Wesco posts higher profit, lowers full year outlook
Electrical equipment supplier Wesco International Inc. lowered its outlook for full-year earnings despite record sales in the second quarter.
The South Side-based company said it was seeing “improving sales momentum,” but not enough of a recovery to overcome “a softer than anticipated start to the year” when severe winter weather hampered the company's customers.
Wesco said 2014 net income would be between $5.20 a share and $5.40 a share, down from an earlier prediction of $5.30 a share to $5.70 a share.
Shares closed down $1.11, or 1.3 percent, to $83.21.
“July is off to a good start with sales growth rates trending in-line with second quarter levels,” CEO John Engel said in a statement. “We continue to see favorable indicators with our customers, including further strengthening in non-residential construction, which we expect will result in ongoing growth in our key markets.”
David Manthey, an analyst with Robert W. Baird & Co. in Milwaukee, said Wesco's sales gain and “improved momentum seen in both the industrial and construction businesses” were positive takeaways from the earnings report, according to a research note to investors.
Manthey didn't change his outlook on the company, which he rates as “outperform.”
For the second quarter, Wesco said net income was $68.9 million, or $1.29 a share, compared with $65.3 million, or $1.25 a share, in the same quarter last year. Analysts had expected per-share net income of $1.33.
Sales were a record $2 billion in the April-June quarter, up from $1.9 billion a year earlier.
Wesco recently landed several big contracts, including a multi-year deal to provide equipment to a “global oil and gas company” for its chemical refining and distribution network, Engel told analysts during a conference call. He did not name the company or the value of the contract.
The company is experiencing “above market sales growth with utility customers,” Engel said.
While focusing on growing sales organically, Wesco also is expanding through acquisitions.
It has closed on three purchases this year — LaPrairie Inc., Hazmasters Inc. and Hi-Line Utility Supply — marking 11 company acquisitions since June 2010, Engel said. Those companies have contributed $1.6 billion to Wesco's annual sales.
“Our acquisition pipeline remains strong, and we see excellent ongoing opportunities to further strengthen our company via acquisitions,” he said.
Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or firstname.lastname@example.org.