Wesco International Reports Third Quarter 2024 Results
Wesco International (NYSE: WCC) reported Q3 2024 results with net sales of $5.5 billion, down 2.7% YOY primarily due to Wesco Integrated Supply divestiture. Organic sales declined 0.6% YOY but increased 0.1% sequentially. Operating profit was $336 million with a 6.1% margin, while gross margin improved to 22.1%, up 50 basis points YOY. The company generated strong operating cash flow of $302 million in Q3 and $825 million for the first nine months of 2024. Communications and Security Solutions segment showed momentum with double-digit growth in global data center business, though weakness in Utility and Broadband Solutions offset overall growth. Management reaffirmed full-year outlook.
Wesco International (NYSE: WCC) ha riportato i risultati del terzo trimestre 2024 con vendite nette di 5,5 miliardi di dollari, in calo del 2,7% rispetto all'anno precedente principalmente a causa della dismissione della divisione Wesco Integrated Supply. Le vendite organiche sono diminuite dello 0,6% anno su anno, ma sono aumentate dello 0,1% rispetto al trimestre precedente. L'utile operativo è stato di 336 milioni di dollari con un margine del 6,1%, mentre il margine lordo è migliorato al 22,1%, in aumento di 50 punti base rispetto all'anno precedente. L'azienda ha generato un forte flusso di cassa operativo di 302 milioni di dollari nel terzo trimestre e 825 milioni di dollari per i primi nove mesi del 2024. Il segmento Comunicazioni e Soluzioni per la Sicurezza ha mostrato slancio con una crescita a doppia cifra nel business dei data center globali, anche se la debolezza nelle Soluzioni per Utilità e Broadband ha compensato la crescita complessiva. La direzione ha confermato le previsioni di fine anno.
Wesco International (NYSE: WCC) reportó resultados del tercer trimestre de 2024 con ventas netas de 5.5 mil millones de dólares, una disminución del 2.7% interanual, principalmente debido a la desinversión de Wesco Integrated Supply. Las ventas orgánicas cayeron un 0.6% interanual, pero aumentaron un 0.1% secuencialmente. La utilidad operativa fue de 336 millones de dólares con un margen del 6.1%, mientras que el margen bruto mejoró al 22.1%, un aumento de 50 puntos básicos interanuales. La compañía generó un sólido flujo de caja operativo de 302 millones de dólares en el tercer trimestre y 825 millones de dólares en los primeros nueve meses de 2024. El segmento de Soluciones de Comunicaciones y Seguridad mostró impulso con un crecimiento de dos dígitos en el negocio de centros de datos globales, aunque la debilidad en Soluciones para Utilidades y Banda Ancha compensó el crecimiento total. La dirección reiteró su perspectiva para el año completo.
Wesco International (NYSE: WCC)는 2024년 3분기 결과를 보고했으며, 순매출은 55억 달러로 전년 대비 2.7% 감소했습니다. 이는 주로 Wesco Integrated Supply의 매각에 기인합니다. 유기적인 매출은 전년 대비 0.6% 감소했지만, 전 분기 대비 0.1% 증가했습니다. 운영 이익은 3억 3천6백만 달러로 6.1%의 마진을 기록했으며, 총 마진은 전년 대비 50bp 증가한 22.1%로 개선되었습니다. 이 회사는 3분기에 3억 2천만 달러의 강력한 운영 현금 흐름을 창출했고, 2024년 첫 9개월 동안 8억 2천5백만 달러를 기록했습니다. 통신 및 보안 솔루션 부문은 글로벌 데이터 센터 비즈니스에서 두 자릿수 성장을 보여주었으나, 유틸리티 및 브로드밴드 솔루션의 약세가 전체 성장에 영향을 미쳤습니다. 경영진은 연간 전망을 재확인했습니다.
Wesco International (NYSE: WCC) a publié les résultats du troisième trimestre 2024 avec un chiffre d'affaires net de 5,5 milliards de dollars, en baisse de 2,7 % par rapport à l'année précédente, principalement en raison de la désinvestissement de Wesco Integrated Supply. Les ventes organiques ont diminué de 0,6 % d'une année sur l'autre, mais ont augmenté de 0,1 % par rapport au trimestre précédent. Le bénéfice d'exploitation s'est élevé à 336 millions de dollars avec une marge de 6,1 %, tandis que la marge brute s'est améliorée à 22,1 %, en hausse de 50 points de base d'une année sur l'autre. L'entreprise a généré un solide flux de trésorerie d'exploitation de 302 millions de dollars au troisième trimestre et de 825 millions de dollars pour les neuf premiers mois de 2024. Le segment Solutions de Communication et de Sécurité a montré un élan avec une croissance à deux chiffres dans le secteur des centres de données mondiaux, bien que la faiblesse dans les Solutions pour les Services Publics et le Haut Débit ait compensé la croissance globale. La direction a réaffirmé ses prévisions pour l'année complète.
Wesco International (NYSE: WCC) hat die Ergebnisse des 3. Quartals 2024 veröffentlicht, mit Nettoumsätzen von 5,5 Milliarden US-Dollar, was einem Rückgang von 2,7 % im Vergleich zum Vorjahr entspricht, hauptsächlich bedingt durch die Veräußering der Wesco Integrated Supply. Der organische Umsatz sank um 0,6 % im Jahresvergleich, stieg jedoch im Vergleich zum vorherigen Quartal um 0,1 %. Der operative Gewinn betrug 336 Millionen US-Dollar bei einer Marge von 6,1 %, während die Bruttomarge auf 22,1 % verbessert wurde, ein Anstieg um 50 Basispunkte im Jahresvergleich. Das Unternehmen generierte im 3. Quartal einen starken operativen Cashflow von 302 Millionen US-Dollar und 825 Millionen US-Dollar in den ersten neun Monaten des Jahres 2024. Das Segment Kommunikations- und Sicherheitslösungen zeigte Auftrieb mit zweistelligem Wachstum im globalen Rechenzentrumsgeschäft, obwohl die Schwäche in den Versorgungs- und Breitbandlösungen das Gesamtwachstum ausglich. Das Management bekräftigte die Jahresprognose.
- Gross margin improved to 22.1%, up 50 basis points YOY
- Strong operating cash flow of $825 million for first nine months, up from $424 million in 2023
- Double-digit growth in global data center business
- Free cash flow of $280 million in Q3, representing 154% of adjusted net income
- Reduced net debt by $188 million in Q3
- Net sales decreased 2.7% YOY to $5.5 billion
- Organic sales declined 0.6% YOY
- Operating profit decreased 11.8% YOY to $335.6 million
- Adjusted earnings per diluted share decreased 20.3% YOY
- SG&A expenses increased to 15.1% of net sales from 14.1% YOY
Insights
The Q3 2024 results show mixed performance with some concerning trends. Net sales declined -2.7% YOY to
The bright spots include strong cash flow generation of
The data center business shows promise with double-digit growth, but weakness in Utility and Broadband Solutions remains a drag. With leverage stable at 2.9X EBITDA and continued focus on strategic acquisitions, the company maintains its full-year outlook despite mixed end markets.
