Wesco International Reports Record First Quarter 2023 Results
- 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
- Adjusted EBITDA of
- Earnings per diluted share of
$3.48 - Adjusted earnings per diluted share of
$3.75 , up 3% YOY
- Adjusted earnings per diluted share of
"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
The following are results for the three months ended
- 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 ofRahi 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 theRahi 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 endedMarch 31, 2023 and 2022, respectively. Due to fluctuations in theU.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 ("
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 ofRahi 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
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
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
Contact Information |
|
Investor Relations |
Corporate Communications |
Director, Investor Relations 484-885-5648 |
Jennifer Sniderman Senior Director, Corporate Communications 717-579-6603 |
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WESCO INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in millions, except per share amounts) (Unaudited)
|
|||||
Three Months Ended |
|||||
|
|
||||
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 |
2023 |
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 |
||
2023 |
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 |
NON-GAAP FINANCIAL MEASURES
In addition to the results provided in accordance with
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) |
||||||||
2023 |
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 % |
|
|
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. |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (in millions, except per share amounts) (Unaudited)
|
||
Three Months Ended |
||
Gross Profit: |
2023 |
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 |
||
2023 |
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 |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (in millions, except per share amounts) (Unaudited)
|
||
Three Months Ended |
||
Adjusted Earnings per Diluted Share: |
2023 |
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 |
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 |
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 |
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. |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (in millions, except per share amounts) (Unaudited)
|
||
Twelve Months Ended |
||
Financial Leverage:
|
2023 |
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 |
||
2023 |
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. |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (in millions, except per share amounts) (Unaudited)
|
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Three Months Ended |
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Free Cash Flow: |
2023 |
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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