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What changed in WESCO INTERNATIONAL INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of WESCO INTERNATIONAL INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+356 added−373 removedSource: 10-K (2024-02-20) vs 10-K (2023-02-21)

Top changes in WESCO INTERNATIONAL INC's 2023 10-K

356 paragraphs added · 373 removed · 260 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

65 edited+12 added−16 removed61 unchanged
Biggest changeWesco’s Inclusion & Diversity Council, which is led by our Vice President of Inclusion & Diversity and comprises members of our senior management, advises on the achievement of these objectives and has formed five Business Resource Groups (“BRGs”) to support the following groups – women, BLIPOC (Black, Latino, Indigenous, and People of Color), LGBTQ+, people with diverse abilities, and veterans of the armed forces.
Biggest changeWesco has six Business Resource Groups (“BRGs”) to support the following groups: women, BLIPOC (Black, Latino, Indigenous, and People of Color), LGBTQ+, people with diverse abilities, veterans of the armed forces and our early-career employees. These BRGs foster a sense of community and inclusion, provide opportunities to network, support advancement opportunities within the organization, and assist with recruiting.
Investor-owned utility companies provide a combination of electric generation, transmission and/or distribution and are owned by investors or shareholders while public power entities are generally non-profit entities owned by their members or governed by local, state and municipal governments. These two markets comprise the vast majority of utility customers in the U.S. and Canada.
Investor-owned utility companies provide a combination of electric generation, transmission and/or distribution and are owned by investors or shareholders while public power entities are generally non-profit entities owned by their members or governed by local, state, or municipal governments. These two markets comprise the vast majority of utility customers in the U.S. and Canada.
We purchase products from a diverse group of more than 50,000 suppliers who are located predominantly in North America, but manufacture products around the world. The main product categories we source are electrical distribution and controls, communications and security, wire, cable and conduit, lighting and sustainability, automation and motors, and general supplies.
We purchase products from a diverse group of more than 50,000 suppliers who are located predominantly in North America, but who manufacture products around the world. The main product categories we source are electrical distribution and controls, communications and security, wire, cable and conduit, lighting and sustainability, automation and motors, and general supplies.
Cameron has served as our Executive Vice President and General Manager of the Utility and Broadband Solutions division since June 2020 and from January 2014 to June 2020 as Vice President and General Manager, Utility and Broadband Group and as Regional Vice President of the utility business from 2011 to 2013. Prior to joining Wesco in 2011, Mr.
Cameron has served as our Executive Vice President and General Manager of the Utility & Broadband Solutions division since June 2020 and from January 2014 to June 2020 as Vice President and General Manager, Utility and Broadband Group and as Regional Vice President of the utility business from 2011 to 2013. Prior to joining Wesco in 2011, Mr.
Geary, II has served as our Executive Vice President and General Manager of the Communications and Security Solutions division since June 2020. Prior to the merger with Anixter in 2020, Mr.
Geary, II has served as our Executive Vice President and General Manager of the Communications & Security Solutions division since June 2020. Prior to the merger with Anixter in 2020, Mr.
Squires III has served as our Executive Vice President and General Manager of the Electrical and Electronic Solutions division since June 2020, and from October 2019 to June 2020 he served as our Senior Vice President and Chief Operating Officer.
Squires III has served as our Executive Vice President and General Manager of the Electrical & Electronic Solutions division since June 2020, and from October 2019 to June 2020 he served as our Senior Vice President and Chief Operating Officer.
(“Wesco International”) and its subsidiaries (collectively, “Wesco” or the “Company”), headquartered in Pittsburgh, Pennsylvania, is a leading provider of business-to-business distribution, logistics services and supply chain solutions. We employ approximately 20,000 people, maintain relationships with more than 50,000 suppliers, and serve approximately 150,000 customers worldwide.
(“Wesco International”) and its subsidiaries (collectively, “Wesco” or the “Company”), headquartered in Pittsburgh, Pennsylvania, is a leading provider of business-to-business distribution, logistics services and supply chain solutions. We employ approximately 20,000 people, maintain relationships with more than 50,000 suppliers, and serve nearly 150,000 customers worldwide.
We partner with the industries’ largest suppliers to deliver leading brands across every product category including automation, broadband, communications, electrical, electronics, energy, lighting, MRO, networking, renewables, safety, security, utility and wire and cable. Customized Solutions. Our customers have unique business models, challenges and priorities.
We partner with the industries’ largest suppliers to deliver leading brands across every product category including automation/IoT, broadband, communications, electrical, electronics, energy, lighting, MRO, networking, renewables, safety, security, utility and wire and cable. Customized Solutions. Our customers have unique business models, challenges and priorities.
Wesco has established relationships with several charitable organizations and encourages employees to volunteer in the community by providing one day of paid volunteer time per year. By connecting with and contributing to local charitable organizations, Wesco supports the development of strong, vibrant and diverse communities.
Wesco has established relationships with several charitable organizations and encourages employees to volunteer in the community by providing one day of paid volunteer time off per year. By connecting with and contributing to local charitable organizations, Wesco supports the development of strong, vibrant and diverse communities.
With millions of 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.
With millions of 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, educational institutions, telecommunications providers, and utilities.
Lazzaris has served as our Executive Vice President and General Counsel since June 2020 and also as Corporate Secretary since February 2021. From 2014 to June 2020 she served as Senior Vice President and General Counsel, and from 2010 to December 2013 she served as our Vice President, Legal Affairs. From 2008 to 2010, Ms.
Lazzaris has served as our Executive Vice President and General Counsel since June 2020 and also as Corporate Secretary from February 2021 to December 2023. She served as our Senior Vice President and General Counsel from 2014 to June 2020, and as our Vice President, Legal Affairs from 2010 to December 2013. From 2008 to 2010, Ms.
We believe that our scale, broad portfolio of products, technical expertise, global reach with local relationships, comprehensive value-added services, and smart, digital solutions provide distinct advantages that benefit our customers. Broad Portfolio of Products from Top Brands. Our broad product portfolio enables us to offer comprehensive, end-to-end solutions in each of our three business units.
Our scale, broad portfolio of products, technical expertise, global reach with local relationships, smart, digital solutions, and comprehensive value-added services provide distinct advantages that benefit our customers. Broad Portfolio of Products from Top Brands. Our broad product portfolio enables us to offer comprehensive, end-to-end solutions in each of our three business units.
As of December 31, 2022, Wesco had approximately 20,000 full-time employees worldwide, with approximately 13,000 in the U.S. and the remaining 7,000 in international locations. Safety. Safety is the first tenet of our core value of commitment to our people and we do not tolerate violations of established safety protocol.
As of December 31, 2023, Wesco had approximately 20,000 full-time employees worldwide, with approximately 13,000 in the U.S. and the remaining 7,000 in international locations. Safety. Safety is the first tenet of our core value of commitment to our people and we do not tolerate violations of established safety protocol.
We have implemented policies and technology to reduce the emissions impact of our fleet, which included evaluation of alternative fuel sources and an assessment of electric vehicle integration into our truck and sales fleet. We have a goal to reduce absolute direct and certain indirect GHG emissions by 30% from a 2019 baseline by 2030. Climate Impact.
We have implemented policies and technology to reduce the emissions impact of our fleet, which included evaluation of alternative fuel sources and an assessment of electric vehicle integration into our truck and sales fleet. We have a goal to reduce absolute direct and certain indirect GHG emissions by 30% from a 2021 baseline by 2030. Climate Impact.
We are implementing digital tools across various aspects of our business to improve the efficiency of our operations as well as those of our business partners, make it easier to do business with Wesco, and increase the value of our data by providing unique insight into end-market use of the products and services we offer.
We are implementing digital tools across our business to improve the efficiency of our operations as well as those of our business partners, make it easier to do business with Wesco, and increase the value of our data by providing unique insight into end-market use of the products and services we offer.
Our Global Corporate Safety team oversees our health and safety program, which covers the core processes and procedures for strong health and safety management, safe work practices, and regulatory compliance. Our health and safety program considers both preventative and reactionary management concepts and elements of the OHSAS-18001 and ISO-45001 guidelines and standards.
Our Global Corporate Safety team oversees our health and safety program, which covers the core processes and procedures for strong health and safety management, safe work practices, and regulatory compliance. Our health and safety program considers both preventative and reactionary management concepts and elements of the OHSAS-18001 and ISO-45001 guidelines and standards, and the strictest global regulations.
Squires III 61 Executive Vice President and General Manager, Electrical and Electronic Solutions Christine A. Wolf 62 Executive Vice President and Chief Human Resources Officer Set forth below is biographical information for our executive officers listed above. John J.
Squires III 62 Executive Vice President and General Manager, Electrical & Electronic Solutions Christine A. Wolf 63 Executive Vice President and Chief Human Resources Officer Set forth below is biographical information for our executive officers listed above. John J.
Each of our business units is positioned to benefit from secular trends that are driving growth. These include increasing electrification, growth of automation/IoT, green energy and utility grid modernization, 24/7 connectivity and security, supply chain consolidation and relocation to North America, and digitalization. Ingenuity and Expertise.
Each of our business units is positioned to benefit from secular trends that are driving growth. These include increasing electrification, growth of automation/IoT, data center, green energy and utility grid modernization, 24/7 connectivity and security, supply chain consolidation and relocation to North America, and digitalization/AI. Ingenuity and Expertise.
Our innovative value-added solutions include supply chain management, logistics and transportation, procurement, warehousing and inventory management, as well as kitting and labeling, limited assembly of products and installation enhancement. 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.
Our innovative value-added solutions include supply chain management, logistics and transportation, procurement, warehousing and inventory management, as well as kitting and labeling, limited assembly of products and installation enhancement. Wesco operates nearly 800 branches, warehouses and sales offices in approximately 50 countries, providing a local presence for customers and a global network to serve multi-location businesses and global corporations.
We also offer a complete set of service solutions including fiber project management, high and medium voltage project design and support, pre-wired meters and capacitor banks, meter testing and advanced metering infrastructure installation, personal protective equipment dielectric testing, tool repair, emergency response management, storage yard management, materials management, and logistics management to improve customer supply chain efficiencies.
UBS also offers a complete set of service solutions including fiber project management, high and medium voltage project design and support, pre-wired meters and capacitor banks, meter testing and advanced metering infrastructure installation, personal protective equipment dielectric testing, tool repair, emergency response management, storage yard management, materials management, and logistics management to improve customer supply chain efficiencies.
The network infrastructure market is comprised of cabling and connectivity, racks and cabinets, power, wireless, and associated products that enable network connectivity and communications in commercial buildings, and hyperscale, cloud-based and multi-tenant data centers. The security market includes video surveillance, fire and intrusion detection, access control, door locking and other solutions that create safe and smart environments for customers.
The network infrastructure market comprises cabling and connectivity, racks and cabinets, power, wireless, and associated products that enable network connectivity and communications in commercial buildings, and hyperscale, cloud-based and multi-tenant data centers. The security market includes video surveillance, fire and intrusion detection, access control, door locking and other solutions that create safe and smart environments for customers.
We have undertaken no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 8 Table of Contents Executive Officers Our executive officers and their respective ages and positions as of February 21, 2023 are set forth below. Name Age Position John J.
We have undertaken no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 8 Table of Contents Executive Officers Our executive officers and their respective ages and positions as of February 20, 2024 are set forth below. Name Age Position John J.
We provide a wide range of value-added services, which draw on our product knowledge and logistics expertise, to help our customers save time, improve productivity, mitigate risk and increase profitability.
We provide a wide range of value-added services, which draw on our product knowledge and logistics expertise, to help our customers save time, improve productivity, mitigate risk and increase 4 Table of Contents profitability.
We believe that accomplishing this vision depends on the successful execution of our strategy, which is comprised of three elements: Extend Our Leading Scale and Value Proposition: Our long-term growth potential benefits from secular trends in electrification, automation/IoT, green energy and utility grid modernization, 24/7 connectivity and security, supply chain consolidation, and digitalization.
We believe that accomplishing this vision depends on the successful execution of our strategy, which comprises three elements: Extend Our Leading Scale and Value Proposition: Our long-term growth potential benefits from secular trends in electrification, automation/IoT, green energy and utility grid modernization, 24/7 connectivity and security, supply chain consolidation, and digitalization/artificial intelligence.
Our international operations and global sourcing capabilities enable us to service our customers around the world. Wesco has approximately 800 branches, warehouses and sales offices with operations in more than 50 countries. Our global distribution network includes 49 facilities that operate as regional distribution centers or large branch locations in key geographic areas in North America, Europe and South America.
Our international operations and global sourcing capabilities enable us to service our customers around the world. Wesco has nearly 800 branches, warehouses and sales offices with operations in approximately 50 countries. Our global distribution network includes 54 facilities that operate as regional distribution centers or large branch locations in key geographic areas in North America, Europe and South America.
In 2022, our ten largest suppliers accounted for approximately 28% of our purchases. No one supplier accounted for more than 5% of our total purchases. Our supplier relationships are important to us, providing access to a wide range of products, services, technical training, and sales and marketing support.
In 2023, our ten largest suppliers accounted for approximately 27% of our purchases. No one supplier accounted for more than 5% of our total purchases. Our supplier relationships are important to us, providing access to a wide range of products, services, technical training, and sales and marketing support.
While our patents have value, none is so essential that its loss would materially affect our business. Environmental Matters Our facilities and operations are subject to federal, state and local laws and regulations relating to environmental protection and human health and safety.
While our patents have value, none is so essential that its loss would materially affect our business. 7 Table of Contents Environmental Matters Our facilities and operations are subject to federal, state and local laws and regulations relating to environmental protection and human health and safety.
Electrical & Electronic Solutions The EES segment, with approximately 7,000 employees supporting customers in more than 50 countries, supplies a broad range of products and solutions primarily to the construction, industrial and original equipment manufacturer (“OEM”) markets.
Electrical & Electronic Solutions The EES segment, with approximately 6,800 employees supporting customers in more than 50 countries, supplies a broad range of products and solutions primarily to the construction, industrial and original equipment manufacturer (“OEM”) markets.
Our sustainability efforts are an integral part of our operations and core values. Customers We have a large base of approximately 150,000 active customers across commercial and industrial businesses, contractors, government agencies, institutions, telecommunications providers, and utilities. Our top ten customers accounted for approximately 10% of our sales in 2022.
Our sustainability efforts are an integral part of our operations and core values. Customers We have a large base of nearly 150,000 active customers across commercial and industrial businesses, contractors, government agencies, educational institutions, telecommunications providers, and utilities. Our top ten customers accounted for approximately 11% of our sales in 2023.
Communications & Security Solutions The CSS segment, with over 4,600 employees supporting customers in more than 50 countries, is a global leader in the network infrastructure and security markets.
Communications & Security Solutions The CSS segment, with approximately 4,400 employees supporting customers in more than 50 countries, is a global leader in the network infrastructure and security markets.
Engel 61 Chairman, President and Chief Executive Officer David S. Schulz 57 Executive Vice President and Chief Financial Officer James F. Cameron 57 Executive Vice President and General Manager, Utility and Broadband Solutions William C.
Engel 62 Chairman, President and Chief Executive Officer David S. Schulz 58 Executive Vice President and Chief Financial Officer James F. Cameron 58 Executive Vice President and General Manager, Utility & Broadband Solutions William C.
We have approximately 1,000 commercial agreements with more than 360 preferred suppliers and purchase nearly 65% of our products pursuant to these arrangements. We offer a wide range of sustainable products from the world’s leading manufacturers and help our customers determine solutions to meet their sustainability goals.
We have commercial agreements with more than 480 preferred suppliers and purchase approximately 66% of our products pursuant to these arrangements. We offer a wide range of sustainable products from the world’s leading manufacturers and help our customers determine solutions to meet their sustainability goals.
This includes 49 facilities that operate as regional distribution centers or large branch locations, of which 38 are located in the U.S., seven in Canada, three in Europe and one in South America. Human Capital At Wesco, our people and our high-performance culture are our greatest assets.
This includes 54 facilities that operate as regional distribution centers or large branch locations, of which 42 are located in the U.S., eight in Canada, two in Europe and two in South America. Human Capital At Wesco, our people and our high-performance culture are our greatest assets.
The three elements of our strategy touch every aspect of our business – from how we go-to-market within our three strategic business units to how we drive efficiency and build our culture across the organization.
The three elements of our strategy touch every aspect of our business – from how we add value to our supplier partners and how we go-to-market within our three strategic business units to how we drive efficiency across the organization.
No one customer accounted for more than 2% of our sales in 2022. Suppliers Our global network of branches, warehouses and sales offices provide customers with access to millions of products. Each location tailors its inventories to meet the needs of its customers, providing a local presence and a global network to service multi-location businesses and multi-national corporations.
No one customer accounted for more than 2% of our sales in 2023. Suppliers Our global network of branches, warehouses and sales offices provide customers with access to millions of products. Specific locations tailor their inventories to meet the needs of their customers, providing a local presence and a global network to service multi-location businesses and global corporations.
