Wesco Misses, Slashes Guidance, Stock Declines (Q2 2024)
Wesco, owner of Anixter, is one of security's largest global distributor but challenges deepened for the company.
In this report, IPVM examines Wesco's decline based on its most recent earnings release, earnings calls, and investor decks.
******* "************" **** ******, ***** ************** ***** ** ** 2024,********* * *.*% *** *** ***** decline, ******* ********, *** ******* ******** *** **** full-year ********. *** *******'* ***** **** more **** *% ** *** *** it ********* *** ** **** *******.
** ********, ***** ********** *** ********* from ******* **** **** **** ***"******** ****** *** ************ *** **** *** ********" ** its **** ****** ******** **** *** said *** ******** ***** **** **** "mid-single ******" *** *** ****** ** a "******* ******** ** *********** *** commercial ************ *** ****** ****** ***** activity." ******* **** ********, ***** **** it ******* *** ******* ** "**** in *** ****** **** ** **** year, ************ ** **."
*** ******* ***** ********** *** **** center ******** *** *** ************** & Security ********* (***) ******** ****** ** expects *** ******* ** **** "***-******-***** growth *** ****-**** ****."
*******, ***** ********** *** **** *********** to *** ******* ********, ******* ******** destocking *** * **** ** *** projects ** **** *****. ** *** presentations, ***** **** **** ********* **** despite *** **** *******, ** ** doing ****** **** *** ********* *** peers, *** *** ***** *********** ** to *****.
Q2 **** ********* ***********
***** ***** *** ******* ****** ** ** ******** * *.*% *** *** ***** decline ** ** **** *** ******* its ****-**** **** ******** ***** ******** from *** ********** ******** *% ******* to *% ******, * *.*% - 1.5% *******.
******* *** ***** *******, *****'* *** profit ****** ********* ** *.* ********** points *** **** *** ** *.*% YoY ** $***.* ******* ** ** 2024.
** *** ***** **** ** ****, Wesco's ******* *** ***** ******** ** 4%, ********* ** *********** ******** ***** the ******* **** ***** **** ******* **** "************."
** *** ******** ****, ***** *** its ***** ******** ******* *** ****** in ***** ****** ** **** ****:
Stock **** *% ** *** *** ** *****'* ** **** Release
*****'* ***** ***** *** **** *.**% after *** ******* ******** *** ** 2024 *******, ***** ****** ******** *** downward ******** *** ****-**** **** *******:
Security ***** ****
*****'* ******** ***** ** ** **** were **** "***-****** ******," *** *** company********** **** ** **** ******* **** year **** *** ******** ****** "**********"** *** **** ****:
******** ***** **** **** ***-****** ******, driven ** * ******* ******** ** nonresidential ********** ************ *** ****** ****** space ********.
The ******** ****** *** ********** **** *** **** *** ********, but we expect it will grow in the second half of this year as comparisons ease significantly, particularly in the fourth quarter. [Emphasis added]
Security & **** ****** **** *******
***** * ******* ****** ** "****** contractions" ** **** *********** *** ********** markets, ***** ******* *** ******** ** "outperform *** ******" *** ** **** year-on-year ** *** ****** **** ** 2024, *********** * "****** **********" ** 2023:
***** ** ***** ***** ** ********,we ****** ** ******* *** ****** *** *** *** ******** ** ** ********** **** ***** ** ****** *********** ** *** ****** **** ** ****. Lastly, our enterprise network infrastructure is expected to be up low single-digits. [Emphasis added]
*****'* **** ****** ******** ** *** fastest ******* ****** ** *** ** its ************* ******** & ********* *****, and *** ******* ******* ** ** be ******* "** *** ***-*****" *** the **** **** ****:
** ********* ************ ****** ** *** data ****** ******** ** *** ****** quarter, ***** *** ** ** *** high ***** ****** * *** ******-***** increase ** *** ***** *******.We *** ****** *** **** ****** ******** ** ** ** ** *** ***-***** *** *** **** ****.
Increased ******* ************* ** ************** *** ******** *********
******* *** ***** ************ *******, ***** said ** ******* *********** **** *** supplier ** ***** ******* *****, ***** increased *** ************* ** ***** ** a ******* ** *** *****:
******, ********** ***** ******* ********. ** the ****** *******, ** ****** **** our ********* ** ******* ******* ***** projects **** ************ **** **** ******** to *** *** **** ** *** supplier. **** ** *** ****** ** customers ******* ** *********** ***** ******** base *** **** ********* ** *** global ***-**** **** ************. ** *** future, ** ********** ******* **** ** these ***** ** ******** *** ********* our ****** ** ****** ********** ******** to *** ********.
