WESCO INTERNATIONAL INC Management’s Discussion and Analysis of Financial Condition and Operating Results. (Form 10-Q)

The following discussion should be read in conjunction with the information in
the unaudited condensed consolidated financial statements and notes thereto
included in Item 1 of this Quarterly Report on Form 10-Q and WESCO
International, Inc.'s audited Consolidated Financial Statements and Management's
Discussion and Analysis of Financial Condition and Results of Operations
included in its Annual Report on Form 10-K for the fiscal year ended
December 31, 2021. The matters discussed herein may contain forward-looking
statements that are subject to certain risks and uncertainties that could cause
actual results to differ materially from expectations. Certain of these risks
are set forth in Item 1A of WESCO International, Inc.'s Annual Report on Form
10-K for the fiscal year ended December 31, 2021, as well as WESCO
International, Inc.'s other reports filed with the Securities and Exchange
Commission (the "SEC"). In this Item 2, "Wesco" refers to WESCO International,
Inc., and its subsidiaries and its predecessors unless the context otherwise
requires. References to "we," "us," "our" and the "Company" refer to Wesco and
its subsidiaries.

In addition to the results provided in accordance with accounting principles
generally accepted in the United States of America ("U.S. GAAP"), our discussion
and analysis of financial condition and results of operations includes certain
non-GAAP financial measures, which are defined further below. These financial
measures include organic sales growth, earnings before interest, taxes,
depreciation and amortization ("EBITDA"), adjusted EBITDA, adjusted EBITDA
margin, financial leverage, adjusted selling, general and administrative
expenses, adjusted income from operations, adjusted provision for income taxes,
adjusted income before income taxes, adjusted net income, adjusted net income
attributable to WESCO International, Inc., adjusted net income attributable to
common stockholders, and adjusted earnings per diluted share. We believe that
these non-GAAP measures are useful to investors as they provide a better
understanding of our financial condition and results of operations on a
comparable basis. Additionally, certain non-GAAP measures either focus on or
exclude items impacting comparability of results, allowing investors to more
easily compare our financial performance from period to period. Management does
not use these non-GAAP financial measures for any purpose other than the reasons
stated above.

Company Overview

Wescowhose head office is at Pittsburgh, Pennsylvaniais a leading provider of business-to-business distribution services, logistics services and supply chain solutions.

We employ more than 18,000 people, maintain relationships with approximately
45,000 suppliers, and serve approximately 140,000 customers worldwide. With
nearly 1,500,000 products, end-to-end supply chain services, and extensive
digital capabilities, we provide innovative solutions to meet customer needs
across commercial and industrial businesses, contractors, government agencies,
institutions, telecommunications providers, and utilities. 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 have approximately 800 branches, warehouses and sales offices with operations
in more than 50 countries, providing a local presence for customers and a global
network to serve multi-location businesses and multi-national corporations.

In 2021, we established a new corporate brand strategy to adopt a single, master
brand architecture. This initiative reflects our corporate integration strategy
and simplifies engagement for our customers and suppliers. As a result, we have
been 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 as part of the master brand strategy for the foreseeable
future.

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. The following is a
description of each of our reportable segments and their business activities.

Electrical and electronic solutions

The EES segment, with over 6,400 employees supporting customers in over 50
countries, supplies a broad range of products and solutions primarily to the
construction, industrial, and original equipment manufacturer ("OEM") markets.
The product portfolio in this business includes a broad range of electrical
equipment and supplies, automation and connected devices (the "Internet of
Things" or "IoT"), security, lighting, wire and cable, safety, and maintenance,
repair and operating ("MRO") products from industry-leading manufacturing
partners. The EES service portfolio includes contractor solutions to improve
project execution, direct and indirect manufacturing supply chain optimization
programs, lighting and renewables advisory services, and digital and automation
solutions to improve safety and productivity.
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                   WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

Communication and security solutions

The CSS segment, with over 3,300 employees supporting customers in over 50
countries, is a global leader in the network infrastructure and security
markets. CSS sells products directly to end-users or through various channels
including data communications contractors, security, network, professional
audio/visual and systems integrators. 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.

Utility and Broadband Solutions

The UBS segment, with over 2,400 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. The UBS segment also includes our integrated supply
business, which provides products and services to large industrial and
commercial end-users to support their MRO spend. The products sold into the
utility and broadband markets include wire and cable, transformers, transmission
and distribution hardware, switches, protective devices, connectors, lighting,
conduit, fiber and copper cable, connectivity products, pole line hardware,
racks, cabinets, safety and MRO products, and point-to-point wireless devices.
The UBS segment also offers a complete set of service solutions to improve
customer supply chain efficiencies.

Overall financial performance

Our financial results for the first nine months of 2022 compared to the first
nine months of 2021 reflect double-digit sales growth driven by the benefits of
increased scale, secular growth trends and the 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 consisting of salaries and
variable compensation, volume-related costs, along with expenses associated with
our digital transformation initiatives.

Net sales for the first nine months of 2022 increased $2.5 billion, or 18.7%,
over the corresponding prior year period. The increase reflects price inflation,
continued strong demand, secular growth trends, and execution of our cross-sell
program, partially offset by the negative impact of fluctuations in foreign
exchange rates. Cost of goods sold as a percentage of net sales was 78.3% and
79.2% for the first nine months of 2022 and 2021, respectively. The improvement
of 90 basis points reflects our focus on value-driven pricing and pass-through
of inflationary costs, along with the continued momentum of our gross margin
improvement program. Cost of goods sold for the first nine months of 2021
included a write-down to the carrying value of certain personal protective
equipment inventories, which increased cost of goods sold as a percentage of net
sales by approximately 20 basis points.

Income from operations was $1.1 billion for the first nine months of 2022
compared to $0.6 billion for the first nine months of 2021, an increase of
$474.7 million, or 81.6%. Income from operations as a percentage of net sales
was 6.7% for the current nine-month period, compared to 4.4% for the first nine
months of the prior year. Income from operations for the first nine months of
2022 includes merger-related and integration costs of $52.2 million.
Additionally, in connection with an integration initiative to review our brand
strategy, certain legacy trademarks are migrating to a master brand
architecture, which resulted in $9.4 million of accelerated amortization expense
for the nine months ended September 30, 2022. Adjusted for these amounts, income
from operations was 7.0% of net sales. For the first nine months of 2021, income
from operations adjusted for merger-related and integration costs of $119.8
million, accelerated trademark amortization expense of $20.2 million, and a net
gain of $8.9 million resulting from the divestiture of our legacy utility and
data communications businesses in Canada during the first quarter of 2021 was
5.3% of net sales. For the nine months ended September 30, 2022, income from
operations compared to the prior year improved across all segments and reflects
sales growth and lower cost of goods sold as a percentage of net sales, as well
as the realization of integration synergies. Income from operations for the
first nine months of 2022 was negatively impacted by higher SG&A payroll and
payroll-related expenses consisting of salaries and variable compensation, as
well as higher volume-related costs and expenses associated with our digital
transformation initiatives.

