Core Insights - WESCO International, Inc. has appointed two new independent directors, Michael L. Carter and David C. Wajsgras, effective January 1, 2026 [1] Group 1: New Appointments - Michael L. Carter is currently the Executive Vice President and Chief Partner Officer of Truist Financial Corporation, with a strong background in corporate and investment banking [2] - David C. Wajsgras is the former CEO of Intelsat Holdings S.A. and has held significant leadership roles at Raytheon and other companies, bringing extensive experience in industrial and technology sectors [3] Group 2: Leadership Statements - John Engel, Chairman, President, and CEO of WESCO, expressed confidence in the new directors' expertise in capital markets and global industrial sectors, which will support the company's strategy and long-term value creation [4] - Engel also acknowledged the contributions of retiring directors Bobby Griffin and Steve Raymund, highlighting their role in advancing the company's strategy and governance [5] Group 3: Company Overview - WESCO International is a FORTUNE 500® company with approximately $22 billion in annual sales for 2024, specializing in business-to-business distribution, logistics services, and supply chain solutions [5] - The company operates over 700 sites in around 50 countries, providing a comprehensive product and service portfolio across various sectors, including electrical, communications, and utility solutions [5]

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Core Insights - WESCO International (WCC) shares increased approximately 3% following strong Q3 2025 results, with adjusted earnings of $3.92 per share, reflecting a 9.5% year-over-year growth and surpassing Zacks Consensus Estimate by 4.53% [1] - Net sales reached $6.2 billion, marking a 13% year-over-year increase and exceeding Zacks Consensus Estimate by 5.17% [1] - Organic sales grew by 2.4% year over year [1] Segment Performance - EES Segment (38.1% of Net Sales): Sales were $2.36 billion, up 11.8% year over year, with organic sales increasing by 11.9% [2] - CSS Segment (38.9% of Net Sales): Sales reached $2.41 billion, a 20.8% year-over-year increase, with organic sales up 18.3% [3] - UBS Segment (23% of Net Sales): Sales totaled $1.43 billion, reflecting a 3.3% year-over-year increase, with organic sales rising by 3.4% [3] Operating Metrics - Q3 2025 gross margin was 21.3%, down 80 basis points year over year [4] - Adjusted EBITDA margin decreased to 6%, down 100 basis points year over year [4] - Selling, general and administrative expenses were $914.1 million, up 10.8% year over year, but as a percentage of net sales, it decreased by 30 basis points to 14.7% [4] - Adjusted operating margin contracted to 5.7%, down 50 basis points year over year [4] Financial Position - As of September 30, 2025, cash and cash equivalents were $571.9 million, down from $667 million as of June 30, 2025 [5] - Long-term debt increased to $5.72 billion from $5.64 billion in the previous quarter [5] - Net cash used in operating activities for Q3 2025 was $82.7 million [5] Future Outlook - For 2025, WESCO anticipates organic sales growth between 8% and 9%, with reported sales expected to be between $21.8 billion and $22.7 billion [6] - The adjusted EBITDA margin is projected to be 6.6%, with adjusted earnings expected to range from $13.10 to $13.60 per share [6] - Free cash flow is anticipated to be between $400 million and $500 million [8] - For Q4 2025, reported sales are expected to increase in the high single-digit range, with adjusted EBITDA expected to rise by approximately 30 basis points [8]

Core Insights - Wesco International (WCC) stock received an upgrade in its Relative Strength (RS) Rating from 79 to 87, indicating improved technical performance [1] - CommScope stock has experienced a significant increase of over 235% in 2025, primarily following the sale of a business [2] Company Performance - CommScope's stock performance has been notable, with a substantial gain attributed to strategic business decisions [2] - Analysts are bullish on several stocks, including Vicor and Amphenol, which have shown strong earnings growth and high RS Ratings [4] Market Trends - There is a rising interest in AI-related stocks, as evidenced by the performance of companies like Shopify and TE Connectivity, which have reached new highs [4] - The data center sector is gaining attention, with analysts optimistic about its growth potential as earnings reports approach [4]

