WESCO International(US:WCC)2025-10-30 20:31Financial Performance - Net sales for Q3 2025 were $6.2 billion, a 12.9% increase from $5.5 billion in Q3 2024, with organic sales growth of 12.1%[119] - Cost of goods sold increased by 14.1% to $4.9 billion in Q3 2025, resulting in a gross margin decrease to 21.3% from 22.1% in Q3 2024[120] - SG&A expenses rose by 11.0% to $922.9 million in Q3 2025, accounting for 14.9% of net sales compared to 15.1% in Q3 2024[121] - Income from operations increased by 2.9% to $345.4 million in Q3 2025, reflecting higher sales but offset by increased costs[123] - Net income attributable to common stockholders was $187.5 million for Q3 2025, with earnings per diluted share at $3.79, slightly down from $3.81 in Q3 2024[128] - Net sales for the first nine months of 2025 were $17.4 billion, an increase of 6.9% compared to $16.3 billion in the same period of 2024[148] - Net income attributable to common stockholders for the first nine months of 2025 was $480.6 million, with earnings per diluted share at $9.71, compared to $509.1 million and $10.02 in 2024[157] - The total net income attributable to common stockholders for Q3 2025 was $187.5 million, compared to $189.9 million in Q3 2024[137] Segment Performance - Electrical & Electronic Solutions (EES) reported net sales of $2.4 billion for Q3 2025, up $249.2 million or 11.8% from Q3 2024, with organic sales growth of 11.9%[132] - Communications & Security Solutions (CSS) net sales reached $2.4 billion in Q3 2025, an increase of $415.0 million or 20.8%, with organic sales growth of 18.3%[134] - Utility & Broadband Solutions (UBS) reported net sales of $1.4 billion for Q3 2025, an increase of $45.5 million or 3.3%, with organic sales growth of 3.4%[136] - Net sales for Electrical & Electronic Solutions (EES) reached $6,682.7 million for the first nine months of 2025, an increase of $373.5 million, or 5.9% year-over-year, with organic sales growing by 7.1%[161] - Communications & Security Solutions (CSS) reported net sales of $6,676.4 million for the first nine months of 2025, an increase of $1,071.4 million, or 19.1%, with organic sales growing by 17.9%[164] - Utility & Broadband Solutions (UBS) net sales were $4,083.3 million for the first nine months of 2025, a decrease of $321.6 million, or 7.3%, with organic sales declining by 2.2%[166] Expenses and Costs - Net interest expense for Q3 2025 was $99.0 million, a 14.5% increase from $86.5 million in Q3 2024, primarily due to the issuance of new notes[124] - The provision for income taxes decreased to $57.8 million in Q3 2025, resulting in an effective tax rate of 23.5% compared to 25.3% in Q3 2024[127] - Cost of goods sold increased by 7.7% to $13.8 billion for the first nine months of 2025, with cost of goods sold as a percentage of net sales rising to 78.9% from 78.3%[149] - SG&A expenses totaled $2.6 billion for the first nine months of 2025, an increase of 5.7% from $2.5 billion in 2024[150] - Other non-operating income fell to $7.0 million for the first nine months of 2025, compared to $99.3 million in the same period of 2024, which included a $122.2 million gain from the sale of the WIS business[154] Adjusted Metrics - Adjusted EBITDA for Q3 2025 was $423.0 million, an increase of $24.9 million or 6.3% year-over-year, driven by a $709.7 million increase in net sales[130] - Adjusted net income attributable to common stockholders for the first nine months of 2025 was $470.9 million, with adjusted earnings per diluted share at $9.51, compared to $461.0 million and $9.07 in 2024[157] - Adjusted EBITDA for the first nine months of 2025 was $1,127.8 million, a decrease of $10.8 million, or 0.9% year-over-year, primarily due to a $986.2 million increase in cost of goods sold and a $142.5 million increase in SG&A expenses[159] - The increase in adjusted earnings per diluted share was primarily due to the favorable impact of the Series A Preferred Stock redemption and increased net sales, partially offset by higher costs and decreased other income[158] Liquidity and Capital Structure - The company has no significant debt maturities until 2028, allowing for strong liquidity to focus on debt reduction, stock buybacks, and acquisitions[115] - As of September 30, 2025, the company had $1,425.0 million outstanding under its Receivables Facility and $258.6 million in cash, providing total liquidity of approximately $1.6 billion[179] - The company’s financial leverage ratio was 3.5x as of September 30, 2025, compared to 2.9x as of December 31, 2024, indicating an increase in leverage[185] - The Revolving Credit Facility has a borrowing limit of $1,725 million, with $425.0 million outstanding as of September 30, 2025[179] - The company plans to direct excess liquidity towards share repurchases, dividends, debt reduction, and digital transformation initiatives in the coming quarters[184] Cash Flow and Investments - Net cash provided by operating activities for the first nine months of 2025 totaled $53.1 million, a significant decrease of $771.5 million compared to $824.6 million in the same period of 2024[192] - Net cash used in investing activities for the first nine months of 2025 was $100.4 million, a decline from $249.7 million provided by investing activities in the first nine months of 2024[194] - Financing activities in the first nine months of 2025 resulted in a net cash outflow of $94.2 million, compared to a net cash outflow of $874.3 million in the same period of 2024[196] - Capital expenditures for the first nine months of 2025 amounted to $55.4 million, primarily for leasehold improvements and equipment to support digital transformation initiatives[194] Digital Transformation - The company is executing a multi-year development of a new Digital and Data Platform to enhance operational efficiency[116] - Digital transformation costs included in adjusted figures amounted to $24.1 million for the nine months ended September 30, 2025[176]