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WESCO Announces Private Offering of Notes Due 2025 & 2028

Zacks Equity Research
·3 mins read

WESCO International, Inc. WCC recently announced that its wholly owned subsidiary, WESCO Distribution intends to offer senior unsecured notes aggregating $1.825 billion due 2025 and $1 billion senior notes due 2028.

The company intends to use the transaction proceeds to finance the previously announced merger of WESCO and Anixter International (AXE) via refinancing certain existing indebtedness of Anixter contemplated by the Merger Agreement and debt payments, among others.

Cash Position

At the end of first-quarter 2020, its cash & cash equivalents were $342.6 million, up from $150.9 million in the prior-year comparable period.

The company generated $31.5 million of cash from operations and $15.8 million in free cash flow in the last reported quarter.

We believe that its strong balance sheet will help it capitalize on investment opportunities and pursue strategic acquisitions, further improving prospects. In our view, the senior notes’ offering will bring down the company’s cost of capital, in turn strengthening the balance sheet and supporting growth.

These notes should provide financial flexibility and propel long-term growth.

WESCO International, Inc. Price and Consensus

 

WESCO International, Inc. Price and Consensus
WESCO International, Inc. Price and Consensus

WESCO International, Inc. price-consensus-chart | WESCO International, Inc. Quote

Bottom Line

WESCO is one of the largest players in the highly fragmented distribution market for electrical construction products in North America. Growing industry opportunities and the adoption of supply chain solutions in cloud, data center, and broadband projects remain tailwinds.

This January, WESCO agreed to acquire Anixter for $4.5 billion. The buyout will open immense growth opportunities for WESCO and further bolster presence in the electronics industry. The consolidated company is expected to be a premier electrical and data communications distribution player.

However, increasing competition, contraction in OEM customer base and sluggish manufacturing demand remain major concerns.

During the first quarter, management stated that sales were negatively impacted by the COVID-19 outbreak. However, WESCO stays confident about product portfolio strength, value-added services and end-market momentum.

Zacks Rank & Stocks to Consider

Amazon currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Wayfair Inc. W, eBay EBAY and Inphi Corporation IPHI, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth for Wayfair, eBay, and Inphi is currently projected at 23%, 12.4% and 37.7%, respectively.

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WESCO International, Inc. (WCC) : Free Stock Analysis Report
 
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Inphi Corporation (IPHI) : Free Stock Analysis Report
 
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