UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 26, 2012
WESCO International, Inc.
(Exact name of registrant as specified in its charter)
Commission file number 001-14989
Delaware (State or other jurisdiction of incorporation or organization) | 25-1723342 (I.R.S. Employer Identification No.) | |
225 West Station Square Drive Suite 700 Pittsburgh, Pennsylvania (Address of principal executive offices) | (412) 454-2200 (Registrant's telephone number, including area code) | |
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
The information in this Item 2.02 is being furnished and shall not be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information in this Item 2.02 shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.
On January 26, 2012, WESCO International, Inc. (the “Company”) issued a press release announcing its financial results for the fourth quarter of 2011 and for the year ended December 31, 2011. A copy of the press release is attached hereto as Exhibit 99.1.
Item 7.01 Regulation FD Disclosure
The information in this Item 7.01 is being furnished and shall not be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information in this Item 7.01 shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.
A slide presentation to be used by senior management of the Company in connection with its discussions with investors regarding the Company's financial results for the fourth quarter of 2011 and for the year ended December 31, 2011 is included in Exhibit 99.2 to this report and is being furnished in accordance with Regulation FD of the Securities and Exchange Commission.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
99.1 Press Release dated January 26, 2012.
99.2 Slide presentation for investors.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
January 26, 2012 | WESCO INTERNATIONAL, INC. | |||
(Date) | ||||
/s/ Richard P. Heyse | ||||
Richard P. Heyse | ||||
Vice President and Chief Financial Officer | ||||
 | NEWS RELEASE |
WESCO International, Inc. / Suite 700, 225 West Station Square Drive / Pittsburgh, PA 15219 | |
WESCO International, Inc. Reports
Fourth Quarter and Full-Year 2011 Results
Fourth quarter results compared to the prior year:
•Earnings per diluted share of $1.12 increased 56%
•Operating margins improved to 5.8%, up 130 basis points
•Consolidated sales of $1.59 billion increased 19%
Full year results compared to the prior year:
•Earnings per diluted share of $3.96 increased 58%
•Operating margins improved to 5.4%, up 120 basis points
•Consolidated sales of $6.1 billion increased 21%
PITTSBURGH, January 26, 2012/PRNewswire/ -- WESCO International, Inc. (NYSE: WCC), a leading provider of electrical, industrial, and communications MRO and OEM products, construction materials, and advanced supply chain management and logistics services, today announced its 2011 fourth quarter and full-year financial results.
The following results are for the quarter-ended December 31, 2011 compared to the quarter-ended December 31, 2010:
• | Consolidated net sales were $1,589.5 million for the fourth quarter of 2011, compared to $1,331.6 million for the fourth quarter of 2010, an increase of 19.4%. Acquisitions positively impacted consolidated sales by 6.2% while one less workday negatively impacted sales by 1.6%, resulting in a normalized organic growth rate of approximately 14.8%. There was no foreign exchange impact in the fourth quarter. Sequentially, fourth quarter 2011 sales increased 0.6%. |
• | Gross profit of $328.0 million, or 20.6% of sales, for the fourth quarter of 2011 was up 30 basis points, compared to $270.3 million, or 20.3% of sales, for the fourth quarter of 2010. |
• | Selling, general & administrative (SG&A) expenses of $227.8 million, or 14.3% of sales, for the fourth quarter of 2011 improved 100 basis points, compared to $204.1 million, or 15.3% of sales, for the fourth quarter of 2010. |
• | Operating profit was $91.5 million for the current quarter, up 52.4% from $60.0 million for the comparable 2010 quarter. Operating profit as a percentage of sales was 5.8% in 2011, up 130 basis points from 4.5% in 2010. |
• | Total interest expense for the fourth quarter of 2011 was $12.0 million, compared to $15.9 million for the fourth quarter of 2010. During the fourth quarter of 2010, WESCO resolved an outstanding tax matter dating back to 1998, which resulted in increased interest expense of $4.2 million. Non-cash interest expense, which includes convertible debt interest, interest related to uncertain tax positions, and the amortization of deferred financing fees, for the fourth quarter of 2011 and 2010 was $1.6 million and $5.6 million, respectively. |
