Have you looked into how Wesco International (WCC) performed internationally during the quarter ending December 2025? Considering the widespread global presence of this maker of electrical and industrial maintenance supplies and construction materials, examining the trends in international revenues is essential for assessing its financial resilience and prospects for growth.In the modern, closely-knit global economic landscape, the capacity of a business to access foreign markets is often a key determinant ...

Wesco International Q1 2026 Investor Presentation Forward-Looking Statements and Non-GAAP Measures All statements made herein that are not historical facts should be considered as "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. These statements include, but are not limited to, statements regarding business strategy, grow ...

Revenue and Market Exposure - The company derives approximately 26% of its revenues from sales outside the U.S.[88] - The company operates a network of more than 700 sites across approximately 50 countries, exposing it to various geopolitical and economic risks[88] - The company has no single customer accounting for more than 5% of its sales, but defaults by larger customers could adversely affect earnings or liquidity[85] Economic and Regulatory Risks - Adverse economic conditions and disruptions in financial markets could negatively impact the company's revenues and operating results[85] - The company is subject to various global laws and regulations, and any compliance failures could result in fines, penalties, or loss of contracts[91] - Fluctuations in foreign currency exchange rates can materially impact the company's financial results, particularly with significant transactions in currencies like the Canadian dollar[92] - The company faces risks from volatile trade policies, which could increase costs and disrupt supply availability[87] - Broader geopolitical conflicts could disrupt supply chains and energy markets, heightening operational risks[90] Strategic and Operational Challenges - The management's expectations and beliefs regarding business strategy and growth are subject to various risks and uncertainties[1] - The company has significantly invested in expanding digital solutions, including e-commerce capabilities and artificial intelligence, but faces risks related to the timely development and deployment of these initiatives[95] - The company completed several acquisitions, including Rahi Systems and Industrial Software Solutions, but integration challenges may hinder the realization of anticipated benefits and cost savings[97] - Non-recurring costs associated with recent acquisitions, including transaction fees and integration expenses, are expected to continue, potentially impacting short-term financial performance[98] - The company completed the divestiture of its Wesco Integrated Supply business in 2024, which may involve risks such as employee distraction and potential disruptions to customer relationships[101] - Heightened scrutiny from antitrust and foreign investment authorities may delay or complicate future strategic transactions, increasing costs and uncertainty[102] Technology and Cybersecurity Risks - The company relies on information systems for operations, and any significant disruption could materially affect business operations and financial results[103] - The ongoing digital transformation strategy may not achieve anticipated benefits, leading to potential operational disruptions and increased costs[105] - The integration of artificial intelligence into business processes introduces operational risks, including inaccuracies and potential disruptions in customer service[108] - Compliance with evolving AI regulations may incur significant costs and complexity, impacting the company's operational practices[110] - Cybersecurity threats have increased, with malicious actors leveraging AI to enhance the sophistication of attacks, posing risks to data integrity and operational continuity[119] - The evolving legal and regulatory environment regarding information security and AI could lead to significant fines and liabilities for non-compliance[120] - The company faces risks related to the integration of AI into operations, which could affect competitive positioning if not executed effectively[111] Financial and Debt Management - As of December 31, 2025, the company had $5.8 billion of consolidated indebtedness, which significantly impacts cash flow and operational flexibility[149] - The company incurred significant additional indebtedness in 2025 to finance the redemption of Series A Preferred Stock, affecting its ability to invest in operations and growth[149] - A substantial portion of the company's cash flow must be dedicated to debt service commitments, reducing available funds for other purposes[150] - The company faces risks related to its ability to generate sufficient cash flows from operations to service its debt and meet capital expenditures[151] - Debt agreements contain restrictive covenants that may limit the company's operational flexibility and ability to obtain additional financing[152] Supply Chain and Operational Risks - The company faces risks related to global supply chain disruptions and regulatory changes that could affect costs and availability of key materials[95] - The company relies on cloud-based services from third-party providers, with potential disruptions posing risks to operational efficiency and financial results[115] - The top 10 suppliers accounted for approximately 32% of the company's purchases by dollar volume in 2025, indicating a significant reliance on key suppliers[122] - Supply chain challenges, including product shortages and delays, have persisted since the COVID-19 pandemic, impacting sales and profit margins[124] - Disruptions to logistics and supply chain management could adversely impact the company's operations and customer service capabilities[133] Competitive and Market Pressures - Increased competition may lead to decreased sales, profit margins, and earnings, particularly from new market entrants with greater resources[138] - The company is exposed to risks related to tax law changes, which could cause unexpected volatility in its results of operations[143] - The company relies on third-party service providers, which increases operational complexity and could negatively impact reputation and financial results[137] - The evolving nature of ESG frameworks may lead to higher operating expenses and impact profitability, particularly if compliance challenges arise[142] - The company may face increased costs or decreased revenue due to customer pressures for net-zero emissions targets, impacting financial performance[142] Human Resources and Legal Risks - Attracting and retaining qualified personnel is critical for the company's success, with potential disruptions from employee turnover and competition[156] - Ongoing legal proceedings may arise, potentially impacting the company's financial condition and liquidity[154] - Intellectual property litigation could incur significant costs and impact the company's ability to utilize critical technology[121] - The company faces risks associated with the sale of nonconforming products, which could lead to significant costs and reputational harm[132]