The market positioning remains solid despite operational headwinds. Key strategic elements include:
- Strong data center growth momentum offsetting traditional segment weakness
- Robust free cash flow at
154% of adjusted net income - Active capital deployment through
$25 million in share repurchases
- Third quarter reported net sales down
2.7% YOY due primarily to the Wesco Integrated Supply divestiture- Organic sales down
0.6% YOY and up0.1% sequentially
- Organic sales down
- Third quarter operating profit of
; operating margin of$336 million 6.1% - Gross margin of
22.1% , up 50 basis points YOY and up 20 basis points sequentially - Adjusted EBITDA margin of
7.3% , down 80 basis points YOY and flat sequentially
- Gross margin of
- Operating cash flow of
in the third quarter and$302 million for the first nine months of 2024, up from$825 million in the first nine months of 2023$424 million - Reaffirming full-year outlook
"We had a strong close to our third quarter, with sales slightly up compared to the second quarter driven by accelerating momentum in our Communications and Security Solutions segment, including double-digit sales growth in our global data center business. The continued weakness in Utility and Broadband Solutions offset what would have been a return to organic growth in the quarter. Adjusted EBITDA margin was flat compared to the second quarter and better than the expectations reviewed during our Investor Day last month, primarily driven by a sequential increase in gross margin," said John Engel, Chairman, President and CEO.
Mr. Engel added, "I am pleased with our free cash flow generation of
Mr. Engel concluded, "Quoting, bid activity levels, and backlog remain healthy across our Wesco enterprise. We are reaffirming our 2024 full-year outlook for sales, profitability and free cash flow. While end markets remain mixed, in the fourth quarter we expect to continue to benefit from double-digit growth in the data center space as well as some large projects in our electrical and industrial end markets. As we look ahead, I like Wesco's leadership position and exposure to the long-term trends we have consistently described in detail. While the macro-economic environment will inevitably present challenges, I believe Wesco will continue to outperform our competitors under all market conditions. Our commitment to value creation from operational improvements, digital transformation and our capital allocation strategy, including focused M&A, is clear and resolute as outlined during our recent Investor Day. The Wesco team will continue to strive to execute on those plans to deliver outsized returns for our shareholders."
The following are results for the three months ended September 30, 2024 compared to the three months ended September 30, 2023:
- Net sales were
for the third quarter of 2024 compared to$5.5 billion for the third quarter of 2023, a decrease of$5.6 billion 2.7% . On an organic basis, which removes the impact of the Wesco Integrated Supply ("WIS") divestiture, differences in foreign exchange rates, and the impact from the number of workdays, sales for the third quarter of 2024 declined by0.6% . The decrease in organic sales reflects volume declines in the EES and UBS segments, partially offset by a volume increase in the CSS segment, and price inflation in the EES and UBS segments. Sequentially, net sales increased0.2% and organic sales grew by0.1% as fluctuations in foreign exchange rates positively impacted reported net sales by0.1% . - Cost of goods sold for the third quarter of 2024 was
compared to$4.3 billion for the third quarter of 2023, and gross profit was$4.4 billion for the third quarter of 2024 and 2023. As a percentage of net sales, gross profit was$1.2 billion 22.1% and21.6% for the third quarter of 2024 and 2023, respectively. The increase in gross profit as a percentage of net sales for the third quarter of 2024 primarily reflects the impact of the divestiture of the WIS business. Sequentially, gross profit as a percentage of net sales increased 20 basis points from21.9% in the second quarter of 2024. - Selling, general and administrative ("SG&A") expenses were
, or$831.1 million 15.1% of net sales, for the third quarter of 2024, compared to , or$796.4 million 14.1% of net sales, for the third quarter of 2023. SG&A expenses for the third quarter of 2024 include of digital transformation costs and$5.4 million of restructuring costs. SG&A expenses for the third quarter of 2023 include$0.5 million of digital transformation costs,$12.9 million of restructuring costs, and$5.6 million of merger-related and integration costs. Adjusted for these costs, SG&A expenses were$2.1 million , or$825.2 million 15.0% of net sales, for the third quarter of 2024 and , or$775.8 million 13.7% of net sales, for the third quarter of 2023. Adjusted SG&A expenses for the third quarter of 2024 reflect higher payroll and payroll-related expenses, costs to operate our facilities and transportation costs, partially offset by the impact of the divestiture of the WIS business. - Depreciation and amortization for the third quarter of 2024 was
compared to$46.0 million for the third quarter of 2023, an increase of$45.1 million .$0.9 million - Operating profit was
for the third quarter of 2024 compared to$335.6 million for the third quarter of 2023, a decrease of$380.5 million , or$44.9 million 11.8% . Operating profit as a percentage of net sales was6.1% for the current quarter compared to6.7% for the third quarter of the prior year. Adjusted for digital transformation costs and restructuring costs, operating profit was , or$341.5 million 6.2% of net sales, for the third quarter of 2024. Adjusted for digital transformation costs, restructuring costs, merger-related and integration costs, and accelerated trademark amortization expense, operating profit was , or$401.5 million 7.1% of net sales, for the third quarter of 2023. - Net interest expense for the third quarter of 2024 was
compared to$86.5 million for the third quarter of 2023. The decrease is primarily attributable to lower borrowings and a decrease in variable interest rates.$98.5 million - Other non-operating income for the third quarter of 2024 was
compared to expense of$24.9 million for the third quarter of 2023. During the third quarter, we finalized the divestiture of our WIS business, and recognized an additional gain from the sale of$3.7 million . We also recognized income of$19.3 million as a result of the finalization of the liabilities transferred related to the settlement of the Anixter Inc. Pension Plan. Adjusted for the gain on the divestiture of our WIS business as well as the reduction to pension settlement costs, other non-operating income was$2.2 million for the third quarter of 2024.$3.4 million - The effective tax rate for the third quarter of 2024 was
25.3% compared to15.9% for the third quarter of 2023. The higher effective tax rate for the third quarter of 2024 is due to lower discrete income tax benefits resulting from the exercise and vesting of stock-based awards as compared to the prior year. The corresponding quarter of the prior year also reflected discrete income tax benefits relating to the reversal of certain valuation allowances and return-to-provision adjustments. - Net income attributable to common stockholders was
for the third quarter of 2024 compared to$189.9 million for the third quarter of 2023. Adjusted for digital transformation costs, restructuring costs, the gain recognized on the divestiture of our WIS business, the reduction to pension settlement cost, and the related income tax effects, net income attributable to common stockholders was$219.0 million for the third quarter of 2024. Adjusted for digital transformation costs, restructuring costs, merger-related and integration costs, accelerated trademark amortization expense, and the related income tax effects, net income attributable to common stockholders was$178.1 million for the third quarter of 2023.$234.4 million - Earnings per diluted share for the third quarter of 2024 was
, based on 49.8 million diluted shares, compared to$3.81 for the third quarter of 2023, based on 52.2 million diluted shares. Adjusted for digital transformation costs, restructuring costs, the gain recognized on the divestiture of our WIS business, the reduction to pension settlement cost, and the related income tax effects, earnings per diluted share for the third quarter of 2024 was$4.20 . Adjusted for digital transformation costs, restructuring costs, merger-related and integration costs, accelerated trademark amortization expense, and the related income tax effects, earnings per diluted share for the third quarter of 2023 was$3.58 . Adjusted earnings per diluted share decreased$4.49 20.3% year-over-year. - Operating cash flow for the third quarter of 2024 was an inflow of
compared to$302.1 million for the third quarter of 2023. Free cash flow for the third quarter of 2024 was$361.7 million , or$279.5 million 144.9% of adjusted net income. The net cash inflow in the third quarter of 2024 was primarily driven by net income of , as well as an improvement in net working capital. Fluctuations in accounts payable resulted in a cash inflow of$204.7 million for the third quarter of 2024, primarily due to the timing of payments to suppliers as well as inventory purchases. A decrease in trade accounts receivable of$136.1 million primarily due to the timing of receipts from customers also contributed to the cash inflow. An increase in inventories resulted in a use of cash of$40.9 million .$103.9 million
