Positive book-to-bill, record-high margin and strong cash flow

 

Ad hoc Announcement pursuant to Art. 53 Listing Rules of SIX Swiss Exchange

• Orders $8,974 million, -5%; comparable¹ -4%
• Revenues $7,870 million, 0%; comparable¹ +2%
• Income from operations $1,217 million; margin 15.5%
• Operational EBITA¹ $1,417 million; margin¹ 17.9%
• Basic EPS $0.49; -12%²
• Cash flow from operating activities $726 million; +157%

 

 

Against high comparables, our Q1 performance shows the year has started off well with stronger than expected order momentum, record-high margin and strong cash delivery. This makes us confident to nudge up our margin expectation for 2024.

Björn Rosengren, CEO

 

CEO summary

My key take-aways from the first quarter of 2024 are the better than expected order intake of $9 billion, positive book-to-bill of 1.14 and record-high Operational EBITA margin as well as the free cash flow of $551 million representing a strong delivery for a first quarter. We published our sustainability report, where a highlight was the proof point of one of our core customer value propositions – reduced greenhouse gas (GHG) emissions. From products sold in 2023, and through their lifecycle, we enabled our customers to avoid 74 megatons of GHG emissions. At the current total of 139 megatons, we are on a good path towards our ambition of helping customers avoid 600 megatons of CO₂e emissions throughout the lifetime of products sold from 2022 to 2030.

As expected, orders declined from last year’s record-high comparable, however the drop was limited at 5% (4% comparable). To summarize the quarter, we see a continued high level of customer activity in the project and systems areas, and I am encouraged by the positive order development in Electrification’s short-cycle businesses. So, while ABB’s total orders declined in the first quarter, I feel even more confident about 2024 than I did coming into the year.

It was impressive to see new record-high order intake in both Electrification and Motion business areas. Process Automation orders declined from the all-time-high comparable, but remained fairly consistent with strong recent quarterly levels. At the start of this year, we called the fourth quarter the trough for Robotics & Discrete Automation order level. This realized, and as expected order intake increased sequentially. However, it declined sharply year-on-year on the back of customers normalizing order patterns after a pre-buy period.

Revenues remained stable (up 2% comparable), with comparable growth supported in equal parts by price and volumes. I was pleased to see the positive gross margin improvement of 270 basis points to 37.3%, supported by a positive development in all business areas. A more efficient execution of slightly higher volumes and price contributed to the 160 basis points increase in Operational EBITA margin to the new record-high of 17.9%. In my view this is a good sign that there is still upside potential in ABB and we can make mid-term improvements within the new higher margin target range announced in November.

The strong cash flow start to the year positions us for what we anticipate to be another good annual free cash flow delivery of at least similar to last year’s level. Using the cash to expand know-how and footprint through acquisitions is an important path to creating long-term shareholder value. It was nice to see the announced acquisition of SEAM, which would add energy asset management and advisory services to clients across industrial and commercial building markets to the Electrification Service division. We have a good target pipeline, including some deals which are slightly more sizeable than most of the recent announcements. The share buyback program is a tool we use to distribute residual excess cash, and we announced another annual program of up to $1 billion which launched on April 1. The size of the program is consistent with last year’s, although the time frame for execution is shorter as it runs until the end of January 2025, to align with the announcement of Q4 2024 results and 2024 dividend proposal.

During the quarter we announced my decision to retire as CEO from ABB. I remain fully committed until the end of July when Morten Wierod takes the reins, and thereafter I will support the transition in an advisory role until the end of the year. I am happy to see Morten take this step and I am confident that the ABB Way operating model will be even further engrained in our ways of working under his already proven leadership. While we regret to see him go, I want to congratulate Tarak Mehta on his new opportunity outside of ABB. Tarak has made an outstanding contribution to the success of our company and I wish him all the best for this next step on his journey. The process to find new leaders to the business areas Electrification and Motion is ongoing and Morten looks to have a full team in place when he takes office in August.