Key Takeaways WESCO shares fell 5.27% after Q4 earnings missed estimates despite 10% sales growth.WCC posted 9% organic sales growth, with CSS segment sales up 16.2% year over year.WESCO guided 2026 sales of $24.7-$25.4B and EPS of $14.50-$16.50 per share.WESCO International (WCC) shares slid 5.27% following disappointing fourth-quarter 2025 earnings results. Adjusted earnings of $3.40 per share increased 7.6% year over year. The bottom line missed the Zacks Consensus Estimate by 11%.Net sales of $6.1 billi ...

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, with the aim of buying high and selling higher, capitalizing on established price movements [1] Company Overview: Wesco International (WCC) - Wesco International currently holds a Momentum Style Score of A, indicating strong momentum characteristics [2] - The company has a Zacks Rank of 2 (Buy), suggesting it is positioned for potential outperformance in the market [3] Performance Metrics - Over the past week, WCC shares have increased by 8.93%, outperforming the Zacks Electronics - Parts Distribution industry, which rose by 6.78% [5] - In the last month, WCC's price change is 3.26%, while the industry has seen a significant performance of 30.01% [5] - For the last quarter, WCC shares have risen by 14.77%, and over the past year, they have increased by 51.68%, compared to the S&P 500's movements of 1.86% and 15.7%, respectively [6] Trading Volume - WCC's average 20-day trading volume is 580,545 shares, which serves as a bullish indicator when combined with rising stock prices [7] Earnings Outlook - In the past two months, one earnings estimate for WCC has increased, while none have decreased, raising the consensus estimate from $15.69 to $15.73 [9] - For the next fiscal year, one estimate has also moved upwards with no downward revisions noted [9] Conclusion - Given the strong performance metrics and positive earnings outlook, WCC is identified as a solid momentum pick and is recommended for consideration in the near term [11]

Economic Indicators - Nonfarm payrolls are expected to increase by +68,000 in January, with the unemployment rate remaining unchanged at 4.4% [1] - Average hourly earnings are projected to rise by +0.3% month-over-month and +3.7% year-over-year in January [1] - Initial weekly unemployment claims are anticipated to decrease by -7,000 to 224,000 [1] - Existing home sales in January are expected to decline by -4.3% month-over-month to 4.16 million [1] - January CPI is expected to rise by +2.5% year-over-year, with core CPI also expected to increase by +2.5% year-over-year [1] Retail Sales and Employment Costs - US December retail sales were unchanged month-over-month, falling short of expectations of +0.4% [2] - The employment cost index for Q4 rose by +0.7% quarter-over-quarter, which is the smallest increase in 4.5 years and below the expected +0.8% [2] Stock Market Performance - Stock indexes experienced mixed trading, with the Dow Jones reaching a new all-time high while the S&P 500 closed down -0.33% and the Nasdaq down -0.56% [6][5] - The broader market initially found support from weaker-than-expected retail sales and employment cost index reports, which lowered bond yields [5] Earnings Season Insights - Over half of the S&P 500 companies have reported earnings, with 78% beating expectations [7] - S&P earnings growth is expected to rise by +8.4% in Q4, marking the tenth consecutive quarter of year-over-year growth [7] - Excluding the Magnificent Seven tech stocks, Q4 earnings are projected to increase by +4.6% [7] Interest Rates and Bond Market - The markets are pricing in a 23% chance of a -25 basis point rate cut at the next Federal Reserve meeting [8] - The 10-year T-note yield fell to a 3.5-week low of 4.13%, supported by weaker-than-expected economic reports [9] Sector Performance - AI-infrastructure stocks faced pressure, with Western Digital down more than -7% and other tech stocks also declining [12] - Wealth-management stocks dropped significantly, with Raymond James Financial down more than -8% due to concerns over AI disruption [13] - Homebuilding stocks rose after the drop in mortgage rates, with Toll Brothers up more than +6% [14] Company-Specific Developments - Goodyear Tire & Rubber Co reported Q4 adjusted EPS of 39 cents, below the consensus of 49 cents, leading to a decline of more than -14% [15] - Incyte forecasted dull-year total net product revenue of $4.77 billion to $4.94 billion, causing a drop of more than -8% [16] - Spotify reported a record 38 million monthly active users in Q4, leading to a rise of more than +17% [17]

