Pittsburgh-based electrical and industrial supplies distributor WESCO International reported its 2021 fourth quarter and full-year financial results on Feb. 15, showing record sales and profits for the company that doubled in size with its landmark $4.5 billion acquisition of Anixter International during 2020.
WESCO was No. 7 on Industrial Distribution's 2021 Big 50 List, specifically for its sales of industrial products.
WESCO reported company record Q4 sales of $4.85 billion, up 17.5 percent year-over-year and outpacing Q4's $4.73 billion by 2.6 percent. Q4 organic sales grew by 15.8 percent, likewise outpacing Q3's by 6.3 percent. Backlog ended Q4 at 80 percent higher year-over-year, and up 14 percent from the end of Q3.
While WESCO's Q4 cost of goods sold jumped nearly 12.0 percent year-over-year, its gross margin of 20.8 percent grew 120 basis points, which the company said reflects execution on supplier price increases and cost initiatives to offset inflation, along with higher supplier volume rebate income.
Q4 operating profit of $220 million surged 137.5 percent year-over-year, largely due to Anixter acquisition-related costs in 2020. Q4 operating margin of 4.5 percent likewise more than doubled the 2.2 percent of a year earlier. Adjusted operating profit of $271 million and margin of increased 57.6 percent year-over-year, with adjusted operating margin of 5.6 percent up from 4.2 percent of a year earlier.
WESCO's Q4 net profit of $167 million dwarfed the $20.0 million profit of a year earlier.
"Since the closing of the Anixter acquisition, our team has executed a complex integration plan with speed, agility and excellence," said John Engel, WESCO chairman, president and CEO. "Based on the strength of this execution, we are again increasing the cost and sales synergy targets for our three-year integration program. At the same time, we have designed and launched an important commitment to digitally transform our business to propel our growth for the next decade and beyond."
By business segment in Q4:
- Electrical & Electronic Solutions (EES) — which includes the company's industrial/MRO products — sales of $2.0 billion jumped 19.6 percent year-over-year and topped Q3's $1.98 billion. Q3 organic sales improved 17.5 percent, reflecting continued double-digit sales growth in the company's construction, industrial and OEM businesses, which WESCO attributed to to strong demand, execution of growth initiatives and price inflation. Operating profit of $133 million more than doubled the $64 million of a year earlier.
- Communications & Security Solutions (CCS) sales of $1.51 billion increased 10.6 percent year-over-year and topped Q3's $1.49 billion. Organic sales increased 8.8 percent, which the company said reflects double-digit growth in its security solutions and network infrastructure businesses due to strong demand and execution of growth initiatives. Operating profit of $102 million topped the $85 million of a year earlier.
- Utility & Broadband Solutions (UBS) sales of $1.34 billion increased 23.0 percent year-over-year and topped Q3's $1.26 billion. Organic sales grew 21.9 percent, which the company said reflects broad-based growth in its utility business and continued strong demand in its broadband business. Operating profit of $413 million dwarfed the $232 million of a year earlier.
Full Year 2021
For the full year, WESCO posted total 2021 sales of $18.2 billion, up 47.8 percent, primarily due to the Anixter acquisition that closed mid-way through 2020. While the company's cost of goods sold jumped 65.2 percent vs. 2020, its gross margin of 20.8 percent increased 190 basis points.
WESCO's 2021 operating profit of $802 million dwarfed 2020's $347 million, while operating margin of 4.4 percent likewise topped 2020's 2.8 percent. Total 2021 net profit of $465 million likewise dwarfed 2020's $101 million.
In its full-year 2022 outlook, WESCO said it is forecasting total sales growth of 5 to 8 percent, which would outpace the company's predicted market growth of 3 to 5 percent.