WESCO saw year-over-year growth in its CSS and UBS units, while its largest unit — EES — declined.
Electrical, data and security products distributor Wesco International reported its 2023 third quarter financial results on Nov. 2, showing a continued modest slowdown in sales growth while margins also narrowed.
Pittsburgh-based Wesco topped MDM’s 2023 Top Electrical, Data & Security Distributors List and was No. 17 for Industrial products.
The company posted total 3Q sales of $5.64 billion, up 3.6% year-over-year, a deceleration from 2Q’s $5.75 billion and 4.8% growth, and 1Q’s robust 12.0% growth.
Wesco’s 3Q organic sales increased approximately 3% year-over-year — on par with 2Q. The company said the organic gain was driven by its November 2022 acquisition of Rahi Systems, which positively impacted sales by 2.4%, while a negative workdays differential had a -1.6% impact.
Wesco’s 3Q gross margin of 21.6% fell 50 basis points year-over-year and matched 2Q’s, while 3Q operating profit margin of 6.7% outpaced 2Q’s 6.3%.
Wesco posted a 3Q net profit of $233 million, trailing the $240 million of a year earlier and topping 2Q’s $193 million. Adjusted EBITDA of $457 million on margin of 8.1% dipped 2% and 50 bps, respectively, from a year earlier.
Wesco’s backlog at the end of September declined by 6% year-over-year, and about 7% from the end of June.
“Our industry-leading customer value proposition, strong cross-sell execution and continued share gains drove record third quarter sales,” Wesco Chairman, President and CEO Johnn Engel said in the company’s financial release. “Overall results were in line with our expectations with sequential sales improvement in our EES business coupled with continued share capture and higher operating margins in our CSS and UBS businesses.”
By Wesco business segment in 3Q:
- Electrical & Electronic Solutions (EES) sales of $2.19 billion declined approximately 2.0% year-over-year, with organic sales down by 0.2%. Wesco said the organic dip reflects downturn in the construction and manufactured structures business.
- Communications & Security Solutions (CSS) sales of $1.18 billion increased approximately 11.0%, with organic sales up 4.1%. Wesco said the organic gain reflects price inflation and market growth.
- Utility & Broadband Solutions (UBS) sales of $1.68 billion increased approximately 4.2%, with organic sales up 5.8%. Wesco said the organic gain reflects price inflation, market growth in the utility business and expansion in the company’s integrated supply business.
Full Year Outlook
In updating its 2023 full year outlook, Wesco now expects net sales growth of approximately 5%, compared to a 5-7% range issued on Aug. 3. Likewise, its updated organic forecast calls for approximately 4% growth, compared to 4-6% issued Aug. 3.
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Mike Hockett
Mike Hockett is MDM’s executive editor, having joined the publication in March 2022. He oversees MDM’s editorial content and direction, coordinates with contributing authors, conducts interviews with executives in the wholesale distribution space and serves as the editorial face of MDM at industry events. He has extensively covered the distribution and manufacturing sectors since 2014. Hockett earned a degree in print journalism from the University of Wisconsin-Eau Claire and works from his home in Madison, Wisconsin. He can be contacted at mike@mdm.com.
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