 

Outlook

In the second quarter of 2024, we anticipate a mid-single-digit comparable revenue growth year-on-year and the Operational EBITA margin to be slightly higher than in the first quarter 2024.

In full-year 2024, we expect a positive book-to-bill, comparable revenue growth to be about 5% and the Operational EBITA margin to be about 18%.

 

 

Orders and revenues

 

 

The first quarter order intake of $8,974 million represents one of the strongest quarterly levels for ABB Group, yet orders declined by 5% (4% comparable) from last year’s record-high. Two business areas even improved from last year’s all-time-highs with Motion’s order growth at 2% (1% comparable) and Electrification at a strong 6% (8% comparable). In Electrification, the year-on-year improvement was supported by a positive development in both the long- and short-cycle businesses. In Process Automation the underlying market activity remained robust, but year-on-year orders declined by 20% (20% comparable) with growth challenged by the record-high comparable and the timing of orders in the current quarter. In Robotics & Discrete Automation, orders declined sharply by 30% (30% comparable) due to the still on-going normalization of order patterns in discrete automation and a softer robotics market.

Orders in the Americas dropped by 3% (3% comparable) as a positive comparable development in the United States was offset by declines elsewhere and mainly due to the timing of large orders. Europe declined by 8% (9% comparable) weighed down by important markets like Germany and Italy. Asia, Middle East and Africa declined by 4% (0% comparable) where the strong comparable development in countries like India, Japan and Australia offset a sharp decline in China.

In transport & infrastructure, there were positive developments in marine, ports and rail. 

Industrial areas with particularly strong development in all regions were utilities and datacenters.

Orders in the buildings segment improved overall, due to the combined impact from a positive development in the commercial area driven by the United States, while the residential segment remained stable in the US and softened slightly in other regions.

In the robotics-related segments, orders declined in the automotive, general industry and consumer-related segments. The machine builder segment declined as customers normalized order patterns after earlier prebuys.

On a very challenging comparable, orders declined in the large process-related segments of oil & gas, pulp & paper and mining. However, a positive development was recorded in the still less sizeable low carbon-related areas such as nuclear, carbon capture, hydrogen etc. The underlying market sentiment remained robust across the board.

Revenues remained stable (up 2% comparable) and amounted to $7,870 million. On a business area level there were variances, with strong growth in Electrification and Process Automation, while Motion and Robotics & Discrete Automation declined. Group revenues were supported by execution of the strong order backlog which more than offset weakness in parts of the short-cycle businesses. In total, price and volume contributed in equal parts to comparable growth.

 

 

Earnings

Gross profit 

Gross profit increased by 8% (9% constant currency) to $2,935 million, reflecting a gross margin improvement of 270 basis points to 37.3%. Gross margin improved in all four business areas.

Income from operations 

Income from operations amounted to $1,217 million and improved by 2% year-on-year. Compared with the last year period, the earnings improvement was supported by a stronger operational performance partially offset by higher expenses related to the ABB Way transformation program and adverse currency hedging impacts. Margin on Income from operations was 15.5%, up by 30 basis points year-on-year.

Operational EBITA 

Despite limited revenue growth, the Operational EBITA improved by 11% year-on-year to $1,417 million and the margin increased by 160 basis points to a new all-time-high of 17.9%. Contribution from operational leverage on slightly higher volumes, a positive price impact and effects from continuous efficiency measures more than offset the higher expenses related to labor costs, Research & development (R&D) and Selling, general and administrative (SG&A) expenses. Operational EBITA in Corporate and Other amounted to -$118 million, of which -$64 million related to the underlying

Corporate costs. The remaining -$54 million related to the E-mobility business where operational performance was hampered by the ongoing reorganization to ensure a more focused portfolio, and some inventory-related provisions. While E-mobility is on track towards the improved portfolio, the financial benefits will not be visible until towards the end of 2024.

