax rate for the first nine months of 2023 was
20.4% compared to 24.0% for the first nine months of 2022. The
effective tax rate for the first nine months of 2023 was lower than
the comparable period due to a larger favorable tax rate impact
from the exercise and vesting of stock-based awards, the favorable
tax rate impact from the reversal of the valuation allowance
against Brazilian deferred tax assets, and return-to-provision
adjustments, primarily attributable to increased U.S. foreign tax
credit utilization.
- Net income attributable to common stockholders was $580.5 million for the first nine months of 2023
compared to $598.5 million for the
first nine months of 2022. Adjusted for merger-related and
integration costs, restructuring costs, accelerated trademark
amortization expense, and the related income tax effects, net
income attributable to common stockholders was $625.7 million for the first nine months of 2023.
Adjusted for merger-related and integration costs, accelerated
trademark amortization expense, and the related income tax effects,
net income attributable to common stockholders for the first nine
months of 2022 was $643.7 million.
Adjusted net income attributable to common stockholders decreased
2.8% year-over-year.
- Earnings per diluted share for the first nine months of 2023
was $11.08, based on 52.4 million
diluted shares, compared to $11.42
for the first nine months of 2022, based on 52.4 million diluted
shares. Adjusted for merger-related and integration costs,
restructuring costs, accelerated trademark amortization expense,
and the related income tax effects, earnings per diluted share for
the first nine months of 2023 was $11.94. Adjusted for merger-related and
integration costs, accelerated trademark amortization expense, and
the related income tax effects, earnings per diluted share for the
first nine months of 2022 was $12.29.
Adjusted earnings per diluted share decreased 2.8%
year-over-year.
- Operating cash flow for the first nine months of 2023 was an
inflow of $423.9 million compared to
an outflow of $410.6 million for the
first nine months of 2022. Free cash flow for the first nine months
of 2023 was $384.4 million, or 57% of
adjusted net income. The net cash inflow in the first nine months
of 2023 was primarily driven by net income of $623.6 million and non-cash adjustments to net
income totaling $190.1 million, which
were primarily comprised of 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
$389.8 million, which were primarily
comprised of an increase in trade accounts receivable of
$133.4 million and a decrease in
accounts payable of $86.5 million due
to the timing of receipts from customers and payments to suppliers,
respectively. Net operating cash flow was also negatively impacted
by $62.7 million from an increase in
inventories. Additionally, the payment of management incentive
compensation earned in 2022 resulted in a cash outflow in the first
nine months of 2023, which was partially offset by the accrual of
management incentive compensation earned in the current year.
Segment Results
The Company has operating segments comprising three strategic
business units consisting of Electrical & Electronic Solutions
("EES"), Communications & Security Solutions ("CSS") and
Utility & Broadband Solutions ("UBS").
The Company incurs corporate costs primarily related to
treasury, tax, information technology, legal and other centralized
functions. Segment results include depreciation expense or other
allocations related to various corporate assets. Interest expense
and other non-operating items are either not allocated to the
segments or reviewed on a segment basis. Corporate expenses not
directly identifiable with our reportable segments are reported in
the tables below to reconcile the reportable segments to the
consolidated financial statements.
The following are results by segment for the three months ended
September 30, 2023 compared to the three months ended
September 30, 2022:
- EES reported net sales of $2,190.7
million for the third quarter of 2023 compared to
$2,234.8 million for the third
quarter of 2022, a decrease of 2.0%. Organic sales for the third
quarter of 2023 declined by 0.2% as fluctuations in foreign
exchange rates and the number of workdays negatively impacted
reported net sales by 0.2% and 1.6%, respectively. The decrease in
organic sales compared to the prior year quarter reflects downturns
in the construction and manufactured structures businesses, offset
by price inflation and continued positive momentum in our
industrial business. In addition, a transfer of certain customer
accounts to the CSS segment negatively impacted reported net sales
for EES by approximately two percentage points. Adjusted EBITDA was
$191.5 million for the third quarter
of 2023, or 8.7% of net sales, compared to $225.8 million for the third quarter of 2022, or
10.1% of net sales. Adjusted EBITDA decreased $34.3 million, or 15.2% year-over-year, primarily
due to the decline in sales, a shift in sales mix, and an increase
in SG&A expenses as a percentage of net sales.
- CSS reported net sales of $1,778.0
million for the third quarter of 2023 compared to
$1,602.4 million for the third
quarter of 2022, an increase of 11.0%. Organic sales for the third
quarter of 2023 grew by 4.1% as the acquisition of Rahi Systems in
the fourth quarter of 2022 and fluctuations in foreign exchange
rates positively impacted reported net sales by 8.2% and 0.3%,
respectively, while the number of workdays negatively impacted
reported net sales by 1.6%. The increase in organic sales compared
to the prior year quarter reflects price inflation and market
growth. The transfer of certain customer accounts from the EES
segment also positively impacted organic net sales for CSS by
approximately 3%. Adjusted EBITDA was $175.5
million for the third quarter of 2023, or 9.9% of net sales,
compared to $156.4 million for the
third quarter of 2022, or 9.8% of net sales. Adjusted EBITDA
increased $19.1 million, or 12.2%
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 cost reduction activities and a reduction to incentive
compensation expense.
- UBS reported net sales of $1,675.7
million for the third quarter of 2023 compared to
$1,608.7 million for the third
quarter of 2022, an increase of 4.2%. Organic sales for the third
quarter of 2023 grew by 5.8% as the number of workdays negatively
impacted reported net sales by 1.6%. The increase in organic sales
compared to the prior year quarter reflects price inflation, market
growth in the utility business, and expansion in our integrated
supply business, partially offset by lower sales in our broadband
business. Adjusted EBITDA was $196.4
million for the third quarter of 2023, or 11.7% of net
sales, compared to $186.3 million for
the third quarter of 2022, or 11.6% of net sales. Adjusted EBITDA
increased $10.1 million, or 5.4%
year-over-year. The increase is driven by sales growth, gross
margin improvement, and lower SG&A expenses as a percentage of
net sales primarily due to cost reduction activities and a
reduction to incentive compensation expense.
