PITTSBURGH--(BUSINESS WIRE)-- Wesco International (NYSE: WCC), a leading provider of business-to-business distribution, logistics services and supply chain solutions, announces its results for the third quarter of 2022.
“Our third quarter results provide demonstrable evidence of the substantial value creation capability of the new Wesco. We once again set new company records for margin, profitability and backlog, and further reduced our leverage ratio in the third quarter. The power of our increased scale, expanded portfolio, and industry-leading positions is clearly evident in our continued strong performance,” said John Engel, Chairman, President and CEO.
Mr. Engel continued, “Strong demand and operational improvements continue to underpin the record-setting performance of each of our strategic business units. Each strategic business unit again delivered strong organic sales and profit growth in the quarter driven by the breakthrough results of our enterprise-wide cross selling and margin improvement programs. Our increased profitability continues to fuel our investment in advanced digital capabilities that will transform our relationship with our customers and supplier partners. The recent acquisition of Rahi Systems underscores our strategy to maximize our exposure to attractive secular growth trends. Our profitable execution against these sustainable trends and our investment in Wesco’s digital transformation supports a virtuous cycle which should result in an even higher level of performance, operating efficiency and customer loyalty.”
Mr. Engel added, “As you recall, after delivering excellent results in each of the first and second quarters, we substantially increased our outlook for the year. Our outstanding results in the third quarter and the continued strong execution across our business support the full year outlook for 2022 previously provided. We are maintaining our organic growth targets but adjusting our reported sales to reflect the unprecedented strong dollar performance throughout 2022. We now expect reported sales to increase 15% to 17% versus our prior outlook of 16% to 18% with the change entirely driven by foreign exchange rates. We are maintaining our record-setting profit forecast and now expect adjusted EBITDA margin to expand to 7.9% to 8.0% of sales, equating to approximately $1.68 billion of adjusted EBITDA at the midpoint of our outlook range. And we are narrowing our outlook for adjusted EPS to a range of $15.80 to $16.20. Given our strong growth, record backlog and investment in inventory to support that backlog, we now expect full year 2022 free cash flow to be approximately 10% of adjusted net income.”
Mr. Engel concluded, “The demonstrated strength of our business model and the success of our integration efforts over the last nine quarters have established a track record of superior results for our company. By providing resilient and critical supply chain solutions for our customers around the world, the new Wesco is demonstrating the benefit of our exposure to sustainable secular trends that are deep and will drive our future sales and profitability. As we conveyed during our recent Investor Day, we are excited because there is still substantial value embedded in the transformational combination of Wesco and Anixter. We look forward with great confidence to a future of sustained growth and market outperformance.”
The following are results for the three months ended September 30, 2022 compared to the three months ended September 30, 2021:
The following are results for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021:
Segment Results
The Company has operating segments comprising three strategic business units consisting of Electrical & Electronic Solutions ("EES"), Communications & Security Solutions ("CSS") and Utility & Broadband Solutions ("UBS").
The Company incurs corporate costs primarily related to treasury, tax, information technology, legal and other centralized functions. Segment results include depreciation expense or other allocations related to various corporate assets. Interest expense and other non-operating items are either not allocated to the segments or reviewed on a segment basis. Corporate expenses not directly identifiable with our reportable segments are reported in the tables below to reconcile the reportable segments to the consolidated financial statements.
The following are results by segment for the three months ended September 30, 2022 compared to the three months ended September 30, 2021:
The following are results by segment for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.
Webcast and Teleconference Access
Wesco will conduct a webcast and teleconference to discuss the third quarter of 2022 earnings as described in this News Release on Thursday, November 3, 2022, 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 Pittsburgh, Pennsylvania, Wesco is a FORTUNE 500® company with more than $18 billion in annual sales and a leading provider of business-to-business distribution, logistics services and supply chain solutions. Wesco offers a best-in-class product and services portfolio of Electrical and Electronic Solutions, Communications and Security Solutions, and Utility and Broadband Solutions. The Company employs more than 18,000 people, partners with the industry’s premier suppliers, and serves thousands of customers around the world, including more than 90% of FORTUNE 100® companies. With nearly 1,500,000 products, end-to-end supply chain services, and leading digital capabilities, Wesco provides innovative solutions to meet customer needs across commercial and industrial businesses, contractors, government agencies, institutions, telecommunications providers, and utilities. Wesco operates approximately 800 branches, warehouses and sales offices in more than 50 countries, providing a local presence for customers and a global network to serve multi-location businesses and multi-national corporations.
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 the expected benefits and costs of the transaction between Wesco and Anixter International Inc., including anticipated future financial and operating results, synergies, accretion and growth rates, and the combined company's plans, objectives, expectations and intentions, statements that address the combined company's expected future business and financial performance, and other statements identified by words such as "anticipate," "plan," "believe," "estimate," "intend," "expect," "project," "will" and similar words, phrases or expressions. 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.