Financial Performance - Net sales for Q3 2025 were $6.2 billion, a 12.9% increase from $5.5 billion in Q3 2024, with organic sales growth of 12.1%[119] - Cost of goods sold increased by 14.1% to $4.9 billion in Q3 2025, resulting in a gross margin decrease to 21.3% from 22.1% in Q3 2024[120] - SG&A expenses rose by 11.0% to $922.9 million in Q3 2025, accounting for 14.9% of net sales compared to 15.1% in Q3 2024[121] - Income from operations increased by 2.9% to $345.4 million in Q3 2025, reflecting higher sales but offset by increased costs[123] - Net income attributable to common stockholders was $187.5 million for Q3 2025, with earnings per diluted share at $3.79, slightly down from $3.81 in Q3 2024[128] - Net sales for the first nine months of 2025 were $17.4 billion, an increase of 6.9% compared to $16.3 billion in the same period of 2024[148] - Net income attributable to common stockholders for the first nine months of 2025 was $480.6 million, with earnings per diluted share at $9.71, compared to $509.1 million and $10.02 in 2024[157] - The total net income attributable to common stockholders for Q3 2025 was $187.5 million, compared to $189.9 million in Q3 2024[137] Segment Performance - Electrical & Electronic Solutions (EES) reported net sales of $2.4 billion for Q3 2025, up $249.2 million or 11.8% from Q3 2024, with organic sales growth of 11.9%[132] - Communications & Security Solutions (CSS) net sales reached $2.4 billion in Q3 2025, an increase of $415.0 million or 20.8%, with organic sales growth of 18.3%[134] - Utility & Broadband Solutions (UBS) reported net sales of $1.4 billion for Q3 2025, an increase of $45.5 million or 3.3%, with organic sales growth of 3.4%[136] - Net sales for Electrical & Electronic Solutions (EES) reached $6,682.7 million for the first nine months of 2025, an increase of $373.5 million, or 5.9% year-over-year, with organic sales growing by 7.1%[161] - Communications & Security Solutions (CSS) reported net sales of $6,676.4 million for the first nine months of 2025, an increase of $1,071.4 million, or 19.1%, with organic sales growing by 17.9%[164] - Utility & Broadband Solutions (UBS) net sales were $4,083.3 million for the first nine months of 2025, a decrease of $321.6 million, or 7.3%, with organic sales declining by 2.2%[166] Expenses and Costs - Net interest expense for Q3 2025 was $99.0 million, a 14.5% increase from $86.5 million in Q3 2024, primarily due to the issuance of new notes[124] - The provision for income taxes decreased to $57.8 million in Q3 2025, resulting in an effective tax rate of 23.5% compared to 25.3% in Q3 2024[127] - Cost of goods sold increased by 7.7% to $13.8 billion for the first nine months of 2025, with cost of goods sold as a percentage of net sales rising to 78.9% from 78.3%[149] - SG&A expenses totaled $2.6 billion for the first nine months of 2025, an increase of 5.7% from $2.5 billion in 2024[150] - Other non-operating income fell to $7.0 million for the first nine months of 2025, compared to $99.3 million in the same period of 2024, which included a $122.2 million gain from the sale of the WIS business[154] Adjusted Metrics - Adjusted EBITDA for Q3 2025 was $423.0 million, an increase of $24.9 million or 6.3% year-over-year, driven by a $709.7 million increase in net sales[130] - Adjusted net income attributable to common stockholders for the first nine months of 2025 was $470.9 million, with adjusted earnings per diluted share at $9.51, compared to $461.0 million and $9.07 in 2024[157] - Adjusted EBITDA for the first nine months of 2025 was $1,127.8 million, a decrease of $10.8 million, or 0.9% year-over-year, primarily due to a $986.2 million increase in cost of goods sold and a $142.5 million increase in SG&A expenses[159] - The increase in adjusted earnings per diluted share was primarily due to the favorable impact of the Series A Preferred Stock redemption and increased net sales, partially offset by higher costs and decreased other income[158] Liquidity and Capital Structure - The company has no significant debt maturities until 2028, allowing for strong liquidity to focus on debt reduction, stock buybacks, and acquisitions[115] - As of September 30, 2025, the company had $1,425.0 million outstanding under its Receivables Facility and $258.6 million in cash, providing total liquidity of approximately $1.6 billion[179] - The company’s financial