- Third quarter reported net sales down 2.7% YOY due primarily
to the Wesco Integrated Supply divestiture
- Organic sales down 0.6% YOY and up 0.1%
sequentially
- Third quarter operating profit of $336 million; operating margin of 6.1%
- Gross margin of 22.1%, up 50 basis points YOY and up 20
basis points sequentially
- Adjusted EBITDA margin of 7.3%, down 80 basis points YOY and
flat sequentially
- Operating cash flow of $302
million in the third quarter and $825
million for the first nine months of 2024, up from
$424 million in the first nine months
of 2023
- Reaffirming full-year outlook
PITTSBURGH, Oct. 31,
2024 /PRNewswire/ -- Wesco International
(NYSE: WCC), a leading provider of business-to-business
distribution, logistics services and supply chain solutions,
announces its results for the third quarter of 2024.
"We had a strong close to our third quarter, with sales slightly
up compared to the second quarter driven by accelerating momentum
in our Communications and Security Solutions segment, including
double-digit sales growth in our global data center business. The
continued weakness in Utility and Broadband Solutions offset what
would have been a return to organic growth in the quarter. Adjusted
EBITDA margin was flat compared to the second quarter and better
than the expectations reviewed during our Investor Day last month,
primarily driven by a sequential increase in gross margin," said
John Engel, Chairman, President and
CEO.
Mr. Engel added, "I am pleased with our free cash flow
generation of $280 million in the
third quarter and $777 million
year-to-date, or 154% of adjusted net income. We have placed a
particular focus on working capital management and are beginning to
see the benefits, particularly in our Communications & Security
Solutions business. Financial leverage was stable at 2.9X trailing
twelve-month adjusted EBITDA as we reduced our net debt
$188 million and repurchased
$25 million of shares in the third
quarter. Our pipeline of strategic acquisitions remains strong and
is aligned with our goal to increase service offerings to our
customers."
Mr. Engel concluded, "Quoting, bid activity levels, and backlog
remain healthy across our Wesco enterprise. We are reaffirming our
2024 full-year outlook for sales, profitability and free cash flow.
While end markets remain mixed, in the fourth quarter we expect to
continue to benefit from double-digit growth in the data center
space as well as some large projects in our electrical and
industrial end markets. As we look ahead, I like Wesco's leadership
position and exposure to the long-term trends we have consistently
described in detail. While the macro-economic environment will
inevitably present challenges, I believe Wesco will continue to
outperform our competitors under all market conditions. Our
commitment to value creation from operational improvements, digital
transformation and our capital allocation strategy, including
focused M&A, is clear and resolute as outlined during our
recent Investor Day. The Wesco team will continue to strive to
execute on those plans to deliver outsized returns for our
shareholders."
The following are results for the three months ended
September 30, 2024 compared to the three months ended
September 30, 2023:
- Net sales were $5.5 billion for
the third quarter of 2024 compared to $5.6
billion for the third quarter of 2023, a decrease of 2.7%.
On an organic basis, which removes the impact of the Wesco
Integrated Supply ("WIS") divestiture, differences in foreign
exchange rates, and the impact from the number of workdays, sales
for the third quarter of 2024 declined by 0.6%. The decrease in
organic sales reflects volume declines in the EES and UBS segments,
partially offset by a volume increase in the CSS segment, and price
inflation in the EES and UBS segments. Sequentially, net sales
increased 0.2% and organic sales grew by 0.1% as fluctuations in
foreign exchange rates positively impacted reported net sales by
0.1%.
- Cost of goods sold for the third quarter of 2024 was
$4.3 billion compared to $4.4 billion for the third quarter of 2023, and
gross profit was $1.2 billion for the
third quarter of 2024 and 2023. As a percentage of net sales, gross
profit was 22.1% and 21.6% for the third quarter of 2024 and 2023,
respectively. The increase in gross profit as a percentage of net
sales for the third quarter of 2024 primarily reflects the impact
of the divestiture of the WIS business. Sequentially, gross profit
as a percentage of net sales increased 20 basis points from 21.9%
in the second quarter of 2024.
- Selling, general and administrative ("SG&A") expenses were
$831.1 million, or 15.1% of net
sales, for the third quarter of 2024, compared to $796.4 million, or 14.1% of net sales, for the
third quarter of 2023. SG&A expenses for the third quarter of
2024 include $5.4 million of digital
transformation costs and $0.5 million
of restructuring costs. SG&A expenses for the third quarter of
2023 include $12.9 million of digital
transformation costs, $5.6 million of
restructuring costs, and $2.1 million
of merger-related and integration costs. Adjusted for these costs,
SG&A expenses were $825.2
million, or 15.0% of net sales, for the third quarter of
2024 and $775.8 million, or 13.7% of
net sales, for the third quarter of 2023. Adjusted SG&A
expenses for the third quarter of 2024 reflect higher payroll and
payroll-related expenses, costs to operate our facilities and
transportation costs, partially offset by the impact of the
divestiture of the WIS business.
- Depreciation and amortization for the third quarter of 2024 was
$46.0 million compared to
$45.1 million for the third quarter
of 2023, an increase of $0.9
million.
- Operating profit was $335.6
million for the third quarter of 2024 compared to
$380.5 million for the third quarter
of 2023, a decrease of $44.9 million,
or 11.8%. Operating profit as a percentage of net sales was 6.1%
for the current quarter compared to 6.7% for the third quarter of
the prior year. Adjusted for digital transformation costs and
restructuring costs, operating profit was $341.5 million, or 6.2% of net sales, for the
third quarter of 2024. Adjusted for digital transformation costs,
restructuring costs, merger-related and integration costs, and
accelerated trademark amortization expense, operating profit was
$401.5 million, or 7.1% of net sales,
for the third quarter of 2023.
- Net interest expense for the third quarter of 2024 was
$86.5 million compared to
$98.5 million for the third quarter
of 2023. The decrease is primarily attributable to lower borrowings
and a decrease in variable interest rates.
- Other non-operating income for the third quarter of 2024 was
$24.9 million compared to expense of
$3.7 million for the third quarter of
2023. During the third quarter, we finalized the divestiture of our
WIS business, and recognized an additional gain from the sale of
$19.3 million. We also recognized
income of $2.2 million as a result of
the finalization of the liabilities transferred related to the
settlement of the Anixter Inc. Pension Plan. Adjusted for the gain
on the divestiture of our WIS business as well as the reduction to
pension settlement costs, other non-operating income was
$3.4 million for the third quarter of
2024.
- The effective tax rate for the third quarter of 2024 was 25.3%
compared to 15.9% for the third quarter of 2023. The higher
effective tax rate for the third quarter of 2024 is due to lower
discrete income tax benefits resulting from the exercise and
vesting of stock-based awards as compared to the prior year. The
corresponding quarter of the prior year also reflected discrete
income tax benefits relating to the reversal of certain valuation
allowances and return-to-provision adjustments.
- Net income attributable to common stockholders was $189.9 million for the third quarter of 2024
compared to $219.0 million for the
third quarter of 2023. Adjusted for digital transformation costs,
restructuring costs, the gain recognized on the divestiture of our
WIS business, the reduction to pension settlement cost, and the
related income tax effects, net income attributable to common
stockholders was $178.1 million for
the third quarter of 2024. Adjusted for digital transformation
costs, restructuring costs, merger-related and integration 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.
