Electrical supplies distributor Wesco reported its second quarter financial results on Aug. 1, which showed continued modest declines in year-over-year sales, but results improved in June with sequential margin expansion.

The Pittsburgh-based company posted total 2Q sales of $5.5 billion, down 4.6% year-over-year, with organic sales down 0.8%. Wesco said the organic sales decline reflects volume declines in its EES and UBS segments, partially offset by a volume increase in CSS segment and price inflation in the EES and UBS segments.

Wesco’s backlog at the end of 2Q was down 10% year-over-year and declined by approximately 2% from the end of 1Q24.

The company’s 2Q gross margin of 21.9% was up 30 basis points year-over-year and up 60 bps from 1Q24. Meanwhile, 2Q operating profit of $324 million fell 11.1% year-over-year as operating margin of 7.3% was down 40 bps year-over-year and up 90 bps sequentially.

“Our second quarter results were somewhat below our expectations for a low single-digit decline in reported sales against a continued mixed and multi-speed economic environment,” Wesco Chairman, President and CEO John Engel said in the company’s financial release. “Results improved as we moved through the quarter with a return to organic sales growth in June along with sequential margin expansion. We continued to benefit from the increase in AI-driven data center growth with sales in our Wesco Data Center Solutions business up double-digits. This was more than offset by a significant slowdown in purchases by our utility customers.”

Engel — who will be featured at MDM’s upcoming SHIFT Conference in a Fireside Chat on Sept. 13 — added that while Wesco remains confident in the long-term growth of its Utility and Broadband Solutions business, the customer destocking and delay of capital projects clearly impacted the company’s 2Q results.

See our new three-part Wesco Analysis series on MDM Premium:

• • • Part 1: Scale and Value Proposition
    • Part 2: Enterprise Strategies
    • Part 3: Digitize the Business
    • Stay tuned for the release our Case Study report that packages insights from that series and much more, to be available in the MDM Store

By Wesco business unit in 2Q:

• Electrical & Electronic Solution (EES) sales of 2.2 billion fell 1.2% year-over-year, with organic sales down by 0.6%. Adjusted EBITDA rose 9% year-over-year.
• Communications & Security Solutions (CSS) sales of 1.9 billion increased 0.8% year-over-year, with organic sales up by 1.1%. Adjusted EBITDA rose 8.1% year-over-year.
• Utility & Broadband Solutions (UBS) sales of 1.4 billion decreased 15% year-over-year, with organic sales down by 0.8%. Adjusted EBITDA rose 12% year-over-year.

Other notes from Wesco’s 2Q financial presentation:

• Wesco executed its capital allocation strategies and repurchased $300 million of its Wesco stock in the second quarter. The company closed on two software-based acquisitions — entroCim and Storeroom Logix.
• Updating its 2024 full-year outlook, Wesco expects total organic growth of -1.5% to 0.5% ($21.6 to $22.6 billion). The Integrated Supply Divestiture is expected to have a -3% impact on full-year sales. The company forecasts full-year adjusted EBITDA margin of 7%-7.3%.

Wesco — No. 1 on MDM’s Top Distributor’s List for Electrical, Data and Security Supplies — posted $22.4 billion in revenue sales for 2023.