leverage ratio was 3.5x as of September 30, 2025, compared to 2.9x as of December 31, 2024, indicating an increase in leverage[185] - The Revolving Credit Facility has a borrowing limit of $1,725 million, with $425.0 million outstanding as of September 30, 2025[179] - The company plans to direct excess liquidity towards share repurchases, dividends, debt reduction, and digital transformation initiatives in the coming quarters[184] Cash Flow and Investments - Net cash provided by operating activities for the first nine months of 2025 totaled $53.1 million, a significant decrease of $771.5 million compared to $824.6 million in the same period of 2024[192] - Net cash used in investing activities for the first nine months of 2025 was $100.4 million, a decline from $249.7 million provided by investing activities in the first nine months of 2024[194] - Financing activities in the first nine months of 2025 resulted in a net cash outflow of $94.2 million, compared to a net cash outflow of $874.3 million in the same period of 2024[196] - Capital expenditures for the first nine months of 2025 amounted to $55.4 million, primarily for leasehold improvements and equipment to support digital transformation initiatives[194] Digital Transformation - The company is executing a multi-year development of a new Digital and Data Platform to enhance operational efficiency[116] - Digital transformation costs included in adjusted figures amounted to $24.1 million for the nine months ended September 30, 2025[176]

Financial Data and Key Metrics Changes - The company reported record quarterly sales of $6.2 billion, marking an 18% organic growth in Communications and Security Solutions (CSS), 12% in Electrical and Electronic Solutions (EES), and a return to growth in Utility and Broadband Solutions (UBS) with a 3% increase [6][34] - Adjusted EPS grew 9.5% year over year and 16% sequentially, with both gross margin and EBITDA margin improving sequentially [7][35] - Organic sales growth accelerated to 12% in Q3, up from 6% in Q1 and 7% in Q2, indicating four consecutive quarters of accelerating momentum [5][10] Business Line Data and Key Metrics Changes - EES delivered organic sales growth of 12%, driven by construction, industrial, and OEM segments, with data center sales up 60% year over year [12][14] - CSS achieved 18% organic sales growth, supported by strong demand in data center solutions and enterprise network infrastructure [14][15] - UBS saw a 3% increase in organic sales, led by high single-digit growth in investor-owned utilities, while public power remained soft [22][23] Market Data and Key Metrics Changes - Total data center sales reached approximately $1.2 billion in Q3, representing 19% of total company sales on a trailing 12-month basis, with a year-over-year growth of 60% [6][17] - Broadband performance accelerated with sales up over 20% year over year, marking a significant improvement from previous quarters [22] Company Strategy and Development Direction - The company is focused on accelerating cross-selling initiatives and driving enterprise-wide margin improvement through technology-driven business transformation [7][8] - The strategic outlook for 2026 includes mid-single-digit organic sales growth, continued strength in electrical markets, and a return to growth in public power [36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to outperform market trends driven by secular growth in digitalization, electrification, and supply chain resiliency [8][35] - The company raised its full-year outlook for organic sales growth, adjusted EBITDA, and adjusted EPS based on strong business momentum [7][30] Other Important Information - The company redeemed $540 million of Series A preferred stock, optimizing its capital structure and reducing financing costs [26] - Free cash flow was a use of $89 million in Q3, attributed to increased working capital needs due to significant sales growth [10][24] Q&A Session Summary Question: How much did price contribute to growth by segment? - The overall pricing benefit in Q3 was just under 3%, with EES at about 4%, CSS at 2%, and UBS at 1% [38] Question: Can you provide insights on EES growth excluding data centers? - EES experienced strong growth across construction, industrial, and OEM segments, with notable increases in infrastructure-related projects [41][43] Question: What is the outlook for public power in the utility segment? - Public power is expected to return to growth in 2026, with current softness attributed to inventory build issues during the pandemic [107] Question: How will supplier volume rebates impact margins? - Supplier volume rebates contributed to gross margin expansion in Q3, and the company expects this trend to continue into 2026 [61] Question: What is the status of the digital transformation and cross-selling? - The digital transformation is progressing well, and cross-selling initiatives have significantly exceeded initial expectations, contributing to overall sales growth [63]

