Publicly Held Distributors See Some Light at the End of the Tunnel in 1Q Reports

May 21, 2010
First-quarter 2010 sales results for publicly held distributors of electrical equipment varied, but senior executives from these companies all saw signs

First-quarter 2010 sales results for publicly held distributors of electrical equipment varied, but senior executives from these companies all saw signs of growth.

Graybar Electric Co., St. Louis, enjoyed a 42 percent increase in net income to approximately $3.56 million, but saw its net sales for the quarter slide 5.3 percent (approximately $56.4 million), but stayed comfortably above a billion dollars. The company said in its 10-Q financial report submitted to the U.S. Securities and Exchange Commission (SEC) that general economic conditions in its North American trading area continued to improve during the first quarter of 2010 and that capital expenditures on business equipment have returned to positive growth following several quarters of decline. However, the 10-Q filing said spending on building construction remains constrained as “credit availability continues to be tight in the aftermath of the financial crisis that began in September 2008.”

“We are pleased by our earnings increase for the first quarter,” said Robert Reynolds, Jr., Graybar's chairman, president and CEO. “The company is in great financial condition with low debt levels and a strong cash position, allowing us to focus on the long-term health of the organization and prepare for future growth.”

WESCO International Inc., Pittsburgh, Pa., enjoyed a 1.4 percent increase in its overall sales for the quarter of $1.15 billion, but a 6.9-percent dip in net income for the quarter, to $21.7 million from $23.3 million in 1Q 2009. John J. Engel, WESCO's CEO, said in a press release announcing the results that the company sees “improving momentum in early 2010 and a return to positive year-over-year sales growth late in the first quarter. “Our industrial sales grew 13 percent, and we increased our construction backlog in the quarter despite facing continued pressure in non-residential construction and utility markets,” he said.

Two publicly held distributors reporting first-quarter sales increases were W.W. Grainger Inc., Lake Forest, Ill., which reported a 2.9-percent increase in its net earnings for 1Q 2010 to $99.2 million from $96.4 million in the first quarter of 2009, and Fastenal Inc., Winona, Minn., which enjoyed a 6.4-percent increase in sales to $520.8 million for 1Q 2010 and a 15.1-percent increase in net earnings to $56 million. The company opened 29 new stores in the quarter for a total store count of 2,392 branches.

Houston Wire & Cable Co., Houston, saw 1Q 2010 sales decline 7.1 percent because of “reduced product demand and very competitive pricing in the continued difficult economic environment,” and Anixter International Inc., Glenview, Ill., said sales were flat for the quarter at $1.27 billion, but that its net income slid dramatically (-77 percent) to $5.9 million from $25.7 million.