WESCO International Brian Begg Treasurer
Safe Harbor Statement Note: All statements made herein that are not historical facts should be considered as “forward- looking statements” within the meaning of the Private Securities Litigation Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. Such risks, uncertainties and other factors include, but are not limited to: adverse economic conditions; disruptions in operations or information technology systems; product, labor or other cost fluctuations; supply chain disruptions or loss of key suppliers; expansion of business activities; exchange rate fluctuations; tax law changes or challenges to tax matters; increase in competition; risks related to acquisitions, including the integration of acquired businesses; litigation, disputes, contingencies or claims; legal or regulatory matters; debt levels, terms, financial market conditions or interest rate fluctuations; goodwill or intangible asset impairment; common stock dilution; and other factors described in detail in the Form 10-K for WESCO International, Inc. for the year ended December 31, 2015 and any subsequent filings with the Securities & Exchange Commission. Any numerical or other representations in this presentation do not represent guidance by management and should not be construed as such. The following presentation includes a discussion of certain non-GAAP financial measures. Information required by Regulation G with respect to such non-GAAP financial measures can be found in the appendix and obtained via WESCO’s website, www.wesco.com. 2
WESCO Overview Competitive Vision Performance Differentiators Goals The global leader of supply chain solutions addressing Grow faster than Product portfolio customers’ MRO, OEM and the market capital project demand streams Double digit Service capabilities Strategy EPS growth Accelerate One WESCO Free cash flow Global footprint Growth Initiatives 90%+ of net income Strengthen Product and Services Portfolio Superior investor Streamline Business Talent and culture returns Global Supply Chain Management Effective Capital Allocation 3
Competitive Differentiator: Product Portfolio Product Categories Value Drivers 8% • Fulfill MRO, OEM, capex 11% customer demand streams 40% 12% • Broaden product portfolio 14% • Improve margin profile 15% • Expand global sourcing General Supplies Communications & Security • Increase private label Wire, Cable & Conduit Electrical Distribution & Controls • Supplier-optimized value chain Lighting & Sustainability Automation, Controls & Motors …providing world class brands when and where needed 4
Competitive Differentiator: Service Capabilities Value Drivers Expand service offerings: Service • Storeroom services Offerings • Inventory management ~25% • Logistics • Warehousing • Kitting/pre-assembly • Labor and supply chain outsourcing 2015 • Capital project management $7.5B Sales • IT procurement solutions …providing a comprehensive service value proposition for customers 5
Competitive Differentiator: Global Footprint Value Drivers • Accelerate One WESCO growth strategy with blue- chip customers • Extend service capabilities WESCO locations • Grow organically through Countries Employees local presence 9,300 17 5,300 • Further expand through 7 bolt-on acquisitions 2004 2015 2004 2015 …expanding globally with blue-chip customers 6
Competitive Differentiator: Continuous Improvement Culture WESCO Lean Journey • Enterprise-wide application and results – Focus on sales, operations and transactional processes – Industry-leading value creation Pull system for continuous program for customers improvement to drive business results by engaging employees at • Lean leadership, culture and all levels to be customer focused, certification programs process minded, relentless in waste • Dedicated field resources driving reduction, and empowered to lead increase in kaizens positive change. • A distinct, competitive differentiator …accelerating Lean inside and outside the company 7
Focused Execution: Enabled by Talent and Culture Global roles Streamlined organization Uniform planning process Focused Bottom up sales plans Execution Compensation tied to sales plans KPI’s to monitor performance Contingency planning …driving improvements in results and forecast accuracy 8
