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): November 15, 2011
WESCO International, Inc.
(Exact name of registrant as specified in its charter)
Commission file number 001-14989
| Delaware | 25-1723342 | |
| (State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) | |
| 225 West Station Square Drive Suite 700 Pittsburgh, Pennsylvania 15219 |
(412) 454-2200 | |
| (Address of principal executive offices) | (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 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.
On November 15, 2011 members of senior management of WESCO International, Inc. (the “Company”) delivered a presentation at the Citi Equity Conference. The presentation included written communication comprised of slides and is accessible on the Company’s website via webcast. The slides from the presentation are attached hereto as Exhibit 99.1 and are being furnished in accordance with Regulation FD of the Securities and Exchange Commission.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits |
| Exhibit 99.1 | 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.
Dated: November 16, 2011
| WESCO INTERNATIONAL, INC. | ||
| By: | /s/ Richard P. Heyse | |
| Richard P. Heyse | ||
| Vice President and Chief Financial Officer | ||
Exhibit 99.1
Exhibit 99.1
Citi 2011 Small/Mid-Cap Conference
WESCO
John Engel
Chairman, President and Chief Executive Officer
November 2011
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.
| 2 |
|
November 2011 |
WESCO Profile
Vision
Global Leader of
Supply Chain Solutions
that consistently delivers
Superior Customer Value
and Shareholder Returns
Known for the best customer service
Fortune 500 Company (NYSE: WCC) and the best people
Headquartered in Pittsburgh, PA
Approximately 7,000 employees Customer
Value Proposition
Over 400 locations in 16 countries
Providing customers the
A leading provider of electrical, industrial, and communications
products and supply chain
MRO and OEM products, construction materials and advanced
services they need for
supply chain management and logistics services
• MRO
Serving over 100,000 customers
• OEM
Partnering with 17,000 suppliers
• Capital Projects
Over 1,000,000 different products shipped annually
International operations and global sourcing capabilities …an industry leader
| 3 |
|
November 2011 |
WESCO Growth Strategy
WESCO Growth Strategy launched in Fall of 2009
• CEO succession plan
• Established eight growth engines
• Initiated One WESCO
• Increased investments
• Greater transparency
• Developed leaders and organization
• Focused execution
2010 and 2011 September YTD results have been excellent
• Positive business momentum
• Gaining market share
• Investments delivering results
• Four acquisitions closed
• Strong earnings growth
• Shareholder value creation
…execution is producing strong results
| 4 |
|
November 2011 |
2010 and September 2011 YTD Results
25%
18% 21% 19%
15%
9%
-3%
4.1%
3.3%
| 5.6% |
|
5.8% |
| 4.6% |
|
4.5% 4.5% |
Total Q1 „10 Q2 „10 Q3 „10 Q4 „10 Q1 „11 Q2 „11 Q3 „11
backlog versus -2% +9% +15% +20% +26% +26% +19%
prior year
| $1.00 |
|
$1.11 |
| $0.60 |
|
$0.74 $0.72 $0.74 |
$0.44
Q1 „10 Q2 „10 Q3 „10 Q4 „10 Q1 „11 Q2 „11 Q3 „11
| 5 |
|
[GRAPHIC APPEARS HERE]
Versus Prior Q1 „10 Q2 „10 Q3 „10 Q4 „10 Q1 „11 Q2 „11 Q3 „11
Year (basis(40) Flat 60 75 120 150 120
points)
3rd Quarter 2011 Results
Sales $1.58 Billion
+19% (+11% organic)
EBIT 5.8%
+120 bpts
EPS $1.11
+50%
November 2011
WESCO Portfolio
Portfolio expanded and strengthened over last 17 years…
Captive Distributor (1922-1994)
175 branches in U.S. and Canada with
over 80% non-residential construction
market exposure and
limited supply relationships other than Westinghouse
Over $1B in annual communications products with the addition of TVC versus less than $100M five years ago
