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): April 18, 2013
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 April 18, 2013, WESCO International, Inc. (the “Company”) issued a press release announcing its financial results for the first quarter of 2013. 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 first quarter of 2013 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 April 18, 2013.
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.
April 18, 2013 | WESCO INTERNATIONAL, INC. | |||
(Date) | ||||
/s/ Kenneth S. Parks | ||||
Kenneth S. Parks | ||||
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 First Quarter 2013 Results;
Achieves Record Quarterly Sales and Record Gross Margin
First quarter results compared to the prior year:
•Consolidated sales of $1.81 billion, growth of 12.6%
•Gross margin of 21.1%, up 120 basis points
•Adjusted earnings per share of $1.12, up 13.1%, excluding favorable non-recurring items
in both years
•Free cash flow of $74 million or 127% of adjusted net income
PITTSBURGH, April 18, 2013/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 2013 first quarter results.
The following are results for the three months ended March 31, 2013 compared to the three months ended March 31, 2012:
• | Net sales were $1,808.1 million for the first quarter of 2013, compared to $1,606.0 million for the first quarter of 2012, an increase of 12.6%. Acquisitions positively impacted sales by 16.0% and organic sales declined 3.4%. Adjusting for the impact of one less workday in the quarter, normalized organic sales declined approximately 1.8%. Sequentially, sales increased 10.0%, and organic sales decreased 2.1%. |
• | Gross profit of $381.1 million, or 21.1% of sales, for the first quarter of 2013 improved 120 basis points compared to $319.7 million, or 19.9% of sales, for the first quarter of 2012. |
• | Selling, general & administrative (SG&A) expenses of $227.5 million, or 12.6% of sales, for the first quarter of 2013 decreased 160 basis points, compared to $228.1 million, or 14.2% of sales, for the first quarter of 2012. First quarter 2013 SG&A expenses include a $36.1 million favorable impact resulting from the recognition of insurance coverage relating to a litigation-related charge recorded in the fourth quarter of 2012. Excluding the impact of this favorable item, SG&A expenses were $263.6 million, or 14.6% of sales. The increase in SG&A expenses was the result of acquisitions, primarily EECOL. |
• | Operating profit was $136.9 million for the current quarter, up 64.0% from $83.5 million for the comparable 2012 quarter. Operating profit as a percentage of sales was 7.6% in 2013, up 240 basis points from 5.2% in 2012. Excluding the favorable impact resulting from the recognition of insurance coverage on a litigation matter, operating profit was $100.8 million, or 5.6% of sales, up 20.7% and 40 basis points, respectively, from the prior year quarter. |
• | Interest expense for the first quarter of 2013 was $21.9 million, compared to $9.0 million for the first quarter of 2012. Interest expense increased for the quarter due to the increase in indebtedness in late 2012 associated with the EECOL acquisition. Non-cash interest expense, which includes convertible debt interest, interest related to uncertain tax positions, and the amortization of deferred financing fees, for the first quarter of 2013 was $2.3 million compared to $1.9 million of income in the first quarter of 2012. The first quarter of 2012 was impacted by a favorable adjustment of $3.2 million of previously recorded interest related to uncertain tax positions. This adjustment was the result of a favorable Internal Revenue Service appeals settlement in the first quarter of 2012 related to the years 2000 to 2006. |
• | The effective tax rate for the current quarter was 26.9%, compared to 29.0% for the prior year first quarter. |
• | Net income of $84.1 million for the current quarter was up 59.0% from $52.9 million for the prior year quarter. Excluding the favorable impact of non-recurring items in both years, first quarter 2013 adjusted net income was $58.6 million, compared to $50.9 million in the prior quarter, an increase of 15.1%. |
• | Earnings per diluted share for the first quarter of 2013 were $1.60 per share, based on 52.4 million diluted shares, and were up 55.3% from $1.03 per share in the first quarter of 2012, based on 51.3 million diluted shares. Excluding the favorable impact of non-recurring items in both years, adjusted earnings per diluted share in first quarter 2013 were $1.12, compared to $0.99 in the prior year quarter and increased 13.1%. |
• | Free cash flow for the first quarter of 2013 was $74.4 million, or 88% of net income, compared to $53.8 million for the first quarter of 2012. Excluding the favorable impact of non-recurring items, first quarter of 2013 free cash flow was 127% of adjusted net income. |
Mr. John J. Engel, WESCO's Chairman and Chief Executive Officer, stated, “Our first quarter results reflect solid execution in a challenging economic environment and, as expected, a continuation of the market trends experienced in the second half of last year. Although organic sales declined 3% in the quarter and were softer than expected, we continued to see the positive impact of our One WESCO sales, productivity and LEAN initiatives on our business. Overall sales and gross margins achieved record levels, and adjusted operating margins expanded 40 basis points to 5.6%, while backlog grew approximately 7% versus year end 2012. In addition, we were pleased with the performance and effective integration of our recent acquisitions, including EECOL where strong first quarter results support our full year EPS accretion expectations.”
