WESCO International (WCC) reported first-quarter 2025 adjusted earnings of $2.21 per share, down 3.9% year over year. The bottom line missed the Zacks Consensus Estimate by 0.90%.Net sales were $5.34 billion, down 0.1% year over year due to continued weakness in the utility business. However, the figure beat the Zacks Consensus Estimate by 2.10%. Organic sales increased 5.6% year over year.Following the release, WCC shares rose 0.97% in the pre-market trading as investors responded positively to robust orga ...

Our Purpose: To make the world smarter, happier, and richer. Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation. ...

Financial Performance - Net sales for Q1 2025 were $5,343.7 million, a slight decrease of 0.1% compared to $5,350.0 million in Q1 2024, with organic sales growth of 5.6%[112] - Income from operations decreased by 8.4% to $240.9 million in Q1 2025 compared to $263.0 million in Q1 2024[118] - Net income attributable to common stockholders was $104.0 million in Q1 2025, with earnings per diluted share of $2.10, compared to $101.4 million and $1.95 in Q1 2024[123] - Adjusted earnings per diluted share for Q1 2025 were $2.21, down from $2.30 in Q1 2024, a decrease of 3.9%[139] Expenses and Costs - The cost of goods sold increased by 0.1% to $4,218.1 million in Q1 2025, resulting in a cost of goods sold as a percentage of net sales of 78.9%[114] - Selling, general and administrative (SG&A) expenses rose to $836.3 million in Q1 2025, an increase of 0.8% from $829.4 million in Q1 2024[115] - Adjusted selling, general and administrative (SG&A) expenses for Q1 2025 were $829.0 million, up from $810.5 million in Q1 2024, reflecting a 2.8% increase[137] - Adjusted EBITDA for Q1 2025 was $310.7 million, down $29.7 million or 8.7% year-over-year, primarily due to a $6.3 million decrease in net sales and a $6.9 million increase in SG&A expenses[125] Segment Performance - EES reported net sales of $2,065.3 million for Q1 2025, a slight increase of $1.0 million from Q1 2024, with organic sales growth of 3.4% driven by price changes[127] - CSS net sales increased by $295.5 million or 17.3% year-over-year to $2,000.3 million, with organic sales growth of 18.1% driven by volume growth in data center solutions[129] - UBS reported net sales of $1,278.1 million for Q1 2025, a decrease of $302.8 million or 19.2%, with organic sales declining by 4.9% due to customer destocking[131] Debt and Financing - The company issued $800 million in senior notes to support the redemption of its Series A Preferred Stock, expected to create substantial net income and cash flow benefits[108] - The financial leverage ratio increased to 3.1x as of March 31, 2025, compared to 2.9x as of December 31, 2024[146] - Approximately 74% of the company's debt portfolio consisted of fixed-rate debt as of March 31, 2025[144] Cash Flow and Liquidity - Net cash provided by operating activities for Q1 2025 was $28.0 million, significantly lower than $746.3 million in Q1 2024[155] - As of March 31, 2025, the company had approximately $2.4 billion in liquidity, consisting of $1.7 billion in available borrowing capacity and $404.8 million in cash[140] - Cash used in investing activities for the first three months of 2025 was $54.4 million, which included $35.2 million paid to acquire Industrial Software Solutions[161] Shareholder Actions - The company repurchased $25.0 million of common stock in the first three months of 2025[162] - The company plans to direct excess liquidity towards share repurchases, dividends, debt reduction, and digital transformation initiatives[145] Taxation - The provision for income taxes increased to $36.1 million in Q1 2025, resulting in an effective tax rate of 23.4% compared to 21.0% in Q1 2024[122] Other Financial Metrics - Adjusted income from operations decreased to $248.2 million in Q1 2025 from $281.9 million in Q1 2024, representing a decline of 11.9%[139] - The total adjusted EBITDA margin for the company was 7.9% for CSS, 10.8% for UBS, and 6.9% for EES in Q1 2025[133]