Earnings per diluted share for the first nine months of 2022 was $11.42, based
on 52.4 million diluted shares, compared to $4.91 for the first nine months of
2021, based on 51.9 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 the first nine months of 2022
was $12.29. Adjusted for merger-related and integration costs, accelerated
trademark amortization expense, net gain on Canadian divestitures, and the
related income tax effects, earnings per diluted share for the first nine months
of 2021 was $6.80. Adjusted earnings per diluted share increased 80.7%
year-over-year.

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                   WESCO INTERNATIONAL, INC. AND SUBSIDIARIES


During the first nine months of 2022, we continued to experience strong demand
from many of our customers. We also continued to experience some delays in
receiving products from our suppliers. We believe that the impact of these
supply chain issues on our net sales for the third quarter of 2022 was
consistent with the first and second quarters of the year. We are aggressively
managing supply chain issues, which includes increasing inventory levels to
service our customers. Our industry and the broader economy are experiencing
supply chain challenges, including product delays and backlogged orders,
shortages in raw materials and components, labor shortages, transportation
challenges, and higher costs. We anticipate that these supply chain challenges,
as well as inflationary pressures, will continue for the remainder of 2022 and
may extend into 2023. We intend to continue to actively manage the impact of
inflation on our results of operations. We cannot reasonably estimate possible
future impacts from these disruptions at this time.

There continues to be ongoing uncertainties associated with the COVID-19
pandemic, including with respect to economic conditions and the possible
resurgence of COVID-19 whether through the emergence of new variants of the
virus or otherwise. As the duration and severity of the COVID-19 pandemic cannot
be predicted, there is significant uncertainty as to the ultimate impact that
COVID-19 will have on our business, results of operations and financial
condition.

Cash flow

Operating cash flow for the first nine months of 2022 was an outflow of $410.6
million. Net cash used in operating activities included net income of $643.0
million and non-cash adjustments to net income totaling $193.1 million, which
were primarily comprised of depreciation and amortization of $135.6 million,
stock-based compensation expense of $34.4 million, amortization of debt discount
and debt issuance costs of $11.6 million, and deferred income taxes of $7.2
million. Operating cash flow also included changes in assets and liabilities of
$1.2 billion, which were primarily comprised of an increase in inventories of
$886.3 million as a result of investments to address supply chain challenges and
to support increases in our sales backlog, including project-based business, an
increase in trade accounts receivable of $737.6 million resulting from higher
sales, partially offset by an increase in accounts payable of $479.6 million due
to the aforementioned higher purchases of inventory.

Investing activities primarily included $59.4 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.

Financing activities were primarily comprised of borrowings and repayments of
$2.8 billion and $2.5 billion, respectively, related to our revolving credit
facility (the "Revolving Credit Facility"), and borrowings and repayments of
$380.0 million and $125.0 million, respectively, related to our accounts
receivable securitization facility (the "Receivables Facility"). Financing
activities for the first nine months of 2022 also included $43.1 million of
dividends paid to holders of our Series A Preferred Stock, $25.0 million of
payments for taxes related to the exercise and vesting of stock-based awards,
and net proceeds from our various international lines of credit of approximately
$0.2 million.

Financing Availability

During the first and third quarters of 2022 we amended our Receivables Facility
and Revolving Credit Facility to, among other things, increase their borrowing
capacities, extend their maturity dates, and replace London Inter-Bank Offered
Rate-based ("LIBOR") interest rate options with Secured Overnight Financing
Rate-based ("SOFR") interest rate options.

See Note 7, “Debt,” to our notes to the unaudited condensed consolidated financial statements for additional information regarding the changes to these facilities.

From September 30, 2022we have had $600.3 million total borrowing capacity available under our revolving credit facility, which matures in March 2027.

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                   WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

Operating results

Third quarter of 2022 versus third quarter of 2021

The following table shows the percentage relationship to net sales of financial statement items in our condensed consolidated statements of earnings for the periods presented:

Three months completed

                                                                  September 30, 2022          September 30, 2021
Net sales                                                                     100.0  %                    100.0  %
Cost of goods sold (excluding depreciation and amortization)                   77.9                        78.7
Selling, general and administrative expenses                                   14.0                        15.3
Depreciation and amortization                                                   0.7                         1.1
Income from operations                                                          7.4                         4.9
Interest expense, net                                                           1.4                         1.4
Other expense (income), net                                                       -                           -
Income before income taxes                                                      6.0                         3.5
Provision for income taxes                                                      1.6                         0.9
Net income                                                                      4.4                         2.6
Net income attributable to noncontrolling interests                               -                           -
Net income attributable to WESCO International, Inc.                            4.4                         2.6
Preferred stock dividends                                                       0.3                         0.4
Net income attributable to common stockholders                                  4.1  %                      2.2  %


Net Sales

The following table sets forth net sales and organic sales growth by segment for
the periods presented:

                             Three Months Ended                                                                  Growth/(Decline)
                     September 30,         September 30,                                                              Foreign Exchange                              Organic Sales
                         2022                  2021                   Reported              Divestiture Impact             Impact            Workday Impact            Growth
                               (In thousands)
EES                 $  2,234,771          $  1,982,485                          12.7%                      -  %                (2.2) %                  -  %               14.9  %
CSS                    1,602,459             1,488,689                           7.6%                      -  %                (2.0) %                  -  %                9.6  %
UBS                    1,608,686             1,257,151                          28.0%                      -  %                (0.6) %                  -  %               28.6  %
Total net sales     $  5,445,916          $  4,728,325                          15.2%                      -  %                (1.7) %                  -  %               16.9  %


Note: Organic sales growth is a non-GAAP financial measure of sales performance.
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 $5.4 billion for the third quarter of 2022 compared to $4.7
billion for the third quarter of 2021, an increase of 15.2%, reflecting price
inflation, continued strong demand, secular growth trends, and the execution of
our cross-sell program. Organic sales for the third quarter of 2022 grew by
16.9% as fluctuations in foreign exchange rates negatively impacted reported net
sales by 1.7%. All segments reported increased sales versus the prior year
period, as described below. For the three months ended September 30, 2022,
pricing related to inflation favorably impacted our net sales by approximately
8%.

EES reported net sales of $2.2 billion for the third quarter of 2022 compared to
$2.0 billion for the third quarter of 2021, an increase of 12.7%. Organic sales
for the third quarter of 2022 grew by 14.9% as fluctuations in foreign exchange
rates negatively impacted reported net sales by 2.2%. The increase reflects
price inflation and strong end market demand, partially offset by the effect of
supply chain constraints and commodity prices.

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CSS reported net sales of $1.6 billion for the third quarter of 2022 compared to
$1.5 billion for the third quarter of 2021, an increase of 7.6%. Organic sales
for the third quarter of 2022 grew by 9.6% as fluctuations in foreign exchange
rates negatively impacted reported net sales by 2.0%. The increase reflects
price inflation, growth in our security solutions and network infrastructure
businesses, as well as and the benefits of cross selling, partially offset by
the effect of supply chain constraints.

UBS reported net sales of $1.6 billion for the third quarter of 2022 compared to
$1.3 billion for the third quarter of 2021, an increase of 28.0%. Organic sales
for the third quarter of 2022 grew by 28.6% as fluctuations in foreign exchange
rates negatively impacted reported net sales by 0.6%. The increase reflects
price inflation, broad-based growth driven by investments in electrification,
green energy, grid modernization and hardening, and rural broadband development,
as well as expansion in our integrated supply business.

