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WESCO International, Inc. (WCC - Free Report) reported third-quarter 2022 adjusted earnings of $4.49 per share, reflecting year-over-year growth of 64%. Also, the bottom line surpassed the Zacks Consensus Estimate by 3.2%.
WCC reported quarterly net sales of $5.45 billion, up 15.2% year over year. However, the figure missed the Zacks Consensus Estimate of $5.54 billion.
Top-line growth was driven by strong momentum across all three business units of WCC.
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 (41% of net sales): Sales in the segment were $2.23 billion for the third quarter, up 12.7% from the year-ago period’s level. This was driven by solid momentum across WESCO’s non-residential construction business. Further, strength across industrial business and original equipment manufacturers drove the top line within the segment. Also, price inflation remained a tailwind for the segment.
CSS (29% of net sales): Sales in the segment were $1.6 billion for the reported quarter, up 7.6% from the year-ago period’s level. This was attributed to the well-performing network infrastructure business and strong demand for structured cabling.
UBS (30% of net sales): Sales in the segment were $1.61 billion for the reported quarter, up 28% from the year-ago period’s number. This was driven by an expanding integrated supply business. Further, solid connectivity demand and rural broadband expansion led to growth in the broadband communication business. Also, benefits from investments in grid modernization, electrification and green energy advanced the utility business.
Operating Details
The gross margin was 22.1% for the reported quarter, which expanded 80 basis points (bps) from the year-ago period’s level.
Selling, general and administrative expenses were $760.2 million, up 5.3% from the year-ago quarter’s reading. As a percentage of net sales, the figure contracted 130 bps year over year to 14.1%.
WESCO’s adjusted operating margin was 7.6%, which expanded 170 bps from the prior-year quarter’s reading.
Balance Sheet & Cash Flow
As of Sep 30, 2022, cash and cash equivalents were $234.1 million, down from $236.8 million as of Jun 30, 2022.
Long-term debt was $5.2 billion at the third-quarter end compared with $5.04 billion in the prior quarter.
WESCO used $106.1 million cash in operations in the third quarter compared with $132.6 million in the previous quarter.
For the third quarter, WESCO reported a negative free cash flow of $127.6 million.
Guidance
For 2022, management lowered its guidance for sales growth from 16-18% to 15-17%. The Zacks Consensus Estimate for 2022 sales is pegged at $21.35 billion.
WCC raised the guidance for adjusted EBITDA margin from 7.8-8% to 7.9-8%.
WESCO narrowed the guidance for adjusted EPS from $15.60-$16.40 to $15.80-$16.20, indicating 58-62% growth from the year-ago reported figure. The Zacks Consensus Estimate for earnings is pegged at $16.04 per share.
US Foods is set to report third-quarter 2022 results on Nov 10. The Zacks Consensus Estimate for USFD’s earnings is pegged at 59 cents per share, suggesting an increase of 22.9% from the prior-year period’s reported figure. USFD has lost 17.4% in the year-to-date period. Its long-term earnings growth rate is currently projected at 20%.
The Trade Desk is scheduled to release third-quarter 2022 results on Nov 9. The Zacks Consensus Estimate for TTD’s earnings is pegged at 24 cents per share, suggesting an increase of 33.3% from the prior-year quarter’s reported figure. TTD has lost 46.3% in the year-to-date period. TTD’s long-term earnings growth rate is currently projected at 24%.
Tencent Music is scheduled to release third-quarter 2022 results on Nov 15. The Zacks Consensus Estimate for TME’s earnings is pegged at 11 cents per share, suggesting an increase of 22.2% from the prior-year quarter’s reported figure. TME has lost 44.7% in the year-to-date period. TME’s long-term earnings growth rate is currently projected at 17.9%.
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WESCO's (WCC) Q3 Earnings Beat Estimates, Sales Rise Y/Y
WESCO International, Inc. (WCC - Free Report) reported third-quarter 2022 adjusted earnings of $4.49 per share, reflecting year-over-year growth of 64%. Also, the bottom line surpassed the Zacks Consensus Estimate by 3.2%.
