WESCO International WCC has reported third-quarter 2024 adjusted earnings of $3.58 per share, down 20.3% year over year. The bottom line beat the Zacks Consensus Estimate by 11.18%.
WCC’s earnings beat the Zacks Consensus Estimate in one of the trailing four quarters, missing the same in the remaining three quarters, the average negative surprise being 8.34%.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Net sales of $5.489 billion fell 2.7% year over year. The figure beat the Zacks Consensus Estimate by 0.55%. Organic sales declined 0.6% year over year.
The company’s shares gained 1.57% in the pre-market trading. WCC shares have returned 10.4% year to date, underperforming the Zacks Computer & Technology sector’s appreciation of 27%.
However, an unimpressive fourth-quarter 2024 guidance reflects weak prospects for WESCO.
WESCO International, Inc. Price, Consensus and EPS Surprise
WESCO International, Inc. price-consensus-eps-surprise-chart | WESCO International, Inc. Quote
WCC’s Top-Line Details
The EES Segment (39.2% of Net Sales): Sales in the segment were $2.15 billion, down 1.8% year over year. Organic sales declined 2.9% year over year.
CSS (35.6% of Net Sales): Sales in the segment were $1.96 billion, up 10% year over year. Organic sales increased 8.5% on a year-over-year basis.
UBS (25.2% of Net Sales): Sales in the segment were $1.38 billion, down 17.5% year over year. Organic sales declined 7.2% year over year.
Large Contract Wins Enhance WESCO’s Prospects
WCC secured a $50-million contract in the EES Segment for a Canadian Hospital Project, leveraging strong client relationships and project management expertise.
WESCO’s CSS segment secured a four-year, $200-million contract to supply high-speed fiber, cable management, racks, accessories and deployment services for a data center project in South America.
The UBS segment secured a five-year, $2-billion contract extension with a North America utility to deliver supply-chain services for grid modernization, operational support and emergency response.
WCC Gross Margin Expands Y/Y, Operating Margin Contracts
The third-quarter 2024 gross margin was 22.1%, marking a year-over-year increase of 50 basis points (bps), driven by the Integrated Supply divestiture.
The adjusted EBITDA margin of 7.3% declined 80 bps year over year.
Selling, general and administrative expenses were $825.2 million, up 6.4% year over year. As a percentage of net sales, the figure increased 130 bps year over year to 15%.
The adjusted operating margin was 6.2%, which contracted 90 bps year over year.
Balance Sheet & Cash Flow
As of Sept. 30, 2024, cash and cash equivalents were $706.8 million, down from $716.5 million as of June 30, 2024.
The long-term debt was $5.01 billion at the third-quarter end compared with $5.2 billion in the prior quarter.
The company generated $302.1 million in cash from operations in the reported quarter compared with $223.8 million in the previous quarter.
For the third quarter, WESCO reported a free cash flow of $279.5 million compared with the previous quarter’s $234.1 million.
WESCO Retains 2024 Guidance
For 2024, WESCO expects organic sales between a decline of 1.5% and growth of 0.5%. Sales on a reported basis are expected to be $21.6-$22 billion.
WESCO expects the adjusted EBITDA margin between 7% and 7.3%.
The adjusted diluted EPS is expected between $12 and $13 per share.
The free cash flow is expected between $800 million and $1 billion.
Zacks Rank & Stocks to Consider
WESCO carries a Zacks Rank #5 (Strong Sell) at present, which implies that investors should stay away from the stock for the time being.
Arista Networks ANET, Cirrus Logic CRUS and Fair Isaac FICO are some better-ranked stocks in the broader sector, 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 64.1% year to date. ANET is set to report third-quarter 2024 results on Nov. 7.
Cirrus Logic shares have gained 32% year to date. CRUS is set to report second-quarter fiscal 2025 results on Nov. 4.
Fair Isaac shares have risen 71.2% year to date. FICO is set to report third-quarter 2024 results on Nov. 6.
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WESCO International, Inc. (WCC) : Free Stock Analysis Report
Cirrus Logic, Inc. (CRUS) : Free Stock Analysis Report
Fair Isaac Corporation (FICO) : Free Stock Analysis Report
Arista Networks, Inc. (ANET) : Free Stock Analysis Report
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