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 Exchange Act of 1934
Date of Report (Date of earliest event reported): February 1, 2018
WESCO International, Inc.
(Exact name of registrant as specified in its charter)
Delaware (State or other jurisdiction of incorporation) | 001-14989 (Commission File Number) | 25-1723342 (IRS Employer Identification No.) | ||
225 West Station Square Drive Suite 700 Pittsburgh, Pennsylvania (Address of principal executive offices) | 15219 (Zip Code) | |||
(412) 454-2200
(Registrant's telephone number, including area code)
Not applicable.
(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))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). | ||||
Emerging growth company o | ||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o | ||||
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 February 1, 2018, WESCO International, Inc. (the “Company”) issued a press release announcing its financial results for the fourth quarter and full year of 2017. 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 and full year of 2017 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.
The following are furnished as exhibits to this report.
SIGNATURES
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.
WESCO International, Inc. | ||
(Registrant) | ||
February 1, 2018 | By: | /s/ David S. Schulz |
(Date) | David S. Schulz | |
Senior 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 2017 Results
Fourth quarter highlights:
• | Consolidated net sales of $2.0 billion |
• | Operating profit of $81.4 million |
• | Earnings per diluted share of $0.47; adjusted earnings per diluted share of $1.03, excluding $26.4 million of net tax expense for U. S. tax reform |
• | Operating cash flow of $68.0 million; free cash flow of $62.5 million, or 129% of adjusted net income |
Full year results:
• | Consolidated net sales of $7.7 billion |
• | Operating profit of $321.0 million |
• | Earnings per diluted share of $3.38; adjusted earnings per diluted share of $3.93, excluding $26.4 million of net tax expense for U. S. tax reform |
• | Operating cash flow of $149.1 million; free cash flow of $127.6 million, or 67% of adjusted net income |
PITTSBURGH, February 1, 2018 /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, announces its results for the fourth quarter and full year 2017.
Mr. John J. Engel, WESCO's Chairman, President and CEO, commented, "Our fourth quarter results reflect continued positive and broad-based momentum in our business. Sales grew 10% organically, our highest growth rate in six years, with all end markets and geographies contributing. Building on our return to growth in June, our sales momentum accelerated in July and remained consistently high throughout the second half of the year and into January. Backlog grew sequentially versus the typical seasonal decline, and expanded to an all-time record level within the quarter. Operating margin was consistent with our outlook, while free cash flow generation was below expectations due to increased working capital to support our accelerating sales growth."
The following are results for the three months ended December 31, 2017 compared to the three months ended December 31, 2016:
• | Net sales were $2.0 billion for the fourth quarter of 2017, compared to $1.79 billion for the fourth quarter of 2016, an increase of 11.3%. Organic sales for the fourth quarter of 2017 grew by 10.1% as foreign exchange rates had a 1.2% positive impact on net sales. Sequentially, net sales decreased 0.2% and organic sales increased 1.6%. |
• | Cost of goods sold for the fourth quarter of 2017 was $1.61 billion and gross profit was $383.1 million, compared to cost of goods sold and gross profit of $1.44 billion and $348.6 million for the fourth quarter of 2016, respectively. As a percentage of net sales, gross profit was 19.2% and 19.4% for the fourth quarter of 2017 and 2016, respectively. |
• | Selling, general and administrative expenses were $285.4 million, or 14.3% of net sales, for the fourth quarter of 2017, compared to $249.9 million, or 13.9% of net sales, for the fourth quarter of 2016. |
• | Operating profit was $81.4 million for the current quarter, compared to $82.1 million for the fourth quarter of 2016. Operating profit as a percentage of net sales was 4.1% for the fourth quarter of 2017, compared to 4.6% for the fourth quarter of 2016. |
• | Net interest expense for the fourth quarter of 2017 was $17.6 million, compared to $17.5 million for the fourth quarter of 2016. Non-cash interest expense for the fourth quarter of 2017 and 2016, which includes amortization of debt discounts and debt issuance costs, and interest related to uncertain tax positions, was $1.0 million and $1.7 million, respectively. |
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• | The effective tax rate for the current quarter was 65.2%, compared to 26.0% for the prior year fourth quarter. As adjusted, the effective tax rate for the fourth quarter of 2017 was 23.9%. The higher effective tax rate in the current quarter as compared to the effective tax rate for the prior year’s comparable quarter is due to $26.4 million of provisional discrete income tax expense related to the application of the Tax Cuts and Jobs Act of 2017 (TCJA). |
• | Net income attributable to WESCO International, Inc. was $22.5 million for the fourth quarter of 2017, compared to a net income of $47.4 million for the fourth quarter of 2016. Adjusted net income attributable to WESCO International, Inc. was $48.9 million for the fourth quarter of December 31, 2017. |
• | Earnings per diluted share was $0.47 for the fourth quarter of 2017, based on 47.5 million diluted shares, compared to earnings per diluted share of $0.96 for the fourth quarter of 2016, based on 49.2 million shares. Adjusted earnings per diluted share for the fourth quarter of 2017 was $1.03. |