Finance net 

Net finance income contributed with a positive $20 million, an improvement from last year’s expense of $21 million. The yearon-year improvement is due to a combination of a lower net debt position and favorable mix of interest rates between borrowings and cash deposits.

Income tax 

Income tax expense was $339 million with an effective tax rate of 27%. This is higher than last year’s rate of 10%, which was low due to favorable resolution of a prior year tax matter relating to the divestment of the Power Grids business.

Net income and earnings per share 

Net income attributable to ABB was $905 million, representing a reduction of 13% from last year, as the improved operational performance this year did not offset last year’s positive benefits from the low tax rate. This resulted in basic earnings per share of $0.49, down from $0.56 in the last year period.

 

 

Balance sheet & Cash flow

Net working capital 

Net working capital amounted to $3,588 million, decreasing year-on-year from $4,164 million as higher receivables and contract assets were more than offset by higher customer advances, and accounts payables. Net working capital as a percentage of revenues1 was 11.2% which declined from 13.9% one year ago.

Capital expenditures 

Purchases of property, plant and equipment and intangible assets amounted to $181 million

Net debt 

Net debt1 amounted to $2,086 million at the end of the quarter and decreased from $3,826 million year-on-year. The sequential increase from $1,991 million was mainly due to the initial dividend payment.

Cash flows 

Cash flow from operating activities was $726 million, representing a steep year-on-year increase from $282 million. Three out of four business areas increased cash flow from operating activities. The increase was driven by better operational performance and a lower build-up of net working capital year-on-year mostly linked to trade receivables and inventories.

Share buyback program 

ABB has completed its share buyback program that was launched in April 2023. Through this buyback program, ABB repurchased a total of 21,387,687 shares – equivalent to 1.09% of its issued share capital at launch of the buyback program – for a total amount of approximately $0.83 billion. A new share buyback program of up to $1 billion was launched on April 1, 2024, and will run to 31 January, 2025. ABB’s total number of issued shares, including shares held in treasury, amounts to 1,882,002,575.

 

 

Electrification

 

Orders and revenues 

The first quarter order intake of $4,392 million represents a new record level, and increased by 6% (8% comparable) from last year. Continued robust demand for the project and systems businesses which this quarter was coupled with strong year-on-year growth in the short-cycle businesses. The book-to-bill ratio was 1.19. 

• Orders remained stable or increased in most customer segments with particular strength in datacenters and utilities. The overall buildings segment improved, as a positive development in the commercial area driven by the United States more than offset a slight weakness in the residential segment, which was stable in the US, and softened slightly in other regions. 
• From a geographical perspective order intake improved in all three regions. Europe was up by 3% (2% comparable). Growth in the Americas was 9% (11% comparable) with the United States outpacing the region at 13% (17% comparable). In Asia, Middle East and Africa orders improved by 6% (11% comparable) with strong growth in countries like India offsetting a slight drop in China of 7% (2% comparable). 
• Revenues increased by 3% (6% comparable) to $3,680 million with a positive development in most divisions. Higher volumes were the main driver to comparable growth, with the added support from slightly increased pricing. Execution of the order backlog combined with higher demand in the short-cycle businesses supported the quarterly revenue generation.

Profit 

Record-high Operational EBITA of $826 million and alltime-high Operational EBITA margin of 22.4%, up by 340 basis points year-on-year. 

• Operational leverage on higher volumes and impact from continuous improvement measures were the key drivers to the higher margin, year-on-year. 
• A positive price impact more than offset higher salary-related costs as well as an increase in R&D and SG&A spend. 
• Margins improved or remained stable in all divisions.

 

 

Motion

 

Orders and revenues 

Robust customer activity in the projects- and systemsrelated businesses offset some weakness in the short-cycle areas. In total, a new all-time-high order level of $2,303 million was achieved, representing an improvement of 2% (1% comparable) from last year. Book-to-bill was 1.26. Some initial encouraging sequential trading signs in the short-cycle businesses were noted. 