Core Insights - Wesco International (WCC) is a significant player in the electronics parts distribution industry, offering a variety of products and services related to maintenance, repair, and operations (MRO) [1] Financial Performance - For the quarter ending December 2025, WCC reported earnings per share (EPS) of $3.34, which was below the estimated $3.82, resulting in an earnings surprise of -11% [2][6] - The company's revenue for the same quarter was approximately $6.07 billion, exceeding the estimated $5.79 billion and reflecting a year-over-year increase from $5.5 billion [3][6] Market Valuation - WCC has a price-to-earnings (P/E) ratio of 20.78, indicating the market's valuation of its earnings [4] - The price-to-sales ratio is approximately 0.58, and the enterprise value to sales ratio stands at 0.83, providing insights into the company's market value relative to its sales and revenue [4] Financial Health - The debt-to-equity ratio is 1.35, showing the proportion of debt used to finance assets relative to shareholders' equity [5] - A current ratio of 2.09 indicates WCC's strong liquidity position, suggesting it can cover short-term liabilities with short-term assets [5] - The company maintains an earnings yield of approximately 4.81%, reflecting the earnings generated per dollar invested [5]

Financial Data and Key Metrics Changes - In Q4 2025, the company achieved record sales of $6.1 billion, a 10% increase year-over-year, with 9% organic growth [6][11] - Adjusted EBITDA for Q4 was $409 million, up 10% year-over-year, with an adjusted EBITDA margin of 6.7% [11][12] - For the full year 2025, sales totaled $23.5 billion, an 8% increase, with organic sales also up 9% [12][14] - Adjusted EPS for Q4 grew 8% to $3.40, while for the full year, it increased 6% to $12.91 [11][14] Business Line Data and Key Metrics Changes - Communications and Security Solutions (CSS) reported organic sales growth of 14% in Q4, with a backlog increase of nearly 40% [15][16] - Electrical and Electronic Solutions (EES) saw organic sales up 9% in Q4, with adjusted EBITDA growing 16% [22] - Utility and Broadband Solutions (UBS) had organic sales growth of 3% in Q4, with a backlog increase of 23% year-over-year [24][25] Market Data and Key Metrics Changes - Data center sales reached $4.3 billion for the full year, up approximately 50%, representing about 18% of total sales [17][18] - Investor-Owned Utilities (IOUs) showed growth momentum, with three consecutive quarters of sales growth, while Public Power customers continued to face challenges [24][50] Company Strategy and Development Direction - The company is focused on capital allocation, prioritizing debt reduction and share repurchases, while also investing in technology-enabled business transformation [8][37] - The strategic outlook for 2026 includes expected sales growth of 5% to 8%, with organic sales between 4% and 7% [34][36] - The company plans to increase its annual common stock dividend by over 10% to $2 per share [8][37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in outperforming the market in 2026, driven by strong demand in data centers and improving trends in other segments [7][40] - The company anticipates continued growth in grid services, expecting double-digit growth in 2026 [25][78] - Management acknowledged challenges in the Public Power segment but expects a return to growth by the end of 2026 [50][76] Other Important Information - The company has made significant progress in its digital transformation, being recognized by Fortune with a top 10 ranking in AI among Fortune 500 companies [9] - The company reported a free cash flow of $54 million for 2025, with expectations for improvement in 2026 [30][37] Q&A Session Summary Question: Clarification on pricing and its impact on EBITDA margins - Management explained that while they are seeing an increase in price notifications from suppliers, they do not include these in their outlook due to uncertainty in timing [43][46] Question: Concerns about UBS performance and competitive pressures - Management clarified that the challenges in UBS are primarily due to Public Power customers facing inventory normalization and competitive pricing pressures, but they expect growth in 2026 [49][50] Question: Data center growth expectations for 2026 - Management indicated that they expect consistent activity levels in data centers throughout 2026, with mid-teens growth anticipated [54][56] Question: Free cash flow expectations for 2026 - Management provided a range of $500 million to $800 million for free cash flow in 2026, highlighting improvements in cash collection [60][62] Question: Backlog trends and engagement in mega projects - Management confirmed that all business units grew their backlog in Q4, with a robust opportunity pipeline for mega projects [65][81]