Lowering ****-**** **** ********
*** ** *** *******'* ******* ***** decline *** *** **** ** ******** + ****** *********, ***** ******* *** full-year **** ********, ********** * **** -1.5% ******* ** *.*% ***** ******, incorporating *** ***** ******** *******:
***** **** ********** **** *** ** "pressure ** ******** ****** *******," ** expects *** ******* ***** ****** ** be ******** ** ****:
** *** ********** * ********* ** the ******* ** ********* **** ***** the ******-****-******** ****** **** **** **** outlook,there **** ** ******** ** ***** ******* ******* ** *** ******** ****** *******. [Emphasis added]
*******-****-*******-****, ***** ******* ***** ******** ** recover ** *** ****** **** ** the **** ******** ** ** *** Q1 ****, ***** ****** **** *** current ****-**** *******, ***** ******* **** decline **** *** ***** **** ** 2024:
*'** ********* **** **** *** **** sequentially ** *** ****** *******, ***** we *** *** *** ****-** ** that ********** ***** ******, ** **** up ***** *% *********** ************ ** the ****** *******. **** *** **** double-digit ********** ****** ** * *****-***-******* basis ****** ***.
*** ***** *** **'** ******* *** market ***********, ** *** ******* *** front **** ****** *** **** **** and **** **'** ****** *** *** full-year ******** *****, **** ***** ******* you **** * ****** *** ** how ****** *** *******. *** *********, July *** ** **** **** *** full-year ******* **** **'** ******** ***. Nothing ************* ********* **** *** ***** from *** ****** ******* ** *** impact ** *** ****-**** *******.
Cost *******
** ******** ** *** ***** ******* across **** *********, ***** **** ** has "***** **** **********" ** *** past ****, *** *** ******* **** its ********* ** ** ** *** pressured *** ******* ********* ******:
**'** ******* ***** **** ********** **** the **** ** ******. **'* ********* for ** ** ****** * *********** reduction ** **** ** *** **** half ** *** ****, ******* ** mind **** ** **** ** **** sure **** ** **** *** ********** to **** ********* ** ******* ****** trends ** *** *** *****. *******, that ********* ******** **** **** ******** on *** ****** ******.
Blaming ******* ******* *** *** ************ *** ******* ****************
********** & ********** *********, *** ********, has **** *****'* ******* ************* **** ****.**** ****, ***** ********** *** ******* to *** ******* ******** *****:
** *** *** ******* ** *** expectations ** *** ***** **** ** the ****. *******, ** ****** *** consensus ** *** ****** ******* ** just ***** $*** *******. ** ***** are *** **** ******* ** *** sales ****** ****.
*** ******* ** *****'* ******* ******** also ********** ******** *** ****** ******:
**** *** **** * **** ** the *********** ****** *** **** *******, it ** ******* **** ** ***** historically ***** **. *** ** *** things **** *'** ********* **** ** the ******* & ********* ********* ******** is *** ******* ******** ****** ****** business. ** ** **'** ****** *** the ******** ** *** ***** *** that, **** ** ****** * **************** effect ** *** *********** *******.
Attribute ********** ** ******* ** ******** **********
***** **** ********* ** ********* **** its ******* ******** ** **** ******* of ******** ********** *** **** ***** are ** *** ********, ***** ** a ****** ** * **** ***** economy:
***destocking *********. I wouldn't say it's project delays. The dynamic that's occurring is with all the inflation that's occurred in -- across our economy and value chain over the last couple of years, the capital spending that was approved is still getting executed by the utilities, but those dollars are not going as far. So it's not that the current projects underway are getting stretched out or slipped or kind of extending if they're not -- the *** ******** *** *** ******* **.
*** * ***** **** **'** ****** is **** **the ******* ******* *** ****** ** *** ****** ******* adjusting to the elevated interest rates that increased, tightened lending standards, even the strong dollar. You're seeing that ripple through, and I think that's what's impacting utilities. Seeing a little bit of resi construction weakening. You're seeing that in the industrial industry, it's kind of trending sideways. That ISM number is a pretty notable number; in 19 of the last 20 months, it's been in contraction territory. So I think that speaks to the overall economic environment being mixed and multi-speed. [Emphasis added]
#*, ******, ***** ************* ************? *** is **** ***** **** ** * problem ******** ** ***** ** *** these ************* ****** ******* ****** ******** generally?
* ***** **** ***** *** ***** sales ******** ** *** ******** ******, especially ******** ********, ** **** *** adequate ***** ****** **********. * ***'* know ***** *** **** ** *** market, *** ****'* ** ******* *****. They ********* *** *** ** ******* or ***'* ***** ****** *********.