Those risks, uncertainties and assumptions include the risk of any unexpected costs or expenses resulting from the transaction, the risk that the transaction could have an adverse effect on the ability of the combined company to retain customers and retain and hire key personnel and maintain relationships with its suppliers, customers and other business relationships and on its operating results and business generally, or the risk that problems may arise in successfully integrating the businesses of the companies, which may result in the combined company not operating as effectively and efficiently as expected, the risk that the combined company may be unable to achieve synergies or other anticipated benefits of the transaction or it may take longer than expected to achieve those synergies or benefits, the risk that the leverage of the company may be higher than anticipated, the impact of natural disasters (including as a result of climate change), health epidemics, pandemics and other outbreaks, such as the ongoing COVID-19 pandemic, supply chain disruptions, and the impact of Russia's invasion of Ukraine, including the impact of sanctions or other actions taken by the U.S. or other countries, the increased risk of cyber incidents and exacerbation of key materials shortages, inflationary cost pressures, material cost increases, demand volatility, and logistics and capacity constraints, which may have a material adverse effect on the combined company's business, results of operations and financial condition, and other important factors that could cause actual results to differ materially from those projected. All such factors are difficult to predict and are beyond the combined company's control. Additional factors that could cause results to differ materially from those described above can be found in Wesco's Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and Wesco's other reports filed with the U.S. Securities and Exchange Commission.
WESCO INTERNATIONAL, INC. | |||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||
(dollar amounts in thousands, except per share amounts) | |||||||||||
(Unaudited) | |||||||||||
| Three Months Ended |
| |||||||||
| September 30, 2022 |
|
| September 30, 2021 |
| ||||||
Net sales | $ | 5,445,916 |
|
|
| $ | 4,728,325 |
|
| ||
Cost of goods sold (excluding depreciation and amortization) |
| 4,241,401 |
| 77.9 | % |
|
| 3,720,332 |
| 78.7 | % |
Selling, general and administrative expenses |
| 760,200 |
| 14.0 | % |
|
| 721,795 |
| 15.3 | % |
Depreciation and amortization |
| 42,723 |
|
|
|
| 56,732 |
|
| ||
Income from operations |
| 401,592 |
| 7.4 | % |
|
| 229,466 |
| 4.9 | % |
Interest expense, net |
| 75,057 |
|
|
|
| 69,720 |
|
| ||
Other expense (income), net |
| 688 |
|
|
|
| (5,320 | ) |
| ||
Income before income taxes |
| 325,847 |
| 6.0 | % |
|
| 165,066 |
| 3.5 | % |
Provision for income taxes |
| 85,637 |
|
|
|
| 44,870 |
|
| ||
Net income |
| 240,210 |
| 4.4 | % |
|
| 120,196 |
| 2.5 | % |
Net income attributable to noncontrolling interests |
| 608 |
|
|
|
| 600 |
|
| ||
Net income attributable to WESCO International, Inc. |
| 239,602 |
| 4.4 | % |
|
| 119,596 |
| 2.5 | % |
Preferred stock dividends |
| 14,352 |
|
|
|
| 14,352 |
|
| ||
Net income attributable to common stockholders | $ | 225,250 |
| 4.1 | % |
| $ | 105,244 |
| 2.2 | % |
|
|
|
|
|
| ||||||
Earnings per diluted share attributable to common stockholders | $ | 4.30 |
|
|
| $ | 2.02 |
|
| ||
Weighted-average common shares outstanding and common share equivalents used in computing earnings per diluted common share (in thousands) |
| 52,389 |
|
|
|
| 52,063 |
|
| ||
|
|
|
|
|
| ||||||
Reportable Segments |
|
|
|
|
| ||||||
Net sales: |
|
|
|
|
| ||||||
Electrical & Electronic Solutions | $ | 2,234,771 |
|
|
| $ | 1,982,485 |
|
| ||
Communications & Security Solutions |
| 1,602,459 |
|
|
|
| 1,488,689 |
|
| ||
Utility & Broadband Solutions |
| 1,608,686 |
|
|
|
| 1,257,151 |
|
| ||
| $ | 5,445,916 |
|
|
| $ | 4,728,325 |
|
| ||
Income from operations: |
|
|
|
|
| ||||||
Electrical & Electronic Solutions | $ | 213,185 |
|
|
| $ | 155,210 |
|
| ||
Communications & Security Solutions |
| 139,013 |
|
|
|
| 108,226 |
|
| ||
Utility & Broadband Solutions |
| 179,291 |
|
|
|
| 108,172 |
|
| ||
Corporate |
| (129,897 | ) |
|
|
| (142,142 | ) |
| ||
| $ | 401,592 |
|
|
| $ | 229,466 |
|
|
WESCO INTERNATIONAL, INC. | |||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||
(dollar amounts in thousands, except per share amounts) | |||||||||||
(Unaudited) | |||||||||||
| Nine Months Ended |
| |||||||||
| September 30, 2022 |
|
| September 30, 2021 |
| ||||||
Net sales | $ | 15,861,622 |
|
|
| $ | 13,365,592 |
|
| ||
Cost of goods sold (excluding depreciation and amortization) |
| 12,418,561 |
| 78.3 | % |
|