• | Operating cash flow for the fourth quarter of 2017 was $68.0 million, compared to $83.0 million for the fourth quarter of 2016. The reduction in operating cash flow was primarily driven by changes in working capital to support sales growth. Free cash flow for the fourth quarter of 2017 was $62.5 million, or 129% of adjusted net income, compared to $78.2 million, or 164% of adjusted net income, for the fourth quarter of 2016. |
The following are results for the year ended December 31, 2017 compared to the year ended December 31, 2016:
• | Net sales were $7.68 billion for 2017, compared to $7.34 billion for 2016, an increase of 4.7%. Organic sales for 2017 grew by 4.5% as foreign exchange rates and acquisitions had a positive impact on net sales of 0.4% and 0.2%, respectively, and were partially offset by a 0.4% impact from the number of workdays. |
• | Cost of goods sold for 2017 was $6.19 billion and gross profit was $1.48 billion, compared to cost of goods sold and gross profit of $5.89 billion and $1.45 billion for 2016, respectively. As a percentage of net sales, gross profit was 19.3% and 19.7% for 2017 and 2016, respectively. |
• | Selling, general and administrative expenses were $1.1 billion, or 14.3% of net sales, for 2017, compared to $1.0 billion, or 14.3% of net sales, for 2016. |
• | Operating profit was $321.0 million for 2017, compared to $332.0 million for 2016. Operating profit as a percentage of net sales was 4.2% for 2017, compared to 4.5% for 2016. |
• | Net interest expense for 2017 was $68.5 million, compared to $76.6 million for 2016. Non-cash interest expense for 2017 and 2016, which includes amortization of debt discounts and debt issuance costs, and interest related to uncertain tax positions, was $4.1 million and $7.8 million, respectively. |
• | Loss on debt redemption of $123.9 million for 2016 was the result of a non-cash charge from the early redemption of the Company's 6.0% Convertible Senior Debentures due 2029 on September 15, 2016. |
• | The effective tax rate for 2017 was 35.4%, compared to 23.1% for 2016. As adjusted, the effective tax rate for 2017 was 24.9%. The higher effective tax rate in the current year as compared to the effective tax rate for the prior year is due to $26.4 million of provisional discrete income tax expense related to the application of the TCJA. |
• | Net income attributable to WESCO International, Inc. was $163.5 million for 2017, compared to $101.6 million for 2016. Adjusted net income attributable to WESCO International, Inc. was $189.9 million million and $184.3 million for 2017 and 2016, respectively. |
• | Earnings per diluted share for 2017 was $3.38, based on 48.4 million diluted shares, compared to $2.10 for 2016, based on 48.3 million diluted shares. Adjusted earnings per diluted share for 2017 and 2016 was $3.93 and $3.80, respectively. |
• | Operating cash flow for 2017 was $149.1 million, compared to $300.2 million for 2016. The reduction in operating cash flow was primarily driven by changes in working capital to support sales growth. Free cash flow for 2017 was $127.6 million, or 67% of adjusted net income, compared to $282.2 million, or 154% of adjusted net income, for 2016. Additionally, the Company repurchased $100 million of shares in 2017. |
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Mr. Engel continued, "We are pleased with our return to growth in 2017 and our positive business momentum to start this year. We expect favorable economic conditions and positive growth in our end markets to continue in 2018. Our plan includes above-market performance, execution of our profitable growth initiatives, investments in our people and processes, and maintaining our cost and cash management discipline. As a result, we reaffirm our 2018 expectation of sales growth in the range of 3% to 6%, EPS of $4.40 to $4.90 per diluted share ($4.05 to $4.55 excluding the impact of U.S. tax reform legislation), and free cash flow generation of at least 90% of net income, all as outlined in our investor outlook call in December."
Mr. Engel added, "Our customers and suppliers need strong and reliable supply chain partners for their businesses across all phases of the economic cycle. WESCO provides leading supply chain solutions, supported by our broad portfolio of products and value-added services. Our efforts are centered on providing outstanding customer service and delivering value to our customers' operations and supply chains. I am very proud of the extra effort demonstrated by all WESCO associates in serving our customers last year, particularly in support of the Hurricane Harvey, Irma and Maria recovery efforts, and I am confident in our team's ability to deliver our commitments in 2018."
Webcast and Teleconference Access
WESCO will conduct a webcast and teleconference to discuss the fourth quarter and full year earnings as described in this News Release on Thursday, February 1, 2018, at 10:00 a.m. E.T. The call will be broadcast live over the internet and can be accessed from the Investor Relations page of the Company's website at www.wesco.investorroom.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) products, construction materials, and advanced supply chain management and logistic services. 2017 annual sales were approximately $7.7 billion. The company employs approximately 9,000 people, maintains relationships with over 26,000 suppliers, and serves approximately 75,000 active customers worldwide. Customers include commercial and industrial businesses, contractors, government agencies, institutions, telecommunications providers, and utilities. WESCO operates ten fully automated distribution centers and approximately 500 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, 2016, as well as the Company's other reports filed with the Securities and Exchange Commission.
