WESCO International (WCC) Q4 2024 earnings summary

Executive summary

• Achieved a return to sales growth in Q4 2024, with organic sales up 2.4% year-over-year, driven by over 70% growth in global data center business and 20% growth in broadband, offset by industrial and utility softness.

• Full-year organic sales were roughly flat, with reported sales down 2.5%; record free cash flow exceeded $1 billion, representing 154% of adjusted net income, driven by effective working capital management.

• Strategic portfolio actions included divesting a low-margin integrated supply business and acquiring three service-based businesses, notably Ascent, to enhance data center lifecycle offerings.

• Reduced net debt by $431 million, repurchased $425 million in shares, and increased the common dividend by 10%.

• Record operating cash flow of $1.1 billion for 2024, up from $493 million in 2023.

Financial highlights

• Q4 reported sales were flat year-over-year; organic sales up 2.4%, with price contributing 1.5% and volume just under 1%.

• Adjusted EPS for Q4 was $3.16, up 19% year-over-year; full-year adjusted EPS was $12.23.

• Full-year reported sales down 2.5%, organic sales down 0.6%; gross margin flat at 21.6%.

• Q4 adjusted EBITDA margin was 6.7%; full-year adjusted EBITDA margin was 6.9%.

• Free cash flow for 2024 was $1.05 billion, 154% of adjusted net income, with net working capital intensity reduced by 160 bps.

Outlook and guidance

• 2025 organic sales expected to grow 2.5%-6.5%; reported sales flat to up 4%, with M&A and FX as headwinds.

• Adjusted EBITDA margin guidance for 2025 is 6.7%-7.2%, with gross margin expansion anticipated.

• Adjusted diluted EPS outlook for 2025 is $12-$14.50, reflecting 8%-mid-20s% growth.

• Free cash flow guidance for 2025 is $600-$800 million.

• Plans to increase the common dividend by 10% and continue share buybacks, though at a lower level than 2024.