• | The effective tax rate for the current quarter was 31.1%, compared to 21.1% for the prior year quarter. The resolution of the previously mentioned tax matter, net of other international tax items, decreased fourth quarter 2010 tax expense by $2.9 million. |
• | Net income of $54.8 million for the current quarter was up 57.5% from $34.8 million for the prior year quarter. The resolution of the previously mentioned tax matter, net of other international tax items, decreased fourth quarter 2010 net income by $1.3 million. |
• | Earnings per diluted share for the fourth quarter of 2011 were $1.12 per share, based on 49.0 million diluted shares, and was up 55.6% from $0.72 per share in the fourth quarter of 2010, based on 48.3 million diluted shares. The resolution of the previously mentioned tax matter, net of other international tax items, negatively impacted fourth quarter 2010 earnings per diluted share by $0.03. |
• | Free cash flow for the fourth quarter of 2011 was $86.4 million, compared to $46.8 million for the fourth quarter of 2010. |
Mr. John J. Engel, WESCO's Chairman and Chief Executive Officer, stated, "Our fourth quarter results were strong and close out an excellent year. We have now posted six consecutive quarters of double-digit organic sales growth and five consecutive quarters of EPS growth of at least 40% versus prior year. On a full year basis, operating margins were 5.4%, up 120 basis points versus prior year, and were driven by a balanced contribution of gross margin expansion and operating cost leverage. In addition, we announced that we completed the acquisition of RS Electronics earlier this month, marking our fifth acquisition in the last 18 months. These acquisitions total over $460 million in annual revenues and have expanded our portfolio of value creation solutions and strengthened our business. Our investments are paying off, effective execution of our growth strategy continues, and we are very pleased with the positive momentum and improved profitability of our business in 2011."
The following results are for the full-year period ended December 31, 2011 compared to the full-year period ended December 31, 2010:
• | Consolidated net sales were $6,125.7 million, compared to $5,063.9 million, an increase of 21.0%. Acquisitions and foreign exchange positively impacted consolidated sales by 6.8% and 0.8%, respectively, while one less workday negatively impacted sales by 0.4%, resulting in a normalized organic sales growth of approximately 13.8%. |
• | Gross profit of $1,236.6 million, or 20.2% of sales, was up 50 basis points, compared to $998.5 million, or 19.7% of sales. |
• | SG&A expenses of $872.0 million, or 14.2% of sales, improved 90 basis points, compared to $763.6 million, or 15.1% of sales. |
• | Operating profit was $333.0 million, up 57.9% from $211.0 million for the comparable 2010 period. Operating profit as a percentage of sales was 5.4% in 2011, up 120 basis points from 4.2% in 2010. |
• | Total interest expense was $53.6 million, compared to $57.6 million. Non-cash interest expense, which |
includes convertible debt interest, interest related to uncertain tax positions, and the amortization of deferred financing fees, for 2011 and 2010 was $8.8 million and $11.8 million, respectively.
• | The effective full-year tax rate was 29.8% for 2011 compared to 26.7% for 2010. After adjusting for the net benefit of the previously mentioned tax matter, the full year 2010 effective tax rate would have been 27.9%. |
• | Net income of $196.3 million for the full-year was up 69.9% from $115.5 million for the prior year. |
• | Earnings per diluted share for 2011 were up 58.4% to $3.96 per share, based on 49.6 million diluted shares, versus $2.50 per share for 2010, based on 46.1 million diluted shares. The resolution of the previously mentioned tax matter, net of other international tax items, negatively impacted 2010 earnings per diluted share by $0.03. |
• | Full-year free cash flow was $134.2 million, compared to $112.2 million in the prior year. |
Mr. Engel continued, "We are focused on building on the positive momentum across WESCO as we continue to execute our growth strategy in 2012. The strength, diversity, and operating leverage of our business position us well in our global markets. I am very proud of the extra effort and results delivered by all WESCO associates in 2011, and I am confident in our team's ability to produce excellent results again in 2012."
# # #
Teleconference Access
WESCO will conduct a teleconference to discuss the fourth quarter earnings as described in this News Release on Thursday, January 26, 2012, at 11:00 a.m. E.D.T. The conference call will be broadcast live over the Internet and can be accessed from the Company's website at http://www.wesco.com. The conference call will be archived on this Internet site for seven days.
