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Wesco International Annual Report, Year Ended Dec 31, 2023

Filing Date
Filed February 20, 2024
Period End
December 31, 2023
Security
WCC
One revenue dollarkept$0.03
In the record · 2016–202610-K1210-Q338-K143

WCC filed 12 annual reports (10-K), 33 quarterly reports (10-Q) and 143 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Mar ’18Mar ’18
  2. Leadership change8-K · Jun ’20Jun ’20
  3. Material agreement8-K · Nov ’22Nov ’22
  4. Material agreement8-K · Sep ’26Sep ’26

01—Abstract

Summary

Summary of the 10-K filed February 20, 2024. Cited figures are marked; the original filing is the authoritative source.

Wesco International, Inc. ("Wesco"), headquartered in Pittsburgh, Pennsylvania, is a business-to-business distribution, logistics services and supply chain solutions provider operating through three segments: Electrical & Electronic Solutions (EES), Communications & Security Solutions (CSS) and Utility & Broadband Solutions (UBS).

In 2023, net sales rose 4.5% to $22.39 billiona from $21.42 billion, with organic sales growth of 3.2%, driven mainly by price changes of approximately 3% and the Rahi Systems acquisition, which contributed 2.1%. Income from operations declined 2.2% to $1.41 billion, and the operating margin fell to 6.3% from 6.7%, reflecting higher cost of goods sold as a percentage of net sales (78.4% versus 78.2%), higher SG&A, and digital transformation expenses. Net income attributable to common stockholders was $708.1 million, and diluted earnings per share were $13.54, compared with $15.33 in 2022.

Adjusted EBITDA was $1.71 billionb, down 1.2% year-over-year, and the financial leverage ratio improved to 2.8x from 2.9x. Cash flow and balance sheet activity were shaped by working capital changes. Operating cash flow was $493.2 million, compared with $11.0 million in 2022, as a $319.7 million decrease in accounts payable offset net income.

Total debt was $5.36 billionc at year-end, and the company had $736.0 million of available Revolving Credit Facility capacity and $75.0 million under its Receivables Facility. The company paid quarterly common dividends of $0.375 per share in 2023 and repurchased $75.0 million of common stock. Management expects to direct excess liquidity toward debt reduction, digital transformation, shareholder returns and potential acquisitions, and expects to refinance its $1.5 billion 7.125% Senior Notes due 2025 during 2024.

The filing also highlights ongoing risks, including exposure to foreign currency fluctuations (about 26% of sales from foreign subsidiaries), variable-rate borrowings sensitive to interest rates (a 100 basis point change would alter interest expense by $25.2 milliond), reliance on key suppliers (the ten largest accounted for approximately 27% of purchases), and cybersecurity threats. Management reports that the company's internal control over financial reporting was effective as of December 31, 2023, and PricewaterhouseCoopers LLP issued an unqualified opinion.

02—Key points

Key Highlights

  1. Net sales increased 4.5% to $22.39 billion in 2023, with organic sales growth of 3.2%, primarily from price increases of approximately 3% and the Rahi Systems acquisition contributing 2.1%.
  2. Income from operations decreased 2.2% to $1.41 billion, and the operating margin declined to 6.3% from 6.7%, due to higher cost of goods sold as a percentage of net sales and higher SG&A expenses.
  3. Diluted EPS was $13.54 versus $15.33 in 2022; adjusted diluted EPS was $14.60 versus $16.42, a decrease of 11.1%.
  4. Adjusted EBITDA was $1.71 billion, down 1.2% year-over-year; the financial leverage ratio improved to 2.8x from 2.9x.
  5. Operating cash flow rose to $493.2 million from $11.0 million, though it was reduced by a $319.7 million decrease in accounts payable.
  6. Total debt was $5.36 billion at December 31, 2023, with $736.0 million available under the Revolving Credit Facility; the company expects to refinance its 7.125% Senior Notes due 2025 during 2024.
  7. Shareholder returns included $76.6 million in common dividends, $57.4 million in Series A Preferred dividends, and $75.0 million in common stock repurchases during 2023.

