- Record first quarter sales, gross margin, operating profit,
and earnings per diluted share
- Net sales of $5.5 billion, up
12% YOY
-
- Organic sales growth of 11% YOY
- Operating profit of $346
million; operating margin of 6.3%
-
- Adjusted EBITDA of $421
million, up 16% YOY; adjusted EBITDA margin of 7.6%, up 20
basis points YOY
- Gross margin of 21.9%, up 60 basis points YOY
- Earnings per diluted share of $3.48
-
- Adjusted earnings per diluted share of $3.75, up 3% YOY
PITTSBURGH, May 4, 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 first quarter of
2023.
"After delivering an exceptional performance in 2022, we're off
to a strong start this year and once again set new first quarter
company records for sales, backlog, margin and profitability. The
power of our increased scale, industry-leading positions, and
expanded portfolio of products, services and solutions is clearly
evident in our continued strong performance," said John Engel, Chairman, President and CEO.
Mr. Engel continued, "Strong secular demand trends and continued
execution of our enterprise-wide cross selling and margin
improvement programs are driving our sustained growth and market
outperformance. Our dedicated team of colleagues continues to
provide resilient and critical supply chain solutions for our
customers around the world, capturing the benefits of our exposure
to these sustainable secular trends. As our three-year integration
program comes to a close this year, our digital transformation is
accelerating which will result in an even higher level of
performance, operating efficiency, supplier partnership and
customer loyalty."
Mr. Engel concluded, "We are reaffirming our 2023 outlook and
remain confident in our ability to drive mid- to high-single digit
sales growth this year, along with continued EBITDA margin
expansion. We are also reaffirming that we expect to generate
approximately $600 to $800
million in free cash flow in support of our growth
initiatives and capital allocation priorities. In the near-term, we
are focusing our cash generation on debt reduction and expect to
reduce our leverage below the midpoint of our target range of 2.0
to 3.5x by year-end. We look forward with greater confidence
than ever to a future of market outperformance and value
creation."
The following are results for the three months ended
March 31, 2023 compared to the three
months ended March 31, 2022:
- Net sales were $5.5 billion for
the first quarter of 2023 compared to $4.9
billion for the first quarter of 2022, an increase of 12.0%,
reflecting price inflation and volume growth, secular demand
trends, execution of our cross-sell program, and an improving
supply chain. Organic sales for the first quarter of 2023 grew
10.8% as the acquisition of Rahi Systems, which closed in November
of 2022, positively impacted reported net sales by 2.8%, while
fluctuations in foreign exchange rates negatively impacted reported
net sales by 1.6%. Backlog at the end of the first quarter of 2023
increased 21% compared to the end of the first quarter of 2022.
Sequentially, backlog remained flat.
- Cost of goods sold for the first quarter of 2023 was
$4.3 billion compared to $3.9 billion for the first quarter of 2022, and
gross profit was $1.2 billion and
$1.0 billion, respectively. As a
percentage of net sales, gross profit was 21.9% and 21.3% for the
first quarter of 2023 and 2022, respectively. Gross profit as a
percentage of net sales for the first quarter of 2023 reflects our
continued focus on value-driven pricing and pass-through of
inflationary costs, along with the continued momentum of our margin
improvement program.
- Selling, general and administrative ("SG&A") expenses were
$817.7 million, or 14.8% of net
sales, for the first quarter of 2023, compared to $718.1 million, or 14.6% of net sales, for the
first quarter of 2022. SG&A expenses for the first quarter of
2023 and 2022 include merger-related and integration costs of
$19.5 million and $25.6 million, respectively. Adjusted for these
amounts, SG&A expenses were $798.2
million, or 14.5% of net sales, for the first quarter of
2023 and $692.5 million, or 14.0% of
net sales, for the first quarter of 2022. Adjusted SG&A
expenses for the first quarter of 2023 reflect higher salaries and
benefits due to wage inflation and increased headcount, including
the impact of the Rahi Systems acquisition, as well as an increase
in volume-related costs such as commissions and transportation.
Increased costs to operate our facilities also contributed to
higher SG&A expenses. In addition, digital transformation
initiatives contributed to higher expenses in the first quarter of
2023, including those related to professional and consulting fees.
These increases were partially offset by the realization of
integration cost synergies and a reduction to incentive
compensation expense.
- Depreciation and amortization for the first quarter of 2023 was
$44.4 million compared to
$47.0 million for the first quarter
of 2022, a decrease of $2.6 million.
