Electrical, data and security products distributor Wesco International reported its 2023 fourth quarter and full-year financial results on Feb. 13, showing a continued slowdown in sales growth in the October-December period but a company record year nonetheless.

Pittsburgh-based Wesco topped MDM’s 2023 Top Electrical, Data & Security Distributors List and was No. 17 for Industrial products.

The company posted total 4Q sales of $5.5 billion, down 1.5% year-over-year, with organic sales down 2.6%, as a +0.7% impact from Wesco’s November 2022 acquisition of Rahi Systems and a +0.4% impact from foreign exchange was more than offset by volume declines in certain businesses. Wesco noted it saw growth in industrial, utility, data center and network infrastructure. 

That overall YoY sales decline followed growth of 3.6% in 3Q23; 4.8% growth in 2Q23 and 12.0% growth in 1Q23.

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Wesco’s backlog at the end of 4Q23 was down 10% YoY, and down 1% sequentially from 3Q23.

The company’s 4Q23 gross margin of 21.4% fell 50 basis points YoY and 20 bps from 3Q23. Meanwhile, 4Q23 operating profit of $316 million fell 17.3% YoY, and operating margin of 5.8% (6.7% in 3Q23) fell 110 bps YoY.

Wesco posted a 4Q23 net profit of $128 million, trailing the $205 million of a year earlier and 3Q23’s $233 million.

“The fourth quarter was disappointing as our stock and flow sales were below our expectations and we saw delays in certain projects that were anticipated to ship in December,” Wesco President and CEO John Engel said in the company’s 4Q23 earnings report.

By Wesco business unit in 4Q23:

• Electrical & Electronic Solutions (EES) sales of $2.08 billion fell 3.9%  YoY (-2.0% in 3Q), with organic sales down 4.1% (-0.2% in 3Q). Wesco attributed the organic slide to decline in volume from construction and OEMs, partially offset by continued positive momentum in industrial, price inflation and the benefits of cross-selling.
• Communications & Security Solutions (CSS) sales of $1.80 billion increased 1.6% YoY (+11.0% in 3Q), with organic sales down 1.4% (+4.1% in 3Q). Wesco said the organic decline reflected volume declines primarily in security solutions, partially offset by growth in data centers and enterprise network infrastructure and price inflation.
• Utility & Broadband Solutions (UBS) sales of $1.60 billion decreased 1.8% YoY (+4.2% YoY), with organic sales down 1.9% (+5.8% in 3Q). Wesco said the organic decline reflects lower  broadband sales, partially offset by price inflation and growth in utility and integrated supply.

Full-Year

For the full-year 2023, Wesco reported total sales of $22.4 billion, up 4.5% vs. 2022, with organic sales up 3.2%. The acquisition of Rahi Systems had a +2.1% impact on 2023 sales, while foreign exchange and fewer business days each had a -0.4% impact.

Wesco’s 2023 gross margin of 21.6%, down 20 bps from 2022, while operating profit of $1.41 billion fell 2.2%. Operating margin of 6.3% in 2023 trailed 2022’s 6.7%.

Wesco had a 2023 net profit of $708 million, trailing 2022’s $803 million.

2024 Outlook

Wesco said it expects its full-year 2024 sales to be up about 1-4% vs. 2023, with adjusted EBITDA margin of 7.5-7.9%.

“Overall conditions in 2024 are supportive of a soft landing, however we are mindful that the election cycle, easing inflation, geopolitical upheaval, and short-term borrowing rates may impact demand,” the company’s 4Q earnings report stated.