UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 30, 2020

WESCO International, Inc.
(Exact name of registrant as specified in its charter)

	
						
Delaware	 	001-14989	 	25-1723342	
(State or other jurisdiction of
incorporation)	 	(Commission File Number)	 	(IRS Employer
Identification No.)	
 	 	 	 	 	 	
225 West Station Square Drive
Suite 700	 	 	 	15219	
Pittsburgh,	Pennsylvania	 	 	 	(Zip Code)	
(Address of principal executive offices)	 	 	 	 	
(412) 454-2200
(Registrant's telephone number, including area code)
Not applicable.
(Former name or former address, if changed since last report)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

					
Title of Class	 	Trading Symbol(s)	 	Name of Exchange on which registered	
Common Stock, par value $.01 per share	 	WCC	 	New York Stock Exchange	

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☑ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

					
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).	
 	 	 	 	 	
Emerging growth company	 	☐	 	 	
 	 	 	 	 	
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐	

	

		
Item 2.02	Results of Operations and Financial Condition.	
The information in this Item 2.02 is being furnished and shall not be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information in this Item 2.02 shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.
On January 30, 2020, WESCO International, Inc. (the “Company”) issued a press release announcing its financial results for the fourth quarter and full year 2019. A copy of the press release is attached hereto as Exhibit 99.1.
		
Item 7.01	Regulation FD Disclosure.	
The information in this Item 7.01 is being furnished and shall not be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information in this Item 7.01 shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.
A slide presentation to be used by senior management of the Company in connection with its discussions with investors regarding the Company's financial results for the fourth quarter and full year 2019 is included in Exhibit 99.2 to this report and is being furnished in accordance with Regulation FD of the Securities and Exchange Commission.
		
Item 9.01	Financial Statements and Exhibits.	
(d) Exhibits.
The following are furnished as exhibits to this report.
        99.1 Press Release, dated January 30, 2020
        99.2 Slide presentation for investors

Additional Information and Where to Find It
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. In connection with the potential transaction between WESCO International, Inc. ("WESCO") and Anixter International Inc. ("Anixter"), WESCO expects to file a registration statement on Form S-4 with the U.S. Securities and Exchange Commission ("SEC") containing a preliminary prospectus of WESCO that also constitutes a preliminary proxy statement of Anixter. After the registration statement is declared effective Anixter will mail a definitive proxy statement/prospectus to stockholders of Anixter. This communication is not a substitute for the proxy statement/prospectus or registration statement or for any other document that WESCO or Anixter may file with the SEC and send to Anixter’s stockholders in connection with the potential transaction. INVESTORS AND SECURITY HOLDERS OF WESCO AND ANIXTER ARE URGED TO READ THE REGISTRATION STATEMENT, PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders will be able to obtain free copies of the registration statement, proxy statement/prospectus and other documents filed with the SEC by WESCO or Anixter through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by WESCO will be available free of charge on WESCO’s website at http://wesco.investorroom.com/sec-filings and copies of the documents filed with the SEC by Anixter will be available free of charge on Anixter’s website at http://investors.anixter.com/financials/sec-filings.
Participants in the Solicitation
WESCO and Anixter and certain of their respective directors, certain of their respective executive officers and other members of management and employees may be considered participants in the solicitation of proxies from Anixter shareholders with respect to the potential transaction under the rules of the SEC. Information about the directors and executive officers of WESCO is set forth in its Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the SEC on February 27, 2019, and its proxy statement for its 2019 annual meeting of stockholders, which was filed with the SEC on April 15, 2019. Information about the directors and executive officers of Anixter is set forth in its Annual Report on Form 10-K for the year ended December 28, 2018, which was filed with the SEC on February 21, 2019, and its proxy statement for its 2019 annual meeting of stockholders, which was filed with the SEC on April 18, 2019. These documents can be obtained free of charge from the sources

indicated above. Additional information regarding the interests of such participants in the solicitation of proxies in respect of the potential transaction will be included in the registration statement and proxy statement/prospectus and other relevant materials to be filed with the SEC when they become available.
Cautionary Note Regarding 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 completion and timing of the proposed transaction, expected benefits and costs of the proposed transaction, and management plans relating to the proposed transaction, and statements that address WESCO’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. Certain of these risks are set forth in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as well as the Company's other reports filed with the SEC.
These risks, uncertainties and assumptions also include the timing, receipt and terms and conditions of any required governmental and regulatory approvals of the proposed transaction between WESCO and Anixter that could reduce anticipated benefits or cause the parties to abandon the proposed transaction, the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement, the possibility that stockholders of Anixter may not adopt the merger agreement, the risk that the parties may not be able to satisfy the conditions to the proposed transaction in a timely manner or at all, risks related to disruption of management time from ongoing business operations due to the proposed transaction, the risk that any announcements relating to the proposed transaction could have adverse effects on the market price of WESCO’s common stock, the risk of any unexpected costs or expenses resulting from the proposed transaction, the risk of any litigation relating to the proposed transaction, the risk that the proposed transaction and its announcement could have an adverse effect on the ability of WESCO or Anixter to retain customers and retain and hire key personnel and maintain relationships with their suppliers, customers and other business relationships and on their operating results and businesses generally, the risk that the pending proposed transaction could distract management of both entities and they will incur substantial costs, 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 proposed transaction or it may take longer than expected to achieve those synergies or benefits 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 WESCO’s control.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	
			
 	 	WESCO International, Inc.	
 	 	(Registrant)	

	
			
January 30, 2020	By:	/s/ David S. Schulz	
(Date)	 	David S. Schulz	
 	 	Senior Vice President and Chief Financial Officer	

	
		
	NEWS RELEASE	
	WESCO International, Inc. / Suite 700, 225 West Station Square Drive / Pittsburgh, PA 15219	
WESCO International, Inc. Reports Fourth Quarter
and Full Year 2019 Results
Fourth quarter highlights:
		
•	Consolidated net sales of $2.1 billion, up 4.4% versus prior year	
		
–	Organic sales growth of 3.9%	
		
•	Earnings per diluted share of $1.26	
		
–	$1.32 adjusted for merger-related transaction costs	
		
•	Operating cash flow of $108 million; free cash flow of $94 million, or 178% of net income	
		
•	Leverage of 2.8x, down 0.2x sequentially	
		
•	Announced merger agreement with Anixter; expected to close Q2 or Q3 of 2020	
Full year results:
		
•	Record consolidated net sales of $8.4 billion, up 2.2% versus prior year	
		
–	Organic sales growth of 2.6%	
		
•	Earnings per diluted share of $5.14, up 7% versus prior year	
		
–	$5.20 adjusted for merger-related transaction costs, up 8% versus prior year	
		
•	Operating cash flow of $224 million; free cash flow of $180 million, or 81% of net income	
		
