Distribution and services giant Wesco on Thursday reported stronger sales numbers in its latest fiscal quarter but cautioned that full-year sales would likely feel the impact of “moderating” conditions in its end markets.
The Pittsburgh-based company — whose industrial operations came in at no. 7 on ID’s 2023 Big 50 — said net sales reached $5.6 billion in the third quarter, a 4% increase compared to the $5.4 billion in the same quarter of 2022. Organic sales rose by 2.8%, while last year’s addition of Rahi Systems boosted sales by 2.4%.
The company’s gross profit, however, remained flat at $1.2 billion year-over-year, and gross profit as a percentage of sales dropped from 22.1% to 21.6%, which Wesco officials attributed to a shifting sales mix and lower supplier volume rebates.
Operating profit, meanwhile, fell 5.3% in the latest quarter — from $401.6 million to $380.5 million — and net income attributable to common stockholders dropped from $225.2 million to $219 million. Earnings per diluted share slid from $4.30 to $4.20, although the company noted that they were flat on an adjusted basis.
“Over the past two years, global supply chain constraints required us to invest in inventory to service our customers,” Wesco Chairman, President and CEO John Engel said in a statement. “With supply chains healing, we are focused on reducing our inventory and returning to strong and consistent free cash flow generation. We saw this in the third quarter.”
Heading into the final quarter of the year, Wesco said it anticipates full-year net sales growth of about 5%, which would be near the low end of its earlier 5% to 7% projection. The forecast remained largely in place for adjusted EBITDA, EBITDA margins and free cash flow, and the company raised its estimates for earnings per share due to “a lower full-year tax rate.”