In connection with an integration initiative to review the
Company's brand strategy, certain legacy trademarks are migrating
to a master brand architecture, which resulted in $5.3 million of accelerated amortization expense
for the first quarter of 2022.
- Operating profit was $346.4
million for the first quarter of 2023 compared to
$284.0 million for the first quarter
of 2022, an increase of $62.4
million, or 22.0%. Operating profit as a percentage of net
sales was 6.3% for the current quarter compared to 5.8% for the
first quarter of the prior year. Adjusted for the merger-related
and integration costs described above, operating profit was
$365.9 million, or 6.6% of net sales,
for the first quarter of 2023. Adjusted for merger-related and
integration costs, and accelerated trademark amortization,
operating profit was $314.9 million,
or 6.4% of net sales, for the first quarter of 2022.
- Net interest expense for the first quarter of 2023 was
$95.0 million compared to
$63.6 million for the first quarter
of 2022. The increase reflects higher borrowings and an increase in
variable interest rates.
- Other non-operating expense for the first quarter of 2023 was
$10.1 million compared to
$1.1 million for the first quarter of
2022. Net benefits of $0.3 million
and $3.6 million associated with the
non-service cost components of net periodic pension (benefit) cost
were recognized for the three months ended March 31, 2023 and 2022, respectively. Due to
fluctuations in the U.S. dollar against certain foreign currencies,
a net foreign currency exchange loss of $9.5
million was recognized for the first quarter of 2023
compared to a net loss of $3.6
million for the first quarter of 2022.
- The effective tax rate for the first quarter of 2023 was 18.3%
compared to 17.2% for the first quarter of 2022. The current
quarter and the comparable prior year period both reflect discrete
income tax benefits resulting from the exercise and vesting of
stock-based awards. The first quarter of 2022 also reflects a
discrete income tax benefit resulting from a reduction to the
valuation allowance recorded against foreign tax credit
carryforwards.
- Net income attributable to common stockholders was $182.7 million for the first quarter of 2023
compared to $166.8 million for the
first quarter of 2022. Adjusted for merger-related and integration
costs and the related income tax effect, net income attributable to
common stockholders was $196.9
million for the first quarter of 2023. Adjusted for
merger-related and integration costs, accelerated trademark
amortization expense, and the related income tax effects, net
income attributable to common stockholders was $189.7 million for the first quarter of 2022.
Adjusted net income attributable to common stockholders increased
3.8% year-over-year.
- Earnings per diluted share for the first quarter of 2023 was
$3.48, based on 52.5 million diluted
shares, compared to $3.19 for the
first quarter of 2022, based on 52.2 million diluted shares.
Adjusted for merger-related and integration costs and the related
income tax effect, earnings per diluted share for the first quarter
of 2023 was $3.75. Adjusted for
merger-related and integration costs, accelerated trademark
amortization expense, and the related income tax effects, earnings
per diluted share for the first quarter of 2022 was $3.63. Adjusted earnings per diluted share
increased 3.3% year-over-year.
- Operating cash flow for the first quarter of 2023 was an
outflow of $255.4 million compared to
an outflow of $172.0 million for the
first quarter of 2022. The net cash outflow in the first quarter of
2023 was primarily driven by changes in working capital, including
an increase in inventories of $223.8
million as shipments from suppliers have accelerated due to
an improving supply chain. An increase in trade accounts receivable
of $133.5 million and a decrease in
accounts payable of $86.5 million due
to the timing of receipts from customers and payments to suppliers,
respectively, also contributed to the net cash outflow.
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 March 31, 2023 compared
to the three months ended March 31, 2022:
- EES reported net sales of $2,135.1
million for the first quarter of 2023 compared to
$2,090.0 million for the first
quarter of 2022, an increase of 2.2%. Organic sales for the first
quarter of 2023 grew 3.9% as fluctuations in foreign exchange rates
negatively impacted reported net sales by 1.7%. The increase in
organic sales compared to the prior year quarter reflects continued
momentum in our industrial business driven by strength in the
automation, petrochemical, and metals and mining end markets, as
well as growth in non-residential construction. These positive
factors were partially offset by a transfer of certain customer
accounts to the CSS segment, which negatively impacted reported net
sales for EES by approximately 2%, as well as lower sales in
certain original equipment manufacturer end markets. EBITDA,
adjusted for other non-operating expenses and non-cash stock-based
compensation expense, was $183.0
million for the first quarter of 2023, or 8.6% of net sales,
compared to $192.4 million for the
first quarter of 2022, or 9.2% of net sales. Adjusted EBITDA
decreased $9.4 million, or 4.9%
year-over-year, as an increase in gross profit was more than offset
by higher SG&A expenses.
