WESCO posts 21% sales gain in 2011

WESCO’s 2011 success can be seen, in part, in the 11.6% rise in its stock price from Jan. 13 to Jan. 26, the day it made Q4 and full-year 2011 results public (the S&P 500 average rose 2.2% in the same period).

Why was WESCO such a standout? Q4 sales came in 19.4% higher than those of 2010, at $1.59 billion; full-year sales were $6.13 billion, up 21%. The company’s Oct. 20 “guidance” to analysts on Q4 chalked out sales growth of 14% or better.

Full-year gross margins were 20.6% in Q4 (compared to 20.4% a year earlier). For the full year, gross margins went up 50 basis points, to 20.2%.

Organic sales growth in Q4 was 14.8%; acquisitions (of companies not owned in 2010’s Q4) added 6.2% to the year-over-year gain, while the calendar (one less workday this past year) subtracted 1.6%.

John Engel, chairman and CEO, cited a few noteworthy accomplishments:

  • “We have now posted six consecutive quarters of double-digit organic sales growth.”
  • Five acquisitions in the past 18 months have added $460 million in annual revenues to the company.

On the financial side, WESCO’s shine became a bit more pronounced. Long-debt debt declined from almost $726 million on Dec. 31, 2010 to a bit less than $643 million a year later. The company’s EBIDTA (earnings before interest, depreciation, taxes, and amortization) rose from $234 million one year ago to more than $364 million on Dec. 31, 2011.

Above: From WESCO’s supplemental PDF, data on sales in the company’s largest segments – industrial (43% of 2011 sales) and construction (35%).

Highlights from the 16-page PDF, Supplemental Financial Data, posted to the company’s website:

  • 2012 sales growth estimated at 7% to 11%, with organic sales tabbed to rise 6% to 9% in Q1, and 5% to 8% in each of the other three quarters.  Should WESCO’s sales come in on the high end of expectations, full-year 2012 would end up at $6.8 billion.
  • Organic sales rose 13.4% for 2011, better than the 7.8% posted in 2010. The company has posted six consecutive quarters of double-digit organic sales growth.
  • “Bidding pipeline” in the company’s Global Accounts and Integrated Supply operations stood at $2.1 billion at Dec. 31, 2011.
  • Year-end construction segment backlog was 7% higher than at Dec. 31, 2010. Construction has had six straight quarters of double-digit organic sales growth, the company said.
  • Utility segment sales rose 9.8% over 2010; the increase in sales in CIG (commercial, institutional, government) was 8.1%.

Note that WESCO’s stock closed at $48.46 on Oct. 31, 2011. Since that time (in roughly one quarter of trading), its stock price is up 32%. The S&P 500 is up 5% in the same time frame.

One year ago WESCO posted a supplement to its 2010 year-end data. In which projected 2011 sales growth was put “at or above” 12%. The company said it would reach $6.2 billion in sales in the year 2013.

The company came close to $6.2 billion in sales in 2011; and sales rose 21% from 2010.

Based on these numbers, one might slap the label “cautiously optimistic” on WESCO’s projections for this year.

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