The following are results for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023:
- Net sales were
for the first nine months of 2024 compared to$16.3 billion for the first nine months of 2023, a decrease of$16.9 billion 3.5% . On an organic basis, which removes the impact of the WIS divestiture, differences in foreign exchange rates, and the impact from the number of workdays, sales for the first nine months of 2024 declined by1.5% . The decrease in organic sales reflects volume declines in the EES and UBS segments, partially offset by a volume increase in the CSS segment, and price inflation in the EES and UBS segments. - Cost of goods sold for the first nine months of 2024 was
compared to$12.8 billion for the first nine months of 2023, and gross profit was$13.2 billion and$3.5 billion , respectively. As a percentage of net sales, gross profit was$3.7 billion 21.7% for the first nine months of 2024 and 2023. - SG&A expenses were
, or$2,488.9 million 15.3% of net sales, for the first nine months of 2024, compared to , or$2,445.8 million 14.5% of net sales, for the first nine months of 2023. SG&A expenses for the first nine months of 2024 include a loss on abandonment of assets,$17.8 million of digital transformation costs,$17.5 million of restructuring costs, and$9.5 million of excise taxes on excess pension plan assets. SG&A expenses for the first nine months of 2023 include$4.8 million of digital transformation costs,$28.5 million of merger-related and integration costs, and$16.9 million of restructuring costs. Adjusted for the loss on abandonment of assets, digital transformation costs, restructuring costs, and excise taxes on excess pension plan assets, SG&A expenses were$15.4 million , or$2,439.3 million 14.9% of net sales, for the first nine months of 2024. Adjusted for digital transformation costs, merger-related and integration costs, and restructuring costs, SG&A expenses were , or$2,385.0 million 14.1% of net sales for the first nine months of 2023. The increase in adjusted SG&A expenses for the first nine months of 2024 compared to the first nine months of 2023 reflects higher costs to operate our facilities, an increase in IT costs, and an increase in payroll and payroll-related costs. - Depreciation and amortization for the first nine months of 2024 was
compared to$137.6 million for the first nine months of 2023, an increase of$136.4 million .$1.2 million - Operating profit was
for the first nine months of 2024 compared to$922.1 million for the first nine months of 2023, a decrease of$1,090.7 million , or$168.6 million 15.5% . Operating profit as a percentage of net sales was5.7% for the first nine months of 2024 compared to6.4% for the first nine months of 2023. Adjusted for the loss on abandonment of assets, digital transformation costs, restructuring costs, and excise taxes on excess pension plan assets, operating profit was , or$971.7 million 6.0% of net sales, for the first nine months of 2024. Adjusted for digital transformation costs, merger-related and integration costs, restructuring costs, and accelerated trademark amortization expense, operating profit was , or$1,152.7 million 6.8% of net sales, for the first nine months of 2023. - Net interest expense for the first nine months of 2024 was
compared to$279.8 million for the first nine months of 2023. The decrease is primarily attributable to lower borrowings and a decrease in variable interest rates.$292.3 million - Other non-operating income for the first nine months of 2024 was
compared to expense of$99.3 million for the first nine months of 2023. In the first nine months of 2024, we completed the divestiture of our WIS business and recognized a gain from the sale of$14.6 million . Additionally, in the first nine months of 2024, we recognized a$122.2 million loss on termination of a business arrangement. Due to fluctuations in the$3.8 million U.S. dollar against certain foreign currencies, a net foreign currency exchange loss of was recognized for the first nine months of 2024 compared to a net loss of$18.2 million for the first nine months of 2023. Net costs of$14.6 million , comprising pension settlement cost, and net benefits of$3.2 million associated with the non-service cost components of net periodic pension (benefit) cost were recognized for the first nine months of 2024 and 2023, respectively. Adjusted for the gain on divestiture of our WIS business, the loss on termination of a business arrangement, and pension settlement cost described above, other non-operating expense was$0.9 million for the first nine months of 2024.$15.8 million - The effective tax rate for the first nine months of 2024 was
25.4% compared to20.4% for the first nine months of 2023. The effective tax rate for the first nine months of 2024 was higher than the comparable prior year period due to lower discrete income tax benefits resulting from the exercise and vesting of stock-based awards as compared to the prior year period. The prior year period also reflected discrete income tax benefits relating to the reversal of certain valuation allowances and return-to-provision adjustments. - Net income attributable to common stockholders was
for the first nine months of 2024 compared to$509.1 million for the first nine months of 2023. Adjusted for the loss on abandonment of assets, digital transformation costs, restructuring costs, excise taxes on excess pension plan assets, the gain recognized on the divestiture of the WIS business, the loss on termination of a business arrangement, pension settlement cost, and the related income tax effects, net income attributable to common stockholders was$580.5 million for the first nine months of 2024. Adjusted for digital transformation costs, merger-related and integration costs, restructuring costs, accelerated trademark amortization expense, and the related income tax effects, net income attributable to common stockholders for the first nine months of 2023 was$461.0 million .$625.7 million - Earnings per diluted share for the first nine months of 2024 was
, based on 50.8 million diluted shares, compared to$10.02 for the first nine months of 2023, based on 52.4 million diluted shares. Adjusted for the loss on abandonment of assets, digital transformation costs, restructuring costs, excise taxes on excess pension plan assets, the gain recognized on the divestiture of our WIS business, the loss on termination of a business arrangement, pension settlement cost, and the related income tax effects, earnings per diluted share for the first nine months of 2024 was$11.08 . Adjusted for digital transformation costs, merger-related and integration costs, restructuring costs, accelerated trademark amortization expense, and the related income tax effects, earnings per diluted share for the first nine months of 2023 was$9.07 . Adjusted earnings per diluted share decreased$11.94 24.0% year-over-year. - Operating cash flow for the first nine months of 2024 was an inflow of
compared to$824.6 million for the first nine months of 2023. Free cash flow for the first nine months of 2024 was$423.9 million , or$776.8 million 153.7% of adjusted net income. The net cash inflow in the first nine months of 2024 was primarily driven by net income of and non-cash adjustments to net income totaling$553.5 million . Operating cash flow was positively impacted by net changes in assets and liabilities of$66.3 million , which primarily comprised an increase in accounts payable of$204.8 million , primarily due to the timing of payments to suppliers, as well as inventory purchases, partially offset by an increase in trade accounts receivable of$478.0 million due to the timing of receipts from customers and an increase in inventories of$217.9 million .$85.0 million
Webcast and Teleconference Access
Wesco will conduct a webcast and teleconference to discuss the third quarter of 2024 earnings as described in this News Release on Thursday, October 31, 2024, 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 https://investors.wesco.com. The call will be archived on this internet site for seven days.
Wesco International (NYSE: WCC) builds, connects, powers and protects the world. Headquartered in
Forward-Looking Statements
All statements made herein that are not historical facts should be considered as "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. These statements include, but are not limited to, statements regarding business strategy, growth strategy, competitive strengths, productivity and profitability enhancement, competition, new product and service introductions, and liquidity and capital resources. Such statements can generally be identified by the use of words such as "anticipate," "plan," "believe," "estimate," "intend," "expect," "project," and similar words, phrases or expressions or future or conditional verbs such as "could," "may," "should," "will," and "would," although not all forward-looking statements contain such words. These forward-looking statements are based on current expectations and beliefs of Wesco's management, as well as assumptions made by, and information currently available to, Wesco's management, current market trends and market conditions and involve risks and uncertainties, many of which are outside of Wesco's and Wesco's management's control, and which may cause actual results to differ materially from those contained in forward-looking statements. Accordingly, you should not place undue reliance on such statements.