Mr. Engel continued, “Free cash flow generation exceeded adjusted net income in the quarter and was directed to debt reduction, improving our financial leverage ahead of schedule, to just above the upper end of our targeted range on a proforma basis. Our acquisition pipeline continues to be actively managed, and we see excellent opportunities to further expand and strengthen our portfolio in 2013. We remain focused on investing in our people while driving execution of our eight growth engines and six operational excellence initiatives, and continue to expect stronger sales growth in the second half of this year”
Mr. Engel continued, “As consolidation and outsourcing accelerates in our industry, our addressable markets remain large and very fragmented. Demand is increasing for our One WESCO value proposition of providing our customers with supply chain integrity and a one-stop-shop for the solutions they need for their MRO, OEM and Capital Project requirements. As a result of the actions that we have taken over the last several years, our global business is stronger, more diverse, and well positioned for continued value creation.”
# # #
Webcast and Teleconference Access
WESCO will conduct a webcast and teleconference to discuss the first quarter earnings as described in this News Release on Thursday, April 18, 2013, at 11:00 a.m. E.D.T. The call will be broadcast live over the Internet and can be accessed from the Company's website at http://www.wesco.com. The 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. 2012 annual sales were approximately $6.6 billion. The Company employs approximately 9,000 people, maintains relationships with over 18,000 suppliers, and serves over 65,000 active customers worldwide. Customers include commercial and industrial businesses, contractors, government agencies, institutions, telecommunications providers and utilities. WESCO operates nine fully automated distribution centers and approximately 475 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, 2012, as well as the Company's other reports filed with the Securities and Exchange Commission.
Contact: Kenneth S. Parks, Vice President and 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 Ended | Three Months Ended | ||||||||||
March 31, 2013 | March 31, 2012 | ||||||||||
Net sales | $ | 1,808.1 | $ | 1,606.0 | |||||||
Cost of goods sold (excluding | 1,427.0 | 78.9 | % | 1,286.3 | 80.1 | % | |||||
depreciation and amortization below) | |||||||||||
Selling, general and administrative expenses | 227.5 | 12.6 | % | 228.1 | 14.2 | % | |||||
Depreciation and amortization | 16.7 | 8.1 | |||||||||
Income from operations | 136.9 | 7.6 | % | 83.5 | 5.2 | % | |||||
Interest expense, net | 21.9 | 9.0 | |||||||||
Income before income taxes | 115.0 | 6.4 | % | 74.5 | 4.6 | % | |||||
Provision for income taxes | 30.9 | 21.6 | |||||||||
Net income attributable to WESCO International, Inc. | $ | 84.1 | 4.7 | % | $ | 52.9 | 3.3 | % | |||
Earnings per diluted common share | $ | 1.60 | $ | 1.03 | |||||||
Weighted average common shares outstanding and common | |||||||||||
share equivalents used in computing earnings per diluted | |||||||||||
share (in millions) | 52.4 | 51.3 | |||||||||
WESCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(dollar amounts in millions)
(Unaudited)
March 31, 2013 | December 31, 2012 | ||||||
Assets | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 116.8 | $ | 86.1 | |||
Trade accounts receivable, net | 1,094.3 | 1,036.2 | |||||