Contact: Mary Ann Bell, Vice President, Investor Relations
WESCO International, Inc. (412) 454-4220, Fax: (412) 222-7409
http://www.wesco.com
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WESCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollar amounts in millions, except per share amounts)
(Unaudited)
Three Months Ended | |||||||||||
December 31, 2017 | December 31, 2016 | ||||||||||
Net sales | $ | 1,996.6 | $ | 1,793.3 | |||||||
Cost of goods sold (excluding | 1,613.5 | 80.8 | % | 1,444.7 | 80.6 | % | |||||
depreciation and amortization) | |||||||||||
Selling, general and administrative expenses | 285.4 | 14.3 | % | 249.9 | 13.9 | % | |||||
Depreciation and amortization | 16.3 | 16.6 | |||||||||
Income from operations | 81.4 | 4.1 | % | 82.1 | 4.6 | % | |||||
Interest expense, net | 17.6 | 17.5 | |||||||||
Income before income taxes | 63.8 | 3.2 | % | 64.6 | 3.6 | % | |||||
Provision for income taxes | 41.6 | 16.8 | |||||||||
Net income | 22.2 | 1.1 | % | 47.8 | 2.7 | % | |||||
Net (loss) income attributable to noncontrolling interests | (0.3 | ) | 0.4 | ||||||||
Net income attributable to WESCO International, Inc. | $ | 22.5 | 1.1 | % | $ | 47.4 | 2.6 | % | |||
Diluted earnings per common share | $ | 0.47 | $ | 0.96 | |||||||
Weighted-average common shares outstanding and common | |||||||||||
share equivalents used in computing earnings | |||||||||||
per diluted share (in millions) | 47.5 | 49.2 | |||||||||
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WESCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollar amounts in millions, except per share amounts)
(Unaudited)
Twelve Months Ended | |||||||||||
December 31, 2017 | December 31, 2016 | ||||||||||
Net sales | $ | 7,679.0 | $ | 7,336.0 | |||||||
Cost of goods sold (excluding | 6,194.4 | 80.7 | % | 5,887.8 | 80.3 | % | |||||
depreciation and amortization) | |||||||||||
Selling, general and administrative expenses | 1,099.6 | 14.3 | % | 1,049.3 | 14.3 | % | |||||
Depreciation and amortization | 64.0 | 66.9 | |||||||||
Income from operations | 321.0 | 4.2 | % | 332.0 | 4.5 | % | |||||
Interest expense, net | 68.5 | 76.6 | |||||||||
Loss on debt redemption | — | 123.9 | |||||||||
Income before income taxes | 252.5 | 3.3 | % | 131.5 | 1.8 | % | |||||
Provision for income taxes | 89.3 | 30.4 | |||||||||
Net income | 163.2 | 2.1 | % | 101.1 | 1.4 | % | |||||
Net loss attributable to noncontrolling interests | (0.3 | ) | (0.5 | ) | |||||||
Net income attributable to WESCO International, Inc. | $ | 163.5 | 2.1 | % | $ | 101.6 | 1.4 | % | |||
Earnings per diluted common share | $ | 3.38 | $ | 2.10 | |||||||
Weighted-average common shares outstanding and common | |||||||||||
share equivalents used in computing earnings per diluted | |||||||||||
share (in millions) | 48.4 | 48.3 | |||||||||
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WESCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollar amounts in millions)
(Unaudited)
December 31, 2017 | December 31, 2016 | ||||||
Assets | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 118.0 | $ | 110.1 | |||
Trade accounts receivable, net | 1,170.1 | 1,034.4 | |||||
Inventories | 956.1 | 821.4 | |||||
Other current assets(1) | 164.7 | 137.1 | |||||
Total current assets | 2,408.9 | 2,103.0 | |||||
Other assets(1) | 2,326.6 | 2,328.8 | |||||
Total assets | $ | 4,735.5 | $ | 4,431.8 | |||
Liabilities and Stockholders' Equity | |||||||
Current Liabilities | |||||||
Accounts payable | $ | 799.5 | $ | 684.7 | |||
Short-term borrowings and current debt | 35.3 | 22.1 | |||||
Other current liabilities(1) | 206.2 | 167.0 | |||||
Total current liabilities | 1,041.0 | 873.8 | |||||
Long-term debt, net | 1,313.3 | 1,363.1 | |||||
Other noncurrent liabilities(1) | 265.1 | 231.3 | |||||
Total liabilities | 2,619.4 | 2,468.2 | |||||
Stockholders' Equity | |||||||
Total stockholders' equity(1) | 2,116.1 | 1,963.6 | |||||
Total liabilities and stockholders' equity | $ | 4,735.5 | $ | 4,431.8 | |||
(1) | In the third quarter of 2017, management determined that the Company's income taxes receivable and payable and other tax account balances were overstated as of December 31, 2016 by a cumulative net amount of $46.4 million, which related to multiple prior periods. The Company also identified a $10.2 million understatement related to deferred income taxes and goodwill. These misstatements are considered immaterial to the Company's previously issued annual and interim financial statements. The Condensed Consolidated Balance Sheet at December 31, 2016 has been revised, and there was an immaterial effect on the Condensed Consolidated Statements of Income (Loss) for the twelve months ended December 31, 2016 and no effect on the Condensed Consolidated Statements of Cash Flows for the respective periods presented herein. |
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WESCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollar amounts in millions)
(Unaudited)
Twelve Months Ended | |||||||
December 31, 2017 | December 31, 2016 | ||||||
Operating Activities: | |||||||
Net income | $ | 163.2 | $ | 101.1 | |||
Add back (deduct): | |||||||
Depreciation and amortization | 64.0 | 66.9 | |||||
Deferred income taxes | (50.4 | ) | (45.2 | ) | |||
Change in trade receivables, net | (113.0 | ) | 56.8 | ||||
Change in inventories | (119.0 | ) | (1.6 | ) | |||
Change in accounts payable | 102.9 | (40.6 | ) | ||||
Other(1) | 101.4 | 162.8 | |||||
Net cash provided by operating activities | 149.1 | 300.2 | |||||
Investing Activities: | |||||||
Capital expenditures | (21.5 | ) | (18.0 | ) | |||
Acquisition payments | — | (50.9 | ) | ||||
Other | 16.3 | (1.6 | ) | ||||
Net cash used in investing activities | (5.2 | ) | (70.5 | ) | |||
Financing Activities: | |||||||
Debt repayments, net | (41.7 | ) | (262.5 | ) | |||
Equity activity, net | (106.8 | ) | (2.9 | ) | |||
Other | 7.3 | (10.8 | ) | ||||
Net cash used in financing activities | (141.2 | ) | (276.2 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | 5.2 | (3.7 | ) | ||||
Net change in cash and cash equivalents | 7.9 | (50.2 | ) | ||||
Cash and cash equivalents at the beginning of the period | 110.1 | 160.3 | |||||
Cash and cash equivalents at the end of the period | $ | 118.0 | $ | 110.1 | |||
(1) | Other operating cash flow activities for the years ended December 31, 2017 and December 31, 2016 include the effect of accruing a $65.0 million tax liability related to the taxation of undistributed earnings of foreign subsidiaries under the TCJA and a $123.9 million loss on redemption of the Company's 6.0% Convertible Senior Debentures due 2029, respectively. |
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NON-GAAP FINANCIAL MEASURES
This earnings release includes certain non-GAAP financial measures. These financial measures include organic sales growth, gross profit, financial leverage, earnings before interest, taxes, depreciation and amortization, free cash flow, adjusted net income and adjusted earnings per diluted share. The Company believes that these non-GAAP measures are useful to investors as they provide a better understanding of sales performance, and the use of debt and liquidity on a comparable basis. Additionally, certain of the aforementioned non-GAAP measures either focus on or exclude transactions impacting comparability of results, 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.
