Less than three weeks after announcing a $4.5 billion merger agreement with Anixter International following a bidding battle, electrical/industrial distributor WESCO International reported its 2019 fourth quarter and full-year financial results on Thursday.
The numbers showed that the company achieved record Q4 and full-year sales, despite an overall market slowdown in the industrial supply space amid weakened demand.
WESCO posted Q4 total sales of $2.1 billion, up 4.4 percent year-over-year (YoY) and down 2.3 percent from Q3, with organic sales up 3.9 percent. Operating profit of $83.8 million was down from $90.5 million a year earlier, while total net profit of $53.1 million was likewise down from $58.1 of a year earlier.
For the full year, WESCO had total 2019 sales of $8.4 billion, a company record that was up 2.2 percent over 2018, with organic sales up 2.6 percent. Operating profit of $346.2 million was down slightly from $352.5 million in 2018, while 2019's net profit of $223.4 million was similarly marginally down from $227.3 million in 2018.
Engel
WESCO was No. 11 on Industrial Distribution's 2019 Big 50 List, on account of its $3.0 billion in 2018 industrial sales.
By end market in Q4:
- Industrial, which comprised 35.5 percent of total sales at $746 million, saw organic sales grow 1.3 percent YoY (+0.6 percent sequentially). The company's analyst presentation noted that "Manufacturing demand remains in soft patch."
- Construction, which comprised 33.0 percent of total sales at $692 million, saw organic sales grow 1.4 percent YoY (-1.5 percent sequentially). The company's presentation noted that "Contractors continue to be challenged by tariff-related budget pressures and an exceptionally tight skilled-labor market."
- Utility, which comprised 16.0 percent of total sales at $335 million, saw organic sales grow 9.8 percent YoY (-4.8 percent sequentially).
- Commercial-Institutional-Government (CIG), which comprised 15.6 percent of total sales at $327 million, saw organic sales grow 10.6 percent YoY (+3.5 percent sequentially).
By geography in Q4, US core sales of $1.54 billion (73.9 percent of total) had 4.0 percent organic growth YoY; Canada core sales of $415 million had 1.5 percent organic growth; and International core sales of $128 million had 12.7 percent organic growth.
WESCO's 2019 sales percentage by product category was as follows:
- General supplies - 41 percent
- Communications & security - 16 percent
- Wire, cable & conduit - 14 percent
- Lighting & sustainability - 11 percent
- Electrical distribution & controls - 10 percent
- Automation, controls & motors - 8 percent
WESCO reiterated its 2020 outlook that it provided in its 2019 Q3 results, saying the company expects sales growth in the range of flat to 4 percent. Meanwhile, the merger with Anixter is expected to close in Q2 or Q3 of 2020, pending stockholder and regulatory approvals. The deal is expected to create a combined electrical/industrial/data solutions products supplier with approximately $17 billion in total 2019 sales. Anixter had 2018 full-year sales of $8.4 billion and a net profit of $156 million.
"As announced earlier this month, the transformational combination of WESCO and Anixter will create a premier electrical and data communications distribution and supply chain services company," Engel said. "As a result, we expect 2020 to be a watershed year for WESCO and we look forward to the substantial value creation for our stockholders, customers, suppliers, and people."