As part of our overall offerings, we provide a comprehensive portfolio of value-added solutions, as outlined below, designed to address our customers’ business needs, help save time, improve productivity, increase profitability, and mitigate risk. • Installation enhancement services to adapt products and packaging in order to streamline processes and reduce the total cost of installation; • Advisory services to help customers implement Lean practices, optimize their supply chains, and digitally transform their workplaces with the latest technologies and infrastructure solutions; • Project deployment services to help secure job site materials, improve efficiency, reduce job site waste, and improve scalability across multifaceted deployments; 3 Table of Contents • Digital services and e-business integrations to transform how our customers consume, deploy, and procure materials and technologies, supporting data-driven decisions and increased operational efficiency; and • Supply chain programs to improve productivity, reduce operating costs and increase operational efficiencies.
As part of our overall offerings, we provide a comprehensive portfolio of value-added solutions, as outlined below, designed to address our customers’ business needs, help drive efficiency, improve productivity, increase profitability, and mitigate risk. • Installation enhancement services to adapt products and packaging in order to streamline processes and reduce the total cost of installation; • Advisory services to help customers implement Lean practices, optimize their supply chains, improve safety, and digitally transform their workplaces through technology and infrastructure solutions; 3 Table of Contents • Global solutions to create customizable programs that fit customers' business needs on a local, national and global scale; • Project deployment services to help secure job site materials, prevent loss, improve efficiency, reduce job site waste, ensure day-to-day supplies are on hand and improve scalability across multifaceted deployments; • Digital services and e-business integrations to transform how our customers consume, deploy, and procure materials and technologies, supporting data-driven decisions and increased operational efficiency; and • Supply chain programs to improve productivity, reduce operating costs and increase operational efficiencies.
Further Develop the Organization and Our Culture of Excellence: Wesco's five core values are foundational to everything we do: Our People are Our Greatest Asset, One Team, Always Strive to Be the Best, Innovation, and Winning With Customers and Suppliers.
Further Develop the Organization and Our Culture of Excellence: Wesco's five core values are foundational to everything we do: Our people are our greatest asset, One team, Always strive to be the best, Innovation, and Winning with customers and suppliers. Safety remains a priority and a company-wide responsibility at Wesco.
As a result, we do not anticipate making significant capital expenditures for environmental control matters either in the current year or in the near future. Seasonality Our operating results are not significantly affected by seasonal factors.
We believe that we are in compliance, in all material respects, with applicable environmental laws. As a result, we do not anticipate making significant capital expenditures for environmental control matters either in the current year or in the near future. Seasonality Our operating results are not significantly affected by seasonal factors.
As attention and interest grow for climate mitigation solutions, we believe that Wesco is well positioned to expand our business in these energy efficiency and renewable energy technologies and products. Waste. Our top three waste streams are cardboard, wood pallets and reels, and plastic. We work to find opportunities to reduce these waste streams by applying Lean principles.
As attention and interest grow for climate mitigation solutions, we believe that Wesco is well positioned to expand our business in these energy efficiency and renewable energy technologies and projects. Waste. Our top three waste streams are cardboard, wood pallets and reels, and plastic.
Geary, II 52 Executive Vice President and General Manager, Communications and Security Solutions Akash Khurana 49 Executive Vice President and Chief Information and Digital Officer Diane E. Lazzaris 56 Executive Vice President, General Counsel and Corporate Secretary Hemant Porwal 49 Executive Vice President Supply Chain and Operations Nelson J.
Geary, II 53 Executive Vice President and General Manager, Communications & Security Solutions Akash Khurana 50 Executive Vice President and Chief Information and Digital Officer Diane E. Lazzaris 57 Executive Vice President and General Counsel Hemant Porwal 50 Executive Vice President, Supply Chain and Operations Nelson J.
We also sponsor a summer internship program to provide college students with work experience within staff or business functions and give them the opportunity to evaluate different career fields. Inclusion and Diversity. Wesco’s focus on inclusion and diversity starts in our boardroom.
We also sponsor a summer internship program to provide college students with work experience within staff or business functions and give them the opportunity to evaluate different career fields.
Our sales development training program has been in place for more than ten years. The program is designed to systematically train and develop new college graduates through on-the-job rotations and cohort learning and development during the first year of employment. Graduates of the program move into various sales and operations roles after completing the one-year program.
The program is designed to systematically train and develop new college graduates through on-the-job rotations and cohort learning and development during the first year of employment. Graduates of the program move into various sales and operations roles after completing the one-year program.
The objectives of Wesco’s Inclusion and Diversity program are to 1) leverage the unique experiences and perspectives of our talented workforce to support Wesco’s mission, 2) engage employees and build an inclusive culture, 3) recruit and develop talent that brings new perspectives and thought processes to Wesco, 4) increase representation of suppliers that are owned and operated by teams with diverse backgrounds, and 5) support the communities in which we operate.
Our inclusion and diversity initiatives extend to all levels of our organization, and we aim to increase the representation of diverse employees through internal promotions, new hires and improved retention, with an inclusion and diversity program that fosters a sense of individual and group belonging. 5 Table of Contents The objectives of Wesco’s inclusion and diversity program are to 1) leverage the unique experiences and perspectives of our talented workforce to support Wesco’s mission, 2) engage employees and build an inclusive culture, 3) recruit and develop talent that brings new perspectives and thought processes to Wesco, 4) increase representation of suppliers that are owned and operated by teams with diverse backgrounds, and 5) support the communities in which we operate.
The trademarks and service marks filed in the U.S. include, among others: “Wesco ® ” and our corporate logo. The “Anixter” trademarks and service marks are registered in the U.S. and various foreign jurisdictions and the “EECOL” service mark is registered in Canada. We have also applied to register international trademarks, patents, and service mark applications in various foreign jurisdictions.
The “Wesco” and “Anixter” trademarks and service marks are registered in the U.S. and various foreign jurisdictions, and the “EECOL” service mark is registered in Canada. The trademarks and service marks filed in the U.S. include, among others: “Wesco ® ” and our corporate logo.
Our ESG management team also reports to the Board of Directors annually on the status of our ESG programs and progress on achieving sustainability goals. We have identified climate-related opportunities that include 6 Table of Contents expanding our offering of energy-efficient and renewable energy products.
Our Board of Directors receives regular updates and ongoing information on significant risks and risk mitigation plans. Our ESG management team also reports to the Board of Directors annually on the status of our ESG programs and progress on achieving sustainability goals. We have identified climate-related opportunities that include expanding our offering of energy-efficient and renewable energy products.
Beginning in 2023, June 22 will become an annual day of caring for Wesco employees globally on which employees will be encouraged to volunteer in their communities. Environmental Management Environmental sustainability is a priority for Wesco. Wesco works to continually improve our environmental management by establishing and working towards various sustainability objectives.
In 2023, June 22nd became an annual day of caring for Wesco employees globally on which employees are encouraged to volunteer in their communities. 6 Table of Contents Environmental Management Environmental sustainability is a priority for Wesco. We strive to continually improve our environmental management by establishing and working towards various sustainability objectives.
A secondary source of our GHG emissions is our truck and car fleet, and part of our emissions is due to corporate travel and the lifecycle impact of our landfilled waste.
As such, the energy efficiency of our buildings is a key focus of our emissions-reduction activities. A secondary source of our GHG emissions is our truck and car fleet, and part of our emissions is due to corporate travel and the lifecycle impact of our landfilled waste.
Wesco aligns with the Task Force on Climate-Related Financial Disclosures (“TCFD”) framework. We annually review environmental programs, policies, and data, including energy consumption and GHG emissions to identify and assess climate-related risks. Our Board of Directors receives annual updates and ongoing information on significant risks and risk mitigation plans.
Wesco aligns with the Task Force on Climate-Related Financial Disclosures (“TCFD”) framework. We annually review environmental programs, policies, and data, including energy consumption and GHG emissions to identify and assess climate-related risks. The Board of Directors oversees the integration of ESG principles throughout our enterprise. This includes oversight of enterprise risk.
Comprising employees from every level of the organization, the BRGs: support our business initiatives; help create a more inclusive work environment; provide opportunities for employee development, education, training, recruitment, retention, and business outreach and development; and support innovation by providing insights into new markets, product development, and multicultural marketing.
Some of the many benefits of our BRGs include: • Supporting our business initiatives; • Creating a more inclusive work environment; • Providing opportunities for employee development, education, training, recruitment, retention, and business outreach and development; and • Supporting innovation by providing insights into new markets, product development, and multicultural marketing.
Our facilities primarily use water for sanitation, cleaning, and irrigation purposes. We track water usage at each of our locations and use the data to identify unusual consumption patterns that could indicate undetected leaks or excessive usage that requires intervention. Information Security Information security and protection of our data is a top priority for Wesco, our customers and suppliers.
As a distributor and supply chain solutions provider, we are not a major consumer of water. Our facilities primarily use water for sanitation, cleaning, and irrigation purposes. We track water usage at our locations and use the data to identify unusual consumption patterns that could indicate undetected leaks or excessive usage that requires intervention.
As part of Wesco’s centennial celebration on June 22, 2022, we announced the launch of Wesco Cares, our new corporate philanthropy program focused on affordable housing and humanitarian aid. Wesco Cares provides for corporate charitable donations, employee volunteerism, and employee gift-matching.
Wesco Cares is our corporate philanthropy program focused on affordable housing and humanitarian aid and provides for corporate charitable donations, employee volunteerism, and employee gift-matching.
Rahi's expertise with complex information technology projects and global presence strengthen Wesco's data center solution offerings. 1 Table of Contents Utility & Broadband Solutions The UBS segment, with over 2,700 employees supporting customers primarily in the U.S. and Canada, provides products and services to investor-owned utilities, public power companies, including municipalities, as well as global service providers, wireless providers, broadband operators and the contractors that service these customers.
CSS products are often combined with supply chain services to increase efficiency and productivity, including installation enhancement, project deployment, advisory, and IoT and digital services. 1 Table of Contents Utility & Broadband Solutions The UBS segment, with approximately 2,900 employees supporting customers primarily in the U.S. and Canada, provides products and services to investor-owned utilities, public power companies, including municipalities, as well as global service providers, wireless providers, broadband operators and the contractors that service these customers.
Our main source of direct and indirect GHG emissions is attributed to the power and natural gas used by our facilities, which accounts for approximately 70% of our total emissions. As such, the energy efficiency of our buildings is a key focus of our emissions-reduction activities.
Our Fleet Efficiency Policy includes the use of fuel-efficient vehicles, determining the most efficient routes, and idling restrictions. Emissions. Our main source of direct and indirect GHG emissions from our own activities is attributed to the power and natural gas used by our facilities, which accounts for approximately 70% of total emissions from our own activities.
More than 2,200 employees from around the globe and at every level of the organization have joined one or more of the BRGs.
The BRGs are global and open to all employees regardless of any aspect of their personal identity. More than 3,300 employees from around the globe and at every level of the organization have joined one or more of the BRGs.
Additionally, we have a finance development program for recent college graduates seeking a career in finance that provides members with eligibility for roles with increasing responsibilities commensurate with their career development goals.
Additionally, we have a function-specific development program for recent college graduates seeking a career in IT, finance, or supply chain that provides members with eligibility for roles with increasing responsibilities commensurate with their career development goals. Individuals in this program have the opportunity to accelerate the development of their business and technical skills through three 8-month job rotations.
In addition, anyone disposing of certain products we distribute, such as ballasts, fluorescent lighting and batteries, must comply with environmental laws that regulate certain materials in these products. 7 Table of Contents We believe that we are in compliance, in all material respects, with applicable environmental laws.
Our owned and leased real property may give rise to such investigation, remediation and monitoring liabilities under environmental laws. In addition, anyone disposing of certain products we distribute, such as ballasts, fluorescent lighting and batteries, must comply with environmental laws that regulate certain materials in these products.
Our broad service offering includes installation enhancement, materials management, kitting and labeling, extensive MRO solutions, onsite job trailer solutions, end-to-end supply chain management and project management/execution across the project lifecycle. 4 Table of Contents Geography We sell to global customers through our network of branches, warehouses and sales offices consisting of 473 locations in the U.S., 148 in Canada, 64 in Europe and the Middle East, 55 in Central America, the Caribbean and South America, and 69 in the Asia Pacific region, which includes Australia.
Geography We sell to global customers through our network of branches, warehouses and sales offices consisting of 450 locations in the U.S., 144 in Canada, 59 in Europe and the Middle East, 51 in Central America, the Caribbean and South America, and 66 in the Asia Pacific region, which includes Australia.
Training and Development. Wesco offers certification and training programs, some of which are required for all employees while others are voluntary or based on job role. We offer a tuition reimbursement program to eligible employees to encourage the pursuit of undergraduate and graduate education to prepare employees for expanded roles in our business.
Training and Development. Wesco offers certification and training programs, some of which are required for all employees while others are voluntary or based on job role. Employees also have access to external training resources.
Wesco has also established a diverse leadership program for the purpose of developing our talent and providing direction for career advancement through exposure to new opportunities. Compensation and Benefits Program. Wesco provides competitive compensation and benefits packages in our locations around the globe.
Wesco has also established a diverse leadership program for the purpose of promoting the development of our diverse emerging leaders and providing direction for career advancement through exposure to new opportunities. Company Ethics. We are firmly committed to operating with the highest level of ethics and integrity.
For waste generated, we work to identify opportunities to reuse and recycle. We have a goal to reduce landfill waste intensity by 15% across our U.S. and Canadian locations from a 2020 baseline by 2030. Water. As a distributor and supply chain solutions provider, we are not a major consumer of water.
We strive to reduce these waste streams by applying Lean principles and identifying opportunities for reuse and recycling. We have developed regional relationships with recycling vendors that recycle non-traditional waste streams, specifically metal and wood. We have a goal to reduce landfill waste intensity by 15% across our U.S. and Canadian locations from a 2020 baseline by 2030. Water.
Where practicable, we engage with the owners and agents of the buildings we lease to improve energy efficiency, and we include energy-efficiency requirements in new building leases. We have implemented lighting retrofit projects, identified participation plans to purchase green power through utility green tariffs, and installed solar systems at certain facilities.
We have implemented lighting retrofit projects, identified participation plans to purchase green power through utility green tariffs, and installed solar systems at certain facilities. Adding to our energy consumption is a fleet of approximately 1,300 trucks and 1,700 cars for our distribution and sales activities.
The policy includes clear management accountability for environmental sustainability, direct program responsibilities, key performance indicators and other metrics to track progress. We are working to reduce our environmental impact in the following areas: Energy. The vast majority of the energy we use is for lighting, heating, and cooling our approximately 800 branches, warehouses, and sales offices around the world.
The policy includes clear management accountability for environmental sustainability, direct program responsibilities, key performance indicators and other metrics to track progress. We produce a Sustainability Report annually which is made public on our website.
Our education and awareness campaigns for employees include training for our branches and distribution centers, enhanced reporting and investigative tools, and reinforced processes at the local branch level. 2 Table of Contents Digitalize and Transform the Business: The role of digital business models in our industry has accelerated over the past several years.
Our goal is to provide a safe work environment for our employees and all those who visit our facilities. Our education and awareness campaigns for employees include training for our branches and distribution centers, enhanced reporting and investigative tools, and reinforced processes at the local branch level.
In addition to the core network infrastructure and security portfolio, CSS has a broad offering of safety and energy management solutions. CSS products are often combined with supply chain services to increase efficiency and productivity, including installation enhancement, project deployment, advisory, and IoT and digital services. On November 1, 2022, Wesco acquired Rahi Systems Holdings, Inc.
In addition to the core network infrastructure and security portfolio, CSS has a broad offering of safety and energy management solutions.
Additionally, our commitment to continuous improvement is a hallmark of our business, and we deploy Lean business practices and Agile methodologies. Wesco continues to enhance its approach to Environmental, Social, and Governance (“ESG”) issues, including expansion of our employee training and leadership development programming, as well as our Inclusion and Diversity program.
Wesco continues to enhance its approach to Environmental, Social, and Governance (“ESG”) matters, including integrating sustainability into our corporate strategy, and expanding our employee training and leadership development programming, as well as our Inclusion and Diversity program. 2 Table of Contents Digitalize and Transform the Business: The role of digital business models in our industry has accelerated over the past several years.
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(“Rahi Systems ” ), a leading provider of global hyperscale data center solutions.
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Additionally, our commitment to continuous improvement is a hallmark of our business, and we do so by deploying Lean business practices and Agile methodologies.
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Safety remains a priority and a company-wide responsibility at Wesco. Our goal is to provide a safe work environment for our employees and all those who visit our facilities.
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Our broad service offering includes installation enhancement, materials management, kitting and labeling, extensive MRO solutions, onsite job trailer solutions, end-to-end supply chain management and project management/execution across the project lifecycle.
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Individuals in this program have the opportunity to accelerate the development of their business and technical skills through three 8-month job rotations in various accounting and finance functions, including Controllership, Financial Planning and Analysis, Treasury, and Internal Audit.
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We offer a tuition reimbursement program to eligible employees to encourage the pursuit of undergraduate and graduate education to prepare employees for expanded roles in our business. Our sales and operations development training program has been in place for more than ten years.
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In 2022, we achieved our goal for Wesco’s Board of Directors to be 50% or more diverse in terms of gender, race or ethnicity.
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We have developed a collective approach to deliver personalized, successive development aligned with enterprise needs, known as “Leadership Essentials.” Leadership Essentials consists of separate programs curated for managers that are new to leading people, leaders of teams, or senior leaders. The programs include personalized development journeys which are aligned to both the individual's and the Company's needs.