•	Repurchased $150 million of shares	
PITTSBURGH, January 30, 2020 /PRNewswire/ -- WESCO International, Inc. (NYSE: WCC), a leading provider of electrical, industrial, and communications maintenance, repair and operating (MRO) and original equipment manufacturer (OEM) products, construction materials, and advanced supply chain management and logistics services, announces its results for the fourth quarter and full year 2019.
Mr. John J. Engel, WESCO's Chairman, President and CEO, commented, “We achieved record fourth quarter and full year sales results against end market conditions that were more challenging than expected. Notably, all of our end markets and geographies grew on a year-over-year basis for the third consecutive year. Gross margin was down versus prior year driven by business mix and the impact of supplier price increases, which we continue to work into the market. Operating margin was within our expected range, after adjusting for Anixter merger-related transaction costs, and was driven by effective cost management. EPS grew 8% to a record $5.20 in 2019, after adjusting for the Anixter-related costs. Free cash flow generation was also strong in the quarter and financial leverage ended the year at 2.8 times net debt to EBITDA after completing $150 million of share repurchases in 2019.”
Mr. Engel continued, "As announced earlier this month, the transformational combination of WESCO and Anixter will create a premier electrical and data communications distribution and supply chain services company. As a result, we expect 2020 to be a watershed year for WESCO and we look forward to the substantial value creation for our stockholders, customers, suppliers, and people. We continue to expect to close this transaction in the second or third quarter of 2020 after receiving approvals from Anixter stockholders and certain regulatory authorities.”
Mr. Engel added, “Our end market outlook for 2020 provided last quarter remains unchanged. We expect to outperform the market by leveraging our full range of WESCO services and supply chain solutions, by making investments in our people and digital capabilities, and by maintaining our cash and cost management discipline. As a result, we continue to expect sales growth in the range of zero to 4% this year, and provide our full year 2020 outlook for operating margin of 4.1% to 4.4%, EPS of $5.10 to $5.70 per diluted share, and free cash flow generation of at least 90% of net income excluding any impacts of the announced merger with Anixter."

1

The following are results for the three months ended December 31, 2019 compared to the three months ended December 31, 2018:

•	Net sales were $2.1 billion for the fourth quarter of 2019, up 4.4% compared to the fourth quarter of 2018. Organic sales for the fourth quarter of 2019 grew by 3.9% as foreign exchange rates negatively impacted net sales by 0.3%, and acquisitions positively impacted net sales by 0.8%.	

•	Cost of goods sold for the fourth quarter of 2019 was $1.7 billion and gross profit was $389.8 million, compared to cost of goods sold and gross profit of $1.6 billion and $390.3 million, respectively, for the fourth quarter of 2018. As a percentage of net sales, gross profit was 18.6% and 19.4% for the fourth quarter of 2019 and 2018, respectively. Sequentially, gross profit as a percentage of net sales was flat. Gross profit as a percentage of net sales for the fourth quarter of 2019 was negatively impacted by a challenging pricing environment, as well as business mix.	

•	Selling, general and administrative ("SG&A") expenses were $289.9 million, or 13.8% of net sales, for the fourth quarter of 2019, compared to $284.2 million, or 14.1% of net sales, for the fourth quarter of 2018. SG&A expenses for the fourth quarter of 2019 include $3.1 million of transaction costs related to WESCO's merger with Anixter International, as announced on January 10, 2020.	

•	Operating profit was $83.8 million for the fourth quarter of 2019, compared to $90.5 million for the fourth quarter of 2018. Operating profit as a percentage of net sales was 4.0% for the current quarter, compared to 4.5% for the fourth quarter of the prior year. Adjusted for merger-related transaction costs of $3.1 million, operating profit was $86.9 million for the fourth quarter of 2019, or 4.1% of net sales.	

•	Net interest and other for the fourth quarter of 2019 was $16.2 million, compared to $16.8 million for the fourth quarter of 2018.	

•	The effective tax rate for the fourth quarter of 2019 was 22.0%, compared to 21.2% for the fourth quarter of 2018. The higher effective tax rate in the current quarter is primarily due to the full application of the international provisions of U.S. tax reform.	

•	Net income attributable to WESCO International, Inc. was $53.1 million for the fourth quarter of 2019, compared to $58.1 million for the fourth quarter of 2018.	

•	Earnings per diluted share for the fourth quarter of 2019 and 2018 was $1.26, based on 42.2 million and 46.2 million diluted shares, respectively. Adjusted earnings per diluted share for the fourth quarter of 2019 was $1.32.	

•	Operating cash flow for the fourth quarter of 2019 was $107.7 million, compared to $122.3 million for the fourth quarter of 2018. Free cash flow for the fourth quarter of 2019 was $94.0 million, or 178% of net income, compared to $109.8 million, or 189% of net income, for the fourth quarter of 2018.	
The following are results for the year ended December 31, 2019 compared to the year ended December 31, 2018:

•	Net sales were $8.4 billion for 2019, compared to $8.2 billion for 2018, an increase of 2.2%. Organic sales for 2019 grew by 2.6% as foreign exchange rates and the number of workdays negatively impacted net sales by 0.8% and 0.4%, respectively, and were partially offset by the positive 0.8% impact from acquisitions.	

•	Cost of goods sold for 2019 was $6.8 billion, compared to $6.6 billion for 2018. Gross profit was $1.6 billion for 2019 and 2018. As a percentage of net sales, gross profit was 18.9% and 19.2% for 2019 and 2018, respectively. Gross profit as a percentage of net sales for 2019 was negatively impacted by a challenging pricing environment, as well as business mix.	

•	SG&A expenses were $1.2 billion for 2019 and 2018. SG&A expenses were 14.0% and 14.1% of net sales for 2019 and 2018, respectively.	

•	Operating profit was $346.2 million for 2019, or 4.1% of net sales, compared to $352.5 million for 2018, or 4.3% of net sales. Adjusted for merger-related transaction costs of $3.1 million, operating profit was $349.3 million for 2019, or 4.2% of net sales.	

•	Net interest and other for 2019 was $64.2 million, compared to $71.4 million for 2018. The resolution of transfer pricing matters associated with the Canadian taxing authority resulted in non-cash interest income of $3.7 million for the year ended December 31, 2019. For the year ended December 31, 2018, net interest and other includes a foreign exchange loss of $3.0 million from the remeasurement of a financial instrument, as well as accelerated amortization of debt discount and debt issuance costs totaling $0.8 million due to early repayments of our then outstanding term loan facility.	

2

		
•	The effective tax rate for 2019 was 21.2%, compared to 19.8% for 2018. The higher effective tax rate in the current year is primarily due to the full application of the international provisions of U.S. tax reform.	

