WESCO International WCC reported fourth-quarter 2024 adjusted earnings of $3.16 per share, up 19.2% year over year. The bottom line missed the Zacks Consensus Estimate by 1.86%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Net sales of $5.5 billion rose 0.5% year over year. The figure beat the Zacks Consensus Estimate by 1.52%. Organic sales increased 2.4% year over year.

The company’s shares gained 0.57% in the pre-market trading. WCC shares have returned 4.1% year to date, outperforming the Zacks Computer & Technology sector’s return of 2.2%.

WCC’s Top-Line Details

The EES Segment (38.6% of Net Sales): Sales in the segment were $2.12 billion, up 1.9% year over year. Organic sales increased 1.0% year over year. Improved business momentum drove a return to profitable growth in the fourth quarter of 2024.

CSS (37.2% of Net Sales): Sales in the segment were $2.05 billion, up 14.2% year over year. Organic sales increased 11.3% on a year-over-year basis. Strong demand for Data Center Solutions fueled double-digit growth in CSS in the fourth quarter of 2024.

UBS (24.2% of Net Sales): Sales in the segment were $1.33 billion, down 16.8% year over year. Organic sales declined 5.9% year over year. WESCO anticipates utility to rebound in the second half of 2025.

WCC Struggles With Margin Contraction

The fourth-quarter 2024 gross margin was 21.2%, marking a year-over-year contraction of 20 basis points (bps), driven by business and project mix in communications and security solutions, including a 30-basis-point headwind from lower supplier volume rebates.

The adjusted EBITDA margin of 6.7% declined 30 bps year over year.

Selling, general and administrative expenses were $807.2 million, up 1.1% year over year. As a percentage of net sales, the figure increased 10 bps year over year to 14.7%.

The adjusted operating margin was 5.7%, which contracted 30 bps year over year.

Balance Sheet & Cash Flow

As of Dec. 31, 2024, cash and cash equivalents were $702.6 million, down from $706.8 million as of Sept. 30, 2024.

The long-term debt was $5.05 billion at the fourth-quarter end compared with $5.01 billion in the prior quarter.

The company generated $276.6 million in cash from operations in the reported quarter compared with $302.1 million in the previous quarter.

For the fourth quarter, WESCO reported a free cash flow of $268.4 million compared with the previous quarter’s $279.5 million.

WESCO Initiates 2025 Guidance

For 2025, the company expects organic sales growth between 2.5% and 6.5%. Sales on a reported basis are expected to be $21.8-$22.7 billion.

WESCO projects the adjusted EBITDA margin between 6.7% and 7.2%.

The adjusted diluted EPS is anticipated between $12 and $14.50 per share.

The free cash flow is expected between $600 and $800 million.

Zacks Rank & Stocks to Consider

WESCO carries a Zacks Rank #4 (Sell) at present.

Arista Networks ANET, Bandwidth BAND and Fastly FSLY are some better-ranked stocks in the broader sector.

Arista Networks flaunts a Zacks Rank #1 (Strong Buy) at present, and Bandwidth and Fastly carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Arista Networks shares have returned 6.3% year to date. ANET is set to report fourth-quarter 2024 results on Feb.18.

Bandwidth shares have gained 9.3% year to date. BAND is set to report fourth-quarter 2024 results on Feb. 20.

Fastly shares have risen 6.5% year to date. FSLY is set to report fourth-quarter 2024 results on Feb.  12.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

WESCO International, Inc. (WCC) : Free Stock Analysis Report

Arista Networks, Inc. (ANET) : Free Stock Analysis Report

Bandwidth Inc. (BAND) : Free Stock Analysis Report

Fastly, Inc. (FSLY) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research