Title: WESCO
1WESCO
- Richard Heyse, Vice President Chief Financial
Officer - WESCO Distribution, Inc.
2Safe 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, debt level, changes in general
economic conditions, fluctuations in interest
rates, increases in raw materials and labor
costs, levels of competition and other factors
described in detail in Form 10-K for WESCO
International, Inc. for the year ended December
31, 2008 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.
3WESCO Profile
Extra-Effort Company
Market Leader
- Fortune 500 Company headquartered in Pittsburgh,
PA - Over 6,300 employees including 2,300 sales
personnel - 380 Locations
- Consistent strategy of market share growth
- Local market penetration with national programs
- Accretive acquisitions
- Operational excellence and LEAN
- Leading Provider of
- National Account Programs
- Integrated Supply Services
- OEM Direct Materials and Services
- Electric Utility Distribution Grid Solutions
- Industry-leading cost structure
- International operations and global sourcing
capabilities
an industry leader
4WESCO Evolution
Captive Distribution Arm of Westinghouse
Recessionand Recovery
GrowthAccelerates
SevereRecession
Growth Strategy Deployed
1922-1994
1994-2001
2001-2003
2004-2008
2008-2009
- LBO in 1994 by management and Clayton, Dublier
Rice - 1.5 Billion in sales
- 175 Branches in U.S. and Canada
- 85 non-residential construction
- Limited supply relationships other than
Westinghouse
- Sales grew to 3.7B
- 25 acquisitions
- Expanded geographic footprint
- Diversified end-markets and supplier base
- Launched National Accounts Program
- Launched Integrated Supply
- Leveraged recapitalization 1998
- IPO 1999
- Severe industry downturn
- High financial leverage
- Suspended acquisition program
- Strong free cash flow generation
- Invested in sales and marketing programs
- Launched LEAN
- 11 quarters of double digit sales growth
- Sales grew to 6.1B
- Invested in sales capacity expansion
- Restarted acquisition program
- 7 acquisitions with 1.1 B sales
- Product category expansion
- Improved capital structure
- Expanded marketing programs
- Expanded LEAN
- Significant cost reduction actions taken
- Record free cash flow generation
- Strengthened capital structure
- Accelerating LEAN and extending to customers
- International expansion
- Investing in attractive growth verticals and
geographies
from captive distributor to global supply chain
company
5Market Opportunity
Large, Fragmented Market
Value of Distribution
600B Construction, MRO, and OEM Markets
SUPPLIERS
CUSTOMERS
- Sales
- Marketing
- Delivery
- Service
- Procurement
- Warehousing
- Logistics Management
MRO
- Thousands of electrical and industrial product
manufacturers - Over 10,000 electrical and industrial
distributors - Top five distributors have 26 share of
electrical distribution industry in U.S. - 75 of electrical products get to market through
distribution - Continuing industry consolidation
Market Trends Benefit WESCO
- Scale
- Global sourcing
- Value-creating solutions
- Enhanced interdependence
large, fragmented market with trends favorable
to WESCO
6WESCO A Total Supply Chain Solutions Provider
beyond electrical and traditional distribution
7WESCO Market Mix and Product Portfolio
Markets and Customers
Products and Suppliers
Distribution Equipment
Wire, Cable Conduit
Data Communication
13
20
16
39
12
6
11
Controls Motors
34
39
10
GeneralSupplies
Lighting Controls
- 115,000 active customers
- Majority of Fortune 500 companies are our
customers
- 1,000,000 different products shipped annually,
with 250,000 in stock - 19,000 suppliers
Note Percentages based on 2008 Sales
diverse market, customer base, product lines,
and suppliers
8WESCOs LEAN Journey
2003 and beyond
Customer Focus
LEAN The process of continuously eliminating
waste across the business and value chain
- 2003 launch
- Initial focus on sales and warehousing
- Centralized LEAN team
- 3,300 Kaizen events
- Enterprise-wide results
- Leader in applying LEAN to supply chain
- A competitive differentiator
Maintenance and Production Support
Safety and Security
Green and Sustainability
continuous improvement culture founded on LEAN
9WESCO Today vs. Last Downturn
Note Percentages based on 2008 Sales
bigger, more diversified and more profitable
with a stronger capital structure
10WESCO Growth Strategy Financial Objectives
Growth Strategy
Long Term Financial Objectives
Markets Customers
- Grow faster than the market plus acquisitions
- Maintain industry-leading cost position
- Expand operating profit
- Provide superior return on invested capital
- Generate strong operating cash flow through the
cycle
Geography
Products Suppliers
- Target sales and marketing initiatives on
attractive verticals - Sell complete set of products to all customers
and service all their locations - Expand product and service portfolio and
capabilities - Expand internationally
focused on shareholder value creation
11WESCO Growth Engines
aggressively targeting attractive opportunities
during the downturn
12Invest in WESCO
- Market leader with low business risk profile
- Organic sales growth faster than market
- Proven business model uniquely positioned in
large, fragmented market - Operational excellence culture focused on LEAN
- Solid ROIC performance and excellent cash
conversion results - Proven acquirer in a consolidating industry
strong company, excellent value creation
opportunity