WESCO's Industrial Organic Sales Improve For First Time In 8 Quarters

WESCO International posted flat Q1 sales on Thursday and a modest profit increase, while its Industrial unit recorded year-over-year organic sales growth after eight consecutive quarters of decline.

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Pittsburgh-based WESCO International — No. 5 on Industrial Distribution's Big 50 List — reported its 2017 first quarter fiscal performance on Thursday, led by flat overall sales and modest profit increase.

The company posted Q1 sales of $1.77 billion — identical to a year earlier — with organic sales down 1.7 percent. Total profit of $37.7 million increased 4.7 percent. Operating profit of $67.1 million was down slightly from $69.5 million a year earlier, while gross profit margin of 19.7 percent declined from 20.0 percent.

WESCO's Q1 webcast presentation showed that organic sales were down approximately 2 percent year-over-year in the U.S. and up 3 percent in Canada. Organic sales were down 4 percent sequentially from Q4 2016, which the company noted is better than typical seasonality.

By business unit in Q1: 

  • WESCO Industrial sales of $680 million — 36 percent of totalwere up 1.5 percent year-over-year, with organic sales up approximately 1 percent. Organic sales were up 5.3 percent from Q4. Industrial organic sales were up 3 percent year-over-year in the U.S. and down 5 percent in Canada. The overall Industrial organic increase was WESCO's first after eight consecutive quarters of decline. Industrial organic sales were up 2 percent from Q4. "While still cost-focused, customers are becoming more optimistic regarding 2017," the company said.
  • WESCO Construction sales of $554 million — 34 percent of total — were down 2.4 percent year-over-year. Organic sales were down 4 percent, with U.S. down 6 percent and Canada up 3 percent. Organic sales were down 10 percent sequentially, which the company noted is in line with normal seasonality.
  • WESCO Utility sales of $267 million — 16 percent of total — were down 4.2 percent year-over-year. Organic sales were down 5 percent, with U.S. down 6 percent and Canada up 10 percent. Organic sales were down 12 percent sequentially.
  • WESCO CIG (Commercial, Institutional, Government) sales of $258 million — 14 percent of total — were down 1.6 percent year-over-year. Organic sales were down 2 percent, with U.S. down 4 percent and Canada up 26 percent. Organic sales were up 1 percent sequentially.

Though WESCO's total organic sales declined in Q1, the 1.1 percent dip was actually the company's smallest year-over-year decline since a 0.9 percent dip in Q1 2015.

"Our sales results reflect improving momentum in our business, driven by a return to growth in Industrial and in Canada," WESCO chairman, president and CEO John Engel said. "Operating margin was also in line with our expectations, as we continue to execute our cost management and supply chain initiatives in a still-challenging and demand-constrained pricing environment."

WESCO reaffirmed its January full-year sales outlook of flat to 4 percent sales growth.

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