- CSS reported net sales of $1,732.0
million for the first quarter of 2023 compared to
$1,434.2 million for the first
quarter of 2022, an increase of 20.8%. Organic sales for the first
quarter of 2023 grew 13.3% as the acquisition of Rahi Systems in
the fourth quarter of 2022 positively impacted reported net sales
by 9.5%, while fluctuations in foreign exchange rates negatively
impacted reported net sales by 2.0%. The increase in organic sales
compared to the prior year quarter reflects growth in our security
solutions and network infrastructure businesses, as well as the
benefits of cross selling and improvements in supply chain
constraints. The transfer of certain customer accounts from the EES
segment also positively impacted reported net sales for CSS by
approximately 2%. EBITDA, adjusted for other non-operating expenses
and non-cash stock-based compensation expense, was $155.5 million for the first quarter of 2023, or
9.0% of net sales, compared to $123.0
million for the first quarter of 2022, or 8.6% of net sales.
Adjusted EBITDA increased $32.5
million, or 26.4% year-over-year. The increase primarily
reflects the factors impacting the overall business, as described
above.
- UBS reported net sales of $1,654.8
million for the first quarter of 2023 compared to
$1,408.0 million for the first
quarter of 2022, an increase of 17.5%. Organic sales for the first
quarter of 2023 grew 18.2% as fluctuations in foreign exchange
rates negatively impacted reported net sales by 0.7%. The increase
in organic sales compared to the prior year quarter reflects
significant price inflation, secular trends in the utility business
that are driving growth, as well as expansion in our integrated
supply business. These positive factors were partially offset by
lower sales in our broadband business due to certain customers
depleting existing inventories. EBITDA, adjusted for other
non-operating expenses and non-cash stock-based compensation
expense, was $187.7 million for the
first quarter of 2023, or 11.3% of net sales, compared to
$136.3 million for the first quarter
of 2022, or 9.7% of net sales. Adjusted EBITDA increased
$51.4 million, or 37.7%
year-over-year. The increase primarily reflects the factors
impacting the overall business, as described above.
Webcast and Teleconference Access
Wesco will conduct a webcast and teleconference to discuss the
first quarter of 2023 earnings as described in this News Release on
Thursday, May 4, 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, such as the impact
of Russia's invasion of
Ukraine, including the impact of
sanctions or other actions taken by the U.S. or other countries
against Russia (as well as those
imposed on 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
|
|
|
|
March 31,
2023
|
|
March 31, 2022
|
|
|
Net sales
|
$
5,521.9
|
|
$
4,932.2
|
|
|
Cost of goods
sold (excluding depreciation and amortization)
|
4,313.4
|
78.1 %
|
3,883.1
|
78.7 %
|
|
Selling, general and
administrative expenses
|
817.7
|
14.8 %
|
718.1
|
14.6 %
|
|
Depreciation and amortization
|
44.4
|
|
47.0
|
|
|
Income from
operations
|
346.4
|
6.3 %
|
284.0
|
5.8 %
|
|
Interest expense, net
|
95.0
|
|
63.6
|
|
|
Other expense, net
|
10.1
|
|
1.1
|
|
|
Income before
income taxes
|
241.3
|
4.4 %
|
219.3
|
4.4 %
|
|
Provision for income taxes
|
44.1
|
|
37.7
|
|
|
Net income
|
197.2
|
3.6 %
|
181.6
|
3.7 %
|
|
Net income attributable to noncontrolling interests
|
0.1
|
|
0.4
|
|
|
Net income
attributable to WESCO International, Inc.