•	Net income attributable to WESCO International, Inc. was $223.4 million and $227.3 million for 2019 and 2018, respectively.	

•	Earnings per diluted share for 2019 was $5.14, based on 43.5 million diluted shares, compared to $4.82 for 2018, based on 47.2 million diluted shares. Adjusted earnings per diluted share for 2019 was $5.20.	

•	Operating cash flow for 2019 was $224.4 million, compared to $296.7 million for 2018. Free cash flow for 2019 was $180.3 million, or 81% of net income, compared to $260.5 million, or 116% of net income, for 2018. The Company repurchased $150.0 million of shares during 2019.	

Webcast and Teleconference Access

WESCO will conduct a webcast and teleconference to discuss the fourth quarter and full year 2019 earnings as described in this News Release on Thursday, January 30, 2020, at 10:00 a.m. E.T. The call will be broadcast live over the internet and can be accessed from the Investor Relations page of the Company's website at www.wesco.investorroom.com. The call will be archived on this internet site for seven days.
WESCO International, Inc. (NYSE: WCC), a publicly traded Fortune 500 holding company headquartered in Pittsburgh, Pennsylvania, is a leading provider of electrical, industrial, and communications maintenance, repair and operating (MRO) and original equipment manufacturer (OEM) products, construction materials, and advanced supply chain management and logistic services. 2019 annual sales were approximately $8.4 billion. The company employs approximately 9,500 people, maintains relationships with approximately 30,000 suppliers, and serves approximately 70,000 active customers worldwide. Customers include commercial and industrial businesses, contractors, government agencies, institutions, telecommunications providers, and utilities. WESCO operates 11 fully automated distribution centers and approximately 500 branches in North America and international markets, providing a local presence for customers and a global network to serve multi-location businesses and multi-national corporations.
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 completion and timing of the proposed transaction between WESCO International, Inc. ("WESCO") and Anixter International Inc. ("Anixter"), expected benefits and costs of the proposed transaction, and management plans relating to the proposed transaction, and statements that address WESCO’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. Certain of these risks are set forth in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as well as the Company's other reports filed with the U.S. Securities and Exchange Commission ("SEC").
These risks, uncertainties and assumptions also include the timing, receipt and terms and conditions of any required governmental and regulatory approvals of the proposed transaction between WESCO and Anixter that could reduce anticipated benefits or cause the parties to abandon the proposed transaction, the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement, the possibility that stockholders of Anixter may not adopt the merger agreement, the risk that the parties may not be able to satisfy the conditions to the proposed transaction in a timely manner or at all, risks related to disruption of management time from ongoing business operations due to the proposed transaction, the risk that any announcements relating to the proposed transaction could have adverse effects on the market price of WESCO’s common stock, the risk of any unexpected costs or expenses resulting from the proposed transaction, the risk of any litigation relating to the proposed transaction, the risk that the proposed transaction and its announcement could have an adverse effect on the ability of WESCO or Anixter to retain customers and retain and hire key personnel and maintain relationships with their suppliers, customers and other business relationships and on their operating results and businesses generally, the risk that the pending proposed transaction could distract management of both entities

3

and they will incur substantial costs, 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 proposed transaction or it may take longer than expected to achieve those synergies or benefits 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 WESCO’s control.
Additional Information and Where to Find It
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. In connection with the potential transaction, WESCO expects to file a registration statement on Form S-4 with the SEC containing a preliminary prospectus of WESCO that also constitutes a preliminary proxy statement of Anixter. After the registration statement is declared effective Anixter will mail a definitive proxy statement/prospectus to stockholders of Anixter. This communication is not a substitute for the proxy statement/prospectus or registration statement or for any other document that WESCO or Anixter may file with the SEC and send to Anixter’s stockholders in connection with the potential transaction. INVESTORS AND SECURITY HOLDERS OF WESCO AND ANIXTER ARE URGED TO READ THE REGISTRATION STATEMENT, PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders will be able to obtain free copies of the registration statement, proxy statement/prospectus and other documents filed with the SEC by WESCO or Anixter through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by WESCO will be available free of charge on WESCO’s website at http://wesco.investorroom.com/sec-filings and copies of the documents filed with the SEC by Anixter will be available free of charge on Anixter’s website at http://investors.anixter.com/financials/sec-filings.
Participants in the Solicitation
WESCO and Anixter and certain of their respective directors, certain of their respective executive officers and other members of management and employees may be considered participants in the solicitation of proxies from Anixter shareholders with respect to the potential transaction under the rules of the SEC. Information about the directors and executive officers of WESCO is set forth in its Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the SEC on February 27, 2019, and its proxy statement for its 2019 annual meeting of stockholders, which was filed with the SEC on April 15, 2019. Information about the directors and executive officers of Anixter is set forth in its Annual Report on Form 10-K for the year ended December 28, 2018, which was filed with the SEC on February 21, 2019, and its proxy statement for its 2019 annual meeting of stockholders, which was filed with the SEC on April 18, 2019. These documents can be obtained free of charge from the sources indicated above. Additional information regarding the interests of such participants in the solicitation of proxies in respect of the potential transaction will be included in the registration statement and proxy statement/prospectus and other relevant materials to be filed with the SEC when they become available.

Contact Information:
Will Ruthrauff
Director, Investor Relations and Corporate Communications
(412) 454-4220
http://www.wesco.com

4

WESCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollar amounts in thousands, except per share amounts)
(Unaudited)

	
												
 	Three Months Ended	 	
 	December 31,
2019	 	 	December 31,
2018	 	
Net sales	$	2,099,452		 	 	$	2,011,447		 	
Cost of goods sold (excluding	1,709,658		81.4	%	 	1,621,117		80.6	%	
    depreciation and amortization)	 	 	 	 	 	
Selling, general and administrative expenses	289,914		13.8	%	 	284,155		14.1	%	
Depreciation and amortization	16,072		 	 	15,675		 	
    Income from operations	83,808		4.0	%	 	90,500		4.5	%	
Net interest and other	16,221		 	 	16,840		 	
    Income before income taxes	67,587		3.2	%	 	73,660		3.7	%	
Provision for income taxes	14,893		 	 	15,592		 	
    Net income	52,694		2.5	%	 	58,068		2.9	%	
Net loss attributable to noncontrolling interests	(404	)	 	 	(67	)	 	
    Net income attributable to WESCO International, Inc.	$	53,098		2.5	%	 	$	58,135		2.9	%	
 	 	 	 	 	 	
Earnings per diluted common share	$	1.26		 	 	$	1.26		 	
Weighted-average common shares outstanding and common	 	 	 	 	 	
share equivalents used in computing earnings per diluted	 	 	 	 	 	
common share (in thousands)	42,210		 	 	46,179		 	

5

WESCO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollar amounts in thousands, except per share amounts)
(Unaudited)