Cost of Goods Sold

Cost of goods sold for the third quarter of 2022 was $4.2 billion compared to
$3.7 billion for the third quarter of 2021, an increase of $521.1 million. Cost
of goods sold as a percentage of net sales was 77.9% and 78.7% for the third
quarter of 2022 and 2021, respectively. The favorable reduction of 80 basis
points reflects our focus on value-driven pricing and pass-through of
inflationary costs, along with the continued momentum of our gross margin
improvement program. The third quarter of 2021 included a write-down to the
carrying value of certain personal protective equipment inventories, which
increased cost of goods sold as a percentage of net sales by approximately 10
basis points.

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 the third quarter of 2022 totaled
$760.2 million versus $721.8 million for the third quarter of 2021, an increase
of $38.4 million, or 5.3%. As a percentage of net sales, SG&A expenses were
14.0% and 15.3% for the third quarter of 2022 and 2021, respectively. SG&A
expenses for the third quarter of 2022 include merger-related and integration
costs of $13.2 million. Adjusted for this amount, SG&A expenses were $747.0
million, or 13.7% of net sales, for the third quarter of 2022. SG&A expenses for
the third quarter of 2021 include $35.8 million of merger-related and
integration costs. Adjusted for this amount, SG&A expenses were $686.0 million,
or 14.5% of net sales, for the third quarter of 2021.

SG&A personnel costs and related costs for the third quarter of 2022 of
$481.7 million increased by $15.8 million compared to the same period in 2021 mainly due to higher salaries.

SG&A expenses not related to payroll and payroll-related costs for the third
quarter of 2022 were $278.5 million compared to $255.9 million for the same
period in 2021. The increase of $22.6 million primarily reflects higher
volume-related costs driven by significant sales growth and digital
transformation initiatives that contributed to higher expenses in the third
quarter of 2022. These increases were partially offset by the realization of
integration cost synergies, as well as lower professional and consulting fees
associated with integration activities.

Depreciation and amortization

Depreciation and amortization decreased $14.0 million to $42.7 million for the
third quarter of 2022 compared to $56.7 million for the third quarter of 2021.
The third quarter of 2022 and 2021 includes $0.4 million and $15.1 million,
respectively, resulting from changes in the estimated useful lives of certain
legacy trademarks that are migrating to our master brand architecture, as
described above. As of September 30, 2022, we expect to recognize approximately
$0.4 million of amortization expense for trademarks migrating to our master
brand architecture over the remainder of 2022 and $5.3 million thereafter.

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                   WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

Income from operations

The following tables present operating income by segment for the periods presented:

                                                                                      Three Months Ended September 30, 2022
(In thousands)                                             EES                   CSS                   UBS               Corporate               Total
Income from operations                               $       213,185       $       139,013       $       179,291       $ (129,897)         $         401,592

                                                                                      Three Months Ended September 30, 2021
(In thousands)                                             EES                   CSS                   UBS               Corporate               Total
Income from operations                               $       155,210       $       108,226       $       108,172       $ (142,142)         $         229,466


Income from operations was $401.6 million for the third quarter of 2022 compared
to $229.5 million for the third quarter of 2021. The increase of $172.1 million,
or 75.0%, reflects sales growth and lower cost of goods sold as a percentage of
net sales, along with the realization of integration synergies, partially offset
by higher SG&A payroll and payroll-related expenses, volume-related costs, as
well as expenses associated with our digital transformation initiatives. Income
from operations for the third quarter of 2022 was not materially affected by
higher pricing related to inflation given the offsetting effect of higher costs
for certain products.

EES reported income from operations of $213.2 million for the third quarter of
2022 compared to $155.2 million for the third quarter of 2021. The increase of
$58.0 million primarily reflects the factors impacting the overall business, as
described above.

CSS reported income from operations of $139.0 million for the third quarter of
2022 compared to $108.2 million for the third quarter of 2021. The increase of
$30.8 million primarily reflects the factors impacting the overall business, as
described above, as well as the negative impact of approximately 20 basis points
from the prior year personal protective equipment inventory value write-down
described in our overall results above.

UBS reported income from operations of $179.3 million for the third quarter of
2022 compared to $108.2 million for the third quarter of 2021. The increase of
$71.1 million primarily reflects the factors impacting the overall business, as
described above.

Corporate, which primarily incurs costs related to treasury, tax, information
technology, legal and other centralized functions, recognized net expenses of
$129.9 million for the third quarter of 2022 compared to $142.1 million for the
third quarter of 2021. The decrease of $12.2 million primarily reflects a
decrease in professional and consulting fees associated with integration
activities.

Interest expense, net

Net interest expense totaled $75.1 million for the third quarter of 2022 compared to $69.7 million for the third quarter of 2021. The increase reflects higher borrowing and an increase in variable interest rates.

Other expenses (income), net

Other non-operating expense totaled $0.7 million for the third quarter of 2022
compared to other non-operating income of $5.3 million for the third quarter of
2021. As disclosed in Note 8, "Employee Benefit Plans" of our Notes to the
unaudited Condensed Consolidated Financial Statements, we recognized net
benefits of $3.4 million and $4.1 million associated with the non-service cost
components of net periodic pension (benefit) cost for the three months ended
September 30, 2022 and 2021, respectively. Due to fluctuations in the U.S.
dollar against certain foreign currencies, we recognized a net foreign currency
exchange loss of $4.4 million for the third quarter of 2022 compared to a net
gain of $1.3 million for the third quarter of 2021.

Income taxes

The provision for income taxes was $85.6 million for the third quarter of 2022
compared to $44.9 million for the corresponding quarter of the prior year,
resulting in effective tax rates of 26.3% and 27.2%, respectively. The effective
tax rate for the quarter ended September 30, 2022 was lower than the comparable
prior year period due to the favorable net impact of discrete income tax items.
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                   WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

Net earnings and earnings per share

The net result for the third quarter of 2022 was $240.2 million compared to $120.2 million for the third quarter of 2021, an increase of $120.0 millioni.e. 99.8%.

Preferred stock dividends expense, which relates to the fixed-rate reset
cumulative perpetual preferred stock, Series A, that was issued in connection
with the merger with Anixter, was $14.4 million for the third quarter of 2022
and 2021.

Net income and earnings per diluted share attributable to common stockholders
were $225.3 million and $4.30, respectively, for the third quarter of 2022
compared to $105.2 million and $2.02, respectively, for the third quarter of
2021. 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 $235.2
million and $4.49, respectively, for the three months ended September 30, 2022
compared to $142.6 million and $2.74, respectively, for the three months ended
September 30, 2021.