|
197.1
|
3.6 %
|
181.2
|
3.7 %
|
|
Preferred stock dividends
|
14.4
|
|
14.4
|
|
|
Net income
attributable to common stockholders
|
$
182.7
|
3.3 %
|
$
166.8
|
3.4 %
|
|
Earnings per diluted share attributable to common stockholders
|
$
3.48
|
|
$
3.19
|
|
|
Weighted-average common
shares outstanding and common
share equivalents used
in computing earnings per diluted common share
|
52.5
|
|
52.2
|
|
|
WESCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(dollar amounts in millions)
(Unaudited)
|
|
|
|
|
As of
|
|
|
Assets
|
|
March 31,
2023
|
December 31,
2022
|
|
|
Current Assets
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
349.1
|
$
527.3
|
|
|
Trade accounts receivable, net
|
|
3,807.4
|
3,662.7
|
|
|
Inventories
|
|
3,729.5
|
3,498.8
|
|
|
Other current assets
|
|
562.1
|
641.7
|
|
|
Total current
assets
|
|
8,448.1
|
8,330.5
|
|
|
Goodwill and intangible assets
|
5,166.3
|
5,184.3
|
|
|
Other assets
|
1,356.8
|
1,296.9
|
|
|
Total assets
|
$
14,971.2
|
$
14,811.7
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
Current Liabilities
|
|
|
|
|
Accounts payable
|
$
2,648.3
|
$
2,728.2
|
|
|
Short-term debt and current portion of long-term debt,
net
|
7.6
|
70.5
|
|
|
Other current liabilities
|
883.0
|
1,018.6
|
|
|
Total current
liabilities
|
3,538.9
|
3,817.3
|
|
|
Long-term debt, net
|
5,595.1
|
5,346.0
|
|
|
Other noncurrent liabilities
|
1,247.5
|
1,198.8
|
|
|
Total liabilities
|
10,381.5
|
10,362.1
|
|
|
Stockholders' Equity
|
|
Total stockholders' equity
|
4,589.7
|
4,449.6
|
Total liabilities and stockholders' equity
|
$
14,971.2
|
$
14,811.7
|
WESCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollar amounts in millions)
(Unaudited)
|
|
Three Months Ended
|
|
March 31,
2023
|
March 31,
2022
|
Operating Activities:
|
|
|
Net income
|
$
197.2
|
$
181.6
|
Add back (deduct):
|
|
|
Depreciation and amortization
|
44.4
|
47.0
|
Deferred income taxes
|
11.6
|
(4.5)
|
Change in trade
receivables, net
|
(133.5)
|
(324.6)
|
Change in inventories
|
(223.8)
|
(214.2)
|
Change in accounts payable
|
(86.5)
|
200.0
|
Other, net
|
(64.8)
|
(57.3)
|
Net cash used in operating activities
|
(255.4)
|
(172.0)
|
Investing Activities:
|
Capital expenditures
|
(13.9)
|
(15.2)
|
Other, net
|
1.3
|
0.1
|
Net cash
used in investing activities
|
(12.6)
|
(15.1)
|
|
|
|
Financing Activities:
|
|
|
Debt borrowings, net(1)
|
181.0
|
191.3
|
Payments for taxes
related to net-share settlement of equity
awards
|
(51.6)
|
(16.8)
|
Payment of common
stock dividends
|
(19.2)
|
—
|
Payment of preferred stock dividends
|
(14.4)
|
(14.4)
|
Other, net
|
(7.2)
|
7.1
|
Net cash provided by financing activities
|
88.6
|
167.2
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
1.2
|
8.8
|
|
|
|
Net change in cash and cash equivalents
|
(178.2)
|
(11.1)
|
Cash and cash equivalents at the beginning of the period
|
527.3
|
212.6
|
Cash and cash equivalents at the end of the
period
|
$
349.1
|
$
201.5
|
|
|
(1)
|
The three months ended
March 31, 2023 includes the repayment of the Company's $58.6
million aggregate principal amount of 5.50% Anixter Senior Notes
due 2023 (the "Anixter 2023 Senior Notes"). The repayment of the
Anixter 2023 Senior Notes was funded with borrowings under the
Company's revolving credit facility.
|
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, 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)
|
|
March 31,
2023
|
March 31,
2022
|
|
Reported
|
Acquisition
Impact
|
|
Foreign
Exchange
Impact
|
Workday
Impact
|
Organic
Growth
|
EES
|
$
2,135.1
|
$
2,090.0
|
|
2.2 %
|
—
|
%
|
(1.7) %
|
— %
|
3.9 %
|
CSS
|
1,732.0
|
1,434.2
|
|
20.8 %
|
9.5
|
%
|
(2.0) %
|
— %
|
13.3 %
|
UBS
|
1,654.8
|
1,408.0
|
|
17.5 %
|
—
|
%
|
(0.7) %
|
— %
|
18.2 %
|
Total net
sales
|
$
5,521.9
|
$
4,932.2
|
|
12.0 %
|
2.8
|
%
|
(1.6) %
|
— %
|
10.8 %
|
|
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.
