WESCO Int'l (NYSE: WCC) reported Q2 EPS of $1.36, $0.70 better than the analyst estimate of $0.66. Revenue for the quarter came in at $2.1 billion versus the consensus estimate of $1.9 billion.

Second quarter summary:

• Anixter merger completed on June 22, 2020
• Consolidated net sales of $2.1 billion, down 2.9% versus prior year
  • Organic sales down 12.3%
• Operating profit of $15.3 million, including $73.3 million of merger-related costs
  • Excluding merger-related costs, adjusted operating margin of 4.2%
  • Adjusted WESCO operating margin of 3.8%, representing decremental margin of approximately 10%
• Loss per diluted share of $0.84
  • Excluding merger-related costs, adjusted diluted earnings per share of $1.36
  • Adjusted WESCO diluted earnings per share of $1.04
• Operating cash flow of $101.2 million
  • Free cash flow of $141.9 million, or 248% of adjusted net income

Mr. John J. Engel, WESCO's Chairman, President and CEO, commented, “We delivered a strong second quarter where our sales, margin, profit and cash generation results exceeded our expectations. Business momentum improved through the quarter as we outperformed the market and built an all-time record backlog. As we have done in prior economic downturns, we aggressively managed our WESCO business and took significant cost reduction and cash management actions, which enabled us to deliver decremental margins of 10% and generate exceptionally strong free cash flow of 248% of adjusted net income. Anixter also delivered a strong performance to close out the second quarter. I would like to recognize and thank all of our associates for their inspirational dedication, commitment and hard work in effectively managing through this COVID-19 driven crisis."

Mr. Engel added, "The second quarter will prove to be a watershed period in our history, as we successfully closed on our industry-shaping merger of WESCO and Anixter. In combining two industry-leading Fortune 500 companies with successful track records, we are creating the premier electrical, communications and utility distribution and supply chain solutions company in the world. Against the challenges imposed by the global pandemic, the extraordinary determination of our WESCO and Anixter associates to execute a flawless day one closing, just five months after signing the merger agreement, was impressive. I could not be more proud of the entire team in achieving this noteworthy milestone.”

Mr. Engel continued, “We have been executing a detailed, rigorous and process-oriented integration planning effort over the last several months. Now, all of our integration efforts and organizational focus shift from planning to execution and synergy realization. We are off to an excellent start in our first six weeks since closing, and have already completed actions to deliver over 50% of our year one cost synergy target of $68 million. We have also begun to realize our first sales synergies through leveraging our expanded global footprint and cross-selling our broader product and services portfolio. The strong cultural alignment between WESCO and Anixter is proving to be a key driver of our initial success. We are building on these early successes and remain highly confident in capturing the significant upside potential and exceeding our three year cost savings, sales growth, and cash generation synergy targets. With this merger, the new WESCO will capitalize on the accelerating secular trends of electrification, increased bandwidth demand driven by higher voice, data, video and mobile usage, and the digitization of our B2B value chain. We are more bullish than ever in the substantial value creation that this transformational combination will create for our customers, supplier partners, employees, investors, and the communities in which we operate."

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