The following are results by segment for the nine months ended
September 30, 2023 compared to the nine months ended
September 30, 2022:
- EES reported net sales of $6,526.1
million for the first nine months of 2023 compared to
$6,654.9 million for the first nine
months of 2022, a decrease of 1.9%. Organic sales for the first
nine months of 2023 declined by 0.5% as fluctuations in foreign
exchange rates and the number of workdays negatively impacted
reported net sales by 0.9% and 0.5%, respectively. The decrease in
organic sales reflects downturns in the construction and
manufactured structures businesses, partially offset by continued
positive momentum in our industrial business and price inflation.
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
$563.5 million for the first nine
months of 2023, or 8.6% of net sales, compared to $653.6 million for the first nine months of 2022,
or 9.8% of net sales. Adjusted EBITDA decreased $90.1 million, or 13.8% year-over-year, primarily
due to the decline in sales, a shift in sales mix, and an increase
in SG&A expenses.
- CSS reported net sales of $5,360.9
million for the first nine months of 2023 compared to
$4,638.6 million for the first nine
months of 2022, an increase of 15.6%. Organic sales for the first
nine months of 2023 grew by 7.9% as the acquisition of Rahi Systems
positively impacted reported net sales by 9.0%, while fluctuations
in foreign exchange rates and the number of workdays negatively
impacted reported net sales by 0.8% and 0.5%, respectively. The
increase in organic sales reflects price inflation, strong growth
in our network infrastructure and security solutions businesses,
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 $510.5 million for the first nine months of 2023,
or 9.5% of net sales, compared to $429.5
million for the first nine months of 2022, or 9.3% of net
sales. Adjusted EBITDA increased $81.0
million, or 18.9% year-over-year. The increase is primarily
driven by sales growth and gross margin improvement.
- UBS reported net sales of $5,024.8
million for the first nine months of 2023 compared to
$4,568.1 million for the first nine
months of 2022, an increase of 10.0%. Organic sales for the first
nine months of 2023 grew by 10.9% as fluctuations in foreign
exchange rates and the number of workdays negatively impacted
reported net sales by 0.4% and 0.5%, respectively. The increase in
organic sales reflects price inflation, market growth in the
utility business, expansion in our integrated supply business, and
the benefits of cross selling, partially offset by lower sales in
our broadband business, particularly in Canada. Adjusted EBITDA was $572.7 million for the first nine months of 2023,
or 11.4% of net sales, compared to $491.7
million for the first nine months of 2022, or 10.8% of net
sales. Adjusted EBITDA increased $81.0
million, or 16.5% 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
third quarter of 2023 earnings as described in this News Release on
Thursday, November 2, 2023, at 10:00
a.m. E.T. The call will be broadcast live over the internet
and can be accessed from the Investor Relations page of the
Company's website at https://investors.wesco.com. The call will be
archived on this internet site for seven days.
Wesco International (NYSE: WCC) builds, connects, powers and
protects the world. Headquartered in Pittsburgh, Pennsylvania, Wesco is a FORTUNE
500® company with more than $21
billion in annual sales and a leading provider of
business-to-business distribution, logistics services and supply
chain solutions. Wesco offers a best-in-class product and services
portfolio of Electrical and Electronic Solutions, Communications
and Security Solutions, and Utility and Broadband Solutions. The
Company employs approximately 20,000 people, partners with the
industry's premier suppliers, and serves thousands of customers
around the world. With millions of products, end-to-end supply
chain services, and leading digital capabilities, Wesco provides
innovative solutions to meet customer needs across commercial and
industrial businesses, contractors, government agencies,
institutions, telecommunications providers, and utilities. Wesco
operates approximately 800 branches, warehouses and sales offices
in more than 50 countries, providing a local presence for customers
and a global network to serve multi-location businesses and
multi-national corporations.
Forward-Looking Statements
All statements made herein that are not historical facts
should be considered as "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
Such statements involve known and unknown risks, uncertainties and
other factors that may cause actual results to differ materially.
These statements include, but are not limited to, statements
regarding business strategy, growth strategy, competitive
strengths, productivity and profitability enhancement, competition,
new product and service introductions, and liquidity and capital
resources, as well as statements regarding the expected benefits
and costs of the transaction between Wesco and Anixter
International Inc., including anticipated future financial and
operating results, synergies, accretion and growth rates, and the
combined company's plans, objectives and expectations. Such
statements can generally be identified by the use of words such as
"anticipate," "plan," "believe," "estimate," "intend," "expect,"
"project," and similar words, phrases or expressions or future or
conditional verbs such as "could," "may," "should," "will," and
"would," although not all forward-looking statements contain such
words. These forward-looking statements are based on current
expectations and beliefs of Wesco's management, as well as
assumptions made by, and information currently available to,
Wesco's management, current market trends and market conditions and
involve risks and uncertainties, many of which are outside of
Wesco's and Wesco's management's control, and which may cause
actual results to differ materially from those contained in
forward-looking statements. Accordingly, you should not place undue
reliance on such statements.