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Our inclusion and diversity initiatives extend to all levels of our organization, and we aim to increase the representation of diverse employees through internal promotions, new hires and improved retention, with an Inclusion and Diversity program that fosters a sense of individual and group belonging.
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In 2023, Wesco also launched a development campaign to provide specific tools and resources to help leaders across the enterprise support ongoing transformational change. Inclusion and Diversity. Wesco’s focus on inclusion and diversity starts in our boardroom. As of December 31, 2023, Wesco’s Board of Directors was 60% diverse in terms of gender, race or ethnicity.
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These BRGs foster a sense of community and inclusion, provide opportunities to network, support advancement opportunities within the organization, and assist with 5 Table of Contents recruiting. The BRGs are global and open to all employees regardless of any aspect of their personal identity.
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Wesco’s Global Inclusion and Diversity Council (the “Council”) is led by our Vice President of Inclusion and Diversity and comprises members of senior management who help to ensure that Wesco is making progress toward achieving our program objectives.
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Adding to our energy consumption is a fleet of approximately 900 trucks and 1,300 cars for our distribution and sales activities. Our Fleet Efficiency Policy includes the use of fuel-efficient vehicles, determining the most efficient routes, and idling restrictions. Emissions.
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This commitment is reflected in our Code of Business Conduct, which applies to our Directors, officers, employees and other parties when they are acting on behalf of Wesco. Annually, employees must acknowledge that they have received, read and will comply with the Code of Business Conduct.
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We take a comprehensive, multi-layered approach to securing our data and business systems from attack, compromise or loss. This includes the combination of leading technologies, physical and organizational safeguards, including a robust suite of security policies and procedures.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeSome of our existing competitors have, and new market entrants may have, greater resources than us. Competition is generally based on product line breadth, product availability, service capabilities and price. Other sources of competition are buying groups formed by smaller distributors to increase purchasing power and provide some cooperative marketing capability, as well as e-commerce companies.
Biggest changeOther sources of competition are buying groups formed by smaller distributors to increase purchasing power and provide some cooperative marketing capability, as well as e-commerce companies. There may be new market entrants with non-traditional business and customer service models, resulting in increased competition and changing industry dynamics.
Acquisitions involve various inherent risks, including: problems that could arise from the integration of the acquired business; uncertainties in assessing the value, strengths, weaknesses, contingent and other liabilities and potential profitability of acquisition candidates; the potential loss of key 13 Table of Contents employees of an acquired business; the ability to achieve identified operating and financial synergies anticipated to result from an acquisition or other transaction; unanticipated changes in business, industry or general economic conditions that affect the assumptions underlying the acquisition or other transaction rationale; and expansion into new countries or geographic markets where we may be less familiar with operating requirements, target customers and regulatory compliance.
Acquisitions involve various inherent risks, including: problems that could arise from the integration of the acquired business; uncertainties in assessing the value, strengths, weaknesses, contingent and other liabilities and potential profitability of acquisition candidates; the potential loss of key employees of an acquired business; the ability to achieve identified operating and financial synergies anticipated to result from an acquisition or other transaction; unanticipated changes in business, industry or general economic conditions that affect the 13 Table of Contents assumptions underlying the acquisition or other transaction rationale; and expansion into new countries or geographic markets where we may be less familiar with operating requirements, target customers and regulatory compliance.
Information technology security threats to our systems, networks and data have dramatically increased in recent years due the proliferation of new technologies and the increased sophistication and activities of perpetrators. We have seen, and will continue to see, industry-wide vulnerabilities, which could cause widespread disruptions to our or other parties' systems.
Information technology security threats to our systems, networks and data have dramatically increased in recent years due to the proliferation of new technologies and the increased sophistication and activities of perpetrators. We have seen, and will continue to see, industry-wide vulnerabilities, which could cause widespread disruptions to our or other parties' systems.
Because we rely heavily on information technology both in serving our customers and in our enterprise infrastructure in order to achieve our objectives, we may be vulnerable to damage or intrusion from a variety of cyber-attacks, including computer viruses, worms or other malicious software programs that seek to gain to access our systems and networks, or those of our third-party service providers.
Because we rely heavily on information technology both in serving our customers and in our enterprise infrastructure in order to achieve our objectives, we may be vulnerable to damage or intrusion from a variety of cyber-attacks, including computer viruses, ransomware, worms or other malicious software programs that seek to gain to access our systems and networks, or those of our third-party service providers.
Beginning in 2020, the pandemic has caused significant disruptions to our business due to, among other things, disruptions to our suppliers and global supply chain, labor shortages, transportation disruptions, travel restrictions, the impact on our customers and their demand for our products and services and ability to pay for them, as well as temporary closures of facilities.
Beginning in 2020, the pandemic caused significant disruptions to our business due to, among other things, disruptions to our suppliers and global supply chain, labor shortages, transportation disruptions, travel restrictions, the impact on our customers and their demand for our products and services and ability to pay for them, as well as temporary closures of facilities.
Any significant interruption or disruption in service at one or more of our distribution centers due to severe weather or natural disasters (including as a result of climate change), information technology upgrades, operating issues, disruptions to our transportation network, public heath crises, pandemics or other unanticipated events, could impair our ability to obtain or deliver inventory in a timely manner, cause cancellations or delays in shipments to customers or otherwise disrupt our normal business operations.
Any significant interruption or disruption in service at one or more of our distribution centers due to severe weather or natural disasters (including as a result of climate change), information technology upgrades, operating issues, disruptions to our transportation network, public heath crises, pandemics, or other unanticipated events, could impair our ability to obtain or deliver inventory in a timely manner, increase transportation costs, cause cancellations or delays in shipments to customers or otherwise disrupt our normal business operations.
We commit time and resources to ESG efforts, consistent with our corporate values and in ways designed to strengthen our business, including programs focused on sustainability, corporate responsibility, human rights, ethics, diversity, equity and inclusion.
We commit time and resources to ESG efforts, consistent with our corporate values and in ways designed to strengthen our business, including programs focused on sustainability, corporate responsibility, human rights, ethics, diversity and inclusion.
The global COVID-19 pandemic has created significant disruption to the broader economies, financial markets, workforces, business environment and supply chains, as well as to our suppliers and customers.
The global COVID-19 pandemic created significant disruption to the broader economies, financial markets, workforces, business environment and supply chains, as well as to our suppliers and customers.
Continued increases in these costs could erode our profit margin and negatively impact our results of operations to the extent we are unable to successfully mitigate and offset the impact of these costs.
Increases in these costs could erode our profit margin and negatively impact our results of operations to the extent we are unable to successfully mitigate and offset the impact of these costs.
For example, an isolated incident of non-compliance or underperformance, the aggregate effect of individually insignificant incidents or the failures of suppliers in our supply chain, can erode trust and confidence in the Company and our brand and adversely affect our business and financial performance, particularly if such events result in adverse publicity, governmental investigations or litigation.
For example, an isolated incident of non-compliance, underperformance or inaccuracy in reporting, the aggregate effect of individually insignificant incidents or the failures of suppliers in our supply chain, can erode trust and confidence in the Company and our brand and adversely affect our business and financial performance, particularly if such events result in adverse publicity, governmental investigations or litigation.
Although we expect that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, should allow us to offset integration-related costs over time, this net benefit may not be achieved in the near term, or at all.
Although we anticipate that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, should allow us to offset integration-related costs over time, this net benefit may not be achieved in the near term, or at all.
The global legal and regulatory environment is complex and exposes us to compliance costs and risks, as well as litigation and other legal proceedings, which could materially affect our operations and financial results. These laws and regulations may change, sometimes significantly, as a result of political or economic events, and some changes are anticipated to occur in the coming year.
The global legal and regulatory environment is complex and exposes us to compliance costs and risks, as well as litigation and other legal proceedings, which could materially affect our operations and financial results. These laws and regulations may change, sometimes significantly, as a result of political or economic events, and some changes are anticipated to occur in the future.
Additionally, if we cannot meet liquidity requirements in the U.S., we may have to repatriate funds from overseas, which would result in additional income taxes being incurred on the amount repatriated.
Additionally, if we cannot meet liquidity requirements in the U.S., we may have to repatriate funds from overseas to meet these liabilities, which would result in additional income taxes being incurred on the amount repatriated.
Our global operations expose us to political, economic, legal, currency and other risks. We operate a network of approximately 800 branches, warehouses and sales offices with operations in more than 50 countries. Approximately one-third of our employee population are non-U.S. employees. We derive approximately 26% of our revenues from sales outside of the U.S.
Our global operations expose us to political, economic, legal, currency and other risks. We operate a network of nearly 800 branches, warehouses and sales offices with operations in approximately 50 countries. Approximately one-third of our employee population are non-U.S. employees. We derive approximately 26% of our revenues from sales outside of the U.S.
Further, many of the products and services we provide to customers rely on information technology to transmit and store data in both Company and third-party systems. Even where Company-managed information systems remain fully operational, a failure by a third-party's systems or procedures could have negative effects on our operations.
Further, many of the products and services we provide to customers rely on information technology to transmit and store data in Company, cloud-based and third-party systems. Even where Company-managed information systems remain fully operational, a failure by a third-party's systems or procedures could have negative effects on our operations.
Although we have implemented policies and procedures designed to facilitate compliance with these laws, we cannot assure you that our employees, contractors, or agents will not violate such laws and regulations, or our policies and procedures.
Although we have implemented policies and procedures designed to facilitate compliance with various laws, we cannot assure you that our employees, contractors, or agents will not violate such laws and regulations, or our policies and procedures.
Our operations depend on our ability to maintain existing systems and implement new technology, which includes allocating sufficient resources to periodically upgrade our information technology systems, and to protect our equipment and the information stored in our databases against both manmade and natural disasters (including those as a result of climate change), as well as power losses, computer and telecommunications failures, technological breakdowns, unauthorized intrusions, cyber-attacks, and other events.
Our operations depend on our ability to maintain existing systems and implement new technology, which includes allocating sufficient resources to upgrade our information technology systems, and to protect our equipment and the information stored in our databases against both man-made and natural disasters (including those as a result of climate change), as well as power losses, computer and telecommunications failures, technological breakdowns, unauthorized intrusions, cyber-attacks, and other events.
These supply chain constraints, increased product costs and inflationary pressures could continue or escalate in the future, for example if the Russia-Ukraine and other geopolitical conflicts escalate or are further prolonged, which would have an adverse impact on our business and results of operations.
Supply chain constraints, increased product costs and inflationary pressures could continue or escalate in the future, for example if the Russia-Ukraine, Middle East and other geopolitical conflicts escalate or are further prolonged, which would have an adverse impact on our business and results of operations.
Furthermore, although our reviews have led to more systematic contingency planning, our plans are in varying stages of development and execution, such that they may not be adequate at the time of occurrence for the magnitude of any particular disaster event that we may encounter. 16 Table of Contents We also depend on transportation service providers for the delivery of products to our customers.
Furthermore, although our reviews have led to more systematic business continuity and contingency planning, our plans are in varying stages of development and execution, such that they may not be adequate at the time of occurrence for the magnitude of any particular disaster event that we may encounter. 17 Table of Contents We also depend on transportation service providers for the delivery of products to our customers.
The effects of global climate change could 15 Table of Contents increase the frequency and intensity of natural disasters or extreme weather conditions, such as tropical storms, severe winter weather, drought, flooding, heat waves, wildfires and rising sea levels, which could cause or exacerbate supply chain interruptions.
The effects of global climate change could increase the frequency and intensity of natural disasters or extreme weather conditions, such as tropical storms, severe winter weather, drought, flooding, heat waves, wildfires and rising sea levels, which could cause or exacerbate supply chain interruptions.
We are subject to a broad range of laws and regulations in the jurisdictions where we operate globally, including, among others, those relating to data privacy and protection, cyber security, import and export requirements, anti-bribery and corruption, product compliance, supplier regulations regarding the sources of supplies or products, environmental protection, health and safety requirements, intellectual property, foreign exchange controls and cash repatriation restrictions, labor and employment, e-commerce, advertising and marketing, anti-competition and tax.
We are subject to a broad range of laws and regulations in the jurisdictions where we operate globally, including, among others, those relating to data privacy and protection, cyber security, import and export requirements, anti-bribery and corruption, product compliance, supplier regulations regarding the sources of supplies or products, sustainability and environmental protection, health and safety requirements, intellectual property, foreign exchange controls and cash repatriation restrictions, labor and employment, human rights, e-commerce, advertising and marketing, anti-competition, artificial intelligence and tax.
While we continue to aggressively and proactively manage these supply chain issues, we have experienced, and may continue to experience, some delays in receiving products from our suppliers. We cannot be certain that particular products will be available to us, or available in quantities sufficient to meet customer demand.
While we continue to aggressively and proactively manage supply chain developments, we have experienced, and may continue to experience, some delays in receiving products from our suppliers. We cannot be certain that particular products will be available to us, or available in quantities sufficient to meet customer demand.
Additionally, such an event could expose us to regulatory sanctions or penalties, lawsuits 14 Table of Contents or other legal action or cause us to incur legal liabilities and costs, which could be significant, in order to address and remediate the effects of an attack and related security concerns.
Additionally, such an event could expose us to regulatory sanctions or penalties, lawsuits or other legal action or cause us to incur legal liabilities and costs, which could be significant, in order to address and remediate the effects of an attack and related security concerns.
They include laws and regulations covering taxation, trade, import and export, labor and employment (including wage and hour), product safety, product labeling, occupational safety and health, data privacy, data protection, intellectual property and environmental matters (including those relating to global climate change and its impact).
They include laws and regulations covering taxation, trade, import and export, labor and employment (including wage and hour), product safety, product labeling, occupational safety and health, data privacy, data protection, intellectual property, artificial intelligence, and sustainability and environmental matters (including those relating to global climate change and its impact).
Even if we successfully defend against claims, we may incur significant costs that could adversely affect our results of operations, financial condition and cash flow. We must attract, retain and motivate our employees, and the failure to do so may adversely affect our business.
Even if we successfully defend against claims, we may incur significant costs that could adversely affect our results of operations, financial condition and cash flow. 20 Table of Contents We must attract, retain and motivate our employees, and the failure to do so may adversely affect our business.
Any such violations could result in the imposition of fines and penalties, damage to our reputation, and, in the case of laws and regulations relating to governmental contracts, the loss of those contracts. 12 Table of Contents Fluctuations in foreign currency have an effect on our results from operations.
Any such violations could result in the imposition of fines and penalties, damage to our reputation, and, in the case of laws and regulations relating to governmental contracts, the loss of those contracts. Fluctuations in foreign currency have an effect on our results from operations.
Our ability to service and refinance our indebtedness, make scheduled payments on our operating leases and fund capital expenditures, acquisitions or other business opportunities, will depend in large part on both our future performance and the availability of additional financing in the future, as well as prevailing interest rates and other market conditions and other factors beyond our control.
Our ability to service and refinance our indebtedness, make scheduled payments on our operating leases, fund capital expenditures, acquisitions or other business opportunities, repurchase shares, and pay dividends will depend in large part on both our future performance and the availability of additional financing in the future, as well as prevailing interest rates and other market conditions and other factors beyond our control.
Operating in the global marketplace exposes us to a number of risks including: • geopolitical and security issues, including armed conflict and civil or military unrest (such as the conflict resulting from Russia's invasion of Ukraine), political instability, terrorist activity and human rights concerns; • natural disasters (including as a result of climate change) and public health crises (including pandemics such as COVID-19), and other catastrophic events; • global supply chain disruptions and large-scale outages or inefficient provision of services from utilities, transportation, data hosting, or telecommunications providers; • abrupt changes in government policies, laws, regulations or treaties, including imposition of export, import, or doing-business regulations, trade sanctions, embargoes or other trade restrictions (such as sanctions and other restrictions imposed against Russia in response to Russia's invasion of Ukraine, as well as those against China to mitigate the potential U.S. national security concerns related to critical infrastructure and technology); • tax or tariff increases; • government restrictions on, or nationalization of, our operations in any country; 11 Table of Contents • changes in labor conditions and difficulties in staffing and managing international operations, including logistical and communication challenges; • restrictions on currency movement; • challenges in protecting our IP rights in certain countries; • local business and cultural factors that differ from our current standards and practices; • continuing uncertainty regarding social, political, immigration, and tax and trade policies in the U.S. and abroad; • currency exchange rate fluctuations; and • other social, political and economic instability, including recessions and other economic crises in other regions.
Operating in the global marketplace exposes us to a number of risks including: • geopolitical and security issues, including armed conflict and civil or military unrest (such as the evolving Russia-Ukraine and Middle East conflicts), political instability, terrorist activity and human rights concerns; • natural disasters (including as a result of climate change) and public health crises (including pandemics such as COVID-19), and other catastrophic events; • global supply chain disruptions and large-scale outages or inefficient provision of services from utilities, transportation, data hosting, or telecommunications providers; • abrupt changes in government policies, laws, regulations or treaties, including imposition of export, import, or doing-business regulations, trade sanctions, embargoes or other trade restrictions (such as sanctions and other restrictions imposed against Russia in response to the Russia-Ukraine conflict, as well as those against China to mitigate the potential U.S. national security concerns related to critical infrastructure and technology); • tax or tariff increases; • government restrictions on, or nationalization of, our operations in any country; 11 Table of Contents • changes in labor conditions and difficulties in staffing and managing international operations, including logistical and communication challenges; • monetary policy of the countries where we operate and related currency exchange rate fluctuations; • challenges in protecting our IP rights in certain countries; • local business and cultural factors that differ from our current standards and practices; • continuing uncertainty regarding social, political, immigration, and tax and trade policies in the U.S. and abroad; and • other social, political and economic instability, including recessions and other economic crises in other regions.