| 10,581,406 |
| 79.2 | % |
Selling, general and administrative expenses |
| 2,251,162 |
| 14.2 | % |
|
| 2,057,952 |
| 15.4 | % |
Depreciation and amortization |
| 135,569 |
|
|
|
| 144,645 |
|
| ||
Income from operations |
| 1,056,330 |
| 6.7 | % |
|
| 581,589 |
| 4.4 | % |
Interest expense, net |
| 207,155 |
|
|
|
| 207,683 |
|
| ||
Other expense (income), net |
| 3,007 |
|
|
|
| (8,929 | ) |
| ||
Income before income taxes |
| 846,168 |
| 5.3 | % |
|
| 382,835 |
| 2.9 | % |
Provision for income taxes |
| 203,178 |
|
|
|
| 84,201 |
|
| ||
Net income |
| 642,990 |
| 4.1 | % |
|
| 298,634 |
| 2.2 | % |
Net income attributable to noncontrolling interests |
| 1,439 |
|
|
|
| 665 |
|
| ||
Net income attributable to WESCO International, Inc. |
| 641,551 |
| 4.0 | % |
|
| 297,969 |
| 2.2 | % |
Preferred stock dividends |
| 43,056 |
|
|
|
| 43,056 |
|
| ||
Net income attributable to common stockholders | $ | 598,495 |
| 3.8 | % |
| $ | 254,913 |
| 1.9 | % |
|
|
|
|
|
| ||||||
Earnings per diluted share attributable to common stockholders | $ | 11.42 |
|
|
| $ | 4.91 |
|
| ||
Weighted-average common shares outstanding and common share equivalents used in computing earnings per diluted common share (in thousands) |
| 52,386 |
|
|
|
| 51,896 |
|
| ||
|
|
|
|
|
| ||||||
Reportable Segments |
|
|
|
|
| ||||||
Net sales: |
|
|
|
|
| ||||||
Electrical & Electronic Solutions | $ | 6,654,883 |
|
|
| $ | 5,626,309 |
|
| ||
Communications & Security Solutions |
| 4,638,631 |
|
|
|
| 4,200,424 |
|
| ||
Utility & Broadband Solutions |
| 4,568,108 |
|
|
|
| 3,538,859 |
|
| ||
| $ | 15,861,622 |
|
|
| $ | 13,365,592 |
|
| ||
Income from operations: |
|
|
|
|
| ||||||
Electrical & Electronic Solutions | $ | 613,462 |
|
|
| $ | 409,062 |
|
| ||
Communications & Security Solutions |
| 373,789 |
|
|
|
| 293,446 |
|
| ||
Utility & Broadband Solutions |
| 471,667 |
|
|
|
| 289,895 |
|
| ||
Corporate |
| (402,588 | ) |
|
|
| (410,814 | ) |
| ||
| $ | 1,056,330 |
|
|
| $ | 581,589 |
|
|
WESCO INTERNATIONAL, INC. | |||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||
(dollar amounts in thousands) | |||||
(Unaudited) | |||||
| As of | ||||
| September 30, 2022 |
| December 31, 2021 | ||
Assets |
|
|
| ||
Current Assets |
|
|
| ||
Cash and cash equivalents | $ | 234,083 |
| $ | 212,583 |
Trade accounts receivable, net |
| 3,622,067 |
|
| 2,957,613 |
Inventories |
| 3,490,121 |
|
| 2,666,219 |
Other current assets |
| 550,816 |
|
| 513,696 |
Total current assets |
| 7,897,087 |
|
| 6,350,111 |
|
|
|
| ||
Goodwill and intangible assets |
| 4,976,881 |
|
| 5,152,474 |
Other assets |
| 1,206,596 |
|
| 1,115,114 |
Total assets | $ | 14,080,564 |
| $ | 12,617,699 |
|
|
|
| ||
|
|
|
| ||
Liabilities and Stockholders' Equity |
|
|
| ||
Current Liabilities |
|
|
| ||
Accounts payable | $ | 2,578,741 |
| $ | 2,140,251 |
Short-term debt and current portion of long-term debt, net(1) |
| 69,295 |
|
| 9,528 |
Other current liabilities |
| 919,536 |
|
| 900,029 |
Total current liabilities |
| 3,567,572 |
|
| 3,049,808 |
|
|
|
| ||
Long-term debt, net |
| 5,192,816 |
|
| 4,701,542 |
Other noncurrent liabilities |
| 1,128,230 |
|
| 1,090,138 |
Total liabilities |
| 9,888,618 |
|
| 8,841,488 |
|
|
|
| ||
Stockholders' Equity |
|
|
| ||
Total stockholders' equity |
| 4,191,946 |
|
| 3,776,211 |
Total liabilities and stockholders' equity | $ | 14,080,564 |
| $ | 12,617,699 |
(1) | As of September 30, 2022, short-term debt and current portion of long-term debt includes the $58.6 million aggregate principal amount of the Company's 5.50% Anixter Senior Notes due 2023, which mature on March 1, 2023. |
WESCO INTERNATIONAL, INC. | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(dollar amounts in thousands) | |||||||
(Unaudited) | |||||||
| Nine Months Ended | ||||||
| September 30, 2022 |
| September 30, 2021 | ||||
Operating Activities: |
|
|
| ||||
Net income | $ | 642,990 |
|
| $ | 298,634 |
|
Add back (deduct): |
|
|
| ||||
Depreciation and amortization |
| 135,569 |
|
|
| 144,645 |
|
Deferred income taxes |
| 7,246 |
|
|
| (5,340 | ) |
Change in trade receivables, net |
| (737,639 | ) |
|
| (521,491 | ) |
Change in inventories |
| (886,328 | ) |
|
| (428,405 | ) |
Change in accounts payable |
| 479,645 |
|
|
| 550,858 |
|
Other, net |
| (52,104 | ) |
|
| 133,769 |
|
Net cash (used in) provided by operating activities |
| (410,621 | ) |
|
| 172,670 |
|
|
|
|
| ||||
Investing Activities: |
|
|
| ||||
Capital expenditures |
| (59,366 | ) |
|
| (25,170 | ) |
Other, net(1) |
| 2,159 |
|
|
| 61,776 |
|
Net cash (used in) provided by investing activities |
| (57,207 | ) |
|
| 36,606 |
|
|
|
|
| ||||
Financing Activities: |
|
|
| ||||
Debt borrowings (repayments), net(2) |
| 549,281 |
|
|
| (330,341 | ) |
Payments for taxes related to net-share settlement of equity awards |