- Earnings per diluted share for the third quarter of 2024 was
$3.81, based on 49.8 million diluted
shares, compared to $4.20 for the
third quarter of 2023, based on 52.2 million diluted shares.
Adjusted for digital transformation costs, restructuring costs, the
gain recognized on the divestiture of our WIS business, the
reduction to pension settlement cost, and the related income tax
effects, earnings per diluted share for the third quarter of 2024
was $3.58. Adjusted for digital
transformation costs, restructuring costs, merger-related and
integration 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 earnings per diluted share decreased 20.3%
year-over-year.
- Operating cash flow for the third quarter of 2024 was an inflow
of $302.1 million compared to
$361.7 million for the third quarter
of 2023. Free cash flow for the third quarter of 2024 was
$279.5 million, or 144.9% of adjusted
net income. The net cash inflow in the third quarter of 2024 was
primarily driven by net income of $204.7
million, as well as an improvement in net working capital.
Fluctuations in accounts payable resulted in a cash inflow of
$136.1 million for the third quarter
of 2024, primarily due to the timing of payments to suppliers as
well as inventory purchases. A decrease in trade accounts
receivable of $40.9 million primarily
due to the timing of receipts from customers also contributed to
the cash inflow. An increase in inventories resulted in a use of
cash of $103.9 million.
The following are results for the nine months ended
September 30, 2024 compared to the nine months ended
September 30, 2023:
- Net sales were $16.3 billion for
the first nine months of 2024 compared to $16.9 billion for the first nine months of 2023,
a decrease of 3.5%. On an organic basis, which removes the impact
of the WIS divestiture, differences in foreign exchange rates, and
the impact from the number of workdays, sales for the first nine
months of 2024 declined by 1.5%. The decrease in organic sales
reflects volume declines in the EES and UBS segments, partially
offset by a volume increase in the CSS segment, and price inflation
in the EES and UBS segments.
- Cost of goods sold for the first nine months of 2024 was
$12.8 billion compared to
$13.2 billion for the first nine
months of 2023, and gross profit was $3.5
billion and $3.7 billion,
respectively. As a percentage of net sales, gross profit was 21.7%
for the first nine months of 2024 and 2023.
- SG&A expenses were $2,488.9
million, or 15.3% of net sales, for the first nine months of
2024, compared to $2,445.8 million,
or 14.5% of net sales, for the first nine months of 2023. SG&A
expenses for the first nine months of 2024 include a $17.8 million loss on abandonment of assets,
$17.5 million of digital
transformation costs, $9.5 million of
restructuring costs, and $4.8 million
of excise taxes on excess pension plan assets. SG&A expenses
for the first nine months of 2023 include $28.5 million of digital transformation costs,
$16.9 million of merger-related and
integration costs, and $15.4 million
of restructuring costs. Adjusted for the loss on abandonment of
assets, digital transformation costs, restructuring costs, and
excise taxes on excess pension plan assets, SG&A expenses were
$2,439.3 million, or 14.9% of net
sales, for the first nine months of 2024. Adjusted for digital
transformation costs, 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. The increase in adjusted SG&A
expenses for the first nine months of 2024 compared to the first
nine months of 2023 reflects higher costs to operate our
facilities, an increase in IT costs, and an increase in payroll and
payroll-related costs.
- Depreciation and amortization for the first nine months of 2024
was $137.6 million compared to
$136.4 million for the first nine
months of 2023, an increase of $1.2
million.
- Operating profit was $922.1
million for the first nine months of 2024 compared to
$1,090.7 million for the first nine
months of 2023, a decrease of $168.6
million, or 15.5%. Operating profit as a percentage of net
sales was 5.7% for the first nine months of 2024 compared to 6.4%
for the first nine months of 2023. Adjusted for the loss on
abandonment of assets, digital transformation costs, restructuring
costs, and excise taxes on excess pension plan assets, operating
profit was $971.7 million, or 6.0% of
net sales, for the first nine months of 2024. Adjusted for digital
transformation costs, merger-related and integration costs,
restructuring costs, and accelerated trademark amortization
expense, operating profit was $1,152.7
million, or 6.8% of net sales, for the first nine months of
2023.
- Net interest expense for the first nine months of 2024 was
$279.8 million compared to
$292.3 million for the first nine
months of 2023. The decrease is primarily attributable to lower
borrowings and a decrease in variable interest rates.
- Other non-operating income for the first nine months of 2024
was $99.3 million compared to expense
of $14.6 million for the first nine
months of 2023. In the first nine months of 2024, we completed the
divestiture of our WIS business and recognized a gain from the sale
of $122.2 million. Additionally, in
the first nine months of 2024, we recognized a $3.8 million loss on termination of a business
arrangement. Due to fluctuations in the U.S. dollar against certain
foreign currencies, a net foreign currency exchange loss of
$18.2 million was recognized for the
first nine months of 2024 compared to a net loss of $14.6 million for the first nine months of 2023.
Net costs of $3.2 million, comprising
pension settlement cost, and net benefits of $0.9 million associated with the non-service cost
components of net periodic pension (benefit) cost were recognized
for the first nine months of 2024 and 2023, respectively. Adjusted
for the gain on divestiture of our WIS business, the loss on
termination of a business arrangement, and pension settlement cost
described above, other non-operating expense was $15.8 million for the first nine months of
2024.
- The effective tax rate for the first nine months of 2024 was
25.4% compared to 20.4% for the first nine months of 2023. The
effective tax rate for the first nine months of 2024 was higher
than the comparable prior year period due to lower discrete income
tax benefits resulting from the exercise and vesting of stock-based
awards as compared to the prior year period. The prior year period
also reflected discrete income tax benefits relating to the
reversal of certain valuation allowances and return-to-provision
adjustments.
- Net income attributable to common stockholders was $509.1 million for the first nine months of 2024
compared to $580.5 million for the
first nine months of 2023. Adjusted for the loss on abandonment of
assets, digital transformation costs, restructuring costs, excise
taxes on excess pension plan assets, the gain recognized on the
divestiture of the WIS business, the loss on termination of a
business arrangement, pension settlement cost, and the related
income tax effects, net income attributable to common stockholders
was $461.0 million for the first nine
months of 2024. Adjusted for digital transformation costs,
merger-related and integration costs, restructuring costs,
accelerated trademark amortization expense, and the related income
tax effects, net income attributable to common stockholders for the
first nine months of 2023 was $625.7
million.
- Earnings per diluted share for the first nine months of 2024
was $10.02, based on 50.8 million
diluted shares, compared to $11.08
for the first nine months of 2023, based on 52.4 million diluted
shares. Adjusted for the loss on abandonment of assets, digital
transformation costs, restructuring costs, excise taxes on excess
pension plan assets, the gain recognized on the divestiture of our
WIS business, the loss on termination of a business arrangement,
pension settlement cost, and the related income tax effects,
earnings per diluted share for the first nine months of 2024 was
$9.07. Adjusted for digital
transformation costs, 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 earnings per diluted share
decreased 24.0% year-over-year.
