WESCO International, Inc. (WCC) stock prices were up by 6.34% as of the market closing on May 7th, 2021, bringing the price per share up to USD$109.49 at the end of the trading day.
Merger with Anixter
In the company’s most recent financial reports for the first quarter of the fiscal year 2021, ended March 31st, 2021, WCC reported the performance of each of its segments individually. The most significant differences in this report compared to reports from the same quarter of the previous year are due to effects of their merger with Anixter.
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Improved Adjusted EBITDA Margin Across Segments
Q1 2021 reported an improvement in adjusted EBITDA margin, reflecting the positing effect of initiatives designed to improve margins. Also contributing to this improvement is a lower operating cost, thanks to cost reduction actions, synergy capture, and integration initiatives.
The Electrical & Electronic Solutions (EES) segment of the business reported USD$1.7 billion in net sales for Q1 2021, up 54.4% from the USD$1.1 billion reported in Q1 2020. In conjunction with the merger, growth in sales in the company’s construction and original equipment manufacturer businesses are responsible for this increase. Operating profit also reported massive improvements, up to USD$100.1 million in Q1 2021 from USD$43.3 million in Q1 2020.
The Communications & Security Solutions segment (CSS) saw its quarterly net sales skyrocket by an astounding 459%, from USD$223.7 million in Q1 2020 to USD$1.3 billion in Q1 2021. Operating profit for the company was up from USD$9.9 million for the first quarter of 2020 to USD$74 million in Q1 2021. Notably, the WCC’s inventory write-down had an adverse effect on CSS operating profit for Q1 2021, having offset considerable further improvements being reported.
The third and final segment, Utility and Broadband Solutions (UBS) reported USD$1.1 billion in Q1 2021 net sales, an increase of 69.7% from the USD$630.5 million reported in Q1 2020. Besides the merger, these numbers are attributable to the growth in sales in WCC’s utility and broadband businesses. A more drastic increase in net sales was offset by lower sales from integrated supply programs, as a direct result of disruption cause by the Covid-19 pandemic. Operating profit was up from USD$41.8 million in Q1 2020 to USD$87 million in Q1 2021.
Future Outlook for WCC
WCC’s merger with Anixter has proven to be a massive success, with extremely strong financial reports backing that claim. Current and potential investors are hopeful that the company will continue to leverage its newly acquired resources to usher in significant and sustained increases in shareholder value.