| (24,963 | ) |
|
| (20,784 | ) |
Payment of dividends |
| (43,056 | ) |
|
| (43,056 | ) |
Other, net |
| (4,011 | ) |
|
| (16,023 | ) |
Net cash provided by (used in) financing activities |
| 477,251 |
|
|
| (410,204 | ) |
|
|
|
| ||||
Effect of exchange rate changes on cash and cash equivalents |
| 12,077 |
|
|
| 3,592 |
|
|
|
|
| ||||
Net change in cash and cash equivalents |
| 21,500 |
|
|
| (197,336 | ) |
Cash and cash equivalents at the beginning of the period |
| 212,583 |
|
|
| 449,135 |
|
Cash and cash equivalents at the end of the period | $ | 234,083 |
|
| $ | 251,799 |
|
(1) | For the nine months ended September 30, 2021, other investing activities includes cash consideration totaling approximately $56.0 million from the divestiture of Wesco's legacy utility and data communications businesses in Canada. The Company used the net proceeds from the divestitures to repay indebtedness. | |
(2) | The nine months ended September 30, 2021 includes the redemption of the Company's $500.0 million aggregate principal amount of 2021 Notes. The redemption of the 2021 Notes was funded with excess cash, as well as borrowings under the Company's accounts receivable securitization and revolving credit facilities. |
NON-GAAP FINANCIAL MEASURES
In addition to the results provided in accordance with U.S. Generally Accepted Accounting Principles ("U.S. GAAP") above, this earnings release includes certain non-GAAP financial measures. These financial measures include organic sales growth, gross profit, gross margin, earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted EBITDA, adjusted EBITDA margin, financial leverage, free cash flow, adjusted selling, general and administrative expenses, adjusted income from operations, adjusted operating margin, adjusted provision for income taxes, adjusted income before income taxes, adjusted net income, adjusted net income attributable to WESCO International, Inc., adjusted net income attributable to common stockholders, 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 our financial condition and results of operations on a comparable basis. Additionally, certain non-GAAP measures either focus on or exclude items impacting comparability of results such as merger-related and integration costs, and the related income tax effect of such items, 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.
Organic Sales Growth by Segment - QTD: |
|
|
|
|
|
|
|
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
| Three Months Ended |
| Growth/(Decline) | |||||||||||||||||
| September 30, 2022 |
| September 30, 2021 |
| Reported |
| Divestiture Impact |
| Foreign Exchange Impact |
| Workday Impact |
| Organic Growth | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
EES | $ | 2,234,771 |
| $ | 1,982,485 |
| 12.7 | % |
| — | % |
| (2.2 | ) % |
| — | % |
| 14.9 | % |
CSS |
| 1,602,459 |
|
| 1,488,689 |
| 7.6 | % |
| — | % |
| (2.0 | ) % |
| — | % |
| 9.6 | % |
UBS |
| 1,608,686 |
|
| 1,257,151 |
| 28.0 | % |
| — | % |
| (0.6 | ) % |
| — | % |
| 28.6 | % |
Total net sales | $ | 5,445,916 |
| $ | 4,728,325 |
| 15.2 | % |
| — | % |
| (1.7 | ) % |
| — | % |
| 16.9 | % |
Organic Sales Growth by Segment - YTD: |
|
|
|
|
|
|
|
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
| Nine Months Ended |
| Growth/(Decline) | |||||||||||||||||
| September 30, 2022 |
| September 30, 2021 |
| Reported |
| Divestiture Impact |
| Foreign Exchange Impact |
| Workday Impact |
| Organic Growth | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
EES | $ | 6,654,883 |
| $ | 5,626,309 |
| 18.3 | % |
| (0.2 | ) % |
| (1.4 | ) % |
| 0.5 | % |
| 19.4 | % |
CSS |
| 4,638,631 |
|
| 4,200,424 |
| 10.4 | % |
| — | % |
| (1.6 | ) % |
| 0.5 | % |
| 11.5 | % |
UBS |
| 4,568,108 |
|
| 3,538,859 |
| 29.1 | % |
| (0.1 | ) % |
| (0.4 | ) % |
| 0.5 | % |
| 29.1 | % |
Total net sales | $ | 15,861,622 |
| $ | 13,365,592 |
| 18.7 | % |
| (0.1 | ) % |
| (1.2 | ) % |
| 0.5 | % |
| 19.5 | % |
Organic Sales Growth by Segment - Sequential: |
|
|
|
|
|
|
|
| ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
| Three Months Ended |
| Growth/(Decline) | |||||||||||||||||
| September 30, 2022 |
| June 30, 2022 |
| Reported |
| Divestiture Impact |
| Foreign Exchange Impact |
| Workday Impact |
| Organic Growth | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
EES | $ | 2,234,771 |
| $ | 2,330,153 |
| (4.1 | ) % |
| — | % |
| (0.9 | ) % |
| — | % |
| (3.2 | ) % |
CSS |
| 1,602,459 |
|
| 1,601,997 |
| — | % |
| — | % |
| (0.8 | ) % |
| — | % |
| 0.8 | % |
UBS |
| 1,608,686 |
|
| 1,551,375 |
| 3.7 | % |
| — | % |
| (0.3 | ) % |
| — | % |
| 4.0 | % |
Total net sales | $ | 5,445,916 |
| $ | 5,483,525 |
| (0.7 | ) % |
| — | % |
| (0.7 | ) % |
| — | % |
| — | % |
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.