Financial Data and Key Metrics Changes - In Q4 2025, the company reported record sales of $6.1 billion, a 10% increase year-over-year, with 9% organic growth [6][12] - Adjusted EBITDA for Q4 was $409 million, up 10% year-over-year, with an adjusted EBITDA margin of 6.7% [12][14] - For the full year, sales reached $23.5 billion, an 8% increase, with organic sales also up 9% [13] - Adjusted EPS for Q4 grew 8% to $3.40, while full-year adjusted EPS increased 6% to $12.91 [14][15] Business Line Data and Key Metrics Changes - Communications and Security Solutions (CSS) saw organic sales growth of 17% for the full year, driven by strong demand in data center solutions [17][18] - Electrical and Electronic Solutions (EES) reported organic sales growth of 8% for the full year, with notable strength in construction and OEM segments [22][23] - Utility and Broadband Solutions (UBS) experienced a decline in full-year sales of 5%, with organic sales down 1%, primarily due to challenges with public power customers [24][25] Market Data and Key Metrics Changes - Data center sales reached $4.3 billion for the full year, up approximately 50%, representing about 18% of total sales [19][20] - The backlog increased by 19% year-over-year, indicating strong demand across various sectors [7][12] - The company expects continued growth in 2026, with reported sales growth projected between 5%-8% and organic sales growth between 4%-7% [30][32] Company Strategy and Development Direction - The company is focused on capital allocation, prioritizing debt reduction and share repurchases while investing in technology-enabled business transformation [9][35] - Plans to increase the annual common stock dividend by over 10% to $2 per share, reflecting a commitment to shareholder returns [9][35] - The company aims to leverage digital transformation to enhance operational efficiency and margin expansion [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in outperforming the market in 2026, driven by strong demand in data centers and improving trends in other business units [8][38] - The company anticipates continued challenges in the public power segment but expects a return to growth by the end of 2026 [25][58] - Management highlighted the importance of grid services, which is expected to grow at a double-digit rate in 2026 [25][59] Other Important Information - The company has made significant progress in its digital transformation, recognized by Fortune as one of the top AI companies [10] - Free cash flow for 2025 was $54 million, with expectations for improvement in 2026 as working capital initiatives take effect [29][35] Q&A Session Summary Question: Clarification on pricing and its impact on EBITDA margins - Management explained that while they are seeing an increase in price notifications from suppliers, they do not include these in their outlook due to uncertainty in timing [39][40] - If price increases are realized, they could provide a transitory benefit to gross margins and operating leverage [42][43] Question: UBS segment performance and future outlook - Management clarified that challenges in the UBS segment are primarily driven by public power customers, with expectations for a return to growth by year-end 2026 [44][45][56] Question: Data center growth expectations - Management indicated that data center sales are expected to grow mid-teens in 2026, with consistent activity levels anticipated throughout the year [46][48] Question: Free cash flow expectations for 2026 - Management provided a range of $500 million-$800 million for free cash flow in 2026, highlighting improved cash generation and working capital management [49][51] Question: Order book trends and backlog growth - Management noted that all business units grew their backlog in Q4, with CSS showing the strongest growth at 40% [52][53]

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