WESCO International Cuts Executive Salaries by 25%

The company said its $4.5 billion acquisition of Anixter is still on track to close in Q2 or Q3.

WESCO International

Electrical, industrial and communications MRO products distributor WESCO International reported its 2020 first quarter financial results on Thursday, which showed a modest dip in year-over-year sales that were hammered during the second half of March due to impacts from the COVID-19 pandemic.

WESCO’s total Q1 sales of $1.97 billion were flat year-over-year (YoY), while organic sales declined by 1.8 percent. Operating profit of $61 million was down from $70.9 million a year earlier, while total profit of $34 million was down from $42 million a year earlier. Sequentially, WESCO’s Q1 figures compare with Q4 2019 sales of $2.1 billion (up 4.4 percent YoY) and organic sales that rose 3.9 percent, operating profit of $84 million and total profit of $53 million.

“Through the middle of March, our first quarter results were on track with our outlook,” said John Engel, WESCO chairman, president and CEO. “We had a strong start to the year with sales growth within our expected range and sequentially improving gross margins. In mid-March, the spread of the COVID-19 pandemic and government-imposed shutdowns impacted our customers and suppliers across all of our end markets.”

Engel said that WESCO’s $4.5 billion acquisition of electrical, data and security products distributor Anixter International — announced mid-January and nearly unanimously approved by Anixter shareholders on April 10 — is still on track to close during the company’s Q2 or Q3. That acquisition is set to form a distributor with a combined company value of about $17 billion.

WESCO detailed actions taken to ensure business continuity during the ongoing pandemic as well as cost-savings measures implemented. Those activities include the following:

  • Temporary compensation reductions that reduce board of directors’ cash retainer by 25 percent, C-Suite executive salaries by 25 percent, vice president salaries by 20 percent, and other employee salaries by 12 to 15 percent
  • Implemented multi-shift strategy to promote social distancing
  • Reward and recognition bonus for on-site employees
  • Implemented business continuity plan that involves “daily impact reporting” to provide supply chain visibility, and sourcing PPE equipment for customers and employees
  • Withdrawl of $100 million on inventory revolver
  • Adjusting hourly shifts to match demand and customer service needs
  • Suspended 401(k) company match and deferred salary increases
  • Reduced discretionary spending
  • Froze all non-essential capital expenditures
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