Additionally, the Organization for Economic Cooperation and Development (the “OECD”) has issued proposed rules to address the tax challenges arising from the digitalization of the global economy.
The Organization for Economic Cooperation and Development (the “OECD”) issued proposed rules to address the tax challenges arising from the digitalization of the global economy.
We continue to assess the magnitude of these costs, and additional unanticipated costs may be incurred in the integration of the two companies’ businesses.
We continue to assess the magnitude of these costs, and additional unanticipated costs may be incurred in the integration of the acquired companies’ businesses.
Our strategic and operational initiatives are subject to various risks and uncertainties, and we may be unable to implement the initiatives successfully. We are engaged in a number of strategic and operational initiatives designed to optimize costs and improve operational efficiency.
Our strategic and operational initiatives, including our digital transformation initiatives, are subject to various risks and uncertainties, and we may be unable to implement the initiatives successfully. We are engaged in a number of strategic and operational initiatives, including our digital transformation initiatives, designed to optimize costs and improve operational efficiency.
Although we have reviewed and analyzed a broad range of risks applicable to our business, the ones that actually affect us may not be those that we have concluded are most likely to occur.
Although we have reviewed and analyzed a broad range of risks applicable to our business, the risks that most significantly affect us may not be those that we have concluded are most likely to occur.
It is possible that the integration process could result in the loss of key employees, higher than expected costs, diversion of management attention, the disruption of either company’s ongoing legacy businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the combined company’s ability to maintain relationships with customers, suppliers and employees or to achieve the anticipated benefits and cost savings of the Merger.
It is possible that the integration process of an acquired business could result in the loss of key employees, higher than expected costs, diversion of management attention, the disruption of either company’s ongoing legacy businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the Company’s ability to maintain relationships with customers, suppliers and employees or to achieve the anticipated benefits and cost savings of the transaction.
In 2020, we incurred significant additional indebtedness to finance the merger with Anixter, which increased our interest expense from historical levels. As a result, a substantial portion of our cash flow from operations must be dedicated to the payment of principal and interest on our indebtedness, thereby reducing the funds available to us for other purposes.
In 2020, we incurred significant additional indebtedness to finance the merger with Anixter. As a result, a substantial portion of our cash flow from operations must be dedicated to the payment of principal and interest on our indebtedness, thereby reducing the funds available to us for other purposes.
There can be no assurance that economic and political instability, both domestically and internationally (for example, resulting from the Russia-Ukraine conflict, changes in the creditworthiness of any government, changes to economic or trade policies, sanctions, tariffs or participation in trade agreements or economic and political unions) will not adversely affect our results of operations, cash flows or financial position in the future.
There can be no assurance that economic and political instability, both domestically and internationally (for example, resulting from the Russia-Ukraine or Middle East conflicts, changes in the creditworthiness of the U.S. or any government, changes to economic or trade policies, sanctions, tariffs or participation in trade agreements or economic and political unions) will not adversely affect our results of operations, cash flows or financial position in the future.
Some of our products, such as wire and conduit, are commodity price based products and may be subject to significant price fluctuations which are beyond our control. Recently, we have experienced increases in commodity costs, as well as in the costs of raw materials and components generally, as a result of global shortages and other macroeconomic trends.
Some of our products, such as wire and conduit, are commodity price based products and may be subject to significant price fluctuations which are beyond our control. Recently, we have experienced fluctuations in commodity costs, as well as in the costs of raw materials and components generally, as a result of global economic conditions and other trends.
Failure to comply with these covenants or restrictions could result in an event of default, under our revolving lines of credit or the indentures governing certain of our outstanding notes which, if not cured or waived, could accelerate our repayment obligations. See the liquidity section in “Item 7. Management's Discussion and Analysis” for further details.
Failure to comply with these covenants or restrictions could result in an event of default, under our revolving lines of credit or the indentures governing certain of our outstanding notes which, if not cured or waived, could accelerate our repayment obligations. See the Liquidity and Capital Resources section in Item 7, “Management's Discussion and Analysis” for further details.
Our failure to execute our ESG programs and objectives as planned, or in accordance with the evolving expectations of various stakeholders or regulators, could adversely affect the Company’s reputation, business and financial performance.
Our failure to execute our ESG programs and objectives as planned, or in accordance with the evolving expectations of various stakeholders or regulators in the United States, Europe and globally, could adversely affect the Company’s reputation, business and financial performance.
Our credit facilities and our other debt agreements, including those governing the debt financings incurred in connection with the merger with Anixter, contain various covenants that restrict or limit our ability to, among other things: • incur additional indebtedness or create liens on assets • engage in mergers, acquisitions or consolidations, • make loans or other investments, • transfer, lease or dispose of assets outside the ordinary course of business, • pay dividends, repurchase equity interests, make other payments with respect to equity interests, repay or repurchase subordinated debt, and • engage in affiliate transactions.
Our credit facilities and our other debt agreements contain various covenants that restrict or limit our ability to, among other things: • incur additional indebtedness or create liens on assets; • engage in mergers, acquisitions or consolidations; • make loans or other investments; • transfer, lease or dispose of assets outside the ordinary course of business; • pay dividends, repurchase equity interests, make other payments with respect to equity interests, repay or repurchase subordinated debt; and • engage in affiliate transactions.
We operate a number of facilities and we coordinate company activities, including information technology systems and administrative services and the like, through our headquarters operations.
We operate a number of facilities and we coordinate company activities, including information technology systems, administrative services, and similar systems, through our headquarters operations.
In addition, the risk of retaliatory cyber-attacks has increased as a result of geopolitical conflicts, including Russia's invasion of Ukraine. These threats and vulnerabilities pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our proprietary and confidential information.
In addition, the risk of retaliatory cyber-attacks has increased as a result of geopolitical conflicts, including the Middle East and Russia-Ukraine conflicts. These threats and vulnerabilities pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our proprietary and confidential information.
In addition, the COVID-19 pandemic may continue to adversely affect many of our suppliers’ and customers' businesses and operations, including the ability of our suppliers to manufacture or obtain the products we sell or to meet delivery requirements and commitments, and our customers’ demand for our products and services and the ability to pay for them, all of which could adversely affect our sales and results of operations.
In addition, COVID variants and other pandemics may adversely affect many of our suppliers’ and customers' businesses and operations, including the ability of our suppliers to manufacture or obtain the products we sell or to meet delivery requirements and commitments, and our customers’ demand for our products and services and the ability to pay for them, all of which could adversely affect our sales and results of operations.
Continued product shortages and delays could impair our ability to make scheduled deliveries to our customers in a timely manner and cause us to be at a competitive disadvantage. The product shortages and delays in deliveries, along with other factors such as price inflation and higher transportation costs, have resulted in price increases from our suppliers.
Any product shortages and delays could impair our ability to make scheduled deliveries to our customers in a timely manner and cause us to be at a competitive disadvantage. Product shortages and delays in deliveries, along with other factors such as price inflation and higher transportation costs, could result in price increases from our suppliers.
While increases in the cost of energy or products could have adverse effects, decreases in those costs, particularly if severe, could also adversely impact us by creating deflation in selling prices, which could cause our profit margin to deteriorate. Fluctuations in energy or raw materials costs can also adversely affect our customers.
While increases in the cost of energy or products could have adverse effects, decreases in those costs, particularly if severe, could also adversely impact us by creating deflation in selling prices, which could cause our profit margin to deteriorate.
Our business and operations have been and will continue to be adversely affected by the COVID-19 pandemic, and the duration and extent to which it will affect our business, financial condition, results of operations, cash flows, liquidity, and stock price remains uncertain.
Our business and operations have been and may continue to be adversely affected by the COVID-19 pandemic, and the duration and extent to which COVID variants or other pandemics will affect our business, financial condition, results of operations, cash flows, liquidity, and stock price remains uncertain.
The full extent to which the pandemic will continue to impact our business, results of operations, and financial condition depends on many evolving factors and future developments for which there remains significant uncertainty, such as possible resurgences of the virus, including new variants; the availability, effectiveness and public acceptance of treatments or vaccines (including boosters); the impact of the imposition of governmental actions; and the impact of the pandemic on the global supply chain and the broader economy and capital markets, as well as the matters noted above.
The full extent to which new COVID variants or new pandemics may impact our business, results of operations, and financial condition depends on many evolving factors and future developments for which there remains significant uncertainty; the availability, effectiveness and public acceptance of treatments or vaccines (including boosters); the impact of the imposition of governmental actions; and the impact of pandemics on the global supply chain and the broader economy and capital markets, as well as the matters noted above.
Any significant or prolonged unavailability or failure of critical information systems could materially impair our ability to maintain proper levels of inventories, process orders, meet the demands of our customers and suppliers in a timely manner, and other harmful effects.
Any significant or prolonged unavailability or failure of critical information systems could materially impair our ability to maintain proper levels of inventories, process orders, meet the demands of our customers and suppliers in a timely manner, and other harmful effects on our business operations, which could negatively affect our financial results.
Some of the actions we have taken in response to the COVID-19 pandemic, such as implementing remote working arrangements, may also create increased vulnerability to cybersecurity incidents and other risks. The duration and severity of the COVID-19 pandemic remains uncertain and cannot be predicted.
Some of the actions we have taken in response to the COVID-19 pandemic, such as implementing remote working arrangements, may also create increased vulnerability to cybersecurity incidents and other risks.
Our ability to successfully execute these initiatives is subject to various risks and uncertainties and there can be no assurance regarding the timing of or extent to which we will realize the anticipated benefits, if at all.
Our ability to successfully execute these initiatives is subject to various risks and uncertainties and there can be no assurance regarding the timing of or extent to which we will realize the anticipated benefits, if at all. We may not be able to fully realize the anticipated benefits and cost savings of mergers and acquisitions.
We have incurred, and expect to continue to incur, a number of non-recurring costs associated with the Merger and combining the operations of the two companies. This includes transaction fees and expenses related to formulating and implementing integration plans, including facilities, systems consolidation and employment-related costs.
We have incurred, and expect to continue to incur, a number of non-recurring costs associated with recent acquisitions and related integration activities. This includes transaction fees and expenses related to formulating and implementing integration plans, including facilities, systems consolidation and employment-related costs.
The insurance coverage we maintain may be inadequate to cover claims or liabilities relating to a cybersecurity attack. In addition, the legal and regulatory environment surrounding information security and privacy in the U.S. and international jurisdictions is constantly evolving.
The insurance coverage we maintain may be inadequate to cover claims or liabilities relating to a cybersecurity attack. In addition, the legal and regulatory environment surrounding information security and privacy in the U.S. and international jurisdictions is constantly evolving and additional laws and regulations regarding artificial intelligence are being considered and implemented.
Simultaneously, increased expectations and regulations around ESG reporting and performance may result in higher operating expenses, capital expenditures and costs of goods sold (including those related to deploying low-carbon technologies, expanding our electric vehicle fleet, strengthening ESG monitoring and reporting programs, transitioning suppliers due to their ESG programs, other costs to pursue our ESG goals or supplier price increases as manufacturers and services providers accommodate their own ESG-related expenses), which could reduce our profitability and cash flow.
Simultaneously, increased expectations and regulations around ESG reporting and performance may result in higher operating expenses, capital expenditures and costs of goods sold (including those related to deploying low-carbon technologies, expanding our electric vehicle fleet, strengthening ESG monitoring and reporting programs, calculating and disclosing different scopes of greenhouse gas emissions in the manner and timeline expected by regulators and other stakeholders, enhancing supply chain transparency programs, transitioning suppliers due to their ESG programs, other costs to pursue our ESG goals or supplier price increases as manufacturers and services providers accommodate their own ESG-related expenses), which could reduce our profitability and cash flow.
As of December 31, 2022, excluding debt discount and debt issuance costs, we had $5.5 billion of consolidated indebtedness. We and our subsidiaries may also undertake additional borrowings in the future, subject to certain limitations contained in the debt instruments governing our indebtedness.
As of December 31, 2023, excluding debt discount and debt issuance costs, we had $5.4 billion of consolidated indebtedness. We and our subsidiaries may also undertake additional borrowings in the future, subject to certain limitations contained in the debt instruments governing our indebtedness. Our debt service obligations impact our ability to operate and grow our business.
If we experience difficulties with the integration process, the anticipated benefits of the Merger may not be realized or may take longer to realize than expected. These integration matters could have an adverse effect on us for an undetermined period. In addition, the actual cost savings of the Merger could be less than anticipated.
If we experience difficulties with the integration process, the anticipated benefits of recent or future mergers or acquisitions may not be realized or may take longer to realize than expected. These integration matters could have an adverse effect on us for an undetermined period.
The economic, political and financial environment may also affect our business and financial condition in ways that we currently cannot predict. Russia's recent invasion of Ukraine, and the resulting international response, have contributed to further volatility and uncertainty in the global financial and commodities markets, resulting in higher oil and commodity prices.
The economic, political and financial environment may also affect our business and financial condition in ways that we currently cannot predict. The Russia-Ukraine and Middle East conflicts, and resulting international responses, have contributed to further volatility and uncertainty in the global financial and commodities markets, resulting in fluctuations in oil and commodity prices.
To the extent the conflict between Russia and Ukraine escalates or is further prolonged, it may have the effect of heightening many of the risks described above or elsewhere in these Risk Factors.
To the extent the Russia-Ukraine and Middle East conflicts escalate or are further prolonged, it may have the effect of heightening many of the risks described above or elsewhere in these risk factors.
Additionally, efforts to align portions of our business on common platforms, systems and processes could result in unforeseen interruptions, increased costs or liability, and other negative effects.
Conversions to new information technology systems may result in cost overruns, delays or business interruptions. Efforts to align portions of our business on common enterprise platforms, systems and processes could result in unforeseen interruptions, increased costs or liability, and other negative effects.
In addition, as a result of such claims, we may lose our rights to utilize critical technology or may be required to pay substantial damages or license fees with respect to infringed rights or be required to redesign or restructure our products or services at a substantial cost, any of which could negatively impact our operating results.
In addition, as a result of such claims, we may lose our rights to utilize critical technology or may be required to pay substantial damages or license fees with respect to infringed rights or be required to redesign or restructure our products or services at a substantial cost, any of which could negatively impact our operating results. 15 Table of Contents Risks Related to Our Industry, Markets and Business Operations Loss of key suppliers could decrease sales, profit margins and earnings.
In 2022, our industry and the broader economy continued to experience supply chain challenges, including shortages in raw materials and components, labor shortages and transportation constraints, leading to product delays, backlogged orders and longer lead times.
Since the start of the COVID-19 pandemic, our industry and the broader economy experienced supply chain challenges, including shortages in raw materials and components, labor shortages and transportation constraints, leading to product delays, backlogged orders, increased transportation cost and longer lead times.
Additionally, certain customers may set net-zero emissions targets, and we could face pressure from such customers to further reduce emissions to assist them in the achievement of such targets or risk the loss of their business, which could result in increased costs or decreased revenue and may adversely impact financial performance.
Additionally, certain customers may set net-zero emissions targets, and we could face pressure from such customers to further reduce emissions to assist them in the achievement of such targets or risk the loss of their business, which could result in increased costs or decreased revenue and may adversely impact financial performance. 18 Table of Contents Risks Related to Tax Matters Changes in tax laws or challenges to the Company's tax positions by taxing authorities could adversely impact the Company's results of operations and financial condition.
Although we believe our relationships with our key suppliers are good, they could change their strategies as a result of a change in control, expansion of their direct sales force, changes in the marketplace or other factors beyond our control, including a key supplier becoming financially distressed.
Although we believe our relationships with our key suppliers are good, they could change their strategies as a result of a change in control, expansion of their direct sales force, changes in the marketplace or other factors beyond our control, including a key supplier becoming financially distressed which could materially affect our supply chain, increase our costs or disrupt our ability to deliver products to our customers in a timely and cost-effective manner.
We cannot be certain that others have not or will not infringe upon our intellectual property. Intellectual property litigation could be costly and time consuming, and we could incur significant legal expenses pursuing these claims against others. From time to time, we may receive notices from third parties that allege intellectual property infringement.
Intellectual property litigation could be costly and time consuming, and we could incur significant legal expenses pursuing these claims against others. From time to time, we may receive notices from third parties that allege intellectual property infringement. Any dispute or litigation involving intellectual property could be costly and time-consuming due to its complexity and uncertainty.
Risks Related to Our Acquisitions, Divestitures and Strategic Initiatives Expansion into new business activities, industries, product lines or geographic areas could subject the company to increased costs and risks and may not achieve the intended results. We have invested significantly in expanding our digitalization initiatives, including but not limited to, e-commerce capabilities and online customer experience.