Markets & Customers
Construction Utility
• Non-Residential • Investor Owned
Electrical • Public Power
Data Communications • Utility Contractors
• Program Management
11%
Industrial CIG
• Global Accounts • Commercial
• Integrated Supply • Institutional
• MRO & OEM • Government
• Industrial Capex
Products & Services
Wire, Cable & Distribution Equipment
Conduit
Lighting &
Data & Controls
Broadband
Communications Controls &
Motors
General Supplies
…by diversifying markets, customer base, product lines, and suppliers
| 6 |
|
November 2011 |
WESCO End Market Momentum
Sales vs. Prior Year 43%
| 25.0% |
|
Industrial |
| 22.3% |
|
21.6% |
• Global Accounts
• Integrated Supply
| 20.0% |
|
18.4% • MRO & OEM |
• Industrial Capex
| 15.0% |
|
14.8% |
10.0%
FY 2010 Q1 2011 Q2 2011 Q3 2011
11%
[GRAPHIC APPEARS HERE] Sales vs. Prior Year
Sales vs. Prior Year 35%
| 25.0% |
|
21.2% |
Construction
| 20.0% |
|
• Non-Residential |
Electrical
| 15.0% |
|
12.7% Data |
Communications
10.9%
• Program
| 10.0% |
|
Management |
6.9%
5.0%
0.0%
FY 2010 Q1 2011 Q2 2011 Q3 2011
[GRAPHIC APPEARS HERE]
11%
Sales vs. Prior Year
| 15.0% |
|
13.2% |
| 10.0% |
|
6.1% |
5.0%
0.0%
(5.0%)
(10.0%)(4.6%)
(15.0%)
(20.0%)(14.6%)
(25.0%)
FY 2010 Q1 2011 Q2 2011 Q3 2011
Utility
Investor Owned
Public Power
Utility Contractors
| 20.0% |
|
17.7% CIG |
• Commercial
• Institutional
| 15.0% |
|
• Government |
11.6%
| 10.0% |
|
7.5% |
| 5.0% |
|
3.4% |
0.0%
FY 2010 Q1 2011 Q2 2011 Q3 2011
| 7 |
|
Note: Core (excluding M&A) sales growth rates as reported in Supplemental Financial presentations
November 2011
Market Opportunity
$500B+
Source: Modern Distribution Management, June 2010
Thousands of electrical and industrial product manufacturers
Over 10,000 electrical and industrial distributors
Top five distributors have an estimated
25% share of electrical distribution industry in U.S.
Over 75% of electrical products get to market through distribution
Continuing industry consolidation
SUPPLIERS CUSTOMERS
• Sales • Procurement
• Marketing • Warehousing
• Delivery • Logistics
• Service Management
Market Trends Benefit WESCO
Increased scale
Global sourcing
Outsourcing
Enhanced interdependence
Financial strength and liquidity
…large, fragmented market with trends favorable to WESCO
| 8 |
|
November 2011 |
Growth Engines
I Expand
| 1 |
|
Geographies |
| 2 |
|
Customers |
| 3 |
|
Focus Markets |
II Enrich
BUSINESS MODELS
Global Accounts &
Integrated Supply
Global Accounts
Provides comprehensive supply chain solutions to Fortune 1000 and other
END MARKETS PRODUCT CATEGORIES
[GRAPHIC APPEARS HERE]
Construction Communications
& Security
Government
| 4 |
|
Products |
and Services
| 5 |
|
New Markets |
III Drive
| 6 |
|
M&A Agenda |
multi-site companies for their MRO, OEM, and capital expenditure needs
Integrated Supply
Provides turnkey outsourcing solutions for MRO and OEM procurement and other supply chain needs
Utility
Lighting &
Sustainability
CAPABILITIES
[GRAPHIC APPEARS HERE]
International M&A Agenda
…improve our position in core markets while expanding through acquisitions
9 November 2011
Sales Capability and Capacity Expansion
3,200 sales and sales management personnel, an increase of 9% over the last year
Highly productive sales force
Capacity expansion to support above market organic sales growth:
Productivity 4 to 6%
Personnel additions 4%+
College recruitment program
Sales training and development
Customer Relationship Management software implementation
10
New and Acquired
2009 2010 2011E
Industrial / Construction / Utility 4 10 17
Data and Broadband Communications 7 36 4
Total 11 46 21
Greenfield openings and acquired company locations strengthen our position
Expansion will continue and is expected to add to market share capture going forward