Three Months Ended |
| Nine Months Ended | |||||||||||||
Gross Profit: | September 30, 2022 |
| September 30, 2021 |
| September 30, 2022 |
| September 30, 2021 | ||||||||
|
|
|
|
|
|
|
| ||||||||
Net sales | $ | 5,445,916 |
|
| $ | 4,728,325 |
|
| $ | 15,861,622 |
|
| $ | 13,365,592 |
|
Cost of goods sold (excluding depreciation and amortization) |
| 4,241,401 |
|
|
| 3,720,332 |
|
|
| 12,418,561 |
|
|
| 10,581,406 |
|
Gross profit | $ | 1,204,515 |
|
| $ | 1,007,993 |
|
| $ | 3,443,061 |
|
| $ | 2,784,186 |
|
Gross margin |
| 22.1 | % |
|
| 21.3 | % |
|
| 21.7 | % |
|
| 20.8 | % |
| Three Months Ended | ||
Gross Profit: | June 30, 2022 | ||
|
| ||
Net sales | $ | 5,483,525 |
|
Cost of goods sold (excluding depreciation and amortization) |
| 4,294,086 | |
Gross profit | $ | 1,189,439 |
|
Gross margin |
| 21.7 | % |
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 | ||||||||||||
Adjusted SG&A Expenses: | September 30, 2022 |
| September 30, 2021 |
| September 30, 2022 |
| September 30, 2021 | ||||||||
|
|
|
|
|
|
|
| ||||||||
Selling, general and administrative expenses | $ | 760,200 |
|
| $ | 721,795 |
|
| $ | 2,251,162 |
|
| $ | 2,057,952 |
|
Merger-related and integration costs |
| (13,210 | ) |
|
| (35,750 | ) |
|
| (52,200 | ) |
|
| (119,792 | ) |
Net gain on divestitures |
| — |
|
|
| — |
|
|
| — |
|
|
| 8,927 |
|
Adjusted selling, general and administrative expenses | $ | 746,990 |
|
| $ | 686,045 |
|
| $ | 2,198,962 |
|
| $ | 1,947,087 |
|
Percentage of net sales |
| 13.7 | % |
|
| 14.5 | % |
|
| 13.9 | % |
|
| 14.6 | % |
| Three Months Ended |
| Nine Months Ended | ||||||||||||
Adjusted Income from Operations: | September 30, 2022 |
| September 30, 2021 |
| September 30, 2022 |
| September 30, 2021 | ||||||||
|
|
|
|
|
|
|
| ||||||||
Income from operations | $ | 401,592 |
|
| $ | 229,466 |
|
| $ | 1,056,330 |
|
| $ | 581,589 |
|
Merger-related and integration costs |
| 13,210 |
|
|
| 35,750 |
|
|
| 52,200 |
|
|
| 119,792 |
|
Accelerated trademark amortization |
| 389 |
|
|
| 15,147 |
|
|
| 9,384 |
|
|
| 20,196 |
|
Net gain on divestitures |
| — |
|
|
| — |
|
|
| — |
|
|
| (8,927 | ) |
Adjusted income from operations | $ | 415,191 |
|
| $ | 280,363 |
|
| $ | 1,117,914 |
|
| $ | 712,650 |
|
Adjusted income from operations margin % |
| 7.6 | % |
|
| 5.9 | % |
|
| 7.0 | % |
|
| 5.3 | % |
| Three Months Ended |
| Nine Months Ended | ||||||||
Adjusted Provision for Income Taxes: | September 30, 2022 |
| September 30, 2021 |
| September 30, 2022 |
| September 30, 2021 | ||||
|
|
|
|
|
|
|
| ||||
Provision for income taxes | $ | 85,637 |
| $ | 44,870 |
| $ | 203,178 |
| $ | 84,201 |
Income tax effect of adjustments to income from operations(1) |
| 3,673 |
|
| 13,512 |
|
| 16,371 |
|
| 32,968 |
Adjusted provision for income taxes | $ | 89,310 |
| $ | 58,382 |
| $ | 219,549 |
| $ | 117,169 |
(1) | The adjustments to income from operations have been tax effected at a rate of approximately 27% for the three and nine months ended September 30, 2022, and at rates of approximately 27% and 25% for the three and nine months ended September 30, 2021, respectively. |
| Three Months Ended |
| Nine Months Ended | ||||||||||
Adjusted Earnings per Diluted Share: | September 30, 2022 |
| September 30, 2021 |
| September 30, 2022 |
| September 30, 2021 | ||||||
|
|
|
|
|
|
|
| ||||||
Adjusted income from operations | $ | 415,191 |
| $ | 280,363 |
|
| $ | 1,117,914 |
| $ | 712,650 |
|
Interest expense, net |
| 75,057 |
|
| 69,720 |
|
|
| 207,155 |
|
| 207,683 |
|
Other expense (income), net |
| 688 |
|
| (5,320 | ) |
|
| 3,007 |
|
| (8,929 | ) |
Adjusted income before income taxes |
| 339,446 |
|
| 215,963 |
|
|
| 907,752 |
|
| 513,896 |
|
Adjusted provision for income taxes |
| 89,310 |
|
| 58,382 |
|
|
| 219,549 |
|
| 117,169 |
|
Adjusted net income |
| 250,136 |
|
| 157,581 |
|
|
| 688,203 |
|
| 396,727 |
|
Net income attributable to noncontrolling interests |
| 608 |
|
| 600 |
|
|
| 1,439 |
|
| 665 |
|
Adjusted net income attributable to WESCO International, Inc. |
| 249,528 |
|
| 156,981 |
|
|
| 686,764 |
|
| 396,062 |
|
Preferred stock dividends |
| 14,352 |
|
| 14,352 |
|
|
| 43,056 |
|
| 43,056 |
|
Adjusted net income attributable to common stockholders | $ | 235,176 |
| $ | 142,629 |
|
| $ | 643,708 |
| $ | 353,006 |
|
|
|
|
|
|
|
|
| ||||||
Diluted shares |
| 52,389 |
|
| 52,063 |
|
|
| 52,386 |
|
| 51,896 |
|
Adjusted earnings per diluted share | $ | 4.49 |