Important factors that could cause actual results or events to differ materially from those presented or implied in the forward-looking statements include, among others, the failure to achieve the anticipated benefits of, and other risks associated with, acquisitions, joint ventures, divestitures and other corporate transactions; the inability to successfully integrate acquired businesses; the impact of increased interest rates or borrowing costs; fluctuations in currency exchange rates; failure to adequately protect Wesco's intellectual property or successfully defend against infringement claims; the inability to successfully deploy new technologies, digital products and information systems or to otherwise adapt to emerging technologies in the marketplace, such as those incorporating artificial intelligence; failure to execute on our efforts and programs related to environmental, social and governance (ESG) matters; unanticipated expenditures or other adverse developments related to compliance with new or stricter government policies, laws or regulations, including those relating to data privacy, sustainability and environmental protection; the inability to successfully develop, manage or implement new technology initiatives or business strategies, including with respect to the expansion of e-commerce capabilities and other digital solutions and digitalization initiatives; disruption of information technology systems or operations; natural disasters (including as a result of climate change), health epidemics, pandemics and other outbreaks; supply chain disruptions; geopolitical issues, including the impact of the evolving conflicts in the
Contact Information | |
Investor Relations | Corporate Communications |
Will Ruthrauff Director, Investor Relations 484-885-5648 | Jennifer Sniderman Vice President, Corporate Communications 717-579-6603 |
WESCO INTERNATIONAL, INC. | |||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||
(in millions, except per share amounts) | |||||
(Unaudited) | |||||
Three Months Ended | |||||
September 30, | September 30, | ||||
Net sales | $ 5,489.4 | $ 5,644.4 | |||
Cost of goods sold (excluding depreciation and amortization) | 4,276.7 | 77.9 % | 4,422.4 | 78.4 % | |
Selling, general and administrative expenses | 831.1 | 15.1 % | 796.4 | 14.1 % | |
Depreciation and amortization | 46.0 | 45.1 | |||
Income from operations | 335.6 | 6.1 % | 380.5 | 6.7 % | |
Interest expense, net | 86.5 | 98.5 | |||
Other (income) expense, net | (24.9) | 3.7 | |||
Income before income taxes | 274.0 | 5.0 % | 278.3 | 4.9 % | |
Provision for income taxes | 69.3 | 44.3 | |||
Net income | 204.7 | 3.7 % | 234.0 | 4.1 % | |
Net income attributable to noncontrolling interests | 0.4 | 0.6 | |||
Net income attributable to WESCO International, Inc. | 204.3 | 3.7 % | 233.4 | 4.1 % | |
Preferred stock dividends | 14.4 | 14.4 | |||
Net income attributable to common stockholders | $ 189.9 | 3.5 % | $ 219.0 | 3.9 % | |
Earnings per diluted share attributable to common stockholders | $ 3.81 | $ 4.20 | |||
Weighted-average common shares outstanding and common | 49.8 | 52.2 |
WESCO INTERNATIONAL, INC. | |||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||
(in millions, except per share amounts) | |||||
(Unaudited) | |||||
Nine Months Ended | |||||
September 30, | September 30, | ||||
Net sales | $ 16,319.1 | $ 16,911.8 | |||
Cost of goods sold (excluding depreciation and amortization) | 12,770.5 | 78.3 % | 13,238.9 | 78.3 % | |
Selling, general and administrative expenses | 2,488.9 | 15.3 % | 2,445.8 | 14.5 % | |
Depreciation and amortization | 137.6 | 136.4 | |||
Income from operations | 922.1 | 5.7 % | 1,090.7 | 6.4 % | |
Interest expense, net | 279.8 | 292.3 | |||
Other (income) expense, net | (99.3) | 14.6 | |||
Income before income taxes | 741.6 | 4.5 % | 783.8 | 4.6 % | |
Provision for income taxes | 188.1 | 160.2 | |||
Net income | 553.5 | 3.4 % | 623.6 | 3.7 % | |
Net income attributable to noncontrolling interests | 1.3 | — | |||
Net income attributable to WESCO International, Inc. | 552.2 | 3.4 % | 623.6 | 3.7 % | |
Preferred stock dividends | 43.1 | 43.1 | |||
Net income attributable to common stockholders | $ 509.1 | 3.1 % | $ 580.5 | 3.4 % | |
Earnings per diluted share attributable to common stockholders | $ 10.02 | $ 11.08 | |||
Weighted-average common shares outstanding and common | 50.8 | 52.4 |
WESCO INTERNATIONAL, INC. | |||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||
(dollar amounts in millions) | |||
(Unaudited) | |||
As of | |||
September 30, | December 31, | ||
Assets | |||
Current Assets | |||
Cash and cash equivalents | $ 706.8 | $ 524.1 | |
Trade accounts receivable, net | 3,629.1 | 3,639.5 | |
Inventories | 3,630.1 | 3,572.1 | |
Other current assets | 717.5 | 655.9 | |
Total current assets | 8,683.5 | 8,391.6 | |
Goodwill and intangible assets | 5,028.9 | 5,119.9 | |
Other assets | 1,562.6 | 1,549.4 | |
Total assets | $ 15,275.0 | $ 15,060.9 | |
Liabilities and Stockholders' Equity | |||
Current Liabilities | |||
Accounts payable | $ 2,839.1 | $ 2,431.5 | |
Short-term debt and current portion of long-term debt, net | 14.9 | 8.6 | |
Other current liabilities | 1,074.5 | 948.3 | |
Total current liabilities | 3,928.5 | 3,388.4 | |
Long-term debt, net | 5,007.8 | 5,313.1 | |
Other noncurrent liabilities | 1,301.9 | 1,327.5 | |
Total liabilities | 10,238.2 | 10,029.0 | |
Stockholders' Equity | |||
Total stockholders' equity | 5,036.8 | 5,031.9 | |
Total liabilities and stockholders' equity | $ 15,275.0 | $ 15,060.9 |
WESCO INTERNATIONAL, INC. | |||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
(dollar amounts in millions) | |||
(Unaudited) | |||
Nine Months Ended | |||
September 30, | September 30, | ||
Operating Activities: | |||
Net income | $ 553.5 | $ 623.6 | |
Add back (deduct): | |||
Depreciation and amortization | 137.6 | 136.4 | |
Gain on divestiture | (122.2) | — | |
Loss on abandonment of assets | 17.8 | — | |
Change in trade receivables, net | (217.9) | (133.4) | |
Change in inventories | (85.0) | (62.7) | |
Change in accounts payable | 478.0 | (86.5) | |
Other, net | 62.8 | (53.5) | |
Net cash provided by operating activities | 824.6 | 423.9 | |
Investing Activities: | |||
Capital expenditures | (70.4) | (63.6) | |
Acquisition payments | (41.7) | — | |
Proceeds from divestiture, net of cash transferred | 354.9 | — | |
Other, net | 6.9 | 2.4 | |
Net cash provided by (used in) investing activities | 249.7 | (61.2) | |
Financing Activities: | |||
Debt repayments, net(1) | (318.2) | (41.0) | |
Payments for taxes related to net-share settlement of equity awards | (26.2) | (68.0) | |
Repurchases of common stock | (375.0) | (50.0) | |
Payment of common stock dividends | (61.4) | (57.6) | |
Payment of preferred stock dividends | (43.1) | (43.1) | |
Debt issuance costs | (26.6) | — | |
Other, net | (23.8) | 6.3 | |
Net cash used in financing activities | (874.3) | (253.4) | |