Important factors that could cause actual results or events
to differ materially from those presented or implied in the
forward-looking statements include, among others, the failure to
achieve the expected benefits of the transaction between Wesco and
Anixter International Inc. or the anticipated benefits of Wesco's
acquisition of Rahi Systems Holdings, Inc. in the expected
timeframe or at all, unexpected costs or problems that may arise in
successfully integrating the businesses of the companies, the
impact of increased interest rates or borrowing costs, failure to
adequately protect Wesco's intellectual property or successfully
defend against infringement claims, failure to execute Wesco's
environmental, social and governance (ESG) programs as planned,
disruption of information technology systems or operations, natural
disasters (including as a result of climate change), health
epidemics, pandemics and other outbreaks (such as the ongoing
COVID-19 pandemic, including any resurgences or new variants),
supply chain disruptions, geopolitical issues, including the impact
of the evolving conflicts in the Middle
East and Ukraine, the
impact of sanctions imposed on, or other actions taken by the U.S.
or other countries against, Russia
or China, the increased risk of
cyber incidents and exacerbation of key materials shortages,
inflationary cost pressures, material cost increases, demand
volatility, and logistics and capacity constraints, which may have
a material adverse effect on the combined company's business,
results of operations and financial condition. All such factors are
difficult to predict and are beyond the company's control.
Additional factors that could cause results to differ materially
from those described above can be found in Wesco's Annual Report on
Form 10-K for the fiscal year ended December
31, 2022 and Wesco's other reports filed with the U.S.
Securities and Exchange Commission.
Contact
Information
|
Investor
Relations
|
Corporate
Communications
|
Will
Ruthrauff
Director, Investor Relations
484-885-5648
|
Jennifer
Sniderman
Senior Director, Corporate Communications
717-579-6603
|
|
http://www.wesco.com
|
WESCO INTERNATIONAL,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(in millions, except
per share amounts)
(Unaudited)
|
|
|
Three Months
Ended
|
|
|
September
30,
2023
|
|
|
September
30,
2022
|
|
Net sales
|
$
5,644.4
|
|
|
$
5,445.9
|
|
Cost of goods sold
(excluding depreciation and amortization)
|
4,422.4
|
78.4 %
|
|
4,241.4
|
77.9 %
|
Selling, general and
administrative expenses
|
796.4
|
14.1 %
|
|
760.2
|
14.0 %
|
Depreciation and
amortization
|
45.1
|
|
|
42.7
|
|
Income from
operations
|
380.5
|
6.7 %
|
|
401.6
|
7.4 %
|
Interest expense,
net
|
98.5
|
|
|
75.1
|
|
Other expense,
net
|
3.7
|
|
|
0.7
|
|
Income before income
taxes
|
278.3
|
4.9 %
|
|
325.8
|
6.0 %
|
Provision for income
taxes
|
44.3
|
|
|
85.6
|
|
Net income
|
234.0
|
4.1 %
|
|
240.2
|
4.4 %
|
Net income attributable
to noncontrolling interests
|
0.6
|
|
|
0.6
|
|
Net income attributable
to WESCO International, Inc.
|
233.4
|
4.1 %
|
|
239.6
|
4.4 %
|
Preferred stock
dividends
|
14.4
|
|
|
14.4
|
|
Net income attributable
to common stockholders
|
$
219.0
|
3.9 %
|
|
$
225.2
|
4.1 %
|
|
|
|
|
|
|
Earnings per diluted
share attributable to common stockholders
|
$
4.20
|
|
|
$
4.30
|
|
Weighted-average common
shares outstanding and common share
equivalents used in
computing earnings per diluted common share
|
52.2
|
|
|
52.4
|
|
WESCO INTERNATIONAL,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(in millions, except
per share amounts)
(Unaudited)
|
|
|
Nine Months
Ended
|
|
|
September
30,
2023
|
|
|
September
30,
2022
|
|
Net sales
|
$
16,911.8
|
|
|
$
15,861.6
|
|
Cost of goods sold
(excluding depreciation and amortization)
|
13,238.9
|
78.3 %
|
|
12,418.6
|
78.3 %
|
Selling, general and
administrative expenses
|
2,445.8
|
14.5 %
|
|
2,251.1
|
14.2 %
|
Depreciation and
amortization
|
136.4
|
|
|
135.6
|
|
Income from
operations
|
1,090.7
|
6.4 %
|
|
1,056.3
|
6.7 %
|
Interest expense,
net
|
292.3
|
|
|
207.1
|
|
Other expense,
net
|
14.6
|
|
|
3.0
|
|
Income before income
taxes
|
783.8
|
4.6 %
|
|
846.2
|
5.3 %
|
Provision for income
taxes
|
160.2
|
|
|
203.2
|
|
Net income
|
623.6
|
3.7 %
|
|
643.0
|
4.1 %
|
Net income attributable
to noncontrolling interests
|
—
|
|
|
1.4
|
|
Net income attributable
to WESCO International, Inc.