Risks Related to Our Strategic Initiatives and Acquisitions Expansion into new business activities, industries, product lines or geographic areas could subject the Company to increased costs and risks and may not achieve the intended results.
However, there can be no assurance that we will be able to include protective provisions in all of our contracts or that vendors will have the financial capability to fulfill their indemnification obligations to us. Disruptions to our logistics capability may have an adverse impact on our operations. Our global logistics services are operated through distribution centers around the world.
However, there can be no assurance that we will be able to include protective provisions in all of our contracts or that vendors will have the financial capability to fulfill their indemnification obligations to us.
The results of certain of our foreign operations are reported in the local currency and then translated into U.S. dollars at the applicable exchange rates for inclusion in our consolidated financial statements. The exchange rates between some of these currencies and the U.S. dollar have fluctuated significantly in recent years, and may continue to do so in the future.
The results of certain of our foreign operations are reported in the local currency and then translated into U.S. dollars at the applicable exchange rates for inclusion in our consolidated financial statements.
Any dispute or litigation involving intellectual property could be costly and time-consuming due to its complexity and uncertainty. Our intellectual property portfolio may not be useful in asserting a counterclaim or negotiating a license in response to a claim of infringement or misappropriation.
Our intellectual property portfolio may not be useful in asserting a counterclaim or negotiating a license in response to a claim of infringement or misappropriation.
Accordingly, our results of operations can fluctuate depending on whether and when large project awards occur and the commencement and progress of work under large contracts already awarded. The awarding and timing of projects is unpredictable and depends on many factors outside of our control. Project awards often involve complex and lengthy negotiations and competitive bidding processes.
The awarding and timing of projects is unpredictable and depends on many factors outside of our control. Project awards often involve complex and lengthy negotiations and competitive bidding processes.
Therefore, we must interpret the applicable laws and make subjective judgments about the expected outcome upon challenge by the applicable taxing authorities. As a result, the impact on our results from operations of the application of enacted tax laws to our facts and circumstances is sometimes uncertain.
As a result, the impact on our results from operations of the application of enacted tax laws to our facts and circumstances is sometimes uncertain.
The Company is evaluating the impact of the guidance released by the OECD, as well as information released by the Financial Accounting Standards Board, to determine the effect on the Company. Finally, the tax laws to which the Company is subject are inherently complex and ambiguous.
The Company is evaluating the impact of the guidance released by the OECD and proposed and enacted domestic legislation in relevant member states, as well as information released by the Financial Accounting Standards Board, to determine the effect on the Company.
Changes in the tax law at the federal and state/provincial levels, in particular in the U.S. and Canada, which has accounted for most of our income before taxes, can have a material adverse effect on our results of operations. For example, Canada's Department of Finance introduced proposals to end hybrid mismatch arrangements, effective in two phases.
We cannot anticipate these changes in tax law, which can cause unexpected volatility in our results of operations. Changes in the tax law at the federal and state/provincial levels, in particular in the U.S. and Canada, jurisdictions which account for most of our income before taxes, can have a material adverse effect on our results of operations.
Risks Related to Tax Matters Changes in tax laws or challenges to the Company's tax positions by taxing authorities could adversely impact the Company's results of operations and financial condition. We are subject to taxes in jurisdictions in which we do business, including but not limited to taxes imposed on our income, receipts, stockholders' equity, property, sales, purchases and payroll.
We are subject to taxes in jurisdictions in which we do business, including but not limited to taxes imposed on our income, receipts, stockholders' equity, property, sales, purchases and payroll. As a result, the tax expense we incur can be adversely affected by changes in tax law.
If our information technology systems are disrupted, become obsolete or do not adequately support our strategic, operational or compliance needs, it could result in a competitive disadvantage or adversely affect our business operations and financial condition, including our ability to process orders, receive and ship products, maintain inventories, collect accounts receivable and pay expenses, therefore impacting our results of operations.
If our technology systems are disrupted, become obsolete or do not adequately support our strategic, operational or compliance needs, or if the controls placed over the use of new and existing technology prove inadequate, it could result in a competitive disadvantage or adversely affect our business operations, reputation or financial condition.
We may incur losses related to foreign currency fluctuations, and foreign exchange controls may prevent us from repatriating cash in countries outside the U.S. In addition, because our financial statements are stated in U.S. dollars, such fluctuations may also affect the comparability of our results between financial periods.
In addition, because our financial 12 Table of Contents statements are stated in U.S. dollars, such fluctuations may also affect the comparability of our results between financial periods.
We may not be able to fully realize the anticipated benefits and cost savings of our merger with Anixter. On June 22, 2020, we completed our merger with Anixter (the "Merger"). The success of the Merger, including anticipated benefits and cost savings, depends on the successful combination and integration of the companies’ businesses.
In 2020, we completed our merger with Anixter and in 2022, we completed the acquisition of Rahi Systems. We consider and may pursue other acquisitions on an on-going basis. The success of these and future acquisitions, including anticipated benefits and cost savings, depends on the successful combination and integration of the companies’ businesses.
There may be new market entrants with non-traditional business and customer service models, resulting in increased competition and changing industry dynamics. Existing or future competitors may seek to gain or retain market share by reducing prices, and we may be required to lower our prices or may lose business, which could adversely affect our financial results.
Existing or future competitors may seek to gain or retain market share by reducing prices, and we may be required to lower our prices or may lose business, which could adversely affect our financial results. We may be subject to supplier price increases while not being able to increase prices to customers.
If unable to do so, we may be 18 Table of Contents required to refinance all or a portion of our existing debt, sell assets, or obtain additional financing. If we are unable to repay indebtedness, lenders having secured obligations could proceed against the collateral securing these obligations.
If the financial performance of the Company does not meet current expectations, then our ability to service or repay our indebtedness may be adversely impacted. If unable 19 Table of Contents to do so, we may be required to refinance all or a portion of our existing debt, sell assets, or obtain additional financing.
In February 2022, Russian forces invaded Ukraine. In response, the United States, the European Union and other governments throughout the world imposed broad economic sanctions and other restrictions against Russia and Russian interests.
In response to the Russia-Ukraine conflict, the United States, the European Union and other governments throughout the world imposed broad economic sanctions and other restrictions against Russia and Russian interests. In October 2023, Hamas militants attacked Israel, leading Israel to respond with air strikes and a major ground operation in Gaza.
A decline in project volume could adversely affect our sales and earnings. While much of our sales and earnings are generated by comparatively smaller and more frequent orders, the fulfillment of large orders for large capital projects generates significant sales and earnings.
While much of our sales and earnings are generated by comparatively smaller and more frequent orders, the fulfillment of large orders for large capital projects generates significant sales and earnings. Accordingly, our results of operations can fluctuate depending on whether and when large project awards occur and the commencement and progress of work under large contracts already awarded.
In addition, our operating results could be adversely affected by increased costs due to increased competition for employees, higher employee turnover, which may also result in loss of significant customer business, or increased employee benefit costs. 19 Table of Contents Item 1B. Unresolved Staff Comments. None.
In addition, our operating results could be adversely affected by increased costs due to increased competition for employees, higher employee turnover, increasing levels of retirement, the possibility of a shrinking workforce in various regions globally, which may also result in increased employee benefit or other costs or the loss of significant customer business, proprietary information, or tacit knowledge, which could negatively impact our operational efficiency, innovation capabilities, and customer relationships.
Risks Related to Our Industry, Markets and Business Operations Loss of key suppliers could decrease sales, profit margins and earnings. Most of our agreements with suppliers are terminable by either party on 60 days' notice or less for any reason. We currently source products from thousands of suppliers.
Most of our agreements with suppliers are terminable by either party on 60 days' notice or less for any reason. We currently source products from thousands of suppliers. However, our 10 largest suppliers in 2023 accounted for approximately 27% of our purchases by dollar volume for the period.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThis includes 49 facilities with square footage between 100,000 and 500,000 that operate as regional distribution centers or large branch locations, of which 38 are located in the U.S., seven in Canada, three in Europe and one in South America. Approximately 7% of our facilities are owned, and the remainder are leased.
Biggest changeThis includes 54 facilities with square footage between 100,000 and 500,000 that operate as regional distribution centers or large branch locations, of which 42 are located in the U.S., eight in Canada, two in Europe and two in South America. Approximately 8% of our facilities are owned, and the remainder are leased.
Item 2. Properties. We operate a network of approximately 650 branches and warehouse locations that hold inventory, and approximately 150 sales offices, with operations in more than 50 countries throughout the world.
Item 2. Properties. We operate a network of approximately 625 branches and warehouse locations that hold inventory, and approximately 140 sales offices, with operations in approximately 50 countries throughout the world.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeWe have not paid dividends on our common stock. We expect, however, to begin paying a quarterly cash dividend on our common stock starting in the first quarter of 2023, subject to approval and declaration by our Board of Directors.
Biggest changeWe began paying a quarterly cash dividend on our common stock starting in the first quarter of 2023. During each of the quarters in the fiscal year ended December 31, 2023, we paid a quarterly cash dividend of $0.375 per common share to our shareholders.
These shares were surrendered by stock-based compensation plan participants to satisfy tax withholding obligations arising from the exercise of stock-settled stock appreciation rights and vesting of restricted stock units.
These shares were surrendered by stock-based compensation plan participants to satisfy tax withholding obligations arising from the exercise of stock-settled stock appreciation rights, and vesting of restricted stock units and performance-based awards.
The graph covers the period from December 31, 2017 to December 31, 2022, and assumes that the value for each investment was $100 on December 31, 2017, and that all dividends were reinvested. 2022 Performance Peer Group: Applied Industrial Technologies, Inc. Fastenal Company Rexel SA Arrow Electronics, Inc. Genuine Parts Company Rockwell Automation, Inc. Avnet, Inc. Hubbell, Inc. W.W.
The graph covers the period from December 31, 2018 to December 31, 2023, and assumes that the value for each investment was $100 on December 31, 2018, and that all dividends were reinvested. 2023 Performance Peer Group: Applied Industrial Technologies, Inc. Fastenal Company Rexel SA Arrow Electronics, Inc. Genuine Parts Company Rockwell Automation, Inc. Avnet, Inc. Hubbell, Inc. W.W.
We were in compliance with these conditions in 2022 and expect to be in 2023. Issuer Purchases of Equity Securities .
We were in compliance with these conditions in 2023 and expect to be in 2024. Issuer Purchases of Equity Securities .
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market, Stockholder and Dividend Information . Our common stock is listed on the New York Stock Exchange under the symbol “WCC”. As of February 17, 2023, there were 51,099,562 shares of common stock outstanding held by approximately 850 holders of record.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market, Stockholder, and Dividend Information . Our common stock is listed on the New York Stock Exchange under the symbol “WCC”. As of February 16, 2024, there were 50,953,600 shares of common stock outstanding held by approximately 860 holders of record.
(2) On June 1, 2022, Wesco announced that its Board of Directors authorized, on May 31, 2022, the repurchase of up to $1 billion of the Company's common stock and Series A Preferred Stock.
(2) On June 1, 2022, Wesco announced that its Board of Directors authorized, on May 31, 2022, the repurchase of up to $1 billion of the Company's common stock and Series A Preferred Stock. The share repurchase authorization has no expiration date and may be modified, suspended, or terminated at any time without prior notice.
The following table sets forth all issuer purchases of common stock during the three months ended December 31, 2022: Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs (2) Period (In millions) October 1, 2022 – October 31, 2022 4,089 $ 123.68 — $ 1,000.0 November 1, 2022 – November 30, 2022 88,661 $ 126.50 87,502 $ 988.9 December 1, 2022 – December 31, 2022 1,258 $ 125.10 — $ 988.9 Total 94,008 $ 126.36 87,502 (1) There were 6,506 shares purchased during the quarterly period ended December 31, 2022 that were not part of the publicly announced share repurchase program.
The following table sets forth all issuer purchases of common stock during the three months ended December 31, 2023: Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs (2) Period (In millions) October 1, 2023 - October 31, 2023 57 $ 143.52 — $ 938.9 November 1, 2023 - November 30, 2023 178,886 $ 139.75 178,886 $ 913.9 December 1, 2023 - December 31, 2023 1,325 $ 174.90 — $ 913.9 Total 180,268 $ 140.01 178,886 (1) There were 1,382 shares purchased during the quarterly period ended December 31, 2023 that were not part of the publicly announced share repurchase program.
The share repurchase authorization has no expiration date and may be modified, suspended, or terminated at any time without prior notice. 21 Table of Contents Company Performance. The following stock price performance graph illustrates the cumulative total return on an investment in Wesco International, a 2022 Performance Peer Group, and the Russell 2000 Index.
The following stock price performance graph illustrates the five-year cumulative total return on an investment in Wesco International, a 2023 Performance Peer Group, and the Russell 2000 Index.
Added
The payment of dividends is within the discretion of our Board of Directors and any decision to pay dividends in the future, and the amount of any such dividend, will depend on an evaluation of a number of factors, including our financial condition, earnings, capital requirements, debt service obligations, restrictive covenants contained in our debt agreements, and other factors deemed relevant by our Board of Directors.
Added
During the three months ended December 31, 2023, the Company entered into spot repurchase transactions through a broker to purchase 178,886 shares of its common stock in the open market for cash totaling $25.0 million. Wesco funded the repurchases with available cash and borrowings under its revolving credit facility. 23 Table of Contents Company Performance.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

92 edited+52 added−83 removed26 unchanged
Biggest changeAdjusted for merger-related and integration costs, accelerated trademark amortization expense, net gain on Canadian divestitures, gain on curtailment of defined benefit pension plans, and the related income tax effects, net income and earnings per diluted share attributable to common stockholders were $519.3 million and $9.98, respectively, for the year ended December 31, 2021. 30 Table of Contents The following tables reconcile selling, general and administrative expenses, income from operations, other non-operating expense (income), provision for income taxes and earnings per diluted share to adjusted selling, general and administrative expenses, adjusted income from operations, adjusted other non-operating expense (income), adjusted provision for income taxes and adjusted earnings per diluted share, which are non-GAAP financial measures, for the periods presented: Year Ended December 31, Adjusted SG&A Expenses: 2022 2021 (In thousands) Selling, general and administrative expenses $ 3,044,223 $ 2,791,641 Merger-related and integration costs (67,446) (158,484) Net gain on divestitures — 8,927 Adjusted selling, general and administrative expenses $ 2,976,777 $ 2,642,084 Year Ended December 31, Adjusted Income from Operations: 2022 2021 (In thousands) Income from operations $ 1,438,085 $ 801,873 Merger-related and integration costs 67,446 158,484 Accelerated trademark amortization 9,774 32,021 Net gain on divestitures — (8,927) Adjusted income from operations $ 1,515,305 $ 983,451 Year Ended December 31, Adjusted Other Expense (Income), net: 2022 2021 (In thousands) Other expense (income), net $ 7,014 $ (48,112) Curtailment gain — 36,580 Adjusted other expense (income), net $ 7,014 $ (11,532) Year Ended December 31, Adjusted Provision for Income Taxes: 2022 2021 (In thousands) Provision for income taxes $ 274,529 $ 115,510 Income tax effect of adjustments to income from operations and other income, net (1) 20,165 33,672 Adjusted provision for income taxes $ 294,694 $ 149,182 (1) The adjustments to income from operations for the years ended December 31, 2022 and 2021 have been tax effected at rates of 26.1% and 23.5%, respectively.
Biggest changeAdjusted EBITDA margin % is calculated by dividing Adjusted EBITDA by net sales. 33 Table of Contents The following tables reconcile selling, general and administrative expenses, income from operations, other non-operating expense, provision for income taxes and earnings per diluted share to adjusted selling, general and administrative expenses, adjusted income from operations, adjusted other non-operating expense, adjusted provision for income taxes and adjusted earnings per diluted share, which are non-GAAP financial measures, for the periods presented: Year Ended December 31, 2023 2022 Adjusted SG&A Expenses: (In millions) Selling, general and administrative expenses $ 3,256.0 $ 3,044.2 Merger-related and integration costs (1) (55.4) (67.4) Restructuring costs (2) (16.7) — Adjusted selling, general and administrative expenses $ 3,183.9 $ 2,976.8 Adjusted Income from Operations: Income from operations $ 1,406.4 $ 1,438.1 Merger-related and integration costs (1) 55.4 67.4 Restructuring costs (2) 16.7 — Accelerated trademark amortization (3) 1.6 9.8 Adjusted income from operations $ 1,480.1 $ 1,515.3 Adjusted Other Expense, net: Other expense, net $ 25.1 $ 7.0 Pension settlement cost (4) (2.8) — Adjusted other expense, net $ 22.3 $ 7.0 Adjusted Provision for Income Taxes: Provision for income taxes $ 225.9 $ 274.5 Income tax effect of adjustments to income from operations (5) 21.0 20.2 Adjusted provision for income taxes $ 246.9 $ 294.7 (1) Merger-related and integration costs include integration and professional fees associated with the integration of Wesco and Anixter, including digital transformation costs, as well as advisory, legal, and separation costs associated with the merger between the two companies.
With millions of products, end-to-end supply chain services, and leading digital capabilities, we provide innovative solutions to meet customer needs across commercial and industrial businesses, contractors, government agencies, institutions, telecommunications providers, and utilities.