- Operating cash flow for the first nine months of 2024 was an
inflow of $824.6 million compared to
$423.9 million for the first nine
months of 2023. Free cash flow for the first nine months of 2024
was $776.8 million, or 153.7% of
adjusted net income. The net cash inflow in the first nine months
of 2024 was primarily driven by net income of $553.5 million and non-cash adjustments to net
income totaling $66.3 million.
Operating cash flow was positively impacted by net changes in
assets and liabilities of $204.8
million, which primarily comprised an increase in accounts
payable of $478.0 million, primarily
due to the timing of payments to suppliers, as well as inventory
purchases, partially offset by an increase in trade accounts
receivable of $217.9 million due to
the timing of receipts from customers and an increase in
inventories of $85.0 million.
Webcast and Teleconference Access
Wesco will conduct a webcast and teleconference to discuss the
third quarter of 2024 earnings as described in this News Release on
Thursday, October 31, 2024, at 10:00
a.m. E.T. The call will be broadcast live over the internet
and can be accessed from the Investor Relations page of the
Company's website at https://investors.wesco.com. The call
will be archived on this internet site for seven days.
Wesco International (NYSE: WCC) builds, connects, powers and
protects the world. Headquartered in Pittsburgh, Pennsylvania, Wesco is a FORTUNE
500® company with more than $22
billion in annual sales and a leading provider of
business-to-business distribution, logistics services and supply
chain solutions. Wesco offers a best-in-class product and services
portfolio of Electrical and Electronic Solutions, Communications
and Security Solutions, and Utility and Broadband Solutions. The
Company employs approximately 20,000 people, partners with the
industry's premier suppliers, and serves thousands of customers
around the world. With millions of products, end-to-end supply
chain services, and leading digital capabilities, Wesco provides
innovative solutions to meet customer needs across commercial and
industrial businesses, contractors, government agencies,
educational institutions, telecommunications providers, and
utilities. Wesco operates nearly 800 branches, warehouses and sales
offices in more than 50 countries, providing a local presence for
customers and a global network to serve multi-location businesses
and global corporations.
Forward-Looking Statements
All statements made herein that are not historical facts
should be considered as "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
Such statements involve known and unknown risks, uncertainties and
other factors that may cause actual results to differ materially.
These statements include, but are not limited to, statements
regarding business strategy, growth strategy, competitive
strengths, productivity and profitability enhancement, competition,
new product and service introductions, and liquidity and capital
resources. Such statements can generally be identified by the use
of words such as "anticipate," "plan," "believe," "estimate,"
"intend," "expect," "project," and similar words, phrases or
expressions or future or conditional verbs such as "could," "may,"
"should," "will," and "would," although not all forward-looking
statements contain such words. These forward-looking statements are
based on current expectations and beliefs of Wesco's management, as
well as assumptions made by, and information currently available
to, Wesco's management, current market trends and market conditions
and involve risks and uncertainties, many of which are outside of
Wesco's and Wesco's management's control, and which may cause
actual results to differ materially from those contained in
forward-looking statements. Accordingly, you should not place undue
reliance on such statements.
Important factors that could cause actual results or events
to differ materially from those presented or implied in the
forward-looking statements include, among others, the failure to
achieve the anticipated benefits of, and other risks associated
with, acquisitions, joint ventures, divestitures and other
corporate transactions; the inability to successfully integrate
acquired businesses; the impact of increased interest rates or
borrowing costs; fluctuations in currency exchange rates; failure
to adequately protect Wesco's intellectual property or successfully
defend against infringement claims; the inability to successfully
deploy new technologies, digital products and information systems
or to otherwise adapt to emerging technologies in the marketplace,
such as those incorporating artificial intelligence; failure to
execute on our efforts and programs related to environmental,
social and governance (ESG) matters; unanticipated expenditures or
other adverse developments related to compliance with new or
stricter government policies, laws or regulations, including those
relating to data privacy, sustainability and environmental
protection; the inability to successfully develop, manage or
implement new technology initiatives or business strategies,
including with respect to the expansion of e-commerce capabilities
and other digital solutions and digitalization initiatives;
disruption of information technology systems or operations; natural
disasters (including as a result of climate change), health
epidemics, pandemics and other outbreaks; supply chain disruptions;
geopolitical issues, including the impact of the evolving conflicts
in the Middle East and
Russia/Ukraine; the impact of sanctions imposed on,
or other actions taken by the U.S. or other countries against,
Russia or China; the failure to manage the increased
risks and impacts of cyber incidents or data breaches; and
exacerbation of key materials shortages, inflationary cost
pressures, material cost increases, demand volatility, and
logistics and capacity constraints, any of which may have a
material adverse effect on the Company's business, results of
operations and financial condition. All such factors are difficult
to predict and are beyond the Company's control. Additional factors
that could cause results to differ materially from those described
above can be found in Wesco's most recent Annual Report on Form
10-K and other periodic reports filed with the U.S. Securities and
Exchange Commission.
|
Contact
Information
|
|
Investor
Relations
|
Corporate
Communications
|
|
Will
Ruthrauff
Director, Investor
Relations
484-885-5648
|
Jennifer
Sniderman
Vice President,
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,
2024
|
|
|
September 30,
2023
|
|
|
Net sales
|
$
5,489.4
|
|
|
$
5,644.4
|
|
|
Cost of goods sold
(excluding depreciation and amortization)
|
4,276.7
|
77.9 %
|
|
4,422.4
|
78.4 %
|
|
Selling, general and
administrative expenses
|
831.1
|
15.1 %
|
|
796.4
|
14.1 %
|
|
Depreciation and
amortization
|
46.0
|
|
|
45.1
|
|
|
Income from
operations
|
335.6
|
6.1 %
|
|
380.5
|
6.7 %
|
|
Interest expense,
net
|
86.5
|
|
|
98.5
|
|
|
Other (income) expense,
net
|
(24.9)
|
|
|
3.7
|
|
|
Income before income
taxes
|
274.0
|
5.0 %
|
|
278.3
|
4.9 %
|
|
Provision for income
taxes
|
69.3
|
|
|
44.3
|
|
|
Net income
|
204.7
|
3.7 %
|
|
234.0
|
4.1 %
|
|
Net income attributable
to noncontrolling interests
|
0.4
|
|
|
0.6
|
|
|
Net income attributable
to WESCO International, Inc.