Inventories, net | 792.4 | 794.0 | |||||
Other current assets | 173.2 | 185.5 | |||||
Total current assets | 2,176.7 | 2,101.8 | |||||
Other assets | 2,492.6 | 2,527.8 | |||||
Total assets | $ | 4,669.3 | $ | 4,629.6 | |||
Liabilities and Stockholders' Equity | |||||||
Current Liabilities | |||||||
Accounts payable | $ | 745.0 | $ | 706.6 | |||
Current debt and short-term borrowings | 40.1 | 39.8 | |||||
Other current liabilities | 253.7 | 261.6 | |||||
Total current liabilities | 1,038.8 | 1,008.0 | |||||
Long-term debt | 1,634.8 | 1,695.4 | |||||
Other noncurrent liabilities | 378.3 | 372.5 | |||||
Total liabilities | 3,051.9 | 3,075.9 | |||||
Stockholders' Equity | |||||||
Total stockholders' equity | 1,617.4 | 1,553.7 | |||||
Total liabilities and stockholders' equity | $ | 4,669.3 | $ | 4,629.6 | |||
WESCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(dollar amounts in millions)
(Unaudited)
Three Months Ended | Three Months Ended | ||||||
March 31, 2013 | March 31, 2012 | ||||||
Operating Activities: | |||||||
Net income | $ | 84.1 | $ | 52.9 | |||
Add back (deduct): | |||||||
Depreciation and amortization | 16.7 | 8.1 | |||||
Deferred income taxes | 20.1 | 7.2 | |||||
Change in Trade and other receivables, net | (74.3 | ) | (38.2 | ) | |||
Change in Inventories, net | (2.4 | ) | 2.0 | ||||
Change in Accounts Payable | 41.8 | 50.3 | |||||
Other | (5.6 | ) | (24.0 | ) | |||
Net cash provided by operating activities | 80.4 | 58.3 | |||||
Investing Activities: | |||||||
Capital expenditures | (6.0 | ) | (4.5 | ) | |||
Acquisition payments | — | (22.0 | ) | ||||
Other | 4.9 | — | |||||
Net cash used by investing activities | (1.1 | ) | (26.5 | ) | |||
Financing Activities: | |||||||
Debt proceeds (repayments) | (52.1 | ) | (32.3 | ) | |||
Equity activity, net | (0.7 | ) | (0.6 | ) | |||
Other | 3.8 | (2.1 | ) | ||||
Net cash used by financing activities | (49.0 | ) | (35.0 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | 0.4 | 2.9 | |||||
Net change in cash and cash equivalents | 30.7 | (0.3 | ) | ||||
Cash and cash equivalents at the beginning of the period | 86.1 | 63.9 | |||||
Cash and cash equivalents at the end of the period | $ | 116.8 | $ | 63.6 | |||
NON-GAAP FINANCIAL MEASURES
This earnings release includes certain non-GAAP financial measures. These financial measures include financial leverage, free cash flow, gross profit, organic sales growth, and adjusted earnings per share. 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
(Unaudited)
Twelve Months Ended | Twelve Months Ended | ||||||
Financial Leverage: | March 31, 2013 | December 31, 2012 | |||||
(dollar amounts in thousands) | |||||||
Income from operations | $ | 386,242 | $ | 332,871 | |||
Add: ArcelorMittal litigation charge | — | 36,134 | |||||
Depreciation and amortization | 46,199 | 37,561 | |||||
Adjusted EBITDA | $ | 432,441 | $ | 406,566 | |||
March 31, 2013 | December 31, 2012 | ||||||
Current debt | $ | 40,090 | $ | 39,759 | |||
Long-term debt | 1,634,813 | 1,695,413 | |||||
Debt discount related to convertible debentures (1) | 182,504 | 183,644 | |||||
Total debt including debt discount | $ | 1,857,407 | $ | 1,918,816 | |||
Financial leverage ratio | 4.3 | 4.7 | |||||
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 Adjusted EBITDA. Adjusted EBITDA is defined as the trailing twelve months earnings before interest, taxes, depreciation and amortization, excluding the ArcelorMittal litigation charge.
