Distributors

Wesco Explains Record 2Q Results

Wesco Explains Record 2Q Results

After reporting record second quarter results on August 4, Wesco’s leaders talked with reporters to dig a little deeper into the continued success following the acquisition of Anixter in 2020. While Wesco is facing the same issues as other distributors in terms of supply chain disruptions and inflation, it increased its full-year outlook.

“Supply chain challenges have continued to impact certain pockets of our business,” Dave Schulz, Executive Vice-President and Chief Financial Officer told reporters during the conference call. “We estimate that the lack of availability of certain products from our suppliers reduced sales by approximately the same amount as in the first quarter of the year. We continue to strategically invest in inventory in the quarter to address these challenges.” Schulz went on to say that despite the supply chain challenge, Wesco’s backlog remains even stronger than was a year ago. “Backlog reached another record level this quarter and was up more than 10% sequentially from March and up more than 80% from the prior year. Each business unit posted backlog increases of more than 60% above the prior year,” Schulz added.

As a result of the expanding backlog and continued synergies of cross-selling Wesco and Anixter products, Wesco decided to increase it’s full-year outlook. “We are increasing our full year outlook for sales growth from the previous range of 12% to 15% to a range of 16% to 18%,” Schultz announced to reporters. “Our assumption for market growth is 12% to 14%, including the benefit of price, which is an increase of 3% from our prior outlook. We expect the demand environment for our products, services and solutions to continue to be strong. However, we recognize that supply chain constraints and the pace of inflation present some uncertainties for the second half of the year.”

Since the earnings report announcement on August 4, Wesco’s stock price is up nearly $7 a share.

John Engel, Chairman, President and CEO of Wesco, told reporters during the conference call that a series of strong earnings reports since the acquisition of Anixter allows Wesco to build on it’s five-year digital investment plan. “I am incredibly bullish, when talking long-term or mid to long term, about the growth prospects and the transformative nature of what we’re doing in digital and what it will do for us and our ability to serve customers,” Engel said. He added that the digital transformation will allow Wesco to “more efficiently and more effectively unlock other avenues of growth and other areas of monetization that forms the basis of new business model as we increasingly tap our big data.”

“I am super excited about it. And here’s the great news. It’s not in our rdesults yet. The investments are in our results, but the results in terms of meaningful sales growth from the digital transformation and margin expansion are not in our results yet and improved.”

 

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