Wesco 2016 Outlook Call

John Engel

Industrial end market should be down mid to high single digits next year

“Taking a look at our end-markets, we’ll start with the industrial end-market, which accounts for about 40% of our total sales. We expect this end-market to be down mid to high single-digits for the year reflecting continued weakness and tougher comps in the first half of the year. Economic data supports our expectation of near-term weakness. The Institute for Supply Management’s Manufacturing Index recently reached its lowest level since June 2009. Oil is in oversupply which will continue to dampen traditional energy production and investment expectations. A strengthening U.S. dollar and global economic challenges are also expected to continue to limit export growth.”

This is completely different than it was six years ago

“When you go back six years ago, the economic downturn was pervasive it’s unlike anything any of us who are in business have seen in our carrier. And quite frankly we didn’t know how far things would dropped and when and if where the bottom would settle out. And so I think what we are facing now is just is a mixed low growth environment with some areas that are experiencing some pockets of growth and other areas that are flattish and then there is some particular verticals that we’re seeing some pretty significant traction so our view is the markets are completely different now in terms of versus five to six years ago in that economic cycle.”

We’re assuming headwinds persist into 2016

“to put it into context and what I’d say is we’re assuming by and large that the headwinds we’re facing right now persist into 2016. That’s true in construction and it’s true across each of our end-markets.”

November a little better than October. December slightly stronger but not significantly different

“So October came in a little bit further down then where we were at the time of the call. November was still down but better than the month of October and December isn’t tracking, it is tracking a little bit stronger but not significantly different.”

Not expecting anything more than the typical December industrial shutdowns

“what we’re hearing I would characterize overall as being more typical to a standard December. With that said in certain verticals like mining and steel and oil and gas, but we have been facing challenges in some of those verticals with customers and their spend-down right. Some of those have adjusted schedules and such so we will see how the next couple of weeks play out but what we’ve said is at this point in time, we haven’t seen — it’s nothing — we are seeing any indications it’s like it was back five-six years ago the original question where we just have pervasive across the board shutdowns and we are going through that major contraction here.”