Effect of exchange rate changes on cash and cash equivalents | (17.3) | (5.2) | |
Net change in cash and cash equivalents | 182.7 | 104.1 | |
Cash and cash equivalents at the beginning of the period | 524.1 | 527.3 | |
Cash and cash equivalents at the end of the period | $ 706.8 | $ 631.4 |
(1) | The nine months ended September 30, 2024 includes the issuance of the Company's |
NON-GAAP FINANCIAL MEASURES
In addition to the results provided in accordance with
WESCO INTERNATIONAL, INC. | |||||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | |||||||||||||
(in millions, except per share amounts) | |||||||||||||
(Unaudited) | |||||||||||||
Organic Sales Growth by Segment - Three Months Ended: | |||||||||||||
Three Months Ended | Growth/(Decline) | ||||||||||||
September 30, | September 30, | Reported | Divestiture | Foreign | Workday | Organic | |||||||
EES | $ 2,151.2 | $ 2,190.7 | (1.8) % | — % | (0.5) % | 1.6 % | (2.9) % | ||||||
CSS | 1,955.1 | 1,778.0 | 10.0 % | — % | (0.1) % | 1.6 % | 8.5 % | ||||||
UBS | 1,383.1 | 1,675.7 | (17.5) % | (11.7) % | (0.2) % | 1.6 % | (7.2) % | ||||||
Total net sales | $ 5,489.4 | $ 5,644.4 | (2.7) % | (3.5) % | (0.2) % | 1.6 % | (0.6) % | ||||||
Organic Sales Growth by Segment - Nine Months Ended: | |||||||||||||
Nine Months Ended | Growth/(Decline) | ||||||||||||
September 30, | September 30, | Reported | Divestiture | Foreign | Workday | Organic | |||||||
EES | $ 6,423.1 | $ 6,526.1 | (1.6) % | — % | (0.3) % | 0.5 % | (1.8) % | ||||||
CSS | 5,491.1 | 5,360.9 | 2.4 % | — % | (0.1) % | 0.5 % | 2.0 % | ||||||
UBS | 4,404.9 | 5,024.8 | (12.3) % | (7.9) % | — % | 0.5 % | (4.9) % | ||||||
Total net sales | $ 16,319.1 | $ 16,911.8 | (3.5) % | (2.3) % | (0.2) % | 0.5 % | (1.5) % | ||||||
Organic Sales Growth by Segment - Sequential: | |||||||||||||
Three Months Ended | Growth/(Decline) | ||||||||||||
September 30, | June 30, | Reported | Divestiture | Foreign | Workday | Organic | |||||||
EES | $ 2,151.2 | $ 2,172.9 | (1.0) % | — % | 0.1 % | — % | (1.1) % | ||||||
CSS | 1,955.1 | 1,865.9 | 4.8 % | — % | 0.1 % | — % | 4.7 % | ||||||
UBS | 1,383.1 | 1,440.9 | (4.0) % | — % | — % | — % | (4.0) % | ||||||
Total net sales | $ 5,489.4 | $ 5,479.7 | 0.2 % | — % | 0.1 % | — % | 0.1 % |
Note: Organic sales growth is a non-GAAP financial measure of sales performance. Organic sales growth is calculated by deducting the percentage impact from acquisitions and divestitures for one year following the respective transaction, fluctuations in foreign exchange rates and number of workdays from the reported percentage change in consolidated net sales. Workday impact represents the change in the number of operating days period-over-period after adjusting for weekends and public holidays in |
Three Months Ended | Nine Months Ended | ||||||
Gross Profit: | September 30, | September 30, | September 30, | September 30, | |||
Net sales | $ 5,489.4 | $ 5,644.4 | $ 16,319.1 | $ 16,911.8 | |||
Cost of goods sold (excluding depreciation and amortization) | 4,276.7 | 4,422.4 | 12,770.5 | 13,238.9 | |||
Gross profit | $ 1,212.7 | $ 1,222.0 | $ 3,548.6 | $ 3,672.9 | |||
Gross margin | 22.1 % | 21.6 % | 21.7 % | 21.7 % |
WESCO INTERNATIONAL, INC. | ||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||
(in millions, except per share amounts) | ||
(Unaudited) | ||
Three Months Ended | ||
Gross Profit: | June 30, 2024 | |
Net sales | $ 5,479.7 | |
Cost of goods sold (excluding depreciation and amortization) | 4,281.7 | |
Gross profit | $ 1,198.0 | |
Gross margin | 21.9 % |
Note: Gross profit is a financial measure commonly used in the distribution industry. Gross profit is calculated by deducting cost of goods sold, excluding depreciation and amortization, from net sales. Gross margin is calculated by dividing gross profit by net sales. |
Three Months Ended | Nine Months Ended | ||||||
September 30, | September 30, | September 30, | September 30, | ||||
Adjusted SG&A Expenses: | |||||||
Selling, general and administrative expenses | $ 831.1 | $ 796.4 | $ 2,488.9 | $ 2,445.8 | |||
Loss on abandonment of assets(1) | — | — | (17.8) | — | |||
Digital transformation costs(2) | (5.4) | (12.9) | (17.5) | (28.5) | |||
Restructuring costs(3) | (0.5) | (5.6) | (9.5) | (15.4) | |||
Excise taxes on excess pension plan assets(4) | — | — | (4.8) | — | |||
Merger-related and integration costs(5) | — | (2.1) | — | (16.9) | |||
Adjusted selling, general and administrative expenses | $ 825.2 | $ 775.8 | $ 2,439.3 | $ 2,385.0 | |||
Percentage of net sales | 15.0 % | 13.7 % | 14.9 % | 14.1 % | |||
Adjusted Income from Operations: | |||||||
Income from operations | $ 335.6 | $ 380.5 | $ 922.1 | $ 1,090.7 | |||
Loss on abandonment of assets(1) | — | — | 17.8 | — | |||
Digital transformation costs(2) | 5.4 | 12.9 | 17.5 | 28.5 | |||
Restructuring costs(3) | 0.5 | 5.6 | 9.5 | 15.4 | |||
Excise taxes on excess pension plan assets(4) | — | — | 4.8 | — | |||
Merger-related and integration costs(5) | — | 2.1 | — | 16.9 | |||
Accelerated trademark amortization(6) | — | 0.4 | — | 1.2 | |||
Adjusted income from operations | $ 341.5 | $ 401.5 | $ 971.7 | $ 1,152.7 | |||
Adjusted income from operations margin % | 6.2 % | 7.1 % | 6.0 % | 6.8 % | |||
Adjusted Other (Income) Expense, net: | |||||||
Other (income) expense, net | $ (24.9) | $ 3.7 | $ (99.3) | $ 14.6 | |||
Gain on divestiture | 19.3 | — | 122.2 | — | |||
Loss on termination of business arrangement(7) | — | — | (3.8) | — | |||
Pension settlement cost(8) | 2.2 | — | (3.3) | — | |||
Adjusted other (income) expense, net | $ (3.4) | $ 3.7 | $ 15.8 | $ 14.6 | |||
Adjusted Provision for Income Taxes: | |||||||
Provision for income taxes | $ 69.3 | $ 44.3 | $ 188.1 | $ 160.2 | |||
Income tax effect of adjustments to income from | (3.8) | 5.6 | (17.4) | 16.8 | |||
Adjusted provision for income taxes | $ 65.5 | $ 49.9 | $ 170.7 | $ 177.0 |
WESCO INTERNATIONAL, INC. | |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | |
(in millions, except per share amounts) | |
(Unaudited) | |
(1) | Loss on abandonment of assets represents the write-off of certain capitalized cloud computing arrangement implementation costs relating to a third-party developed operations management software product in favor of an application with functionality that better suits the Company's operations. |
(2) | Digital transformation costs include costs associated with certain digital transformation initiatives. |
(3) | Restructuring costs include severance costs incurred pursuant to an ongoing restructuring plan. |
(4) | Excise taxes on excess pension plan assets represent the excise taxes applicable to the excess pension plan assets following the final settlement of the Company's |
(5) | Merger-related and integration costs include integration and professional fees associated with the integration of Wesco and Anixter, as well as advisory, legal, and separation costs associated with the merger between the two companies. |
