Pittsburgh, PA-based industrial and electrical products distributor WESCO International reported its 2017 fourth quarter and full-year fiscal performance on Thursday, led by continued considerable gains in sales and profit.
The company posted total Q4 sales of $2.0 billion, up 11.3 percent year-over-year (YoY), with organic sales up 10.1 percent — its best mark in six years. Organic net sales improved 11.3 percent, and foreign exchange had a negative 1.2 percent impact. Sequentially, Q4 organic sales increased 1.6 percent from Q3. By month in Q4, organic sales increased 9 percent in October; 10 percent in November; and 11 percent in December. By region, Q4 organic sales were up 9 percent in the U.S.; up 13 percent in Canada and up 19 percent in International.
WESCO's Q4 organic sales were comprised of:
- 37 percent from Industrial, where organic sales increased 14 percent YoY (+12 percent in U.S.)
- 33 percent from Construction, where organic sales increased 9 percent YoY (+7 percent in U.S.)
- 16 percent from Utility, where organic sales increased 9 percent YoY (+10 percent in U.S.)
- 14 percent in CIG (Commercial, Institutional, Government), where organic sales increased 5 percent YoY (+5 percent in U.S.)
WESCO said it renewed a multi-year contract in Q4 to supply electrical MRO materials and support capital projects for the upstream, midstream and downstream operations of a large oil and gas company. WESCO's Q4 Industrial core sales of $744 million increased 15.0 percent YoY and increased 2.5 percent sequentially from Q3.
Total Q4 profit of $22.5 million was less than half the $47.8 million from a year earlier, but beat Wall Street expectations. Operating profit of $81.4 million was essentially flat compared to $82.1 million a year earlier, while gross profit margin of 19.2 percent in Q4 compared with 19.4 percent a year earlier.
"Our fourth quarter results reflect continued positive and broad-based momentum in our business," said John Engel, WESCO chairman, president and CEO. "Building on our return to growth in June, our sales momentum accelerated in July and remained consistently high throughout the second half of the year and into January. Backlog grew sequentially versus the typical seasonal decline, and expanded to an all-time record level within the quarter. Operating margin was consistent with our outlook, while free cash flow generation was below expectations due to increased working capital to support our accelerating sales growth."
For the full-year 2017, WESCO's sales of $7.68 billion increased 4.7 percent, with organic sales up 4.5 percent. Total profit of $163.5 million compared with $101.6 million in 2016, while operating profit of $321 million compared with $332 million a year earlier.
By end market:
- Industrial core sales of $2.87 billion increased 7.9 percent
- Construction core sales of $2.56 billion increased 2.6 percent
- Utility core sales of $1.19 billion increased 2.1 percent
- CIG core sales of $1.10 billion increased 4.7 percent
"We are pleased with our return to growth in 2017 and our positive business momentum to start this year," Engel said. "We expect favorable economic conditions and positive growth in our end markets to continue in 2018."
WESCO said its breakdown of products and services at the end of 2017 are:
- General supplies - 40 percent
- Communications & Security - 15 percent
- Wire, Cable & Conduit - 15 percent
- Lighting & Sustainability - 12 percent
- Electrical Distribution & Controls - 10 percent
- Automation, Controls & Motors - 8 percent