With millions of products, end-to-end supply chain services, and leading digital capabilities, we provide innovative solutions to meet customer needs across commercial and industrial businesses, contractors, government agencies, educational institutions, telecommunications providers, and utilities.
We believe that we are able to maintain sufficient liquidity for our domestic operations and commitments without repatriating cash from our foreign subsidiaries. 40 Table of Contents We finance our operating and investing needs primarily with borrowings under our Revolving Credit Facility, Receivables Facility, as well as uncommitted lines of credit entered into by certain of our foreign subsidiaries to support local operations, some of which are overdraft facilities.
We believe that we are able to maintain sufficient liquidity for our domestic operations and commitments without repatriating cash from our foreign subsidiaries. 36 Table of Contents We finance our operating and investing needs primarily with borrowings under our Revolving Credit Facility and Receivables Facility, as well as uncommitted lines of credit entered into by certain of our foreign subsidiaries to support local operations, some of which are overdraft facilities.
We expect to fund future uses of cash with a combination of existing cash balances, cash generated from operating activities, borrowings under our revolving credit and accounts receivable securitization facilities, or new issuances of debt. 42 Table of Contents Purchase orders for inventory requirements and service contracts are not included in the table above.
We expect to fund future uses of cash with a combination of existing cash balances, cash generated from operating activities, borrowings under our revolving credit and accounts receivable securitization facilities, or new issuances of debt. Purchase orders for inventory requirements and service contracts are not included in the table above.
We performed our annual impairment tests of goodwill and indefinite-lived intangible assets during the fourth quarter of 2022 by assessing qualitative factors to determine whether it was more likely than not that the fair values of our reporting units and indefinite-lived intangible assets were less than their respective carrying amounts.
We performed our annual impairment tests of goodwill and indefinite-lived intangible assets during the fourth quarter of 2023 by assessing qualitative factors to determine whether it was more likely than not that the fair values of our reporting units and indefinite-lived intangible assets were less than their respective carrying amounts.
The maximum borrowing limits of our international lines of credit vary by facility and range between $0.6 million and $31.0 million. Our international lines of credit generally are renewable on an annual basis and certain facilities are fully and unconditionally guaranteed by Wesco Distribution. Accordingly, certain borrowings under these lines directly reduce availability under our Revolving Credit Facility.
The maximum borrowing limits of our international lines of credit vary by facility and range between $0.6 million and $10.0 million. Our international lines of credit generally are renewable on an annual basis and certain facilities are fully and unconditionally guaranteed by Wesco Distribution. Accordingly, certain borrowings under these lines directly reduce availability under our Revolving Credit Facility.
Future uses of cash could also include acquisitions of businesses and the repurchase of common or preferred stock. We expect to spend approximately $100 million in 2023 on capital expenditures for information technology investments and to support our global network of branches, warehouses and sales offices.
Future uses of cash could also include acquisitions of businesses and the repurchase of common or preferred stock. We expect to spend approximately $100 million in 2024 on capital expenditures for information technology investments and to support our global network of branches, warehouses and sales offices.
Our policy is to fund these plans as required by the Employee Retirement Income Security Act, the Internal Revenue Service and local statutory law. We currently estimate that we will contribute $7.0 million to our foreign pension plans in 2023.
Our policy is to fund these plans as required by the Employee Retirement Income Security Act, the Internal Revenue Service and local statutory law. We currently estimate that we will contribute $7.0 million to our foreign pension plans in 2024.
Our innovative value-added solutions include supply chain management, logistics and transportation, procurement, warehousing and inventory management, as well as kitting and labeling, limited assembly of products and installation enhancement. We operate 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.
Our innovative value-added solutions include supply chain management, logistics and transportation, procurement, warehousing and inventory management, as well as kitting and labeling, limited assembly of products and installation enhancement. We operate nearly 800 branches, warehouses and sales offices in approximately 50 countries, providing a local presence for customers and a global network to serve multi-location businesses and global corporations.
Due to the future impact of various market conditions, rates of return and changes in plan participants, we cannot provide a meaningful estimate of our future contributions beyond 2023.
Due to the future impact of various market conditions, rates of return and changes in plan participants, we cannot provide a meaningful estimate of our future contributions beyond 2024.
For additional information regarding the amendments to the Receivables Facility and Revolving Credit Facility as well as disclosure of our debt instruments, including our outstanding indebtedness as of December 31, 2022, see Note 9, “Debt” of our Notes to Consolidated Financial Statements.
For information regarding amendments to the Receivables Facility and Revolving Credit Facility as well as disclosure of our debt instruments, including our outstanding indebtedness as of December 31, 2023, see Note 9, “Debt” of our Notes to Consolidated Financial Statements.
We have elected to pay the transition tax in installments over an eight year period, which ends in 2026. As of December 31, 2022, our remaining liability for the transition tax was $58.8 million. We continue to assert that the remaining undistributed earnings of our foreign subsidiaries are indefinitely reinvested.
We have elected to pay the transition tax in installments over an eight year period, which ends in 2026. As of December 31, 2023, our remaining liability for the transition tax was $53.8 million. We continue to assert that the remaining undistributed earnings of our foreign subsidiaries are indefinitely reinvested.
We were in compliance with all financial covenants and restrictions contained in our debt agreements as of December 31, 2022.
We were in compliance with all financial covenants and restrictions contained in our debt agreements as of December 31, 2023.
The consolidated weighted-average discount rate used to measure the projected benefit obligation of all plans was 4.6% and 2.6% at December 31, 2022 and 2021, respectively.
The consolidated weighted-average discount rate used to measure the projected benefit obligation of all plans was 4.4% and 4.6% at December 31, 2023 and 2022, respectively.
Net cash provided by operating activities for 2022 included net income of $862.1 million and non-cash adjustments to net income totaling $243.1 million, which were primarily comprised of depreciation and amortization of $179.0 million, stock-based compensation expense of $46.4 million, amortization of debt discount and debt issuance costs of $15.2 million, and deferred income taxes of $1.2 million.
Net cash provided by operating activities for 2022 included net income of $862.1 million and non-cash adjustments to net income totaling $243.1 million, which primarily consisted of depreciation and amortization of $179.0 million, stock-based compensation expense of $46.4 million, and amortization of debt discount and debt issuance costs of $15.2 million, partially offset by deferred income taxes of $1.2 million.
Changes in the expected long-term rate of return on plan assets and assumptions relating to the employee workforce are less likely to have a material impact on the measurement of defined benefit pension plan liabilities. See Note 13, “Employee Benefit Plans” of our Notes to Consolidated Financial Statements for additional disclosure regarding defined benefit pension plans.
Changes in the expected long-term rate of return on plan assets and assumptions relating to the employee workforce are less likely to have a material impact on the measurement of defined benefit pension plan liabilities. 27 Table of Contents See Note 2, “Accounting Policies” and Note 13, “Employee Benefit Plans” of our Notes to Consolidated Financial Statements for additional disclosure regarding defined benefit pension plans.
Economic conditions have contributed to increases in interest rates during 2022. Further increases will raise the rates we pay on our variable rate debt and will contribute to higher interest expense versus prior periods. At December 31, 2022, approximately 53% of our debt portfolio was comprised of fixed rate debt.
Economic conditions contributed to increases in interest rates during 2023 and 2022. Further increases will raise the rates we pay on our variable rate debt and will contribute to higher interest expense versus prior periods. At December 31, 2023, approximately 53% of our debt portfolio consisted of fixed rate debt.
The distribution of earnings by our foreign subsidiaries in the form of dividends, or otherwise, may be subject to additional taxation. We estimate that additional taxes of approximately $91.4 million would be payable upon the remittance of all previously undistributed foreign earnings as of December 31, 2022, based upon the laws in effect on that date.
The distribution of earnings by our foreign subsidiaries in the form of dividends, or otherwise, may be subject to additional taxation. We estimate that additional taxes of approximately $119.3 million would be payable upon the remittance of all previously undistributed foreign earnings as of December 31, 2023, based upon the laws in effect on that date.
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.
Note: Financial leverage ratio 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.
We expect to maintain sufficient liquidity through our credit facilities and cash balances. We believe cash provided by operations and financing activities will be adequate to cover our operational and business needs for at least the next twelve months. We communicate on a regular basis with our lenders regarding our financial and working capital performance, and liquidity position.
We believe cash provided by operations and financing activities will be adequate to cover our operational and business needs for at least the next twelve months. We communicate on a regular basis with our lenders regarding our financial and working capital performance, and liquidity position.
Primary uses of cash in 2022 included an increase in inventories of $817.0 million due to supply chain challenges and to support growth in our sales backlog, including project-based business, an increase in trade accounts receivable of $690.6 million resulting from significant sales growth, an increase in other current and noncurrent assets of $153.2 million primarily due to an increase in capitalized costs associated with developing cloud computing arrangements to support our digital transformation initiatives, an increase in other accounts receivable of $54.8 million associated with higher supplier volume rebate income accruals, and a decrease in accrued payroll and benefit costs of $63.1 million due to lower incentive compensation accruals.
Primary uses of cash in 2022 included an increase in inventories of $817.0 million due to supply chain challenges and to support growth in our sales backlog, including project-based business, an increase in trade accounts receivable of $690.6 million resulting from significant sales growth, an increase in other current and noncurrent assets of $153.2 million, primarily due to an increase in capitalized costs associated with developing cloud computing arrangements to support our digital transformation initiatives, an increase in other receivables of $54.8 million associated with higher supplier volume rebate income accruals, and a decrease in accrued payroll and benefit costs of $63.1 million due to lower incentive compensation accruals. 37 Table of Contents Investing Activities Net cash used in investing activities in 2023 was $89.6 million, compared to $283.6 million in 2022.
The Revolving Credit Facility and the Receivables Facility mature in March 2027 and March 2025, respectively. As of December 31, 2022, we also had $10.1 million of borrowing capacity available under our international lines of credit that did not directly reduce availability under the Revolving Credit Facility.
The Revolving Credit Facility and the Receivables Facility mature in March 2027 and March 2025, respectively. As of December 31, 2023, we also had $8.2 million of borrowing capacity available under our international lines of credit that did not directly reduce availability under the Revolving Credit Facility.
The impact of a 50-basis-point increase in the assumed discount rate would result in a decrease in the expense for 2023 of approximately $3.0 million, and a decrease in our projected benefit obligations at December 31, 2022 of $37.0 million.
The impact of a 50-basis-point increase in the assumed discount rate would result in a decrease in the expense for 2024 of approximately $1.0 million, and a decrease in our projected benefit obligations at December 31, 2023 of $29.0 million.
As a sensitivity measure, the effect of a 50-basis-point decline in the assumed discount rate would result in an increase in the expense for 2023 of approximately $1.0 million, and an increase in our projected benefit obligations at December 31, 2022 of $41.0 million.
As a sensitivity measure, the effect of a 50-basis-point decline in the assumed discount rate would result in no change in the expense for 2024, and an increase in our projected benefit obligations at December 31, 2023 of $31.0 million.
As of December 31, 2022, there was $10.1 million of borrowing capacity available under the international lines of credit that did not directly reduce availability under the Revolving Credit facility. As of December 31, 2022, we had $7.1 million outstanding under our international lines of credit.
As of December 31, 2023, there was $8.2 million of borrowing capacity available under the international lines of credit that did not directly reduce availability under the Revolving Credit Facility. As of December 31, 2023, we had $1.0 million outstanding under our international lines of credit.
In addition to the cash requirements disclosed in the table above, we expect future uses of cash to include working capital requirements, capital expenditures, investments in our digital capabilities, costs to integrate the operations of Wesco and Anixter and achieve the anticipated synergies of the merger with Anixter, dividend payments to holders of our common stock and Series A Preferred Stock, benefit payments to participants in our deferred compensation plan, and other organic opportunities.
In addition to the cash requirements disclosed in the table above, we expect future uses of cash to include working capital requirements, capital expenditures, investments in our digital capabilities, dividend payments to holders of our common stock and Series A Preferred Stock, benefit payments to participants in our deferred compensation plan, and other organic opportunities.
The Revolving Credit Facility has a borrowing limit of $1,725 million and the purchase limit under the Receivables Facility is $1,625 million. As of December 31, 2022, we had $1,023.6 million and $1,535.0 million outstanding under the Revolving Credit Facility and Receivables Facility, respectively.
The Revolving Credit Facility has a borrowing limit of $1,725 million and the purchase limit under the Receivables Facility is $1,625 million. As of December 31, 2023, we had $953.0 million and $1,550.0 million outstanding under the Revolving Credit Facility and Receivables Facility, respectively.
As of December 31, 2022, we had $664.9 million in available borrowing capacity under our Revolving Credit Facility, after giving effect to outstanding letters of credit and certain borrowings under our international lines of credit, and $50.0 million in available borrowing capacity under our Receivables Facility, which combined with available cash of $294.5 million, provided liquidity of $1.0 billion.
As of December 31, 2023, we had $736.0 million in available borrowing capacity under our Revolving Credit Facility, after giving effect to outstanding letters of credit and certain borrowings under our international lines of credit, and $75.0 million in available borrowing capacity under our Receivables Facility, which combined with available cash of $250.1 million, provided liquidity of $1.1 billion.
An analysis of cash flows for 2022 and 2021 follows: Operating Activities Net cash provided by operating activities for 2022 totaled $11.0 million, compared to $67.1 million of cash generated in 2021.
An analysis of cash flows for 2023 and 2022 follows: Operating Activities Net cash provided by operating activities for 2023 totaled $493.2 million, compared to $11.0 million of cash generated in 2022.
Income Taxes The provision for income taxes was $274.5 million for 2022 compared to $115.5 million for 2021, resulting in effective tax rates of 24.2% and 19.9%, respectively.
Income Taxes The provision for income taxes was $225.9 million for 2023 compared to $274.5 million for 2022, resulting in effective tax rates of 22.8% and 24.2%, respectively.
(2) Stock-based compensation expense in the calculation of adjusted EBITDA for the year ended December 31, 2021 excludes $5.1 million as such amount is included in merger-related and integration costs.
(2) Stock-based compensation expense in the calculation of adjusted EBITDA for the year ended December 31, 2022 excludes $5.4 million that is included in merger-related and integration costs.
During periods of economic expansion or contraction, our sales by quarter have varied significantly from this pattern. Recent Accounting Standards See Note 2, “Accounting Policies” of our Notes to Consolidated Financial Statements for a description of recently adopted and recently issued accounting standards.
Sales typically increase beginning in March, with slight fluctuations per month through October. During periods of economic expansion or contraction, our sales by quarter have varied significantly from this pattern. Recent Accounting Standards See Note 2, “Accounting Policies” of our Notes to Consolidated Financial Statements for a description of recently adopted and recently issued accounting standards.
Adjusted for merger-related and integration costs, accelerated trademark amortization expense, and the related income tax effects, net income and earnings per diluted share attributable to common stockholders were $860.1 million and $16.42, respectively, for the year ended December 31, 2022.
Adjusted for merger-related and integration costs, accelerated trademark amortization expense, and the related income tax effects, net income and earnings per diluted share attributable to common stockholders were $860.1 million and $16.42, respectively, for the year ended December 31, 2022. Adjusted EBITDA Adjusted EBITDA, a non-GAAP financial measure, was $1,705.3 million for 2023 compared to $1,725.6 million for 2022.
Included in 2022 was $255.4 million of cash paid to acquire Rahi Systems, less cash acquired of $68.6 million, as described in Note 6, “Acquisitions and Disposals” of our Notes to Consolidated Financial Statements. Included in 2021 was $56.0 million of net proceeds from the Canadian divestitures. Capital expenditures were $99.4 million in 2022, compared to $54.7 million in 2021.
Included in 2022 was $255.4 million of cash paid to acquire Rahi Systems, less cash acquired of $68.6 million, as described in Note 6, “Acquisitions and Disposals” of our Notes to Consolidated Financial Statements. Capital expenditures were $99.4 million in 2022.
SG&A expenses for 2022 totaled $3.0 billion versus $2.8 billion for 2021, an increase of $252.6 million, or 9.0%. As a percentage of net sales, SG&A expenses were 14.2% and 15.3% for 2022 and 2021, respectively. SG&A expenses for 2022 include merger-related and integration costs of $67.4 million.
SG&A expenses for 2023 totaled $3.3 billion versus $3.0 billion for 2022, an increase of 7.0%. As a percentage of net sales, SG&A expenses were 14.5% and 14.2% for 2023 and 2022, respectively. SG&A expenses for 2023 and 2022 include merger-related and integration costs of $55.4 million and $67.4 million, respectively.
Selling, General and Administrative Expenses SG&A expenses primarily include payroll and payroll-related costs, shipping and handling, travel and entertainment, facilities, utilities, information technology expenses, professional and consulting fees, credit losses, gains (losses) on the sale of property and equipment, as well as real estate and personal property taxes. SG&A expenses for 2021 totaled $2.8 billion versus $1.9 billion for 2020.
Selling, General and Administrative Expenses Selling, general and administrative (“SG&A”) expenses primarily include payroll and payroll-related costs, shipping and handling, travel and entertainment, facilities, utilities, information technology expenses, professional and consulting fees, credit losses, gains (losses) on the sale of property and equipment, as well as real estate and personal property taxes.
