Wesco Earnings: Markets Spooked by Lowered 2023 Guidance; We Maintain Our Undervalued Call

The market sent Wesco’s shares down approximately 14% in intraday trading after management lowered 2023 guidance. The key surprise was weaker-than-expected sales in the company’s electrical and electronic solutions segment. Organic sales in EES decreased 5% year on year, while adjusted EBITDA margins came in 150 basis points below the year-ago period. The main catalyst to lower sales was inventory destocking by customers, due to supply chain rebalancing. Supply lead times have improved, leading many customers to delay purchases of wire and cables. The company is now expecting flat year-over-year sales growth in 2023 for EES, compared with mid-single-digit growth previously.