REVENUE (Notes)

9 Months Ended

Sep. 30, 2022

Revenue from Contract with Customer [Abstract]

Revenue from Contract with Customer

3. REVENUE

Wesco distributes products and provides services to customers globally in various end markets within its business segments. The segments, which consist of EES, CSS and UBS, operate in the United States, Canada and various other international countries.

The following tables disaggregate Wesco’s net sales by segment and geography for the periods presented:

	Three Months Ended				Nine Months Ended
	September 30				September 30
(In thousands)	2022		2021		2022		2021
Electrical & Electronic Solutions	$	2,234,771	$	1,982,485	$	6,654,883	$	5,626,309
Communications & Security Solutions	1,602,459		1,488,689		4,638,631		4,200,424
Utility & Broadband Solutions	1,608,686		1,257,151		4,568,108		3,538,859
Total by segment	$	5,445,916	$	4,728,325	$	15,861,622	$	13,365,592

	Three Months Ended				Nine Months Ended
	September 30				September 30
(In thousands)	2022		2021		2022		2021
United States	$	4,050,924	$	3,407,437	$	11,745,090	$	9,656,183
Canada	765,281		709,507		2,288,146		2,020,395
Other International(1)	629,711		611,381		1,828,386		1,689,014
Total by geography(2)	$	5,445,916	$	4,728,325	$	15,861,622	$	13,365,592

(1)    No individual country's net sales are greater than 10% of total net sales.

(2)    Wesco attributes revenues from external customers to individual countries on the basis of point of sale.

Due to the terms of certain contractual arrangements, Wesco bills or receives payment from its customers in advance of satisfying the respective performance obligation. Such advance billings or payments are recorded as deferred revenue and recognized as revenue when the performance obligation has been satisfied and control has transferred to the customer, which is generally upon shipment. Deferred revenue is usually recognized within a year or less from the date of the advance billing or payment. At September 30, 2022 and December 31, 2021, $55.5 million and $35.5 million, respectively, of deferred revenue was recorded as a component of other current liabilities in the Condensed Consolidated Balance Sheets.

The Company also has certain long-term contractual arrangements where revenue is recognized over time based on the cost-to-cost input method. As of September 30, 2022 and December 31, 2021, the Company had contract assets of $38.6 million and $33.4 million, respectively, resulting from arrangements where the amount of revenue recognized exceeded the amount billed to the customer. Contract assets are recorded in the Condensed Consolidated Balance Sheets as a component of prepaid expenses and other current assets.

Wesco’s revenues are adjusted for variable consideration, which includes customer volume rebates, returns and discounts. Wesco measures variable consideration by estimating expected outcomes using analysis and inputs based upon historical data, as well as current and forecasted information. Variable consideration is reviewed by management on a monthly basis and revenue is adjusted accordingly. Variable consideration reduced revenue for the three months ended September 30, 2022 and 2021 by approximately $120.5 million and $85.8 million, respectively, and by approximately $324.1 million and $246.9 million for the nine months ended September 30, 2022 and 2021, respectively. The variable consideration for the three and nine months ended September 30, 2021 reflect adjustments that reduced the previously disclosed amounts by $9.7 million and $27.8 million, respectively. As of September 30, 2022 and December 31, 2021, the Company's estimated product return obligation was $45.5 million and $38.8 million, respectively.

Billings to customers for shipping and handling are recognized in net sales. Wesco has elected to recognize shipping and handling costs as a fulfillment cost. Shipping and handling costs recorded as a component of selling, general and administrative expenses totaled $77.9 million and $63.5 million for the three months ended September 30, 2022 and 2021, respectively, and $222.0 million and $179.5 million for the nine months ended September 30, 2022 and 2021, respectively