# # #
WESCO International, Inc. (NYSE: WCC), a publicly traded Fortune 500 holding company headquartered in Pittsburgh, Pennsylvania, is a leading provider of electrical, industrial, and communications maintenance, repair and operating (“MRO”) and original equipment manufacturers (“OEM”) product, construction materials, and advanced supply chain management and logistic services. 2011 annual sales were approximately $6.1 billion. The Company employs approximately 7,300 people, maintains relationships with over 18,000 suppliers, and serves over 100,000 customers worldwide. Customers include commercial and industrial businesses, contractors, government agencies, institutions, telecommunications providers and utilities. WESCO operates seven fully automated distribution centers and approximately 400 full-service branches in North America and international markets, providing a local presence for customers and a global network to serve multi-location businesses and multi-national corporations.
# # #
The matters discussed herein may contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from expectations. Certain of these risks are set forth in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010, as well as the Company's other reports filed with the Securities and Exchange Commission.
Contact: Richard Heyse, Vice President & Chief Financial Officer
WESCO International, Inc. (412) 454-2392, Fax: (412) 222-7566
http://www.wesco.com
WESCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(dollar amounts in millions, except per share amounts)
(Unaudited)
Three Months | Three Months | |||||||||||
Ended | Ended | |||||||||||
December 31, | December 31, | |||||||||||
2011 | 2010 | |||||||||||
Net sales | $ | 1,589.5 | $ | 1,331.6 | ||||||||
Cost of goods sold (excluding | 1,261.5 | 79.4 | % | 1,061.3 | 79.7 | % | ||||||
depreciation and amortization below) | ||||||||||||
Selling, general and administrative expenses | 227.8 | 14.3 | % | 204.1 | 15.3 | % | ||||||
Depreciation and amortization | 8.7 | 6.2 | ||||||||||
Income from operations | 91.5 | 5.8 | % | 60.0 | 4.5 | % | ||||||
Interest expense, net | 12.0 | 15.9 | ||||||||||
Income before income taxes | 79.5 | 5.0 | % | 44.1 | 3.3 | % | ||||||
Provision for income taxes | 24.7 | 9.3 | ||||||||||
Net income attributable to WESCO International, Inc. | $ | 54.8 | 3.4 | % | $ | 34.8 | 2.6 | % | ||||
Earnings per diluted common share | $ | 1.12 | $ | 0.72 | ||||||||
Weighted average common shares outstanding and common | ||||||||||||
share equivalents used in computing earnings per diluted | ||||||||||||
share (in millions) | 49.0 | 48.3 | ||||||||||
WESCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(dollar amounts in millions, except per share amounts)
(Unaudited)
Twelve Months | Twelve Months | |||||||||||
Ended | Ended | |||||||||||
December 31, | December 31, | |||||||||||
2011 | 2010 | |||||||||||
Net sales | $ | 6,125.7 | $ | 5,063.9 | ||||||||
Cost of goods sold (excluding | 4,889.1 | 79.8 | % | 4,065.4 | 80.3 | % | ||||||
depreciation and amortization below) | ||||||||||||
Selling, general and administrative expenses | 872.0 | 14.2 | % | 763.6 | 15.1 | % | ||||||
Depreciation and amortization | 31.6 | 23.9 | ||||||||||
Income from operations | 333.0 | 5.4 | % | 211.0 | 4.2 | % | ||||||
Interest expense, net | 53.6 | 57.6 | ||||||||||
Other income | — | (4.3 | ) | |||||||||
Income before income taxes | 279.4 | 4.6 | % | 157.7 | 3.1 | % | ||||||
Provision for income taxes | 83.1 | 42.2 | ||||||||||
Net income attributable to WESCO International, Inc. | $ | 196.3 | 3.2 | % | $ | 115.5 | 2.3 | % | ||||
Earnings per diluted common share | $ | 3.96 | $ | 2.50 | ||||||||
Weighted average common shares outstanding and common | ||||||||||||
share equivalents used in computing earnings per diluted | ||||||||||||
share (in millions) | 49.6 | 46.1 | ||||||||||
WESCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(dollar amounts in millions)
(Unaudited)
December 31, | December 31, | |||||||
2011 | 2010 | |||||||