The following tables reconcile selling, general and administrative expenses,
income from operations, provision for income taxes and earnings per diluted
share to adjusted selling, general and administrative expenses, adjusted income
from operations, adjusted provision for income taxes and adjusted earnings per
diluted share, which are non-GAAP financial measures, for the periods presented:

                                                                         Three Months Ended
Adjusted SG&A Expenses:                                                       September 30, 2022                September 30, 2021
                                                                                                 (In thousands)
Selling, general and administrative expenses                              $                   760,200       $                   721,795
Merger-related and integration costs                                                         (13,210)                          (35,750)
Adjusted selling, general and administrative expenses                     $                   746,990       $                   686,045


                                                        Three Months Ended

Adjusted operating income: September 30, 2022 September 30, 2021

                                                          (In thousands)
    Income from operations                 $          401,592      $          229,466
    Merger-related and integration costs               13,210                  35,750
    Accelerated trademark amortization                    389                  15,147
    Adjusted income from operations        $          415,191      $          280,363


                                                                          Three Months Ended
Adjusted Provision for Income Taxes:                        September 30, 2022           September 30, 2021
                                                                            (In thousands)
Provision for income taxes                                $            85,637          $            44,870
Income tax effect of adjustments to income from
operations(1)                                                           3,673                       13,512
Adjusted provision for income taxes                       $            89,310          $            58,382


(1) Operating income adjustments were taxed at a rate of approximately 27% for the three months ended September 30, 2022 and 2021.

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                   WESCO INTERNATIONAL, INC. AND SUBSIDIARIES


                                                                          Three Months Ended
Adjusted Earnings per Diluted Share:                              September 

30, September 30,

                                                                       2022                 2021
(In thousands, except per share data)
Adjusted income from operations                                   $   415,191          $   280,363
Interest expense, net                                                  75,057               69,720
Other expense (income), net                                               688               (5,320)
Adjusted income before income taxes                                   339,446              215,963
Adjusted provision for income taxes                                    89,310               58,382
Adjusted net income                                                   250,136              157,581
Net income attributable to noncontrolling interests                       608                  600

Adjusted net income attributable to WESCO International, Inc. 249,528

              156,981
Preferred stock dividends                                              14,352               14,352
Adjusted net income attributable to common stockholders           $   

235 176 $142,629

Diluted shares                                                         52,389               52,063
Adjusted earnings per diluted share                               $      

4.49 $2.74


Note: For the three months ended September 30, 2022 and 2021, selling, general
and administrative 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 amortization expense
associated with migrating to our master brand architecture, and the related
income tax effects. These non-GAAP financial measures provide a better
understanding of our financial results on a comparable basis.

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                   WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

EBITDA, Adjusted EBITDA and Adjusted EBITDA margin %

The following tables reconcile net income attributable to common shareholders to EBITDA, Adjusted EBITDA and Adjusted EBITDA margin % by segment, which are non-GAAP financial measures, for the periods presented:

                                                                           Three Months Ended September 30, 2022
(In thousands)                                        EES                CSS               UBS             Corporate            Total
Net income attributable to common
stockholders                                      $    214,054       $   138,747       $   180,354       $ (307,905)         $    225,250
Net income attributable to noncontrolling
interests                                                  200                 -                 -              408                   608
Preferred stock dividends                                    -                 -                 -           14,352                14,352
Provision for income taxes                                   -                 -                 -           85,637                85,637
Interest expense, net                                        -                 -                 -           75,057                75,057
Depreciation and amortization                            9,596            15,929             5,859           11,339                42,723
EBITDA                                            $    223,850       $   154,676       $   186,213       $ (121,112)         $    443,627
Other (income) expense, net                            (1,069)               266           (1,063)            2,554                   688
Stock-based compensation expense(1)                      2,983             1,428             1,107            2,853                 8,371
Merger-related and integration costs                         -                 -                 -           13,210                13,210
Adjusted EBITDA                                   $    225,764       $   156,370       $   186,257       $ (102,495)         $    465,896
Adjusted EBITDA margin %                                 10.1%              9.8%             11.6%                                   8.6%

(1) Stock-based compensation expense in the calculation of Adjusted EBITDA for the three months ended September 30, 2022 excludes
$1.3 million this amount being included in the costs related to the merger and integration.

                                                                           Three Months Ended September 30, 2021
(In thousands)                                        EES                CSS               UBS             Corporate            Total
Net income attributable to common
stockholders                                      $    155,627       $   107,898       $   108,150       $ (266,431)         $    105,244
Net income attributable to noncontrolling
interests                                                  309                 -                 -              291                   600
Preferred stock dividends                                    -                 -                 -           14,352                14,352
Provision for income taxes                                   -                 -                 -           44,870                44,870
Interest expense, net                                        -                 -                 -           69,720                69,720
Depreciation and amortization                           16,840            24,723             5,869            9,300                56,732
EBITDA                                            $    172,776       $   132,621       $   114,019       $ (127,898)         $    291,518
Other (income) expense, net                              (726)               328                22           (4,944)              (5,320)
Stock-based compensation expense(1)                      1,848               752               633            5,079                 8,312
Merger-related and integration costs                         -                 -                 -           35,750                35,750
Adjusted EBITDA                                   $    173,898       $   133,701       $   114,674       $  (92,013)         $    330,260
Adjusted EBITDA margin %                                8.8  %            9.0  %            9.1  %                                 7.0  %

(1) Stock-based compensation expense in the calculation of Adjusted EBITDA for the three months ended September 30, 2021 excludes
$1.3 million this amount being included in the costs related to the merger and integration.


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. Adjusted EBITDA is defined as EBITDA
before other non-operating expenses (income), non-cash stock-based compensation
expense and merger-related and integration costs. Adjusted EBITDA margin % is
calculated by dividing Adjusted EBITDA by net sales.
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                   WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

Nine month period ended September 30, 2022 compared to nine months ended September 30, 2021

The following table shows the percentage relationship to net sales of financial statement items in our condensed consolidated statements of earnings for the periods presented:

Nine month period ended

                                                                  September 30, 2022          September 30, 2021
Net sales                                                                     100.0  %                    100.0  %
Cost of goods sold (excluding depreciation and amortization)                   78.3                        79.2
Selling, general and administrative expenses                                   14.2                        15.4
Depreciation and amortization                                                   0.8                         1.0
Income from operations                                                          6.7                         4.4
Interest expense, net                                                           1.4                         1.6
Other expense (income), net                                                       -                        (0.1)
Income before income taxes                                                      5.3                         2.9
Provision for income taxes                                                      1.2                         0.5
Net income                                                                      4.1                         2.4
Net income attributable to noncontrolling interests                               -                           -
Net income attributable to WESCO International, Inc.                            4.1                         2.4
Preferred stock dividends                                                       0.3                         0.5
Net income attributable to common stockholders                                  3.8  %                      1.9  %


Net Sales

The following table sets forth net sales and organic sales growth by segment for
the periods presented:

                               Nine Months Ended                                                                  Growth/(Decline)
                     September 30,          September 30,                                                              Foreign Exchange                             Organic Sales
                          2022                   2021                   Reported             Divestiture Impact             Impact            Workday Impact            Growth
                                (In thousands)
EES                 $   6,654,883          $   5,626,309                       18.3  %                   (0.2) %                (1.4) %                0.5  %              19.4  %
CSS                     4,638,631              4,200,424                       10.4  %                      -  %                (1.6) %                0.5  %              11.5  %
UBS                     4,568,108              3,538,859                       29.1  %                   (0.1) %                (0.4) %                0.5  %              29.1  %
Total net sales     $  15,861,622          $  13,365,592                       18.7  %                   (0.1) %                (1.2) %                0.5  %              19.5  %


Net sales were $15.9 billion for the first nine months of 2022 compared to $13.4
billion for the first nine months of 2021, an increase of 18.7%, reflecting
price inflation, continued strong demand, secular growth trends, and the
execution of our cross-sell program. Organic sales for the first nine months of
2022 grew by 19.5% as the number of workdays positively impacted reported net
sales by 0.5%, while fluctuations in foreign exchange rates and the divestiture
of our legacy utility and data communications businesses in Canada in the first
quarter of 2021 negatively impacted reported net sales by 1.2% and 0.1%,
respectively. All segments reported increased sales versus the prior year
period, as discussed below. For the first nine months of 2022, pricing related
to inflation favorably impacted our net sales by approximately 8%.