|
204.3
|
3.7 %
|
|
233.4
|
4.1 %
|
|
Preferred stock
dividends
|
14.4
|
|
|
14.4
|
|
|
Net income attributable
to common stockholders
|
$
189.9
|
3.5 %
|
|
$
219.0
|
3.9 %
|
|
|
|
|
|
|
|
Earnings per diluted
share attributable to common stockholders
|
$
3.81
|
|
|
$
4.20
|
|
|
Weighted-average common
shares outstanding and common
share equivalents used in computing earnings
per diluted
common share
|
49.8
|
|
|
52.2
|
|
|
WESCO INTERNATIONAL,
INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
|
(in millions, except
per share amounts)
|
|
(Unaudited)
|
|
|
Nine Months
Ended
|
|
|
September 30,
2024
|
|
|
September 30,
2023
|
|
|
Net sales
|
$
16,319.1
|
|
|
$
16,911.8
|
|
|
Cost of goods sold
(excluding depreciation and amortization)
|
12,770.5
|
78.3 %
|
|
13,238.9
|
78.3 %
|
|
Selling, general and
administrative expenses
|
2,488.9
|
15.3 %
|
|
2,445.8
|
14.5 %
|
|
Depreciation and
amortization
|
137.6
|
|
|
136.4
|
|
|
Income from
operations
|
922.1
|
5.7 %
|
|
1,090.7
|
6.4 %
|
|
Interest expense,
net
|
279.8
|
|
|
292.3
|
|
|
Other (income) expense,
net
|
(99.3)
|
|
|
14.6
|
|
|
Income before income
taxes
|
741.6
|
4.5 %
|
|
783.8
|
4.6 %
|
|
Provision for income
taxes
|
188.1
|
|
|
160.2
|
|
|
Net income
|
553.5
|
3.4 %
|
|
623.6
|
3.7 %
|
|
Net income attributable
to noncontrolling interests
|
1.3
|
|
|
—
|
|
|
Net income attributable
to WESCO International, Inc.
|
552.2
|
3.4 %
|
|
623.6
|
3.7 %
|
|
Preferred stock
dividends
|
43.1
|
|
|
43.1
|
|
|
Net income attributable
to common stockholders
|
$
509.1
|
3.1 %
|
|
$
580.5
|
3.4 %
|
|
|
|
|
|
|
|
Earnings per diluted
share attributable to common stockholders
|
$
10.02
|
|
|
$
11.08
|
|
|
Weighted-average common
shares outstanding and common
share equivalents used in computing earnings
per diluted
common share
|
50.8
|
|
|
52.4
|
|
|
WESCO INTERNATIONAL,
INC.
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(dollar amounts in
millions)
|
|
(Unaudited)
|
|
|
As of
|
|
September
30,
2024
|
|
December 31,
2023
|
|
Assets
|
|
|
|
|
Current
Assets
|
|
|
|
|
Cash and cash
equivalents
|
$
706.8
|
|
$
524.1
|
|
Trade accounts
receivable, net
|
3,629.1
|
|
3,639.5
|
|
Inventories
|
3,630.1
|
|
3,572.1
|
|
Other current
assets
|
717.5
|
|
655.9
|
|
Total current assets
|
8,683.5
|
|
8,391.6
|
|
|
|
|
|
Goodwill and intangible
assets
|
5,028.9
|
|
5,119.9
|
|
Other assets
|
1,562.6
|
|
1,549.4
|
|
Total assets
|
$
15,275.0
|
|
$
15,060.9
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Accounts
payable
|
$
2,839.1
|
|
$
2,431.5
|
|
Short-term debt and
current portion of long-term debt, net
|
14.9
|
|
8.6
|
|
Other current
liabilities
|
1,074.5
|
|
948.3
|
|
Total current liabilities
|
3,928.5
|
|
3,388.4
|
|
|
|
|
|
Long-term debt,
net
|
5,007.8
|
|
5,313.1
|
|
Other noncurrent
liabilities
|
1,301.9
|
|
1,327.5
|
|
Total liabilities
|
10,238.2
|
|
10,029.0
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
Total stockholders' equity
|
5,036.8
|
|
5,031.9
|
|
Total liabilities and stockholders' equity
|
$
15,275.0
|
|
$
15,060.9
|
|
WESCO INTERNATIONAL,
INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(dollar amounts in
millions)
|
|
(Unaudited)
|
|
|
Nine Months
Ended
|
|
September
30,
2024
|
|
September
30,
2023
|
|
Operating
Activities:
|
|
|
|
|
Net income
|
$
553.5
|
|
$
623.6
|
|
Add back
(deduct):
|
|
|
|
|
Depreciation and
amortization
|
137.6
|
|
136.4
|
|
Gain on
divestiture
|
(122.2)
|
|
—
|
|
Loss on abandonment of
assets
|
17.8
|
|
—
|
|
Change in trade
receivables, net
|
(217.9)
|
|
(133.4)
|
|
Change in
inventories
|
(85.0)
|
|
(62.7)
|
|
Change in accounts
payable
|
478.0
|
|
(86.5)
|
|
Other, net
|
62.8
|
|
(53.5)
|
|
Net cash provided by
operating activities
|
824.6
|
|
423.9
|
|
|
|
|
|
Investing
Activities:
|
|
|
|
|
Capital
expenditures
|
(70.4)
|
|
(63.6)
|
|
Acquisition
payments
|
(41.7)
|
|
—
|
|
Proceeds from
divestiture, net of cash transferred
|
354.9
|
|
—
|
|
Other, net
|
6.9
|
|
2.4
|
|
Net cash provided by
(used in) investing activities
|
249.7
|
|
(61.2)
|
|
|
|
|
|
Financing
Activities:
|
|
|
|
|
Debt repayments,
net(1)
|
(318.2)
|
|
(41.0)
|
|
Payments for taxes
related to net-share settlement of equity awards
|
(26.2)
|
|
(68.0)
|
|
Repurchases of common
stock
|
(375.0)
|
|
(50.0)
|
|
Payment of common
stock dividends
|
(61.4)
|
|
(57.6)
|
|
Payment of preferred
stock dividends
|
(43.1)
|
|
(43.1)
|
|
Debt issuance
costs
|
(26.6)
|
|
—
|
|
Other, net
|
(23.8)
|
|
6.3
|
|
Net cash used in
financing activities
|
(874.3)
|
|
(253.4)
|
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents
|
(17.3)
|
|
(5.2)
|
|
|
|
|
|
Net change in cash and
cash equivalents
|
182.7
|
|
104.1
|
|
Cash and cash
equivalents at the beginning of the period
|
524.1
|
|
527.3
|
|
Cash and cash
equivalents at the end of the period
|
$
706.8
|
|
$
631.4
|
|
|
|
(1)
|
The nine months ended
September 30, 2024 includes the issuance of the Company's
$900.0 million aggregate principal amount of 6.375% Senior Notes
due 2029 and (the "2029 Notes") and the Company's $850.0 million
aggregate principal amount of 6.625% Senior Notes due 2032 (the
"2032 Notes" and, together with the 2029 Notes, the "2029 and 2032
Notes"). The proceeds from the issuance of the 2029 and 2032 Notes
were used for the redemption of the Company's $1,500.0 million
aggregate principal amount of 7.125% Senior Notes due 2025 (the
"2025 Notes"). 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 other non-operating
expense (income), adjusted provision for income taxes, adjusted
income before income taxes, adjusted net income, adjusted net
income attributable to WESCO International, Inc., adjusted net
income attributable to common stockholders, and adjusted earnings
per diluted share. The Company believes that these non-GAAP
measures are useful to investors as they provide a better
understanding of our financial condition and results of operations
on a comparable basis. Additionally, certain non-GAAP measures