Core Insights - Wesco International reported $5.34 billion in revenue for Q1 2025, a slight year-over-year decline of 0.1% and an EPS of $2.21, down from $2.30 a year ago [1] - The revenue exceeded the Zacks Consensus Estimate of $5.23 billion by 2.10%, while the EPS fell short of the consensus estimate of $2.23 by 0.90% [1] Financial Performance Metrics - Net Sales for Electrical & Electronic Solutions (EES) were $2.07 billion, matching the four-analyst average estimate, with a year-over-year decline of 1.6% [4] - Net Sales for Utility & Broadband Solutions (UBS) were $1.28 billion, below the four-analyst average estimate of $1.36 billion, reflecting a significant year-over-year decline of 19.2% [4] - Net Sales for Communications & Security Solutions (CSS) reached $2 billion, surpassing the $1.82 billion average estimate, with a year-over-year increase of 19.8% [4] Adjusted EBITDA Analysis - Adjusted EBITDA for Corporate was -$128.70 million, slightly worse than the average estimate of -$126.37 million [4] - Adjusted EBITDA for UBS was $138.30 million, below the four-analyst average estimate of $146.25 million [4] - Adjusted EBITDA for CSS was $158.50 million, exceeding the average estimate of $143.46 million, while EES reported $142.60 million, below the average estimate of $163.59 million [4] Stock Performance - Wesco International's shares returned +0.4% over the past month, contrasting with a -0.7% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - The company reported a 6% organic sales growth in Q1 2025, exceeding expectations, driven by strong performance in the data center business, which grew 70% year-over-year [4][14] - Gross margin remained stable sequentially and improved in the CSS segment, while adjusted EBITDA margin decreased by 60 basis points year-over-year [5][14] - Adjusted earnings per share were $2.21, down 4% from the prior year [15] Business Line Data and Key Metrics Changes - The data center business was a significant growth driver, up 70%, while OEM and broadband businesses experienced high single-digit growth [5][14] - EES organic sales increased by 3%, but reported sales were flat due to foreign exchange headwinds and one less workday [16] - CSS sales grew 18% year-over-year on an organic basis, with data center solutions representing nearly 40% of CSS sales [18][20] Market Data and Key Metrics Changes - The utility market continued to show weakness due to customer destocking and lower project activity, with expectations for recovery in the second half of the year [25][66] - Broadband business grew high single digits, particularly in Canada, while UBS backlog was down 13% year-over-year but up 13% sequentially [25][26] Company Strategy and Development Direction - The company is focused on debt reduction and stock repurchases while investing in tech-enabled business transformation and managing M&A opportunities [7][40] - The strategic focus includes addressing supply chain challenges and leveraging global scale to mitigate tariff impacts [9][33] - The company reaffirmed its full-year outlook, increasing sales growth expectations for the data center business from mid-teens to about 20% [34][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of the utility business in the second half of the year, supported by ongoing electrification and grid modernization trends [25][66] - The company acknowledged uncertainties related to tariffs and their potential impact on the global economy but emphasized control over internal initiatives [8][39] - Management noted that while there is a risk of demand destruction due to higher prices, they believe pricing benefits from tariffs could mitigate this risk [108] Other Important Information - The company issued $800 million in senior notes to redeem preferred stock and strengthen its balance sheet, with an estimated annualized net income benefit of approximately $30 million [6][29] - Free cash flow for Q1 was $9 million, exceeding expectations, with a focus on reducing inventory as a percentage of sales [26][27] Q&A Session Summary Question: Clarification on revised outlook regarding tariffs - Management confirmed that no tariff-related price increases were incorporated into the outlook, which assumes organic growth rates of 2.5% to 6.5% [46][48] Question: Supplier price increases and surcharges - Management noted that supplier price increases in Q1 were down 15% year-over-year, but there has been a significant increase in price notifications in Q2 [59][60] Question: Confidence in utility market recovery - Management indicated that they have not seen significant changes in the utility market and expect a return to growth in the second half of the year based on customer activity levels [66][68] Question: Data center growth and customer engagement - Management highlighted strong momentum in the data center business, with customers increasing their scope of supply and no reduction in booking rates [76][78] Question: Pricing dynamics across business units - Management explained that CSS has seen less impact from pricing increases compared to EES, which is more affected by tariffs and supplier pricing dynamics [95][98]

WESCO International (WCC) Q1 2025 Earnings Call May 01, 2025 09:00 AM ET Company Participants Scott Gaffner - Senior Vice President-Investor RelationsJohn Engel - Chairman, President & CEODavid Schulz - EVP & CFOStephen Volkmann - Managing DirectorNigel Coe - Managing DirectorDeane Dray - Managing DirectorSam Darkatsh - Managing Director Conference Call Participants David Manthey - Senior Research AnalystPatrick Baumann - Analyst Operator note that this event is being recorded. I will now hand the call over ...

