BUSINESS SEGMENTS

12 Months Ended

Dec. 31, 2021

Segment Reporting [Abstract]

SEGMENTS AND RELATED INFORMATION

17. BUSINESS SEGMENTS

The Company has operating segments that are organized around three strategic business units consisting of EES, CSS and UBS. These operating segments are equivalent to the Company's reportable segments. The Company's chief operating decision maker evaluates the performance of its operating segments based primarily on net sales, income from operations, adjusted EBITDA, adjusted EBITDA margin percentage, and total assets.

The following is a description of each of the Company's reportable segments and their business activities.

Electrical & 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.

Communications & 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 & 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 Wesco's 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.

Corporate

Corporate primarily incurs costs related to treasury, tax, information technology, legal and other centralized functions. The Company also has various corporate assets which are reported in corporate. Segment assets may not include jointly used assets, but segment results include depreciation expense or other allocations related to those assets. Interest expense and other non-operating items are either not allocated to the segments or reviewed on a segment basis. Corporate expenses and assets not directly identifiable with a reportable segment are reported in the tables below to reconcile the reportable segments to the consolidated financial statements.

The following table sets forth financial information by reportable segment for the periods presented:

(In thousands)	Year Ended December 31, 2021
	EES			CSS			UBS			Corporate		Total
Net sales	$	7,621,263		$	5,715,238		$	4,881,011		$	—	$	18,217,512
Income from operations	542,059			395,343			412,740			(548,269)		801,873
Adjusted EBITDA	604,461			480,820			428,367			(337,965)		1,175,683
Adjusted EBITDA Margin %	7.9		%	8.4		%	8.8		%			6.5		%
Supplemental information:
Depreciation and amortization	$	55,998		$	82,870		$	22,447		$	37,239	$	198,554
Capital expenditures	4,469			3,197			5,207			41,873		54,746
	Year Ended December 31, 2020
(In thousands)	EES			CSS			UBS			Corporate		Total
Net sales	$	5,479,760		$	3,323,264		$	3,522,971		$	—	$	12,325,995
Income from operations	260,207			217,163			231,702			(362,034)		347,038
Adjusted EBITDA	308,327			280,656			265,593			(194,259)		660,317
Adjusted EBITDA Margin %	5.6		%	8.4		%	7.5		%			5.4		%
Supplemental information:
Depreciation and amortization	$	35,811		$	37,765		$	22,380		$	25,644	$	121,600
Capital expenditures	7,081			1,495			12,834			35,261		56,671
	Year Ended December 31, 2019
(In thousands)	EES			CSS			UBS			Corporate		Total
Net sales	$	4,860,541		$	909,496		$	2,588,880		$	—	$	8,358,917
Income from operations	261,788			43,835			184,931			(144,337)		346,217
Adjusted EBITDA	291,473			51,067			198,745			(110,769)		430,516
Adjusted EBITDA Margin %	6.0		%	5.6		%	7.7		%			5.2		%
Supplemental information:
Depreciation and amortization	$	28,569		$	7,155		$	13,583		$	12,800	$	62,107
Capital expenditures	20,405			3,093			6,460			14,109		44,067

The following table sets forth total assets by reportable segment for the periods presented:

	As of
	December 31, 2021
(In thousands)	EES		CSS		UBS		Corporate(1)		Total
Total assets	$	4,098,335	$	4,601,132	$	3,266,231	$	652,001	$	12,617,699
	As of
	December 31, 2020
(In thousands)	EES		CSS		UBS		Corporate(1)		Total
Total assets	$	3,726,855	$	4,275,611	$	2,947,406	$	930,342	$	11,880,214

(1)Total assets for Corporate primarily consist of cash and cash equivalents, deferred income taxes, fixed assets and right-of-use assets associated with operating leases.

The following table sets forth tangible long-lived assets, which include property, buildings and equipment, and operating lease assets, by geographic area:

	As of December 31,
	2021		2020
(In thousands)
United States	$	698,942	$	693,807
Canada	141,380		146,620
Other International(1)	69,553		93,435
Total	$	909,875	$	933,862

(1)    No individual other international country's tangible long-lived assets are material.