either focus on or exclude items impacting comparability of results
such as merger-related and integration costs, digital
transformation costs, restructuring costs, cloud computing
arrangement amortization, pension settlement cost and excise taxes
on excess pension plan assets related to the final settlement of
the Anixter Inc. Pension Plan, loss on abandonment of assets, the
gain recognized on the divestiture of the WIS business, the loss on
termination of business arrangement, and the related income tax
effects, 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,
2024
|
|
September 30,
2023
|
|
Reported
|
|
Divestiture
|
|
Foreign
Exchange
|
|
Workday
|
|
Organic
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EES
|
$
2,151.2
|
|
$
2,190.7
|
|
(1.8) %
|
|
— %
|
|
(0.5) %
|
|
1.6 %
|
|
(2.9) %
|
|
CSS
|
1,955.1
|
|
1,778.0
|
|
10.0 %
|
|
— %
|
|
(0.1) %
|
|
1.6 %
|
|
8.5 %
|
|
UBS
|
1,383.1
|
|
1,675.7
|
|
(17.5) %
|
|
(11.7) %
|
|
(0.2) %
|
|
1.6 %
|
|
(7.2) %
|
|
Total net
sales
|
$
5,489.4
|
|
$
5,644.4
|
|
(2.7) %
|
|
(3.5) %
|
|
(0.2) %
|
|
1.6 %
|
|
(0.6) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic Sales Growth
by Segment - Nine Months Ended:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
Growth/(Decline)
|
|
September 30,
2024
|
|
September 30,
2023
|
|
Reported
|
|
Divestiture
|
|
Foreign
Exchange
|
|
Workday
|
|
Organic
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EES
|
$
6,423.1
|
|
$
6,526.1
|
|
(1.6) %
|
|
— %
|
|
(0.3) %
|
|
0.5 %
|
|
(1.8) %
|
|
CSS
|
5,491.1
|
|
5,360.9
|
|
2.4 %
|
|
— %
|
|
(0.1) %
|
|
0.5 %
|
|
2.0 %
|
|
UBS
|
4,404.9
|
|
5,024.8
|
|
(12.3) %
|
|
(7.9) %
|
|
— %
|
|
0.5 %
|
|
(4.9) %
|
|
Total net
sales
|
$
16,319.1
|
|
$
16,911.8
|
|
(3.5) %
|
|
(2.3) %
|
|
(0.2) %
|
|
0.5 %
|
|
(1.5) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic Sales Growth
by Segment - Sequential:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Growth/(Decline)
|
|
September 30,
2024
|
|
June 30,
2024
|
|
Reported
|
|
Divestiture
|
|
Foreign
Exchange
|
|
Workday
|
|
Organic
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EES
|
$
2,151.2
|
|
$
2,172.9
|
|
(1.0) %
|
|
— %
|
|
0.1 %
|
|
— %
|
|
(1.1) %
|
|
CSS
|
1,955.1
|
|
1,865.9
|
|
4.8 %
|
|
— %
|
|
0.1 %
|
|
— %
|
|
4.7 %
|
|
UBS
|
1,383.1
|
|
1,440.9
|
|
(4.0) %
|
|
— %
|
|
— %
|
|
— %
|
|
(4.0) %
|
|
Total net
sales
|
$
5,489.4
|
|
$
5,479.7
|
|
0.2 %
|
|
— %
|
|
0.1 %
|
|
— %
|
|
0.1 %
|
|
|
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 the first nine months of 2024 had one more workday
compared to the third quarter and the first nine months of
2023. There was no change in the number of workdays in the
third quarter of 2024 compared to the second quarter of
2024.
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
Gross
Profit:
|
September 30,
2024
|
|
September 30,
2023
|
|
September 30,
2024
|
|
September 30,
2023
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
5,489.4
|
|
$
5,644.4
|
|
$
16,319.1
|
|
$
16,911.8
|
|
Cost of goods sold
(excluding depreciation and amortization)
|
4,276.7
|
|
4,422.4
|
|
12,770.5
|
|
13,238.9
|
|
Gross profit
|
$
1,212.7
|
|
$
1,222.0
|
|
$
3,548.6
|
|
$
3,672.9
|
|
Gross margin
|
22.1 %
|
|
21.6 %
|
|
21.7 %
|
|
21.7 %
|
|
WESCO
INTERNATIONAL, INC.
|
|
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
|
|
(in millions, except
per share amounts)
|
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
Gross
Profit:
|
|
June 30,
2024
|
|
|
|
|
Net sales
|
|
$
5,479.7
|
|
Cost of goods sold
(excluding depreciation and amortization)
|
|
4,281.7
|
|
Gross profit
|
|
$
1,198.0
|
|
Gross margin
|
|
21.9 %
|
|
|
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,
2024
|
|
September 30,
2023
|
|
September 30,
2024
|
|
September 30,
2023
|
|
Adjusted SG&A
Expenses:
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
$
831.1
|
|
$
796.4
|
|
$
2,488.9
|
|
$
2,445.8
|
|
Loss on abandonment of
assets(1)
|
—
|
|
—
|
|
(17.8)
|
|
—
|
|
Digital transformation
costs(2)
|
(5.4)
|
|
(12.9)
|
|
(17.5)
|
|
(28.5)
|
|
Restructuring
costs(3)
|
(0.5)
|
|
(5.6)
|
|
(9.5)
|
|
(15.4)
|
|
Excise taxes on excess
pension plan assets(4)
|
—
|
|
—
|
|
(4.8)
|
|
—
|
|
Merger-related and
integration costs(5)
|
—
|
|
(2.1)
|
|
—
|
|
(16.9)
|
|
Adjusted selling,
general and administrative expenses
|
$
825.2
|
|
$
775.8
|
|
$
2,439.3
|
|
$
2,385.0
|
|
Percentage of net
sales
|
15.0 %
|
|
13.7 %
|
|
14.9 %
|
|
14.1 %
|
|
|
|
|
|
|
|
|
|
Adjusted Income from
Operations:
|
|
|
|
|
|
|
|
|
Income from
operations
|
$
335.6
|
|
$
380.5
|
|
$
922.1
|
|
$
1,090.7
|
|
Loss on abandonment of
assets(1)
|
—
|
|
—
|
|
17.8
|
|
—
|
|
Digital transformation
costs(2)
|
5.4
|
|
12.9
|
|
17.5
|
|
28.5
|
|
Restructuring
costs(3)
|
0.5
|
|
5.6
|
|
9.5
|
|
15.4
|
|
Excise taxes on excess
pension plan assets(4)
|
—
|
|
—
|
|
4.8
|
|
—
|
|
Merger-related and
integration costs(5)
|
—
|
|
2.1
|
|
—
|
|
16.9
|
|
Accelerated trademark
amortization(6)
|
—
|
|
0.4
|
|
—
|
|
1.2
|
|
Adjusted income from
operations
|
$
341.5
|
|
$
401.5
|
|
$
971.7
|
|
$
1,152.7
|
|
Adjusted income from
operations margin %
|
6.2 %
|
|
7.1 %
|
|
6.0 %
|
|
6.8 %
|
|
|
|
|
|
|
|
|
|
Adjusted Other
(Income) Expense, net:
|
|
|
|
|
|
|
|
|
Other (income) expense,
net
|
$
(24.9)
|
|
$
3.7
|
|
$
(99.3)
|
|
$
14.6
|
|
Gain on
divestiture
|
19.3
|
|
—
|
|
122.2
|
|
—
|
|
Loss on termination of
business arrangement(7)
|
—
|
|
—
|
|
(3.8)
|
|
—
|
|
Pension settlement
cost(8)
|
2.2
|
|
—
|
|
(3.3)
|
|
—
|
|
Adjusted other (income)
expense, net
|
$
(3.4)
|
|
$
3.7
|
|
$
15.8
|
|
$
14.6
|
|
|
|
|
|
|
|
|
|
Adjusted Provision
for Income Taxes:
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
$
69.3
|
|
$
44.3
|
|
$
188.1
|
|
$
160.2
|
|
Income tax effect of
adjustments to income from
operations and other (income) expense,
net(9)
|
(3.8)
|
|
5.6
|
|
(17.4)
|
|
16.8
|
|
Adjusted provision for
income taxes
|
$
65.5
|
|
$
49.9
|
|
$
170.7
|
|
$
177.0
|
|
WESCO INTERNATIONAL,
INC.