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WESCO INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(dollar amounts in millions, except organic sales data)
(Unaudited)
Three Months Ended | Twelve Months Ended | ||||
Organic Sales Growth: | December 31, 2017 | December 31, 2017 | |||
Change in net sales | 11.3 | % | 4.7 | % | |
Impact from acquisitions | — | % | 0.2 | % | |
Impact from foreign exchange rates | 1.2 | % | 0.4 | % | |
Impact from number of workdays | — | % | (0.4 | )% | |
Organic sales growth | 10.1 | % | 4.5 | % | |
Three Months Ended | ||
Organic Sales Growth - Sequential: | December 31, 2017 | |
Change in net sales | (0.2 | )% |
Impact from acquisitions | — | % |
Impact from foreign exchange rates | (0.2 | )% |
Impact from number of workdays | (1.6 | )% |
Organic sales growth | 1.6 | % |
Note: Organic sales growth is a measure of sales performance. Organic sales growth is calculated by deducting the percentage impact from acquisitions in the first year of ownership, foreign exchange rates and number of workdays from the overall percentage change in consolidated net sales.
Three Months Ended | Twelve Months Ended | ||||||||||||||
Gross Profit: | December 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||
Net sales | $ | 1,996.6 | $ | 1,793.3 | $ | 7,679.0 | $ | 7,336.0 | |||||||
Cost of goods sold (excluding depreciation and amortization) | 1,613.5 | 1,444.7 | 6,194.4 | 5,887.8 | |||||||||||
Gross profit | $ | 383.1 | $ | 348.6 | $ | 1,484.6 | $ | 1,448.2 | |||||||
Gross margin | 19.2 | % | 19.4 | % | 19.3 | % | 19.7 | % | |||||||
Note: Gross profit is a financial measure commonly used within 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.
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WESCO INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(dollar amounts in millions)
(Unaudited)
Twelve Months Ended | |||||||
Financial Leverage: | December 31, 2017 | December 31, 2016 | |||||
Income from operations | $ | 321.0 | $ | 332.0 | |||
Depreciation and amortization | 64.0 | 66.9 | |||||
EBITDA | $ | 385.0 | $ | 398.9 | |||
December 31, 2017 | December 31, 2016 | ||||||
Short-term borrowings and current debt | $ | 35.3 | $ | 22.1 | |||
Long-term debt | 1,313.3 | 1,363.1 | |||||
Debt discount and debt issuance costs(1) | 14.2 | 17.3 | |||||
Total debt | $ | 1,362.8 | $ | 1,402.5 | |||
Financial leverage ratio | 3.5 | 3.5 | |||||
(1) | Long-term debt is presented in the condensed consolidated balance sheets net of debt discount and debt issuance costs. |
Note: Financial leverage measures the use of debt. Financial leverage ratio is calculated by dividing total debt, including debt discount and debt issuance costs, by EBITDA. EBITDA is defined as the trailing twelve months earnings before interest, taxes, depreciation and amortization.
Three Months Ended | Twelve Months Ended | ||||||||||||||
Free Cash Flow: | December 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||
Cash flow provided by operations | $ | 68.0 | $ | 83.0 | $ | 149.1 | $ | 300.2 | |||||||
Less: Capital expenditures | (5.5 | ) | (4.8 | ) | (21.5 | ) | (18.0 | ) | |||||||
Free cash flow | $ | 62.5 | $ | 78.2 | $ | 127.6 | $ | 282.2 | |||||||
Percentage of adjusted net income(1) | 129 | % | 164 | % | 67 | % | 154 | % | |||||||
(1) | See the following page for a reconciliation of adjusted net income. |
Note: Free cash flow is a measure of liquidity. Capital expenditures are deducted from operating cash flow to determine free cash flow. Free cash flow is available to fund other investing and financing activities.
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WESCO INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(dollar amounts in millions, except per share amounts)
(Unaudited)
Three Months Ended | Twelve Months Ended | ||||||||||||||
Adjusted Income Before Income Taxes: | December 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||
Income before income taxes | $ | 63.8 | $ | 64.6 | $ | 252.5 | $ | 131.5 | |||||||
Loss on debt redemption | — | — | — | 123.9 | |||||||||||
Adjusted income before income taxes | $ | 63.8 | $ | 64.6 | $ | 252.5 | $ | 255.4 | |||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||
Adjusted Tax Provision: | December 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||
Provision for income taxes | $ | 41.6 | $ | 16.8 | $ | 89.3 | $ | 30.4 | |||||||
Income tax expense for TCJA | (26.4 | ) | — | (26.4 | ) | — | |||||||||
Income tax benefit from loss on debt redemption(1) | — | — | — | 41.2 | |||||||||||
Adjusted provision for income taxes | $ | 15.2 | $ | 16.8 | $ | 62.9 | $ | 71.6 | |||||||
(1) Represents the third quarter of 2016 income tax benefit related to the loss on debt redemption.
