Wesco International reports quarter net sales up 0.5% YOY
Wesco International, a provider of business-to-business distribution, logistics services and supply chain solutions, reported its Q4 2024 net sales were $5,499.7 million, an increase of 0.5%.
"We are pleased with our return to sales growth in the fourth quarter sparked by more than 70% growth year-over-year in our global Data Center business, 20% growth in Broadband Solutions, and renewed positive sales momentum in Electrical and Electronic Solutions," said President and CEO John Engel. "This was partially offset by a slowdown with industrial customers and the expected continued weakness in our utility business in the fourth quarter. With that said, our positive momentum has carried into January with preliminary sales per workday, adjusted for M&A, up 5% versus prior year. Our opportunity pipeline remains at a record level, backlog remains healthy and bid activity levels remain very strong. Gross margin was stable on a full-year basis although we experienced some pressure in Communication and Security Solutions as sales ramped to customers on project deployments. Consistent with past practice, we expect to improve margins as we move through the project deployment life cycle in this segment.
"Our continued focus on effective working capital management yielded strong benefits again in the fourth quarter and contributed to record free cash flow generation of over $1 billion in 2024, or 154% of adjusted net income," he continued. "Financial leverage remained stable at 2.9x trailing twelve-month adjusted EBITDA as we reduced our net debt by $431 million and repurchased $425 million of shares last year. We also significantly strengthened our portfolio through the divestiture of our integrated supply business and the acquisitions of three services-based businesses, including Ascent. As we look to 2025, our pipeline of strategic acquisitions remains strong and is aligned with our goal to increase service offerings to our customers."
Engel added, "We also made excellent progress on our enterprise-wide digitalization efforts and overall business transformation in 2024. We're more than halfway complete on our technology and capabilities build, which once completed, will accelerate our earnings growth through greater cross-sell, expand our margins through improved pricing and operating cost leverage, and dramatically increase our speed to value on the integration of future acquisitions.
"In 2025, we expect organic sales to grow 2.5% to 6.5% and operating margin to expand, as all three business units are expected to deliver profitable growth. We expect to generate $600 to $800 million of free cash flow and I am pleased to announce that we plan to increase our common stock dividend by 10% again this year to $1.82 per share while continuing our share buyback program. As we outlined in our recent Investor Day, we are committed to substantial value creation from operational improvements, digital transformation, and our capital allocation strategy including additional M&A.
"We're well-positioned to deliver outsized growth due to the secular trends of AI-driven data centers, increased power generation, electrification, automation, and reshoring. And we remain laser focused on our enterprise wide margin improvement program, which has been a historical strength for Wesco. I'm confident that Wesco will outperform our markets this year, and we're best positioned to deliver improved sales growth and continue toward our long-term EBITDA margin expansion goal. Finally, I continue to be very proud of our talented and dedicated Wesco team, who remain steadfast in executing our strategic plan to capture the significant value creation opportunity in front us, as we realize our vision of becoming the best tech-enabled supply chain solutions provider in the world."
INDUSTRIAL SUPPLY MAGAZINE
The January/February issue of Industrial Supply magazine features an in-depth cover story about MSC Industrial Supply. Plus, we're featuring articles by contributing writers Dr. Bharani Nagarathnam and Frank Hurtte, as well as interviews with numerous product and distribution industry experts.
