Wesco Stock Drops, Lowers 2023 Guidance
Wesco acquired Anixter 3 years ago and has touted the synergies in past financial reports. After a confident Q1 2023 with performance beating analysts' estimates, the company missed revenue estimates in Q2 and lowered its 2023 guidance.
Inside this note, we examine Wesco's financials, comments from Wesco's executives, the macroeconomic environment, and Wesco's position among security distributors.
Q2 **** ********* ***********
***** ************* $*.* ******* ** ** **** revenue, * ~*.*% *** ******, **** ****** ********' ************ *** prompted *** ******* ** ***** *** 2023 *** ***** ****** ******** **** the *%-*% ********* ** *** ** 2022 ******** **** ** *%-*%.
*** *******'* ** *** ****** **** 13% ** ~$*** *******. ** **** lowered *** ********** **** ****** (******** before ********, ***, ************, *** ************) margin **** *.*% - *.*% ** 7.8%-8.0%.
*** *** ***** **** ** ****, Wesco *** ** *********** *** *** sales ****** ** *%. **********,***** ******** ****-****, *** *** ***** growth ** **% ** **** *** 47% ** ****, ************.
Causes ** *** **** ***********
***** *** ***** **** ******** ********: the ********** & ********** ********* (***) business, ***** ***** ** ~**% ** total *****; *** ************** *** ******** solutions (***) ********, ********* *******, ***** makes ** ~**% ** ***** *****, and *** ******* *** ********* ********* (UBS) ********, ***** ***** ** ~**% of ***** *****. ** **, ****, Wesco ******** ***** ****** ** **** CSS *** *** *** ******** * sales **** ** ***:
*****'* ********, *********, *** ******* ************** ** ********* ** *** ********* earnings **** **** *** ****** ***** re-balancing ** *** ********** *** ********** solutions ******** ******* *** **** ***** the ********:
** **** ******* ***** ***** ** address *** ****** ***** **-********* ** our *** [********** *** ********** *********] business ******* * $** ******* ********** cost ********* *** ** *******, ***** in **** **** **** ***** ** benefit *** ****** ****.
** **** ******,*** ******* ***** ** *** *-* filing**** *** ********* ** *** ************ and ************ ********** ******** **** ******* the ***** ****:
*** ******** ** ******* ***** ******** to *** ***** **** ******* ********downturns ** *** ************ *** ************ ********** **********, partially offset by price inflation and continued momentum in our industrial business. In addition, a transfer of certain customer accounts to the CSS segment negatively impacted reported net sales for EES by approximately two percentage points. [Emphasis added]
***** ********* **** *** ****** ***** rebalancing ** *** *** ******** ******* drove ******** **********. ****, ******** **** select ****** ********, **** ** * difficult ******* *** *** *******.
** *** ******* **** ********, ***** expects *** *** ******* ** ** flat, *** *** ******* ***** ** be ** ****-****** ** ***-****** ****** in *****, *** *** *** *******, the ******** ******** ********* *******, ** grow ***** *** **** ** ***-***** percentages. *** ***-***** ****** *********** *** CSS *** * ****** **** ***** expectations ** **** ****** ** *** double-digit ******,********* ** *****'* ** **** ******** call.
Stock *******
*****'* ***** ***** ******* **% ** response ** *** **** *********** ***** the ****** ****** *****:
**** ** ****, *****'* ***** *** up **% **** *********, *** *** drop ***** ***** *** **** **** half ** **** ****:
Security ******* & ******* *********
******* * **** *** ********, ***** is ***** **** ** ********, ********* 7% *** ******* ***** ****** ** communications & ******** ********* *** **, 2023.
*** ******* *** ************** ******** ********* ******* ***** ** acquired *******, ********* **** ********* ***, **** importantly, *****-**** ******** ****** **** *** security ********. ***** **** ** ******* Q2, **** ********* ******** ** *** earnings **** ******:
***** **** **** *** *****-**** ********* between *** ****** ***** *** ****** Anixter:
*** **** *******, *****/******* **** ******* this **** ****** **** **** ******* ********* *** Dahua ******** ** ***** ******* **** its ****** *** ***.
Compared ** ***
*****/*******'* *** ********** ** ******** ***************'* ** **** ******* *** "****"***, ***'* ****** ******* ******* **** in *** ** **** ******** ****. Resideo **** **** **** ** ******* ADI ** **** *** ******-***** ******* growth *** *** ****:
*** ***, *** **** ******* ************ low ******-***** ******* ******, ** ****** growth ** **********-******* ********** ** ********* offset ** ****** ******** ** *********** categories, ********* ** *** *********.
*** *** **** * ****** **** for *** ***-********** *******, *** *** security *********** ** **** ********* **** year ***** ********* ******* *********** *** thus **** ***** *********. *** ** the **** ***********, ******* *********** "**** *********" ****** ***** ****.
**** ***** ** ******* *******'* ** 2023 ********** ***** **** ** ********* after *** ****** ****** *****, ****** 3.
****** *****/*******, *** *** ************ **** closer ************* **** ********* *** *****. For *******, *** **** ********* *****************, *** **** ********, *********** * ****, ******* ********** ***** from ********* ***.