• The Traction division was the engine for order growth, including a large order of $150 million to supply complete traction packages for 65 new six-car passenger trains for the Queensland Train Manufacturing Program. The new trains are to be operational in time for the Brisbane 2032 Olympics. 
• Besides the rail segment, a stronger order momentum was noted in the process-related segments of oil & gas and power generation including grid stabilization equipment. Some slowness from last year’s high level was noted in food & beverage, pulp & paper, metals and chemicals. HVAC remained muted. 
• Orders in Asia, Middle East and Africa were up by 16% (21% comparable), supported by the large order in Australia, while China declined by 12% (8% comparable). The Americas softened by 1% (4% comparable) including the decline of 4% (6% comparable) in the United States. Europe declined by 8% (11% comparable). • Revenues amounted to $1,829 million and declined by 6% (6% comparable) due to weakness in the short-cycle businesses and parts of the backlog execution impacted by some delivery timing changes

Profit 

Operational EBITA of $343 million declined by 6% and the Operational EBITA margin softened by 40 basis points to 18.5%. 

• Operational leverage on the lower production volumes in the short-cycle businesses weighed on results. 
• The positive price impact and the stringent cost focus more than offset the adverse impacts from the higher expenses related to salaries, R&D and SG&A, year-on-year.

 

Process Automation

 

Orders and revenues 

The underlying markets remained buoyant. However, last year’s record high comparable was strongly supported by the timing of large orders received, and in contrast some timing delay in orders in the current quarter were noted. Order intake declined by 20% (20% comparable) and amounted to $1,697 million, a level broadly similar to recent quarters. Book-to-bill was positive at 1.06. 

• On a very challenging comparable, orders declined in the large process-related segments oil & gas, pulp & paper and mining. However, a positive development was recorded for ports and in the less sizeable low carbon-related areas such as nuclear, carbon capture, hydrogen etc. The underlying market sentiment remained robust across the board. 
• On execution of the high order backlog, revenues increased strongly at 11% (12% comparable) and amounted to $1,601 million with a positive contribution from all divisions, supported by strong contribution from the service business.

Profit 

With support from all divisions, the Operational EBITA margin improved by 140 basis points to the new recordhigh level of 15.6% and the Operational EBITA improved by 23% to $253 million. 

• Profitability was supported by the mix in execution of the order backlog which hosts a higher gross margin, whilst keeping SG&A expenses on a stable percentage of revenues. 
• A slight positive price impact offset increased salaryrelated expenses, year-on-year. 
• Operational EBITA margin improved in all divisions with all now in the “teens” margin range.

 

 

Robotics & Discrete Automation

Orders and revenues 

As anticipated, order intake improved from the fourth quarter, with the strongest increase recorded in the Robotics division. However, total orders declined by 30% (30% comparable) from last year’s high comparable and amounted to $701 million. 

• Orders declined at a double-digit rate in both divisions, although more pronounced in Machine Automation. 
• The Robotics demand declined in all customer segments year-on-year. The sequential pattern was encouraging and inventory levels in the channels did seemingly align with the current market situation towards the end of quarter. 
• Machine Automation customers held off placing orders while awaiting deliveries from the recent pre-buy period. Order backlog remains high and supports deliveries into the latter part of the summer. 
• From a geographical perspective, orders in the Americas declined by 24% (26% comparable). The decline in Europe was 31% (32% comparable). In Asia, Middle East and Africa orders declined by 32% (28% comparable), hampered by China being down by 46% (43% comparable). 
• Revenues of $864 million represented a decline of 8% (7% comparable) from last year, including a positive price impact. This is the combined effect of a strong increase in the Machine Automation division executing the order backlog; and a decline in the larger robotics division where the order backlog has normalized and the short-cycle business was under pressure.

Profit 

Operational leverage on lower volumes put pressure on the Operational EBITA which declined by 19% to $113 million and the Operational EBITA margin which dropped by 170 basis points year-on-year to 13.2%. 