Three Months Ended | Twelve Months Ended | ||||||||||||||
Adjusted Net Income Attributable to WESCO International, Inc.: | December 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||
Adjusted income before income taxes | $ | 63.8 | $ | 64.6 | $ | 252.5 | $ | 255.4 | |||||||
Adjusted provision for income taxes | 15.2 | 16.8 | 62.9 | 71.6 | |||||||||||
Adjusted net income | 48.6 | 47.8 | 189.6 | 183.8 | |||||||||||
Net (loss) income attributable to noncontrolling interests | (0.3 | ) | 0.4 | (0.3 | ) | (0.5 | ) | ||||||||
Adjusted net income attributable to WESCO International, Inc. | $ | 48.9 | $ | 47.4 | $ | 189.9 | $ | 184.3 | |||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||
Adjusted Earnings Per Diluted Share: | |||||||||||||||
December 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | ||||||||||||
Earnings per diluted common share | $ | 0.47 | $ | 0.96 | $ | 3.38 | $ | 2.10 | |||||||
Impact of TCJA(2) | 0.56 | — | 0.55 | — | |||||||||||
Loss on debt redemption(3) | — | — | — | 2.54 | |||||||||||
Tax effect of loss on debt redemption(3) | — | — | — | (0.84 | ) | ||||||||||
Adjusted earnings per diluted common share | $ | 1.03 | $ | 0.96 | $ | 3.93 | $ | 3.80 | |||||||
(2) The application of the TCJA resulted in a provisional discrete income tax expense of $26.4 million, which is comprised of $82.8 million of expense associated with the deemed repatriation of undistributed earnings of foreign subsidiaries partially offset by a $56.4 million benefit from the remeasurement of net deferred income tax liabilities.
(3) The loss on debt redemption and related income tax benefit are based on the third quarter of 2016 diluted shares of 48.7 million.
11
WESCO INTERNATIONAL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Note: Adjusted net income attributable to WESCO International, Inc. for the three and twelve month periods ended December 31, 2017, does not include provisional discrete income tax expense of $26.4 million associated with the application of the TCJA. For the year ended 2016, adjusted net income attributable to WESCO International, Inc. is defined as income (loss) before income taxes plus the 2016 third quarter loss on debt redemption, less the provision for income taxes excluding the 2016 third quarter benefit of such loss.
For the three and twelve month periods ended December 31, 2017, adjusted earnings per diluted share is computed by dividing adjusted net income by the weighted-average common shares outstanding and common share equivalents. For the year ended 2016, adjusted earnings per diluted share is computed by adding the loss per diluted share on the debt redemption and deducting the related income tax benefit per diluted share recognized in the third quarter of 2016 divided by the weighted-average common shares outstanding and common share equivalents.
The Company believes that these non-GAAP financial measures are useful to investors' overall understanding of the Company's current financial performance and provides a consistent measure for assessing the current and historical financial results.
12
Webcast Presentation – February 1, 2018
Q4 & Full Year 2017 Earnings
2 Q4 & FY 2017 Earnings Webcast 2/1/18
Safe Harbor Statement
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 economic
conditions; disruptions in operations or information technology systems; supply chain disruptions,
changes in supplier strategy or loss of key suppliers; product or other cost fluctuations; expansion of
business activities; personnel turnover or labor cost increases; tax law changes or challenges to tax
matters; increase in competition; risks related to acquisitions, including the integration of acquired
businesses; exchange rate fluctuations; legal or regulatory matters; litigation, disputes, contingencies or
claims; debt levels, terms, financial market conditions or interest rate fluctuations; goodwill or intangible
asset impairment; stock market, economic or political instability; and other factors described in detail in
the Form 10-K for WESCO International, Inc. for the year ended December 31, 2016 and any subsequent
filings with the Securities & Exchange Commission. The following presentation includes a discussion of
certain non-GAAP financial measures. Information required by Regulation G with respect to such non-
GAAP financial measures can be found in the appendix and obtained via WESCO’s website,
www.wesco.com.
3 Q4 & FY 2017 Earnings Webcast 2/1/18
Q4 2017 Highlights
…performance exceeded outlook
• Fourth quarter results exceeded our expectations
• Positive business momentum and growth across all end
markets and geographies
• Reported sales were up 11%, organic sales were up 10%
‒ Highest organic growth rate since 2011
‒ Organic sales were up 9% in the U.S.
‒ Organic sales were up 13% in Canada
‒ Organic sales were up 19% in International
• Sequentially, reported sales were flat and organic sales
were up 2%, better than normal seasonality
• Estimated pricing impact +2%
• January MTD sales up high single digits
• Q4 backlog grew 5% sequentially versus typical seasonal
decline, and expanded to an all-time record level in the
quarter
• Tax act provides potential stimulus for increased business
and capex spending in 2018
(6.7)
(3.1)
(6.2)
(3.6)
(1.7)
1.0
8.6
10.1
Organic Growth
(%)
Oct 9%
Nov 10%
Dec 11%
Note: Organic growth excludes the impact of acquisitions in the first year of
ownership, foreign exchange rates and number of workdays. See appendix for
non-GAAP reconciliations.
Q4Q1
2016
Q2 Q3 Q4 Q1
2017
Q2 Q3
4 Q4 & FY 2017 Earnings Webcast 2/1/18
Industrial End Market
• Q4 2017 Sales
− Organic sales were up 14% versus prior year
(up 12% in the U.S. and up 15% in Canada in local
currency)
− Up 4% sequentially
• Increasing business momentum with industrial
customers
• Sales growth was broad-based across the U.S. and
Canada
• Global Account and Integrated Supply opportunity
pipeline and bidding activity levels remain strong
• Customer trends include continued high expectations
for supply chain process improvements, cost
reductions, and supplier consolidation
Organic Sales Growth versus Prior Year
37%
Industrial
• Global Accounts
• Integrated Supply
• OEM
• General Industrial
Renewed a multi-year contract to supply electrical MRO materials and support capital
projects for the upstream, midstream and downstream operations of a large global oil and
gas company.
Note: See appendix for non-GAAP reconciliations.