| $ | 2.74 |
|
| $ | 12.29 |
| $ | 6.80 |
|
Note: For the three and nine months ended September 30, 2022, SG&A expenses, income from operations, the provision for income taxes and earnings per diluted share have been adjusted to exclude merger-related and integration costs, accelerated amortization expense associated with migrating to the Company's master brand architecture, and the related income tax effects. For the three and nine months ended September 30, 2021, SG&A expenses, income from operations, the provision for income taxes and earnings per diluted share have been adjusted to exclude merger-related and integration costs, a net gain on the divestiture of Wesco's legacy utility and data communications businesses in Canada, accelerated amortization expense associated with migrating to the Company's master brand architecture, and the related income tax effects. These non-GAAP financial measures provide a better understanding of the Company's financial results on a comparable basis.
|
| Three Months Ended September 30, 2022 | ||||||||||||||||||
EBITDA and Adjusted EBITDA by Segment: |
| EES |
| CSS |
| UBS |
| Corporate |
| Total | ||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Net income attributable to common stockholders |
| $ | 214,054 |
|
| $ | 138,747 |
|
| $ | 180,354 |
|
| $ | (307,905 | ) |
| $ | 225,250 |
|
Net income attributable to noncontrolling interests |
|
| 200 |
|
|
| — |
|
|
| — |
|
|
| 408 |
|
|
| 608 |
|
Preferred stock dividends |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 14,352 |
|
|
| 14,352 |
|
Provision for income taxes |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 85,637 |
|
|
| 85,637 |
|
Interest expense, net |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 75,057 |
|
|
| 75,057 |
|
Depreciation and amortization |
|
| 9,596 |
|
|
| 15,929 |
|
|
| 5,859 |
|
|
| 11,339 |
|
|
| 42,723 |
|
EBITDA |
| $ | 223,850 |
|
| $ | 154,676 |
|
| $ | 186,213 |
|
| $ | (121,112 | ) |
| $ | 443,627 |
|
Other (income) expense, net |
|
| (1,069 | ) |
|
| 266 |
|
|
| (1,063 | ) |
|
| 2,554 |
|
|
| 688 |
|
Stock-based compensation expense(1) |
|
| 2,983 |
|
|
| 1,428 |
|
|
| 1,107 |
|
|
| 2,853 |
|
|
| 8,371 |
|
Merger-related and integration costs |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 13,210 |
|
|
| 13,210 |
|
Adjusted EBITDA |
| $ | 225,764 |
|
| $ | 156,370 |
|
| $ | 186,257 |
|
| $ | (102,495 | ) |
| $ | 465,896 |
|
Adjusted EBITDA margin % |
|
| 10.1 | % |
|
| 9.8 | % |
|
| 11.6 | % |
|
|
|
| 8.6 | % | ||
(1) Stock-based compensation expense in the calculation of adjusted EBITDA for the three months ended September 30, 2022 excludes $1.3 million as such amount is included in merger-related and integration costs. | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||
|
| Three Months Ended September 30, 2021 | ||||||||||||||||||
EBITDA and Adjusted EBITDA by Segment: |
| EES |
| CSS |
| UBS |
| Corporate |
| Total | ||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Net income attributable to common stockholders |
| $ | 155,627 |
|
| $ | 107,898 |
|
| $ | 108,150 |
|
| $ | (266,431 | ) |
| $ | 105,244 |
|
Net income attributable to noncontrolling interests |
|
| 309 |
|
|
| — |
|
|
| — |
|
|
| 291 |
|
|
| 600 |
|
Preferred stock dividends |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 14,352 |
|
|
| 14,352 |
|
Provision for income taxes |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 44,870 |
|
|
| 44,870 |
|
Interest expense, net |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 69,720 |
|
|
| 69,720 |
|
Depreciation and amortization |
|
| 16,840 |
|
|
| 24,723 |
|
|
| 5,869 |
|
|
| 9,300 |
|
|
| 56,732 |
|
EBITDA |
| $ | 172,776 |
|
| $ | 132,621 |
|
| $ | 114,019 |
|
| $ | (127,898 | ) |
| $ | 291,518 |
|
Other (income) expense, net |
|
| (726 | ) |
|
| 328 |
|
|
| 22 |
|
|
| (4,944 | ) |
|
| (5,320 | ) |
Stock-based compensation expense(1) |
|
| 1,848 |
|
|
| 752 |
|
|
| 633 |
|
|
| 5,079 |
|
|
| 8,312 |
|
Merger-related and integration costs |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 35,750 |
|
|
| 35,750 |
|
Adjusted EBITDA |
| $ | 173,898 |
|
| $ | 133,701 |
|
| $ | 114,674 |
|
| $ | (92,013 | ) |
| $ | 330,260 |
|
Adjusted EBITDA margin % |
|
| 8.8 | % |
|
| 9.0 | % |
|
| 9.1 | % |
|
|
|
| 7.0 | % | ||
(1) Stock-based compensation expense in the calculation of adjusted EBITDA for the three months ended September 30, 2021 excludes $1.3 million as such amount is included in merger-related and integration costs. |