Financial Data and Key Metrics Changes - The company reported record quarterly sales of $6.2 billion, marking an 18% organic growth in Communications and Security Solutions (CSS), 12% in Electrical and Electronic Solutions (EES), and a return to growth in Utility and Broadband Solutions (UBS) [6][35] - Adjusted EPS grew 9.5% year-over-year and 16% sequentially, with both gross margin and EBITDA margin improving sequentially [7][36] - Organic sales growth accelerated to 12% in Q3, following 6% in Q1 and 7% in Q2, indicating four consecutive quarters of accelerating momentum [5][11] Business Line Data and Key Metrics Changes - EES delivered organic sales growth of 12%, driven by construction, industrial, and OEM segments, with data center sales up 60% year-over-year [13][14] - CSS achieved 18% organic growth, primarily from data center solutions, which were up over 50% due to large project activity [15][16] - UBS saw a 3% increase in organic sales, led by high single-digit growth in investor-owned utilities, while public power remained soft [23][24] Market Data and Key Metrics Changes - Total data center sales reached approximately $1.2 billion, representing 19% of total company sales on a trailing 12-month basis, with a year-over-year growth of 60% [6][18] - Backlog in UBS increased by 11% year-over-year, reflecting stronger customer order rates [23] Company Strategy and Development Direction - The company is focused on accelerating cross-selling initiatives and driving enterprise-wide margin improvement through technology-driven business transformation [8][9] - The strategic outlook for 2026 includes mid-single-digit organic sales growth, with continued strength in electrical markets and a return to growth in public power [37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to outperform markets due to secular growth trends in digitalization, electrification, and supply chain resiliency [9][36] - The company raised its full-year outlook for organic sales growth, adjusted EBITDA, and adjusted EPS based on increasing business momentum [8][31] Other Important Information - The company redeemed $540 million of Series A Preferred Stock, optimizing its capital structure and reducing financing costs [27] - Free cash flow was a use of $89 million in Q3, attributed to increased working capital needs due to significant sales growth [10][25] Q&A Session Summary Question: How much did price contribute to growth by segment? - The overall pricing benefit in Q3 was just under 3%, with EES at about 4%, CSS at 2%, and UBS at 1% [39] Question: Can you discuss the strength in EES outside of data centers? - EES saw growth across all operating groups, particularly in construction and OEM, driven by robust demand in infrastructure projects [40][42] Question: Are you seeing a crowd-out effect from AI and tech spending? - There is no observed crowd-out effect; EES growth is attributed to overall market outperformance [51][52] Question: What gives confidence in the return to growth for public power? - Public power is expected to return to growth in 2026, supported by improving customer order rates and inventory builds [109][110]

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Financial Data and Key Metrics Changes - The company reported record quarterly sales of $6.2 billion, marking an 18% organic growth in Communications and Security Solutions, 12% in Electrical and Electronic Solutions, and a return to growth in Utility and Broadband Solutions [7][36] - Adjusted EPS grew 9.5% year over year and 16% sequentially, with both gross margin and EBITDA margin improving sequentially [8][36] - Organic sales growth accelerated to 12% in Q3, following 6% in Q1 and 7% in Q2, indicating four consecutive quarters of accelerating momentum [6][36] Business Line Data and Key Metrics Changes - Electrical and Electronic Solutions (EES) saw organic sales up 