EES reported net sales $6.7 billion for the first nine months of 2022 compared
to $5.6 billion for the first nine months of 2021, an increase of 18.3%. Organic
sales for the first nine months of 2022 grew by 19.4% as the number of workdays
positively impacted reported net sales by 0.5%, while fluctuations in foreign
exchange rates and the Canadian divestitures described above negatively impacted
reported net sales by 1.4% and 0.2%, respectively. The increase reflects price
inflation, expansion in our industrial, construction, and original equipment
manufacturer businesses, as well as the benefits of cross selling and secular
growth trends in electrification and automation, partially offset by the effect
of supply chain constraints and commodity prices.
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                   WESCO INTERNATIONAL, INC. AND SUBSIDIARIES


CSS reported net sales of $4.6 billion for the first nine months of 2022
compared to $4.2 billion for the first nine months of 2021, an increase of
10.4%. Organic sales for the first nine months of 2022 grew by 11.5% as the
number of workdays positively impacted reported net sales by 0.5% and
fluctuations in foreign exchange rates negatively impacted reported net sales by
1.6%. The increase reflects strong growth in our security solutions and network
infrastructure businesses, as well as price inflation and the benefits of cross
selling, partially offset by the effect of supply chain constraints.

UBS reported net sales of $4.6 billion for the first nine months of 2022
compared to $3.5 billion for the first nine months of 2021, an increase of
29.1%. Organic sales for the first nine months of 2022 grew by 29.1% as the
number of workdays positively impacted reported net sales by 0.5%, while
fluctuations in foreign exchange rates and the Canadian divestitures described
above negatively impacted reported net sales by 0.4% and 0.1%, respectively. The
increase reflects price inflation, broad-based growth in our utility and
broadband businesses, as well as expansion in our integrated supply business.

Cost of Goods Sold

Cost of goods sold for the first nine months of 2022 was $12.4 billion compared
to $10.6 billion for the first nine months of 2021, an increase of $1.8 billion.
Cost of goods sold as a percentage of net sales was 78.3% for the first nine
months of 2022 compared to 79.2% for the first nine months of 2021. The
favorable reduction of 90 basis points reflects our focus on value-driven
pricing and pass-through of inflationary costs, along with the continued
momentum of our gross margin improvement program. The first nine months of 2021
included a write-down to the carrying value of certain personal protective
equipment inventories, which increased cost of goods sold as a percentage of net
sales by approximately 20 basis points.

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 the first nine months of 2022 totaled
$2.3 billion versus $2.1 billion for the first nine months of 2021, an increase
of $193.2 million, or 9.4%. As a percentage of net sales, SG&A expenses were
14.2% and 15.4% for the first nine months of 2022 and 2021, respectively. SG&A
expenses for the first nine months of 2022 include merger-related and
integration costs of $52.2 million. Adjusted for this amount, SG&A expenses were
13.9% of net sales for the first nine months of 2022. SG&A expenses for the
first nine months of 2021 include $119.8 million of merger-related and
integration costs, as well as a net gain of $8.9 million resulting from the
Canadian divestitures. Adjusted for these amounts, SG&A expenses were 14.6% of
net sales for the first nine months of 2021.

SG&A payroll and payroll-related expenses for the first nine months of 2022 of
$1.4 billion increased by $80.5 million compared to the same period in 2021
primarily due to higher salaries and variable compensation expense.
Additionally, stock-based compensation expense increased as a result of raising
our estimate of the payout levels for certain performance-based awards.

SG&A expenses not related to payroll and payroll-related costs for the first
nine months of 2022 of $822.6 million increased by $112.7 million compared to
the same period in 2021. The increase primarily reflects higher volume-related
costs driven by significant sales growth and digital transformation initiatives
that contributed to higher expenses in the first nine months of 2022, as well as
the absence of the net gain recognized in the first quarter of 2021 on the
Canadian divestitures. These increases were partially offset by the realization
of integration cost synergies, as well as lower professional and consulting fees
associated with integration activities.

Depreciation and amortization

Depreciation and amortization decreased $9.0 million to $135.6 million for the
first nine months of 2022 compared to $144.6 million for the first nine months
of 2021. The first nine months of 2022 and 2021 includes $9.4 million and
$20.2 million, respectively, resulting from changes in the estimated useful
lives of certain legacy trademarks that are migrating to our master brand
architecture, as described above.

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                   WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

Income from operations

The following tables present operating income by segment for the periods presented:

                                                                                       Nine Months Ended September 30, 2022
(In thousands)                                             EES                   CSS                   UBS               Corporate               Total
Income from operations                               $       613,462       $       373,789       $       471,667       $ (402,588)         $        1,056,330

                                                                                       Nine Months Ended September 30, 2021
(In thousands)                                             EES                   CSS                   UBS               Corporate               Total
Income from operations                               $       409,062       $       293,446       $       289,895       $ (410,814)         $          581,589


Income from operations was $1.1 billion for the first nine months of 2022
compared to $0.6 billion for the first nine months of 2021. The increase of
$474.7 million, or 81.6%, reflects sales growth and lower cost of goods sold as
a percentage of net sales, along with the realization of integration synergies,
partially offset by higher SG&A payroll and payroll-related expenses,
volume-related costs, as well as expenses associated with our digital
transformation initiatives.

EES reported income from operations of $613.5 million for the first nine months
of 2022 compared to $409.1 million for the first nine months of 2021. The
increase of $204.4 million primarily reflects the factors impacting the overall
business, as described above.

CSS reported income from operations of $373.8 million for the first nine months
of 2022 compared to $293.4 million for the first nine months of 2021. The
increase of $80.4 million primarily reflects the factors impacting the overall
business, as described above. Additionally, operating profit for the first nine
months of 2021 was negatively impacted by approximately 40 basis points from the
inventory write-down described under Cost of Goods Sold above.

UBS reported income from operations of $471.7 million for the first nine months
of 2022 compared to $289.9 million for the first nine months of 2021. The
increase of $181.8 million primarily reflects the factors impacting the overall
business, as described above, offset by the benefit in the first quarter of 2021
from the net gain on the Canadian divestitures.

Corporate, which primarily incurs costs related to treasury, tax, information
technology, legal and other centralized functions, recognized net expenses of
$402.6 million for the first nine months of 2022 compared to $410.8 million for
the first nine months of 2021. The decrease of $8.2 million primarily reflects a
decrease in professional and consulting fees associated with integration
activities, partially offset by an increase in information technology expenses.