• A solid execution of higher volumes resulted in improved profitability in the Machine Automation business. This was however more than offset by lower production volumes triggering underabsorption of fixed costs in the short-cycle Robotics business. 
• A positive price contribution from order backlog deliveries and the efficiency measures activated as a response to the soft market climate broadly offset adverse impacts from increased labor, SG&A and R&D expenses.

 

 

Sustainability

Q1 outcome 

• 28% reduction year-on-year of CO₂e emissions due to a shift to green electricity and a lower use of fossil fuels in our operations. 
• 7% decrease year-on-year in LTIFR, continuing to remain at a low level. 
• 2.5%-points increase year-on-year in the proportion of women in senior management roles, demonstrating strong progress towards our target

Events from the Quarter 

• ABB and CERN, the European Laboratory for Particle Physics, have collaborated on a strategic research partnership to enhance energy efficiency in cooling and ventilation systems at CERN’s particle physics institute in Geneva, Switzerland. Through energy efficiency audits, they identified a 17.4% energysaving potential across a fleet of 800 motors. This translates to annual energy savings of up to 31 gigawatt-hours (GWh) – enough to power over 18,000 European households and avoid 4 kilotonnes of CO₂ emissions. The initiative surpassed CERN’s goal of reducing cooling and ventilation energy use by 10-15%. 
• SEV, the main electricity supplier in the Faroe Islands, contracted ABB to enhance grid stability during the transition to green energy. ABB is providing synchronous condenser (SC) technology to stabilize the power grid as fossil-fueled plants are phased out in favor of renewable generation. The latest SC will be deployed on the island of Borðoy where it will reinforce the local electricity supply for around 5,000 people. 
• ABB will deliver a shore-to-ship power supply solution allowing DEME’s diverse fleet to avoid emissions when berthed in the port of Vlissingen, the Netherlands. The technology supports DEME’s longterm decarbonization strategy, providing flexibility to adapt to changing grid capabilities. ABB will install shore power for suitably equipped vessels calling at Vlissingen’s DEME base by the end of 2024, as part of a government-supported initiative stimulating the use of shore power facilities in Dutch seaports. Connecting to shore power while at berth is expected to become mandatory at main EU ports from 2030 under FuelEU Maritime regulations. 
• ABB Electrification’s facility in Vaasa has achieved a 1,400t CO2e reduction in Scope 1 & 2 emissions since 2019. This progress is driven by a company-wide culture of sustainability, employee-led energy savings, and investment in renewable energy sourcing. The teams at ABB Vaasa have contributed over 100 energy-saving ideas, resulting in a 20 percent reduction in consumption (equivalent to 1,082 MWh) since 2019. Automation, smart energy solutions, and a commitment to net zero have played pivotal roles. ABB Vaasa, a global center for electrical low-voltage switches and protection relays, exemplifies empowered employees leading the way toward sustainability. 
• In March, ABB teams across the world celebrated International Women’s Day and Women’s History Month with numerous events, mentor programs, panel discussions, networking sessions and campaigns that highlighted the importance of gender equality, whilst promoting initiatives to foster inclusion in the workplace and society at large.

 

Significant events

During Q1 2024 

• On February 23, ABB announced that Morten Wierod will succeed Björn Rosengren as CEO on August 1, 2024. From August 1, 2024, until his retirement at the end of the year, Björn Rosengren will advise and assist Morten Wierod and the Executive Committee to ensure a seamless transition. Morten Wierod joined ABB in 1998 and has been serving as a member of ABB’s Executive Committee since 2019, currently as President of the Electrification Business Area and previously as President of the Motion Business Area. The search process for the position of President, Electrification Business Area has been launched. 
• On March 21, the Annual General Meeting elected two new Board members, namely Johan Forssell and Mats Rahmström. They replace Jacob Wallenberg and Gunnar Brock who decided not to stand for reelection. 
• On March 21, ABB announced that the Board of Directors has approved a new share buyback program for capital reduction purposes of up to $1 billion. This new program launched on April 1. It will be executed on a second trading line on the SIX Swiss Exchange and is planned to run until January 31, 2025, to adjust the timing of its share buyback cycle to align with the announcement of its Q4 2024 results and 2024 dividend proposal. 
• On March 27, ABB announced that Tarak Mehta, President Motion Business Area and Member of the Executive Committee, has decided to leave ABB to accept the role as CEO of another company. Tarak will leave ABB at the end of July this year. The search process for the position of President, Motion Business Area has been launched.