Group 1: Earnings Performance - Wesco International reported quarterly earnings of $2.21 per share, missing the Zacks Consensus Estimate of $2.23 per share, and down from $2.30 per share a year ago [1] - The earnings surprise for this quarter was -0.90%, and the company had a previous quarter surprise of -1.86% with actual earnings of $3.16 per share against an expectation of $3.22 [2] - Over the last four quarters, Wesco has surpassed consensus EPS estimates only once [2] Group 2: Revenue Performance - The company posted revenues of $5.34 billion for the quarter, exceeding the Zacks Consensus Estimate by 2.10%, but slightly down from $5.35 billion year-over-year [3] - Wesco has topped consensus revenue estimates three times over the last four quarters [3] Group 3: Stock Performance and Outlook - Wesco International shares have declined approximately 10% since the beginning of the year, compared to a -5.3% decline in the S&P 500 [4] - The company's earnings outlook is mixed, with a current Zacks Rank of 3 (Hold), indicating expected performance in line with the market [7] - The current consensus EPS estimate for the upcoming quarter is $3.40 on revenues of $5.62 billion, and for the current fiscal year, it is $13.25 on revenues of $22.27 billion [8] Group 4: Industry Context - The Electronics - Parts Distribution industry, to which Wesco belongs, is currently in the top 38% of over 250 Zacks industries, suggesting a favorable industry outlook [9]

Financial Performance - First quarter 2025 reported net sales were $5,343.7 million, down 0.1% year-over-year, with organic sales growth of 5.6%[6] - Diluted earnings per share (EPS) for the first quarter was $2.10, reflecting a 7.7% increase year-over-year; adjusted diluted EPS was $2.21[6] - Net income for the three months ended March 31, 2025, was $118.3 million, a slight increase from $116.1 million in the same period of 2024[26] - Adjusted net income attributable to common stockholders for the three months ended March 31, 2025, was $109.6 million, a decrease of 7.9% from $119.2 million in the same period of 2024[35] - Net income attributable to common stockholders for the twelve months ended March 31, 2025, was $662.8 million, slightly up from $660.2 million for the previous year[42] Sales and Revenue - Data center sales experienced significant growth of 70% in the first quarter[6] - Organic sales growth for the total net sales was 5.6% for the three months ended March 31, 2025, despite a reported decline of 0.1%[30] - Preliminary sales per workday in April were up 7% compared to the prior year, indicating continued positive momentum[4] Cash Flow and Liquidity - Operating cash flow for the first quarter was $28 million, a decrease of 96.2% compared to the previous year[6] - Free cash flow generation in the first quarter was $9.4 million, a decline of 98.7% year-over-year[7] - The company reported a net cash provided by operating activities of $28.0 million for the three months ended March 31, 2025, a significant decrease from $746.3 million in the same period of 2024[26] - Free cash flow for the three months ended March 31, 2025, was $9.4 million, a significant decrease from $731.4 million for the same period in 2024, representing a decline of approximately 99%[45] - Cash flow provided by operations for the three months ended March 31, 2025, was $28.0 million, down from $746.3 million in the prior year[45] Expenses and Margins - Gross margin for the first quarter was 21.1%, down 10 basis points sequentially and 20 basis points year-over-year[6] - Adjusted selling, general and administrative expenses were $829.0 million for the three months ended March 31, 2025, representing 15.5% of net sales, compared to 15.1% in 2024[33] - Total Adjusted EBITDA for the three months ended March 31, 2025, was $310.7 million, compared to $340.4 million in Q1 2024, indicating a decrease of 8.7%[38] - Adjusted EBITDA margin for Q1 2025 was 5.8%, down from 6.4% in Q1 2024, showing a decline of 0.6 percentage points[38] - Adjusted earnings per diluted share for Q1 2025 was $2.21, down from $2.30 in Q1 2024, reflecting a decline of 3.9%[35] Debt and Financial Position - Long-term debt increased to $5,136.6 million as of March 31, 2025, compared to $5,045.5 million as of December 31, 2024, reflecting a rise of 1.8%[24] - Total debt as of March 31, 2025, increased to $5,215.5 million from $5,112.1 million as of December 31, 2024, reflecting a rise of about 2%[42] - The financial leverage ratio increased to 3.1 as of March 31, 2025, compared to 2.9 as of December 31, 2024, indicating a higher reliance on debt[42] - Interest expense, net for Q1 2025 was $86.3 million, a slight decrease from $94.4 million in Q1 2024, reflecting a reduction of 8.6%[35] - The company reported a net interest expense of $356.9 million for the twelve months ended March 31, 2025, down from $364.9 million in the previous year[42] Asset Management - Total assets increased to $15,515.1 million as of March 31, 2025, compared to $15,061.4 million as of December 31, 2024, reflecting a growth of 3.0%[24] - Total current liabilities rose to $4,035.5 million as of March 31, 2025, from $3,804.0 million as of December 31, 2024, indicating an increase of 6.1%[24] - The company experienced a change in trade receivables, net, of $(188.7) million for the three months ended March 31, 2025, compared to $(116.1) million in 2024, indicating a worsening in cash flow management[26] Corporate Actions - The company plans to redeem preferred stock in June using proceeds from $800 million of notes issued during the first quarter[5] - The company issued $800 million in Senior Notes due 2033, intending to use the proceeds to redeem outstanding preferred stock and repay a portion of its revolving credit facility[26] - Preferred stock dividends remained constant at $14.4 million for both Q1 2025 and Q1 2024[35] - The company experienced a restructuring cost of $1.1 million in Q1 2025, compared to $8.0 million in Q1 2024[38] - Restructuring costs for the twelve months ended March 31, 2025, decreased to $5.1 million from $12.1 million in the previous year, indicating a reduction of approximately 58%[42] Digital Transformation - Digital transformation costs included in the adjusted EBITDA for Q1 2025 amounted to $6.2 million[38] - Digital transformation costs for the twelve months ended March 31, 2025, amounted to $25.0 million, slightly up from $24.9 million in the previous year[42]