Three Months Ended | Three Months Ended | ||||||
Free Cash Flow: | March 31, 2013 | March 31, 2012 | |||||
(dollar amounts in millions) | |||||||
Cash flow provided by operations | $ | 80.4 | $ | 58.3 | |||
Less: Capital expenditures | (6.0 | ) | (4.5 | ) | |||
Free cash flow | $ | 74.4 | $ | 53.8 | |||
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
(Unaudited)
Three Months Ended | Three Months Ended | ||||||
Gross Profit: | March 31, 2013 | March 31, 2012 | |||||
(dollar amounts in millions) | |||||||
Net Sales | $ | 1,808.1 | $ | 1,606.0 | |||
Cost of goods sold (excluding depreciation and amortization) | 1,427.0 | 1,286.3 | |||||
Gross profit | $ | 381.1 | $ | 319.7 | |||
Gross margin | 21.1 | % | 19.9 | % | |||
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 Ended | Three Months Ended | ||||
Normalized Organic Sales Growth: | March 31, 2013 | March 31, 2012 | |||
Change in net sales | 12.6 | % | 12.2 | % | |
Impact from acquisitions | 16.0 | % | 2.6 | % | |
Impact from foreign exchange rates | — | % | (0.2 | )% | |
Impact from number of workdays | (1.6 | )% | 1.6 | % | |
Normalized organic sales growth | (1.8 | )% | 8.2 | % | |
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, foreign exchange rates and number of workdays from the overall percentage change in consolidated net sales.
Three Months Ended | Three Months Ended | ||||||
Adjusted Earnings per Share: | March 31, 2013 | March 31, 2012 | |||||
(amounts in millions, except EPS) | |||||||
Income before income taxes | $ | 115.0 | $ | 74.5 | |||
Less: Favorable IRS appeals settlement | — | (3.2 | ) | ||||
Less: Recognition of insurance coverage for ArcelorMittal litigation charge | (36.1 | ) | — | ||||
Adjusted income before income taxes | 78.9 | 71.3 | |||||
Provision for income taxes | 20.3 | 20.4 | |||||
Adjusted net income attributable to WESCO International, Inc. | $ | 58.6 | $ | 50.9 | |||
Adjusted earnings per diluted common share | $ | 1.12 | $ | 0.99 | |||
Weighted average common shares outstanding and common share equivalents used in computing earnings per diluted share | 52.4 | 51.3 | |||||
Note: Adjusted earnings per share is provided by the Company as an additional financial measure. Adjusted earnings per share is calculated by eliminating the impact of the reversal of ArcelorMittal litigation charge and the favorable IRS appeals settlement from Income before income taxes. The adjusted net income attributable to WESCO International, Inc. is divided by the weighted average common shares outstanding and common share equivalents.
Prepared for WESCO Investor Day 2011. The information contained herein is confidential in nature and considered proprietary to WESCO. We request that no oral or written disclosure of such information be made without the prior written approval by WESCO. The information contained herein is confidential in nature and considered proprietary to WESCO Distribution, Inc. It is intended for the exclusive use of the employees, contractors and agents of client companies. We request that no oral or written disclosure of such information be made without the prior written approval by WESCO Distribution, Inc. The information contained herein is confidential in nature and considered proprietary to WESCO Distribution, Inc. It is intended for the exclusive use of the employees, contractors and agents of client companies. We request that no oral or written disclosure of such information be made without the prior written approval by WESCO Distribution, Inc. Supplemental Financial Data WESCO First Quarter April 18, 2013
2 The information contained herein is confidential in nature and considered proprietary to WESCO Distribution, Inc. It is intended for the exclusive use of the employees, contractors and agents of client companies. We request that no oral or written disclosure of such information be made without the prior written approval by WESCO Distribution, Inc. Supplemental Financial 4/18/2013 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: adverse conditions in the global economy; increase in competition; debt levels, terms, financial market conditions or interest rate fluctuations; risks related to acquisitions, including the integration of EECOL; disruptions in operations or information technology systems; expansion of business activities; litigation, contingencies or claims; product, labor or other cost fluctuations; and other factors described in detail in the Form 10-K for WESCO International, Inc. for the year ended December 31, 2012 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. The following presentation may also include a discussion of certain non-GAAP financial measures. Information required by Regulation G with respect to such non-GAAP financial measures can be obtained via WESCO’s website, www.wesco.com.