|
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
|
|
(in millions, except
per share amounts)
|
|
(Unaudited)
|
|
|
(1)
|
Loss on abandonment of
assets represents the write-off of certain capitalized cloud
computing arrangement implementation costs relating to a
third-party developed operations management software product in
favor of an application with functionality that better suits the
Company's operations.
|
|
(2)
|
Digital transformation
costs include costs associated with certain digital transformation
initiatives.
|
|
(3)
|
Restructuring costs
include severance costs incurred pursuant to an ongoing
restructuring plan.
|
|
(4)
|
Excise taxes on excess
pension plan assets represent the excise taxes applicable to the
excess pension plan assets following the final settlement of the
Company's U.S. pension plan.
|
|
(5)
|
Merger-related and
integration costs include integration and professional fees
associated with the integration of Wesco and Anixter, as well as
advisory, legal, and separation costs associated with the merger
between the two companies.
|
|
(6)
|
Accelerated trademark
amortization represents additional amortization expense resulting
from changes in the estimated useful lives of certain legacy
trademarks that have migrated to our master brand
architecture.
|
|
(7)
|
Loss on termination of
business arrangement represents the loss recognized as a result of
management's decision to terminate a business arrangement with a
third party.
|
|
(8)
|
Pension settlement cost
represents expense related to the final settlement of the Company's
U.S. pension plan. Reduction to pension settlement cost during the
three months ended September 30, 2024 represents income of
$2.2 million as a result of the finalization of the liabilities
transferred as part of the settlement of the Company's U.S. pension
plan.
|
|
(9)
|
The adjustments to
income from operations and other (income) expense, net have been
tax effected at rates of approximately 24% and 27% for the three
months ended September 30, 2024 and 2023, respectively, and at
a rate of approximately 27% for the nine months ended
September 30, 2024 and 2023.
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
Adjusted Earnings
per Diluted Share:
|
September
30, 2024
|
|
September
30, 2023
|
|
September
30, 2024
|
|
September
30, 2023
|
|
|
|
|
|
|
|
|
|
Adjusted income from
operations
|
$
341.5
|
|
$
401.5
|
|
$
971.7
|
|
$
1,152.7
|
|
Interest expense,
net
|
86.5
|
|
98.5
|
|
279.8
|
|
292.3
|
|
Adjusted other
(income) expense, net
|
(3.4)
|
|
3.7
|
|
15.8
|
|
14.6
|
|
Adjusted income before
income taxes
|
258.4
|
|
299.3
|
|
676.1
|
|
845.8
|
|
Adjusted provision for
income taxes
|
65.5
|
|
49.9
|
|
170.7
|
|
177.0
|
|
Adjusted net
income
|
192.9
|
|
249.4
|
|
505.4
|
|
668.8
|
|
Net income
attributable to noncontrolling interests
|
0.4
|
|
0.6
|
|
1.3
|
|
—
|
|
Adjusted net income
attributable to WESCO International, Inc.
|
192.5
|
|
248.8
|
|
504.1
|
|
668.8
|
|
Preferred stock
dividends
|
14.4
|
|
14.4
|
|
43.1
|
|
43.1
|
|
Adjusted net income
attributable to common stockholders
|
$
178.1
|
|
$
234.4
|
|
$
461.0
|
|
$
625.7
|
|
|
|
|
|
|
|
|
|
Diluted
shares
|
49.8
|
|
52.2
|
|
50.8
|
|
52.4
|
|
Adjusted earnings per
diluted share
|
$
3.58
|
|
$
4.49
|
|
$
9.07
|
|
$
11.94
|
|
|
Note: For the three and
nine months ended September 30, 2024, SG&A expenses, income
from operations, other non-operating (income) expense, the
provision for income taxes and earnings per diluted share have been
adjusted to exclude the loss on abandonment of assets, digital
transformation costs, restructuring costs, excise taxes on excess
pension plan assets related to the final settlement of the Anixter
Inc. Pension Plan, the gain recognized on the divestiture of the
WIS business, the loss on termination of business arrangement,
pension settlement cost, and the related income tax effects. 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
digital transformation costs, merger-related and integration costs,
restructuring costs, accelerated trademark amortization expense,
and the related income tax effects. These non-GAAP financial
measures provide a better understanding of our 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, 2024
|
|
EBITDA and Adjusted
EBITDA by Segment:
|
|
EES
|
|
CSS
|
|
UBS
|
|
Corporate
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
|
$
168.4
|
|
$
150.4
|
|
$
168.5
|
|
$ (297.4)
|
|
$
189.9
|
|
Net (loss) income
attributable to noncontrolling interests
|
|
(1.0)
|
|
0.9
|
|
—
|
|
0.5
|
|
0.4
|
|
Preferred stock
dividends
|
|
—
|
|
—
|
|
—
|
|
14.4
|
|
14.4
|
|
Provision for income
taxes(1)
|
|
—
|
|
—
|
|
—
|
|
69.3
|
|
69.3
|
|
Interest expense,
net(1)
|
|
—
|
|
—
|
|
—
|
|
86.5
|
|
86.5
|
|
Depreciation and
amortization
|
|
12.2
|
|
17.6
|
|
6.9
|
|
9.3
|
|
46.0
|
|
EBITDA
|
|
$
179.6
|
|
$
168.9
|
|
$
175.4
|
|
$
(117.4)
|
|
$
406.5
|
|
Other expense
(income), net(2)
|
|
5.6
|
|
4.7
|
|
(19.7)
|
|
(15.5)
|
|
(24.9)
|
|
Stock-based
compensation expense
|
|
1.1
|
|
1.6
|
|
0.8
|
|
3.3
|
|
6.8
|
|
Digital transformation
costs(3)
|
|
—
|
|
—
|
|
—
|
|
5.4
|
|
5.4
|
|
Cloud computing
arrangement amortization(4)
|
|
—
|
|
—
|
|
—
|
|
3.8
|
|
3.8
|
|
Restructuring
costs(5)
|
|
—
|
|
—
|
|
—
|
|
0.5
|
|
0.5
|
|
Adjusted
EBITDA
|
|
$
186.3
|
|
$
175.2
|
|
$
156.5
|
|
$
(119.9)
|
|
$
398.1
|
|
Adjusted EBITDA
margin %
|
|
8.7 %
|
|
9.0 %
|
|
11.3 %
|
|
|
|
7.3 %
|
|
|
(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) Other income for the UBS
segment includes the gain on the divestiture of the WIS
business.
|
|
(3)
Digital transformation costs include costs associated with certain
digital transformation initiatives.