 

Acquisitions and divestments, last twelve months

 

Additional figures

 

Additional 2024 guidance

 

Important notice about forward-looking information

This press release includes forward-looking information and statements as well as other statements concerning the outlook for our business, including those in the sections of this release titled “CEO summary,” “Outlook,” and “Sustainability”. These statements are based on current expectations, estimates and projections about the factors that may affect our future performance, including global economic conditions, the economic conditions of the regions and industries that are major markets for ABB. These expectations, estimates and projections are generally identifiable by statements containing words such as “anticipates,” “expects,” “estimates,” “plans,” “targets,” “guidance,” “likely” or similar expressions. However, there are many risks and uncertainties, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking information and statements made in this press release and which could affect our ability to achieve any or all of our stated targets. Some important factors that could cause such differences include, among others, business risks associated with the volatile global economic environment and political conditions, costs associated with compliance activities, market acceptance of new products and services, changes in governmental regulations and currency exchange rates and such other factors as may be discussed from time to time in ABB Ltd’s filings with the U.S. Securities and Exchange Commission, including its Annual Reports on Form 20-F. Although ABB Ltd believes that its expectations reflected in any such forward looking statement are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved.

 

Q1 results presentation on April 18, 2024

The Q1 2024 results press release and presentation slides are available on the ABB News Center at www.abb.com/news and on the Investor Relations homepage at www.abb.com/investorrelations.

A conference call and webcast for analysts and investors is scheduled to begin at 10:00 a.m. CET.

To pre-register for the conference call or to join the webcast, please refer to the ABB website: www.abb.com/investorrelations.

The recorded session will be available after the event on ABB’s website.

 

 

Financial calendar

2024 

July 18 Q2 2024 results 

October 17 Q3 2024 results

 

 

 

• Honeywell’s Solstice® refrigerant technology powers Bosch Home Comfort’s solutions to reduce carbon emissions
• Both companies will team to educate technicians on the use of new refrigerants

 

CHARLOTTE, N.C. April 16, 2024 – Honeywell (Nasdaq: HON) today announced that Bosch’s newest line of heat pumps will incorporate Honeywell’s energy-efficient Solstice low-global warming potential (GWP) refrigerant. As part of this collaboration, Bosch technicians will be trained in the safe maintenance and installation of these next generation low-GWP solutions. 

…

 

Telegärtner is pleased to announce the new distribution contract between Telegärtner and RTIS Technologies which was signed in Steinenbronn on 21st March 2024. 

 

Between 18th and 22nd March we welcomed Mr Célestin BOLI, CEO of RTIS Technologies, and Mr Noël Agoualé, CEO of Tele-Connect to our premises in Steinenbronn and undertook some extremely productive discussions about the West African market and the development of our cooperation together.

…

 

Southwire is pleased to announce that Winn Wise has been named Executive Vice President and Chief Commercial Officer, effective April 29, 2024.

 

In line with the company’s long-term strategy, its efforts to remain generationally-sustainable and its commitment to best meet the needs of its stakeholders, Wise will lead commercial activities for the company and drive continuous improvement of the customer experience. 

…

 

Next week a part of our export sales team will be attending Connected North 2024 in Manchester. 

 

Visit our stand 34 to learn more about our products and solutions. 

 

Connected North is a newer sister event to Connected Britain. 

…

 

ARE implements building technology for Turku’s new music hall. 

 

ARE is responsible for the heating, water, ventilation, electricity, automation and sprinkler works of the music hall Fuuga. The price of the contract is around 11 million euros.

