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Classified in: Mining industry, Transportation, Science and technology, Business, Covid-19 virus
Subjects: ERN, ERP

Wesco International Reports Third Quarter 2023 Results


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:

The following are results for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022:

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:

The following are results by segment for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022:

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.


 

SOURCE WESCO International, Inc.


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