Assets | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 63.9 | $ | 53.6 | ||||
Trade accounts receivable, net | 939.4 | 792.7 | ||||||
Inventories, net | 627.0 | 588.8 | ||||||
Other current assets | 107.2 | 78.6 | ||||||
Total current assets | 1,737.5 | 1,513.7 | ||||||
Other assets | 1,341.0 | 1,313.1 | ||||||
Total assets | $ | 3,078.5 | $ | 2,826.8 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 642.8 | $ | 537.5 | ||||
Current debt | 6.4 | 4.0 | ||||||
Other current liabilities | 196.7 | 166.7 | ||||||
Total current liabilities | 845.9 | 708.2 | ||||||
Long-term debt | 642.9 | 725.9 | ||||||
Other noncurrent liabilities | 243.8 | 244.1 | ||||||
Total liabilities | 1,732.6 | 1,678.2 | ||||||
Stockholders' Equity | ||||||||
Total stockholders' equity | 1,345.9 | 1,148.6 | ||||||
Total liabilities and stockholders' equity | $ | 3,078.5 | $ | 2,826.8 | ||||
WESCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(dollar amounts in millions)
(Unaudited)
Twelve Months Ended | Twelve Months Ended | |||||||
December 31, 2011 | December 31, 2010 | |||||||
Operating Activities: | ||||||||
Net income | $ | 196.2 | $ | 115.5 | ||||
Add back (deduct): | ||||||||
Depreciation and amortization | 31.6 | 23.9 | ||||||
Deferred income taxes | 14.4 | 21.0 | ||||||
Change in Trade and other receivables, net | (143.5 | ) | (118.5 | ) | ||||
Change in Inventories, net | (33.8 | ) | (34.0 | ) | ||||
Change in Accounts Payable | 101.7 | 53.9 | ||||||
Other | 0.9 | 65.5 | ||||||
Net cash provided by operating activities | 167.5 | 127.3 | ||||||
Investing Activities: | ||||||||
Capital expenditures | (33.3 | ) | (15.1 | ) | ||||
Acquisition payments | (48.1 | ) | (265.4 | ) | ||||
Proceeds from sale of subsidiary | — | 40.0 | ||||||
Repayment of note receivable | — | 15.0 | ||||||
Other | 0.1 | 5.0 | ||||||
Net cash used by investing activities | (81.3 | ) | (220.5 | ) | ||||
Financing Activities: | ||||||||
Debt borrowing (repayments), net | (84.1 | ) | 33.5 | |||||
Equity activity, net | (2.0 | ) | 4.3 | |||||
Other | 15.2 | (7.2 | ) | |||||
Net cash provided (used) by financing activities | (70.9 | ) | 30.6 | |||||
Effect of exchange rate changes on cash and cash equivalents | (5.0 | ) | 3.9 | |||||
Net change in cash and cash equivalents | 10.3 | (58.7 | ) | |||||
Cash and cash equivalents at the beginning of the period | 53.6 | 112.3 | ||||||
Cash and cash equivalents at the end of the period | $ | 63.9 | $ | 53.6 | ||||
NON-GAAP FINANCIAL MEASURES
This earnings release includes certain non-GAAP financial measures. These financial measures include financial leverage, free cash flow, gross profit and organic sales growth. The Company believes that these non-GAAP measures are useful to investors in order to provide a better understanding of the Company's capital structure position, liquidity, and organic growth trends on a comparable basis. Additionally, certain non-GAAP measures either focus on or exclude transactions of an unusual nature, 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
(dollar amounts in thousands)
(Unaudited)
Twelve Months | Twelve Months | |||||||
Ended | Ended | |||||||
December 31, | December 31, | |||||||
2011 | 2010 | |||||||
Financial Leverage: | ||||||||
Income from operations | $ | 332,979 | $ | 210,919 | ||||
Depreciation and amortization | 31,607 | 23,935 | ||||||
EBITDA | $ | 364,586 | $ | 234,854 | ||||
December 31, | December 31, | |||||||
2011 | 2010 | |||||||
Current debt | $ | 6,411 | $ | 3,988 | ||||
Long-term debt | 642,922 | 725,893 | ||||||
Debt discount related to convertible debentures (1) | 175,908 | 178,427 | ||||||
Total debt including debt discount | $ | 825,241 | $ | 908,308 | ||||
Financial leverage ratio | 2.3 | 3.9 | ||||||
Note: Financial leverage is provided by the Company as an indicator of capital structure position. Financial leverage is calculated by dividing total debt, including debt discount, by the trailing twelve months earnings before interest, taxes, depreciation and amortization (EBITDA).