|
623.6
|
3.7 %
|
|
641.6
|
4.0 %
|
Preferred stock
dividends
|
43.1
|
|
|
43.1
|
|
Net income attributable
to common stockholders
|
$
580.5
|
3.4 %
|
|
$
598.5
|
3.8 %
|
|
|
|
|
|
|
Earnings per diluted
share attributable to common stockholders
|
$
11.08
|
|
|
$
11.42
|
|
Weighted-average common
shares outstanding and common share
equivalents used in
computing earnings per diluted common share
|
52.4
|
|
|
52.4
|
|
WESCO INTERNATIONAL,
INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(dollar amounts in
millions)
(Unaudited)
|
|
|
As of
|
|
September
30,
2023
|
|
December 31,
2022
|
Assets
|
|
|
|
Current
Assets
|
|
|
|
Cash and cash
equivalents
|
$
631.4
|
|
$
527.3
|
Trade accounts
receivable, net
|
3,795.0
|
|
3,662.7
|
Inventories
|
3,541.4
|
|
3,498.8
|
Other current
assets
|
643.6
|
|
641.7
|
Total current assets
|
8,611.4
|
|
8,330.5
|
|
|
|
|
Goodwill and intangible
assets
|
5,112.6
|
|
5,184.3
|
Other assets
|
1,444.6
|
|
1,296.9
|
Total assets
|
$
15,168.6
|
|
$
14,811.7
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
Current
Liabilities
|
|
|
|
Accounts
payable
|
$
2,650.0
|
|
$
2,728.2
|
Short-term debt and
current portion of long-term debt, net
|
14.7
|
|
70.5
|
Other current
liabilities
|
988.9
|
|
1,018.6
|
Total current liabilities
|
3,653.6
|
|
3,817.3
|
|
|
|
|
Long-term debt,
net
|
5,378.3
|
|
5,346.0
|
Other noncurrent
liabilities
|
1,254.2
|
|
1,198.8
|
Total liabilities
|
10,286.1
|
|
10,362.1
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
Total stockholders' equity
|
4,882.5
|
|
4,449.6
|
Total liabilities and stockholders' equity
|
$
15,168.6
|
|
$
14,811.7
|
WESCO INTERNATIONAL,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollar amounts in
millions)
(Unaudited)
|
|
|
Nine Months
Ended
|
|
September
30,
2023
|
|
September
30,
2022
|
Operating
Activities:
|
|
|
|
Net income
|
$
623.6
|
|
$
643.0
|
Add back
(deduct):
|
|
|
|
Depreciation and
amortization
|
136.4
|
|
135.6
|
Deferred income
taxes
|
6.5
|
|
7.2
|
Change in trade
receivables, net
|
(133.4)
|
|
(737.6)
|
Change in
inventories
|
(62.7)
|
|
(886.3)
|
Change in accounts
payable
|
(86.5)
|
|
479.6
|
Other, net
|
(60.0)
|
|
(52.1)
|
Net cash provided by
(used in) operating activities
|
423.9
|
|
(410.6)
|
|
|
|
|
Investing
Activities:
|
|
|
|
Capital
expenditures
|
(63.6)
|
|
(59.4)
|
Other, net
|
2.4
|
|
2.2
|
Net cash used in
investing activities
|
(61.2)
|
|
(57.2)
|
|
|
|
|
Financing
Activities:
|
|
|
|
Debt borrowings,
net(1)
|
(41.0)
|
|
549.3
|
Payments for taxes
related to net-share settlement of equity awards
|
(68.0)
|
|
(25.0)
|
Repurchases of common
stock
|
(50.0)
|
|
—
|
Payment of common
stock dividends
|
(57.6)
|
|
—
|
Payment of preferred
stock dividends
|
(43.1)
|
|
(43.1)
|
Other, net
|
6.3
|
|
(4.0)
|
Net cash (used in)
provided by financing activities
|
(253.4)
|
|
477.2
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents
|
(5.2)
|
|
12.1
|
|
|
|
|
Net change in cash and
cash equivalents
|
104.1
|
|
21.5
|
Cash and cash
equivalents at the beginning of the period
|
527.3
|
|
212.6
|
Cash and cash
equivalents at the end of the period
|
$
631.4
|
|
$
234.1
|
|
|
(1) The nine months ended September 30, 2023
includes the repayment of the Company's $58.6 million aggregate
principal amount of 5.50% Anixter Senior Notes due 2023 (the
"Anixter 2023 Senior Notes"). The repayment of the Anixter 2023
Senior Notes was funded with borrowings under the Company's
revolving credit facility.
|
NON-GAAP FINANCIAL MEASURES
In addition to the results provided in accordance with U.S.
Generally Accepted Accounting Principles ("U.S. GAAP") above, this
earnings release includes certain non-GAAP financial measures.
These financial measures include organic sales growth, gross
profit, gross margin, earnings before interest, taxes,
depreciation and amortization (EBITDA), adjusted EBITDA, adjusted
EBITDA margin, financial leverage, free cash flow, adjusted
selling, general and administrative expenses, adjusted income from
operations, adjusted operating margin, adjusted provision for
income taxes, adjusted income before income taxes, adjusted net
income, adjusted net income attributable to WESCO International,
Inc., adjusted net income attributable to common stockholders, and
adjusted earnings per diluted share. The Company believes that
these non-GAAP measures are useful to investors as they provide a
better understanding of our financial condition and results of
operations on a comparable basis. Additionally, certain non-GAAP
measures either focus on or exclude items impacting comparability
of results such as merger-related and integration costs,
restructuring costs, and the related income tax effect of such
items, allowing investors to more easily compare the Company's
financial performance from period to period. Management does not
use these non-GAAP financial measures for any purpose other than
the reasons stated above.
WESCO INTERNATIONAL,
INC.
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
(in millions, except
per share amounts)
(Unaudited)
|
|
Organic Sales Growth
by Segment - Three Months Ended:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Growth/(Decline)
|
|
September 30,
2023
|
|
September 30,
2022
|
|
Reported
|
|
Acquisition
|
|
Foreign
Exchange
|
|
Workday
|
|
Organic
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EES
|
$
2,190.7
|
|
$
2,234.8
|
|
(2.0) %
|
|
— %
|
|
(0.2) %
|
|
(1.6) %
|
|
(0.2) %
|
CSS
|
1,778.0
|
|
1,602.4
|
|
11.0 %
|
|
8.2 %
|
|
0.3 %
|
|
(1.6) %
|
|
4.1 %
|
UBS
|
1,675.7
|
|
1,608.7
|
|
4.2 %
|
|
— %
|
|
— %
|
|
(1.6) %
|
|
5.8 %
|
Total net
sales
|
$
5,644.4
|
|
$
5,445.9
|
|
3.6 %
|
|
2.4 %
|
|
— %
|
|
(1.6) %
|
|
2.8 %
|
|
|
|
|
|
|
|
|
|
Organic Sales Growth
by Segment - Nine Months Ended:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
Growth/(Decline)
|
|
September 30,
2023
|
|
September 30,
2022
|
|
Reported
|
|
Acquisition
|
|
Foreign
Exchange
|
|
Workday
|
|
Organic
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EES
|
$
6,526.1
|
|
$
6,654.9
|
|
(1.9) %
|
|
— %
|
|
(0.9) %
|
|
(0.5) %
|
|
(0.5) %
|
CSS
|
5,360.9
|
|
4,638.6
|
|
15.6 %
|
|
9.0 %
|
|
(0.8) %
|
|
(0.5) %
|
|
7.9 %
|
UBS
|
5,024.8
|
|
4,568.1
|
|
10.0 %
|
|
— %
|
|
(0.4) %
|
|
(0.5) %
|
|
10.9 %
|
Total net
sales
|
$
16,911.8
|
|
$
15,861.6
|
|
6.6 %
|
|
2.6 %
|
|
(0.8) %
|
|
(0.5) %
|
|
5.3 %
|
|
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; the third
quarter and first nine months of 2023 had one less workday compared
to the third quarter and first nine months of 2022.
