WESCO International Inc (WCC) Reports 4% YOY Increase in Q3 2023 Net Sales
WESCO International Inc (NYSE:WCC) reports Q3 2023 net sales of $5.6 billion, up 4% YOY.
Operating profit for the quarter was $381 million, with an operating margin of 6.7%.
Earnings per diluted share stood at $4.20, with adjusted earnings per diluted share at $4.49.
The company generated an operating cash flow of $362 million and a free cash flow of $357 million.
WESCO International Inc (NYSE:WCC), a leading provider of business-to-business distribution, logistics services, and supply chain solutions, announced its Q3 2023 results on November 2, 2023. The company reported net sales of $5.6 billion, marking a 4% increase year-over-year (YOY). The operating profit for the quarter stood at $381 million, with an operating margin of 6.7%. The company's earnings per diluted share were $4.20, while the adjusted earnings per diluted share were flat YOY at $4.49.
Financial Performance
WESCO's Q3 2023 results showed an operating cash flow of $362 million and a free cash flow of $357 million, which is 143% of the adjusted net income. The company's financial leverage now stands at 2.7x, which is the lowest level since the Anixter merger in June 2020. The company's gross margin remained flat sequentially at 21.6%.
CEO's Commentary
We generated very strong free cash flow of $357 million, or 143% of adjusted net income, in the third quarter highlighting the strength of our B2B distribution business model. Our financial leverage now stands at 2.7x, below the mid-point of our target range, and at the lowest level since the Anixter acquisition in June 2020. We expect our strong free cash flow generation to continue, and we remain in an excellent position to use that cash to invest in above market growth and increase return of capital to shareholders," said John Engel, Chairman, President, and CEO.
2023 Outlook Update
WESCO is now expecting reported net sales growth of approximately 5%, near the low-end of the prior range of 5%-7% driven by moderating end market conditions. EBITDA margins are still forecast to be 7.8%-8.0% and adjusted EBITDA at the mid-point of the guidance range remains approximately $1.8 billion. Earnings per share are now forecast to be $15.60-$16.10 versus $15.00-$16.00 previously, primarily due to a lower full-year tax rate. The company's free cash flow outlook is unchanged at $500-$700 million.
Financial Tables Summary
Net sales for the third quarter of 2023 were $5.6 billion compared to $5.4 billion for the third quarter of 2022, an increase of 3.6%. Cost of goods sold for the third quarter of 2023 was $4.4 billion compared to $4.2 billion for the third quarter of 2022, and gross profit was $1.2 billion for both periods. Operating profit was $380.5 million for the third quarter of 2023 compared to $401.6 million for the third quarter of 2022, a decrease of $21.1 million, or 5.3%.
Company's Performance Analysis
WESCO's Q3 2023 results show a steady performance with a 4% YOY increase in net sales. The company's operating profit and operating margin indicate a strong operational efficiency. The strong free cash flow and the lowest financial leverage since the Anixter merger highlight the company's robust financial health. The company's unchanged free cash flow outlook and the expected net sales growth of 5% indicate a positive outlook for the future.
Explore the complete 8-K earnings release (here) from WESCO International Inc for further details.
This article first appeared on GuruFocus.