	
												
 	Twelve Months Ended	 	
 	December 31,
2019	 	 	December 31,
2018	 	
Net sales	$	8,358,917		 	 	$	8,176,601		 	
Cost of goods sold (excluding	6,777,456		81.1	%	 	6,609,220		80.8	%	
    depreciation and amortization)	 	 	 	 	 	
Selling, general and administrative expenses	1,173,137		14.0	%	 	1,151,944		14.1	%	
Depreciation and amortization	62,107		 	 	62,997		 	
    Income from operations	346,217		4.1	%	 	352,440		4.3	%	
Net interest and other	64,156		 	 	71,415		 	
    Income before income taxes	282,061		3.4	%	 	281,025		3.4	%	
Provision for income taxes	59,863		 	 	55,670		 	
    Net income	222,198		2.7	%	 	225,355		2.8	%	
Net loss attributable to noncontrolling interests	(1,228	)	 	 	(1,988	)	 	
    Net income attributable to WESCO International, Inc.	$	223,426		2.7	%	 	$	227,343		2.8	%	
 	 	 	 	 	 	
Earnings per diluted common share	$	5.14		 	 	$	4.82		 	
Weighted-average common shares outstanding and common	 	 	 	 	 	
share equivalents used in computing earnings per diluted	 	 	 	 	 	
common share (in thousands)	43,487		 	 	47,199		 	

6

WESCO INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(dollar amounts in thousands)
(Unaudited)

	
								
 	December 31,
2019	 	December 31,
2018	
Assets	 	 	 	
Current Assets	 	 	 	
Cash and cash equivalents	$	150,902		 	$	96,343		
Trade accounts receivable, net	1,187,359		 	1,166,607		
Inventories	1,011,674		 	948,726		
Other current assets	190,476		 	173,964		
    Total current assets	2,540,411		 	2,385,640		
 	 	 	 	
Other assets (1)	2,477,224		 	2,219,396		
    Total assets	$	5,017,635		 	$	4,605,036		

Liabilities and Stockholders' Equity	 	 	 	
Current Liabilities	 	 	 	
Accounts payable	$	830,478		 	$	794,348		
Short-term borrowings and current debt	26,685		 	56,214		
Other current liabilities (1)	226,896		 	211,384		
    Total current liabilities	1,084,059		 	1,061,946		
 	 	 	 	
Long-term debt, net	1,257,067		 	1,167,311		
Other noncurrent liabilities (1)	417,838		 	246,053		
    Total liabilities	2,758,964		 	2,475,310		
 	 	 	 	
Stockholders' Equity	 	 	 	
    Total stockholders' equity	2,258,671		 	2,129,726		
    Total liabilities and stockholders' equity	$	5,017,635		 	$	4,605,036		
		
(1) 	Effective January 1, 2019, the Company adopted Accounting Standards Update 2016-02, Leases, and all the related amendments (“Topic 842”) using the effective date method. The adoption of Topic 842 resulted in the recognition of right-of-use assets and lease liabilities in the balance sheet. As of December 31, 2019, other assets includes $235.8 million of operating lease assets, and other current liabilities and other noncurrent liabilities include $62.0 million and $179.8 million, respectively, of operating lease liabilities.	

7

WESCO INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollar amounts in thousands)
(Unaudited)

	
								
 	Twelve Months Ended	
 	December 31,
2019	 	December 31,
2018	
Operating Activities:	 	 	 	
Net income	$	222,198		 	$	225,355		
Add back (deduct):	 	 	 	
Depreciation and amortization	62,107		 	62,997		
Deferred income taxes	13,205		 	9,137		
Change in trade receivables, net	11,453		 	(22,934	)	
Change in inventories	(47,297	)	 	(8,702	)	
Change in accounts payable	23,506		 	9,193		
Other	(60,805	)	 	21,675		
Net cash provided by operating activities	224,367		 	296,721		
 	 	 	 	
Investing Activities:	 	 	 	
Capital expenditures	(44,067	)	 	(36,210	)	
    Other	(16,733	)	 	2,068		
Net cash used in investing activities	(60,800	)	 	(34,142	)	
 	 	 	 	
Financing Activities:	 	 	 	
Debt borrowings (repayments), net	57,187		 	(128,068	)	
Equity activity, net	(153,049	)	 	(127,169	)	
Other	(13,904	)	 	(19,857	)	
Net cash used in financing activities	(109,766	)	 	(275,094	)	
 	 	 	 	
Effect of exchange rate changes on cash and cash equivalents	758		 	(9,095	)	
 	 	 	 	
Net change in cash and cash equivalents	54,559		 	(21,610	)	
Cash and cash equivalents at the beginning of the period	96,343		 	117,953		
Cash and cash equivalents at the end of the period	$	150,902		 	$	96,343		

8

NON-GAAP FINANCIAL MEASURES

This earnings release includes certain non-GAAP financial measures. These financial measures include organic sales growth, gross profit, gross margin, financial leverage, earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted EBITDA free cash flow, adjusted income from operations, and adjusted earnings per diluted share. The Company believes that these non-GAAP measures are useful to investors as they provide a better understanding of sales performance, and the use of debt and liquidity on a comparable basis. Management does not use these non-GAAP financial measures for any purpose other than the reasons stated above.

9

WESCO INTERNATIONAL, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(dollar amounts in thousands, except organic sales data)
(Unaudited)

	
						
 	Three Months Ended	 	Twelve Months Ended	
Organic Sales Growth:	December 31,
2019	 	December 31,
2019	
 	 	 	 	
    Change in net sales	4.4	 %	 	2.2	 %	
    Impact from acquisitions	0.8	 %	 	0.8	 %	
    Impact from foreign exchange rates	(0.3	)%	 	(0.8	)%	
    Impact from number of workdays	—	 %	 	(0.4	)%	
        Organic sales growth	3.9	 %	 	2.6	 %	
Note: Organic sales growth is a measure of sales performance. Organic sales growth is calculated by deducting the percentage impact from acquisitions in the first year of ownership, foreign exchange rates and number of workdays from the overall percentage change in consolidated net sales.

																
 	Three Months Ended	 	Twelve Months Ended	
Gross Profit:	December 31,
2019	 	December 31,
2018	 	December 31,
2019	 	December 31,
2018	
 	 	 	 	 	 	 	 	
Net sales	$	2,099,452		 	$	2,011,447		 	$	8,358,917		 	$	8,176,601		
Cost of goods sold (excluding depreciation and amortization)	1,709,658		 	1,621,117		 	6,777,456		 	6,609,220		
Gross profit	$	389,794		 	$	390,330		 	$	1,581,461		 	$	1,567,381		
Gross margin	18.6	%	 	19.4	%	 	18.9	%	 	19.2	%	

				
 	Three Months Ended	
Gross Profit:	September 30,
2019	
 	 	
Net sales	$	2,148,110		
Cost of goods sold (excluding depreciation and amortization)	1,747,913		
Gross profit	$	400,197		
Gross margin	18.6	%	
Note: Gross profit is a financial measure commonly used within the distribution industry. Gross profit is calculated by deducting cost of goods sold, excluding depreciation and amortization, from net sales. Gross margin is calculated by dividing gross profit by net sales.