|
|
(4)
Cloud computing arrangement amortization consists of expense
recognized in selling, general and administrative expenses for
capitalized implementation costs
for cloud computing arrangements to support
our digital transformation initiatives.
|
|
(5)
Restructuring costs include severance costs incurred pursuant to an
ongoing restructuring plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
Digital transformation
costs(2)
|
|
—
|
|
—
|
|
—
|
|
12.9
|
|
12.9
|
|
Restructuring
costs(3)
|
|
—
|
|
—
|
|
—
|
|
5.6
|
|
5.6
|
|
Merger-related and
integration costs(4)
|
|
—
|
|
—
|
|
—
|
|
2.1
|
|
2.1
|
|
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) Digital transformation
costs include costs associated with certain digital transformation
initiatives.
|
|
(3)
Restructuring costs include severance costs incurred pursuant to an
ongoing restructuring plan.
|
|
(4)
Merger-related and integration costs include integration and
professional fees associated with the integration of Wesco and
Anixter, as well as advisory, legal,
and separation costs associated with the merger
between the two companies.
|
|
WESCO
INTERNATIONAL, INC.
|
|
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
|
|
(in millions, except
per share amounts)
|
|
(Unaudited)
|
|
|
|
Three Months Ended
June 30, 2024
|
|
EBITDA and Adjusted
EBITDA by Segment:
|
|
EES
|
|
CSS
|
|
UBS
|
|
Corporate
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
|
$
179.3
|
|
$
114.3
|
|
$
268.5
|
|
$ (344.4)
|
|
$
217.7
|
|
Net income (loss)
attributable to noncontrolling interests
|
|
0.1
|
|
0.7
|
|
—
|
|
(0.1)
|
|
0.7
|
|
Preferred stock
dividends
|
|
—
|
|
—
|
|
—
|
|
14.4
|
|
14.4
|
|
Provision for income
taxes(1)
|
|
—
|
|
—
|
|
—
|
|
87.8
|
|
87.8
|
|
Interest expense,
net(1)
|
|
—
|
|
—
|
|
—
|
|
98.8
|
|
98.8
|
|
Depreciation and
amortization
|
|
11.4
|
|
18.2
|
|
7.4
|
|
9.1
|
|
46.1
|
|
EBITDA
|
|
$
190.8
|
|
$
133.2
|
|
$
275.9
|
|
$
(134.4)
|
|
$
465.5
|
|
Other expense
(income), net(2)
|
|
3.0
|
|
16.0
|
|
(103.2)
|
|
(11.7)
|
|
(95.9)
|
|
Stock-based
compensation expense
|
|
1.1
|
|
1.6
|
|
0.8
|
|
(0.8)
|
|
2.7
|
|
Loss on abandonment of
assets(3)
|
|
—
|
|
—
|
|
—
|
|
17.8
|
|
17.8
|
|
Digital transformation
costs(4)
|
|
—
|
|
—
|
|
—
|
|
6.1
|
|
6.1
|
|
Cloud computing
arrangement amortization(5)
|
|
—
|
|
—
|
|
—
|
|
3.0
|
|
3.0
|
|
Restructuring
costs(6)
|
|
—
|
|
—
|
|
—
|
|
0.9
|
|
0.9
|
|
Adjusted
EBITDA
|
|
$
194.9
|
|
$
150.8
|
|
$
173.5
|
|
$
(119.1)
|
|
$
400.1
|
|
Adjusted EBITDA
margin %
|
|
9.0 %
|
|
8.1 %
|
|
12.0 %
|
|
|
|
7.3 %
|
|
|
(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)
Other income for the UBS segment includes the gain on the
divestiture of the WIS business.
|
|
(3)
Loss on abandonment of assets represents the write-off of certain
capitalized cloud computing arrangement implementation costs
relating to a third-party
developed operations management software
product in favor of an application with functionality that better
suits the Company's operations.
|
|
(4)
Digital transformation costs include costs associated with certain
digital transformation initiatives.
|
|
(5)
Cloud computing arrangement amortization consists of expense
recognized in selling, general and administrative expenses for
capitalized implementation costs
for cloud computing arrangements to support
our digital transformation initiatives.
|
|
(6)
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. For the three months
ended September 30, 2024, Adjusted EBITDA is defined as earnings
before interest, taxes, depreciation and amortization before other
non-operating expenses (income), non-cash stock-based compensation
expense, digital transformation costs, cloud computing arrangement
amortization, and restructuring costs. For the three months ended
September 30, 2023, Adjusted EBITDA is defined as earnings before
interest, taxes, depreciation and amortization before other
non-operating expenses (income), non-cash stock-based compensation
expense, digital transformation costs, restructuring costs, and
merger-related and integration costs. For the three months ended
June 30, 2024, Adjusted EBITDA is defined as earnings before
interest, taxes, depreciation and amortization before other
non-operating expenses (income), non-cash stock-based compensation
expense, loss on abandonment of assets, digital transformation
costs, cloud computing arrangement amortization, 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, 2024
|
|
EBITDA and Adjusted
EBITDA by Segment:
|
|
EES
|
|
CSS
|
|
UBS
|
|
Corporate
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
|
$
495.9
|
|
$
353.1
|
|
$
597.8
|
|
$
(937.7)
|
|
$
509.1
|
|
Net (loss) income
attributable to noncontrolling interests
|
|
(1.3)
|
|
1.9
|
|
—
|
|
0.7
|
|
1.3
|
|
Preferred stock
dividends
|
|
—
|
|
—
|
|
—
|
|
43.1
|
|
43.1
|
|
Provision for income
taxes(1)
|
|
—
|
|
—
|
|
—
|
|
188.1
|
|
188.1
|
|
Interest expense,
net(1)
|
|
—
|
|
—
|
|
—
|
|
279.8
|
|
279.8
|
|
Depreciation and
amortization
|
|
34.8
|
|
53.9
|
|
21.3
|
|
27.6
|
|
137.6
|
|
EBITDA
|
|
$
529.4
|
|
$
408.9
|
|
$
619.1
|
|
$
(398.4)
|
|
$
1,159.0
|
|
Other expense
(income), net(2)
|
|
14.3
|
|
39.4
|
|
(122.1)
|
|
(30.9)
|
|
(99.3)
|
|
Stock-based
compensation expense
|
|
3.3
|
|
4.9
|
|
2.4
|
|
9.0
|
|
19.6
|
|
Loss on abandonment of
assets(3)
|
|
—
|
|
—
|
|
—
|
|
17.8
|
|
17.8
|
|
Digital transformation
costs(4)
|
|
—
|
|
—
|
|
—
|
|
17.5
|
|
17.5
|
|
Cloud computing
arrangement amortization(5)
|
|
—
|
|
—
|
|
—
|
|
9.7
|
|
9.7
|
|
Restructuring
costs(6)
|
|
—
|
|
—
|
|
—
|
|
9.5
|
|
9.5
|
|
Excise taxes on excess
pension plan assets(7)
|
|
—
|
|
—
|
|
—
|
|
4.8
|
|
4.8
|
|
Adjusted
EBITDA
|
|
$
547.0
|
|
$
453.2
|
|
$
499.4
|
|
$
(361.0)
|
|
$
1,138.6
|
|
Adjusted EBITDA
margin %
|
|
8.5 %
|
|
8.3 %
|
|
11.3 %
|
|
|
|
7.0 %
|
|
|
(1)
The reportable segments do not incur income taxes and interest
expense as these costs are centrally controlled through the
Corporate tax and treasury functions.