 

…

 

Next week a part of our export sales team will be attending Connected North 2024 in Manchester. 

 

Visit our stand 34 to learn more about our products and solutions. 

 

Connected North is a newer sister event to Connected Britain. 

…

 

Transaction Grows Prysmian’s North America Exposure, Enhancing Geographical and Business Portfolio

 

Prysmian today announced that it has entered into a definitive merger agreement under which it will acquire Encore Wire (NASDAQ: WIRE) for $290.00 per share in cash (the “Transaction”). The Transaction represents a premium of approximately 20% to the 30-day volume weighted average share price (VWAP) as of Friday, April 12, 2024 and approximately 29% to the 90-day VWAP as of the same date.

At the terms of the Transaction, Encore Wire’s implied Enterprise Value is approximately €3.9 billion[1] representing a multiple of 8.2x EV/2023A EBITDA and 6.3x EV/2023A EBITDA including run rate synergies.

 

About Encore Wire

Encore Wire is a leading manufacturer of a broad range of copper and aluminum electrical wire and cables, supplying power generation and distribution solutions. Encore Wire’s diversified product portfolio and low-cost of production position it exceptionally well to play a key role in the transition to a more sustainable and reliable energy infrastructure. In fiscal year 2023, Encore Wire delivered revenue of approximately $2.6 billion and EBITDA of $517 million[2].

 

Strategic Rationale

Encore Wire is highly complementary to Prysmian’s strategy and, in particular, the Transaction will allow Prysmian to:

• increase its exposure to secular growth drivers;
• enhance its exposure to North America;
• leverage Encore Wire’s operational efficiency and best in class service across Prysmian’s portfolio;
• broaden Prysmian’s product offering enabling the combined company to better address customers’ needs in North America; and
• generate ~€140m in run-rate EBITDA synergies expected within 4 years from closing.

“The acquisition of Encore Wire represents a landmark moment for Prysmian and a strategic and unique opportunity to create value for our shareholders and customers,” said Massimo Battaini, Prysmian designated Group CEO. “Through this acquisition, Prysmian will grow its North American presence, enhancing its portfolio and geographic mix, while significantly increasing the exposure to secular growth drivers. We look forward to welcoming the Encore Wire team to Prysmian and benefitting from the combined company’s enhanced product offerings and customer relationships.”

 

“We are pleased to have reached an agreement that reflects the remarkable value Encore Wire has created with our expansive single-campus model, low-cost production, centralized distribution and product innovation,” said Daniel L. Jones, Encore Wire’s Chairman, President and Chief Executive Officer. “This transaction maximizes value for Encore Wire shareholders and provides an attractive premium for their shares. Encore Wire and Prysmian are two highly complementary organizations, and we anticipate a bright future for Encore Wire as part of Prysmian. Furthermore, as part of a larger, global operation, we expect this transaction will bring additional future opportunities for our employees, whose dedication and hard work made this transaction possible. We look forward to working with Prysmian to complete this value-enhancing combination and realize the significant benefits that we expect it will bring to all of our stakeholders.”

 

Following closing of the Transaction, Prysmian expects to maintain a significant presence at Encore Wire’s vertically-integrated, single-site, McKinney, Texas campus.

 

Financial Highlights

Based on pro forma aggregated results for the twelve months ended December, 2023, the combined group would have posted net sales of over €17.7 billion and adjusted EBITDA of approximately €2.1 billion[3].

Prysmian expects to generate run-rate pre-tax synergies of approximately €140 million within 4 years from Closing. One-off capex / costs to achieve the above-mentioned synergies are estimated at approximately 1.2-1.3x run-rate pre-tax synergies.

The Transaction is expected to generate an EPS accretion of ~30% including run-rate synergies, an EPS [4] accretion of ~20% pre-synergies[5] for Prysmian shareholders.

The transaction will be financed through a mix of cash on Prysmian’s Balance Sheet (€1.1 billion) and newly committed debt facilities (€3.4 billion). Pro-forma net debt for the combined group of approximately €5.1 billion, representing a 2.4x 2023 ND/Adj. EBITDA[6] ratio.