Core Insights - Wesco International reported a 6% organic growth in sales for Q1 2025, driven by a 70% increase in data center sales and high single-digit growth in Broadband and OEM businesses [2][10]. - The company reaffirmed its full-year outlook for 2025, citing positive momentum and a strong opportunity pipeline [3][10]. Financial Performance - Net sales for Q1 2025 were $5,343.7 million, a slight decrease of 0.1% compared to $5,350.0 million in Q1 2024 [4][10]. - Organic sales growth was reported at 5.6%, reflecting volume growth in the Communication and Security Solutions (CSS) segment, partially offset by a decline in the Utility Business Solutions (UBS) segment [5][24]. - Gross profit for Q1 2025 was $1,125.6 million, with a gross margin of 21.1%, down from 21.3% in the previous year [4][26]. - Net income attributable to common stockholders increased to $104.0 million, or $2.10 per diluted share, representing a 7.7% increase year-over-year [4][10]. Cash Flow and Capital Management - Free cash flow for Q1 2025 was significantly lower at $9.4 million compared to $731.4 million in Q1 2024, primarily due to changes in working capital [4][10]. - The company issued $800 million in notes to redeem preferred stock, which is expected to strengthen the balance sheet and improve cash flow and earnings per share [3][10]. Segment Performance - The CSS segment experienced an organic sales growth of 18.1%, while the UBS segment saw a decline of 4.9% [24]. - The Electrical and Electronic Solutions (EES) segment reported a 3.4% organic sales growth [24]. Operational Highlights - The company noted a stable gross margin on a sequential basis compared to Q4 2024, with initial improvements in Communication and Security Solutions [2][3]. - SG&A expenses increased to $836.3 million, reflecting higher operational and transportation costs [4][7]. Market Outlook - Wesco remains focused on cross-selling activities and operational improvements amid economic uncertainty, with confidence in outperforming market trends driven by AI-driven data centers and electrification [3][10].

Group 1 - Wesco International will hold its first quarter 2025 earnings conference call on May 1 at 9:00 a.m. ET [1] - The company reported approximately $22 billion in annual sales for 2024 [3] - Wesco operates over 700 sites in around 50 countries, providing a local presence and a global network for customers [3] Group 2 - Wesco will participate in several upcoming conferences, including the Oppenheimer Industrial Growth Conference on May 7 and the Goldman Sachs Leveraged Finance and Credit conference on May 29 [2] - The company employs approximately 20,000 people and partners with premier suppliers in the industry [3] - Wesco offers a diverse portfolio of products and services, including Electrical and Electronic Solutions, Communications and Security Solutions, and Utility and Broadband Solutions [3]