|
|
(2)
Other income for the UBS segment includes the gain on the
divestiture of the WIS business.
|
|
(3)
Loss on abandonment of assets represents the write-off of certain
capitalized cloud computing arrangement implementation costs
relating to a third-party
developed operations management software
product in favor of an application with functionality that better
suits the Company's operations.
|
|
(4)
Digital transformation costs include costs associated with certain
digital transformation initiatives.
|
|
(5)
Cloud computing arrangement amortization consists of expense
recognized in selling, general and administrative expenses for
capitalized implementation costs
for cloud computing arrangements to support our
digital transformation initiatives.
|
|
(6)
Restructuring costs include severance costs incurred pursuant to an
ongoing restructuring plan.
|
|
(7)
Excise taxes on excess pension plan assets represent the excise
taxes applicable to the excess pension plan assets following the
final settlement of the Company's
U.S. pension plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
Digital transformation
costs(3)
|
|
—
|
|
—
|
|
—
|
|
28.5
|
|
28.5
|
|
Merger-related and
integration costs(4)
|
|
—
|
|
—
|
|
—
|
|
16.9
|
|
16.9
|
|
Restructuring
costs(5)
|
|
—
|
|
—
|
|
—
|
|
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)
Digital transformation costs include costs associated with certain
digital transformation initiatives.
|
|
(4)
Merger-related and integration costs include integration and
professional fees associated with the integration of Wesco and
Anixter, as well as advisory, legal,
and separation costs associated with the merger
between the two companies.
|
|
(5)
Restructuring costs include severance costs incurred pursuant to an
ongoing restructuring plan.
|
|
WESCO INTERNATIONAL,
INC.
|
|
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
|
|
(in millions, except
per share amounts)
|
|
(Unaudited)
|
|
|
Note: 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. For the nine months ended September
30, 2024, Adjusted EBITDA is defined as earnings before interest,
taxes, depreciation and amortization before other non-operating
expenses (income), non-cash stock-based compensation expense, loss
on abandonment of assets, digital transformation costs, cloud
computing arrangement amortization, restructuring costs, and
excise taxes on excess pension plan assets related to the final
settlement of the Anixter Inc. Pension Plan. For the nine months
ended September 30, 2023, Adjusted EBITDA is defined as
earnings before interest, taxes, depreciation and amortization
before other non-operating expenses (income), non-cash stock-based
compensation expense, digital transformation costs, 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,
2024
|
|
December 31,
2023
|
|
|
|
|
|
Net income
attributable to common stockholders
|
$
636.8
|
|
$
708.1
|
|
Net income
attributable to noncontrolling interests
|
1.9
|
|
0.6
|
|
Preferred stock
dividends
|
57.4
|
|
57.4
|
|
Provision for income
taxes
|
253.7
|
|
225.9
|
|
Interest expense,
net
|
376.9
|
|
389.3
|
|
Depreciation and
amortization
|
182.4
|
|
181.3
|
|
EBITDA
|
$
1,509.1
|
|
$
1,562.6
|
|
Other (income)
expense, net
|
(88.8)
|
|
25.1
|
|
Stock-based
compensation expense
|
33.0
|
|
45.5
|
|
Merger-related and
integration costs(1)
|
2.4
|
|
19.3
|
|
Restructuring
costs(2)
|
10.8
|
|
16.7
|
|
Digital transformation
costs(3)
|
25.1
|
|
36.1
|
|
Excise taxes on excess
pension plan assets(4)
|
4.8
|
|
—
|
|
Loss on abandonment of
assets(5)
|
17.8
|
|
—
|
|
Cloud computing
arrangement amortization(6)
|
9.7
|
|
—
|
|
Adjusted
EBITDA
|
$
1,523.9
|
|
$
1,705.3
|
|
|
|
|
|
As of
|
|
September
30,
2024
|
|
December 31,
2023
|
|
Short-term debt and
current portion of long-term debt, net
|
$
14.9
|
|
$
8.6
|
|
Long-term debt,
net
|
5,007.8
|
|
5,313.1
|
|
Debt discount and debt
issuance costs(7)
|
50.6
|
|
43.0
|
|
Fair value adjustments
to Anixter Senior Notes due 2023 and 2025(7)
|
(0.1)
|
|
(0.1)
|
|
Total debt
|
5,073.2
|
|
5,364.6
|
|
Less: Cash and cash
equivalents
|
706.8
|
|
524.1
|
|
Total debt, net of
cash
|
$
4,366.4
|
|
$
4,840.5
|
|
|
|
|
|
Financial leverage
ratio
|
2.9
|
|
2.8
|
|
|
|
(1)
|
Merger-related and
integration costs include integration and professional fees
associated with the integration of Wesco and Anixter, 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)
|
Digital transformation
costs include costs associated with certain digital transformation
initiatives, which have historically been included in
merger-related and integration costs in prior years.
|
|
(4)
|
Excise taxes on excess
pension plan assets represent the excise taxes applicable to the
excess pension plan assets following the final settlement of the
Company's U.S. pension plan.
|
|
(5)
|
Loss on abandonment of
assets represents the write-off of certain capitalized cloud
computing arrangement implementation costs relating to a
third-party developed operations management software product in
favor of an application with functionality that better suits the
Company's operations.
|
|
(6)
|
Cloud computing
arrangement amortization consists of expense recognized in selling,
general and administrative expenses for capitalized implementation
costs for cloud computing arrangements to support our digital
transformation initiatives.
|
|
(7)
|
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 ratio 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, restructuring costs, digital transformation
costs, excise taxes on excess pension plan assets related to the
final settlement of the Anixter Inc. Pension Plan, loss on
abandonment of assets, and cloud computing arrangement
amortization.
|
|
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,
2024
|
|
September 30,
2023
|
|
September 30,
2024
|
|
September 30,
2023
|
|
|
|
|
|
|
|
|
|
Cash flow provided by
operations
|
$
302.1
|
|
$
361.7
|
|
$
824.6
|
|
$
423.9
|
|
Less: Capital
expenditures
|
(29.2)
|
|
(19.3)
|
|
(70.4)
|
|
(63.6)
|
|
Add: Other
adjustments
|
6.6
|
|
14.7
|
|
22.6
|
|
24.1
|
|
Free cash
flow
|
$
279.5
|
|
$
357.1
|
|
$
776.8
|
|
$
384.4
|
|
Percentage of adjusted
net income
|
144.9 %
|
|
143.2 %
|
|
153.7 %
|
|
57.5 %
|
|
|
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, 2024, the Company
paid for certain costs related to digital transformation and
restructuring. For the three and nine months ended September 30,
2023, the Company paid for certain costs to integrate the acquired
Anixter business and related to digital transformation as well as
certain restructuring costs. Such expenditures have been added back
to operating cash flow to determine free cash flow for such
periods. Our calculation of free cash flow may not be comparable to
similar measures used by other companies.
|
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SOURCE Wesco International