(10.2%)
1.2%
6.0%
11.2%
13.9%
FY 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017
2017
8.0%
5 Q4 & FY 2017 Earnings Webcast 2/1/18
(2.2%)
(3.6%) (4.4%)
6.0% 8.9%
• Q4 2017 Sales
− Organic sales were up 9% versus prior year
(up 7% in the U.S. and up 13% in Canada in local
currency)
− Up 2% sequentially
• Increasing business momentum with
construction/contractor customers
• Sales growth was broad-based across the U.S. and
Canada
• Backlog is up 20% versus prior year and is up 5% from
Q3, versus a typical seasonal decline
• Expecting moderate growth and uptrend in non-
residential construction market to continue
• Non-Residential
• Contractors
Construction
33%
Organic Sales Growth versus Prior Year
Construction End Market
Awarded a contract to provide electrical equipment for the renovation and expansion of a
water treatment facility in Canada.
Note: See appendix for non-GAAP reconciliations.
FY 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017
2017
1.7%
6 Q4 & FY 2017 Earnings Webcast 2/1/18
Utility End Market
Organic Sales Growth versus Prior Year
16%
Utility
• Investor Owned
• Public Power
• Utility Contractors
• Q4 2017 Sales
− Organic sales were up 9% versus prior year (up 10%
in the U.S. and up 7% in Canada in local currency)
− Up 4% sequentially
− Excluding exited contract, organic sales up 18%
versus prior year (up 20% in the U.S.)
• Continued scope expansion and value creation with
investor-owned utility, public power, and generation
customers
• Continued interest in Integrated Supply solution
offerings
• Favorable economic conditions, continued improvement
in construction market, renewables growth, and
consolidation trend within Utility industry remain
positive catalysts for future spending
Awarded a contract to provide high voltage materials to a publicly owned utility for a
hydropower transmission line.
0.5%
(4.5%) (4.4%)
8.6% 9.1%
FY 2016 Q1 2017 Q2 2017 Q3 2017
Note: See appendix for non-GAAP reconciliations.
Q4 2017
2017
2.3%
7 Q4 & FY 2017 Earnings Webcast 2/1/18
CIG End Market
• Q4 2017 Sales
− Organic sales were up 5% versus prior year
(up 5% in the U.S. and up 11% in Canada in local
currency)
− Down 9% sequentially
• Technical expertise and supply chain solutions
driving positive momentum in datacenter,
broadband, and cloud technology projects
• Increasing momentum seen in LED lighting retrofits,
FTTX deployments, broadband build outs, and cyber
and physical security for critical infrastructure
protection
Organic Sales Growth versus Prior Year
CIG
• Commercial
• Institutional
• Government
14%
Awarded a contract for a turnkey lighting retrofit program for a government
installation.
Note: See appendix for non-GAAP reconciliations.
(1.7%) (2.0%)
7.4%
9.0%
4.8%
FY 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017
2017
4.8%
8 Q4 & FY 2017 Earnings Webcast 2/1/18
Q4 2017 Results
Outlook Actual YOY
Sales 5% to 8% $2.00B Up 11.3%
Gross Margin 19.2% Down 20 bps
SG&A $285M, 14.3% Up 14%, Up 40 bps
Operating Profit $81M Flat
Operating Margin 3.9% to 4.3% 4.1% Down 50 bps
Effective Tax Rate ~27% 23.9%, as adjusted Down 210 bps, as adjusted
8.9%
Growth
240 bps
680 bps
$2.00B
$1.79B
Q4 2017
Sales
InternationalCanadaU.S.Q4 2016
Sales
12.8%
Growth
19.3%
Growth
10.1%
Organic
Growth
11.3%
Growth
Note: See appendix for non-GAAP reconciliations.
Foreign
Exchange
120 bps
90 bps
9 Q4 & FY 2017 Earnings Webcast 2/1/18
Full Year 2017 Results
Outlook Actual YOY
Sales 3% to 4% $7.68B Up 4.7%
Gross Margin 19.3% Down 40 bps
SG&A $1.10B, 14.3% Up 5%, Flat in bps
Operating Profit $321M Down 3%
Operating Margin 4.1% to 4.3% 4.2% Down 30 bps
Effective Tax Rate ~26% 24.9%, as adjusted Down 310 bps, as adjusted
EPS $3.75 to $3.95 $3.93, as adjusted Up 3%, as adjusted
Note: See appendix for non-GAAP reconciliations.
2.9%
Growth
140 bps
220 bps
$7.68B
$7.34B
2017
Sales
InternationalCanadaU.S.2016
Sales
40 bps
7.8%
Growth
18.8%
Growth
4.5%
Organic
Growth
4.7%
Growth
Foreign
Exchange
40 bps
Workday
Impact
90 bps
Acquisitions
20 bps
10 Q4 & FY 2017 Earnings Webcast 2/1/18
Diluted EPS Walk
Q4 FY
2016 Adjusted (1) $0.96 $3.80
Core
operations
(Reflects favorable operating leverage, offset by the planned
restoration of variable compensation versus prior year) (0.01)) (0.11)
Foreign exchange 0.02 0.08
Tax 0.03 0.16
Share count 0.03 0.00
2017 Adjusted (1) $1.03 $3.93
(1) Earnings per share for Q4 2016 is as reported. See appendix for non-GAAP reconciliations of adjusted EPS for FY 2016, Q4 2017 and FY 2017.
11 Q4 & FY 2017 Earnings Webcast 2/1/18
1.5
2
2.5
3
3.5
4
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Free Cash Flow & Leverage
282.2
127.6
2016 FY 2017 FY
Free Cash Flow
($ Millions)
Note: See appendix for non-GAAP reconciliations.