|
WESCO INTERNATIONAL,
INC.
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
(in millions, except
per share amounts)
(Unaudited)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
Gross
Profit:
|
September 30,
2023
|
|
September 30,
2022
|
|
September 30,
2023
|
|
September 30,
2022
|
|
|
|
|
|
|
|
|
Net sales
|
$
5,644.4
|
|
$
5,445.9
|
|
$ 16,911.8
|
|
$ 15,861.6
|
Cost of goods sold
(excluding depreciation and amortization)
|
4,422.4
|
|
4,241.4
|
|
13,238.9
|
|
12,418.6
|
Gross profit
|
$
1,222.0
|
|
$
1,204.5
|
|
$
3,672.9
|
|
$
3,443.0
|
Gross margin
|
21.6 %
|
|
22.1 %
|
|
21.7 %
|
|
21.7 %
|
|
Three Months
Ended
|
Gross
Profit:
|
June 30,
2023
|
|
|
Net sales
|
$
5,745.5
|
Cost of goods sold
(excluding depreciation and amortization)
|
4,503.1
|
Gross profit
|
$
1,242.4
|
Gross margin
|
21.6 %
|
|
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
|
|
Nine Months
Ended
|
|
September
30,
2023
|
|
September
30,
2022
|
|
September
30,
2023
|
|
September
30,
2022
|
Adjusted SG&A
Expenses:
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
$
796.4
|
|
$
760.2
|
|
$
2,445.8
|
|
$
2,251.1
|
Merger-related and
integration costs(1)
|
(15.0)
|
|
(13.2)
|
|
(45.4)
|
|
(52.2)
|
Restructuring
costs(2)
|
(5.6)
|
|
—
|
|
(15.4)
|
|
—
|
Adjusted selling,
general and administrative expenses
|
$
775.8
|
|
$
747.0
|
|
$
2,385.0
|
|
$
2,198.9
|
Percentage of net
sales
|
13.7 %
|
|
13.7 %
|
|
14.1 %
|
|
13.9 %
|
|
|
|
|
|
|
|
|
Adjusted Income from
Operations:
|
|
|
|
|
|
|
|
Income from
operations
|
$
380.5
|
|
$
401.6
|
|
$
1,090.7
|
|
$
1,056.3
|
Merger-related and
integration costs(1)
|
15.0
|
|
13.2
|
|
45.4
|
|
52.2
|
Restructuring
costs(2)
|
5.6
|
|
—
|
|
15.4
|
|
—
|
Accelerated trademark
amortization(3)
|
0.4
|
|
0.4
|
|
1.2
|
|
9.4
|
Adjusted income from
operations
|
$
401.5
|
|
$
415.2
|
|
$
1,152.7
|
|
$
1,117.9
|
Adjusted income from
operations margin %
|
7.1 %
|
|
7.6 %
|
|
6.8 %
|
|
7.0 %
|
|
|
|
|
|
|
|
|
Adjusted Provision
for Income Taxes:
|
|
|
|
|
|
|
|
Provision for income
taxes
|
$
44.3
|
|
$
85.6
|
|
$
160.2
|
|
$
203.2
|
Income tax effect of
adjustments to income from operations(4)
|
5.6
|
|
3.7
|
|
16.8
|
|
16.4
|
Adjusted provision for
income taxes
|
$
49.9
|
|
$
89.3
|
|
$
177.0
|
|
$
219.6
|
|
|
(1) Merger-related and integration costs include
integration and professional fees associated with the integration
of Wesco and Anixter, including digital transformation costs, as
well as advisory, legal, and separation costs associated with the
merger between the two companies.
|
(2) Restructuring costs include severance costs incurred
pursuant to an ongoing restructuring plan.
|
(3) Accelerated trademark amortization represents
additional amortization expense resulting from changes in the
estimated useful lives of certain legacy trademarks that are
migrating to our master brand architecture.
|
(4) The adjustments to income from operations have been
tax effected at a rate of approximately 27% for the three and nine
months ended September 30, 2023 and 2022.
|
WESCO INTERNATIONAL,
INC.
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
(in millions, except
per share amounts)
(Unaudited)
|
|
|
Three Months
Ended
|
|
June 30,
2023
|
Adjusted SG&A
Expenses:
|
|
Selling, general and
administrative expenses
|
$
831.7
|
Merger-related and
integration costs(1)
|
(10.9)
|
Restructuring
costs(2)
|
(9.8)
|
Adjusted selling,
general and administrative expenses
|
$
811.0
|
Percentage of net
sales
|
14.1 %
|
|
|
Adjusted Income from
Operations:
|
|
Income from
operations
|
$
363.8
|
Merger-related and
integration costs(1)
|
10.9
|
Restructuring
costs(2)
|
9.8
|
Accelerated trademark
amortization(3)
|
0.8
|
Adjusted income from
operations
|
$
385.3
|
Adjusted income from
operations margin %
|
6.7 %
|
|
|
(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.