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. EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA before other non-operating expenses (income), non-cash stock-based compensation expense, and merger-related and integration costs. Adjusted EBITDA margin % is calculated by dividing Adjusted EBITDA by net sales.
|
| Nine Months Ended September 30, 2022 | ||||||||||||||||||
EBITDA and Adjusted EBITDA by Segment: |
| EES |
| CSS |
| UBS |
| Corporate |
| Total | ||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Net income attributable to common stockholders |
| $ | 615,547 |
|
| $ | 373,073 |
|
| $ | 472,119 |
|
| $ | (862,244 | ) |
| $ | 598,495 |
|
Net income attributable to noncontrolling interests |
|
| 561 |
|
|
| — |
|
|
| — |
|
|
| 878 |
|
|
| 1,439 |
|
Preferred stock dividends |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 43,056 |
|
|
| 43,056 |
|
Provision for income taxes |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 203,178 |
|
|
| 203,178 |
|
Interest expense, net |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 207,155 |
|
|
| 207,155 |
|
Depreciation and amortization |
|
| 32,818 |
|
|
| 51,916 |
|
|
| 17,315 |
|
|
| 33,520 |
|
|
| 135,569 |
|
EBITDA |
| $ | 648,926 |
|
| $ | 424,989 |
|
| $ | 489,434 |
|
| $ | (374,457 | ) |
| $ | 1,188,892 |
|
Other (income) expense, net |
|
| (2,646 | ) |
|
| 716 |
|
|
| (452 | ) |
|
| 5,389 |
|
|
| 3,007 |
|
Stock-based compensation expense(1) |
|
| 7,350 |
|
|
| 3,747 |
|
|
| 2,670 |
|
|
| 16,612 |
|
|
| 30,379 |
|
Merger-related and integration costs |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 52,200 |
|
|
| 52,200 |
|
Adjusted EBITDA |
| $ | 653,630 |
|
| $ | 429,452 |
|
| $ | 491,652 |
|
| $ | (300,256 | ) |
| $ | 1,274,478 |
|
Adjusted EBITDA margin % |
|
| 9.8 | % |
|
| 9.3 | % |
|
| 10.8 | % |
|
|
|
| 8.0 | % | ||
(1) Stock-based compensation expense in the calculation of adjusted EBITDA for the nine months ended September 30, 2022 excludes $4.1 million as such amount is included in merger-related and integration costs. | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||
|
| Nine Months Ended September 30, 2021 | ||||||||||||||||||
EBITDA and Adjusted EBITDA by Segment: |
| EES |
| CSS |
| UBS |
| Corporate |
| Total | ||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Net income attributable to common stockholders |
| $ | 410,233 |
|
| $ | 292,537 |
|
| $ | 289,851 |
|
| $ | (737,708 | ) |
| $ | 254,913 |
|
Net income attributable to noncontrolling interests |
|
| 158 |
|
|
| — |
|
|
| — |
|
|
| 507 |
|
|
| 665 |
|
Preferred stock dividends |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 43,056 |
|
|
| 43,056 |
|
Provision for income taxes |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 84,201 |
|
|
| 84,201 |
|
Interest expense, net |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 207,683 |
|
|
| 207,683 |
|
Depreciation and amortization |
|
| 40,184 |
|
|
| 60,257 |
|
|
| 16,545 |
|
|
| 27,659 |
|
|
| 144,645 |
|
EBITDA |
| $ | 450,575 |
|
| $ | 352,794 |
|
| $ | 306,396 |
|
| $ | (374,602 | ) |
| $ | 735,163 |
|
Other (income) expense, net |
|
| (1,329 | ) |
|
| 909 |
|
|
| 44 |
|
|
| (8,553 | ) |
|
| (8,929 | ) |
Stock-based compensation expense(1) |
|
| 4,648 |
|
|
| 1,818 |
|
|
| 1,517 |
|
|
| 10,972 |
|
|
| 18,955 |
|
Merger-related and integration costs |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 119,792 |
|
|
| 119,792 |
|
Net gain on divestitures |
|
| — |
|
|
| — |
|
|
| (8,927 | ) |
|
| — |
|
|
| (8,927 | ) |
Adjusted EBITDA |
| $ | 453,894 |
|
| $ | 355,521 |
|
| $ | 299,030 |
|
| $ | (252,391 | ) |
| $ | 856,054 |
|
Adjusted EBITDA margin % |
|
| 8.1 | % |
|
| 8.5 | % |
|
| 8.4 | % |
|
|
|
| 6.4 | % | ||
(1) Stock-based compensation expense in the calculation of adjusted EBITDA for the nine months ended September 30, 2021 excludes $3.8 million as such amount is included in merger-related and integration costs. |
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. EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA before other non-operating expenses (income), non-cash stock-based compensation expense, merger-related and integration costs, and net gain on the divestiture of Wesco's legacy utility and data communications businesses in Canada. Adjusted EBITDA margin % is calculated by dividing Adjusted EBITDA by net sales.