(6) | Accelerated trademark amortization represents additional amortization expense resulting from changes in the estimated useful lives of certain legacy trademarks that have migrated to our master brand architecture. |
(7) | Loss on termination of business arrangement represents the loss recognized as a result of management's decision to terminate a business arrangement with a third party. |
(8) | Pension settlement cost represents expense related to the final settlement of the Company's |
(9) | The adjustments to income from operations and other (income) expense, net have been tax effected at rates of approximately |
Three Months Ended | Nine Months Ended | ||||||
Adjusted Earnings per Diluted Share: | September | September | September | September | |||
Adjusted income from operations | $ 341.5 | $ 401.5 | $ 971.7 | $ 1,152.7 | |||
Interest expense, net | 86.5 | 98.5 | 279.8 | 292.3 | |||
Adjusted other (income) expense, net | (3.4) | 3.7 | 15.8 | 14.6 | |||
Adjusted income before income taxes | 258.4 | 299.3 | 676.1 | 845.8 | |||
Adjusted provision for income taxes | 65.5 | 49.9 | 170.7 | 177.0 | |||
Adjusted net income | 192.9 | 249.4 | 505.4 | 668.8 | |||
Net income attributable to noncontrolling interests | 0.4 | 0.6 | 1.3 | — | |||
Adjusted net income attributable to WESCO International, Inc. | 192.5 | 248.8 | 504.1 | 668.8 | |||
Preferred stock dividends | 14.4 | 14.4 | 43.1 | 43.1 | |||
Adjusted net income attributable to common stockholders | $ 178.1 | $ 234.4 | $ 461.0 | $ 625.7 | |||
Diluted shares | 49.8 | 52.2 | 50.8 | 52.4 | |||
Adjusted earnings per diluted share | $ 3.58 | $ 4.49 | $ 9.07 | $ 11.94 |
Note: For the three and nine months ended September 30, 2024, SG&A expenses, income from operations, other non-operating (income) expense, the provision for income taxes and earnings per diluted share have been adjusted to exclude the loss on abandonment of assets, digital transformation costs, restructuring costs, excise taxes on excess pension plan assets related to the final settlement of the Anixter Inc. Pension Plan, the gain recognized on the divestiture of the WIS business, the loss on termination of business arrangement, pension settlement cost, and the related income tax effects. For the three and nine months ended September 30, 2023, SG&A expenses, income from operations, the provision for income taxes and earnings per diluted share have been adjusted to exclude digital transformation costs, merger-related and integration costs, restructuring costs, accelerated trademark amortization expense, and the related income tax effects. These non-GAAP financial measures provide a better understanding of our financial results on a comparable basis. |
WESCO INTERNATIONAL, INC. | ||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||||||||
(in millions, except per share amounts) | ||||||||||
(Unaudited) | ||||||||||
Three Months Ended September 30, 2024 | ||||||||||
EBITDA and Adjusted EBITDA by Segment: | EES | CSS | UBS | Corporate | Total | |||||
Net income attributable to common stockholders | $ 168.4 | $ 150.4 | $ 168.5 | $ (297.4) | $ 189.9 | |||||
Net (loss) income attributable to noncontrolling interests | (1.0) | 0.9 | — | 0.5 | 0.4 | |||||
Preferred stock dividends | — | — | — | 14.4 | 14.4 | |||||
Provision for income taxes(1) | — | — | — | 69.3 | 69.3 | |||||
Interest expense, net(1) | — | — | — | 86.5 | 86.5 | |||||
Depreciation and amortization | 12.2 | 17.6 | 6.9 | 9.3 | 46.0 | |||||
EBITDA | $ 179.6 | $ 168.9 | $ 175.4 | $ (117.4) | $ 406.5 | |||||
Other expense (income), net(2) | 5.6 | 4.7 | (19.7) | (15.5) | (24.9) | |||||
Stock-based compensation expense | 1.1 | 1.6 | 0.8 | 3.3 | 6.8 | |||||
Digital transformation costs(3) | — | — | — | 5.4 | 5.4 | |||||
Cloud computing arrangement amortization(4) | — | — | — | 3.8 | 3.8 | |||||
Restructuring costs(5) | — | — | — | 0.5 | 0.5 | |||||
Adjusted EBITDA | $ 186.3 | $ 175.2 | $ 156.5 | $ (119.9) | $ 398.1 | |||||
Adjusted EBITDA margin % | 8.7 % | 9.0 % | 11.3 % | 7.3 % | ||||||
(1) The reportable segments do not incur income taxes and interest expense as these costs are centrally controlled through the Corporate tax and treasury functions. | ||||||||||
(2) Other income for the UBS segment includes the gain on the divestiture of the WIS business. | ||||||||||
(3) Digital transformation costs include costs associated with certain digital transformation initiatives. | ||||||||||
(4) Cloud computing arrangement amortization consists of expense recognized in selling, general and administrative expenses for capitalized implementation costs | ||||||||||
(5) Restructuring costs include severance costs incurred pursuant to an ongoing restructuring plan. | ||||||||||
Three Months Ended September 30, 2023 | ||||||||||
EBITDA and Adjusted EBITDA by Segment: | EES | CSS | UBS | Corporate | Total | |||||
Net income attributable to common stockholders | $ 177.9 | $ 146.0 | $ 188.7 | $ (293.6) | $ 219.0 | |||||
Net income (loss) attributable to noncontrolling interests | — | 0.7 | — | (0.1) | 0.6 | |||||
Preferred stock dividends | — | — | — | 14.4 | 14.4 | |||||
Provision for income taxes(1) | — | — | — | 44.3 | 44.3 | |||||
Interest expense, net(1) | — | — | — | 98.5 | 98.5 | |||||
Depreciation and amortization | 10.9 | 18.0 | 6.3 | 9.9 | 45.1 | |||||
EBITDA | $ 188.8 | $ 164.7 | $ 195.0 | $ (126.6) | $ 421.9 | |||||
Other expense (income), net | 1.7 | 9.7 | 0.6 | (8.3) | 3.7 | |||||
Stock-based compensation expense | 1.0 | 1.1 | 0.8 | 7.9 | 10.8 | |||||
Digital transformation costs(2) | — | — | — | 12.9 | 12.9 | |||||
Restructuring costs(3) | — | — | — | 5.6 | 5.6 | |||||
Merger-related and integration costs(4) | — | — | — | 2.1 | 2.1 | |||||
Adjusted EBITDA | $ 191.5 | $ 175.5 | $ 196.4 | $ (106.4) | $ 457.0 | |||||
Adjusted EBITDA margin % | 8.7 % | 9.9 % | 11.7 % | 8.1 % | ||||||
(1) The reportable segments do not incur income taxes and interest expense as these costs are centrally controlled through the Corporate tax and treasury functions. | ||||||||||
(2) Digital transformation costs include costs associated with certain digital transformation initiatives. | ||||||||||
(3) Restructuring costs include severance costs incurred pursuant to an ongoing restructuring plan. | ||||||||||
(4) Merger-related and integration costs include integration and professional fees associated with the integration of Wesco and Anixter, as well as advisory, legal, |
WESCO INTERNATIONAL, INC. | ||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||||||||
(in millions, except per share amounts) | ||||||||||
(Unaudited) | ||||||||||
Three Months Ended June 30, 2024 | ||||||||||
EBITDA and Adjusted EBITDA by Segment: | EES | CSS | UBS | Corporate | Total | |||||
Net income attributable to common stockholders | $ 179.3 | $ 114.3 | $ 268.5 | $ (344.4) | $ 217.7 | |||||
Net income (loss) attributable to noncontrolling interests | 0.1 | 0.7 | — | (0.1) | 0.7 | |||||
