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WESCO International, Inc. (WCC - Free Report) reported first-quarter 2022 adjusted earnings of $3.63 per share, reflecting 153.8% growth on a year-over-year basis. Also, the bottom line surpassed the Zacks Consensus Estimate by 65%. Further, the metric improved 14.5% sequentially.
WESCO reported quarterly net sales of $4.93 billion, up 22% year over year and 1.7% on a sequential basis. Also, the figure beat the Zacks Consensus Estimate by 6.8%.
Top-line growth was primarily driven by a strong performance by three business units and contributions from expanded product and service offerings.
WESCO International, Inc. Price, Consensus and EPS Surprise
WESCO operates under three business units, namely Electrical & Electronic Solutions (EES), Communications & Security Solutions (CSS), and Utility & Broadband Solutions (UBS).
EES (42% of net sales): Sales in the segment were $2.09 billion for the first quarter, up 21.5% from the year-ago level. This was driven by solid momentum across non-residential construction, original equipment manufacturer and industrial businesses.
CSS (29% of net sales): Sales in the segment were $1.43 billion for the reported quarter, which increased 14.7% from the year-ago period’s level. Despite the global supply challenges, the segment performed well on strong momentum across security solutions and network infrastructure businesses.
UBS (29% of net sales): Sales in the segment were $1.41 billion for the first quarter and grew 31.6% from the year-ago reading. This was driven by robust utility plus broadband and integrated supply businesses.
Operating Details
Gross margin was 21.3% for the reported quarter, which expanded 120 basis points (bps) from the year-ago level.
Selling, general and administrative expenses were $718.1 million, up 12.8% from the year-ago reading. As a percentage of net sales, the figure contracted 119 bps year over year to 14.6%.
WESCO’s adjusted operating margin was 6.4%, which expanded 220 bps from the prior-year level.
Adjusted EBITDA as a percentage of sales was 7.4% for the reported quarter, which expanded 200 bps year over year.
Balance Sheet & Cash Flow
As of Mar 31, 2022, cash & cash equivalents were $201.5 million, down from $212.6 million on Dec 31, 2021.
Long-term debt was $4.84 billion at the first-quarter-end compared with $4.70 billion in the prior quarter.
WESCO used $171.9 million cash for operations in the first quarter compared with $105.5 million in the previous quarter.
For the first quarter, WESCO reported a negative free cash flow of $164.4 million.
Guidance
For 2022, management raised the sales growth rate to 12-15% from 5-8%. The Zacks Consensus Estimate for 2022 sales is pegged at $19.5 billion.
Adjusted EBITDA margin is lifted from 6.7-7% to 7.3-7.6%.
WESCO also hiked adjusted EPS from $11-$12 to $14-$15, indicating 40-50% growth from the year-ago reported figure. The Zacks Consensus Estimate for earnings is pegged at $11.54 per share.
Zacks Rank & Stocks to Consider
Currently, WESCO has a Zacks Rank #3 (Hold). Investors interested in the broader technology sector can consider stocks like Jabil (JBL - Free Report) , Jack Henry & Associates (JKHY - Free Report) , and Broadcom (AVGO - Free Report) . While Jabil currently sports a Zacks Rank #1 (Strong Buy), Jack Henry & Associates and Broadcom carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Jabil has gained 6.9% over a year. The long-term earnings growth rate for JBL is currently projected at 12%.
Jack Henry & Associates has gained 18.6% over a year. The long-term earnings growth rate for JKHY is currently projected at 17%.
Broadcom has gained 28.9% over a year. The long-term earnings growth rate for AVGO is currently projected at 15.6%.
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WESCO (WCC) Q1 Earnings & Sales Beat Estimates, Rise Y/Y
WESCO International, Inc. (WCC - Free Report) reported first-quarter 2022 adjusted earnings of $3.63 per share, reflecting 153.8% growth on a year-over-year basis. Also, the bottom line surpassed the Zacks Consensus Estimate by 65%. Further, the metric improved 14.5% sequentially.
WESCO reported quarterly net sales of $4.93 billion, up 22% year over year and 1.7% on a sequential basis. Also, the figure beat the Zacks Consensus Estimate by 6.8%.
Top-line growth was primarily driven by a strong performance by three business units and contributions from expanded product and service offerings.
WESCO International, Inc. Price, Consensus and EPS Surprise
WESCO International, Inc. price-consensus-eps-surprise-chart | WESCO International, Inc. Quote
Top-Line Details
WESCO operates under three business units, namely Electrical & Electronic Solutions (EES), Communications & Security Solutions (CSS), and Utility & Broadband Solutions (UBS).
EES (42% of net sales): Sales in the segment were $2.09 billion for the first quarter, up 21.5% from the year-ago level. This was driven by solid momentum across non-residential construction, original equipment manufacturer and industrial businesses.
CSS (29% of net sales): Sales in the segment were $1.43 billion for the reported quarter, which increased 14.7% from the year-ago period’s level. Despite the global supply challenges, the segment performed well on strong momentum across security solutions and network infrastructure businesses.
UBS (29% of net sales): Sales in the segment were $1.41 billion for the first quarter and grew 31.6% from the year-ago reading. This was driven by robust utility plus broadband and integrated supply businesses.
Operating Details
Gross margin was 21.3% for the reported quarter, which expanded 120 basis points (bps) from the year-ago level.
Selling, general and administrative expenses were $718.1 million, up 12.8% from the year-ago reading. As a percentage of net sales, the figure contracted 119 bps year over year to 14.6%.
WESCO’s adjusted operating margin was 6.4%, which expanded 220 bps from the prior-year level.
Adjusted EBITDA as a percentage of sales was 7.4% for the reported quarter, which expanded 200 bps year over year.
Balance Sheet & Cash Flow
As of Mar 31, 2022, cash & cash equivalents were $201.5 million, down from $212.6 million on Dec 31, 2021.
Long-term debt was $4.84 billion at the first-quarter-end compared with $4.70 billion in the prior quarter.
WESCO used $171.9 million cash for operations in the first quarter compared with $105.5 million in the previous quarter.
For the first quarter, WESCO reported a negative free cash flow of $164.4 million.
Guidance
For 2022, management raised the sales growth rate to 12-15% from 5-8%. The Zacks Consensus Estimate for 2022 sales is pegged at $19.5 billion.
Adjusted EBITDA margin is lifted from 6.7-7% to 7.3-7.6%.
WESCO also hiked adjusted EPS from $11-$12 to $14-$15, indicating 40-50% growth from the year-ago reported figure. The Zacks Consensus Estimate for earnings is pegged at $11.54 per share.
Zacks Rank & Stocks to Consider
Currently, WESCO has a Zacks Rank #3 (Hold). Investors interested in the broader technology sector can consider stocks like Jabil (JBL - Free Report) , Jack Henry & Associates (JKHY - Free Report) , and Broadcom (AVGO - Free Report) . While Jabil currently sports a Zacks Rank #1 (Strong Buy), Jack Henry & Associates and Broadcom carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Jabil has gained 6.9% over a year. The long-term earnings growth rate for JBL is currently projected at 12%.
Jack Henry & Associates has gained 18.6% over a year. The long-term earnings growth rate for JKHY is currently projected at 17%.
Broadcom has gained 28.9% over a year. The long-term earnings growth rate for AVGO is currently projected at 15.6%.