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WESCO (WCC) Q2 Earnings & Sales Beat Estimates, Rise Y/Y

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WESCO International, Inc. WCC reported second-quarter 2021 adjusted earnings of $2.64 per share, reflecting growth of 98% on a year-over-year basis. Also, the bottom line surpassed the Zacks Consensus Estimate by 35.4%.

The company reported quarterly net sales of $4.6 billion, up 120.2% year over year. Also, the figure beat the Zacks Consensus Estimate of $4.3 billion.

Top-line growth was primarily driven by the contributions from the company’s merger with Anixter, which was completed on Jun 22, 2020.

Top-Line Details

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

EES (41.8% of net sales): Sales in the segment were $1.9 billion for the second quarter, up 84.3% from the year-ago period’s level. This was driven by a solid momentum across the company’s construction, original equipment manufacturer and industrial businesses. Also, benefits from Anixter merger were other positives.

CSS (31.8% of net sales): Sales in the segment were $1.5 billion for the reported quarter, which significantly jumped from $341.5 million in the year-ago period. This was attributed to the well-performing security solutions and network infrastructure businesses, and Anixter merger contributions.

UBS (26.4% of net sales): Sales in the segment were $1.2 billion for the reported quarter, up 72.6% from the year-ago period’s reading. This was driven by robust utility plus broadband and integrated supply businesses. Also, Anixter merger contributed well.

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

Operating Details

Gross margin was 21% for the reported quarter, which expanded 210 basis points (bps) from the year-ago period’s level.

Selling, general and administrative expenses were $699.6 million, up 94.4% from the year-ago quarter’s reading. As a percentage of net sales, the figure contracted 200 bps year over year to 15.2%.

WESCO’s adjusted operating margin was 5.7%, which expanded 150 bps from the prior-year quarter’s level.

Balance Sheet & Cash Flow

As of Jun 30, 2021, cash & cash equivalents were $287.9 million, down from $303.9 million as of Mar 31, 2021.
Long-term debt was $4.3 billion at the end of the second quarter compared with $4.6 billion at the end of the fourth quarter of 2020.

WESCO used $17.7 million of cash in operations during the reported quarter compared with $120.5 million of cash generated from operations in the previous quarter.

The company generated ($580) million of free cash flow in the second quarter.

Guidance

For 2021, management raised its guidance for sales growth from 4.5-7.5% to 10-13%. The Zacks Consensus Estimate for 2021 sales is pegged at $17.2 billion.

Adjusted EBITDA margins are now expected in the range of 6.1-6.4%. The previous guidance for the same was 5.8-6.1%.

The company lifted its guidance for adjusted EPS from $6.80-$7.30 to $8.40-$8.80. The Zacks Consensus Estimate for earnings is pegged at $7.39 per share.

Zacks Rank & Other Stocks to Consider

Currently, WESCO has a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader technology sector are Carrier Global Corporation CARR, Ametek AME and Agilent Technologies A, all currently carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth rate for Carrier, Ametek and Agilent are currently projected at 14.5%, 10.2% and 13%, respectively.


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