Three Months | Three Months | Twelve Months | Twelve Months | |||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||
December 31, | December 31, | December 31, | December 31, | |||||||||||||
Free Cash Flow: | 2011 | 2010 | 2011 | 2010 | ||||||||||||
(dollar amounts in millions) | ||||||||||||||||
Cash flow provided by operations | $ | 95.7 | $ | 51.8 | $ | 167.5 | $ | 127.3 | ||||||||
Less: Capital expenditures | (9.3 | ) | (5.0 | ) | (33.3 | ) | (15.1 | ) | ||||||||
Free Cash flow | $ | 86.4 | $ | 46.8 | $ | 134.2 | $ | 112.2 | ||||||||
Note: Free cash flow is provided by the Company as an additional liquidity measure. Capital expenditures are deducted from operating flow to determine free cash flow. Free cash flow is available to provide a source of funds for any of the Company's financing needs.
(1)The convertible debentures are presented in the consolidated balance sheets in long-term debt net of the unamortized discount.
WESCO INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(dollar amounts in thousands)
(Unaudited)
Three Months | Three Months | |||||||
Ended | Ended | |||||||
Quarterly Gross Profit: | December 31, | December 31, | ||||||
2011 | 2010 | |||||||
Net Sales | $ | 1,589.5 | $ | 1,331.6 | ||||
Cost of goods sold (excluding depreciation and amortization) | 1,261.5 | 1,061.3 | ||||||
Gross profit | $ | 328.0 | $ | 270.3 | ||||
Gross margin | 20.6 | % | 20.3 | % | ||||
Twelve Months | Twelve Months | |||||||
Ended | Ended | |||||||
Annual Gross Profit: | December 31, | December 31, | ||||||
2011 | 2010 | |||||||
Net Sales | $ | 6,125.7 | $ | 5,063.9 | ||||
Cost of goods sold (excluding depreciation and amortization) | 4,889.1 | 4,065.4 | ||||||
Gross profit | $ | 1,236.6 | $ | 998.5 | ||||
Gross margin | 20.2 | % | 19.7 | % | ||||
Note: Gross profit is provided by the Company as an additional financial measure. Gross profit is calculated by deducting cost of goods sold, excluding depreciation and amortization, from net sales. This amount represents a commonly used financial measure within the distribution industry. Gross margin is calculated by dividing gross profit by net sales.
Three Months | Twelve Months | |||||||
Ended | Ended | |||||||
Normalized Organic Sales Growth: | December 31, | December 31, | ||||||
2011 | 2011 | |||||||
Change in net sales | 19.4 | % | 21.0 | % | ||||
Impact from acquisitions | 6.2 | % | 6.8 | % | ||||
Impact from foreign exchange rates | — | % | 0.8 | % | ||||
Impact from number of workdays | (1.6 | )% | (0.4 | )% | ||||
Normalized organic sales growth | 14.8 | % | 13.8 | % | ||||
Note: Organic sales growth is provided by the Company as an additional financial measure to provide a better understanding of the Company's sales growth trends. Organic sales growth is calculated by deducting the percentage impact on net sales from acquisitions and foreign exchange rates from the overall percentage change in consolidated net sales.
Supplemental Financial Data WESCO Fourth Quarter and Full Year 2011 January 26, 2012
2 Safe Harbor Statement Note: All statements made herein that are not historical facts should be considered as “forward- looking statements” within the meaning of the Private Securities Litigation Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. Such risks, uncertainties and other factors include, but are not limited to, debt level, changes in general economic conditions, fluctuations in interest rates, increases in raw materials and labor costs, levels of competition and other factors described in detail in Form 10-K for WESCO International, Inc. for the year ended December 31, 2010 and any subsequent filings with the Securities & Exchange Commission. Any numerical or other representations in this presentation do not represent guidance by management and should not be construed as such.
