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WESCO International, Inc. (WCC - Free Report) reported fourth-quarter 2022 adjusted earnings of $4.13 per share, reflecting year-over-year growth of 30%. Also, the bottom line surpassed the Zacks Consensus Estimate by 8.4%.
Quarterly net sales of $5.56 billion rose 14.6% year over year and beat the Zacks Consensus Estimate of $5.37 billion.
The top-line growth was driven by strong demand environment, solid execution of cross-sell program and improving supply-chain condition. Further, strong performance across all business units contributed well.
Top-Line Details
WESCO operates under three business units, namely Electrical & Electronic Solutions (EES), Communications & Security Solutions (CSS) and Utility & Broadband Solutions (UBS).
EES (39% of net sales): Sales in the segment were $2.2 billion, up 8.7% from the year-ago period’s level. This was driven by solid momentum across WESCO’s non-residential construction business, owing to rising investments in electrification and renewables. Further, strength across industrial business and original equipment manufacturers driven by growing momentum among automation, petrochem, and metals and mining, was a positive.
CSS (32% of net sales): Sales in the segment were $1.8 billion, up 16.4% from the year-ago period’s level. This was attributed to the well-performing network infrastructure business and strong momentum among multinational customers for professional A/V projects and in-building wireless applications.
UBS (29% of net sales): Sales in the segment were $1.6 billion, up 21.2% from the year-ago period’s number. This was driven by solid connectivity demand and rural broadband expansion, resulting in growth in the broadband communication business. Further, growing investments in electrification, green energy and grid modernization contributed well.
WESCO International, Inc. Price, Consensus and EPS Surprise
The gross margin expanded 110 basis points (bps) from the year-ago period’s level to 21.9%.
Selling, general and administrative expenses were $793.1 million, up 8.1% from the year-ago quarter’s reading. As a percentage of net sales, the figure contracted 80 bps year over year to 14.1%.
Adjusted operating margin was 7.1%, which expanded 150 bps from the prior-year quarter’s reading.
Balance Sheet & Cash Flow
As of Dec 31, 2022, cash and cash equivalents were $527.4 million, up from $234.1 million as of Sep 30, 2022.
Long-term debt was $5.3 billion at the fourth-quarter end compared with $5.2 billion in the prior quarter.
The company generated $422 million of cash from operations against $106.1 million of cash used in operations in the previous quarter.
For the fourth quarter, WESCO reported a free cash flow of $399 million.
Guidance
For 2023, management expects sales growth in the band of 6-9% on a reported basis.
Adjusted EBITDA margin is anticipated between 8.1% and 8.4%.
Adjusted earnings per share is projected in the range of $16.80-$18.30. The Zacks Consensus Estimate for earnings is pegged at $16.74.
Also, free cash flow is expected in the band of $600-$800 million.
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WESCO (WCC) Q4 Earnings Beat Estimates, Sales Increase Y/Y
WESCO International, Inc. (WCC - Free Report) reported fourth-quarter 2022 adjusted earnings of $4.13 per share, reflecting year-over-year growth of 30%. Also, the bottom line surpassed the Zacks Consensus Estimate by 8.4%.
Quarterly net sales of $5.56 billion rose 14.6% year over year and beat the Zacks Consensus Estimate of $5.37 billion.
The top-line growth was driven by strong demand environment, solid execution of cross-sell program and improving supply-chain condition. Further, strong performance across all business units contributed well.
Top-Line Details
WESCO operates under three business units, namely Electrical & Electronic Solutions (EES), Communications & Security Solutions (CSS) and Utility & Broadband Solutions (UBS).
EES (39% of net sales): Sales in the segment were $2.2 billion, up 8.7% from the year-ago period’s level. This was driven by solid momentum across WESCO’s non-residential construction business, owing to rising investments in electrification and renewables. Further, strength across industrial business and original equipment manufacturers driven by growing momentum among automation, petrochem, and metals and mining, was a positive.
CSS (32% of net sales): Sales in the segment were $1.8 billion, up 16.4% from the year-ago period’s level. This was attributed to the well-performing network infrastructure business and strong momentum among multinational customers for professional A/V projects and in-building wireless applications.
UBS (29% of net sales): Sales in the segment were $1.6 billion, up 21.2% from the year-ago period’s number. This was driven by solid connectivity demand and rural broadband expansion, resulting in growth in the broadband communication business. Further, growing investments in electrification, green energy and grid modernization contributed well.
WESCO International, Inc. Price, Consensus and EPS Surprise
WESCO International, Inc. price-consensus-eps-surprise-chart | WESCO International, Inc. Quote
Operating Details
The gross margin expanded 110 basis points (bps) from the year-ago period’s level to 21.9%.
Selling, general and administrative expenses were $793.1 million, up 8.1% from the year-ago quarter’s reading. As a percentage of net sales, the figure contracted 80 bps year over year to 14.1%.
Adjusted operating margin was 7.1%, which expanded 150 bps from the prior-year quarter’s reading.
Balance Sheet & Cash Flow
As of Dec 31, 2022, cash and cash equivalents were $527.4 million, up from $234.1 million as of Sep 30, 2022.
Long-term debt was $5.3 billion at the fourth-quarter end compared with $5.2 billion in the prior quarter.
The company generated $422 million of cash from operations against $106.1 million of cash used in operations in the previous quarter.
For the fourth quarter, WESCO reported a free cash flow of $399 million.
Guidance
For 2023, management expects sales growth in the band of 6-9% on a reported basis.
Adjusted EBITDA margin is anticipated between 8.1% and 8.4%.
Adjusted earnings per share is projected in the range of $16.80-$18.30. The Zacks Consensus Estimate for earnings is pegged at $16.74.
Also, free cash flow is expected in the band of $600-$800 million.
Zacks Rank & Stocks to Consider
Currently, WESCO has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Computer & Technology sector are Agilent Technologies (A - Free Report) , Arista Networks (ANET - Free Report) and Garmin (GRMN - Free Report) , all carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Agilent has gained 8.4% in the past year. A’s long-term earnings growth rate is currently projected at 10%.
Arista Networks has gained 6.1% in the past year. The long-term earnings growth rate for ANET is currently projected at 17.5%.
Garmin has lost 24.6% in the past year. The long-term earnings growth rate for GRMN is currently projected at 5.6%.