Wesco International — Third Quarter 2026 Earnings Summary

Financial Performance:

• Reported net sales for the third quarter of 2026 reached a record $7.2 billion, an increase of 17% year-over-year (YOY) and 8% sequentially; organic sales grew 17% YOY.
• Data center sales totaled $1.8 billion, up approximately 55% YOY, while non-data center sales increased 7% YOY.
• Operating margin was 6.2%, up 60 basis points YOY; adjusted EBITDA margin was 7.8%, up 100 basis points YOY.
• Diluted EPS was a record $5.43; adjusted diluted EPS was a record $5.77, up 47% YOY.
• Operating cash flow was $194 million; free cash flow was $184 million.
• Financial leverage ratio decreased to 2.8x from 3.4x at year-end 2025.
• For the nine months ended September 30, 2026, net sales were $19.97 billion (up 14.5% YOY), operating profit was $1.13 billion (up 24.0% YOY), and net income attributable to common stockholders was $630.6 million (up 31.2% YOY).
• Gross margin for the quarter was 21.7%, up 40 basis points YOY.

Guidance and Future Outlook:

• Wesco raised its full-year 2026 outlook citing record sales, profitability, and backlog.
• Management expressed confidence in continuing to outperform markets and deliver value through 2026 and 2027.
• Backlog reached a record level, up approximately 80% YOY, fueled by multi-year customer commitments.
• The company noted five consecutive quarters of double-digit sales growth, indicating a higher growth profile extending beyond data center positioning.

Business Segments and Product Lines:

• Organic sales growth was driven by volume growth across all three segments: Communications and Security Solutions (CSS), Electrical and Electronic Solutions (EES), and Utility and Broadband Solutions (UBS).
• CSS segment sales grew 21.7% YOY in the quarter; EES grew 17.5% YOY; UBS grew 6.4% YOY.
• The "One Wesco" cross-selling strategy continues to demonstrate effectiveness as customers rely on the company for diversified needs.
• Customer demand remains strong across commercial and industrial businesses, technology companies, telecommunications providers, and utilities.

Market and Competitive Landscape:

• The company reported strong customer demand for major capital and infrastructure projects.
• Wesco positions itself as a leading provider with global capabilities across communications, security, electrical, utility, and power markets.
• Management stated the company is outperforming the market due to its customer value proposition and leading portfolio.

Risks and Challenges:

• Forward-looking statements highlight risks including potential failure to achieve benefits of acquisitions, inability to integrate acquired businesses, and increased interest rates or borrowing costs.
• Risks include currency exchange rate fluctuations, evolving impacts from tariffs or trade tensions, and supply chain disruptions.
• Potential challenges include the inability to successfully deploy new technologies or adapt to emerging technologies like AI, cyber incidents, data breaches, and geopolitical conflicts.
• Risks also encompass material shortages, inflationary cost pressures, and logistics capacity constraints.

Management Commentary and Tone:

• John Engel, Chairman, President, and CEO, described the results as "very pleased" with positive momentum into the fourth quarter.
• Management highlighted that sales, backlog, operating profit, and EPS all increased double digits versus the prior year, exceeding expectations.
• Engel noted strong free cash flow generation given the sales growth and expressed being "bullish" on continued outperformance.
• The tone emphasized the effectiveness of the cross-selling strategy and the recognition of Wesco's unique capabilities by large customers.

Other Key Points:

• The company issued $650 million of 5.250% Senior Notes due 2031 and $850 million of 5.500% Senior Notes due 2034 during the first nine months of 2026.
• Proceeds from the new notes were used to redeem $1.325 billion of 7.250% Senior Notes due 2028 and repay a portion of the Revolving Credit Facility.
• SG&A expenses included $24.8 million in digital transformation costs for the quarter, compared to $8.8 million in the prior year quarter.
• The effective tax rate for the quarter was 24.4%, driven by higher non-deductible compensation expense.
• The company employs approximately 21,000 people and operates more than 700 sites in approximately 50 countries.
• Wesco is a FORTUNE 500 company with approximately $24 billion in annual sales in 2025.