|
WESCO INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(in millions, except
per share amounts)
(Unaudited)
|
|
Three Months Ended
|
Gross Profit:
|
March 31,
2023
|
March 31,
2022
|
|
|
|
Net sales
|
$
5,521.9
|
$
4,932.2
|
Cost of goods sold
(excluding depreciation and amortization)
|
4,313.4
|
3,883.1
|
Gross profit
|
$
1,208.5
|
$
1,049.1
|
Gross margin
|
21.9 %
|
21.3 %
|
|
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
|
|
March 31,
2023
|
March 31,
2022
|
Adjusted SG&A Expenses:
|
|
|
Selling, general and
administrative expenses
|
$
817.7
|
$
718.1
|
Merger-related and integration costs
|
(19.5)
|
(25.6)
|
Adjusted selling, general and administrative expenses
|
$
798.2
|
$
692.5
|
Percentage of net sales
|
14.5 %
|
14.0 %
|
|
|
|
Adjusted Income
from Operations:
|
|
|
Income from operations
|
$
346.4
|
$
284.0
|
Merger-related and integration costs
|
19.5
|
25.6
|
Accelerated trademark amortization
|
—
|
5.3
|
Adjusted income from operations
|
$
365.9
|
$
314.9
|
Adjusted income
from operations margin %
|
6.6 %
|
6.4 %
|
|
|
|
Adjusted Provision for Income Taxes:
|
|
|
Provision for income taxes
|
$
44.1
|
$
37.7
|
Income tax effect
of adjustments to income from
operations(1)
|
5.3
|
8.0
|
Adjusted
provision for income taxes
|
$
49.4
|
$
45.7
|
|
|
(1)
|
The adjustments to
income from operations have been tax effected at rates of
approximately 27% and 26% for the three months ended March 31, 2023
and 2022, respectively.
|
WESCO INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(in millions, except
per share amounts)
(Unaudited)
|
|
Three Months Ended
|
Adjusted Earnings per
Diluted Share:
|
March 31,
2023
|
March 31,
2022
|
|
|
|
Adjusted income from operations
|
$
365.9
|
$
314.9
|
Interest expense, net
|
95.0
|
63.6
|
Other expense, net
|
10.1
|
1.1
|
Adjusted income
before income taxes
|
260.8
|
250.2
|
Adjusted provision for
income taxes
|
49.4
|
45.7
|
Adjusted net income
|
211.4
|
204.5
|
Net income attributable to noncontrolling interests
|
0.1
|
0.4
|
Adjusted net
income attributable to WESCO International, Inc.
|
211.3
|
204.1
|
Preferred stock dividends
|
14.4
|
14.4
|
Adjusted net income attributable to common stockholders
|
$
196.9
|
$
189.7
|
|
|
|
Diluted shares
|
52.5
|
52.2
|
Adjusted earnings per diluted share
|
$
3.75
|
$
3.63
|
|
Note: For the three
months ended March 31, 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 and the related income tax effects. For the three months
ended March 31, 2022, SG&A expenses, income from
operations, the provision for income taxes and earnings per diluted
share have been adjusted to exclude merger- related and integration
costs, accelerated amortization expense associated with migrating
to the Company's master brand architecture, and the related income
tax effects. These non-GAAP financial measures provide a better
understanding of the Company's financial results on a comparable
basis.
|
WESCO INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(in millions, except
per share amounts)
(Unaudited)
|
|
Three Months Ended March 31, 2023
|
EBITDA and Adjusted
EBITDA by Segment:
|
EES
|
CSS
|
UBS
|
Corporate
|
Total
|
Net income
attributable to common stockholders
|
$
171.3
|
$
135.4
|
$
180.3
|
$
(304.3)
|
$
182.7
|
Net (loss)
income attributable to noncontrolling
interests
|
(0.1)
|
0.2
|
—
|
—
|
0.1
|
Preferred stock
dividends
|
—
|
—
|
—
|
14.4
|
14.4
|
Provision for income taxes
|
—
|
—
|
—
|
44.1
|
44.1
|
Interest expense, net
|
—
|
—
|
—
|
95.0
|
95.0
|
Depreciation and amortization
|
9.9
|
18.0
|
6.0
|
10.5
|
44.4
|
EBITDA
|
$
181.1
|
$
153.6
|
$
186.3
|
$
(140.3)
|
$
380.7
|
Other expense, net
|
0.5
|
0.8
|
0.6
|
8.2
|
10.1
|
Stock-based compensation expense(1)
|
1.4
|
1.1
|
0.8
|
7.1
|
10.4
|
Merger-related and integration costs
|
—
|
—
|
—
|
19.5
|
19.5
|
Adjusted EBITDA
|
$
183.0
|
$
155.5
|
$
187.7
|
$
(105.5)
|
$
420.7
|
Adjusted EBITDA margin %
|
8.6 %
|
9.0 %
|
11.3 %
|
|
7.6 %
|
|
|
(1)
|
Stock-based
compensation expense in the calculation of adjusted EBITDA for the
three months ended March 31, 2023 excludes $1.3
million that is included in merger-related and
integration costs.