…drives profitable growth
November 2011
Acquisition Strategy
Acquisition strategy is focused on:
Expanding product and service portfolio
Targeting core and new markets
Strengthening geographic position
Improving overall financial metrics
11
Highly fragmented industry with many profitable niches
Acquisition engine restarted in mid 2010
Acquisition target pipeline at record level Dedicated WESCO resources in-place
We are building on our track record of
36 acquisitions, which added over $2B in revenues from 1995 through September 2011
…adds capabilities, revenues, and profits
November 2011
One WESCO Product and Services Portfolio
Automation and Control
Broadband Communications
Data Communications
Electrical
• Electromechanical
• Electronics
• Industrial MRO and
Consumables
• Lighting
• Network and Physical
Security
• OEM
• Solar
• Utility
• Wind
• Wire and Cable
…comprehensive supply chain solutions for our customers
| 12 |
|
November 2011 |
[GRAPHIC APPEARS HERE]
Business Priorities and Financial Objectives
Take share
Expand margins
Strengthen portfolio
Build high performance culture
Grow faster than the market and strengthen business through acquisitions
Maintain industry leading cost structure
Expand operating profit and margins
Generate strong operating cash flow through the cycle
Provide superior investor returns
Targeting 20-25% annual net income growth
TODAY TOMORROW
Market-Focused One WESCO
Branches
National Accounts Global Accounts
LEAN and Complete
Integrated Supply Supply Chain
North American Global
Centric
Fortune 500 company with market leadership positions,
a balanced portfolio of businesses, and an operational excellence culture
…focused on shareholder value creation
| 13 |
|
November 2011 |
WESCO Evolution
Current Vision
Customers and Markets “Expanding Blue Chip Customer Base” “Supply Chain Solutions Company”
• End Markets Industrial, Construction, Utility, CIG Vertical market expansion
• Industry Leadership North America Undisputed #1 market positions
• Geographic Footprint ot mrcnBs ihItlepnin Improved global mix
• Customer Satisfaction Improving Customer loyalty
Product and Service Portfolio
• Product and Service Categories Electrical plus industrial, some services New product and service categories
• Supplier Relationships Strong partnerships Supply chain partner of choice
LEAN: Continuous Improvement Maturing and expanding Self-initiated in all locations and groups
Talent and Culture Strong and deep team nutylae n “mlyro hie”
Extra-effort employees One WESCO team
Marketing, Sales & Service Competitive advantage Competitive differentiator
IT and e-Business Significantly enhanced Competitive differentiator
Acquisitions 3 acquisitions in last 12 months Faster pace and larger sizes
Value Creation 2011 Expectations
• Sales $6B+ Stretch Goal: double-digit sales growth
• EBIT % 5.2%+ Back to 6%, then to 8.0%+
• Free Cash Flow Approximately 70% to 80% of net income ~ 90% net income through economic cycle
• EPS $3.65+ Commensurate with net income growth
• Cost Structure Low cost leadership Maintain low cost leadership
• Capital Structure ~2.5x leverage 2.0 to 3.5x leverage
[GRAPHIC APPEARS HERE] [GRAPHIC APPEARS HERE]
…strong company, excellent value creation opportunity
| 14 |
|
November 2011 |
Invest in WESCO
Industry leader with low risk business profile
Proven business model and well positioned in large, fragmented markets
Organic sales growth faster than the market
Operational excellence culture founded on LEAN
Excellent margin expansion results and future potential
Proven acquirer in a consolidating industry
Strong free cash flow generation through economic cycle
…strong company, excellent value creation opportunity
| 15 |
|
November 2011 |
| 16 |
|
November 2011 |