67%
of adjusted
net income
154%
of adjusted
net income
~ $1B of free
cash flow over
last 4 years
Target
Leverage
2.0x – 3.5x
3.5X
Leverage
(Total Debt to TTM EBITDA)
2015 2016 2017
Lower free cash
flow driven by an
increase in working
capital due to sales
growth
12 Q4 & FY 2017 Earnings Webcast 2/1/18
2018 Outlook
Q1
FY
(Current)
FY
(Previous)
Sales 6% to 9% 3% to 6% 3% to 6%
Operating Margin 3.5% to 3.8% 4.2% to 4.6% 4.2% to 4.6%
Effective Tax Rate ~ 22% 21% to 23% ~ 28%
Diluted EPS $4.40 to $4.90 $4.05 to $4.55
Free Cash Flow >90% of net income >90% of net income
Notes: Excludes unannounced acquisitions.
Assumes a CAD/USD exchange rate of 0.80.
See appendix for non-GAAP reconciliations.
13 Q4 & FY 2017 Earnings Webcast 2/1/18
Appendix
NON-GAAP FINANCIAL MEASURES
This presentation includes certain non-GAAP financial measures. These financial measures include organic
sales growth, gross margin, financial leverage, earnings before interest, taxes, depreciation and amortization
(EBITDA), free cash flow, adjusted net income, adjusted earnings per diluted share and adjusted effective tax
rate. Management believes that these non-GAAP measures are useful to investors as they provide a better
understanding of sales performance, the use of debt and liquidity on a comparable basis. Additionally, certain
of the aforementioned non-GAAP measures either focus on or exclude transactions impacting comparability
of our results, allowing investors to more easily compare the Company’s financial results from period to
period. Management does not use these non-GAAP financial measures for any purpose other than the
reasons stated above.
14 Q4 & FY 2017 Earnings Webcast 2/1/18
WESCO Profile 2017
37%
33%
16%
14%
40%
15%
15%
12%
10%
8%
Note: Markets & Customers and Products & Services percentages reported on a TTM consolidated basis.
Products & ServicesMarkets & Customers
Utility
CIG
Industrial
Construction
Investor Owned | Public Power
Utility Contractors
Commercial | Institutional | Government
Global Accounts | Integrated Supply
OEM | General Industrial
Non-Residential | Contractors
Automation, Controls & Motors
Lighting & Sustainability
General Supplies
Communications & Security
Wire, Cable & Conduit
Electrical Distribution & Controls
15 Q4 & FY 2017 Earnings Webcast 2/1/18
Sales Growth
2015 2016 2017
Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY
Change in Net Sales 0.3 (4.4) (7.4) (6.7) (4.7) (2.2) (0.3) (3.6) (3.7) (2.4) (0.2) (0.1) 7.8 11.3 4.7
Acquisition Impact 1.2 1.6 2.0 3.0 2.0 3.9 3.7 2.9 1.8 3.1 0.9 0.2
Core (0.9) (6.0) (9.4) (9.7) (6.7) (6.1) (4.0) (6.5) (5.5) (5.5) (1.1) (0.1) 7.8 11.3 4.5
FX Impact (2.5) (3.0) (4.1) (3.7) (3.4) (2.6) (0.9) (0.3) (0.3) (1.0) 0.6 (1.1) 0.8 1.2 0.4
Workday Impact (1.6) 1.6 3.2 (1.6) 0.4 (1.6) (0.4)
Organic 3.2 (3.0) (5.3) (7.6) (3.3) (6.7) (3.1) (6.2) (3.6) (4.9) (1.7) 1.0 8.6 10.1 4.5
(%)
Note: Core sales growth excludes acquisitions during the first year of ownership.
16 Q4 & FY 2017 Earnings Webcast 2/1/18
Q4 2017 Organic Sales Growth by Geography
U.S. Canada International WESCO
Change in net sales (USD) 8.9 17.9 24.2 11.3
Impact from acquisitions - - - -
Impact from foreign exchange rates - 5.1 4.9 1.2
Impact from number of workdays - - - -
Organic sales growth 8.9 12.8 19.3 10.1
(%)
17 Q4 & FY 2017 Earnings Webcast 2/1/18
Note: The prior period end market amounts noted above may contain reclassifications to conform to current period presentation.
