WESCO International (WCC) Q4 2023 earnings summary

Executive summary

• FY 2023 net sales reached a record $22.385B, up 4.5% reported and 3.2% organically; adjusted EBITDA was $1.705B, down 1% YoY.

• Q4 sales were $5.473B, down 1.5% reported and 2.6% organically; adjusted EBITDA fell 15% to $385M and adjusted diluted EPS fell 36% to $2.65.

• Backlog remained above historical levels despite a 10% YoY decline; FY 2024 guidance calls for 1%–4% reported sales growth and ~$1.75B adjusted EBITDA at midpoint.

Financial highlights

• Q4 revenue was $5.473B vs. $5.559B; gross profit was $1.171B vs. $1.218B, and adjusted operating profit was $327.5M vs. $397.4M.

• FY revenue was $22.385B vs. $21.420B; gross profit was $4.844B vs. $4.661B, and adjusted operating profit was $1.480B vs. $1.515B.

• Q4 net income attributable to common stockholders was $127.6M and adjusted net income was $137.9M; FY figures were $708.1M and $763.6M, respectively.

• Diluted EPS was $2.45 in Q4 and $13.54 for FY; adjusted diluted EPS was $2.65 and $14.60, respectively, with FY adjusted EPS down 11.1% YoY.

Outlook and guidance

• FY 2024 organic sales growth guidance is flat to +3%; two additional workdays add 1%, supporting reported sales growth guidance of +1% to +4%.

• Adjusted EBITDA margin guidance is 7.5%–7.9%, with ~$1.75B at midpoint; adjusted diluted EPS guidance is $13.75–$15.75.

• FY 2024 free cash flow guidance is $600M–$800M, with management expecting ~$700M; capital expenditures are expected at ~$100M and the effective tax rate at 27%.

• Carryover pricing is expected to contribute ~1% to 2024 growth; preliminary January sales per workday were down ~5% YoY.

• SBU growth outlook: EES flat to +LSD, CSS +LSD to +MSD, and UBS +MSD; digital transformation rollout is planned over 36 months.