|
|
|
|
Three Months Ended March 31, 2022
|
EBITDA and Adjusted
EBITDA by Segment:
|
EES
|
CSS
|
UBS
|
Corporate
|
Total
|
Net income attributable to common stockholders
|
$
178.7
|
$
103.7
|
$
129.9
|
$
(245.5)
|
$
166.8
|
Net income attributable to noncontrolling interests
|
0.2
|
—
|
—
|
0.2
|
0.4
|
Preferred stock
dividends
|
—
|
—
|
—
|
14.4
|
14.4
|
Provision for income taxes
|
—
|
—
|
—
|
37.7
|
37.7
|
Interest expense, net
|
—
|
—
|
—
|
63.6
|
63.6
|
Depreciation and amortization
|
12.0
|
18.1
|
5.8
|
11.1
|
47.0
|
EBITDA
|
$
|
190.9
|
$
|
121.8
|
$
|
135.7
|
$
(118.5)
|
$
329.9
|
Other (income) expense, net
|
(0.1)
|
0.3
|
—
|
0.9
|
1.1
|
Stock-based compensation expense(1)
|
1.6
|
0.9
|
0.6
|
4.4
|
7.5
|
Merger-related and integration costs
|
—
|
—
|
—
|
25.6
|
25.6
|
Adjusted EBITDA
|
$
192.4
|
$
123.0
|
$
136.3
|
$
(87.6)
|
$
364.1
|
Adjusted EBITDA margin %
|
9.2 %
|
8.6 %
|
9.7 %
|
|
7.4 %
|
|
|
|
|
|
|
|
|
|
(1)
|
Stock-based
compensation expense in the calculation of adjusted EBITDA for the
three months ended March 31, 2022 excludes $1.4
million that is included in merger-related and
integration costs.
|
|
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, and
merger- related and integration 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:
|
March 31,
2023
|
December 31,
2022
|
Net income attributable to common stockholders
|
$
818.9
|
$
803.1
|
Net income attributable to noncontrolling interests
|
1.3
|
1.7
|
Preferred stock dividends
|
57.4
|
57.4
|
Provision for income taxes
|
281.0
|
274.5
|
Interest expense, net
|
325.8
|
294.4
|
Depreciation and amortization
|
176.5
|
179.0
|
EBITDA
|
$
1,660.9
|
$
1,610.1
|
Other expense, net
|
16.0
|
7.0
|
Stock-based compensation expense
|
43.9
|
41.0
|
Merger-related and integration costs
|
61.4
|
67.5
|
Adjusted EBITDA
|
$
1,782.2
|
$
1,725.6
|
|
|
|
As of
|
|
March 31,
2023
|
December 31,
2022
|
Short-term debt
and current portion of long-term debt,
net
|
$
7.6
|
$
70.5
|
Long-term debt, net
|
5,595.1
|
5,346.0
|
Debt discount and
debt issuance costs(1)
|
54.2
|
57.9
|
Fair value adjustments to Anixter Senior
Notes due 2023 and 2025(1)
|
(0.1)
|
(0.3)
|
Total debt
|
5,656.8
|
5,474.1
|
Less: cash and
cash equivalents
|
349.1
|
527.3
|
Total debt, net of cash
|
$
5,307.7
|
$
4,946.8
|
|
|
|
Financial leverage ratio
|
3.0
|
2.9
|
|
|
(1)
|
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, and merger-related and
integration costs.
|
WESCO INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(in millions, except
per share amounts)
(Unaudited)
|
|
Three Months Ended
|
Free Cash Flow:
|
March 31,
2023
|
March 31,
2022
|
Cash flow used
in operations
|
$
(255.4)
|
$
(172.0)
|
Less: Capital expenditures
|
(13.9)
|
(15.2)
|
Add: Merger-related and integration cash
costs
|
3.4
|
22.8
|
Free cash flow
|
$
(265.9)
|
$
(164.4)
|
Percentage of adjusted net income
|
(126) %
|
(80) %
|
|
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 months ended March 31, 2023 and 2022,
the Company paid for certain costs to integrate the acquired
Anixter business. 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