01—Abstract
Summary
Summary of the 10-Q filed October 31, 2024. Cited figures are marked; the original filing is the authoritative source.
Wesco International, Inc. reported third-quarter 2024 net sales of $5.49 billiona, down 2.7% from $5.64 billion a year earlier, with organic sales declining 0.6% as volume fell roughly 2% and price contributed roughly 2%.
Income from operations was $335.6 millionb versus $380.5 million, and net income attributable to common stockholders was $189.9 million, or $3.81 per diluted share, compared with $4.20 a year earlier. Adjusted EBITDA was $398.1 million versus $457.0 million, and adjusted diluted EPS was $3.58 versus $4.49. Results were weighed down by volume declines in the UBS and EES segments, partly offset by growth in CSS, which rose 10.0% reported.
For the first nine months of 2024, net sales were $16.3 billionc, down 3.5%, and operating cash flow improved to $824.6 million from $423.9 million, driven largely by a $478.0 million increase in accounts payable. The company sold its Wesco Integrated Supply (WIS) business on April 1, 2024 for total consideration of $334.2 million, recording a $122.2 million gain for the nine months. It also refinanced its $1.5 billion 7.125% Senior Notes due 2025 with new $900 million 6.375% notes due 2029 and $850 million 6.625% notes due 2032, and repurchased $375.0 million of common stock in the period.
At September 30, 2024, total debt was $5,068.5 milliond, cash was $706.8 million, and the financial leverage ratio was 2.9x. The company reported $1.2 billion of available Revolving Credit Facility capacity and $100.0 million under its Receivables Facility. Subsequent to quarter-end, on October 30, 2024, Wesco agreed to acquire Ascent, LLC, a data center services provider, for a base purchase price of $185.0 million, with closing expected in the fourth quarter of 2024.
02—Key points
Key Highlights
- Q3 2024 net sales of $5.49 billion, down 2.7% year over year; organic sales declined 0.6%, with CSS up 8.5% organically and UBS down 7.2%.
- Q3 2024 diluted EPS of $3.81 versus $4.20; adjusted diluted EPS of $3.58 versus $4.49 in the prior-year quarter.
- Nine-month operating cash flow of $824.6 million, up from $423.9 million, supported by a $478.0 million increase in accounts payable.
- Sale of the WIS business completed April 1, 2024 for total consideration of $334.2 million, generating a $122.2 million gain for the nine months.
- Refinanced the $1.5 billion 7.125% Senior Notes due 2025 through issuance of $900 million 6.375% notes due 2029 and $850 million 6.625% notes due 2032.
- Repurchased $375.0 million of common stock in the first nine months of 2024; financial leverage ratio of 2.9x at September 30, 2024.
- Agreed on October 30, 2024 to acquire Ascent, LLC for a base purchase price of $185.0 million, expected to close in Q4 2024.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2024, Wesco International kept $0.04.
- Revenue$5.49B100.0%
- Cost of revenue−$4.28B77.9%
- Gross profit$1.21B22.1%
- Operating costs−$877.1M16.0%
- Operating income$335.6M6.1%
- Interest, other & tax−$131.3M2.4%
- Net income$204.3M3.7%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed October 31, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $5.49B$5.64B | −2.7% |
| Cost of Revenue | $4.28B$4.42B | −3.3% |
| Gross Profit | $1.21B$1.22B | −0.8% |
| SG&A Expenses | $831.10M$796.40M | +4.4% |
| Operating Income | $335.60M$380.50M | −11.8% |
| Net Income | $204.30M$233.40M | −12.5% |
| EPS (Basic) | $3.87$4.28 | −9.6% |
| EPS (Diluted) | $3.81$4.20 | −9.3% |
| Shares Outstanding (Basic) | 49.10M51.20M | −4.1% |
| Shares Outstanding (Diluted) | 49.80M52.20M | −4.6% |
05—Questions
Frequently Asked Questions
Why did Wesco's sales and earnings decline in the third quarter of 2024?
Net sales fell 2.7% to $5.49 billion, and organic sales declined 0.6%, reflecting an approximately 2% volume decline driven by the EES and UBS segments, partly offset by volume growth in CSS and price increases of about 2%. Income from operations fell 11.8% to $335.6 million, as lower sales and higher SG&A expenses outweighed lower cost of goods sold as a percentage of sales. SG&A rose $34.7 million, or 4.4%, to $831.1 million.
How did the WIS divestiture affect Wesco's results?
The WIS business, part of the UBS segment, was sold on April 1, 2024 for total consideration of $334.2 million. The divestiture reduced reported net sales by 3.5% in the third quarter and 2.3% for the first nine months, and generated a gain of $19.3 million in Q3 and $122.2 million year to date, recorded in other (income) expense, net.
How is Wesco's debt structure changing?
In March 2024 Wesco Distribution issued $900 million of 6.375% Senior Notes due 2029 and $850 million of 6.625% Senior Notes due 2032. Proceeds were used to redeem the $1.5 billion 7.125% Senior Notes due 2025 on June 17, 2024. As of September 30, 2024, total debt was $5,068.5 million, approximately 61% of the debt portfolio was fixed rate, and the financial leverage ratio was 2.9x.
What liquidity does Wesco have and what are its capital return plans?
As of September 30, 2024, Wesco had approximately $1.2 billion of available Revolving Credit Facility capacity, $100.0 million under its Receivables Facility, and available cash of $370.0 million, for total liquidity of approximately $1.7 billion. The company expects excess liquidity to go primarily toward share repurchases, dividends, debt reduction, digital transformation, acquisitions, and potentially redeeming Series A Preferred Stock in 2025.
What acquisitions did Wesco announce or complete?
Wesco acquired entroCIM on June 3, 2024 for total consideration of $36.5 million, and Independent Electric Supply Inc. (IES) effective July 1, 2024 for total consideration of $13.2 million. On October 30, 2024, Wesco agreed to acquire Ascent, LLC, a data center services provider, for a base purchase price of $185.0 million, expected to close in the fourth quarter of 2024.
06—Continue