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WESCO (WCC) Q1 Earnings Miss Estimates, Sales Decline Y/Y
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WESCO International (WCC - Free Report) reported first-quarter 2023 adjusted earnings of $2.30 per share, down 38.7% year over year. Also, the bottom line lagged the Zacks Consensus Estimate by 6.5%.
Net sales of $5.35 billion fell 3.1% year over year. The figure beat the Zacks Consensus Estimate by 0.7%. Organic sales declined 3.2% year over year.
Top-Line Details
EES (39.2% of Net Sales): Sales in the segment were $2.09 billion, down 1.7% year over year. Organic sales declined 1.8% due to sluggish solar sales. Weak momentum among original equipment manufacturers (“OEM”) was a negative.
Nevertheless, the growing industrial business, owing to strength in automation, electrical equipment upgrades, and solid momentum in the oil and gas market, remained a plus.
CSS (31.3% of Net Sales): Sales in the segment were $1.67 billion, down 3.6% year over year. Organic sales dipped 3.7% year over year. Softness in the service provider market, which led to a decline in Enterprise Network Infrastructure, was concerning. The weak adoption of security solutions remained another negative.
Nevertheless, strong momentum in Wesco Data Center Solutions remained a plus.
UBS (29.5% of Net Sales): Sales in the segment were $1.58 billion, down 4.5% year over year. Organic sales dipped 4.6% year over year. Declining utility and broadband sales were concerning.
WESCO International, Inc. Price, Consensus and EPS Surprise
The gross margin contracted 60 basis points (bps) on a year-over-year basis to 21.3%.
Selling, general and administrative expenses were $829.4 million, up 1.4% year over year. As a percentage of net sales, the figure expanded 70 bps year over year to 14.6%.
The adjusted operating margin was 5.3%, which contracted 130 bps year over year.
Balance Sheet & Cash Flow
As of Mar 31, 2024, cash and cash equivalents were $984.1 million, up from $524.1 million as of Dec 31, 2023.
The long-term debt was $5.18 billion at the first-quarter end compared with $5.31 billion in the prior quarter.
The company generated $746.3 million in cash from operations compared with $69.3 million in the previous quarter.
For the first quarter, WESCO reported a free cash flow of $731.4 million.
Guidance
For 2024, the company revised guidance for sales growth downward from 1-4% to (2)-1%. Organic sales growth is expected to be flat to 3%. The Zacks Consensus Estimate for sales stands at $22.41 billion.
The adjusted EBITDA margin is expected between 7.5% and 7.9%.
The free cash flow is expected between $800 million and $1 billion.
Adjusted earnings are anticipated between $13.75 and $15.75 per share. The Zacks Consensus Estimate for the same is pegged at $14.14.
Zacks Rank & Stocks to Consider
WESCO has a Zacks Rank #5 (Strong Sell) at present.
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WESCO (WCC) Q1 Earnings Miss Estimates, Sales Decline Y/Y
WESCO International (WCC - Free Report) reported first-quarter 2023 adjusted earnings of $2.30 per share, down 38.7% year over year. Also, the bottom line lagged the Zacks Consensus Estimate by 6.5%.
Net sales of $5.35 billion fell 3.1% year over year. The figure beat the Zacks Consensus Estimate by 0.7%. Organic sales declined 3.2% year over year.
Top-Line Details
EES (39.2% of Net Sales): Sales in the segment were $2.09 billion, down 1.7% year over year. Organic sales declined 1.8% due to sluggish solar sales. Weak momentum among original equipment manufacturers (“OEM”) was a negative.
Nevertheless, the growing industrial business, owing to strength in automation, electrical equipment upgrades, and solid momentum in the oil and gas market, remained a plus.
CSS (31.3% of Net Sales): Sales in the segment were $1.67 billion, down 3.6% year over year. Organic sales dipped 3.7% year over year. Softness in the service provider market, which led to a decline in Enterprise Network Infrastructure, was concerning. The weak adoption of security solutions remained another negative.
Nevertheless, strong momentum in Wesco Data Center Solutions remained a plus.
UBS (29.5% of Net Sales): Sales in the segment were $1.58 billion, down 4.5% year over year. Organic sales dipped 4.6% year over year. Declining utility and broadband sales were concerning.
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 contracted 60 basis points (bps) on a year-over-year basis to 21.3%.
Selling, general and administrative expenses were $829.4 million, up 1.4% year over year. As a percentage of net sales, the figure expanded 70 bps year over year to 14.6%.
The adjusted operating margin was 5.3%, which contracted 130 bps year over year.
Balance Sheet & Cash Flow
As of Mar 31, 2024, cash and cash equivalents were $984.1 million, up from $524.1 million as of Dec 31, 2023.
The long-term debt was $5.18 billion at the first-quarter end compared with $5.31 billion in the prior quarter.
The company generated $746.3 million in cash from operations compared with $69.3 million in the previous quarter.
For the first quarter, WESCO reported a free cash flow of $731.4 million.
Guidance
For 2024, the company revised guidance for sales growth downward from 1-4% to (2)-1%. Organic sales growth is expected to be flat to 3%. The Zacks Consensus Estimate for sales stands at $22.41 billion.
The adjusted EBITDA margin is expected between 7.5% and 7.9%.
The free cash flow is expected between $800 million and $1 billion.
Adjusted earnings are anticipated between $13.75 and $15.75 per share. The Zacks Consensus Estimate for the same is pegged at $14.14.
Zacks Rank & Stocks to Consider
WESCO has a Zacks Rank #5 (Strong Sell) at present.
Some better-ranked stocks in the broader technology sector are Arista Networks (ANET - Free Report) , Applied Material (AMAT - Free Report) and Dell Technologies (DELL - 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.
Arista Networks’ shares have gained 11.6% year to date. ANET is set to report its first-quarter 2024 results on May 7.
Applied Material’s shares have gained 22.4% year to date. AMAT is set to report second-quarter fiscal 2024 results on May 16.
Dell Technologies’ shares have surged 62.1% year to date. DELL is set to report its first-quarter fiscal 2025 results on May 30.