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
Adjusted Earnings
per Diluted Share:
|
September
30,
2023
|
|
September
30,
2022(1)
|
|
September
30,
2023
|
|
September
30,
2022(1)
|
|
|
|
|
|
|
|
|
Adjusted income from
operations
|
$
401.5
|
|
$
415.2
|
|
$
1,152.7
|
|
$
1,117.9
|
Interest expense,
net
|
98.5
|
|
75.1
|
|
292.3
|
|
207.1
|
Other expense,
net
|
3.7
|
|
0.7
|
|
14.6
|
|
3.0
|
Adjusted income before
income taxes
|
299.3
|
|
339.4
|
|
845.8
|
|
907.8
|
Adjusted provision for
income taxes
|
49.9
|
|
89.3
|
|
177.0
|
|
219.6
|
Adjusted net
income
|
249.4
|
|
250.1
|
|
668.8
|
|
688.2
|
Net income
attributable to noncontrolling interests
|
0.6
|
|
0.6
|
|
—
|
|
1.4
|
Adjusted net income
attributable to WESCO International, Inc.
|
248.8
|
|
249.5
|
|
668.8
|
|
686.8
|
Preferred stock
dividends
|
14.4
|
|
14.4
|
|
43.1
|
|
43.1
|
Adjusted net income
attributable to common stockholders
|
$
234.4
|
|
$
235.1
|
|
$
625.7
|
|
$
643.7
|
|
|
|
|
|
|
|
|
Diluted
shares
|
52.2
|
|
52.4
|
|
52.4
|
|
52.4
|
Adjusted earnings per
diluted share
|
$
4.49
|
|
$
4.49
|
|
$
11.94
|
|
$
12.29
|
|
|
(1) Basic and diluted earnings per share for the three
and nine months ended September 30, 2022 were previously calculated
and reported based on amounts as presented in thousands. As such,
certain prior year amounts may not foot or recalculate based on the
amounts as presented in millions in the current year
presentation.
|
|
Note: For the three and
nine months ended September 30, 2023, SG&A expenses,
income from operations, the provision for income taxes and earnings
per diluted share have been adjusted to exclude merger-related and
integration costs, restructuring costs, accelerated amortization
expense associated with migrating to the Company's master brand
architecture, and the related income tax effects. For the three and
nine months ended September 30, 2022, SG&A expenses,
income from operations, the provision for income taxes and earnings
per diluted share have been adjusted to exclude merger-related and
integration costs, accelerated amortization expense associated with
migrating to the Company's master brand architecture, and the
related income tax effects. These non-GAAP financial measures
provide a better understanding of the Company's financial results
on a comparable basis.
|
|
|
WESCO INTERNATIONAL,
INC.
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
(in millions, except
per share amounts)
(Unaudited)
|
|
|
|
Three Months Ended
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, 2022
|
EBITDA and Adjusted
EBITDA by Segment:
|
|
EES
|
|
CSS
|
|
UBS
|
|
Corporate
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
|
$
214.1
|
|
$
138.7
|
|
$
180.4
|
|
$
(308.0)
|
|
$
225.2
|
Net income
attributable to noncontrolling interests
|
|
0.2
|
|
—
|
|
—
|
|
0.4
|
|
0.6
|
Preferred stock
dividends
|
|
—
|
|
—
|
|
—
|
|
14.4
|
|
14.4
|
Provision for income
taxes(1)
|
|
—
|
|
—
|
|
—
|
|
85.6
|
|
85.6
|
Interest expense,
net(1)
|
|
—
|
|
—
|
|
—
|
|
75.1
|
|
75.1
|
Depreciation and
amortization
|
|
9.6
|
|
15.9
|
|
5.9
|
|
11.3
|
|
42.7
|
EBITDA
|
|
$
223.9
|
|
$
154.6
|
|
$
186.3
|
|
$
(121.2)
|
|
$
443.6
|
Other (income)
expense, net
|
|
(1.1)
|
|
0.3
|
|
(1.1)
|
|
2.6
|
|
0.7
|
Stock-based
compensation expense(2)
|
|
3.0
|
|
1.5
|
|
1.1
|
|
2.8
|
|
8.4
|
Merger-related and
integration costs(3)
|
|
—
|
|
—
|
|
—
|
|
13.2
|
|
13.2
|
Adjusted
EBITDA
|
|
$
225.8
|
|
$
156.4
|
|
$
186.3
|
|
$
(102.6)
|
|
$
465.9
|
Adjusted EBITDA
margin %
|
|
10.1 %
|
|
9.8 %
|
|
11.6 %
|
|
|
|
8.6 %
|
|
(1)
The reportable segments do not incur income taxes and interest
expense as these costs are centrally controlled through the
Corporate tax and treasury functions.
|
(2)
Stock-based compensation expense in the calculation of adjusted
EBITDA for the three months ended September 30, 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.
|
|
Note: EBITDA, Adjusted
EBITDA and Adjusted EBITDA margin % are non-GAAP financial measures
that provide indicators of the Company's performance and its
ability to meet debt service requirements. EBITDA is defined as
earnings before interest, taxes, depreciation and amortization.
Adjusted EBITDA is defined as EBITDA before other non-operating
expenses (income), non-cash stock-based compensation expense,
merger-related and integration costs, and restructuring costs.
