WESCO International (WCC) Q3 2024 earnings summary

Executive summary

• Q3 2024 net sales were $5.5 billion, down 2.7% year-over-year, with organic sales declining 0.6% and strong double-digit growth in data center business offsetting continued weakness in Utility and Broadband segments.

• Adjusted EBITDA for Q3 was $398 million (7.3% margin), flat sequentially but down 12.9% year-over-year, reflecting lower sales and higher SG&A expenses.

• Free cash flow was robust at $280 million for Q3 and $777 million year-to-date, representing 154% of adjusted net income.

• The company reaffirmed its full-year 2024 outlook for sales, profitability, and free cash flow, expecting results in the lower half of the guidance range if current trends persist.

• Major contract wins included a $2 billion+ UBS extension, a $200 million CSS data center project, and a $50 million EES hospital project.

Financial highlights

• Q3 2024 net sales: $5.5 billion, down 2.7% year-over-year; organic sales down 0.6%.

• Gross margin improved to 22.1%, up 50 basis points year-over-year and 20 basis points sequentially.

• Adjusted EBITDA margin for Q3 was 7.3%, down 80 basis points year-over-year and flat sequentially.

• Adjusted EPS was $3.58, down 20.3% year-over-year; reported EPS was $3.81.

• Free cash flow for Q3 was $279.5 million (144.9% of adjusted net income); trailing 12-month free cash flow at $836 million (127% of adjusted net income).

Outlook and guidance

• Full-year 2024 outlook for sales, adjusted EBITDA margin, and free cash flow reaffirmed, with expectations to finish in the lower half of the range.

• Q4 sales expected to be flat to down slightly sequentially, with EBITDA margin in line or slightly lower than Q3.

• Management expects continued double-digit growth in the data center business and large project wins in electrical and industrial end markets in Q4.

• For 2025, a return to growth is expected, with sales weighted more to the second half and recovery anticipated in broadband and industrial markets.

• Free cash flow guidance for the year is $800 million to $1 billion.