WESCO International Q3 Earnings Call Highlights

Key Points

• WESCO reported record third-quarter results, with organic sales up 17% to $7.2 billion, adjusted EBITDA rising 33% to $562 million, and adjusted EPS increasing 47% to $5.77.
• Data centers remained the primary growth engine: sales rose approximately 55% to $1.8 billion, while Communications and Security Solutions backlog increased 140% year over year. Electrical and utility businesses also posted solid growth and record backlogs.
• WESCO raised its 2026 outlook to 13%–14% organic sales growth, approximately $26.8–$27 billion in revenue, and adjusted EPS of $18–$18.50; net leverage improved to 2.8 times adjusted EBITDA.

WESCO International NYSE: WCC reported record third-quarter results for 2026, with double-digit increases in sales, backlog, operating profit and earnings per share, as data center demand and broader infrastructure activity supported growth across all three business units.

Chairman, President and Chief Executive Officer John Engel said the company entered the fourth quarter with positive momentum and raised its full-year outlook. “The past five consecutive quarters of double-digit sales growth demonstrate Wesco's higher growth profile,” Engel said, adding that sales excluding data centers rose at a high-single-digit rate.

Third-quarter organic sales increased 17% year over year to $7.2 billion, driven by approximately 14% volume growth and a roughly 3% contribution from pricing, according to Executive Vice President and Chief Financial Officer Neel Dev. Adjusted EBITDA rose 33% to a record $562 million, while adjusted EBITDA margin expanded 100 basis points to 7.8%.

Adjusted earnings per share increased 47% from the prior year to a record $5.77. Gross margin rose to 21.7%, while SG&A expense improved by about 50 basis points as sales growth, productivity initiatives and cost management generated operating leverage, Dev said.

Data Centers Remain Major Growth Driver

Data center sales rose approximately 55% year over year to a record $1.8 billion in the quarter. On a trailing 12-month basis, data center revenue totaled approximately $6 billion, representing about 23% of company sales.

Management said the business is now margin accretive to the company and is contributing to overall margin expansion. Engel attributed the improvement not primarily to pricing, but to Wesco increasing the amount of products and services it supplies during construction projects and after facilities are deployed.

“The gross margin improvement is because of our services content increasing over time,” Engel said. He added that the company has expanded its capabilities to support data centers beyond initial construction, including services for operating facilities after deployment.

Wesco’s Communications and Security Solutions business, or CSS, generated record sales of $2.9 billion, up 22% year over year. Organic sales increased 21%, driven almost entirely by volume. Wesco Data Center Solutions grew about 40%, led by hyperscale and multi-tenant data center customers, while network infrastructure demand also supported growth in enterprise networking and security.

CSS backlog increased about 140% year over year to a record level. Adjusted EBITDA rose 42% to $313 million, and the unit’s adjusted EBITDA margin expanded 160 basis points to 10.7%.

Engel said Wesco’s data center business also includes enterprise, private and hybrid AI infrastructure customers in addition to hyperscalers. The company plans to discuss its data center offerings in greater detail during a virtual investor event scheduled for Nov. 10.

Growth Across Electrical and Utility Businesses

Electrical and Electronic Solutions, or EES, reported sales of $2.8 billion, up 18% from a year earlier. The unit’s OEM sales grew about 30%, supported by semiconductor and data center markets. Construction sales increased at a mid-teens rate on infrastructure and data center project activity, while industrial sales rose at a mid-single-digit rate on maintenance, repair and operations demand.

EES data center sales more than doubled from the prior year. Excluding data centers, EES grew at a high-single-digit rate. Its backlog rose approximately 40% to a record level, while adjusted EBITDA increased 31% to $259 million. Adjusted EBITDA margin expanded 90 basis points to 9.3%.

The Utility and Broadband Solutions, or UBS, business posted sales of $1.5 billion, up 6%, with organic growth of 7%. Utility sales rose at a high-single-digit rate, helped by investor-owned utility performance, improving public-power trends and infrastructure investment. Broadband sales were flat against a comparison period in which sales had risen more than 20%.

UBS backlog increased approximately 90% year over year to a record level, driven by Grid Services and utility and broadband orders. Adjusted EBITDA rose 6% to $158 million, while adjusted EBITDA margin was 10.4%, up 40 basis points sequentially.

Engel said Grid Services is margin accretive and has grown at a double-digit rate through the first three quarters of 2026. He also said a large, multiyear Grid Services win announced in the previous quarter is expected to begin contributing meaningfully in the first half of 2027.

Cash Flow, Leverage and Outlook

Wesco generated $184 million in free cash flow during the third quarter after investing in working capital to support sales growth. Net working capital was approximately 20% of trailing 12-month sales, generally consistent with prior quarters, Dev said.

Net leverage improved to 2.8 times net debt to adjusted EBITDA, compared with 3.4 times at the end of 2025. The company exited the quarter with more than $2 billion of available liquidity and no significant near-term debt maturities, according to management.

Based on year-to-date performance and fourth-quarter momentum, Wesco raised its 2026 outlook. The company now expects:

• Organic sales growth of 13% to 14%;
• Reported sales growth of 14% to 15%;
• Full-year sales of approximately $26.8 billion to $27 billion;
• Adjusted EBITDA margin of approximately 7.2%; and
• Adjusted earnings per share of $18 to $18.50.

For the fourth quarter, the company expects reported sales growth in the low- to mid-teens and adjusted EBITDA margin expansion of approximately 50 basis points from the prior-year period. Preliminary October sales per workday were up in the high teens year over year.

Looking ahead, Engel said Wesco expects to outperform its markets in 2027, with sales growth in the mid- to high-single digits and continued margin expansion. The company said it will provide a detailed 2027 outlook when it reports fourth-quarter results in February.

About WESCO International (NYSE:WCC)

WESCO International, Inc is a business-to-business provider of electrical, communications, security, and supply chain solutions. The company distributes products used in electrical and electronic systems, including wire and cable, lighting, circuit protection, automation and control equipment, data communications infrastructure, security products, and other electrical and industrial supplies.

WESCO serves a broad range of customers, including electrical and data communications contractors, industrial companies, original equipment manufacturers, utilities, commercial and institutional businesses, government entities, and telecommunications providers.

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