WCC reported quarterly net sales of $5.45 billion, up 15.2% year over year. However, the figure missed the Zacks Consensus Estimate of $5.54 billion.
Top-line growth was driven by strong momentum across all three business units of WCC.
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 (41% of net sales): Sales in the segment were $2.23 billion for the third quarter, up 12.7% from the year-ago period’s level. This was driven by solid momentum across WESCO’s non-residential construction business. Further, strength across industrial business and original equipment manufacturers drove the top line within the segment. Also, price inflation remained a tailwind for the segment.
CSS (29% of net sales): Sales in the segment were $1.6 billion for the reported quarter, up 7.6% from the year-ago period’s level. This was attributed to the well-performing network infrastructure business and strong demand for structured cabling.
UBS (30% of net sales): Sales in the segment were $1.61 billion for the reported quarter, up 28% from the year-ago period’s number. This was driven by an expanding integrated supply business. Further, solid connectivity demand and rural broadband expansion led to growth in the broadband communication business. Also, benefits from investments in grid modernization, electrification and green energy advanced the utility business.
Operating Details
The gross margin was 22.1% for the reported quarter, which expanded 80 basis points (bps) from the year-ago period’s level.
Selling, general and administrative expenses were $760.2 million, up 5.3% from the year-ago quarter’s reading. As a percentage of net sales, the figure contracted 130 bps year over year to 14.1%.
WESCO’s adjusted operating margin was 7.6%, which expanded 170 bps from the prior-year quarter’s reading.
Balance Sheet & Cash Flow
As of Sep 30, 2022, cash and cash equivalents were $234.1 million, down from $236.8 million as of Jun 30, 2022.
Long-term debt was $5.2 billion at the third-quarter end compared with $5.04 billion in the prior quarter.
WESCO used $106.1 million cash in operations in the third quarter compared with $132.6 million in the previous quarter.
For the third quarter, WESCO reported a negative free cash flow of $127.6 million.
Guidance
For 2022, management lowered its guidance for sales growth from 16-18% to 15-17%. The Zacks Consensus Estimate for 2022 sales is pegged at $21.35 billion.
WCC raised the guidance for adjusted EBITDA margin from 7.8-8% to 7.9-8%.
WESCO narrowed the guidance for adjusted EPS from $15.60-$16.40 to $15.80-$16.20, indicating 58-62% growth from the year-ago reported figure. The Zacks Consensus Estimate for earnings is pegged at $16.04 per share.
Zacks Rank & Stocks to Consider
Currently, WESCO has a Zacks Rank #3 (Hold).
Investors interested in the broader Zacks Computer & Technology sector can consider some better-ranked stocks like US Foods (USFD - Free Report) , The Trade Desk (TTD - Free Report) and Tencent Music Entertainment Group (TME - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
US Foods is set to report third-quarter 2022 results on Nov 10. The Zacks Consensus Estimate for USFD’s earnings is pegged at 59 cents per share, suggesting an increase of 22.9% from the prior-year period’s reported figure. USFD has lost 17.4% in the year-to-date period. Its long-term earnings growth rate is currently projected at 20%.
The Trade Desk is scheduled to release third-quarter 2022 results on Nov 9. The Zacks Consensus Estimate for TTD’s earnings is pegged at 24 cents per share, suggesting an increase of 33.3% from the prior-year quarter’s reported figure. TTD has lost 46.3% in the year-to-date period. TTD’s long-term earnings growth rate is currently projected at 24%.
Tencent Music is scheduled to release third-quarter 2022 results on Nov 15. The Zacks Consensus Estimate for TME’s earnings is pegged at 11 cents per share, suggesting an increase of 22.2% from the prior-year quarter’s reported figure. TME has lost 44.7% in the year-to-date period. TME’s long-term earnings growth rate is currently projected at 17.9%.