Other income and expenses, net

Other non-operating expense totaled $3.0 million for the first nine months of
2022 compared to other non-operating income of $8.9 million for the first nine
months of 2021. As disclosed in Note 8, "Employee Benefit Plans" of our Notes to
the unaudited Condensed Consolidated Financial Statements, we recognized net
benefits of $10.5 million and $12.3 million associated with the non-service cost
components of net periodic pension (benefit) cost for the nine months ended
September 30, 2022 and 2021, respectively. Due to fluctuations in the U.S.
dollar against certain foreign currencies, we recognized a net foreign currency
exchange loss of $11.5 million for the first nine months of 2022 compared to a
net loss of $1.4 million for the first nine months of 2021.

Income taxes

The provision for income taxes was $203.2 million for the first nine months of
2022 compared to $84.2 million in last year's comparable period, resulting in
effective tax rates of 24.0% and 22.0%, respectively. The effective tax rates
for the first nine months of 2022 and last year's comparable period reflect
discrete income tax benefits of $13.4 million and $8.3 million, respectively,
resulting from reductions to the valuation allowance recorded against foreign
tax credit carryforwards, as well as the exercise and vesting of stock-based
awards of $9.4 million and $7.8 million, respectively. These discrete income tax
benefits were partially offset by discrete income tax expense of $0.8 million
and $4.2 million, respectively, resulting from return-to-provision adjustments.
The net impact of discrete income tax items was a reduction to the estimated
annual effective tax rates in such periods of approximately 2.6 and 3.1
percentage points, respectively.
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                   WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

Net earnings and earnings per share

The net result for the first nine months of 2022 was $643.0 million compared to
$298.6 million for the first nine months of 2021, an increase of $344.4 millioni.e. 115.3%.

Preferred stock dividends expense, which relates to the fixed-rate reset
cumulative perpetual preferred stock, Series A, that was issued in connection
with the merger with Anixter, was $43.1 million for the first nine months of
2022 and 2021.

Net income and earnings per diluted share attributable to common stockholders
were $598.5 million and $11.42, respectively, for the first nine months of 2022
compared to $254.9 million and $4.91, respectively, for the first nine months of
2021. 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 $643.7
million and $12.29, respectively, for the first nine months of 2022. Adjusted
for merger-related and integration costs, accelerated trademark amortization,
net gain on Canadian divestitures, and the related income tax effects, net
income and earnings per diluted share attributable to common stockholders were
$353.0 million and $6.80, respectively, for the first nine months of 2021.

The following tables reconcile selling, general and administrative expenses,
income from operations, provision for income taxes and earnings per diluted
share to adjusted selling, general and administrative expenses, adjusted income
from operations, adjusted provision for income taxes and adjusted earnings per
diluted share, which are non-GAAP financial measures, for the periods presented:


                                                                          Nine Months Ended
Adjusted SG&A Expenses:                                                        September 30, 2022                 September 30, 2021
                                                                                                  (In thousands)
Selling, general and administrative expenses                              $                  2,251,162       $                  2,057,952
Merger-related and integration costs                                                          (52,200)                          (119,792)
Net gain on divestitures                                                                             -                              8,927
Adjusted selling, general and administrative expenses                     $                  2,198,962       $                  1,947,087




                                                        Nine Months Ended

Adjusted operating income: September 30, 2022 September 30, 2021

                                                         (In thousands)
   Income from operations                 $         1,056,330      $          581,589
   Merger-related and integration costs                52,200                 119,792
   Accelerated trademark amortization                   9,384                  20,196
   Net gain on divestitures                                 -                  (8,927)
   Adjusted income from operations        $         1,117,914      $          712,650


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                   WESCO INTERNATIONAL, INC. AND SUBSIDIARIES


                                                                        Nine Months Ended
Adjusted Provision for Income Taxes:                     September 30, 2022          September 30, 2021
                                                                         (In thousands)
Provision for income taxes                              $          203,178          $           84,201
Income tax effect of adjustments to income from
operations(1)                                                       16,371                      32,968
Adjusted provision for income taxes                     $          219,549  

$117,169

(1) Operating income adjustments were taxed at the rates of 27% and 25% for the nine months ended September 30, 2022 and 2021, respectively.

                                                                           Nine Months Ended
Adjusted Earnings per Diluted Share:                               

September 30, September 30,

                                                                       2022                  2021
(In thousands, except per share data)
Adjusted income from operations                                   $  1,117,914          $   712,650
Interest expense, net                                                  207,155              207,683
Other expense (income), net                                              3,007               (8,929)
Adjusted income before income taxes                                    907,752              513,896
Adjusted provision for income taxes                                    219,549              117,169
Adjusted net income                                                    688,203              396,727
Net income attributable to noncontrolling interests                      1,439                  665

Adjusted net income attributable to WESCO International, Inc. 686 764

              396,062
Preferred stock dividends                                               43,056               43,056
Adjusted net income attributable to common stockholders           $    

643 708 $353,006

Diluted shares                                                          52,386               51,896
Adjusted earnings per diluted share                               $      

12.29 $6.80


Note: For the nine months ended September 30, 2022, selling, general and
administrative 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 amortization expense associated with migrating to
our master brand architecture, and the related income tax effects. For the nine
months ended September 30, 2021, selling, general and administrative expenses,
income from operations, 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 amortization expense associated with migrating to our
master brand architecture, and the related income tax effects. These non-GAAP
financial measures provide a better understanding of our financial results on a
comparable basis.

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                   WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

EBITDA, Adjusted EBITDA and Adjusted EBITDA margin %

The following tables reconcile net income attributable to common shareholders to EBITDA, Adjusted EBITDA and Adjusted EBITDA margin % by segment, which are non-GAAP financial measures, for the periods presented:

                                                                             Nine Months Ended September 30, 2022
(In thousands)                                     EES                CSS               UBS                 Corporate                  Total
Net income attributable to common
stockholders                                  $     615,547       $   373,073       $   472,119       $            (862,244)       $      598,495
Net income attributable to
noncontrolling interests                                561                 -                 -                          878                1,439
Preferred stock dividends                                 -                 -                 -                       43,056               43,056
Provision for income taxes                                -                 -                 -                      203,178              203,178
Interest expense, net                                     -                 -                 -                      207,155              207,155
Depreciation and amortization                        32,818            51,916            17,315                       33,520              135,569
EBITDA                                        $     648,926       $   424,989       $   489,434       $            (374,457)       $    1,188,892
Other (income) expense, net                         (2,646)               716             (452)                        5,389                3,007
Stock-based compensation expense(1)                   7,350             3,747             2,670                       16,612               30,379
Merger-related and integration costs                      -                 -                 -                       52,200               52,200
Adjusted EBITDA                               $     653,630       $   429,452       $   491,652       $            (300,256)       $    1,274,478
Adjusted EBITDA margin %                             9.8  %            9.3  %           10.8  %                                            8.0  %

(1) Stock-based compensation expense in the calculation of Adjusted EBITDA for the nine months ended September 30, 2022 excludes $4.1 million this amount being included in the costs related to the merger and integration.