Adjusted EBITDA margin % is calculated by dividing Adjusted EBITDA
by net sales.
|
WESCO INTERNATIONAL,
INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in millions, except per share amounts)
(Unaudited)
|
|
|
|
Three Months Ended
June 30, 2023
|
EBITDA and Adjusted
EBITDA by Segment:
|
|
EES
|
|
CSS
|
|
UBS
|
|
Corporate
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
|
$
167.0
|
|
$
132.2
|
|
$
183.1
|
|
$
(303.6)
|
|
$
178.7
|
Net (loss) income
attributable to noncontrolling interests
|
|
(0.7)
|
|
0.1
|
|
—
|
|
(0.1)
|
|
(0.7)
|
Preferred stock
dividends
|
|
—
|
|
—
|
|
—
|
|
14.4
|
|
14.4
|
Provision for income
taxes(1)
|
|
—
|
|
—
|
|
—
|
|
71.8
|
|
71.8
|
Interest expense,
net(1)
|
|
—
|
|
—
|
|
—
|
|
98.8
|
|
98.8
|
Depreciation and
amortization
|
|
11.5
|
|
17.9
|
|
6.4
|
|
11.1
|
|
46.9
|
EBITDA
|
|
$
177.8
|
|
$
150.2
|
|
$
189.5
|
|
$
(107.6)
|
|
$
409.9
|
Other expense
(income), net
|
|
9.8
|
|
27.7
|
|
(1.7)
|
|
(35.0)
|
|
0.8
|
Stock-based
compensation expense(2)
|
|
1.4
|
|
1.6
|
|
0.8
|
|
7.1
|
|
10.9
|
Merger-related and
integration costs(3)
|
|
—
|
|
—
|
|
—
|
|
10.9
|
|
10.9
|
Restructuring
costs(4)
|
|
—
|
|
—
|
|
—
|
|
9.8
|
|
9.8
|
Adjusted
EBITDA
|
|
$
189.0
|
|
$
179.5
|
|
$
188.6
|
|
$
(114.8)
|
|
$
442.3
|
Adjusted EBITDA
margin %
|
|
8.6 %
|
|
9.7 %
|
|
11.1 %
|
|
|
|
7.7 %
|
(1)
The reportable segments do not incur income taxes and interest
expense as these costs are centrally controlled through the
Corporate tax and treasury functions.
|
(2)
Stock-based compensation expense in the calculation of adjusted
EBITDA for the three months ended June 30, 2023 excludes $1.3
million that is included in merger-related and integration
costs.
|
(3)
Merger-related and integration costs include integration and
professional fees associated with the integration of Wesco and
Anixter, including digital transformation costs, as well as
advisory, legal, and separation costs associated with the merger
between the two companies.
|
(4)
Restructuring costs include severance costs incurred pursuant to an
ongoing restructuring plan.
|
|
Note: EBITDA, Adjusted
EBITDA and Adjusted EBITDA margin % are non-GAAP financial measures
that provide indicators of the Company's performance and its
ability to meet debt service requirements. EBITDA is defined as
earnings before interest, taxes, depreciation and amortization.
Adjusted EBITDA is defined as EBITDA before other non-operating
expenses (income), non-cash stock-based compensation expense,
merger-related and integration costs, and restructuring costs.
Adjusted EBITDA margin % is calculated by dividing Adjusted EBITDA
by net sales.
|
WESCO INTERNATIONAL,
INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in millions, except per share amounts)
(Unaudited)
|
|
|
|
Nine Months Ended
September 30, 2023
|
EBITDA and Adjusted
EBITDA by Segment:
|
|
EES
|
|
CSS
|
|
UBS
|
|
Corporate
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
|
$
516.2
|
|
$
413.6
|
|
$
552.1
|
|
$
(901.4)
|
|
$
580.5
|
Net (loss) income
attributable to noncontrolling interests
|
|
(0.8)
|
|
1.0
|
|
—
|
|
(0.2)
|
|
—
|
Preferred stock
dividends
|
|
—
|
|
—
|
|
—
|
|
43.1
|
|
43.1
|
Provision for income
taxes(1)
|
|
—
|
|
—
|
|
—
|
|
160.2
|
|
160.2
|
Interest expense,
net(1)
|
|
—
|
|
—
|
|
—
|
|
292.3
|
|
292.3
|
Depreciation and
amortization
|
|
32.3
|
|
53.9
|
|
18.7
|
|
31.5
|
|
136.4
|
EBITDA
|
|
$
547.7
|
|
$
468.5
|
|
$
570.8
|
|
$
(374.5)
|
|
$
1,212.5
|
Other expense
(income), net
|
|
12.0
|
|
38.2
|
|
(0.5)
|
|
(35.1)
|
|
14.6
|
Stock-based
compensation expense(2)
|
|
3.8
|
|
3.8
|
|
2.4
|
|
22.1
|
|
32.1
|
Merger-related and
integration costs(3)
|
|
—
|
|
—
|
|
—
|
|
45.4
|
|
45.4
|
Restructuring
costs(4)
|
|
—
|
|
—
|
|
—
|
|
15.4
|
|
15.4
|
Adjusted
EBITDA
|
|
$
563.5
|
|
$
510.5
|
|
$
572.7
|
|
$
(326.7)
|
|
$
1,320.0
|
Adjusted EBITDA
margin %
|
|
8.6 %
|
|
9.5 %
|
|
11.4 %
|
|
|
|
7.8 %
|
|
(1)
The reportable segments do not incur income taxes and interest
expense as these costs are centrally controlled through the
Corporate tax and treasury functions.
|
(2) Stock-based
compensation expense in the calculation of adjusted EBITDA for the
nine months ended September 30, 2023 excludes $2.6 million
that is included in merger-related and integration
costs.
|
(3)
Merger-related and integration costs include integration and
professional fees associated with the integration of Wesco and
Anixter, including digital transformation costs, as well as
advisory, legal, and separation costs associated with the merger
between the two companies.
