David Schulz: Certainly. Let me start with CSS. Relative to our expectations, and if you take a look at how we finished the fourth quarter, the biggest miss relative to our expectations was within the CSS business. That’s where we did see some of our large projects to technology customers, including some data centers, got pushed out of 2024. We were clearly focused on having those ship in November, December, they’ve been pushed to the current year. So that is something that was unexpected. We have included those sales as we think about the growth rates in the current year into 2024. On EES. So EES came in, as John mentioned, relatively close to our expectations, but we had some puts and calls within the makeup of those sales.
I’ll mention on OEM. We had called out the manufactured structures business, which is, as you said, Patrick, it includes some specialty vehicle. It also includes some manufactured housing. That business has been relatively stable. I mean, I think we’ve hit the bottom in terms of the overall market opportunity and our sales. But we did have some customers in other segments where sales were expected to ship in November, December that we did not see ship. So we do think that, that was driven by a market downshift relative to our expectations. And then I’ll just highlight again on UBS. Broadband came down more than we thought it would. The other thing that we had highlighted was utility, just comping some very strong numbers. We still see very strong demand from the utility business.
But again, against the tough comparison, we came in below our expectations in the fourth quarter.
John Engel: Patrick, I’ll add that the secular growth trends are still intact. And so I’ll just — I’ll add to Dave’s comment relative to data centers and what we call our WDCS business, our WESCO Data Center Solutions, which is the combination of Rahi plus Anixter’s legacy data center business, which was exceptionally strong. So that had very strong results in the fourth quarter, and it grew double-digits. Obviously, it was up very strongly across the year. But there were some projects that did slip out that we had expected to get in December. The momentum vector is still exceptionally strong there. And we got very high good bidding — bid activity levels and quoting levels. The AI-driven demand is expected to only further accelerate, I think, the opportunities with data centers. And we expect very strong results in 2024 because I think that was part of your question as well. Very high single digit to low double-digit growth for that portion of our CSS business.
David Schulz: Yes. Let me just go back. I failed to mention solar. So solar is high single-digit percent of our EES business. We’ve not provided the specific number. We do support a combination of nonresidential plus residential customers related to that solar business. We’ve seen a significant downturn just based on inflation, interest rates and some of those demand patterns in our EES business for solar.
Patrick Baumann: Thanks. And then just one follow-up just on the first quarter. You mentioned, I think, sales down mid-single digit. And then I was wondering if you could give some color on margin expectations for the year-over-year because for the full year, you have them up, I think, 10 basis points at the midpoint. But since you’re starting slow, I’m going to imagine that you’re down to start the year-over-year on margin. If you could just help provide some parameters around that. That’s be helpful.
David Schulz: Yes, Patrick. Let me walk you through how we developed our 2024 outlook, and I’ll focus on sales first. As we mentioned, we’re down about 5% in the month of January on a preliminary basis. That’s in line with typical seasonality. And the way that we built our 2024 sales outlook is we started with our Q4 2023 and we applied the typical seasonality on a sales per workday basis. So from that perspective, we typically see January down mid-single digits, typical seasonality, and we see the first quarter down low single digits. We’ve applied that same methodology for each of our quarters. The one thing I’ll note here is that Q1 and Q2 of 2023, the reported sales were up 12% and up 5%, respectively. So we’ve got tough base period comparisons in the first half.
In the second half of the year, again, we’ve applied typical seasonality sequentially by quarter which includes sequential growth Q1 to Q2, relatively flat Q2 to Q3 and then just a very modest growth rate into the fourth quarter. In 2024, we have two extra workdays, they’re both in the back half of the year. So as we think about the construct of our sales outlook, it’s roughly 48% front half, 52% back half. That 52% back half, of course, being helped by the two extra workdays. So again, we’ve applied typical seasonality against our sales outlook. If you look at typical seasonality, it would point you towards the higher end of the range of our 1% to 4%. But we, of course, have taken a look at some of the other external factors and we’ve incorporated that into how we’ve set the range for 2024.
Our project activity, our bidding levels continue to be strong. That also supports the range of 1% to 4%. On the margin profile, we’ve given you the margin profile and our expectations for the full year. We’re not going to provide the specific margin drivers for the first quarter.
Patrick Baumann: Hey, thanks. Appreciate the color.
Operator: This concludes our question-and-answer session. I would now like to turn the conference back over to John Engel for any closing remarks.
John Engel: Okay. Thank you again for joining us. I’ll bring the call to a close. We’ve addressed all your questions. I thank you for your support. It’s appreciated. We look forward to speaking with many of you. I know we have many follow-up calls planned today and tomorrow in the coming days. We also will be participating in a series of conferences over the next two months. First, the Raymond James Institutional Conference; second, the Loop Investor Conference; and third, the JPMorgan’s Industrial Conference. And additionally, we expect to announce our first quarter earnings results on Thursday, May 2nd. So with that, thank you, and have a good day.
Operator: This concludes our conference. Thank you for attending today’s presentation. You may now disconnect.