                                                                             Nine Months Ended September 30, 2021
(In thousands)                                     EES                CSS               UBS                 Corporate                  Total
Net income attributable to common
stockholders                                  $     410,233       $   292,537       $   289,851       $            (737,708)       $      254,913
Net income attributable to
noncontrolling interests                                158                 -                 -                          507                  665
Preferred stock dividends                                 -                 -                 -                       43,056               43,056
Provision for income taxes                                -                 -                 -                       84,201               84,201
Interest expense, net                                     -                 -                 -                      207,683              207,683
Depreciation and amortization                        40,184            60,257            16,545                       27,659              144,645
EBITDA                                        $     450,575       $   352,794       $   306,396       $            (374,602)       $      735,163
Other (income) expense, net                         (1,329)               909                44                      (8,553)              (8,929)
Stock-based compensation expense(2)                   4,648             1,818             1,517                       10,972               18,955
Merger-related and integration costs                      -                 -                 -                      119,792              119,792
Net gain on divestitures                                  -                 -           (8,927)                            -              (8,927)
Adjusted EBITDA                               $     453,894       $   355,521       $   299,030       $            (252,391)       $      856,054
Adjusted EBITDA margin %                             8.1  %            8.5  %            8.4  %                                            6.4  %

(2) Stock-based compensation expense in calculating Adjusted EBITDA for the nine months ended September 30, 2021 excludes $3.8 million this amount being included in the costs related to the merger and integration.


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. Adjusted EBITDA is defined as EBITDA
before other non-operating expenses (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. Adjusted
EBITDA margin % is calculated by dividing Adjusted EBITDA by net sales.
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                   WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

Cash 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. As of September 30, 2022, we had
$600.3 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, which combined with
available cash of $84.7 million, provided liquidity of $685.0 million. Cash
included in our determination of liquidity represents cash in certain deposit
and interest-bearing investment accounts. We monitor the depository institutions
that hold our cash and cash equivalents on a regular basis, and we believe that
we have placed our deposits with creditworthy financial institutions.

We regularly review our mix of fixed versus variable rate debt, and we may, from
time to time, issue or retire borrowings and/or refinance existing debt in an
effort to mitigate the impact of interest rate and foreign exchange rate
fluctuations, and to maintain a cost-effective capital structure consistent with
our anticipated capital requirements. 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.

As of September 30, 2022, approximately 54% of our debt portfolio was comprised
of fixed rate debt. 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. 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 were in compliance with
all financial covenants and restrictions contained in our debt agreements as of
September 30, 2022.

We also measure our ability to service our debts by our leverage ratio, which was 3.2 at September 30, 2022 and 3.9 from
December 31, 2021. Since our merger with Anixter on June 22, 2020we have reduced our financial leverage by 2.5.

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                   WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

The following table sets forth our leverage ratio, which is a non-GAAP financial measure, for the periods presented:

                                                                      Twelve Months Ended
                                                             September 30,             December 31,
                                                                 2022                      2021
(In millions of dollars, except ratio)
Net income attributable to common stockholders            $          751.6          $         408.0
Net income attributable to noncontrolling interests                    1.8                      1.0
Preferred stock dividends                                             57.4                     57.4
Provision for income taxes                                           234.5                    115.5
Interest expense, net                                                267.5                    268.1
Depreciation and amortization                                        189.5                    198.5
EBITDA                                                             1,502.3                  1,048.5
Other income, net(1)                                                 (36.2)                   (48.1)
Stock-based compensation expense                                      37.1                     25.7
Merger-related and integration costs                                  90.9                    158.5
Net gain on divestitures                                                 -                     (8.9)
Adjusted EBITDA                                           $        1,594.1          $       1,175.7

                                                                             As of
                                                             September 30,             December 31,
                                                                 2022                      2021

Short-term debt and current portion of long-term debt, net amount

                                                       $           69.3          $           9.5
Long-term debt, net                                                5,192.8                  4,701.5
Debt discount and debt issuance costs(2)                              60.8                     70.6

Fair value adjustments to Anixter Senior Notes due 2023 and 2025(2)

                                                           (0.4)                    (0.9)
Total debt                                                         5,322.5                  4,780.7
Less: Cash and cash equivalents                                      234.1                    212.6
Total debt, net of cash                                   $        5,088.4          $       4,568.1

Financial leverage ratio                                               3.2                      3.9


(1)Other non-operating income for the twelve months ended September 30, 2022 and
December 31, 2021 includes a $36.6 million curtailment gain resulting from the
remeasurement of our pension obligations in the U.S. and Canada due to amending
certain terms of such defined benefit plans.

(2)Debt is presented in the condensed 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 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. Adjusted EBITDA is defined as
the trailing twelve months EBITDA before other non-operating expenses (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.

Most of the undistributed earnings of our foreign subsidiaries have been taxed
in the U.S. under either the one-time tax on the deemed repatriation of
undistributed foreign earnings, or the global intangible low-taxed income 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. We continue to assert that the remaining undistributed
earnings of our foreign subsidiaries are indefinitely reinvested. The
distribution of earnings by our foreign subsidiaries in the form of dividends,
or otherwise, may be subject to additional taxation. We believe that we are able
to maintain sufficient liquidity for our domestic operations and commitments
without repatriating cash from our foreign subsidiaries.
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                   WESCO INTERNATIONAL, INC. AND SUBSIDIARIES


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. The Revolving Credit
Facility has a borrowing limit of $1,525 million and the purchase limit under
the Receivables Facility is $1,525 million. As of September 30, 2022, we had
$883.1 million and $1,525.0 million outstanding under the Revolving Credit
Facility and Receivables Facility, respectively. 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. As of September 30, 2022, we had $6.7 million outstanding under
our international lines of credit.

On March 1, 2022, we amended our Receivables Facility to increase its borrowing
capacity from $1,300 million to $1,400 million and extend its maturity date from
June 21, 2024 to March 1, 2025. Additionally, the amendments to the Receivables
Facility replaced the LIBOR-based interest rate option with SOFR-based interest
rate options, including term SOFR and daily simple SOFR, and decreased the
interest rate spread from 1.15% to 1.10%.

On March 1, 2022, we also amended our Revolving Credit Facility to, among other
things, increase its borrowing capacity from $1,200 million to $1,350 million,
extend its maturity date from June 22, 2025 to March 1, 2027, and replace its
LIBOR-based interest rate option with SOFR-based interest rate options,
including term SOFR and daily simple SOFR.

On August 2, 2022, we further amended our Receivables Facility to increase its
borrowing capacity from $1,400 million to $1,525 million and to decrease the
interest rate spread from 1.10% to 1.05%.

On August 2, 2022we also further amended our revolving credit facility to, among other things, increase its ability to borrow from $1,350 million at
$1,525 million and to increase the sub-facility for loans denominated in Canadian dollars by $550 million at $600 million.

As disclosed in Note 13, "Subsequent Events" of our Notes to the unaudited
Condensed Consolidated Financial Statements, we amended our Revolving Credit
Facility and Receivables Facility again on October 31, 2022 to increase their
borrowing capacities to $1,725 million and $1,625 million, respectively,
primarily to fund our acquisition of Rahi Systems Holdings, Inc.

For additional information regarding our debt instruments, including our outstanding debt at September 30, 2022see note 7, “Debt” of our notes to the unaudited condensed consolidated financial statements.

