Pittsburgh-based electrical and industrial supplies distributor WESCO International released its fourth quarter and full year 2021 financial results on Feb. 15, showing record sales and profits for the company which has doubled in size with its landmark acquisition of Anixter International for $4.5 billion in 2020.
WESCO was No. 7 on Industrial distribution‘s 2021 Big 50 List, specifically for its industrial product sales.
WESCO reported record fourth-quarter sales of $4.85 billion, up 17.5% year-over-year and 2.6% ahead of the $4.73 billion in the fourth quarter. Fourth quarter organic sales increased by 15.8%, also outpacing third quarter by 6.3%. Backlog ended the fourth quarter up 80% year-over-year and up 14% from the end of the third quarter.
While WESCO’s fourth-quarter cost of goods sold jumped nearly 12.0% year-on-year, its gross margin of 20.8% increased 120 basis points, which the company says reflects the executing vendor price increases and cost initiatives to offset inflation, as well as higher vendor volume. reimbursement income.
Fourth-quarter operating income of $220 million jumped 137.5% year-on-year, largely driven by costs related to the 2020 acquisition of Anixter. 4.5% also more than doubled from 2.2% the previous year. Adjusted operating income of $271 million and margin increased 57.6% year-on-year, with an adjusted operating margin of 5.6%, compared to 4.2% a year earlier.
WESCO’s fourth-quarter net profit of $167 million eclipsed the $20.0 million profit a year earlier.
“Since completing the Anixter acquisition, our team has executed a complex integration plan with speed, agility and excellence,” said John Engel, president and CEO of WESCO. “Based on this strong 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 a significant commitment to digitally transform our business to propel our growth for the next decade and beyond.”
By business segment in Q4:
- Electrical and electronic solutions (EES) — which includes the company’s Industrials/MRO products — sales of $2.0 billion jumped 19.6% year-over-year and topped $1.98 billion in the third trimester. Third-quarter organic sales increased 17.5%, reflecting continued double-digit sales growth across the company’s construction, industrial and OEM businesses, which WESCO attributes to strong demand, execution of growth initiatives and price inflation. Operating profit of $133 million more than doubled from $64 million a year earlier.
- Communication and security solutions (CCS) sales of $1.51 billion were up 10.6% year-on-year and surpassed $1.49 billion in the third quarter. Organic sales increased 8.8%, which the company says reflects double-digit growth in its security and network infrastructure solutions businesses due to strong demand and execution of growth initiatives. Operating profit of $102 million topped $85 million a year earlier.
- Utility and Broadband Solutions (UBS) sales of $1.34 billion were up 23.0% year-over-year and topped $1.26 billion in the third quarter. Organic sales rose 21.9%, which the company said reflects broad-based growth in its utilities business and continued strong demand in its broadband business. Operating profit of $413 million eclipsed the previous year’s $232 million.
Full year 2021
For the full year, WESCO reported total revenue of $18.2 billion in 2021, up 47.8%, primarily due to the acquisition of Anixter which closed. closed in mid-2020. While the company’s cost of goods sold jumped 65.2% from 2020, its gross margin of 20.8% increased 190 basis points.
WESCO’s 2021 operating profit of $802 million eclipsed 2020’s $347 million, while operating margin of 4.4% also topped 2020’s 2.8%. 2021 total of $465 million also eclipsed 2020’s $101 million.
In its outlook for 2022, WESCO said it expects total sales growth of 5-8%, which would exceed the company’s forecast market growth of 3-5%.