01—Abstract
Summary
Summary of the 10-Q filed May 1, 2025. Cited figures are marked; the original filing is the authoritative source.
Wesco International, Inc. reported first-quarter 2025 net sales of $5,343.7 milliona, essentially flat against $5,350.0 million in the first quarter of 2024, with organic sales growth of 5.6%.
Growth was driven by the CSS segment, where net sales rose to $2,000.3 millionb on strong data center solutions activity, while the UBS segment declined to $1,278.1 million amid customer destocking and the April 2024 divestiture of its Wesco Integrated Supply business. Income from operations fell to $240.9 million from $263.0 million, and diluted EPS was $2.10 versus $1.95 a year earlier. Adjusted EBITDA declined to $310.7 million from $340.4 million, and adjusted diluted EPS was $2.21 versus $2.30.
Cash generation weakened sharply, with net cash provided by operating activities of $28.0 millionc compared with $746.3 million a year earlier, reflecting a $227.4 million inventory build and a $188.7 million increase in trade receivables, partly offset by a $343.8 million rise in accounts payable. Financial leverage rose to 3.1x from 2.9x at year-end 2024. In March 2025 the company issued $800 million of 6.375% senior notes due 2033, with proceeds intended to redeem its Series A Preferred Stock in June 2025; the company expects this redemption to create a $30 million income benefit to common stockholders and substantial net income, EPS and cash flow benefits.
Management states it was in compliance with all financial covenants and believes cash from operations and financing will be adequate for at least the next twelve months. The company reported approximately $2.4 billiond of liquidity as of March 31, 2025, and repurchased $25.0 million of common stock during the quarter. Management also cited tariff-related actions, including price pass-throughs and supply chain re-engineering, as steps to address supplier price increases and tariff impacts.
02—Key points
Key Highlights
- Net sales were $5,343.7 million, roughly flat versus $5,350.0 million, with organic sales growth of 5.6%.
- CSS net sales rose 17.3% to $2,000.3 million on data center project activity, while UBS net sales fell 19.2% to $1,278.1 million, including a 12.2% divestiture impact.
- Income from operations declined to $240.9 million from $263.0 million; adjusted EBITDA fell to $310.7 million from $340.4 million.
- Diluted EPS was $2.10 versus $1.95; adjusted diluted EPS was $2.21 versus $2.30.
- Operating cash flow was $28.0 million versus $746.3 million, driven by a $227.4 million inventory increase and a $188.7 million receivables increase.
- Financial leverage ratio increased to 3.1x from 2.9x; $800 million of 6.375% senior notes due 2033 were issued in March 2025.
- The Series A Preferred Stock is planned for redemption in June 2025, with a $30 million expected income benefit to common stockholders.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2025, Wesco International kept $0.02.
- Revenue$5.34B100.0%
- Cost of revenue−$4.22B78.9%
- Gross profit$1.13B21.1%
- Operating costs−$884.7M16.6%
- Operating income$240.9M4.5%
- Interest, other & tax−$122.5M2.3%
- Net income$118.4M2.2%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2025filed May 1, 2025Financial Statements
Q1 FY2025 against Q1 FY2024
| Line item | Q1 FY2025Q1 FY2024 | Change |
|---|---|---|
| Revenue | $5.34B$5.35B | −0.1% |
| Cost of Revenue | $4.22B$4.21B | +0.1% |
| Gross Profit | $1.13B$1.14B | −1.1% |
| SG&A Expenses | $836.30M$829.40M | +0.8% |
| Operating Income | $240.90M$263.00M | −8.4% |
| Net Income | $118.40M$115.80M | +2.2% |
| EPS (Basic) | $2.13$1.99 | +7.0% |
| EPS (Diluted) | $2.10$1.95 | +7.7% |
| Shares Outstanding (Basic) | 48.80M50.90M | −4.1% |
| Shares Outstanding (Diluted) | 49.60M51.90M | −4.4% |
05—Questions
Frequently Asked Questions
Why did operating cash flow drop so sharply in the first quarter of 2025?
Net cash provided by operating activities was $28.0 million versus $746.3 million in the first quarter of 2024. The filing attributes primary uses of cash to a $227.4 million increase in inventories tied to ongoing projects, a $188.7 million increase in trade receivables from significant CSS sales growth, and a $77.1 million decrease in accrued payroll, partly offset by a $343.8 million increase in accounts payable.
What is the purpose of the 2033 Notes issuance?
Wesco Distribution issued $800 million of 6.375% senior notes due 2033 on March 6, 2025. The company intends to use the net proceeds to redeem all outstanding 10.625% Series A Preferred Stock in June 2025 and repay a portion of revolving credit facility borrowings. The company expects the redemption to generate a $30 million income benefit attributable to common stockholders.
How did the segments perform?
CSS net sales increased 17.3% to $2,000.3 million with organic growth of 18.1%, led by data center solutions, and adjusted EBITDA rose to $158.5 million. EES net sales were $2,065.3 million, with adjusted EBITDA down to $142.6 million from $161.8 million. UBS net sales declined to $1,278.1 million with organic sales down 4.9% due to customer destocking, and adjusted EBITDA fell to $138.3 million.
Is the company's liquidity and debt position under control?
As of March 31, 2025, the company had approximately $2.4 billion of liquidity, including about $1.7 billion of available revolving credit capacity, $275.0 million of available receivables facility capacity and $404.8 million of cash. The company stated it was in compliance with all financial covenants. Its financial leverage ratio rose to 3.1x from 2.9x, and 74% of its debt was fixed rate.
What did management say about tariffs and supply chain risks?
Management said increased inventories and experience navigating supply chain challenges will help address supplier price increases and the potential impact of global tariffs on customers. Actions taken include pass-through price increases, leveraging scale for locally sourced products, reducing imports from high-tariff countries, optimizing logistics, and re-engineering the global supply chain.
06—Continue