3 Fourth Quarter 2011 Results Category Q4 Outlook Provided Fourth Quarter 2011 Performance Sales Growth Sales growth expected to be at or above 14% year-over-year and down 3.5% sequentially Sales growth of 19.4% versus prior year; sales up 0.6% sequentially; normalized organic sales growth of approximately 14.8% versus prior year. Sixth consecutive quarter of double-digit organic sales growth versus prior year Gross Margin Gross margin expected to be at or above 19.8% Gross margin of 20.6%, up 30 basis points over prior year Operating Margin Operating margin expected to be at or above 5.2% Operating margin of 5.8%, up 130 basis points versus prior year Effective Tax Rate Tax rate expected to be approximately 30% to 31% Effective tax rate of 31%
4 Full Year 2011 Results Category 2011 Outlook Provided Revised October 20, 2011 2011 Performance Sales Growth Sales growth expected to be at or above 19%. Pricing and F/X rates assumed consistent with first half levels Sales growth of 21% versus 2010; normalized organic growth of approximately 13.8% Gross Margin Expected to be at or above 19.9% Gross margin of 20.2%, up 50 basis points over prior year Operating Margin Expected to be at or above 5.2% Operating margin of 5.4%, up 120 basis points over prior year Effective Tax Rate Expected to be in the range of 29% to 30% Effective Tax Rate of 29.8% Cash Flow Expected to be at least 70% to 80% of Net Income Free cash flow totaled $134 million or 68% of Net Income
5 Organic Sales Versus Prior Year ---------------- 2010 ------------------ ------------------- 2011 -------------------- Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 Q4* Full Year* (2.6%) 8.6% 14.9% 17.6% 9.5% 24.6% 21.1% 19.3% 19.4% 21.0% (1.8%) (1.9%) (0.9%) (0.7%) (1.3%) (1.1%) (1.0%) (1.1%) 0% (0.8%) 0 0 (0.7%) (1.1%) (0.4%) (7.0%) (7.4%) (6.9%) (6.2%) (6.8%) (4.4%) 6.7% 13.3% 15.8% 7.8% 16.5% 12.7% 11.3% 14.8%* 13.8%* 1.5% 3.0% 2.5% 3.0% 2.5% 3.5% 3.0% 3.0% 3.5% 2.0% *Q4 2011 had one less workday versus Q4 2010. *FY 2011 had one less workday versus 2010 (1.6%) (0.4%) (4.4%) 6.7% 13.3% 15.8% 7.8% 16.5% 12.7% 11.3% 13.2% 13.4%* Consolidated Sales Growth F/X Acquisitions Organic Sales Growth Workday Impact Organic Sales Per Workday Management Estimated Price Impact
6 Number of Work Days by Quarter Q1 Q2 Q3 Q4 FY 2010 63 64 64 64 255 2011 63 64 64 63 254 2012 64 64 63 64 255
7 WESCO Confidential—Do not copy or distribute without express permission from WESCO Distribution, Inc. WESCO End Markets and Product Categories 2010 40% 36% 12% 12% Markets & Customers 33% 19% 17% 11% 10% 10% Products & Services Controls & Motors Lighting & Controls General Supplies Data & Broadband Communications* Wire, Cable & Conduit Distribution Equipment Utility • Investor Owned • Public Power • Utility Contractors CIG • Commercial • Institutional • Government Industrial • Global Accounts • Integrated Supply • OEM • General Industrial Construction • Non-Residential • Residential 2011 43% 35% 11% 11% Markets & Customers 34% 17% 18% 11% 9% 11% Products & Services Controls & Motors Lighting & Controls General Supplies Data & Broadband Communications Wire, Cable & Conduit Distribution Equipment Utility • Investor Owned • Public Power • Utility Contractors CIG • Commercial • Institutional • Government Industrial • Global Accounts • Integrated Supply • OEM • General Industrial Construction • Non-Residential • Residential *Proforma: Assumes TVC acquired 1/1/2010
