What happened

Wesco International (WCC -0.81%) quarterly earnings fell short of expectations, and the company lowered its full-year revenue expectations. Investors were caught off guard, sending shares of the industry parts distributor down nearly 20%.

So what

Wesco is a distribution and supply chain management specialist with a catalog of electrical, security, communications, and broadband products available through a network of 800 offices in more than 50 countries.

The company saw strong demand in the most recent quarter, but it didn't quite translate into the level of profits that analysts had hoped for. Wesco earned $3.71 per share on revenue of $5.75 billion, a split result relative to the consensus estimate of $4.05 per share on sales of $5.4 billion.

The sales figure was up 5% year over year, but adjusted earnings before interest, taxes, earnings before interest, taxes, depreciation, and amortization (EBITDA) was flat compared to a year prior and gross margin fell by 10 basis points to 21.6%. Wesco said the weakness was in its electrical component business, where CEO John Engel said "unprecedented supply chain rebalancing" was going on, and in the commercial construction and manufacturing sectors.

Wesco is continuing to digest its $4.5 billion acquisition of Anixter, a 2020 deal that significantly increased its scale and market reach. The company raised its sales synergy target from the deal to $2 billion from $1.8 billion and used free cash flow in the quarter to pay down some of the debt taken on from the merger.

The company's total debt stood at 2.8 times equity at quarter's end, near the midpoint of its target range and the lowest level since acquiring Anixter.

Now what

The choppiness in the electrical sector is expected to continue into the second half of the year. As a result, Wesco lowered its full-year revenue target to 5% to 7% growth, from 6% to 9%. EBITDA margins are now forecast to be 7.8% to 8% for the year, down from 8.1% to 8.4%. And Wesco now expects to earn between $15 per share and $16 per share for the year, short of the $17.32-per-share consensus.

The near term is difficult, but the long-term story the company told when it acquired Anixter is playing out. Wesco has created a one-stop shop for industrial equipment; it just can't control the cyclical nature of some of its end markets.

For those intrigued by the story and willing to ride out some near-term volatility, Thursday's drop could be a potential buying opportunity.