10

WESCO INTERNATIONAL, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(dollar amounts in thousands)
(Unaudited)

	
								
 	Twelve Months Ended	
Financial Leverage:	December 31,
2019	 	December 31,
2018	
 	 	 	 	
Income from operations	$	346,217		 	$	352,440		
Depreciation and amortization	62,107		 	62,997		
EBITDA	$	408,324		 	$	415,437		
 	 	 	 	
 	December 31,
2019	 	December 31,
2018	
Short-term borrowings and current debt	$	26,685		 	$	56,214		
Long-term debt	1,257,067		 	1,167,311		
Debt discount and debt issuance costs (1)	8,876		 	9,731		
Total debt	1,292,628		 	1,233,256		
Less: cash and cash equivalents	150,902		 	96,343		
Total debt, net of cash	$	1,141,726		 	$	1,136,913		
 	 	 	 	
Financial leverage ratio	2.8		 	2.7		
		
(1) 	Debt is presented in the condensed consolidated balance sheets net of debt discount and debt issuance costs.	
Note: Financial leverage measures the use of debt. Financial leverage ratio is calculated by dividing total debt, including debt discount and debt issuance costs, net of cash, by EBITDA. EBITDA is defined as the trailing twelve months earnings before interest, taxes, depreciation and amortization.

																
 	Three Months Ended	 	Twelve Months Ended	
Free Cash Flow:	December 31, 2019	 	December 31, 2018	 	December 31, 2019	 	December 31, 2018	
 	 	 	 	 	 	 	 	
Cash flow provided by operations	$	107,703		 	$	122,261		 	$	224,367		 	$	296,721		
Less: capital expenditures	(13,744	)	 	(12,461	)	 	(44,067	)	 	(36,210	)	
Free cash flow	$	93,959		 	$	109,800		 	$	180,300		 	$	260,511		
Percentage of net income	178	%	 	189	%	 	81	%	 	116	%	
Note: Free cash flow is a measure of liquidity. Capital expenditures are deducted from operating cash flow to determine free cash flow. Free cash flow is available to fund investing and financing activities.

11

WESCO INTERNATIONAL, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(dollar amounts in thousands, except per share amounts)
(Unaudited)

																
 	Three Months Ended	 	Twelve Months Ended	
Adjusted Income from Operations / Adjusted EBITDA:	December 31,
2019	 	December 31,
2018	 	December 31,
2019	 	December 31,
2018	
 	 	 	 	 	 	 	 	
Income from operations	$	83,808		 	$	90,500		 	$	346,217		 	$	352,440		
Merger-related transaction costs	3,130		 	—		 	3,130		 	—		
Adjusted income from operations	$	86,938		 	$	90,500		 	$	349,347		 	$	352,440		
Depreciation and amortization	16,072		 	15,675		 	62,107		 	62,997		
Adjusted EBITDA	$	103,010		 	$	106,175		 	$	411,454		 	$	415,437		

																
 	Three Months Ended	 	Twelve Months Ended	
Adjusted Provision for Income Taxes:	December 31,
2019	 	December 31,
2018	 	December 31,
2019	 	December 31,
2018	
 	 	 	 	 	 	 	 	
Provision for income taxes	$	14,893		 	$	15,592		 	$	59,863		 	$	55,670		
Income tax effect of merger-related transaction costs	664		 	—		 	664		 	—		
Adjusted provision for income taxes	$	15,557		 	$	15,592		 	$	60,527		 	$	55,670		

																
 	Three Months Ended	 	Twelve Months Ended	
Adjusted Earnings Per Diluted Share:	December 31,
2019	 	December 31,
2018	 	December 31,
2019	 	December 31,
2018	
 	 	 	 	 	 	 	 	
Adjusted income from operations	$	86,938		 	$	90,500		 	$	349,347		 	$	352,440		
Net interest and other	16,221		 	16,840		 	64,156		 	71,415		
Adjusted income before income taxes	70,717		 	73,660		 	285,191		 	281,025		
Adjusted provision for income taxes	15,557		 	15,592		 	60,527		 	55,670		
Adjusted net income	55,160		 	58,068		 	224,664		 	225,355		
Net loss attributable to noncontrolling interests	(404	)	 	(67	)	 	(1,228	)	 	(1,988	)	
Adjusted net income attributable to WESCO International, Inc.	$	55,564		 	$	58,135		 	$	225,892		 	$	227,343		
 	 	 	 	 	 	 	 	
Diluted shares	42,210		 	46,179		 	43,487		 	47,199		
Adjusted earnings per diluted share	$	1.32		 	$	1.26		 	$	5.20		 	$	4.82		

12

Fourth Quarter & Full Year 2019 Webcast Presentation January 30, 2020 1

 