The increase of $26.3 million, or 9.8%, reflects higher borrowings and an increase in variable interest rates. Other Expense (Income), net Other non-operating expense totaled $7.0 million for 2022 compared to other non-operating income of $48.1 million for 2021.
The increase of $94.9 million, or 32.2%, reflects higher borrowings and an increase in variable interest rates. Other Expense, net Other non-operating expense totaled $25.1 million for 2023 compared to $7.0 million for 2022.
Investing activities primarily included $255.4 million of cash paid to acquire Rahi Systems, less cash acquired of $68.6 million, and $99.4 million of capital expenditures mostly consisting of internal-use computer software and information technology hardware to support our digital transformation initiatives, as well as equipment and leasehold improvements to support our global network of branches, warehouses and sales offices.
Investing activities primarily included $92.3 million of capital expenditures mostly consisting of internal-use computer software and information technology hardware to support our digital transformation initiatives, as well as equipment and leasehold improvements to support our global network of branches, warehouses and sales offices.
Net income and earnings per diluted share attributable to common stockholders were $803.1 million and $15.33, respectively, for 2022 compared to $408.0 million and $7.84, respectively, for 2021.
Net Income and Earnings per Share Net income and earnings per diluted share attributable to common stockholders were $708.1 million and $13.54, respectively, for 2023 compared to $803.1 million and $15.33, respectively, for 2022.
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. Net sales were $21.4 billion for 2022 compared with $18.2 billion for 2021, an increase of 17.6%.
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.
For the year ended December 31, 2021, SG&A expenses, income from operations, other non-operating income, 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 our legacy utility and data communications businesses in Canada, accelerated trademark amortization expense associated with migrating to our master brand architecture, a curtailment gain, and the related income tax effects.
For the year ended December 31, 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 trademark amortization expense associated with migrating to our master brand architecture, and the related income tax effects.
During 2022, financing activities were primarily comprised of net borrowings of $433.0 million related to our Revolving Credit Facility and net borrowings of $265.0 million related to our Receivables Facility.
Net cash provided by financing activities in 2022 was $584.0 million. During 2022, financing activities primarily consisted of net borrowings of $433.0 million related to our Revolving Credit Facility and net borrowings of $265.0 million related to our Receivables Facility.
Note: EBITDA, Adjusted EBITDA and Adjusted EBITDA margin % are non-GAAP financial measures that provide indicators of our performance and ability to meet debt service requirements. EBITDA is defined as earnings before interest, taxes, depreciation and amortization.
Note: Adjusted EBITDA and Adjusted EBITDA margin % are non-GAAP financial measures that provide indicators of our performance and ability to meet debt service requirements. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization before other non-operating expenses (income), non-cash stock-based compensation expense, merger-related and integration costs, and restructuring costs.
See Note 5, “Goodwill and Intangible Assets” of our Notes to Consolidated Financial Statements for additional disclosure regarding goodwill and indefinite-lived intangible assets. 25 Table of Contents Defined Benefit Pension Plans Liabilities and expenses for defined benefit pension plans are determined using actuarial methodologies and incorporate significant assumptions, including the interest rate used to discount the future estimated cash flows, the expected long-term rate of return on plan assets, and several assumptions relating to the employee workforce (salary increases, retirement age, and mortality).
Defined Benefit Pension Plans Liabilities and expenses for defined benefit pension plans are determined using actuarial methodologies and incorporate significant assumptions, including the interest rate used to discount the future estimated cash flows, the expected long-term rate of return on plan assets, and several assumptions relating to the employee workforce (salary increases, retirement age, and mortality).
Management does not use these non-GAAP financial measures for any purpose other than the reasons stated above. Company Overview Wesco, headquartered in Pittsburgh, Pennsylvania, is a leading provider of business-to-business distribution, logistics services and supply chain solutions. We employ approximately 20,000 people, maintain relationships with more than 50,000 suppliers, and serve approximately 150,000 customers worldwide.
Company Overview Wesco, headquartered in Pittsburgh, Pennsylvania, is a leading provider of business-to-business distribution, logistics services and supply chain solutions. We employ approximately 20,000 people, maintain relationships with more than 50,000 suppliers, and serve nearly 150,000 customers worldwide.
Adjusted EBITDA is defined as the trailing twelve months EBITDA before other non-operating expense (income), non-cash stock-based compensation expense, merger-related and integration costs, and net gain on the divestiture of our legacy utility and data communications businesses in Canada. The undistributed earnings of our foreign subsidiaries amounted to approximately $1,865.4 million at December 31, 2022.
Adjusted EBITDA is defined as the trailing twelve months EBITDA before other non-operating expense (income), non-cash stock-based compensation expense, merger-related and integration costs, and restructuring costs. The undistributed earnings of our foreign subsidiaries amounted to approximately $2,194.1 million at December 31, 2023.
We also measure our ability to meet our debt obligations based on our financial leverage ratio, which was 2.9 as of December 31, 2022 and 3.9 as of December 31, 2021. 39 Table of Contents The following table sets forth our financial leverage ratio, which is a non-GAAP financial measure, for the periods presented: Twelve months ended December 31, 2022 December 31, 2021 (In millions of dollars, except ratios) Net income attributable to common stockholders $ 803.1 $ 408.0 Net income attributable to noncontrolling interests 1.7 1.0 Preferred stock dividends 57.4 57.4 Provision for income taxes 274.5 115.5 Interest expense, net 294.4 268.1 Depreciation and amortization 179.0 198.5 EBITDA $ 1,610.1 $ 1,048.5 Other expense (income), net (1) 7.0 (48.1) Stock-based compensation expense 41.0 25.7 Merger-related and integration costs 67.4 158.5 Net gain on divestitures — (8.9) Adjusted EBITDA $ 1,725.5 $ 1,175.7 As of December 31, 2022 December 31, 2021 Short-term debt and current portion of long-term debt, net $ 70.5 $ 9.5 Long-term debt, net 5,346.0 4,701.5 Debt discount and debt issuance costs (2) 57.9 70.6 Fair value adjustments to Anixter Senior Notes due 2023 and 2025 (2) (0.3) (0.9) Total debt 5,474.1 4,780.7 Less: Cash and cash equivalents 527.3 212.6 Total debt, net of cash $ 4,946.8 $ 4,568.1 Financial leverage ratio 2.9 3.9 (1) Other non-operating income for the year ended December 31, 2021 includes a $36.6 million curtailment gain.
We also measure our ability to meet our debt obligations based on our financial leverage ratio, which was 2.8x as of December 31, 2023 and 2.9x as of December 31, 2022. 35 Table of Contents The following table sets forth our financial leverage ratio, which is a non-GAAP financial measure, for the periods presented: Twelve months ended December 31, 2023 December 31, 2022 (In millions of dollars, except ratios) Net income attributable to common stockholders $ 708.1 $ 803.1 Net income attributable to noncontrolling interests 0.6 1.7 Preferred stock dividends 57.4 57.4 Provision for income taxes 225.9 274.5 Interest expense, net 389.3 294.4 Depreciation and amortization 181.3 179.0 EBITDA $ 1,562.6 $ 1,610.1 Other expense, net 25.1 7.0 Stock-based compensation expense 45.5 41.0 Merger-related and integration costs (1) 55.4 67.4 Restructuring costs (2) 16.7 — Adjusted EBITDA $ 1,705.3 $ 1,725.6 As of December 31, 2023 December 31, 2022 Short-term debt and current portion of long-term debt, net $ 8.6 $ 70.5 Long-term debt, net 5,313.1 5,346.0 Debt discount and debt issuance costs (3) 43.0 57.9 Fair value adjustments to Anixter Senior Notes due 2023 and 2025 (3) (0.1) (0.3) Total debt 5,364.6 5,474.1 Less: Cash and cash equivalents 524.1 527.3 Total debt, net of cash $ 4,840.5 $ 4,946.8 Financial leverage ratio 2.8 2.9 (1) Merger-related and integration costs include integration and professional fees associated with the integration of Wesco and Anixter, including digital transformation costs, as well as advisory, legal, and separation costs associated with the merger between the two companies.
Most of these earnings have been taxed in the U.S. under either the one-time tax on the deemed repatriation of undistributed foreign earnings (the “transition tax”), or the GILTI tax regime imposed by the Tax Cuts and Jobs Act of 2017. Future distributions of previously taxed earnings by our foreign subsidiaries should, therefore, result in minimal U.S. taxation.
Most of these earnings have been taxed in the U.S. under either the one-time tax on the deemed repatriation of undistributed foreign earnings (the “transition tax”), or the global intangible low-taxed income (“GILTI”) tax regime imposed by the Tax Cuts and Jobs Act of 2017.
(2) Debt is presented in the 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.
(2) Restructuring costs include severance costs incurred pursuant to an ongoing restructuring plan. (3) Debt is presented in the 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.
Depreciation and amortization for 2022 and 2021 includes $9.8 million and $32.0 million, respectively, of accelerated amortization expense resulting from changes in the estimated useful lives of certain legacy trademarks that are migrating to our master brand architecture, as described in our overall results above.
Depreciation and amortization for 2023 and 2022 includes $1.6 million and $9.8 million, respectively, of accelerated amortization expense resulting from changes in the estimated useful lives of certain legacy trademarks that are migrating to our master brand architecture. Income from Operations Income from operations was $1,406.4 million for 2023 compared to $1,438.1 million for 2022.
The following table summarizes our material cash requirements from known contractual and other obligations at December 31, 2022, including interest, and the expected effect on our liquidity and cash flow in future periods: 2023 2024 to 2025 2026 to 2027 2028 - After Total (In millions) Debt, excluding debt discount and debt issuance costs $ 70.5 $ 3,049.6 $ 1,028.5 $ 1,325.6 $ 5,474.2 Interest on indebtedness (1) 339.0 563.1 256.5 48.0 1,206.6 Non-cancelable operating leases 158.6 244.3 156.3 170.9 730.1 Transition tax installments 5.0 40.2 13.6 — 58.8 Defined benefit pension plans (2) 7.0 — — — 7.0 Total $ 580.1 $ 3,897.2 $ 1,454.9 $ 1,544.5 $ 7,476.7 (1) Interest on variable rate debt was calculated using the rates and balances outstanding at December 31, 2022.
The following table summarizes our material cash requirements from known contractual and other obligations at December 31, 2023, including interest, and the expected effect on our liquidity and cash flow in future periods: 2024 2025 to 2026 2027 to 2028 2029 - After Total (In millions) Debt, excluding debt discount and debt issuance costs $ 8.6 $ 3,070.0 $ 2,284.5 $ 1.5 $ 5,364.6 Interest on indebtedness (1) 365.4 393.5 155.0 — 913.9 Non-cancelable operating leases 191.2 319.0 206.4 188.8 905.4 Transition tax installments 16.1 37.7 — — 53.8 Defined benefit pension plans (2) 7.0 — — — 7.0 Total $ 588.3 $ 3,820.2 $ 2,645.9 $ 190.3 $ 7,244.7 (1) Interest on variable rate debt was calculated using the rates and balances outstanding at December 31, 2023.
We have operating segments comprising three strategic business units consisting of Electrical & Electronic Solutions (“EES”), Communications & Security Solutions (“CSS”) and Utility & Broadband Solutions (“UBS”). These operating segments are equivalent to our reportable segments. See Item 1, “Business” in this Annual Report on Form 10-K for a description of each of our reportable segments and their business activities.
These operating segments are equivalent to our reportable segments. See Item 1, “Business” in this Annual Report on Form 10-K for a description of each of our reportable segments and their business activities.
Financing activities for 2021 also included $57.4 million of dividends paid to holders of our Series A Preferred Stock, borrowings and repayments of $14.5 million and $34.8 million, respectively, related to our various international lines of credit, and $27.2 million of payments for taxes related to the exercise and vesting of stock-based awards.
Financing activities for 2023 also included $76.6 million and $57.4 million of dividends paid to holders of our common stock and Series A Preferred Stock, respectively, $75.0 million of common stock repurchases, $68.3 million of payments for taxes related to the exercise and vesting of stock-based awards, and net repayments on our various international lines of credit of approximately $6.0 million.
Earnings per diluted share for 2022 was $15.33, based on 52.4 million diluted shares, compared to $7.84 for 2021, based on 52.0 million diluted shares. Adjusted for merger-related and integration costs, accelerated trademark amortization expense, and the related income tax effects, earnings per diluted share for 2022 was $16.42.
Earnings per diluted share for 2023 was $13.54, based on 52.3 million diluted shares, compared to $15.33 for 2022, based on 52.4 million diluted shares, a decrease of 11.7%. Adjusted for merger-related and integration costs, restructuring costs, accelerated trademark amortization expense, net pension settlement cost, and the related income tax effects, earnings per diluted share for 2023 was $14.60.
The effective tax rates for both the current year and the prior year were favorably impacted by the tax benefits related to intercompany financing and reductions in the valuation allowance recorded against certain foreign tax credit carryforwards.
The effective tax rate for both the current year and the prior year were favorably impacted by the tax benefits related to the exercise and vesting of stock-based awards and reductions in the valuation allowance recorded against certain deferred tax assets.
Net cash provided by operating activities included net income of $862.1 million and non-cash adjustments to net income totaling $243.1 million, which were primarily comprised of depreciation and amortization of $179.0 million, stock-based compensation expense of $46.4 million, amortization of debt discount and debt issuance costs of $15.2 million, and deferred income taxes of $1.2 million.
Net cash provided by operating activities included net income of $766.1 million and non-cash adjustments to net income totaling $235.8 million, which primarily consisted of depreciation and amortization of $181.3 million, stock-based compensation expense of $48.1 million, amortization of debt discount and debt issuance costs of $14.8 million, and deferred income taxes of $7.9 million.
Adjusted for merger-related and integration costs, accelerated trademark amortization expense, net gain on Canadian divestitures, gain on curtailment of defined benefit pension plans, and the related income tax effects, net income and earnings per diluted share attributable to common stockholders were $519.3 million and $9.98, respectively, for the year ended December 31, 2021.
Adjusted for merger-related and integration costs, restructuring costs, accelerated trademark amortization expense, net pension settlement cost, and the related income tax effects, net income and earnings per diluted share attributable to common stockholders were $763.6 million and $14.60, respectively, for the year ended December 31, 2023.
Income from operations as a percentage of net sales was 6.7% for the current year, compared to 4.4% for the prior year. Income from operations for 2022 includes merger-related and integration costs of $67.4 million.
Income from operations was $1,406.4 million for 2023, compared to $1,438.1 million for 2022, a decrease of $31.7 million, or 2.2%. Income from operations as a percentage of net sales was 6.3% for the current year, compared to 6.7% for the prior year.
We believe our capital structure has an appropriate mix of fixed versus variable rate debt and secured versus unsecured instruments. Over the next several quarters, it is expected that excess liquidity will be directed primarily at debt reduction, integration activities and potential acquisitions, or returning capital to shareholders through the payment of dividends and our existing share repurchase authorization.
Over the next several quarters, we expect that our excess liquidity will be directed primarily at debt reduction, digital transformation initiatives, returning capital to shareholders through the payment of dividends and our existing share repurchase authorization, or potential acquisitions and related integration activities. We expect to maintain sufficient liquidity through our credit facilities and cash balances.
Capital expenditures were $54.7 million in 2021, compared to $56.7 million in 2020. Financing Activities Net cash provided by financing activities in 2022 was $584.0 million, compared to $310.8 million of net cash used in financing activities in 2021.
Financing Activities Net cash used in financing activities in 2023 was $403.9 million, compared to $584.0 million of net cash provided by financing activities in 2022.
Seasonality Our operating results are not significantly affected by seasonal factors. Sales during the first and fourth quarters have historically been affected by a reduced level of activity due to the impact of weather on projects. Sales typically increase beginning in March, with slight fluctuations per month through October.
See Note 11, “Income Taxes” in our Notes to Consolidated Financial Statements for further information related to unrecognized tax benefits. Seasonality Our operating results are not significantly affected by seasonal factors. Sales during the first and fourth quarters have historically been affected by a reduced level of activity due to the impact of weather on projects.
The Anixter 5.50% Senior Notes due 2023 will mature on March 1, 2023 and we expect to use borrowings under our Revolving Credit Facility to redeem the $58.6 million aggregate principal amount of this instrument.
On March 1, 2023, we repaid the $58.6 million aggregate principal amount of our 5.50% Anixter Senior Notes due 2023. The repayment was funded with borrowings under our Revolving Credit Facility and had no impact on our results of operations. Our $1,500 million of 7.125% Senior Notes will mature on June 15, 2025 (“2025 Notes”).
In 2022, we launched the master brand identity in North America and began migrating certain legacy sub-brands to the master brand architecture, a process that will continue for the next several years. Due to the strength of its recognition with customers and suppliers, we will continue to use the Anixter brand name globally for the foreseeable future.
In 2022, we launched the master brand identity in North America and began migrating certain legacy sub-brands to the master brand architecture, a process that will continue for the next several years. In 2023, we launched the Wesco Anixter go-to-market brand in all markets outside of the U.S. and Canada, as part of our master brand deployment strategy.
(2) Stock-based compensation expense in the calculation of adjusted EBITDA for the year ended December 31, 2021 excludes $5.1 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 our performance and ability to meet debt service requirements.