8 6.9% 21.2% 12.7% 10.9% 12.5% 13.7% 0% 5% 10% 15% 20% 25% FY 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 FY 2011 22.3% 21.6% 18.4% 14.8% 12.0% 16.7% 0% 5% 10% 15% 20% 25% FY 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 FY 2011 11.6% 17.7% 3.4% 7.5% 10.1% 8.1% 0% 5% 10% 15% 20% 25% FY 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 FY 2011 (14.6%) (4.6%) 6.1% 13.2% 21.7% 9.8% (20%) (15%) (10%) (5%) 0% 5% 10% 15% 20% 25% FY 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 FY 2011 WESCO End Market Momentum Industrial Construction Utility CIG Sales vs. Prior Year Sales vs. Prior Year Sales vs. Prior Year Sales vs. Prior Year 11% Utility ● Investor Owned ● Public Power ● Utility Contractors 11% CIG ● Commercial ● Institutional ● Government 35% Construction ● Non-Residential ● Residential 43% Industrial ● Global Accounts ● Integrated Supply ● OEM ● General Industrial
9 End Market Q4 2011 vs. Q4 2010 Q4 2011 vs. Q3 2011 2011 vs. 2010 Comments WESCO Core 13.1% (0.4%) 14.1% • Sixth consecutive quarter of year-over-year double digit organic sales growth • All four major end market categories grew double digits in Q4 versus last year • Q4 2011 normalized organic sales growth of 14.8% • Full year 2011 normalized organic sales growth of 13.8% Industrial 12.0% 1.3% 16.7% • Eighth consecutive quarter of year-over-year double digit organic sales growth • 10 of 16 Global Account industry verticals grew sales double digits in 2011 • Notable customer trends include outsourcing, increased capital spending, and high expectations for supply chain process improvement and savings • Strong bidding activity continues; Global Accounts and Integrated Supply opportunity pipeline at $2.1+ billion Construction 12.5% Flat 13.7% • Sixth consecutive quarter of year-over-year double digit organic sales growth • Year end backlog up 7% over last year • Non-residential construction market appears to be stabilizing Utility 21.6% (1.6%) 9.8% • Second consecutive quarter of year-over-year double digit organic sales growth • Increased bidding activity levels on transmission, sub-station and alternative energy projects • Distribution grid spending is expected to grow in 2012 driven by system maintenance, reliability projects and storm restoration Commercial, Institutional, Government (CIG) 10.1% (7.5%) 8.1% • Government opportunities driven by infrastructure projects, security and data communications • Stimulus programs continue – rural broadband and certain DOE projects are beneficiaries • $350 million government and stimulus opportunity pipeline 2011 End Market Comments Core year-over-year and sequential quarterly sales comparisons . Note: Q4 versus prior year excludes TVC, RECO and Brews results. Full year excludes Potelcom, TVC, RECO and Brews results. Q4 sequential excludes Brews.
10 Key Financial Metrics 12/31/2010 12/31/2011 Liquidity(1) $338 million $511 million Full Year Free Cash Flow(2) $112 million $134 million Financial Leverage (Par Value Debt with Reported EBITDA) 3.9x 2.3x ($Millions) Outstanding at December 31, 2010 Outstanding at December 31, 2011 Debt Maturity Schedule AR Securitization (V) $370 $250 2013 Inventory Revolver (V) $0 $37 2013 Real Estate Mortgage (F) $39 $37 2013 2017 Bonds (F) $150 $150 2017 2029 Convertible Bonds (F) $345 $345 2029 (No Put) Other (F) $4 $6 N/A Total Debt $908 $825 Capital Structure V= Variable Rate Debt F= Fixed Rate Debt 1= Asset-backed credit facilities total available plus invested cash 2= Operating cash flow less capital expenditures
11 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 Q 4 0 7 Q 1 0 8 Q 2 0 8 Q 3 0 8 Q 4 0 8 Q 1 0 9 Q 2 0 9 Q 3 0 9 Q 4 0 9 Q 1 1 0 Q 2 1 0 Q 3 1 0 Q 4 1 0 Q 1 1 1 Q 2 1 1 Q 3 1 1 Q 4 1 1 Quarterly Financial Leverage Target Leverage 2.0x – 3.5x 2.3x