Additional Information and Where to Find It This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. In connection with the potential transaction, WESCO International, Inc. (“WESCO”) expects to file a registration statement on Form S-4 with the U.S. Securities and Exchange Commission (“SEC”) containing a preliminary prospectus of WESCO that also constitutes a preliminary proxy statement of Anixter International Inc. (“Anixter”). After the registration statement is declared effective Anixter will mail a definitive proxy statement/prospectus to stockholders of Anixter. This communication is not a substitute for the proxy statement/prospectus or registration statement or for any other document that WESCO or Anixter may file with the SEC and send to Anixter’s stockholders in connection with the potential transaction. INVESTORS AND SECURITY HOLDERS OF WESCO AND ANIXTER ARE URGED TO READ THE REGISTRATION STATEMENT, PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT WESCO, ANIXTER AND THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain free copies of the registration statement, proxy statement/prospectus and other documents filed with the SEC by WESCO or Anixter through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by WESCO will be available free of charge on WESCO’s website at http://wesco.investorroom.com/sec-filings and copies of the documents filed with the SEC by Anixter will be available free of charge on Anixter’s website at http://investors.anixter.com/financials/sec-filings. Participants in the Solicitation WESCO and Anixter and certain of their respective directors, certain of their respective executive officers and other members of management and employees may be considered participants in the solicitation of proxies from Anixter shareholders with respect to the potential transaction under the rules of the SEC. Information about the directors and executive officers of WESCO is set forth in its Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the SEC on February 27, 2019, and its proxy statement for its 2019 annual meeting of stockholders, which was filed with the SEC on April 15, 2019. Information about the directors and executive officers of Anixter is set forth in its Annual Report on Form 10- K for the year ended December 28, 2018, which was filed with the SEC on February 21, 2019, and its proxy statement for its 2019 annual meeting of stockholders, which was filed with the SEC on April 18, 2019. These documents can be obtained free of charge from the sources indicated above. Additional information regarding the interests of such participants in the solicitation of proxies in respect of the potential transaction will be included in the registration statement and proxy statement/prospectus and other relevant materials to be filed with the SEC when they become available. 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 completion and timing of the proposed transaction, expected benefits and costs of the proposed transaction, and management plans relating to the proposed transaction, and statements that address each 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 the management of WESCO and Anixter (as the case may be), as well as assumptions made by, and information currently available to, such management, current market trends and market conditions and involve risks and uncertainties, many of which are outside of each company’s and each company’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 timing, receipt and terms and conditions of any required governmental and regulatory approvals of the proposed transaction that could reduce anticipated benefits or cause the parties to abandon the proposed transaction, the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement, the possibility that stockholders of Anixter may not adopt the merger agreement, the risk that the parties may not be able to satisfy the conditions to the proposed transaction in a timely manner or at all, risks related to disruption of management time from ongoing business operations due to the proposed transaction, the risk that any announcements relating to the proposed transaction could have adverse effects on the market price of WESCO’s common stock or Anixter’s common stock, the risk of any unexpected costs or expenses resulting from the proposed transaction, the risk of any litigation relating to the proposed transaction, the risk that the proposed transaction and its announcement could have an adverse effect on the ability of WESCO or Anixter to retain customers and retain and hire key personnel and maintain relationships with their suppliers, customers and other business relationships and on their operating results and businesses generally, the risk the pending proposed transaction could distract management of both entities and they will incur substantial costs, 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 proposed transaction or it may take longer than expected to achieve those synergies or benefits 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 WESCO’s control. Additional factors that could cause results to differ materially from those described above can be found in WESCO’s most recent Annual Report on Form 10-K, as it may be updated from time to time by quarterly reports on Form 10-Q and current reports on Form 8-K all of which are available on WESCO’s website at http://wesco.investorroom.com/sec-filings and on the SEC’s website at http://www.sec.gov, and in Anixter’s most recent Annual Report on Form 10-K, as it may be updated from time to time by quarterly reports on Form 10-Q and current reports on Form 8-K all of which are available on Anixter’s website at http://investors.anixter.com/financials/sec-filings and on the SEC’s website at http://www.sec.gov. Forward-looking statements speak only as of the date of this communication. Neither WESCO nor Anixter undertake any intent or obligation to publicly update or revise any of the estimates and other forward-looking statements made in this announcement, whether as a result of new information, future events or otherwise, except as required by law. Non-GAAP Measures This presentation includes certain non-GAAP financial measures. These financial measures include organic sales growth, gross profit, gross margin, financial leverage, earnings before interest, taxes, depreciation and amortization (EBITDA), free cash flow, adjusted income from operations, and adjusted diluted earnings per share. The Company believes that these non-GAAP measures are useful to investors as they provide a better understanding of sales performance, and the use of debt and liquidity on a comparable basis. Management does not use these non-GAAP financial measures for any purpose other than the reasons stated above. 2

 

Anixter Acquisition Update • Announced acquisition of Anixter International in early January • Integration planning process is underway • Required filings with the SEC and regulatory approvals are in process • Expect to close transaction in second or third quarter of 2020 3

 

Fourth Quarter and Full Year 2019 Highlights Organic Sales Growth versus Prior Year Fourth Quarter • Record fourth quarter sales of $2.1 billion; Organic sales up 3.9% Annual Quarter – Strength in Utility, CIG, and Datacom – Down 1% sequentially, in line with seasonality • Year-over-year growth in all end markets and geographies for the second consecutive quarter October +4% • Free cash flow of $94 million; 178% of net income November +6% December +1% • Adjusted operating margin down 40 basis points versus prior year • Estimated pricing impact of +1% U.S. +4% 6.2% Canada +2% • Preliminary January sales up low single digits International +13% FY 2019 3.9% • Record sales of $8.4 billion; Organic sales up 2.6% 2.6% • Year-over-year growth in all end markets and geographies for the third consecutive year 1.5% • Record adjusted diluted earnings per share of $5.20; up 8% versus prior year 2018 2019 2018 2019 • Free cash flow of $180 million; 81% of net income • Repurchased $150 million of shares • Financial leverage of 2.8x at year-end • Announced acquisition of Anixter International in early January Record sales and adjusted EPS in 2019 Note: Organic sales growth excludes the impact of acquisitions in the first year of ownership, foreign 4 exchange rates and differences in the number of workdays. See appendix for non-GAAP reconciliations.

 

Fourth Quarter and Full Year 2019 Results Fourth Quarter Full Year Versus Implied Versus 2019 $ Millions, except per share amounts 2018 2019 2018 2019 PY Midpoint PY Outlook Sales $2,011 $2,099 4.4% ~3.5% $8,177 $8,359 2.2% 1% - 3% Gross Profit $390 $390 flat $1,567 $1,581 0.9% % of sales 19.4% 18.6% (80) bps 19.2% 18.9% (30) bps SG&A $284 $290 2.0% $1,152 $1,173 1.8% % of sales 14.1% 13.8% (30) bps 14.1% 14.0% (10) bps Operating Profit $91 $84 (7.4)% $352 $346 (1.8)% % of sales 4.5% 4.0% (50) bps 4.3% 4.1% (20) bps Adjusted Operating Profit $91 $87 (3.9)% ~4.2% $352 $349 (0.9)% ~4.2% % of Sales 4.5% 4.1% (40) bps 4.3% 4.2% (10) bps Effective Tax Rate 21.2% 22.0% 80 bps ~21% 19.8% 21.2% 140 bps ~21% Diluted EPS $1.26 $1.26 flat $4.82 $5.14 6.6% Adjusted Diluted EPS $1.26 $1.32 4.8% $4.82 $5.20 7.9% $5.00 - $5.40 5 Note: See appendix for non-GAAP reconciliations.