12% year over year, driven by growth across all operating groups, particularly in construction and OEM [15][16] - Communications and Security Solutions (CSS) delivered organic sales growth of 18%, supported by strong demand in data center solutions [16][17] - Utility and Broadband Solutions (UBS) reported a 3% increase in organic sales, marking a return to growth after seven quarters of declines, driven by investor-owned utilities [23][36] Market Data and Key Metrics Changes - Total data center sales reached approximately $1.2 billion, up 60% year over year, representing 19% of total Q3 company sales on a trailing 12-month basis [7][19] - The broadband segment experienced over 20% year-over-year growth, indicating a significant improvement from previous quarters [23] - Backlog increased 11% year over year, reflecting stronger customer order rates across various segments [23] Company Strategy and Development Direction - The company is focused on accelerating cross-selling initiatives and driving enterprise-wide margin improvement through technology-driven business transformation [8][10] - The strategic outlook includes capitalizing on secular growth trends such as digitalization, electrification, and supply chain resiliency, with expectations for continued market-leading growth into 2026 [10][36] - The company raised its full-year outlook for organic sales growth and adjusted EBITDA based on increasing business momentum [8][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to outperform markets due to strong portfolio strength and ongoing secular growth trends [10][36] - The outlook for 2026 includes expectations for mid-single-digit organic sales growth and continued strength in electrical markets, with a return to full-year growth in utility services [37] - Management acknowledged challenges related to working capital investments but emphasized the high quality of cash flow issues due to significant sales growth [71] Other Important Information - The company redeemed $540 million in Series A preferred stock, marking a significant milestone in capital structure optimization [27] - Free cash flow was a use of $89 million in Q3, attributed to increased working capital needs due to significant growth [24][25] - The company is experiencing a dynamic tariff environment, with supplier price increase notifications up over 100% in count, but the impact on results was limited [28] Q&A Session Summary Question: How much did price contribute to growth by segment? - Overall pricing benefit in Q3 was just under 3%, with EES at about 4%, CSS at about 2%, and UBS at about 1% [39] Question: Can you discuss the strength in EES outside of data centers? - EES saw growth across construction, industrial, and OEM sectors, with construction up mid-teens driven by infrastructure projects [42][44] Question: Is there a crowd-out effect from AI and tech spending? - There is no observed crowd-out effect; EES growth is attributed to overall market outperformance [51] Question: What is the outlook for public power in the utility segment? - Public power is expected to return to growth in 2026, with current softness attributed to inventory build issues [108]

Third Quarter Performance - Record quarterly sales reached $6.2 billion, driven by organic growth across all three business units: CSS up 18%, EES up 12%, and UBS up 3%[7] - Total data center sales amounted to approximately $1.2 billion, a year-over-year increase of roughly 60%[7] - Adjusted EBITDA margin saw a sequential increase of 10 bps due to improved gross margin[7] - Backlog increased by 7% year-over-year[7] - Preliminary October sales per workday showed positive momentum, increasing by approximately 9%[7] Full Year Outlook & Strategic Sales Growth - The company raised its full-year outlook for organic sales growth to 8%-9%, with reported growth expected at 7%-8%[7, 40] - Data Center sales are expected to be up approximately 50%[41] - The company anticipates reported sales between $23.3 billion and $23.6 billion[42] - Adjusted diluted EPS is projected to be in the range of $13.10 to $13.60[42] - Free cash flow is expected to be between $400 million and $500 million[42] Financial Restructuring - The company redeemed $540 million of preferred stock with a 10.625% dividend rate[37] - This refinancing is expected to generate approximately $32 million in annualized benefit to net income and cash flow, and approximately $0.65 annualized benefit to EPS[37]