Given the strong cash flow generation of the combined business, further enhanced by the synergies, Prysmian will enjoy an accelerated deleverage which is expected to bring leverage ratio (ND/Adj. EBITDA) close to Prysmian standalone 2023 leverage ratio by 2027.

 

Approvals and Timing

The Transaction, which has been unanimously approved by each company’s Board of Directors and recommended to its shareholders by Encore Wire’s Board of Directors, is expected to close in the second half of 2024, subject to approval of Encore Wire’s shareholders representing at least a majority of the outstanding shares, regulatory approvals, and other customary closing conditions.

*************

 

 

Goldman Sachs Bank Europe SE, Succursale Italia is acting as sole financial advisor to Prysmian and Wachtell, Lipton, Rosen & Katz is acting as legal advisor. J.P. Morgan Securities LLC is acting as sole financial advisor to Encore Wire and O’Melveny & Myers LLP is acting as legal advisor.

Conference Call to Discuss Transaction Monday 15th of April at 10:00 a.m. CET a presentation and a conference call for analysts and institutional investors will be hosted by Massimo Battaini, designated CEO of Prysmian. Please find below the link to access the webcast:

Webcast link: https://edge.media-server.com/mmc/p/evqv6n35

*************

 

^[1]Equivalent to $4.2 billion, converted at 1.08x USD/EUR FX

^[2]Encore financials based on US GAAP

^[3]Based on PF EBITDA of €2,102m (Prysmian €1,628m + Encore Wire $517m converted at 1.08x USD/EUR FX of €479m). Encore Wire financials based on US GAAP.

^[4]EPS stands for Earnings per share

^[5]EPS accretion computed without considering potential PPA impact deriving from the Transaction. Encore Wire financials as per US GAAP.

^[6]Based on pro-forma EBITDA of €2,102m (€1,628m + $517m converted at 1.08x USD/EUR FX of €479m).

 

Fargo, N.D. — Border States is proud to announce that Don Masters has been elected to the Board of Directors.

 

Masters joined Border States as Southeast Region VP with the acquisition of Shealy Electrical Wholesalers(Shealy) in 2016. On January 1, 2021, he was promoted to Executive VP — East Region and joined Border States’ Executive Committee in April 2021. Most recently, Masters was promoted to Executive VP — Sales and Marketing, with responsibility for development and execution of sales strategies across the company’s three core markets — construction, industrial and utility — and leading revenue operations, marketing and vendor relations.

Masters entered the distribution industry in 1998 as a Sales Trainee with a regional Midwest industrial distributor. After a successful tenure as a Sales Engineer, he joined a Southeast regional electrical distributor and held several roles, including Region VP. After working with a successful startup business in the telecommunications industry, Masters returned to the electrical distribution industry as an Area Business Manager at Shealy, which quickly expanded into a Construction Core Market Sales VP role before the company was acquired by Border States.

“The addition of Don to our board strengthens and broadens the breadth of talent and experience,” said Jason Seger, President and CEO at Border States. “Don has provided outstanding leadership as his responsibilities have grown, and we look forward to having his leadership and voice on the board.”

 

Border States supplies products and services to construction, industrial and utility customers. The 100% employee-owned company is rated the sixth largest electrical distributor in the United States by Electrical Wholesaling magazine. Border States has more than 3,200 employee-owners and 120 branches in 29 states. The Branch Support Center (corporate office) is located in Fargo, North Dakota.

 

PITTSBURGH, April 12, 2024 /PRNewswire/ — Wesco International (NYSE:WCC) will hold its first quarter 2024 earnings conference call on Thursday, May 2 at 10:00 a.m. ET. 

 

Dial-in details are below. The live audio webcast of the earnings presentation can be accessed at https://investors.wesco.com/, where related materials will be posted prior to the presentation and a replay of the webcast will be available.

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