(2) Stock-based compensation expense in the calculation of adjusted EBITDA for the year ended December 31, 2023 excludes $2.6 million that is included in merger-related and integration costs.
The adjustment to other-non operating income for the year ended December 31, 2021 has been tax effected at a rate of 24.6% as the majority of the curtailment gain relates to our Canadian defined benefit pension plans. 31 Table of Contents Year Ended December 31, Adjusted Earnings Per Diluted Share: 2022 2021 (In thousands, except per share data) Adjusted income from operations $ 1,515,305 $ 983,451 Interest expense, net 294,420 268,073 Adjusted other expense (income), net 7,014 (11,532) Adjusted income before income taxes 1,213,871 726,910 Adjusted provision for income taxes 294,694 149,182 Adjusted net income 919,177 577,728 Net income attributable to noncontrolling interests 1,651 1,020 Adjusted net income attributable to WESCO International, Inc. 917,526 576,708 Preferred stock dividends 57,408 57,408 Adjusted net income attributable to common stockholders $ 860,118 $ 519,300 Diluted shares 52,395 52,030 Adjusted earnings per diluted share $ 16.42 $ 9.98 Note: For the year ended December 31, 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 trademark amortization expense associated with migrating to our master brand architecture, and the related income tax effects.
(5) The adjustments to income from operations for the years ended December 31, 2023 and 2022 have been tax effected at rates of 27.5% and 26.1%, respectively. 34 Table of Contents Year Ended December 31, Adjusted Earnings Per Diluted Share: 2023 2022 (In millions, except per share data) Adjusted income from operations $ 1,480.1 $ 1,515.3 Interest expense, net 389.3 294.4 Adjusted other expense, net 22.3 7.0 Adjusted income before income taxes 1,068.5 1,213.9 Adjusted provision for income taxes 246.9 294.7 Adjusted net income 821.6 919.2 Net income attributable to noncontrolling interests 0.6 1.7 Adjusted net income attributable to WESCO International, Inc. 821.0 917.5 Preferred stock dividends 57.4 57.4 Adjusted net income attributable to common stockholders $ 763.6 $ 860.1 Diluted shares 52.3 52.4 Adjusted earnings per diluted share $ 14.60 $ 16.42 Note: For the year ended December 31, 2023, SG&A expenses, income from operations, other non-operating expense, the provision for income taxes and earnings per diluted share have been adjusted to exclude merger-related and integration costs, restructuring costs, accelerated amortization expense associated with migrating to our master brand architecture, net pension settlement cost primarily related to the partial settlement of the Company's pension plan in the U.S., partially offset by pension settlement gains related to other plans, and the related income tax effects.
For 2021, income from operations adjusted for merger-related and integration costs of $158.5 million, accelerated trademark amortization expense of $32.0 million, and a net gain of $8.9 million resulting from the divestiture of our legacy utility and data communications businesses in Canada was 5.4% of net sales.
For 2022, income from operations was 7.1% of net sales, as adjusted for merger-related and integration costs of $67.4 million and accelerated trademark amortization expense of $9.8 million.
Due to fluctuations in the U.S. dollar against certain foreign currencies, for example the Canadian dollar, we recorded foreign currency exchange losses of $19.9 million and $2.8 million in 2022 and 2021, respectively.
Due to fluctuations in the U.S. dollar against certain foreign currencies, particularly the Argentine Peso and the Egyptian Pound, a net foreign currency exchange loss of $22.9 million was recognized for 2023 compared to a net loss of $19.9 million for 2022.
Liabilities related to unrecognized tax benefits, including interest and penalties, of $122.9 million were excluded from the table above as we cannot reasonably estimate the timing of these potential cash settlements with taxing authorities. See Note 11, “Income Taxes” in our Notes to Consolidated Financial Statements for further information related to unrecognized tax benefits.
We do not have significant agreements to purchase material or goods that would specify minimum order quantities. 38 Table of Contents Liabilities related to unrecognized tax benefits, including interest and penalties, of $133.7 million were excluded from the table above as we cannot reasonably estimate the timing of these potential cash settlements with taxing authorities.
During 2021, financing activities were primarily comprised of the redemption of the $500.0 million and $354.7 million aggregate principal amounts of our 5.375% Senior Notes due 2021 and 5.375% Senior Notes due 2024, respectively, net borrowings of $347.0 million related to our Revolving Credit Facility, and net borrowings of $320.0 million related to our Receivables Facility.
During 2023, financing activities primarily consisted of net repayments of $70.3 million related to our Revolving Credit Facility and the repayment of our $58.6 million aggregate principal amount of 5.50% Anixter Senior Notes due 2023, partially offset by net borrowings of $15.0 million related to our Receivables Facility.
These non-GAAP financial measures provide a better understanding of our financial results on a comparable basis. 32 Table of Contents EBITDA, Adjusted EBITDA and Adjusted EBITDA margin % The following tables reconcile net income attributable to common stockholders to EBITDA, adjusted EBITDA and adjusted EBITDA margin % by segment, which are non-GAAP financial measures, for the periods presented: Year Ended December 31, 2022 (In thousands) EES CSS UBS Corporate Total Net income attributable to common stockholders $ 801,283 $ 526,985 $ 648,478 $ (1,173,683) $ 803,063 Net income attributable to noncontrolling interests 158 — — 1,493 1,651 Preferred stock dividends — — — 57,408 57,408 Provision for income taxes — — — 274,529 274,529 Interest expense, net — — — 294,420 294,420 Depreciation and amortization 42,621 68,448 23,251 44,694 179,014 EBITDA $ 844,062 $ 595,433 $ 671,729 $ (501,139) $ 1,610,085 Other (income) expense, net (2,022) (1,292) 1,992 8,336 7,014 Stock-based compensation expense (1) 9,226 4,859 3,534 23,418 41,037 Merger-related and integration costs — — — 67,446 67,446 Adjusted EBITDA $ 851,266 $ 599,000 $ 677,255 $ (401,939) $ 1,725,582 Adjusted EBITDA margin % 9.6 % 9.4 % 10.9 % 8.1 % (1) Stock-based compensation expense in the calculation of adjusted EBITDA for the year ended December 31, 2022 excludes $5.4 million as such amount is included in merger-related and integration costs.
(4) Restructuring costs include severance costs incurred pursuant to an ongoing restructuring plan. 32 Table of Contents Year Ended December 31, 2022 (In millions) EES CSS UBS Corporate Total Net income attributable to common stockholders $ 801.3 $ 527.0 $ 648.5 $ (1,173.7) $ 803.1 Net income attributable to noncontrolling interests 0.2 — — 1.5 1.7 Preferred stock dividends — — — 57.4 57.4 Provision for income taxes (1) — — — 274.5 274.5 Interest expense, net (1) — — — 294.4 294.4 Depreciation and amortization 42.6 68.4 23.3 44.7 179.0 Other (income) expense, net (2.0) (1.3) 2.0 8.3 7.0 Stock-based compensation expense (2) 9.2 4.9 3.5 23.4 41.0 Merger-related and integration costs (3) — — — 67.4 67.4 Adjusted EBITDA $ 851.3 $ 599.0 $ 677.3 $ (401.9) $ 1,725.6 Adjusted EBITDA margin % 9.6 % 9.4 % 10.9 % (1) The reportable segments do not incur income taxes and interest expense as these costs are centrally controlled through the Corporate tax and treasury functions.
Organic sales for 2022 grew 11.5% as the acquisition of Rahi Systems in the fourth quarter of 2022 and the number of workdays positively impacted reported net sales by 2.0% and 0.4%, respectively, while fluctuations in foreign exchange rates negatively impacted reported net sales by 1.9%.
Adjusting for the favorable impact from the acquisition of Rahi Systems of 7.1%, the unfavorable impacts from fluctuations in foreign exchange rates of 0.4% and the number of workdays of 0.4%, CSS organic sales for 2023 grew 5.4%, reflecting the impact of changes in price, which favorably impacted organic sales by approximately 1%.
Adjusted EBITDA margin % is calculated by dividing Adjusted EBITDA by net sales. 38 Table of Contents Liquidity and Capital Resources Our liquidity needs generally arise from fluctuations in our working capital requirements, information technology investments, capital expenditures, acquisitions and debt service obligations.
These non-GAAP financial measures provide a better understanding of our financial results on a comparable basis. Liquidity and Capital Resources Our liquidity needs generally arise from fluctuations in our working capital requirements, information technology investments, capital expenditures, acquisitions, the payment of dividends, and debt service obligations.
SG&A expenses not related to payroll and payroll-related costs for 2022 were $1.1 billion, an increase of $123.9 million compared to 2021.
SG&A expenses not related to payroll and payroll-related costs for 2023 were $1.2 billion, an increase of $122.4 million compared to 2022, which primarily reflects higher costs to operate our facilities of $49.2 million, increased marketing costs of $11.5 million, as well as higher employee expenses of $6.6 million due to increased headcount.
These increases were partially offset by the realization of integration cost synergies and lower costs associated with integration activities. Depreciation and Amortization Depreciation and amortization decreased $19.6 million to $179.0 million for 2022, compared to $198.6 million for 2021.
In addition, digital transformation initiatives contributed to higher expenses of $22.4 million in 2023, which includes higher professional and consulting expenses. These increases were partially offset by the realization of integration cost synergies. Depreciation and Amortization Depreciation and amortization increased $2.3 million to $181.3 million for 2023, compared to $179.0 million for 2022.
The increase of $636.2 million, or 79.3%, reflects sales growth and lower cost of goods sold as a percentage of net sales, along with the realization of integration synergies and a reduction to incentive compensation expense, partially offset by higher salaries and commissions, volume-related costs, as well as expenses associated with our digital transformation initiatives.
The decrease of $31.7 million, or 2.2%, reflects slightly higher cost of goods sold as a percentage of net sales and higher SG&A expenses, as described above, partially offset by sales growth and the realization of integration synergies. Interest Expense, net Net interest expense totaled $389.3 million for 2023 compared to $294.4 million for 2022.
Overall Financial Performance Our financial results for 2022 compared to 2021 reflect double-digit sales growth driven by the benefits of price inflation and higher volumes, increased scale, secular demand trends and execution of our cross-sell program, as well as margin expansion and the realization of integration synergies, partially offset by higher selling, general and administrative (“SG&A”) payroll and payroll-related expenses, volume-related costs, along with expenses associated with our digital transformation initiatives.
Overall Financial Performance Our financial results for 2023 compared to 2022 reflect single-digit sales growth driven by the benefits of price inflation, increased scale, and secular demand trends.
Financing activities were primarily comprised of net borrowings of $433.0 million related to our revolving credit facility (the “Revolving Credit Facility”) and net borrowings of $265.0 million related to our accounts receivable securitization facility (the “Receivables Facility”).
Financing activities primarily consisted of net repayments of $70.3 million related to our revolving credit facility (the “Revolving Credit Facility”) and the repayment of our $58.6 million aggregate principal amount of 5.50% Anixter Senior Notes due 2023, which matured on March 1, 2023, partially offset by net borrowings of $15.0 million related to our accounts receivable securitization facility (the “Receivables Facility”).
As disclosed in Note 13, “Employee Benefit Plans” of our Notes to Consolidated Financial Statements, we recognized net benefits of $14.8 million and $53.2 million associated with the non-service cost components of net periodic pension (benefit) cost for 2022 and 2021, respectively. The non-service cost components of net periodic pension (benefit) cost for 2021 includes a $36.6 million curtailment gain.
We recognized net costs of $0.2 million and net benefits of $14.8 million associated with the non-service cost components of net periodic pension cost (benefit) for 2023 and 2022, respectively. The year-over-year change was primarily due to a decrease in expected return on plan assets and an increase in interest cost.
Cost of Goods Sold Cost of goods sold for 2021 was $14.4 billion compared to $10.0 billion for 2020, an increase of $4.4 billion, reflecting the merger with Anixter. Cost of goods sold as a percentage of net sales was 79.2% and 81.1% for 2021 and 2020, respectively.
Cost of goods sold as a percentage of net sales was 78.4% and 78.2% for 2023 and 2022, respectively.
Financing activities for 2022 also included $57.4 million of dividends paid to holders of our Series A Preferred Stock, $25.8 million of payments for taxes related to the exercise and vesting of stock-based awards, borrowings and repayments of $19.5 million and $19.5 million, respectively, related to our various international lines of credit, and $11.1 million of common stock repurchases. 24 Table of Contents Financing Availability During 2022 we amended our Receivables Facility and Revolving Credit Facility to, among other things, increase their borrowing capacities, extend their maturity dates, and replace the London Inter-Bank Offered Rate-based (“LIBOR”) interest rate options with Secured Overnight Financing Rate-based (“SOFR”) interest rate options.
Financing activities for 2023 also included $76.6 million and $57.4 million of dividends paid to holders of our common stock and Series A Preferred Stock, respectively, $75.0 million of common stock repurchases, and $68.3 million of payments for taxes related to the exercise and vesting of stock-based awards. 26 Table of Contents Financing Availability As of December 31, 2023, we had $736.0 million in total available borrowing capacity under our Revolving Credit Facility and $75.0 million of available borrowing capacity under our Receivables Facility.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs our 5.50% Senior Notes due 2023, 6.00% Senior Notes due 2025, 7.125% Senior Notes due 2025, and 7.250% Senior Notes due 2028 were issued at fixed rates, interest expense would not be impacted by interest rate fluctuations.
Biggest changeAs our 6.00% Anixter Senior Notes due 2025, 7.125% Senior Notes due 2025, and 7.250% Senior Notes due 2028 were issued at fixed rates, interest expense would not be impacted by interest rate fluctuations.
Our exposure to currency rate fluctuations primarily relate to Canada (Canadian dollar), certain countries in the European Union (euro), the United Kingdom (British pound), Sweden (Swedish krona), Switzerland (Swiss franc), and Australia (dollar).
Our exposure to currency rate fluctuations primarily relate to Canada (Canadian dollar), certain countries in the European Union (euro), the United Kingdom (British pound), Sweden (Swedish krona), Switzerland (Swiss franc), and Australia (Australian dollar).
The fair value of these debt instruments at December 31, 2022 approximated carrying value. We borrow under our Revolving Credit Facility and Receivables Facility for general corporate purposes, including working capital requirements and capital expenditures.
The fair value of these debt instruments at December 31, 2023 approximated carrying value. We borrow under our Revolving Credit Facility and Receivables Facility for general corporate purposes, including working capital requirements and capital expenditures.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk. Foreign Currency Risks In 2022, approximately 26% of our sales were from our foreign subsidiaries and are denominated in foreign currencies.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk. Foreign Currency Risks In 2023, approximately 26% of our sales were from our foreign subsidiaries and are denominated in foreign currencies.
The fair value of our debt instruments with fixed interest rates is disclosed in Note 4, “Fair Value of Financial Instruments” of our Notes to Consolidated Financial Statements. Floating Rate Borrowings : Our variable rate borrowings are comprised of the Revolving Credit Facility, the Receivables Facility, and international lines of credit.
The fair value of our debt instruments with fixed interest rates is disclosed in Note 4, “Fair Value of Financial Instruments” of our Notes to Consolidated Financial Statements. Floating Rate Borrowings : Our variable rate borrowings comprise the Revolving Credit Facility, the Receivables Facility, and international lines of credit.
The use of SOFR in place of LIBOR for such facilities has not had a material impact on our results from operations. A 100 basis point rise or decline in interest rates would result in an increase or decrease to interest expense of $25.7 million under our current capital structure. 43 Table of Contents
The use of SOFR in place of LIBOR for such facilities has not had a material impact on our results from operations. A 100 basis point rise or decline in interest rates would result in an increase or decrease to interest expense of $25.2 million under our current capital structure. 39 Table of Contents
However, since these forward contracts are intended to be effective economic hedges, we would record offsetting gains as a result of the remeasurement of the underlying foreign currency denominated monetary amounts being hedged. Interest Rate Risk Fixed Rate Borrowings : As of December 31, 2022, approximately 53% of our debt portfolio is comprised of fixed rate debt.
However, since these forward contracts are intended to be effective economic hedges, we would record offsetting gains as a result of the remeasurement of the underlying foreign currency denominated monetary amounts being hedged. Interest Rate Risk Fixed Rate Borrowings : As of December 31, 2023, approximately 53% of our debt portfolio comprises fixed rate debt.
We prepared a sensitivity analysis of our foreign currency forward contracts assuming a 10% adverse change in the value of foreign currency contracts outstanding. The hypothetical adverse changes would have resulted in recording a $17.3 million and $18.9 million loss in 2022 and 2021, respectively.
We prepared a sensitivity analysis of our foreign currency forward contracts assuming a 10% adverse change in the value of foreign currency contracts outstanding. The hypothetical adverse changes would have resulted in recording a $16.8 million and $17.3 million loss in 2023 and 2022, respectively.
The foreign currency forward contracts are not designated as hedges for accounting purposes. At December 31, 2022 and 2021, the gross and net notional amounts of foreign currency forward contracts outstanding were approximately $172.8 million and $188.6 million, respectively.
The foreign currency forward contracts are not designated as hedges for accounting purposes. At December 31, 2023 and 2022, the gross and net notional amounts of foreign currency forward contracts outstanding were approximately $168.4 million and $172.8 million, respectively.

Other WCC 10-K year-over-year comparisons