3 The information contained herein is confidential in nature and considered proprietary to WESCO Distribution, Inc. It is intended for the exclusive use of the employees, contractors and agents of client companies. We request that no oral or written disclosure of such information be made without the prior written approval by WESCO Distribution, Inc. Supplemental Financial 4/18/2013 Adjusted Results Q1 2012 Q1 2013 Reported Results Non-recurring Favorable Item Adjusted Results Reported Results Non-recurring Favorable Item Adjusted Results Sales 1,606.0 - 1,606.0 1,808.1 - 1,808.1 Gross Profit 319.7 - 319.7 381.1 - 381.1 Gross margin 19.9% 19.9% 21.1% 21.1% SG&A 228.1 - 228.1 227.5 36.1 263.6 SG&A rate 14.2% 14.2% 12.6% 14.6% Operating profit 83.5 - 83.5 136.9 (36.1) 100.8 Operating margin 5.2% 5.2% 7.6% 5.6% Interest 9.0 3.2 12.2 21.9 - 21.9 Taxes 21.6 (1.2) 20.4 30.9 (10.6) 20.3 Effective tax rate 29.0% 28.6% 26.9% 25.7% Net income 52.9 (2.0) 50.9 84.1 (25.5) 58.6 Average Shares Outstanding 51.3 51.3 52.4 52.4 Fully diluted EPS 1.03 0.99 1.60 1.12 Financial results throughout the remainder of this presentation will reference the adjusted results above.
4 The information contained herein is confidential in nature and considered proprietary to WESCO Distribution, Inc. It is intended for the exclusive use of the employees, contractors and agents of client companies. We request that no oral or written disclosure of such information be made without the prior written approval by WESCO Distribution, Inc. Supplemental Financial 4/18/2013 Q1 2013 Highlights • Sales of $1.81 billion, up 12.6% YOY − Achieved record quarterly sales − 16 points from acquisitions; EECOL sales of $227 million, up approximately 7% YOY − (3.4) points organic, or approximately (1.8) points normalized for one less workday in 2013 • Gross margin 21.1%, up 120 bps YOY − Achieved record gross margin − Core gross margin expansion of 30 bps YOY • SG&A 14.6% of sales, up 40 bps YOY − Core SG&A expenses flat YOY and sequentially • Operating margin 5.6%, up 40 bps YOY • Net income of $58.6 million, up 15.1% YOY • EPS of $1.12, up 13.1% YOY − EECOL contributed approximately $0.22 of EPS accretion • Free cash flow of $74.4 million, 127% of net income • Financial leverage reduced to approximately 3.6x on a proforma basis
5 The information contained herein is confidential in nature and considered proprietary to WESCO Distribution, Inc. It is intended for the exclusive use of the employees, contractors and agents of client companies. We request that no oral or written disclosure of such information be made without the prior written approval by WESCO Distribution, Inc. Supplemental Financial 4/18/2013 Industrial End Market Core Sales Growth versus Prior Year • Q1 2013 − Down 5.4% versus prior year − Down 2.3% sequential • Sales declines driven by prior year industrial capital projects and delays in customer spending • Channel inventory levels appear to be tightening. • Strong bidding activity continues with notable customer trends including outsourcing and supplier consolidation. • Global Accounts and Integrated Supply opportunity pipeline increased to $2.4+ billion. A One WESCO multi-year award providing electrical MRO, data communications, and OEM electronics to a global telecommunications company. Industrial Communications and Security 11.8% 7.7% 0.8% 0.7% (5.4%) Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 45% Industrial • Global Accounts • Integrated Supply •OEM •General Industrial 12% Note: Excludes acquisitions during the first year of ownership. 2012 5.1%
6 The information contained herein is confidential in nature and considered proprietary to WESCO Distribution, Inc. It is intended for the exclusive use of the employees, contractors and agents of client companies. We request that no oral or written disclosure of such information be made without the prior written approval by WESCO Distribution, Inc. Supplemental Financial 4/18/2013 4.7% 3.8% 0.0% (4.8%) (5.8%) Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Construction End Market Core Sales Growth versus Prior Year Construction •Non-Residential •Residential 30% • Q1 2013 − Down 5.8% versus prior year − Down 5.2% sequential • Core backlog down approximately 3% versus last year, and up approximately 7% from year end 2012. • U. S. non-residential construction market remains weak, but residential recovery is positive leading indicator. • Canadian construction market continues to grow, but at slower rate. Awarded multi-million dollar electrical contract for oil sands extraction project in western Canada. Additionally, awarded all of the ongoing electrical MRO materials. Construction Note: Excludes acquisitions during the first year of ownership. 2012 0.9%