03—One dollar

Follow one dollar

Of each $1.00 of revenue in FY2023, Wesco International kept $0.03.

  1. Revenue$22.39B100.0%
  2. Cost of revenue−$17.54B78.4%
  3. Gross profit$4.84B21.6%
  4. Operating costs−$3.44B15.4%
  5. Operating income$1.41B6.3%
  6. Interest, other & tax−$640.9M2.9%
  7. Net income$765.5M3.4%
Computed from 10-KFY2023filed February 20, 2024Computed from this filing’s revenue, gross profit, operating income and net income · right columngrey figure: share of revenue

Where FY2023 revenue went

$22.39B
  • Cost of revenue: $17.54B, 78% of revenue
  • SG&A: $3.26B, 15% of revenue
  • Net income: $765.5M, 3.4% of revenue
  • Other operating costs: $181.3M, 0.8% of revenue
  • Interest, other & tax: $640.9M, 2.9% of revenue

Kept 3.4% as net incomeNet income $765.5M · 3.4%

Full revenue history →

04—Financials

Financial Highlights

Figures from 10-KFY2023filed February 20, 2024
Revenue$22.39B21.6% Gross MarginNet Income$765.50M3.4% Net MarginEPS (Diluted)$13.54Total Assets$15.06BCash & Equivalents$524.10MFree Cash Flow$493.20M

Financial Statements

FY2023 against FY2022

Line itemFY2023FY2022Change
Revenue$22.39B$21.42B+4.5%
Cost of Revenue$17.54B$16.76B+4.7%
Gross Profit$4.84B$4.66B+3.9%
SG&A Expenses$3.26B$3.04B+7.0%
Operating Income$1.41B$1.44B−2.2%
Net Income$765.50M$860.50M−11.0%
EPS (Basic)$13.86$15.83−12.4%
EPS (Diluted)$13.54$15.33−11.7%
Shares Outstanding (Basic)51.10M50.70M+0.8%
Shares Outstanding (Diluted)52.30M52.40M−0.2%

05—Questions

Frequently Asked Questions

  1. How did Wesco perform financially in 2023?

    Net sales grew 4.5% to $22.39 billion, and organic sales grew 3.2%. Income from operations fell 2.2% to $1.41 billion, and net income attributable to common stockholders was $708.1 million, compared with $803.1 million in 2022. Diluted EPS was $13.54, versus $15.33 a year earlier.

  2. What drove the decline in profitability?

    Cost of goods sold rose to 78.4% of net sales from 78.2%, reflecting lower supplier volume rebates and a shift in sales mix. SG&A rose to 14.5% of net sales from 14.2%, with higher payroll costs from wage inflation and headcount growth, higher facility costs, and digital transformation expenses. Merger-related and integration costs of $55.4 million and restructuring costs of $16.7 million also affected results.

  3. How is the company's debt position and liquidity?

    Total debt was $5.36 billion at December 31, 2023, and the financial leverage ratio was 2.8x. The company had $736.0 million available under the Revolving Credit Facility, $75.0 million available under the Receivables Facility, and $250.1 million of available cash, giving liquidity of $1.1 billion. Approximately 53% of the debt portfolio was fixed rate.

  4. What are the main risks highlighted in the filing?

    Key risks include adverse global economic conditions, foreign currency fluctuations (about 26% of sales were from foreign subsidiaries), dependence on key suppliers (the ten largest accounted for approximately 27% of purchases), supply chain disruptions, product cost fluctuations, competition, cybersecurity threats, and the impact of interest rates on variable-rate debt, where a 100 basis point change would alter interest expense by $25.2 million.

  5. What capital allocation priorities did management outline?

    Management expects excess liquidity to be directed primarily at debt reduction, digital transformation initiatives, returning capital to shareholders through dividends and the existing share repurchase authorization, or potential acquisitions. The company expects approximately $100 million in 2024 capital expenditures and plans to refinance its 2025 Notes during 2024.

06—Continue

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