12 Convertible Debt and Non-cash Interest as of December 31, 2011 GAAP vs. Non-GAAP Debt Reconciliation Non-Cash Interest Expense Schedule Convertible Debentures (000s) Maturity Par Value of Debt Debt Discount Debt per Balance Sheet 2026 $ 56 $ 0 56 2029 $ 344,962 $ (175,908) $ 169,054 Total $ 345,018 $ (175,908) $ 169,110 ($ millions) 2010 2011 Convertible Debt $4.3 $2.5 Amortization of Deferred Financing Fees $2.6 $4.4 FIN 48 $5.0 $1.9 Total $11.9 $8.8 Non-Cash Interest Expense (year-to-date)
13 Core Sales Reconciliation of Non-GAAP Financial Measures Unaudited 2011 2010 % Growth Industrial Core $ 2,632 $ 2,256 16.7 % Contruction Core 2,097 1,845 13.7 % Utility Core 683 622 9.8 % CIG Core 388 359 8.1 % Total Core Gross Sales $ 5,800 $ 5,082 14.1 % Total Gross Sales from Acquisitions 347 — Total Gross Sales $ 6,147 $ 5,082 21.0 % Gross Sales Reductions/Discounts (21 ) (18 ) Total Net Sales $ 6,126 $ 5,064 21.0 % Q4 Q4 2011 2010 % Growth $ 679 $ 606 12.0 % 541 481 12.5 % 186 153 21.6 % 106 97 10.1 % $ 1,512 $ 1,337 13.1 % 83 — $ 1,595 $ 1,337 19.3 % (5 ) (5 ) $ 1,590 $ 1,332 19.4 % Q4 Q3 2011 2011 % Growth $ 685 $ 676 1.3 % 547 547 — % 186 189 (1.6 )% 160 173 (7.5 )% $ 1,578 $ 1,585 (0.4 )% 17 — $ 1,595 $ 1,585 0.6 % (5 ) (5 ) $ 1,590 $ 1,580 0.6 % Q4 2011 vs. Q4 2010 Q4 2011 vs. Q3 2011 Full Year 2011 vs. 2010 Note: Q4 versus prior year excludes TVC, RECO and Brews results. Full year excludes Potelcom, TVC, RECO and Brews results. Q4 sequential excludes Brews. (dollar amounts in millions)
14 Convertible Debt and SARs/Options EPS Dilution Weighted Average Quarterly Share Count Stock Price Incremental Shares from 2029 Convertible Debt (in millions)3 Incremental Shares from SARs/Option Awards (in millions) Total Diluted Share Count (in millions)4 $30.00 0.45 0.41 44.20 $40.00 3.33 0.74 47.41 Q4 2011 Average ($47.14) 4.63 1.04 49.01 $50.00 5.05 1.12 49.50 $60.00 6.20 1.31 50.85 $75.00 7.35 1.69 52.38 $100.00 8.50 2.05 53.89 2029 Convertible Debt Details Conversion Price $28.8656 Conversion Rate 34.6433 1 Underlying Shares 11,950,622 2 Footnotes: 2029 Convertible Debenture 1 1000/28.8656 2 $345 million/28.8656 3 (Underlying Shares x Avg. Quarterly. Stock Price) minus $345 million Avg. Quarterly Stock Price 4 Basic Share Count of 43.34 million shares
15 Q1 2012 Outlook Category Q1 2012 Expectations Sales Growth Total sales growth expected to be 7% to 11% consistent with the August Investor Day outlook: • Q1 organic sales growth rate expected to be 6% to 9% • Acquired sales expected to add approximately 2% points to sales growth • Total sales expectations assume pricing and F/X rates consistent with Q4 2011 levels Gross Margin Gross margin expected to be at or above 20.0% Operating Margin Operating margin expected to be at or above 5.0% Effective Tax Rate Effective tax rate expected to be approximately 30% to 32%
16 2012 Full Year Outlook Category 2012 Expectations Sales Growth Total sales growth expected to be 7% to 11% consistent with the August Investor Day outlook: • Q1 organic sales growth rate expected to be 6% to 9% • Q2 to Q4 organic sales growth rate expected to be 5% to 8% • Acquired sales targeted to add approximately 2+% • Total sales expectations assume pricing and F/X rates consistent with 2011 levels Gross Margin Gross margin expected to be at or above 20.2% based on the following assumptions: • Margin improvement initiatives expected to positively impact gross margin by 15 to 25 basis points • Full year supplier volume rebate rates expected to decrease by 10 to 20 basis points Operating Margins Operating margin expected to be at or above 5.8%; expected margin expansion at the low end of the 40 to 60 basis points range provided at the Investor Day Effective Tax Rate Effective tax rate expected to be approximately 30% to 32% Cash Flow Free cash flow expected to be at or above 80% of net income