7 The information contained herein is confidential in nature and considered proprietary to WESCO Distribution, Inc. It is intended for the exclusive use of the employees, contractors and agents of client companies. We request that no oral or written disclosure of such information be made without the prior written approval by WESCO Distribution, Inc. Supplemental Financial 4/18/2013 Utility End Market Core Sales Growth versus Prior Year 13% Utility • Investor Owned •Public Power •Utility Contractors • Q1 2013 − Up 17.5% versus prior year − Up 6.4% sequential • Eighth consecutive quarter of year-over- year organic sales growth. • Implementation of 2012 customer wins providing strong YOY growth. • Scope expansion with IOU, public power and generation customers also providing sales growth. • Strong interest for WESCO Integrated Supply across all utility customer groups. WESCO’s success in 2011 and 2012 in expanding two existing utility customer programs and securing two new programs reflects an industry trend toward utility integrated supply applications. Utility 23.9% 11.7% 4.3% 6.9% 17.5% Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Note: Excludes acquisitions during the first year of ownership. 2012 10.9%
8 The information contained herein is confidential in nature and considered proprietary to WESCO Distribution, Inc. It is intended for the exclusive use of the employees, contractors and agents of client companies. We request that no oral or written disclosure of such information be made without the prior written approval by WESCO Distribution, Inc. Supplemental Financial 4/18/2013 CIG End Market • Q1 2013 − Down 8.5% versus prior year − Down 5.3% sequential • Bidding activity remains active in CIG verticals. • Federal contracts continue but awards have slowed due to budget constraints and uncertainty associated with sequestration. • Government opportunity pipeline remains healthy at over $500 million. Signed multi-year cooperative agreement with a group purchasing organization used by public agencies eliminating need for multiple bid solicitations. A One WESCO win that includes electrical, data communications, security and lighting product categories. Government Core Sales Growth versus Prior Year CIG •Commercial • Institutional •Government 12% 5.4% 14.3% 0.0% Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 (3.3%) (8.5%) Note: Excludes acquisitions during the first year of ownership. 2012 3.8%
9 The information contained herein is confidential in nature and considered proprietary to WESCO Distribution, Inc. It is intended for the exclusive use of the employees, contractors and agents of client companies. We request that no oral or written disclosure of such information be made without the prior written approval by WESCO Distribution, Inc. Supplemental Financial 4/18/2013 Q1 2013 Results versus Outlook Q1 Outlook Q1 Actual Sales Growth of 12% to 14% (1)% to 1% excluding EECOL (2)% to flat organic Growth of 12.6% (1.6)% excluding EECOL (3.4)% organic, (1.8)% normalized Gross Margin At or above 20.6% 21.1% Operating Margin At or above 5.5% 5.6% Effective Tax Rate Approximately 27% to 29% 25.7%
10 The information contained herein is confidential in nature and considered proprietary to WESCO Distribution, Inc. It is intended for the exclusive use of the employees, contractors and agents of client companies. We request that no oral or written disclosure of such information be made without the prior written approval by WESCO Distribution, Inc. Supplemental Financial 4/18/2013 0.99 1.12 (0.12) 0.25 Q1 2012 Core Acquisitions Q1 2013 EPS Roadmap ($) (3)% organic +30 bps GM Flat SG&A Share Count Growth EECOL ~0.22 Conney/Trydor ~0.03 +13%
11 The information contained herein is confidential in nature and considered proprietary to WESCO Distribution, Inc. It is intended for the exclusive use of the employees, contractors and agents of client companies. We request that no oral or written disclosure of such information be made without the prior written approval by WESCO Distribution, Inc. Supplemental Financial 4/18/2013 1.5 2 2.5 3 3.5 4 4.5 5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Cash Generation 53.8 74.4 Q1 2012 Q1 2013 Target Leverage 2.0x – 3.5x 2011 2012 (Total Par Debt to TTM EBITDA) Leverage 2013 Reported 4.7X Estimated Proforma < 4.0X 4.3X 3.6X Free Cash Flow ($ Millions) +38% 127% of net income 106% of net income
12 The information contained herein is confidential in nature and considered proprietary to WESCO Distribution, Inc. It is intended for the exclusive use of the employees, contractors and agents of client companies. We request that no oral or written disclosure of such information be made without the prior written approval by WESCO Distribution, Inc. Supplemental Financial 4/18/2013 Q2 2013 Outlook Outlook Sales Growth of 13% to 16% (1)% to 2% excluding EECOL Gross Margin At or above 20.9% Operating Margin At or above 6.0% Effective Tax Rate 26% to 28% Note: The outlook above includes only completed acquisitions.