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

	Year Ended December 31, 2021
(In thousands)	EES			CSS			UBS			Corporate		Total
Net income attributable to common stockholders	$	543,633		$	394,031		$	412,698		$	(942,388)	$	407,974
Net income attributable to noncontrolling interests	298			—			—			722		1,020
Preferred stock dividends	—			—			—			57,408		57,408
Provision for income taxes	—			—			—			115,510		115,510
Interest expense, net	—			—			—			268,073		268,073
Depreciation and amortization	55,998			82,870			22,447			37,239		198,554
Other (income) expense, net(1)	(1,872)			1,312			42			(47,594)		(48,112)
Stock-based compensation expense(2)	6,404			2,607			2,107			14,581		25,699
Merger-related and integration costs	—			—			—			158,484		158,484
Net gain on Canadian divestitures	—			—			(8,927)			—		(8,927)
Adjusted EBITDA	$	604,461		$	480,820		$	428,367		$	(337,965)	$	1,175,683
Adjusted EBITDA margin %	7.9		%	8.4		%	8.8		%			6.5		%
(1) Corporate other non-operating income in the calculation of adjusted EBITDA for the year ended December 31, 2021 includes a $36.6 million curtailment gain resulting from the remeasurement of the Company's pension obligations in the U.S. and Canada due to amending certain terms of such defined benefit plans.
(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.
	Year Ended December 31, 2020
(In thousands)	EES			CSS			UBS			Corporate		Total
Net income attributable to common stockholders	$	262,829		$	217,211		$	231,678		$	(641,297)	$	70,421
Net loss attributable to noncontrolling interests	(842)			—			—			321		(521)
Preferred stock dividends	—			—			—			30,139		30,139
Provision for income taxes	—			—			—			22,803		22,803
Interest expense, net	—			—			—			226,591		226,591
Depreciation and amortization	35,811			37,765			22,380			25,644		121,600
Other (income) expense, net	(1,780)			(48)			24			(591)		(2,395)
Stock-based compensation expense(3)(4)	4,080			1,403			1,336			9,895		16,714
Merger-related and integration costs	—			—			—			132,236		132,236
Merger-related fair value adjustments	15,411			22,000			6,282			—		43,693
Out-of-period adjustment(3)	12,634			2,325			3,893			—		18,852
Gain on sale of asset	(19,816)			—			—			—		(19,816)
Adjusted EBITDA	$	308,327		$	280,656		$	265,593		$	(194,259)	$	660,317
Adjusted EBITDA margin %	5.6		%	8.4		%	7.5		%			5.4		%
(3) Stock-based compensation and the out-of-period adjustment by reportable segment for the year ended December 31, 2020, as previously reported in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2020, have been reallocated to conform to the current period's presentation.
(4) Stock-based compensation expense in the calculation of adjusted EBITDA for the year ended December 31, 2020 excludes $2.6 million as such amount is included in merger-related and integration costs.

	Year Ended December 31, 2019
(In thousands)	EES			CSS			UBS			Corporate		Total
Net income attributable to common stockholders	$	264,570		$	43,835		$	184,931		$	(269,910)	$	223,426
Net loss attributable to noncontrolling interests	(1,228)			—			—			—		(1,228)
Provision for income taxes	—			—			—			59,863		59,863
Interest expense, net	—			—			—			65,710		65,710
Depreciation and amortization	28,569			7,155			13,583			12,800		62,107
Other income, net	(1,554)			—			—			—		(1,554)
Stock-based compensation expense	1,116			77			231			17,638		19,062
Merger-related costs	—			—			—			3,130		3,130
Adjusted EBITDA	$	291,473		$	51,067		$	198,745		$	(110,769)	$	430,516
Adjusted EBITDA margin %	6.0		%	5.6		%	7.7		%			5.2		%

Note: Adjusted EBITDA and Adjusted EBITDA margin % are non-GAAP financial measures that provide indicators of the Company's performance and its ability to meet debt service requirements. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization before foreign exchange and other non-operating expenses (income), non-cash stock-based compensation, costs and fair value adjustments associated with the merger with Anixter, an out-of-period adjustment related to inventory cost absorption accounting, and net gains on the divestiture of Wesco's legacy utility and data communications businesses in Canada and sale of an operating branch in the U.S. Adjusted EBITDA margin % is calculated by dividing Adjusted EBITDA by net sales.