WESCO “Guarded” About Q1
In the conference call that followed last week’s release of 2009 full-year
and Q4 sales and earnings, WESCO apparently spooked some—at least, one Reuters
reporter. Here’s some of what the wire service reported on Jan. 28:
WESCO “provided a guarded first-quarter sales outlook, a sign that a healthy
rebound from the economic downturn is still some distance away” and “said it
expected its first-quarter sales to be down 1% to 3% from fourth-quarter levels.
“Based on the outlook range, revenue outlook for first quarter will come in
between $1.13 billion and $1.09 billion, compared with analysts expectation
of $1.10 billion.”
Note that last year’s Q1 sales came in at $1.18 billion. WCC stock closed Jan.
27 at $28.50 and finished out last week at $27.72. See WESCO’s release on sales/earnings
on
the Yahoo! Finance site.
Sales: Q4 sales dipped 20.8%, to $1.13 billion; the company said there
was a .7% positive forex impact. For the year, sales of $4.62 billion were down
24.3%; from that, subtract a .9% negative forex impact.
Gross margins: 19.5% in 2009 vs. 19.7% in 2008. Q4 came in at 19.2%
vs. 19.9% one year earlier.
Debt: WESCO said “total net debt was reduced by $292 million or 27.7%
to $762 million from year-end 2008 levels.” Net debt = total debt minus cash
and cash-like stuff.
From John Engel, CEO: “Overall, our 2009 performance was favorable compared
to the last economic downturn and demonstrates the improvements made to our
business.” The company credited itself with $140 million in operating cost reductions.
Hidden in plain sight: What you might find of interest on WESCO’s
website:
Separate websites for Bruckner
Supply (integrated supply operation) and W.R. Controls (retail solutions
provider).
Grainger’s Year
Grainger, the leading multi-industry distributor, saw its stock spend 10 of
the 14 days leading up to last Friday above the $100-per-share mark. It closed
Jan. 29 at $99.28, according to Yahoo! Finance. Here are highlights from its
end-year 2009 financial release:
Sales: Down 9.2% for the year, at $6.22 billion. Q4 sales rose 2.6%
from 2009’s same quarter, to $1.63 billion. U.S. sales were down 10.1%.
Note on Q4 sales, from Grainger: “The 3% increase for the quarter included
a 4-percentage-point contribution from acquisitions, a 2-percentage-point benefit
from foreign exchange, and a 2-percentage-point lift from price increases, partially
offset by a 5-percentage-point decline in volume.
Gross margins: 41.8% for 2009 vs. 41.0% for 2008. Q4 came in at 41.9%
this time vs. 42.7% a year ago.
From Jim Ryan, chairman, president, and CEO: "We are seeing some
initial signs of improvement in the overall economy, although job growth is
expected to lag the recovery. Stronger sales growth in December and January
give us greater confidence to raise our 2010 sales growth guidance to a range
of 6% to 10%…we are well positioned for continued share gain, particularly as
many competitors have been forced to reduce inventories."
Hidden in plain sight: Nuggets of info from Grainger’s website:
11-page
transcript of the Q4 earnings release podcast. You can also listen
to the podcast (you must register to do so).
2-page
PDF showing 2009, 2008, and 2007 comparisons of daily sales growth by each
month and quarter.
Downloadable and playable materials from the company’s Nov.
18, 2009 analyst meeting.
What the company is charging for a wide variety of GE
lamps (advertised on the home page as “save up to 25% on selected products”).
The Grainger site’s Green
Resources page.
Transcat Posts Sales Gain, Acquisition
Transcat, which distributes test and measurement instruments, bought United
Scale & Engineering last week, a privately held supplier and services of
industrial scales & weighing systems. The acquired company was said to have
2,000 customers, but sales were not disclosed (neither was the purchase price).
Separately, the company ended Q3 of FY2010 on Dec. 26, 2009, with $21.8 million
in the quarter (up 9.2%). Nine-month revenue, at $57.5 million, was up 1.9%.
Those recent numbers did not include United’s results. The company’s gross margin
declined from 24.3% for the first nine months of FY09 to 22.1% in the more-recent
period.
Distribution Voices
Adam Fein, Ph.D.—it’ll cost you nothing (except the time to fill
in some information for Adam’s sponsor, IBM) to download the 2010 Economic Outlook for Wholesale Distributors. It’s a 24-page report; in an
email promoting it, Fein noted that “the recovery will not feel as robust as
previous turnarounds.”
Note: On page 11, Fein provided a table with a sales forecast for
various distributor groups.
Electrical & Electronic: + 3.6% actual in 2008, - 7.9% estimated
for 2009, + 8.1% forecast for 2010.
Industrial: + 9.7% actual in 2008, -17.5% estimated for 2009, -.1%
forecast for this year.
Dave Kahle—his 2,500-word piece for The Wholesaler carries
the headline, Effective
selling begins with information. Addressed to the sales person, it included
this:
If you’re going to work with good information, you must be the one who collects
that information. That means that you must create systems to collect, store,
and use the information that will be most helpful to you.
Since our world is constantly producing new information, the system you
create isn’t something you do once and forget. Rather, it has to be a
dynamic system that is constantly processing, storing, and using new information.
Bruce Merrifield—last week posted a 54-page PDF, Think
Big, Act Small: Fail Forward with Brilliant Mistakes. Earlier last month,
he posted a 69-page PDF, A
Balance Scorecard Service for Distributors. Each is downloadable for the
price of a click!
Bill Wade—Dollars Off or Discounted Percent? Which works better?
Which sticks? Those are questions Wade attempted to answer in an
October blog on the Industrial Distribution site.
Retail Watch
Best Buy & “your junk”—the company’s electronic product recycling
operation is a brilliant stroke of strategy, according
to Fortune magazine. Between March and November, the company has
accepted 12,500 tons of “in-store take-back” at its 1,044 stores, the article
noted. Supposedly, Best Buy is “America’s biggest collector of electronic garbage.”
Lowe’s & Haiti—a Jan. 26 release noted that the company has
already contributed $1 million to aid Haiti relief efforts and that Lowe’s “is
challenging customers to match its pledge.” Thus far, customers have reportedly
kicked in $500,000-plus to the American Red Cross.
Stock Building Supply—formerly the property of Wolseley, the
big U.K.-based distributor that owns Ferguson’s (and more), the company “is
on the prowl for acquisition targets” and “likely will be sold or taken public
in the next few years” by The Gores Group, which took the operation off of Wolseley’s
hands. All this is from a Jan. 14 story in a
Raleigh newspaper.
Walmart/Sam’s Club—the company will reduce employment at the
Sam’s Club megastore operation (in the U.S.) by 11,500 jobs. According to Agence
France-Presse, “the layoffs will affect approximately 10,000 product demonstration
associates, most of whom work part-time.”
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