By Bridget McCrea
Most of the results are in and the second quarter sales numbers that were released by electrical distributors in July and August were largely positive. And while HD Supply has yet to release its data (which is expected to be made public sometime in September), so far the trends are pointing to improved business conditions and sales numbers.
Anixter International Inc., of Glenview, Ill., a leading global distributor of communication and security products, electrical and electronic wire & cable, and fasteners, reported sales of $1.58 billion for the second quarter of 2012. The number represents a 1 percent increase over the same quarter in 2011, when Anixter reported sales of $1.57 billion. According to the company, sales increased 4 percent organically on 1 percent reported growth.
Second quarter operating income of $89.9 million declined 2 percent compared to $92.0 million during the same period in 2011. Excluding the $3.7 million impact of unfavorable copper pricing and $0.9 million of unfavorable foreign exchange effects, operating income was favorable to the prior year period by 3 percent.
Anixter’s net income from continuing operations for the second quarter was $44.0 million compared to $48.4 million one year ago. Diluted earnings per share of $1.28 declined 4 percent from $1.33 per diluted share reported for the second quarter of 2011.
During the company’s second quarter earnings call, published on SeekingAlpha.com, CEO Robert J. Eck addressed a question from William Blair & Company LLC, analyst Ryan Merkel, who asked about Anixter’s 4-5 percent organic growth for the quarter. Eck said the company saw growth in the security market and noted that emerging markets were also strong. “The electrical, electronic wire & cable business, which has shown healthy growth, will continue to show growth,” said Eck, noting that Anixter has made wire and cable investments in Asia Pacific. “We should see some benefit from that continuing in the second half of the year.”
Shawn M. Harrison, an analyst with Longbow Research, LLC, inquired about current pricing levels in the industry, and inventory levels being held by Anixter’s competitors. Eck broke his answer down by market, noting that pricing in the electrical, electronic wire & cable business is being driven by the decline in copper year-over-year, and “not so much by other competitive pressures.” In the enterprise business, Eck said competitive pressure on pricing does exist right now.
“When you have low-demand situation that we’re in, and in a market where there’s excess manufacturing capacity, it certainly creates pressure on pricing,” said Eck, adding that both manufacturers and distributors add to that pricing pressure. “Distributors are fighting to maintain or take position in a soft market…both in North America and in Europe.”
Graybar, a leading distributor of electrical, communications and data networking products and provider of related supply chain management and logistics services, reported net sales of $1.38 billion for the second quarter of 2012, an increase of 0.8%, compared to the same period in 2011. The St. Louis-based company also reported $42.8 million in net income for the quarter, a 78.5% increase from the same period last year.
The numbers reported by WESCO International, Inc., for the second quarter were also positive, with the company revealing consolidated net sales of $1,672.7 million for the second quarter of 2012, compared to $1,524.5 million for the second quarter of 2011. It was WESCO’s seventh consecutive quarter of double-digit earnings-per-share growth.
The distributor’s earnings per diluted share for the second quarter of 2012 were $1.15 per share, based on 51.1 million diluted shares, and were up 15.0% from $1.00 per share in the second quarter of 2011, based on 50.3 million diluted shares.
WESCO’s second quarter conference call was equally as optimistic, although several analysts appeared to remain cautiously confident about the distributor’s performance.
John J. Engel, the firm’s chairman, president, and CEO, said WESCO’s second quarter results reflect the continued execution of the company’s “One WESCO” growth strategy. “We delivered another quarter of solid sales and earnings growth while generating good momentum in all of our end markets,” said Engel.
Engel said WESCO’s third quarter is “off to a solid start” with sales up in the high single digits. “Consistent execution of our LEAN and margin improvement initiatives continues and has translated into improved operating margins and double digit earnings growth in the second quarter,” said Engel. “Free cash flow generation was also strong in the quarter and exceeded 80% in net income. Our investments are clearly paying off.”
When analyst David Manthey of Robert W. Baird & Co., inquired about the condition of WESCO’s construction customer segment, Engel said that market hasn’t “meaningfully changed” in terms of end-market activity. “It’s been a darn tough market, quite frankly,” said Engel. “When you set the clock back a few years, our outlook was for this long and protracted recovery. We had thought that the non-residential construction market would have bottomed and started its recovery by now.”
Analyst Jack Stimac of BB&T Capital Markets asked Engel about his outlook for the industrial market. Engel pointed out that WESCO doesn’t typically dissect its end markets by segment. “Industrial still grows,” he said. “I think we fared very well in terms of the industrial performance during the second quarter; that’s all I’d say.”
Rexel SA of Paris, France, reported second quarter sales growth of 5.8%, compared to the same period in 2011. The company, which supplies electrical products and solutions for the housing, commercial development, and industrial markets, said the growth was supported by currencies (namely, appreciation of the U.S. dollar) and acquisitions.
Rexel recorded sales of €3.341bn (approximately $4.104 billion USD). On a constant and same-day basis, sales were flat for Rexel, as sustained growth in China and the Americas was offset by a slight drop in Europe and the Pacific.
For the first half of 2012, Rexel recorded sales of €6.568 bn (approximately $8.068 billion USD), up 6.6% on a reported basis and up 0.8% on a constant and same-day basis. Excluding the negative 0.9 percentage point impact due to the change in copper-based cable prices, sales were up 1.7% on a constant and same-day basis.
In North America, which comprises 31% of Rexel’s sales, the company posted sales growth of 5.3% (on a constant and same-day basis) during the second quarter, compared to the same period in 2011. The numbers reflect continued growth in both the U.S. and Canada.
In the U.S., company sales were up 3.3% during the second quarter and were driven by the industrial end-market, mainly in the energy and lighting segments, according to a company press release. In Canada, sales were up 9.9%, and propelled by the industrial end-market, particularly in the mining and oil & gas segments.
W.W. Grainger, Inc., reported record results for the second quarter ending June 30, 2012. Sales of $2.2 billion were up 12 percent versus $2.0 billion in the second quarter of 2011. The distributor’s net earnings for the quarter increased 12 percent to $191 million versus $170 million in 2011. Earnings per share of $2.63 increased 12 percent versus $2.34 in 2011.
In a conference call published by SeekingAlpha.com, Laura D. Brown, Grainger’s senior vice president of communications and William D. Chapman, senior director of investor relations, discussed the distributor’s second quarter results. “Healthy sales growth, consistent execution, and impressive market expansion was the storyline for the quarter,” said Brown. “This performance was largely driven by continued enhancements to the foundation of our business and aggressive investment in our growth programs.”
Company sales increased 12% for the quarter and daily sales growth by month was as follows: 12% in April, 13% in May, and 12% in June. According to Brown, the 12% sales growth for the quarter included 5 percentage points from acquisitions and a 2 percentage point decline from unfavorable foreign exchange. Sales in the U.S., which accounts for 77% of total company revenue, increased 7% in the quarter, consisting of 4% volume growth and 3% from price.
McCrea is a Florida-based writer who covers business, industrial, and educational topics for a variety of magazines and journals. You can reach her at firstname.lastname@example.org or visit her website at www.expertghostwriter.net.Tagged with financial, tED