Consistent execution of our LEAN and margin improvement initiative continues and have translated in the strong financial results. Operating margins of 5.2%, net income of $53 million and EPS of $1.03 in the first quarter were up 70 basis points, 42% and 39% respectively versus prior year.
The growth in net income was well above the high end of our 20% to 25% range which we communicated in our investor day in August of last year. In addition, free cash flow generation was strong in the quarter and exceeded net income.
Our investments are clearly paying off. Effective execution of our growth strategy continues and we are pleased with our business results to start the year. In January, we completed the acquisition of RS Electronics, our fifth acquisition since mid-2010. These five acquired companies had annualized sales of approximately $460 million as of their respective closing dates.
With liquidity increasing to over $570 million and financial leverage dropping to 2.1 at the end of first quarter, we have the capacity and financial flexibility to continue to fund our strategy of above market organic growth plus secretive acquisitions. Our acquisition pipeline remains robust and we see excellent opportunities for acquisitions to further expand and strengthen our portfolio.
In summary, we are operating in 2012 with a stronger and more diverse business. Stronger and more diverse in terms of customers and end markets, products and suppliers and geographies.
Our long term outlook remains unchanged. We expect the economy to recover slowly over the next several years. We expect the industrial and utility end markets to continue to grow and construction and Data communications to improve in the second half of 2012. We are continuing to invest in our growth engine and our six operational excellence initiatives. We have generated strong momentum across our company over the last few years and are focused on executing our one WESCO growth strategy, which provides customers with a leading supply chain solutions they need that meet their global MRO, OEM and capital project requirements.
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