WESCO International(US:WCC)2025-10-30 10:03Financial Performance - Record third quarter net sales of $6.2 billion, up 12.9% year-over-year, with organic sales growth of 12.1%[6] - Adjusted EPS for the third quarter was $3.92, reflecting a 9.5% increase year-over-year[6] - Net sales for Q3 2025 reached $6,199.1 million, a 12.9% increase from $5,489.4 million in Q3 2024[24] - For the nine months ended September 30, 2025, net sales totaled $17,442.4 million, an increase of 6.9% from $16,319.1 million in the same period of 2024[26] - Adjusted net income attributable to common stockholders for Q3 2025 was $193.9 million, compared to $178.1 million in Q3 2024, representing an increase of 10.2%[43] - Adjusted earnings per diluted share for Q3 2025 was $3.92, up from $3.58 in Q3 2024, reflecting a growth of 9.5%[45] Sales and Segment Performance - Data center sales reached $1.2 billion, representing a 60% increase compared to the prior year[4] - The EES segment reported organic sales growth of 11.9% for the three months ended September 30, 2025, with sales of $2,359.6 million, up from $2,110.4 million in 2024[34] - The CSS segment achieved a 20.8% increase in reported sales, reaching $2,410.9 million for the three months ended September 30, 2025, compared to $1,995.9 million in 2024[34] - The UBS segment experienced a decline of 7.3% in reported sales for the nine months ended September 30, 2025, totaling $4,083.3 million compared to $4,404.9 million in 2024[35] Profitability and Margins - Adjusted EBITDA margin for the third quarter was 6.8%, up 10 basis points sequentially[6] - Gross profit for the three months ended September 30, 2025, was $1,317.4 million, with a gross margin of 21.3%, down from 22.1% in the same period of 2024[38] - Adjusted income from operations for the three months ended September 30, 2025, was $354.2 million, with an adjusted income from operations margin of 5.7%[41] - Total EBITDA for Q3 2025 was $394.5 million, compared to $406.5 million in Q3 2024, indicating a decline of 2.5%[48] - Adjusted EBITDA margin for Q3 2025 was 6.8%, down from 7.3% in Q3 2024, showing a decrease of 0.5 percentage points[48] Expenses and Costs - SG&A expenses for the third quarter increased by 11% year-over-year, driven by higher salaries and operational costs[7] - Digital transformation costs for the three months ended September 30, 2025, amounted to $10.4 million, impacting the adjusted income from operations[41] - Digital transformation costs for Q3 2025 amounted to $10.4 million, compared to $5.4 million in Q3 2024, representing an increase of 92.6%[48] - Interest expense for Q3 2025 was $99.0 million, up from $86.5 million in Q3 2024, reflecting a rise of 14.4%[48] Cash Flow and Liquidity - Operating cash flow for the third quarter was negative $82.7 million, a decrease of 127.4% compared to the prior year[7] - Free cash flow for the three months ended September 30, 2025, was $(89.3) million, compared to $279.5 million for the same period in 2024[61] - Free cash flow for the nine months ended September 30, 2025, was $6.6 million, down from $776.8 million in 2024[61] - The company reported cash flow used in operations of $(82.7) million for the three months ended September 30, 2025, compared to $302.1 million in 2024[61] Balance Sheet and Debt - The total assets as of September 30, 2025, were $16,553.3 million, up from $15,061.4 million as of December 31, 2024[28] - Total liabilities increased to $11,711.6 million as of September 30, 2025, compared to $10,095.9 million at the end of 2024[28] - The company reported a total debt of $5,801.2 million as of September 30, 2025, up from $5,112.1 million as of December 31, 2024[56] - The financial leverage ratio increased to 3.5 as of September 30, 2025, compared to 2.9 as of December 31, 2024[57] Strategic Initiatives and Risks - The company is focused on executing cross-selling initiatives and enterprise-wide margin improvement programs[5] - The company highlighted ongoing risks including supply chain disruptions and geopolitical issues that could impact future performance[21] - The company incurred restructuring costs of $1.6 million in Q3 2025, compared to a gain of $0.5 million in Q3 2024, indicating a shift in financial strategy[43] - The company recognized a loss on abandonment of assets related to capitalized cloud computing arrangement implementation costs[59]