Preferred stock dividends | — | — | — | 14.4 | 14.4 | |||||
Provision for income taxes(1) | — | — | — | 87.8 | 87.8 | |||||
Interest expense, net(1) | — | — | — | 98.8 | 98.8 | |||||
Depreciation and amortization | 11.4 | 18.2 | 7.4 | 9.1 | 46.1 | |||||
EBITDA | $ 190.8 | $ 133.2 | $ 275.9 | $ (134.4) | $ 465.5 | |||||
Other expense (income), net(2) | 3.0 | 16.0 | (103.2) | (11.7) | (95.9) | |||||
Stock-based compensation expense | 1.1 | 1.6 | 0.8 | (0.8) | 2.7 | |||||
Loss on abandonment of assets(3) | — | — | — | 17.8 | 17.8 | |||||
Digital transformation costs(4) | — | — | — | 6.1 | 6.1 | |||||
Cloud computing arrangement amortization(5) | — | — | — | 3.0 | 3.0 | |||||
Restructuring costs(6) | — | — | — | 0.9 | 0.9 | |||||
Adjusted EBITDA | $ 194.9 | $ 150.8 | $ 173.5 | $ (119.1) | $ 400.1 | |||||
Adjusted EBITDA margin % | 9.0 % | 8.1 % | 12.0 % | 7.3 % | ||||||
(1) The reportable segments do not incur income taxes and interest expense as these costs are centrally controlled through the Corporate tax and treasury functions. | ||||||||||
(2) Other income for the UBS segment includes the gain on the divestiture of the WIS business. | ||||||||||
(3) Loss on abandonment of assets represents the write-off of certain capitalized cloud computing arrangement implementation costs relating to a third-party | ||||||||||
(4) Digital transformation costs include costs associated with certain digital transformation initiatives. | ||||||||||
(5) Cloud computing arrangement amortization consists of expense recognized in selling, general and administrative expenses for capitalized implementation costs | ||||||||||
(6) Restructuring costs include severance costs incurred pursuant to an ongoing restructuring plan. |
Note: EBITDA, Adjusted EBITDA and Adjusted EBITDA margin % are non-GAAP financial measures that provide indicators of the Company's performance and its ability to meet debt service requirements. For the three months ended September 30, 2024, Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization before other non-operating expenses (income), non-cash stock-based compensation expense, digital transformation costs, cloud computing arrangement amortization, and restructuring costs. For the three months ended September 30, 2023, Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization before other non-operating expenses (income), non-cash stock-based compensation expense, digital transformation costs, restructuring costs, and merger-related and integration costs. For the three months ended June 30, 2024, Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization before other non-operating expenses (income), non-cash stock-based compensation expense, loss on abandonment of assets, digital transformation costs, cloud computing arrangement amortization, and restructuring costs. Adjusted EBITDA margin % is calculated by dividing Adjusted EBITDA by net sales. |
WESCO INTERNATIONAL, INC. | ||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||||||||
(in millions, except per share amounts) | ||||||||||
(Unaudited) | ||||||||||
Nine Months Ended September 30, 2024 | ||||||||||
EBITDA and Adjusted EBITDA by Segment: | EES | CSS | UBS | Corporate | Total | |||||
Net income attributable to common stockholders | $ 495.9 | $ 353.1 | $ 597.8 | $ (937.7) | $ 509.1 | |||||
Net (loss) income attributable to noncontrolling interests | (1.3) | 1.9 | — | 0.7 | 1.3 | |||||
Preferred stock dividends | — | — | — | 43.1 | 43.1 | |||||
Provision for income taxes(1) | — | — | — | 188.1 | 188.1 | |||||
Interest expense, net(1) | — | — | — | 279.8 | 279.8 | |||||
Depreciation and amortization | 34.8 | 53.9 | 21.3 | 27.6 | 137.6 | |||||
EBITDA | $ 529.4 | $ 408.9 | $ 619.1 | $ (398.4) | $ 1,159.0 | |||||
Other expense (income), net(2) | 14.3 | 39.4 | (122.1) | (30.9) | (99.3) | |||||
Stock-based compensation expense | 3.3 | 4.9 | 2.4 | 9.0 | 19.6 | |||||
Loss on abandonment of assets(3) | — | — | — | 17.8 | 17.8 | |||||
Digital transformation costs(4) | — | — | — | 17.5 | 17.5 | |||||
Cloud computing arrangement amortization(5) | — | — | — | 9.7 | 9.7 | |||||
Restructuring costs(6) | — | — | — | 9.5 | 9.5 | |||||
Excise taxes on excess pension plan assets(7) | — | — | — | 4.8 | 4.8 | |||||
Adjusted EBITDA | $ 547.0 | $ 453.2 | $ 499.4 | $ (361.0) | $ 1,138.6 | |||||
Adjusted EBITDA margin % | 8.5 % | 8.3 % | 11.3 % | 7.0 % | ||||||
(1) The reportable segments do not incur income taxes and interest expense as these costs are centrally controlled through the Corporate tax and treasury functions. | ||||||||||
(2) Other income for the UBS segment includes the gain on the divestiture of the WIS business. | ||||||||||
(3) Loss on abandonment of assets represents the write-off of certain capitalized cloud computing arrangement implementation costs relating to a third-party | ||||||||||
(4) Digital transformation costs include costs associated with certain digital transformation initiatives. | ||||||||||
(5) Cloud computing arrangement amortization consists of expense recognized in selling, general and administrative expenses for capitalized implementation costs | ||||||||||
(6) Restructuring costs include severance costs incurred pursuant to an ongoing restructuring plan. | ||||||||||
(7) Excise taxes on excess pension plan assets represent the excise taxes applicable to the excess pension plan assets following the final settlement of the Company's | ||||||||||
Nine Months Ended September 30, 2023 | ||||||||||
EBITDA and Adjusted EBITDA by Segment: | EES | CSS | UBS | Corporate | Total | |||||
Net income attributable to common stockholders | $ 516.2 | $ 413.6 | $ 552.1 | $ (901.4) | $ 580.5 | |||||
Net (loss) income attributable to noncontrolling interests | (0.8) | 1.0 | — | (0.2) | — | |||||
Preferred stock dividends | — | — | — | 43.1 | 43.1 | |||||
Provision for income taxes(1) | — | — | — | 160.2 | 160.2 | |||||
Interest expense, net(1) | — | — | — | 292.3 | 292.3 | |||||
Depreciation and amortization | 32.3 | 53.9 | 18.7 | 31.5 | 136.4 | |||||
EBITDA | $ 547.7 | $ 468.5 | $ 570.8 | $ (374.5) | $ 1,212.5 | |||||
Other expense (income), net | 12.0 | 38.2 | (0.5) | (35.1) | 14.6 | |||||
Stock-based compensation expense(2) | 3.8 | 3.8 | 2.4 | 22.1 | 32.1 | |||||
Digital transformation costs(3) | — | — | — | 28.5 | 28.5 | |||||
Merger-related and integration costs(4) | — | — | — | 16.9 | 16.9 | |||||
Restructuring costs(5) | — | — | — | 15.4 | 15.4 | |||||
Adjusted EBITDA | $ 563.5 | $ 510.5 | $ 572.7 | $ (326.7) | $ 1,320.0 | |||||
Adjusted EBITDA margin % | 8.6 % | 9.5 % | 11.4 % | 7.8 % | ||||||
(1) The reportable segments do not incur income taxes and interest expense as these costs are centrally controlled through the Corporate tax and treasury functions. | ||||||||||
(2) Stock-based compensation expense in the calculation of adjusted EBITDA for the nine months ended September 30, 2023 excludes | ||||||||||