($ Millions)
Sales Growth-End Markets
Q4 2017 vs. Q4 2016 Q4 2017 vs. Q3 2017 FY 2017 vs FY 2016
Q4 Q4 Q4 Q3 FY FY
2017 2016
%
Growth 2017 2017
%
Growth 2017 2016
%
Growth
Industrial Core 744 647 15.0% 744 726 2.5% 2,865 2,655 7.9%
Construction Core 679 613 10.7% 679 678 0.1% 2,558 2,493 2.6%
Utility Core 322 293 9.7% 322 314 2.6% 1,187 1,163 2.1%
CIG Core 261 247 5.8% 261 292 (10.6)% 1,104 1,054 4.7%
Total Core Gross Sales 2,006 1,800 11.4% 2,006 2,009 (0.2)% 7,713 7,364 4.7%
Total Gross Sales from Acquisitions - - - - - - - - -
Total Gross Sales 2,006 1,800 11.4% 2,006 2,009 (0.2)% 7,713 7,364 4.7%
Gross Sales Reductions/Discounts (9) (7) - (9) (9) - (34) (28) -
Total Net Sales 1,997 1,793 11.3% 1,997 2,000 (0.2)% 7,679 7,336 4.7%
18 Q4 & FY 2017 Earnings Webcast 2/1/18
Q4 2017 Organic Sales by End Market
Industrial Construction Utility CIG WESCO
Core Sales Growth 15.0 10.7 9.7 5.8 11.3
FX Impact 1.1 1.8 0.6 1.0 1.2
Workday Impact - - - - -
Organic Growth 13.9 8.9 9.1 4.8 10.1
(%)
19 Q4 & FY 2017 Earnings Webcast 2/1/18
Gross Margin
($ Millions)
Three Months Ended Twelve Months Ended
December 31,
2017
December 31,
2016
December 31,
2017
December 31,
2016
Net sales $1,997 $1,793 $7,679 $7,336
Cost of goods sold (excluding depreciation and amortization) 1,613 1,445 6,194 5,888
Gross profit $383 $349 $1,485 $1,448
Gross margin 19.2% 19.4% 19.3% 19.7%
20 Q4 & FY 2017 Earnings Webcast 2/1/18
Adjusted Diluted EPS
($ millions, except for EPS) FY 2016 Q4 2017 FY 2017
Reported
Results Adjustments
Adjusted
Results
Reported
Results Adjustments
Adjusted
Results
Reported
Results Adjustments
Adjusted
Results
Income from operations $ 332.0 - $ 332.0 $ 81.4 - $ 81.4 $ 321.0 - $ 321.0
Interest, net 76.6 - 76.6 17.6 - 17.6 68.5 - 68.5
Loss on debt redemption (1) 123.9 (123.9) - - - - - - -
Income before income taxes 131.5 123.9 255.4 63.8 - 63.8 252.5 - 252.5
Income taxes (1) (2) 30.4 41.2 71.6 41.6 (26.4) 15.2 89.3 (26.4) 62.9
Effective tax rate 23.1% 28.0% 65.2% 23.8% 35.4% 24.9%
Net income 101.1 82.7 183.8 22.2 26.4 48.6 163.2 26.4 189.6
Less: Non-controlling interests (0.5) - (0.5) (0.3) - (0.3) (0.3) - (0.3)
Net income attributable to WESCO $ 101.6 82.7 $ 184.3 $ 22.5 26.4 $ 48.9 $ 163.5 26.4 $ 189.9
Adjusted Earnings per Diluted Share:
Earnings per diluted share (as reported) $2.10 $0.47 $3.38
Impact of Tax Cuts and Jobs Act of 2017 (TCJA) (2) - 0.56 0.55
Loss on debt redemption (3) 2.54 - -
Tax effect of loss on debt redemption (3) (0.84) - -
Adjusted diluted earnings per common share $3.80 $1.03 $3.93
1 Represents the third quarter of 2016 income tax benefit related to the loss on debt redemption.
2 The application of the TCJA resulted in a provisional discrete income tax expense of $26.4 million, which is comprised of $82.8 million of expense associated with the deemed repatriation of undistributed earnings of foreign subsidiaries partially offset by a $56.4 million benefit from
the remeasurement of net deferred income tax liabilities.
3 The loss on debt redemption and related income tax benefit are based on third quarter diluted shares of 48.7 million.
21 Q4 & FY 2017 Earnings Webcast 2/1/18
Outstanding at
December 31, 2016
Outstanding at
December 31, 2017
Debt
Maturity Schedule
AR Revolver (V) 380 380 2020
Inventory Revolver (V) 4 12 2020
2019 Term Loans (V) 145 85 2019
2021 Senior Notes (F) 500 500 2021
2024 Senior Notes (F) 350 350 2024
Other (V) 24 36 N/A
Total Debt 1,403 1,363
Capital Structure
Key Financial Metrics
YE 2016 YE 2017
Cash 110 118
Capital Expenditures 18 22
Free Cash Flow (1) 282 128
Liquidity (2) 705 794
($ Millions)
(V) Variable Rate Debt (1) Cash flow provided by operations less capital expenditures.
(F) Fixed Rate Debt (2) Total availability under asset-backed credit facilities plus cash in investment accounts.
22 Q4 & FY 2017 Earnings Webcast 2/1/18
Financial Leverage
Twelve Months Ended
December 31, 2017
Financial leverage ratio:
Income from operations $ 321
Depreciation and amortization 64
EBITDA $ 385
December 31, 2017
Short-term borrowings and current debt $ 35
Long-term debt 1,314
Debt discount and debt issuance costs (1) 14
Total debt $ 1,363
Less: cash and cash equivalents $ 118
Total debt, net of cash $ 1,245
Financial leverage ratio 3.5X
Financial leverage ratio, net of cash 3.2X
(1) Long-term debt is presented in the condensed consolidated balance sheet as of December 31, 2017 net of debt discount and debt issuance costs.
($ Millions)
Note: For financial leverage ratio in prior periods, see quarterly earnings webcasts as previously furnished to the Securities & Exchange Commission, which
can be obtained from the Investor Relations page of WESCO’s website at www.wesco.com.
23 Q4 & FY 2017 Earnings Webcast 2/1/18
2015 2016 2017
Amortization of Debt Discount(1) 6.1 3.0 0.3
Amortization of Debt Issuance Costs 6.1 3.6 3.7
Uncertain Tax Positions (8.7) 1.2 0.1
Total 3.5 7.8 4.1
Non-Cash Interest Expense
(1) Includes convertible debt and term loan; the convertible debt was redeemed in Q3 2016.
($ Millions)
24 Q4 & FY 2017 Earnings Webcast 2/1/18
Free Cash Flow Reconciliation
FY
2016
FY
2017
Cash flow provided by operations 300.2 149.1
Less: Capital expenditures (18.0) (21.5)
Free cash flow 282.2 127.6
Adjusted net income 183.8 189.6
Percentage of adjusted net income 154% 67%
Note: Free cash flow is provided by the Company as an additional liquidity measure. Capital expenditures are deducted from operating cash
flow to determine free cash flow. Free cash flow is available to fund other investing and financing activities.
($ Millions)
25 Q4 & FY 2017 Earnings Webcast 2/1/18
Work Days
Q1 Q2 Q3 Q4 FY
2016 64 64 64 62 254
2017 64 64 63 62 253
2018 64 64 63 62 253