|
(4)
Restructuring costs include severance costs incurred pursuant to an
ongoing restructuring plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, 2022
|
EBITDA and Adjusted
EBITDA by Segment:
|
|
EES
|
|
CSS
|
|
UBS
|
|
Corporate
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
|
$
615.5
|
|
$
373.1
|
|
$
472.1
|
|
$
(862.2)
|
|
$
598.5
|
Net income
attributable to noncontrolling interests
|
|
0.6
|
|
—
|
|
—
|
|
0.8
|
|
1.4
|
Preferred stock
dividends
|
|
—
|
|
—
|
|
—
|
|
43.1
|
|
43.1
|
Provision for income
taxes(1)
|
|
—
|
|
—
|
|
—
|
|
203.2
|
|
203.2
|
Interest expense,
net(1)
|
|
—
|
|
—
|
|
—
|
|
207.1
|
|
207.1
|
Depreciation and
amortization
|
|
32.8
|
|
51.9
|
|
17.4
|
|
33.5
|
|
135.6
|
EBITDA
|
|
$
648.9
|
|
$
425.0
|
|
$
489.5
|
|
$
(374.5)
|
|
$
1,188.9
|
Other (income)
expense, net
|
|
(2.6)
|
|
0.7
|
|
(0.5)
|
|
5.4
|
|
3.0
|
Stock-based
compensation expense(2)
|
|
7.3
|
|
3.8
|
|
2.7
|
|
16.6
|
|
30.4
|
Merger-related and
integration costs(3)
|
|
—
|
|
—
|
|
—
|
|
52.2
|
|
52.2
|
Adjusted
EBITDA
|
|
$
653.6
|
|
$
429.5
|
|
$
491.7
|
|
$
(300.3)
|
|
$
1,274.5
|
Adjusted EBITDA
margin %
|
|
9.8 %
|
|
9.3 %
|
|
10.8 %
|
|
|
|
8.0 %
|
|
(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) Stock-based
compensation expense in the calculation of adjusted EBITDA for the
nine months ended September 30, 2022 excludes
$4.1 million that is included in merger-related and
integration costs.
|
(3)
Merger-related and integration costs include integration and
professional fees associated with the integration of Wesco and
Anixter, including digital transformation costs, as well as
advisory, legal, and separation costs associated with the merger
between the two companies.
|
|
Note: EBITDA, Adjusted
EBITDA and Adjusted EBITDA margin % are non-GAAP financial measures
that provide indicators of the Company's performance and its
ability to meet debt service requirements. EBITDA is defined as
earnings before interest, taxes, depreciation and amortization.
Adjusted EBITDA is defined as EBITDA before other non-operating
expenses (income), non-cash stock-based compensation expense,
merger-related and integration costs, and restructuring costs.
Adjusted EBITDA margin % is calculated by dividing Adjusted EBITDA
by net sales.
|
WESCO INTERNATIONAL,
INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in millions, except per share amounts)
(Unaudited)
|
|
|
Twelve Months
Ended
|
Financial
Leverage:
|
September
30,
2023
|
|
December 31,
2022
|
|
|
|
|
Net income
attributable to common stockholders
|
$
785.0
|
|
$
803.1
|
Net income
attributable to noncontrolling interests
|
0.2
|
|
1.7
|
Preferred stock
dividends
|
57.4
|
|
57.4
|
Provision for income
taxes
|
231.6
|
|
274.5
|
Interest expense,
net
|
379.5
|
|
294.4
|
Depreciation and
amortization
|
179.9
|
|
179.0
|
EBITDA
|
$
1,633.6
|
|
$
1,610.1
|
Other expense,
net
|
18.6
|
|
7.0
|
Stock-based
compensation expense
|
42.7
|
|
41.0
|
Merger-related and
integration costs(1)
|
60.7
|
|
67.5
|
Restructuring
costs(2)
|
15.4
|
|
—
|
Adjusted
EBITDA
|
$
1,771.0
|
|
$
1,725.6
|
|
|
|
|
|
As of
|
|
September
30,
2023
|
|
December 31,
2022
|
Short-term debt and
current portion of long-term debt, net
|
$
14.7
|
|
$
70.5
|
Long-term debt,
net
|
5,378.3
|
|
5,346.0
|
Debt discount and debt
issuance costs(3)
|
46.8
|
|
57.9
|
Fair value adjustments
to Anixter Senior Notes due 2023 and 2025(3)
|
(0.1)
|
|
(0.3)
|
Total debt
|
5,439.7
|
|
5,474.1
|
Less: Cash and cash
equivalents
|
631.4
|
|
527.3
|
Total debt, net of
cash
|
$
4,808.3
|
|
$
4,946.8
|
|
|
|
|
Financial leverage
ratio
|
2.7
|
|
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
|
|
Nine Months
Ended
|
Free Cash
Flow:
|
September 30,
2023
|
|
September 30,
2022
|
|
September 30,
2023
|
|
September 30,
2022
|
|
|
|
|
|
|
|
|
Cash flow provided by
(used in) operations
|
$
361.7
|
|
$
(106.1)
|
|
$
423.9
|
|
$
(410.6)
|
Less: Capital
expenditures
|
(19.3)
|
|
(27.7)
|
|
(63.6)
|
|
(59.4)
|
Add: Merger-related,
integration and restructuring cash costs
|
14.7
|
|
6.2
|
|
24.1
|
|
49.5
|
Free cash
flow
|
$
357.1
|
|
$
(127.6)
|
|
$
384.4
|
|
$
(420.5)
|
Percentage of adjusted
net income
|
143 %
|
|
(51) %
|
|
57 %
|
|
(61) %
|
|
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 nine months ended September 30, 2023 and 2022,
the Company paid for certain costs to integrate the acquired
Anixter business as well as certain restructuring costs. Such
expenditures have been added back to operating cash flow to
determine free cash flow for such periods. Our calculation of free
cash flow may not be comparable to similar measures used by other
companies.
|
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/wesco-international-reports-third-quarter-2023-results-301975057.html
SOURCE WESCO International, Inc.