Electrical and industrial products distributor Wesco International reported its 2022 second-quarter financial results on Aug. 4, showing that major year-over-year sales growth held steady during the April-June period while backlog likewise remained substantially higher than a year earlier.
The Pittsburgh, Pennsylvania-based company reported total 2Q sales of $5.48 billion, up 19.3% year-over-year, with organic sales up 21%. That organic growth was identical to 1Q, when total sales jumped 22.0%. Sequentially, 2Q sales grew 11.2% from 1Q and organic sales grew 10.0%.
Like in 1Q, the 2Q total sales figure was a company record, as was its backlog that Wesco said increased to more than 80% year-over-year as of June 30. Backlog grew 10% from the end of 1Q, marking the sixth straight quarter of sequential growth.
Wesco’s 2Q gross margin of 21.7% grew 70 basis points year-over-year and 40 points sequentially, while operating profit of $371 surged 69% year-over-year as operating margin of 6.8% likewise expanded by 200 basis points.
Wesco’s total 2Q net profit of $221 million increased nearly doubled the $119 million of a year earlier.
June 22 marked the two-year anniversary of the closing of Wesco’s transformative $4.5 billion acquisition of Anixter International, which essentially doubled the size of Wesco.
“We once again set new company records for sales, backlog, margin and profitability, and leverage is back to within our target range, a full year earlier than what we guided the market to expect after we completed our merger in June 2020,” said John Engel, Wesco chairman and CEO. “Strong demand in our end markets continues to underpin the accelerating performance of each of our strategic business units. Each strategic business unit again delivered double-digit sales and profit growth in the quarter driven by the ongoing success of our enterprise-wide cross-selling and margin improvement programs.”
Like it did after 1Q, Wesco again raised its full-year 2022 outlook in its 2Q report. The company now expects FY sales growth of 16-18%, up from the 12-15% given in its 1Q report.
By Wesco business segment in 2Q:
- Electrical & Electronic Solutions (EES) sales of $2.33 billion grew 21.2% year-over-year, with organic sales up 23.1%. Sequentially, sales grew 11.5% and organic sales increased 10.4%. Wesco said the YoY increase reflects strong sales growth in its construction, OEM and industrial businesses due to business expansion, price inflation and the benefits of cross-selling. EES operating profit of $222 million jumped 44%.
- Communications & Security Solutions (CCS) sales of $1.60 billion increased 9.6% year-over-year, with organic sales up 11.5%. Sequentially, sales grew 11.7% and organic sales increased 10.7%. Wesco said the YoY sales increase reflects strong growth in its network infrastructure and security solutions businesses, as well as price inflation and the benefits of cross-selling. Operating profit of $131 million increased 17.4%.
- Utility & Broadband Solutions (UBS) sales of $1.55 billion increased 28.0% year-over-year, with organic sales up 28.6%. Sequentially, sales grew 10.2% and organic sales increased 8.7%. Wesco said the increase reflects price inflation, broad-based growth driven by investment in grid modernization, connectivity demand and rural broadband demand, as well as expansion in its integrated supply business. Operating profit of $162 million jumped 71.5%.