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WESCO (WCC) Q2 Earnings Lag Estimates, Revenues Dip Y/Y

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WESCO International (WCC - Free Report) reported second-quarter 2024 adjusted earnings of $3.21 per share, down 13.5% year over year. The bottom line lagged the Zacks Consensus Estimate by 7.76%.

Net sales of $5.48 billion fell 4.6% year over year. The figure missed the Zacks Consensus Estimate by 1.48%. Organic sales declined 0.8% year over year.

Top-Line Details

EES (39.7% of Net Sales): Sales in the segment were $2.17 billion, down 1.2% year over year. Organic sales declined 0.6% year over year. 

CSS (34.1% of Net Sales): Sales in the segment were $1.87 billion, up 0.8% year over year. Organic sales increased 1.1% on a year-over-year basis.

UBS (26.3% of Net Sales): Sales in the segment were $1.44 billion, down 15% year over year.

 

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Operating Details

The gross margin expanded 20 basis points (bps) on a year-over-year basis to 21.9%.

Selling, general and administrative expenses were $828.4 million, down 0.4% year over year. As a percentage of net sales, the figure increased 60 bps year over year to 15.1%.

The adjusted operating margin was 6.4%, which contracted 30 bps year over year.

Balance Sheet & Cash Flow

As of Jun 30, 2024, cash and cash equivalents were $716.5 million, up from $984.1 million as of Mar 31, 2024.

The long-term debt was $5.22 billion at the second-quarter end compared with $5.18 billion in the prior quarter.

The company burnt $223.8 million in cash from operations compared with $746.3 million in the previous quarter.

For the second quarter, WESCO reported a free cash outflow of $234.1 million.

Guidance

For 2024, WESCO expects organic sales between a decline of 1.5% and a growth of 0.5%. Reported sales are expected to be in the $21.6-$22 billion.

WESCO expects an adjusted EBITDA margin between 7% and 7.3% and an adjusted EBITDA of $1.55 billion at the mid-point. 

The free cash flow is expected between $800 million and $1 billion.

Zacks Rank & Stocks to Consider

WESCO carries a Zacks Rank #3 (Hold) at present.

WCC shares have declined 8.7% year to date, underperforming the Zacks Computer & Technology sector’s growth of 17.3%.

Shopify (SHOP - Free Report) , CACI International (CACI - Free Report) and Dell Technologies (DELL - Free Report) are some better-ranked stocks that investors can consider 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.

Shopify shares have declined 25.4% year to date. SHOP is set to report second-quarter 2024 results on Aug 7.

CACI International shares have gained 43.2% year to date. CACI is set to report fourth-quarter fiscal 2024 results on Aug 8.

Dell Technologies shares have gained 41.7% year to date. DELL is set to report second-quarter fiscal 2025 results on Aug 29.

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