13 The information contained herein is confidential in nature and considered proprietary to WESCO Distribution, Inc. It is intended for the exclusive use of the employees, contractors and agents of client companies. We request that no oral or written disclosure of such information be made without the prior written approval by WESCO Distribution, Inc. Supplemental Financial 4/18/2013 Appendix
14 The information contained herein is confidential in nature and considered proprietary to WESCO Distribution, Inc. It is intended for the exclusive use of the employees, contractors and agents of client companies. We request that no oral or written disclosure of such information be made without the prior written approval by WESCO Distribution, Inc. Supplemental Financial 4/18/2013 Q1 2013 Consolidated Sales 45% 30% 13% 12% Markets & Customers 40% 13% 17% 11% 10% 9% 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 Note: Markets & Customers and Products & Services percentages reported on consolidated basis. Mix change (vs. FY 2012 Proforma) Industrial +1 pt. Construction -2 pts. Utility +1 pt. CIG – Mix change (vs. FY 2012 Proforma) General Supplies +2 pts. Data & Broadband Communications – Wire, Cable & Conduit – Distribution Equipment -2 pts. Lighting & Controls – Controls & Motors –
15 The information contained herein is confidential in nature and considered proprietary to WESCO Distribution, Inc. It is intended for the exclusive use of the employees, contractors and agents of client companies. We request that no oral or written disclosure of such information be made without the prior written approval by WESCO Distribution, Inc. Supplemental Financial 4/18/2013 Sales Growth Components 2011 2012 2013 Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 Q4 Full Year Q1 Organic Sales Growth (%) 16.5 12.7 11.3 13.2 13.4 9.8 8.2 1.4 (1.3) 4.4 (3.4) Acquisitions (%) 7.0 7.4 6.9 6.2 6.8 2.6 2.2 4.0 4.3 3.3 16.0 FX (%) 1.1 1.0 1.1 0.0 0.8 (0.2) (0.7) (0.6) 0.5 (0.3) 0.0 Consolidated Sales Growth (%) 24.6 21.1 19.3 19.4 21.0 12.2 9.7 4.8 3.5 7.4 12.6 Workdays 63 64 64 63 254 64 64 63 63 254 63 Organic Growth Impact (%) - - - (1.6) (0.4) 1.6 - (1.6) - - (1.6) Day Adjusted Organic Growth (%) 16.5 12.7 11.3 14.8 13.8 8.2 8.2 3.0 (1.3) 4.4 (1.8) Estimated Price Impact (%) 3.5 3.0 3.5 2.0 3.0 1.5 1.0 0.5 1.0 1.0 1.0
16 The information contained herein is confidential in nature and considered proprietary to WESCO Distribution, Inc. It is intended for the exclusive use of the employees, contractors and agents of client companies. We request that no oral or written disclosure of such information be made without the prior written approval by WESCO Distribution, Inc. Supplemental Financial 4/18/2013 Outstanding at December 31, 2012 Outstanding at March 31, 2013 Debt Maturity Schedule AR Revolver (V) 445 447 2014 Inventory Revolver (V) 218 191 2016 Real Estate Mortgage (F) 26 - 2019 Term Loans (V) 850 840 2019 2029 Convertible Bonds (F) 345 345 2029 (No Put) Other (V) 35 34 N/A Total Par Debt 1,919 1,857 Capital Structure Key Financial Metrics Q1 2012 YE 2012 Q1 2013 Cash 64 86 117 Capital Expenditures 5 23 6 Free Cash Flow (1) 54 265 74 Liquidity (2) 572 299 374 ($ Millions) V = Variable Rate Debt 1 = Operating cash flow less capital expenditures F = Fixed Rate Debt 2 = Asset-backed credit facilities total availability plus invested cash
