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WESCO (WCC) Q1 Earnings & Sales Beat Estimates, Rise Y/Y

WESCO International, Inc. WCC reported first-quarter 2022 adjusted earnings of $3.63 per share, reflecting 153.8% growth on a year-over-year basis. Also, the bottom line surpassed the Zacks Consensus Estimate by 65%. Further, the metric improved 14.5% sequentially.

WESCO reported quarterly net sales of $4.93 billion, up 22% year over year and 1.7% on a sequential basis. Also, the figure beat the Zacks Consensus Estimate by 6.8%.

Top-line growth was primarily driven by a strong performance by three business units and contributions from expanded product and service offerings.

WESCO International, Inc. Price, Consensus and EPS Surprise

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

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

Top-Line Details

WESCO operates under three business units, namely Electrical & Electronic Solutions (EES), Communications & Security Solutions (CSS), and Utility & Broadband Solutions (UBS).

EES (42% of net sales): Sales in the segment were $2.09 billion for the first quarter, up 21.5% from the year-ago level. This was driven by solid momentum across non-residential construction, original equipment manufacturer and industrial businesses.

CSS (29% of net sales): Sales in the segment were $1.43 billion for the reported quarter, which increased 14.7% from the year-ago period’s level. Despite the global supply challenges, the segment performed well on strong momentum across security solutions and network infrastructure businesses.

UBS (29% of net sales): Sales in the segment were $1.41 billion for the first quarter and grew 31.6% from the year-ago reading. This was driven by robust utility plus broadband and integrated supply businesses.

Operating Details

Gross margin was 21.3% for the reported quarter, which expanded 120 basis points (bps) from the year-ago level.

Selling, general and administrative expenses were $718.1 million, up 12.8% from the year-ago reading. As a percentage of net sales, the figure contracted 119 bps year over year to 14.6%.

WESCO’s adjusted operating margin was 6.4%, which expanded 220 bps from the prior-year level.

Adjusted EBITDA as a percentage of sales was 7.4% for the reported quarter, which expanded 200 bps year over year.

Balance Sheet & Cash Flow

As of Mar 31, 2022, cash & cash equivalents were $201.5 million, down from $212.6 million on Dec 31, 2021.

Long-term debt was $4.84 billion at the first-quarter-end compared with $4.70 billion in the prior quarter.

WESCO used $171.9 million cash for operations in the first quarter compared with $105.5 million in the previous quarter.

For the first quarter, WESCO reported a negative free cash flow of $164.4 million.

Guidance

For 2022, management raised the sales growth rate to 12-15% from 5-8%. The Zacks Consensus Estimate for 2022 sales is pegged at $19.5 billion.

Adjusted EBITDA margin is lifted from 6.7-7% to 7.3-7.6%.

WESCO also hiked adjusted EPS from $11-$12 to $14-$15, indicating 40-50% growth from the year-ago reported figure. The Zacks Consensus Estimate for earnings is pegged at $11.54 per share.

Zacks Rank & Stocks to Consider

Currently, WESCO has a Zacks Rank #3 (Hold). Investors interested in the broader technology sector can consider stocks like Jabil JBL, Jack Henry & Associates JKHY, and Broadcom AVGO. While Jabil currently sports a Zacks Rank #1 (Strong Buy), Jack Henry & Associates and Broadcom carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Jabil has gained 6.9% over a year. The long-term earnings growth rate for JBL is currently projected at 12%.

Jack Henry & Associates has gained 18.6% over a year. The long-term earnings growth rate for JKHY is currently projected at 17%.

Broadcom has gained 28.9% over a year. The long-term earnings growth rate for AVGO is currently projected at 15.6%.


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