 

Fourth Quarter Gross Margin Influencers Mix Impact Summary Q4 2019 vs. Q4 2018 Historical Gross Margin vs. Q4 2019 vs. Q4 2019 vs. (1) Q3 2019 Gross margin down driven by two factors: WESCO Average Q4 2018 Industrial ABOVE 1. Price / Cost CIG AVERAGE • Supplier price increases Headwind Tailwind Construction BELOW • END MARKET Competitive environment Utility BELOW 2. Business Mix Canada ABOVE U.S. AVERAGE Headwind Headwind Q4 2019 vs. Q3 2019 GEOGRAPHY International BELOW Gross margin flat with no overall mix impact Stock ABOVE Special Order AVERAGE Neutral Neutral SHIPMENT Direct BELOW (1) Presented at June, 2019 Investor Day 6

 

Fourth Quarter Diluted EPS and Sales Growth Walk Diluted EPS Walk1 Sales Growth Walk Reported Q4 2018 Diluted EPS $1.26 Q4 2018 Sales $2,011 M Core operations $0.05 U.S. 290 bps Foreign exchange rates $(0.01) Canada 30 bps International 70 bps SLS acquisition $(0.08) Organic Growth 3.9% Tax $(0.02) Foreign exchange rates (30) bps Lower share count $0.12 SLS acquisition 80 bps Adjusted Q4 2019 Diluted EPS $1.32 Q4 2019 Sales $2,099M Merger-related transaction costs $(0.06) Reported Growth 4.4% Reported Q4 2019 Diluted EPS $1.26 1 Calculation differences due to rounding. 7

 

Full Year 2019 Diluted EPS and Sales Growth Walk Diluted EPS Walk1 Sales Growth Walk Reported FY 2018 Diluted EPS $4.82 FY 2018 Sales $8,177 M Core operations $0.12 U.S. 170 bps Canada 60 bps Foreign exchange rates $(0.02) International 30 bps SLS acquisition $(0.11) Organic Growth 2.6% Tax, net of interest benefit $(0.02) Foreign exchange rates (80) bps Lower share count $0.41 SLS acquisition 80 bps Adjusted FY 2019 Diluted EPS $5.20 Number of workdays (40) bps Merger-related transaction costs $(0.06) FY 2019 Sales $8,359 M Reported FY 2019 Diluted EPS $5.14 Reported Growth 2.2% 1 Calculation differences due to rounding. 8

 

Industrial End Market Organic Sales Growth versus Prior Year Annual Quarter • Q4 2019 organic sales − Up 1% versus prior year − U.S. down 2%; Canada up 6% in local currency − Up 1% sequentially 4.3% − 3rd consecutive quarter of organic growth • FY 2019 organic sales − Up 2% versus prior year − Up 1% in U.S.; Canada up 5% in local currency • Manufacturing demand remains in soft patch 1.6% 1.3% • Continued growth with global accounts for technology and petrochemical customers 0.6% • Bidding activity levels remain high in Global Accounts and 2018 2019 4Q18 4Q19 Integrated Supply platforms Global Integrated General OEM Awarded multiple contracts with a total value of $18 million with a petroleum refiner to Accounts Supply Industrial provide electrical equipment for a plant expansion in the U.S. Gulf Coast region. 36% of WESCO Sales Note: See appendix for non-GAAP reconciliations. 9

 

Construction End Market Organic Sales Growth versus Prior Year • Q4 2019 organic sales Annual Quarter − Up 1% versus prior year − Up 2% in the U.S. and flat in Canada in local currency − Down 1% sequentially − 10th consecutive quarter of organic growth • FY 2019 organic sales 5.1% − Up 2% versus prior year − Up 1% in the U.S.; Canada up 4% in local currency • Backlog remains at historically strong level; down sequentially in line with normal seasonality 2.5% • Contractors continue to be challenged by tariff-related 1.4% 1.2% budget pressures and an exceptionally tight skilled-labor market 2018 2019 4Q18 4Q19 • Continue to see some customer project delays partly due to slowing business output and uncertainty around trade Non-Residential | Contractors Awarded a multimillion dollar contract to provide electrical switchgear, lighting, and 33% of WESCO Sales other materials for the expansion of a food retailer’s distribution facility in Canada. Note: See appendix for non-GAAP reconciliations. 10

 

Utility End Market Organic Sales Growth versus Prior Year • Q4 2019 organic sales Annual Quarter − Up 10% versus prior year − Up 11% in the U.S.; down 7% in Canada in local currency − Down 5% sequentially 10.2% 9.8% • FY 2019 organic sales − Up 4% versus prior year − 9th consecutive year of organic growth 3.9% • Growth driven by product and service scope expansion with customers; increased our inventory and initiated deliveries on new contract wins 2018 2019 • Integrated Supply solutions continue to drive value for (4.6)% customers 4Q18 4Q19 • Expect grid reliability and modernization projects as well as growth in renewable energy to drive future demand Investor Owned | Public Power | Utility Contractors Awarded a multi-year contract valued at $25 million to provide lighting products and material management to a public utility, expanding our scope of supply and services. 16% of WESCO Sales Note: See appendix for non-GAAP reconciliations. 11

 

CIG End Market Organic Sales Growth versus Prior Year Annual Quarter • Q4 2019 organic sales − Up 11% versus prior year − Up 15% in the U.S.; up 5% in Canada in local currency 12.1% − Up 4% sequentially − 11th consecutive quarter of organic growth 10.6% 9.4% • FY 2019 organic sales − Up 4% versus prior year − Up 3% in the U.S.; up 10% in Canada in local currency • Supply chain solutions driving results in datacenter, 3.6% security, and cloud technology projects • Continue to be well positioned to serve data center construction, LED lighting renovation and retrofits, FTTx 2018 2019 4Q18 4Q19 deployments and broadband build outs Commercial | Institutional | Government Awarded a multimillion dollar contract to provide turnkey LED lighting retrofit materials 15% of WESCO Sales and services to upgrade a convention center facility in the U.S. Note: See appendix for non-GAAP reconciliations. 12

 

Free Cash Flow & Leverage Free Cash Flow Leverage ($ Millions) (Debt, Net of Cash, to TTM EBITDA) target leverage ~ $1.1B of free cash flow over the last 5 years 4.0x 2.0x – 3.5x $94 million and 178% of net 3.5x income in Q4 $260.5 3.0x 116% of net income 2.8x $180.3 2.5x 81% of net income 2.0x 1.5x Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY 2018 FY 2019 2018 2019 Note: See appendix for non-GAAP reconciliations. 13

 

2020 Outlook Full Year Sales Outlook First Quarter and Full Year Outlook (unchanged from outlook provided on 10/31/19) End Market Range First Quarter Full Year Industrial (LSD) to LSD Sales 2% to 5% 0% to 4% Construction (LSD) to LSD Operating Margin 3.4% to 3.6% 4.1% to 4.4% Utility LSD CIG Flat to LSD Effective Tax Rate ~22% ~22% End Market Sales Growth (1%) to 3% Diluted EPS $5.10 to $5.70 Market Outperformance 1% to 2% Foreign Currency/M&A1 Neutral Free Cash Flow ~90% of net income Consolidated WESCO 0% to 4% Notes Excludes the impact of the announced Anixter merger expected to close in Q2 or Q3 of 2020. Assumes a CAD/USD exchange rate of 0.75 in FY20. Q1 and full year 2020 have one additional workday than 2019 See appendix for non-GAAP reconciliations. 1Foreign currency exchange rates expected to be a slight headwind offset by the carryover impact of the SLS acquisition in March, 2019 14

