WESCO International(US:WCC)2022-02-15 19:55Financial Data and Key Metrics Changes - WESCO achieved record sales of $18.2 billion for the full year 2021, up 14% compared to 2020 pro forma results [31] - Adjusted EBITDA for the fourth quarter was $3.17, a record and up 160% from the prior year [28] - Gross margin for the fourth quarter was 20.8%, up 120 basis points year-over-year [26] - The company reduced its leverage ratio to 3.9x trailing 12-month adjusted EBITDA, down 1.8 turns since the Anixter acquisition [51][52] Business Line Data and Key Metrics Changes - EES segment sales were up 18% year-over-year in Q4, with adjusted EBITDA up 59% [33][34] - CSS segment sales increased by 9% year-over-year, with adjusted EBITDA margin at 8.3%, a 10 basis point increase [35][36] - UBS segment organic sales rose 22% year-over-year, with adjusted EBITDA up 63% [38][40] Market Data and Key Metrics Changes - Backlog reached a record level, up 14% from the previous quarter, with each business unit posting backlog increases of over 60% year-over-year [25][32] - Preliminary January results showed sales up low teens year-over-year on a workday-adjusted basis [24] Company Strategy and Development Direction - WESCO is focused on cross-selling initiatives and capturing growth from trends in grid modernization, rural broadband, and digital applications [13][14] - The company is committed to digital transformation and has launched new IoT solutions to enhance customer operations [16][18] - WESCO is increasing its cost and sales synergy targets for its three-year integration program from $500 million to $600 million [42][45] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in strong demand across all end markets, despite supply chain constraints [66] - The company expects to outperform the market in 2022, with sales growth projected at 5% to 8% [53][54] - Management highlighted the importance of maintaining supply chain integrity and resilience as a core value proposition [102] Other Important Information - WESCO was recognized as one of the world's best employers and included in Bloomberg's Gender Equality Index for the fourth consecutive year [22] - The company is committed to responsible ESG practices and has set new improvement goals for 2030 [21] Q&A Session Summary Question: Demand outlook for 2022 and backlog conversion - Management noted strong demand across all end markets and indicated that backlog is expected to convert to sales as supply chains are rebuilt [66][72] Question: Corporate expenses and hiring plans - Management explained that corporate expenses are expected to increase due to digital transformation investments and hiring [78][79] Question: Gross margin and inventory management - Management discussed the benefits of inventory gains and the impact of inflation on costs, indicating a positive outlook for gross margins [81][83] Question: Synergies and operational improvements - Management clarified that synergies would not be front-end loaded and would be realized throughout the year as integration progresses [92][93]