It has been about a month since the last earnings report for Wesco International (WCC). Shares have added about 14.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Wesco International due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

WESCO Q4 Earnings Lag Estimates, Revenues Dip Y/Y

WESCO International reported fourth-quarter 2023 adjusted earnings of $2.65 per share, down 35.8% year over year. Also, the bottom line lagged the Zacks Consensus Estimate by 1.15%.

Net sales of $5.47 billion fell 1.5% year over year. The figure missed the Zacks Consensus Estimate by 1.66%. Organic sales declined 2.6% year over year.

Top-Line Details

EES (38.1% of Net Sales): Sales in the segment were $2.08 billion, down 3.9% year over year. Organic sales declined 4.1% due to declines in construction and original equipment manufacturers (“OEM”), partially offset by the continued positive momentum in the industrial business, price inflation and the benefits of cross-selling.

CSS (32.7% of Net Sales): Sales in the segment were $1.79 billion, up 1.6% year over year. Organic sales dipped 1.4% on a volume decline in security solutions.

UBS (29.2% of Net Sales): Sales in the segment were $1.60 billion, down 1.8% year over year.

Operating Details

The gross margin contracted 50 basis points (bps) on a year-over-year basis to 21.4%.

Selling, general and administrative expenses were $798.8 million, up 2.7% year over year. As a percentage of net sales, the figure increased 60 bps year over year to 14.6%.

The adjusted operating margin was 6%, which contracted 120 bps year over year.

Balance Sheet & Cash Flow

As of Dec 31, 2023, cash and cash equivalents were $524.1 million, up from $631.4 million as of Sep 30, 2023.

Long-term debt was $5.31 billion at the fourth-quarter end compared with $5.37 billion in the prior quarter.

The company generated $69.3 million in cash from operations compared with $361.7 million in the previous quarter.

For the fourth quarter, WESCO reported a free cash flow of $59.2 million.

Guidance

For 2024, WESCO expects an adjusted EBITDA margin between 7.5% and 7.9%, and an adjusted EBITDA of $1.75 billion at the mid-point.

The free cash flow is expected to be $700 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.