 

APPENDIX

 

Trailing Twelve Month Sales Mix 15% 8% 10% 36% 41% 16% End 11% Products Markets 14% 33% 16% Industrial General Supplies Construction Communications & Security Utility Wire, Cable & Conduit CIG Lighting & Sustainability Electrical Distribution & Controls Automation, Controls & Motors 16

 

Adjusted Results Q4 2019 YTD 2019 Reported Adjusted Reported Adjusted Results Adjustments (1) Results Results Adjustments (1) Results (in millions, except for EPS) Income from operations $ 83.8 $ 3.1 $ 86.9 $ 346.2 $ 3.1 $ 349.4 Net interest and other 16.2 - 16.2 64.2 - 64.2 Income before income taxes $ 67.6 3.1 $ 70.7 $ 282.1 3.1 $ 285.2 Income tax 14.9 0.7 15.6 59.9 0.7 60.5 Effective tax rate 22.0% 22.0% 21.2% 21.2% Net income 52.7 2.5 55.2 222.2 2.5 224.7 Less: Non-controlling interests (0.4) - (0.4) (1.2) - (1.2) Net income attributable to WESCO $ 53.1 2.5 $ 55.6 $ 223.4 2.5 $ 225.9 Diluted Shares 42.2 42.2 43.5 43.5 EPS $ 1.26 $ 1.32 $ 5.14 $ 5.20 (1) Merger-related transaction costs included in SG&A expenses and related income tax effect. 17

 

Fourth Quarter Organic Sales Growth ($ Millions) Year-over-Year Three Months Ended, Core Less: Less: Organic December 31, 2018 December 31, 2019 Growth FX Impact Workday Growth Industrial core sales 739 746 0.9% (0.4)% 0.0% 1.3% Construction core sales 677 684 1.0% (0.4)% 0.0% 1.4% Utility core sales 305 335 9.6% (0.2)% 0.0% 9.8% CIG core sales 290 319 10.1% (0.5)% 0.0% 10.6% Total core sales $ 2,011 $ 2,084 3.6% (0.3)% 0.0% 3.9% U.S. core sales 1,482 1,540 4.0% 0.0% 0.0% 4.0% Canada core sales 413 415 0.5% (1.0)% 0.0% 1.5% International core sales 116 128 10.5% (2.2)% 0.0% 12.7% Total core sales $ 2,011 $ 2,084 3.6% (0.3)% 0.0% 3.9% Plus: SLS sales - 16 Total net sales $ 2,011 $ 2,099 Sequential Three Months Ended, Reported Less: Less: Organic September 30, 2019 December 31, 2019 Growth FX Impact Workday Growth Industrial sales 755 746 (1.2)% (0.2)% (1.6)% 0.6% Construction sales 715 692 (3.2)% (0.1)% (1.6)% (1.5)% Utility sales 358 335 (6.4)% 0.0% (1.6)% (4.8)% CIG sales 321 327 1.8% (0.1)% (1.6)% 3.5% Total net sales 2,148 2,099 (2.3)% (0.1)% (1.6)% (0.6)% Note: Prior period end market amounts may contain reclassifications to conform to current period presentation. 18

 

Full Year Organic Sales Growth ($ Millions) Year-over-Year Twelve Months Ended, Core Less: Less: Organic December 31, 2018 December 31, 2019 Growth FX Impact Workday Growth Industrial core sales 2,983 2,999 0.5% (0.7)% (0.4)% 1.6% Construction core sales 2,685 2,712 1.0% (1.2)% (0.4)% 2.5% Utility core sales 1,304 1,347 3.4% (0.3)% (0.4)% 3.9% CIG core sales 1,205 1,234 2.4% (0.8)% (0.4)% 3.6% Total core sales $ 8,177 $ 8,292 1.4% (0.8)% (0.4)% 2.6% U.S. core sales 6,053 6,172 2.0% 0.0% (0.4)% 2.4% Canada core sales 1,648 1,643 (0.3)% (2.9)% (0.4)% 3.0% International core sales 475 478 0.5% (3.3)% (0.4)% 4.2% Total core sales $ 8,177 $ 8,292 1.4% (0.8)% (0.4)% 2.6% Plus: SLS sales - 67 Total net sales $ 8,177 $ 8,359 Note: Prior period end market amounts may contain reclassifications to conform to current period presentation. 19

 

Capital Structure and Leverage ($ Millions) EBITDA Twelve Months Ended, December 31,2018 December 31,2019 Income from operations 352 346 Depreciation and amortization 63 62 EBITDA 415 408 Debt As of, Maturity December 31, 2018 December 31, 2019 AR Revolver (variable) 275 415 2022 Inventory Revolver (variable) 52 - 2024 Term Loans (variable) 25 - 2019 2021 Senior Notes (fixed) 500 500 2021 2024 Senior Notes (fixed) 350 350 2024 Other 31 28 Various Total debt1 1,233 1,293 Less: cash and cash equivalents 96 151 Total debt, net of cash 1,137 1,142 Leverage 2.7x 2.8x Liquidity2 Liquidity 824 823 (1) Debt is presented in the condensed consolidated balance sheets net of debt discount and debt issuance costs. (2) Total availability under asset-backed credit facilities plus cash in investment accounts. Note: For financial leverage ratio in prior periods, see quarterly earnings webcasts as previously furnished to the Securities & Exchange Commission, which can be obtained from the Investor Relations page of WESCO’s website at www.wesco.com. 20

 

Gross Profit and Free Cash Flow ($ Millions) Gross Profit Three Months Ended, December 31, 2018 December 31, 2019 Net sales 2,011 2,099 Cost of goods sold1 1,621 1,710 Gross profit2 390 390 Gross margin 2 19.4% 18.6% Free Cash Flow Twelve Months Ended, December 31, 2018 December 31, 2019 Net cash provided by operating activities 297 224 Less: capital expenditures (36) (44) Free cash flow3 261 180 Net income 225 222 % of net income 116% 81% 1 Excluding depreciation and amortization. 2 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. 3 Free cash flow is provided by the Company as an additional liquidity measure. Capital expenditures are deducted from operating cash flow to determine free cash flow. Free cash flow is available to fund investing and financing activities. Note: For gross profit in prior periods, see quarterly earnings webcasts as previously furnished to the Securities & Exchange Commission, which can be obtained from the Investor Relations page of WESCO’s website at www.wesco.com. 21

 

Work Days Q1 Q2 Q3 Q4 FY 2017 64 64 63 62 253 2018 64 64 63 62 253 2019 63 64 63 62 252 2020 64 64 64 61 253 22