WESCO finalizes $800M senior notes offering and credit amendments

WESCO International Inc. (NYSE:WCC), a leading provider of electrical, industrial, and communications maintenance, repair and operating (MRO) and original equipment manufacturers (OEM) products, construction materials, and advanced supply chain management and logistics services, has completed the issuance of $800 million in senior notes and amended credit facilities, according to a recent SEC filing. With a market capitalization of $8.2 billion and annual revenue of $21.8 billion, WESCO maintains a strong financial position, earning a "GOOD" overall health score according to InvestingPro analysis, which currently indicates the stock is trading below its Fair Value.

On Thursday, WESCO Distribution, a wholly owned subsidiary of WESCO International, finalized its offering of 6.375% senior notes due 2033, raising net proceeds of approximately $789.5 million after discounts and expenses. The notes were sold at par and will pay interest semi-annually, with the first payment due on September 15, 2025, and maturing on March 15, 2033. The company’s solid financial foundation is reflected in its healthy current ratio of 2.2, indicating strong ability to meet short-term obligations.

The company plans to use the proceeds to redeem its outstanding 10.625% Series A Fixed-Rate Reset Cumulative Perpetual Preferred Stock and related depositary shares on June 22, 2025, and to repay a portion of its asset-based revolving credit facility (ABL Facility). Prior to redemption, WESCO Distribution will temporarily reduce borrowings under its accounts receivable securitization facility (Receivables Facility) and the ABL Facility, with plans to redraw under these facilities to fund the redemption.

The notes, which are unsecured and unsubordinated obligations, may be redeemed in part or in full before March 15, 2028, at a make-whole premium. Additionally, they are subject to repurchase at 101% of their principal amount plus accrued interest in the event of certain change of control scenarios.

Alongside the note offering, WESCO Distribution amended its ABL Facility, extending its maturity to February 28, 2030, and making other amendments including an increase in the capacity for revolving commitments and removal of the credit spread adjustment for certain loans.

WESCO Distribution also amended its Receivables Facility to extend the termination date to February 28, 2028, among other changes.

These strategic financial moves are part of WESCO’s ongoing efforts to optimize its capital structure and lower its cost of capital. The company’s financial strategies are governed by covenants that limit certain activities, such as incurring additional liens or engaging in mergers, subject to certain conditions. For deeper insights into WESCO’s financial health and detailed capital structure analysis, investors can access comprehensive Pro Research Reports available exclusively on InvestingPro, which covers over 1,400 US stocks with expert analysis and actionable intelligence.

The information for this article is based on a press release statement.

In other recent news, Wesco International reported fourth-quarter earnings that fell short of analyst expectations, with adjusted earnings per share coming in at $3.16 compared to the consensus estimate of $3.25. However, the company’s revenue for the quarter exceeded projections, reaching $5.5 billion against the anticipated $5.41 billion. Wesco’s sales rose by 0.5% year-over-year, driven by significant growth in its global data center and broadband solutions sectors, which saw increases of over 70% and 20%, respectively. Despite these gains, the company experienced challenges in its industrial and utility segments.

In a move to manage its financial structure, Wesco announced plans to issue $600 million in senior notes, primarily to redeem its 10.625% Series A Fixed-Rate Reset Cumulative Perpetual Preferred Stock by 2025. Meanwhile, KeyBanc Capital Markets maintained an Overweight rating on Wesco with a $245 price target, citing potential for earnings per share growth if demand strengthens. Oppenheimer also reiterated an Outperform rating with a $225 target, acknowledging the company’s 19% increase in fourth-quarter adjusted EPS, despite it missing their estimate.

Wesco’s guidance for 2025 includes organic sales growth of 2.5% to 6.5% and an adjusted EPS range of $12.00 to $14.50. The company also plans to increase its common stock dividend by 10% and continue its share buyback program. Oppenheimer noted that Wesco’s free cash flow for 2024 outperformed expectations, registering at $1.045 billion, surpassing both their estimate and the company’s guidance.

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