Global Sales and Marketing Priorities Priorities • Integrating all our efforts around customers • Focusing on profitable organic growth opportunities • Branding, demand creation Integrate our portfolio of products, programs, and marketing leverage services, and supplier • Sales and specialist training and relationships into comprehensive solution selling supply chain solutions for our • Refining management incentive and customers’ global MRO, OEM, sales force compensation plans and capital project needs. …to expand our global customer base and relationships 9
10 Checkerboard Strategy LOCATION 5 LOCATION 4 LOCATION 3 LOCATION 2 LOCATION 1 New business Penetration % Sales < 20% ~ 50% >80% Security Comm & DATA COMMUNICATIONS Data …resulted in 40% sales increase with a mature global account WIRE DATA COMMUNICATIONS Oil and Gas Global Account Customer with Trapped Potential CONDUIT-METAL Wire & Cable CONDUIT-NON METALLIC CONDUIT & CABLE FITTINGS RACEWAYS, WIREWAYS,STRUT,CABLE TRAY WIRE, POWER, CORDS & BUILDING BOXES METALLIC & NON-METALLIC CIRCUIT BREAKERS CUTOUT, ARRESTOR, CAPACITORS & H.V. SWITCHES ENCLOSURES Electrical Distribution & Controls ENGINEER SERVICES & (W) RENEWAL PARTS FUSES, FUSE BLOCKS & FUSE HOLDERS LOADCENTERS/BREAKERS/METER CENTER PRODUCT CATEGORY PENETRATION METERING/INSTRUMENT TRANSFORMERS PANELBOARDS/SWITCHGEAR/BUSDUCT T&D UTILITY PRODUCTS TERMINATIONS,LUGS,CONNECTORS & ACCESSORIES TRANSFORMERS TRANSFORMERS:DISTRIBUTION TRANSFORMERS:POWER WIRING DEVICES MOTOR CONTROL CENTERS Automation MOTORS & DRIVES SAFETY SWITCHES CONTROL - OPEN & CLOSED PROGRAMMABLE CONTROLLERS Safety & Industrial Supplies ELECTRICAL SUPPLIES FANS,HEATERS,VENTING EQUIP. INDUSTRIAL MAINTENANCE MISC ELECTRICAL TOOLS TAPE,INSULATING MATERIAL,HEAT SHRINK TUBING,SEALANTS & ADHESIVES OEM Lighting FACTORY PRODUCTS BALLASTS LAMPS LIGHTING
Capitalize on Growth Markets Critical Infrastructure Cloud Computing Protection Intelligent Buildings LED Lighting Retrofit Alternative Energy Physical Security Broadband Industrial Networking Communications …developing core competencies and resources in growth markets 11
Acquisitions Strategy and Priorities Cumulative 1,900 2,000 Acquired Sales 1,500 1,600 ($M, first 12 months) • Consolidate core electrical 1 Markets & products and services Customers category in North America Geographies 400 325 • Expand into adjacent product 2 and services categories 2010 2011 2012 2014 2015 2016 • Follow customers globally 3 # 2 2 4 3 3 1 Core Products & and establish local operations Suppliers in high priority countries. Acquired Sales by End Market since 2010 Acquisition Criteria CIG Consistent with WESCO strategy Industrial Rate of return greater than WESCO Utility risk-adjusted average cost of capital Construction Accretive in first year of operation Margins higher than WESCO …driving strategic growth and shareholder value 12
Global Supply Chain and Operations Priorities Strategy Customer Service • Simplify and streamline business − Lean processes − Optimize footprint Safety • Supply chain management − Optimize supply base Operations − Leverage purchasing − Manage inventory • Improve pricing Transportation − Optimize with tools and analytics − Measure with KPIs Network Optimization …center on Lean applications across the supply chain 13
Financial Performance Adjusted EPS (1) Sales 6% 7% CAGR CAGR ($ Billions) ($) 7.9 7.5 7.5 7.4 5.02 5.18 6.6 3.96 4.38 6.1 4.18 3.88 5.1 2.50 2010 2011 2012 2013 2014 2015 TTM Q3 2010 2011 2012 2013 2014 2015 TTM Q3 2016 2016 Free Cash Flow 110% of Total Shareholder Return Adjusted Net Income (1) on Average ($ Millions) (January 1, 2010 through October 31, 2016) 308 306 142% 265 261 231 122% 101% 91% 91% 85% 134 112 57% 68% 2010 2011 2012 2013 2014 2015 TTM Q3 WCC RXL AXE MSM FAST GWW RUT S&P 2016 Note: See appendix for non-GAAP reconciliations. (1) Excludes the non-recurring, non-cash charge related to the early redemption of convertible debt in Q3 2016. …solid long-term performance 14
Cost Leverage Sales per Employee SG&A ($ Thousands) (%) 19% NAED 2014 887 860 843 829 807 788 15.1 611 14.2 14.1 14.0 NAED 13.7 13.6 SG&A/ ($ thousands) 119 122 125 114 115 113 Employee 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 NAED: National Association of Electrical Distributors Note: See appendix for non-GAAP reconciliations …compares favorably to industry benchmarks 15
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