01—Abstract
Summary
Summary of the 8-K filed May 1, 2025. Cited figures are marked; the original filing is the authoritative source.
WESCO International, Inc. reported essentially flat first-quarter 2025 net sales of $5,343.7 milliona, down 0.1% from $5,350.0 million a year earlier, while organic sales grew 5.6% after adjusting for the divestiture of Wesco Integrated Supply, the Ascent acquisition, foreign exchange and one fewer workday.
Growth was led by data center sales, which rose 70%, and by high single digit growth in the Broadband and OEM businesses, partly offset by continued weakness in utility. Diluted EPS was $2.10b, up 7.7% from $1.95, and adjusted diluted EPS was $2.21 compared with $2.30, reflecting lower adjusted gross profit and higher SG&A. Gross margin was 21.1%, down 20 basis points year over year.
Cash generation was weak in the quarter. Operating cash flow was $28.0 millionc versus $746.3 million in the prior-year period, and free cash flow was $9.4 million, with the decline attributed mainly to inventory and receivables build and the timing of payables. Adjusted EBITDA was $310.7 million compared with $340.4 million.
Net debt rose modestly, and the financial leverage ratio was 3.1 at March 31, 2025 versus 2.9 at December 31, 2024. Management reaffirmed its full-year 2025 outlook and said April sales per workday were up approximately 7%. The company issued $800 milliond of 6.375% senior notes due 2033 to fund the June 2025 redemption of its 10.625% Series A preferred stock, which the presentation says is expected to add roughly $32 million in annualized net income and cash flow benefit and about $0.65 in annualized EPS.
02—Key points
Key Highlights
- Net sales of $5,343.7 million were down 0.1% year over year, while organic sales grew 5.6%.
- Data center sales rose 70%, and management cited high single digit growth in Broadband and OEM, with continued weakness in utility.
- Diluted EPS was $2.10, up 7.7%; adjusted diluted EPS was $2.21 versus $2.30 a year earlier.
- Operating cash flow fell to $28.0 million from $746.3 million, and free cash flow was $9.4 million versus $731.4 million.
- Adjusted EBITDA was $310.7 million, down 8.7% from $340.4 million; the financial leverage ratio rose to 3.1 from 2.9.
- The company issued $800 million of 6.375% senior notes due 2033 to redeem its 10.625% preferred stock in June 2025, with no significant debt maturities until 2028.
- The full-year 2025 outlook was reaffirmed, including organic sales growth of 2.5% to 6.5%, adjusted EBITDA margin of 6.7% to 7.2%, adjusted diluted EPS of $12.00 to $14.50, and free cash flow of $600 million to $800 million.
03—Questions
Frequently Asked Questions
Why did operating cash flow decline so sharply in the first quarter?
The filing attributes the quarter's $28.0 million operating cash flow to net income of $118.3 million, offset by a $227.4 million use of cash from higher inventories, a $188.7 million increase in trade receivables due to customer payment timing, and a $77.1 million outflow from accrued payroll and benefits, partly offset by a $343.8 million inflow from accounts payable. The prior-year period reported operating cash flow of $746.3 million.
What is the impact of the preferred stock redemption?
WESCO plans to redeem its $540 million 10.625% Series A preferred stock in June 2025 using proceeds from $800 million of 6.375% senior notes due 2033. The presentation estimates an approximately $32 million annualized benefit to net income and cash flow and about $0.65 in annualized EPS, and says the company will have no significant debt maturities until 2028.
How did the company's sales performance differ by segment?
Communications and Security Solutions reported organic sales growth of 18.1%, driven by data center projects, with backlog up 32% year over year. Electrical and Electronic Solutions organic sales rose 3.4%, led by OEM. Utility and Broadband Solutions organic sales declined 4.9%, reflecting utility destocking, partly offset by strong broadband growth in Canada.
What does management expect for the rest of 2025?
Management reaffirmed its full-year outlook, calling for reported sales of $21.8 to $22.7 billion, organic growth of 2.5% to 6.5%, adjusted EBITDA margin of 6.7% to 7.2%, adjusted diluted EPS of $12.00 to $14.50, and free cash flow of $600 million to $800 million. Preliminary April sales per workday were up approximately 7%.
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