WESCO International Inc.

S&P Global Ratings' stable outlook on WESCO International Inc. reflects our expectation that continued improvement in the company's end markets will likely lead to modest revenue growth over the next 12 months. This growth, coupled with stable-to-modestly improving margins, should allow WESCO to maintain leverage at the stronger end of the 3x-4x range over the next 12 months. We could lower our rating on WESCO if its operating performance deteriorates and causes its leverage to increase well above 4x for 12 months or longer. We could also lower the rating if WESCO's leverage increases above 4x following future acquisitions and does not quickly improve, either due to a challenging operating environment or because the acquisitions stretch the company's credit measures

...The company's end markets remain positioned for modest growth over the next 12 months. We forecast a broad-based improvement in demand across the majority of WESCO's end markets supported by our expectation for modest macroeconomic growth. The company's maintenance, repair, and operations (MRO) demand should remain healthy. In addition, the company's customers are moving forward with capital projects in 2019, which will support organic revenue growth. Still, pockets of weakness exist, primarily due to choppy demand from original equipment manufacturers (OEMs). WESCO has not completed any large acquisitions since the purchase of Canada-based EECOL in 2012 for $1.1 billion, though we believe the company could undertake a sizeable transformative acquisition over the next several years. The electrical distribution industry is consolidating and scale is becoming a more important basis for competition. Although we only incorporate small- to mid-size acquisitions in our base-case forecast, we...

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