| Twelve Months Ended | ||||||
Financial Leverage: | September 30, 2022 |
| December 31, 2021 | ||||
|
|
|
| ||||
Net income attributable to common stockholders | $ | 751,555 |
|
| $ | 407,974 |
|
Net income attributable to noncontrolling interests |
| 1,794 |
|
|
| 1,020 |
|
Preferred stock dividends |
| 57,408 |
|
|
| 57,408 |
|
Provision for income taxes |
| 234,487 |
|
|
| 115,510 |
|
Interest expense, net |
| 267,545 |
|
|
| 268,073 |
|
Depreciation and amortization |
| 189,478 |
|
|
| 198,554 |
|
EBITDA |
| 1,502,267 |
|
|
| 1,048,539 |
|
Other income, net(1) |
| (36,176 | ) |
|
| (48,112 | ) |
Stock-based compensation expense |
| 37,122 |
|
|
| 25,699 |
|
Merger-related and integration costs |
| 90,892 |
|
|
| 158,484 |
|
Net gain on divestitures |
| — |
|
|
| (8,927 | ) |
Adjusted EBITDA | $ | 1,594,105 |
|
| $ | 1,175,683 |
|
|
|
|
| ||||
| As of | ||||||
| September 30, 2022 |
| December 31, 2021 | ||||
Short-term debt and current portion of long-term debt, net | $ | 69,295 |
|
| $ | 9,528 |
|
Long-term debt, net |
| 5,192,816 |
|
|
| 4,701,542 |
|
Debt discount and debt issuance costs(2) |
| 60,765 |
|
|
| 70,572 |
|
Fair value adjustments to Anixter Senior Notes due 2023 and 2025(2) |
| (439 | ) |
|
| (957 | ) |
Total debt |
| 5,322,437 |
|
|
| 4,780,685 |
|
Less: cash and cash equivalents |
| 234,083 |
|
|
| 212,583 |
|
Total debt, net of cash | $ | 5,088,354 |
|
| $ | 4,568,102 |
|
|
|
|
| ||||
Financial leverage ratio |
| 3.2 |
|
|
| 3.9 |
|
(1) | Other non-operating income for the twelve months ended September 30, 2022 and December 31, 2021 includes a $36.6 million curtailment gain resulting from the remeasurement of the Company's pension obligations in the U.S. and Canada due to amending certain terms of such defined benefit plans. | |
(2) | 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 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, and net gain on the divestiture of Wesco's legacy utility and data communications businesses in Canada.
| Three Months Ended |
| Nine Months Ended | ||||||||||||
Free Cash Flow: | September 30, 2022 |
| September 30, 2021 |
| September 30, 2022 |
| September 30, 2021 | ||||||||
|
|
|
|
|
|
|
| ||||||||
Cash flow (used in) provided by operations | $ | (106,090 | ) |
| $ | 69,875 |
|
| $ | (410,621 | ) |
| $ | 172,670 |
|
Less: Capital expenditures |
| (27,725 | ) |
|
| (4,979 | ) |
|
| (59,366 | ) |
|
| (25,170 | ) |
Add: Merger-related and integration cash costs |
| 6,200 |
|
|
| 20,109 |
|
|
| 49,460 |
|
|
| 61,676 |
|
Free cash flow | $ | (127,615 | ) |
| $ | 85,005 |
|
| $ | (420,527 | ) |
| $ | 209,176 |
|
Percentage of adjusted net income |
| (51 | ) % |
|
| 54 | % |
|
| (61 | ) % |
|
| 53 | % |
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, 2022 and 2021, the Company paid for certain costs to integrate the acquired Anixter business. Such expenditures have been added back to operating cash flow to determine free cash flow for such periods.
View source version on businesswire.com: https://www.businesswire.com/news/home/20221103005461/en/
Investor Relations Will Ruthrauff Director, Investor Relations 484-885-5648
Corporate Communications Jennifer Sniderman Senior Director, Corporate Communications 717-579-6603
Source: Wesco International