17 The information contained herein is confidential in nature and considered proprietary to WESCO Distribution, Inc. It is intended for the exclusive use of the employees, contractors and agents of client companies. We request that no oral or written disclosure of such information be made without the prior written approval by WESCO Distribution, Inc. Supplemental Financial 4/18/2013 Notes: 1. Q1 2013 compared to prior year excludes Trydor, Conney and EECOL results. 2. Q1 2013 sequential excludes EECOL results. 3. The prior period end market amounts noted above may contain reclassifications to conform to current period presentation. Reconciliation of Non-GAAP Financial Measures ($ Millions) Unaudited Sales Full Year 2012 vs. 2011 Q1 2013 vs. Q1 2012 Q1 2013 vs. Q4 2012 Q1 Q1 Q1 Q4 2012 2011 % Growth 2013 2012 % Growth 2013 2012 % Growth Industrial Core 2,736 2,604 5.1% 699 740 (5.4)% 710 727 (2.3)% Construction Core 2,088 2,071 0.9% 446 473 (5.8)% 447 471 (5.2)% Utility Core 759 685 10.9% 210 179 17.5% 220 207 6.4% CIG Core 817 787 3.8% 200 219 (8.5)% 209 221 (5.3)% Total Core Gross Sales 6,400 6,147 4.1% 1,555 1,611 (3.4)% 1,586 1,626 (2.4)% Total Gross Sales from Acquisitions 201 - - 259 - - 228 24 - Total Gross Sales 6,601 6,147 7.4% 1,814 1,611 12.6% 1,814 1,650 9.9% Gross Sales Reductions/Discounts (22) (21) - (6) (5) - (6) (6) - Total Net Sales 6,579 6,126 7.4% 1,808 1,606 12.6% 1,808 1,644 10.0%
18 The information contained herein is confidential in nature and considered proprietary to WESCO Distribution, Inc. It is intended for the exclusive use of the employees, contractors and agents of client companies. We request that no oral or written disclosure of such information be made without the prior written approval by WESCO Distribution, Inc. Supplemental Financial 4/18/2013 Convertible Debt Non-Cash Interest Expense ($ Millions) Maturity Par Value of Debt Debt Discount Debt per Balance Sheet 2029 344.9 (173.0) 171.9 ($ Millions) 2011 2012 Q1 2013 Convertible Debt 2.5 2.3 1.1 Amortization of Deferred Financing Fees 4.4 2.6 1.2 FIN 48 1.9 (3.4) - Total 8.8 1.5 2.3 Convertible Debt and Non-Cash Interest as of March 31, 2013
19 The information contained herein is confidential in nature and considered proprietary to WESCO Distribution, Inc. It is intended for the exclusive use of the employees, contractors and agents of client companies. We request that no oral or written disclosure of such information be made without the prior written approval by WESCO Distribution, Inc. Supplemental Financial 4/18/2013 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 $50.00 5.05 0.69 49.82 $60.00 6.20 0.86 51.15 $70.00 7.02 1.05 52.16 Q1 2013 Average $73.03 7.23 1.10 52.42 $80.00 7.64 1.21 52.93 $90.00 8.12 1.34 53.55 $100.00 8.50 1.46 54.04 2029 Convertible Debt Details Conversion Price $28.8656 Conversion Rate 34.6433 1 Underlying Shares 11,949,067 2 Footnotes: 2029 Convertible Debenture 1 1000/28.8656 2 $345 million/28.8656 3 (Underlying Shares x Avg. Quarterly. Stock Price) minus $345 million Avg. Quarterly Stock Price 4 Basic Share Count of 43.92 million shares
20 The information contained herein is confidential in nature and considered proprietary to WESCO Distribution, Inc. It is intended for the exclusive use of the employees, contractors and agents of client companies. We request that no oral or written disclosure of such information be made without the prior written approval by WESCO Distribution, Inc. Supplemental Financial 4/18/2013 Work Days Q1 Q2 Q3 Q4 FY 2012 64 64 63 63 254 2013 63 64 64 63 254
21 The information contained herein is confidential in nature and considered proprietary to WESCO Distribution, Inc. It is intended for the exclusive use of the employees, contractors and agents of client companies. We request that no oral or written disclosure of such information be made without the prior written approval by WESCO Distribution, Inc. Supplemental Financial 4/18/2013 Free Cash Flow Reconciliation Q1 2012 Q1 2013 Cash flow provided by operations 58.3 80.4 Less: Capital expenditures (4.5) (6.0) Free Cash Flow 53.8 74.4 Note: Free cash flow is provided by the Company as an additional liquidity measure. Capital expenditures are deducted from cash flow from operations to determine free cash flow. Free cash flow is available to provide a source of funds for the Company’s financing needs. ($ Millions)