(3) Digital transformation costs include costs associated with certain digital transformation initiatives. | ||||||||||
(4) Merger-related and integration costs include integration and professional fees associated with the integration of Wesco and Anixter, as well as advisory, legal, | ||||||||||
(5) Restructuring costs include severance costs incurred pursuant to an ongoing restructuring plan. |
WESCO INTERNATIONAL, INC. |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
(in millions, except per share amounts) |
(Unaudited) |
Note: Adjusted EBITDA and Adjusted EBITDA margin % are non-GAAP financial measures that provide indicators of the Company's performance and its ability to meet debt service requirements. For the nine months ended September 30, 2024, Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization before other non-operating expenses (income), non-cash stock-based compensation expense, loss on abandonment of assets, digital transformation costs, cloud computing arrangement amortization, restructuring costs, and excise taxes on excess pension plan assets related to the final settlement of the Anixter Inc. Pension Plan. For the nine months ended September 30, 2023, Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization before other non-operating expenses (income), non-cash stock-based compensation expense, digital transformation costs, merger-related and integration costs, and restructuring costs. Adjusted EBITDA margin % is calculated by dividing Adjusted EBITDA by net sales. |
WESCO INTERNATIONAL, INC. | |||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | |||
(in millions, except per share amounts) | |||
(Unaudited) | |||
Twelve Months Ended | |||
Financial Leverage: | September 30, | December 31, | |
Net income attributable to common stockholders | $ 636.8 | $ 708.1 | |
Net income attributable to noncontrolling interests | 1.9 | 0.6 | |
Preferred stock dividends | 57.4 | 57.4 | |
Provision for income taxes | 253.7 | 225.9 | |
Interest expense, net | 376.9 | 389.3 | |
Depreciation and amortization | 182.4 | 181.3 | |
EBITDA | $ 1,509.1 | $ 1,562.6 | |
Other (income) expense, net | (88.8) | 25.1 | |
Stock-based compensation expense | 33.0 | 45.5 | |
Merger-related and integration costs(1) | 2.4 | 19.3 | |
Restructuring costs(2) | 10.8 | 16.7 | |
Digital transformation costs(3) | 25.1 | 36.1 | |
Excise taxes on excess pension plan assets(4) | 4.8 | — | |
Loss on abandonment of assets(5) | 17.8 | — | |
Cloud computing arrangement amortization(6) | 9.7 | — | |
Adjusted EBITDA | $ 1,523.9 | $ 1,705.3 | |
As of | |||
September 30, | December 31, | ||
Short-term debt and current portion of long-term debt, net | $ 14.9 | $ 8.6 | |
Long-term debt, net | 5,007.8 | 5,313.1 | |
Debt discount and debt issuance costs(7) | 50.6 | 43.0 | |
Fair value adjustments to Anixter Senior Notes due 2023 and 2025(7) | (0.1) | (0.1) | |
Total debt | 5,073.2 | 5,364.6 | |
Less: Cash and cash equivalents | 706.8 | 524.1 | |
Total debt, net of cash | $ 4,366.4 | $ 4,840.5 | |
Financial leverage ratio | 2.9 | 2.8 |
(1) | Merger-related and integration costs include integration and professional fees associated with the integration of Wesco and Anixter, as well as advisory, legal, and separation costs associated with the merger between the two companies |
(2) | Restructuring costs include severance costs incurred pursuant to an ongoing restructuring plan. |
(3) | Digital transformation costs include costs associated with certain digital transformation initiatives, which have historically been included in merger-related and integration costs in prior years. |
(4) | Excise taxes on excess pension plan assets represent the excise taxes applicable to the excess pension plan assets following the final settlement of the Company's |
(5) | Loss on abandonment of assets represents the write-off of certain capitalized cloud computing arrangement implementation costs relating to a third-party developed operations management software product in favor of an application with functionality that better suits the Company's operations. |
(6) | Cloud computing arrangement amortization consists of expense recognized in selling, general and administrative expenses for capitalized implementation costs for cloud computing arrangements to support our digital transformation initiatives. |
(7) | Debt is presented in the condensed consolidated balance sheets net of debt discount and debt issuance costs, and includes adjustments to record the long-term debt assumed in the merger with Anixter at its acquisition date fair value. |
Note: Financial leverage ratio is a non-GAAP measure of the use of debt. Financial leverage ratio is calculated by dividing total debt, excluding debt discount, debt issuance costs and fair value adjustments, net of cash, by adjusted EBITDA. EBITDA is defined as the trailing twelve months earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as the trailing twelve months EBITDA before other non-operating expenses (income), non-cash stock-based compensation expense, merger-related and integration costs, restructuring costs, digital transformation costs, excise taxes on excess pension plan assets related to the final settlement of the Anixter Inc. Pension Plan, loss on abandonment of assets, and cloud computing arrangement amortization. |
WESCO INTERNATIONAL, INC. | |||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | |||||||
(in millions, except per share amounts) | |||||||
(Unaudited) | |||||||
Three Months Ended | Nine Months Ended | ||||||
Free Cash Flow: | September 30, | September 30, | September 30, | September 30, | |||
Cash flow provided by operations | $ 302.1 | $ 361.7 | $ 824.6 | $ 423.9 | |||
Less: Capital expenditures | (29.2) | (19.3) | (70.4) | (63.6) | |||
Add: Other adjustments | 6.6 | 14.7 | 22.6 | 24.1 | |||
Free cash flow | $ 279.5 | $ 357.1 | $ 776.8 | $ 384.4 | |||
Percentage of adjusted net income | 144.9 % | 143.2 % | 153.7 % | 57.5 % |
Note: Free cash flow is a non-GAAP financial measure of liquidity. Capital expenditures are deducted from operating cash flow to determine free cash flow. Free cash flow is available to fund investing and financing activities. For the three and nine months ended September 30, 2024, the Company paid for certain costs related to digital transformation and restructuring. For the three and nine months ended September 30, 2023, the Company paid for certain costs to integrate the acquired Anixter business and related to digital transformation as well as certain restructuring costs. Such expenditures have been added back to operating cash flow to determine free cash flow for such periods. Our calculation of free cash flow may not be comparable to similar measures used by other companies. |
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SOURCE Wesco International
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