A cash flow analysis for the first nine months of 2022 and 2021 follows:

Operational activities

Net cash used in operations for the first nine months of 2022 totaled $410.6
million, compared to $172.7 million of cash provided by operating activities for
the first nine months of 2021. Operating activities for the first nine months of
2022 included net income of $643.0 million and non-cash adjustments to net
income totaling $193.1 million, which were primarily comprised of depreciation
and amortization of $135.6 million, stock-based compensation expense of $34.4
million, amortization of debt discount and debt issuance costs of $11.6 million,
and deferred income taxes of $7.2 million. Other sources of cash in the first
nine months of 2022 included an increase in accounts payable of $479.6 million
due to higher purchases of inventory and an increase in other current and
noncurrent liabilities of $102.6 million primarily due to an increase in accrued
interest. Primary uses of cash in the first nine months of 2022 included an
increase in inventories of $886.3 million due to investments to address supply
chain challenges and to support increases in our sales backlog, including
project-based business, an increase in trade accounts receivable of $737.6
million resulting from higher sales, an increase in other current and noncurrent
assets of $101.5 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 $15.1
million, and a decrease in accrued payroll and benefit costs of $88.4 million
resulting primarily from the payment of management incentive compensation earned
in 2021.

Net cash provided by operating activities for the first nine months of 2021
totaled $172.7 million, which included net income of $298.6 million and non-cash
adjustments to net income totaling $177.0 million that were primarily comprised
of depreciation and amortization of $144.6 million, stock-based compensation
expense of $22.8 million, amortization of debt discount and debt issuance costs
of $15.3 million, a net gain of $8.9 million resulting from the Canadian
divestitures, and deferred income taxes of $5.3 million. Other sources of cash
for the first nine months of 2021 included an increase in accounts payable of
$550.9 million due to higher purchases of inventory, an increase in other
current and noncurrent liabilities of $95.9 million, an increase in accrued
payroll and benefit costs of $65.1 million, and a decrease in other current and
noncurrent assets of $19.3 million. Primary uses of cash in the first nine
months of 2021 included an increase in trade accounts receivable of $521.5
million resulting from higher sales in the latter part of the quarter, an
increase in inventories of $428.4 million to support

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                   WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

increase in customer demand and an increase in other receivables from $84.3 million due to increased vendor volume discount accruals.

Investing activities

Net cash used in investing activities for the first nine months of 2022 was
$57.2 million compared to $36.6 million net cash provided by investing activities in the first nine months of 2021. Capital expenditures in the first nine months of 2022 included $59.4 million compared to $25.2 million for the nine-month period ended September 30, 2021. Included in the first nine months of 2021 was $56.0 million the net proceeds from the sale of our former utilities and data communications businesses in Canada.

Fundraising activities

Net cash provided by financing activities for the first nine months of 2022 was
$477.3 million, compared to $410.2 million of net cash used in financing
activities for the first nine months of 2021. During the first nine months of
2022, financing activities were primarily comprised of borrowings and repayments
of $2.8 billion and $2.5 billion, respectively, related to our Revolving Credit
Facility, and borrowings and repayments of $380.0 million and $125.0 million,
respectively, related to our Receivables Facility. The first nine months of 2022
also included $43.1 million of dividends paid to holders of our Series A
Preferred Stock, $25.0 million of payments for taxes related to the exercise and
vesting of stock-based awards, and net proceeds from our various international
lines of credit of approximately $0.2 million.

During the first nine months of 2021, financing activities primarily consisted
of the redemption of our $500.0 million aggregate principal amount of 5.375%
Senior Notes due 2021 and our $354.7 million aggregate principal amount of
5.375% Senior Notes due 2024, borrowings and repayments of $1.7 billion and $1.4
billion, respectively, related to our Revolving Credit Facility, and borrowings
and repayments of $763.0 million and $528.0 million, respectively, related to
our Receivables Facility. The first nine months of 2021 also included $43.1
million of dividends paid to holders of our Series A Preferred Stock,
$20.8 million of payments for taxes related to the exercise and vesting of
stock-based awards, and net repayments related to our various international
lines of credit of approximately $10.7 million.

Cash contractual obligations and other business commitments

There have been no material changes to our contractual obligations and other business commitments that would require updating the information provided in our Annual Report on Form 10-K for the year ended December 31, 2021.

Seasonality

Our operating results are not significantly affected by seasonal factors. Sales
during the first and fourth quarters are usually 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. During
periods of economic expansion or contraction, our sales by quarter have varied
significantly from this pattern.

Critical accounting estimates

No material changes have been made to the critical accounting estimates presented in Part II, Section 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of WESCO International, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

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                   WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

Recent accounting standards

See Note 2, “Accounting Policies,” to our Notes to the Unaudited Condensed Consolidated Financial Statements for a description of recently adopted and recently issued accounting standards.

Forward-looking statements

All statements made herein that are not historical facts should be considered as
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements involve known and unknown risks,
uncertainties and other factors that may cause actual results to differ
materially. These statements include, but are not limited to, statements
relating to plans to declare and pay dividends, statements regarding the
expected benefits and costs of the transaction between Wesco and Anixter,
including anticipated future financial and operating results, synergies,
accretion and growth rates, and the combined company's plans, objectives,
expectations and intentions, statements that address the combined company's
expected future business and financial performance, and other statements
identified by words such as "anticipate," "plan," "believe," "estimate,"
"intend," "expect," "project," "will" and similar words, phrases or expressions.
These forward-looking statements are based on current expectations and beliefs
of Wesco's management, as well as assumptions made by, and information currently
available to, Wesco's management, current market trends and market conditions
and involve risks and uncertainties, many of which are outside of Wesco's and
Wesco's management's control, and which may cause actual results to differ
materially from those contained in forward-looking statements. Accordingly, you
should not place undue reliance on such statements.

Those risks, uncertainties and assumptions include the risk of any unexpected
costs or expenses resulting from the transaction, the risk that the transaction
could have an adverse effect on the ability of the combined company to retain
customers and retain and hire key personnel and maintain relationships with its
suppliers, customers and other business relationships and on its operating
results and business generally, or the risk that problems may arise in
successfully integrating the businesses of the companies, which may result in
the combined company not operating as effectively and efficiently as expected,
the risk that the combined company may be unable to achieve synergies or other
anticipated benefits of the transaction or it may take longer than expected to
achieve those synergies or benefits, the risk that the leverage of the company
may be higher than anticipated, the impact of natural disasters (including as a
result of climate change), health epidemics, pandemics and other outbreaks, such
as the ongoing COVID-19 pandemic, supply chain disruptions, and the impact of
Russia's invasion of Ukraine, including the impact of sanctions or other actions
taken by the U.S. or other countries, the increased risk of cyber incidents and
exacerbation of key materials shortages, inflationary cost pressures, material
cost increases, demand volatility, and logistics and capacity constraints, which
may have a material adverse effect on the combined company's business, results
of operations and financial condition, and other important factors that could
cause actual results to differ materially from those projected. All such factors
are difficult to predict and are beyond the combined company's control.
Additional factors that could cause results to differ materially from those
described above can be found in WESCO International, Inc.'s Annual Report on
Form 10-K for the fiscal year ended December 31, 2021 and WESCO International,
Inc.'s other reports filed with the SEC.

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