WESCO International, Inc.

Hello and welcome to Wesco's fourth quarter and full year 2022 earnings call. I would like to remind you that all lines are on listen-only mode throughout the presentation. If you would like to ask a question, please press star followed by one on your telephone keypad. Please note that this event is being recorded. I will now hand the call over to Scott Gaffner, Senior Vice President of Investor Relations. Please begin.

Thank you and good morning, everyone. Before we get started, I wanted to remind you that certain statements made on this call contain forward-looking information. Forward-looking statements are not guarantees of performance and by their nature are subject to inherent uncertainties. Actual results may differ materially. Please see our webcast slides as well as the company's SEC filings for additional risk factors and disclosures. Any forward-looking information relayed on this call speaks only as of this date and the company undertakes no obligation to update the information. to reflect the changed circumstances. Additionally, today we will use certain non-GAAP financial measures. Required information about these non-GAAP measures is available on our webcast slides and in our press release, both of which are posted on our website at Wesco.com. On the call this morning, we've got John Engel, Wesco's Chairman, President, and Chief Executive Officer, and Dave Schultz, Executive Vice President and Chief Financial Officer. And now I'll turn the call over to John.

Thank you, Scott, and good morning, everyone. It's a pleasure to be with you today. Wesco delivered a stellar encore performance in 2022, clearly demonstrating the power of our ongoing transformation and our ability to drive sustained growth and market outperformance. We again set new company records for sales margin and profitability and reduced leverage to below three times for the first time since 2019. With this trajectory, we've taken a significant step forward in the achievement of our long-term 10-plus percent EBITDA margin target. We also delivered record quarterly free cash flow and reduced networking capital in the fourth quarter, notably on the strength of double-digit organic sales growth that exceeded our expectations. We're carrying very strong positive momentum into 2023, and I am confident that this year will be another transformational year with advances in our digital capabilities above market growth, continued margin expansion, and record free cash flow generation that supports our capital allocation priorities. Now turning to page four. The strength of our business model and the success of our integration efforts over the past two and a half years have established a track record of superior results for our company. This page highlights our record 2022 results compared to the pro forma pre-pandemic results of legacy Wesco, plus legacy annexed in 2019. As you can see, we have clearly outperformed the market, delivering impressive sales growth and margin expansion, and we achieved record profitability, all while rapidly deleveraging our balance sheet. Most importantly, our dedicated team of Wesco associates continues to provide resilient and critical supply chain solutions for our customers around the world, capturing the benefits of our exposure to sustainable secular growth trends that are both deep and drive our future sales and profitability. Turning to page five. This page outlines our noteworthy performance over the last six years, and it starts with Wesco's standalone results in 2017 and 2018. It's then followed by the Wesco plus Annexer pro forma results in 2019 and 2020. And then it's followed by the results of the new Wesco, the result of combining Wesco and Anixter in 2021 and 2022. We delivered an impressive adjusted EBITDA CAGR of 24% from 2019 through 2022. These results would have been truly exceptional under normal circumstances, but they're even more impressive given the tremendous challenges of combining two equal-sized Fortune 500 companies against the backdrop of the pandemic over the last two and a half years. Our three-year post-merger integration plan is coming to a close at the end of 2023. Our digital transformation plan is progressing well, and we're on track to deliver advanced digital capabilities to create superior value for our customers and supplier partners. And this is as we continue our march towards becoming a double-digit EBITDA margin business. Now moving to page six for a quick update on Rahi Systems, the acquisition we completed on November 1st. Rahi's performance in November and December was absolutely outstanding, with sales of $112 million, far exceeding our expectation of $65 to $85 million in sales. For the full year 2022, Rahi generated approximately $480 million in sales, which is substantially higher than their trailing 12-month revenue of $400 million as of the end of September 2022. For 2023, their strong growth is expected to continue with sales up over 20%. Rahi is an excellent example of the type of acquisition that fits well within our strategy and our capital allocation priorities. It operates in a fast-growing market, is highly complementary to Wesco's product and service capabilities, and it is easily integrated into our operations. Now shifting to page seven. As announced in our investor day last year, we substantially raised our free cash flow expectations for the new Wesco. This upsized cash generation of 3.5 to 4.5 billion through 2026 fully supports investing in our business for continued above market growth and increasing our capital return to shareholders. For 2023, our capital allocation priorities include initiating a common stock dividend, which we expect to begin paying this quarter. subject to the board's final review and approval, as well as continuing share repurchases under our current $1 billion share repurchase authorization. This represents our commitment to even higher shareholder returns and our strong confidence in the ongoing strength and future performance of Wesco. Overall, our stock price has performed well since closing the annex or acquisition in June, 2020. but we're still trading far below our expectations and our intrinsic value. This is especially so given our series of record-setting results and our overall positive business momentum vector. We look forward with greater confidence than ever to a future of sustained growth and market outperformance. With that, I will now turn the call over to Dave.