WESCO Int'l (WCC) Misses Q4 EPS by 1c; Offers FY20 EPS Guidance

WESCO Int'l (NYSE: WCC) reported Q4 EPS of $1.32, $0.01 worse than the analyst estimate of $1.33. Revenue for the quarter came in at $2.1 billion versus the consensus estimate of $2.1 billion.

Fourth quarter highlights:

• Consolidated net sales of $2.1 billion, up 4.4% versus prior year
  • Organic sales growth of 3.9%
• Earnings per diluted share of $1.26
  • $1.32 adjusted for merger-related transaction costs
• Operating cash flow of $108 million; free cash flow of $94 million, or 178% of net income
• Leverage of 2.8x, down 0.2x sequentially
• Announced merger agreement with Anixter; expected to close Q2 or Q3 of 2020

Mr. John J. Engel, WESCO's Chairman, President and CEO, commented, "We achieved record fourth quarter and full year sales results against end market conditions that were more challenging than expected. Notably, all of our end markets and geographies grew on a year-over-year basis for the third consecutive year. Gross margin was down versus prior year driven by business mix and the impact of supplier price increases, which we continue to work into the market. Operating margin was within our expected range, after adjusting for Anixter merger-related transaction costs, and was driven by effective cost management. EPS grew 8% to a record $5.20 in 2019, after adjusting for the Anixter-related costs. Free cash flow generation was also strong in the quarter and financial leverage ended the year at 2.8 times net debt to EBITDA after completing $150 million of share repurchases in 2019."

Mr. Engel continued, "As announced earlier this month, the transformational combination of WESCO and Anixter will create a premier electrical and data communications distribution and supply chain services company. As a result, we expect 2020 to be a watershed year for WESCO and we look forward to the substantial value creation for our stockholders, customers, suppliers, and people. We continue to expect to close this transaction in the second or third quarter of 2020 after receiving approvals from Anixter stockholders and certain regulatory authorities."

GUIDANCE:

WESCO Int'l sees FY2020 EPS of $5.10-$5.70, versus the consensus of $5.48.

Mr. Engel added, "Our end market outlook for 2020 provided last quarter remains unchanged. We expect to outperform the market by leveraging our full range of WESCO services and supply chain solutions, by making investments in our people and digital capabilities, and by maintaining our cash and cost management discipline. As a result, we continue to expect sales growth in the range of zero to 4% this year, and provide our full year 2020 outlook for operating margin of 4.1% to 4.4%, EPS of $5.10 to $5.70 per diluted share, and free cash flow generation of at least 90% of net income excluding any impacts of the announced merger with Anixter."

For earnings history and earnings-related data on WESCO Int'l (WCC) click here.

You May Also Be Interested In

• IBM tumbles on soft Q1 revenue; announces HashiCorp $6.4bn acquisition
• Sanofi (SNY) Tops Q1 EPS by 85c; reaffirms guidance
• TAL Education (TAL) Tops Q1 EPS by 10c