WESCO Q4: EPS Miss, Flat Sales, Effective Working Capital Management And More

WESCO International, Inc. (WCC) reported its fourth-quarter and full-year 2024 results, with mixed performance across various metrics. The company's earnings per share (EPS) missed analyst estimates, while sales remained relatively flat. However, WESCO demonstrated effective working capital management and showed progress in strategic initiatives.



Fourth-quarter highlights:

* Adjusted EPS of $3.16, missing the street view of $3.23
* Quarterly sales of $5.50 billion, outpacing the analyst consensus estimate of $5.41 billion
* Net sales increased by 0.5% year-over-year, with organic sales rising 2.4% year-over-year and 1.7% sequentially
* Gross margin of 21.2%, down from 21.4% in the previous year
* Operating profit of $301.1 million, a decrease of 4.7% year-over-year
* Effective tax rate of 20.8%, down from 31.5% in the prior year
* Net income attributable to common stockholders increased by 18.3% year-over-year



Full-year highlights:

* Net sales decreased by 2.5% to $21.8 billion
* Full-year EPS was $13.05, below the estimated $13.16
* Operating cash flow of $1.1 billion, significantly up from $493 million in 2023
* Record operating profit of $1.4 billion; operating margin of 6.7%
* Record adjusted EBITDA of $1.7 billion, up 47% year-over-year; record adjusted EBITDA margin of 8.1%, up 160 basis points year-over-year

Strategic initiatives and outlook:

WESCO's Chairman, President, and CEO, John Engel, highlighted the company's strategic initiatives and outlook for 2025:

* Organic sales growth of 2.5% to 6.5% and operating margin expansion, as all three business units deliver profitable growth
* Free cash flow generation of $600 million to $800 million
* A 10% increase in the common stock dividend to $1.82 per share while continuing its share buyback program
* A strong pipeline of strategic acquisitions aligned with the goal of expanding service offerings to customers



WESCO's focus on digital transformation and strategic acquisitions aligns with its long-term growth strategy, with expected impacts on revenue and earnings. The company's strong growth trajectory in the data center solutions business, along with its effective working capital management and progress in strategic initiatives, positions WESCO for future success. However, continued challenges in utility and broadband sectors, pricing pressures, and increased expenses could hinder the company's revenue growth and pressure margins. Investors should monitor WESCO's progress in overcoming these challenges and capitalizing on secular trends to enhance revenue and earnings growth.