Financial Data and Key Metrics Changes - Organic sales grew 7% in Q2 2025, following a 6% increase in Q1 2025, with preliminary July sales per workday up approximately 10% year over year [5][11][39] - Adjusted EBITDA margin increased by 90 basis points sequentially, driven by strong operating cost leverage and stable gross margin [6][12] - Adjusted EPS was $3.39, reflecting a 6% increase compared to the prior year [7][13] Business Line Data and Key Metrics Changes - CSS (Communications and Security Solutions) achieved 17% organic growth, while EES (Electrical and Electronic Solutions) grew by 6% [5][12] - Data center sales surpassed $1 billion in Q2, marking a 65% year-over-year increase, indicating strong demand driven by AI trends [5][19] - UBS (Utility and Broadband Solutions) experienced a 4% decline in sales, although investor-owned utility sales returned to growth in Q2 [22][24] Market Data and Key Metrics Changes - The utility market faced challenges but showed signs of recovery, with investor-owned utilities growing low single digits in Q2 [22][56] - Backlog increased across all business units, with CSS backlog up 36% year over year, reflecting strong demand in data center projects [36][65] - The overall data center sales represented approximately 18% of total sales in Q2, up from 10% in the previous year [19] Company Strategy and Development Direction - The company raised its full-year outlook for organic sales growth to 5% to 7%, up from a previous range of 2.5% to 6.5% [33][35] - Focus remains on executing cross-sell initiatives, managing margins, and delivering operational improvements through technology [9][38] - The company aims to prioritize deleveraging the balance sheet while remaining opportunistic regarding share repurchases and acquisitions [37][38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth trajectory supported by trends in electrification, data center expansion, and infrastructure modernization [16][24] - The company acknowledged uncertainties related to tariffs and the overall economy but noted strong demand for data centers and improving electrical end markets [35][36] - Preliminary July sales indicate continued positive momentum, with expectations for mid to high single-digit growth in Q3 [39][41] Other Important Information - The company redeemed $540 million of Series A preferred stock, enhancing financial flexibility and stability [26][27] - Inventory management remains a focus, with a 60 basis point year-over-year improvement in networking capital intensity [25][37] - The company is actively managing tariff impacts and global trade uncertainties to protect margins [30][41] Q&A Session Summary Question: Clarification on pricing and demand trends - Management confirmed that no tariff impacts are included in the second half outlook, and July sales show genuine demand increase rather than just easier comparisons [45][46] Question: Insights on UBS margins - UBS margins were impacted by customer mix and increased SG&A costs, but management expects significant operating leverage as utility sales return to growth [48][50] Question: Utility business performance - Investor-owned utilities returned to growth in Q2, while public power customers are expected to follow suit in the second half of the year [56][58] Question: Data center growth metrics - Management highlighted strong visibility into data center demand, with significant growth in both white space and gray space projects [60][62] Question: Inventory gains and pricing impacts - Management indicated that inventory gains from price increases are temporary and will be reflected in future financials, but specific impacts are difficult to project [78][89]

Financial Data and Key Metrics Changes - The company reported a 6% organic sales growth in the first quarter, exceeding expectations, driven primarily by a 70% increase in the data center business and high single-digit growth in OEM and broadband sectors [4][5][14] - Gross margin remained stable sequentially and adjusted EBITDA margin decreased by 60 basis points year-over-year, primarily due to project and product mix [14][15] - Adjusted earnings per share were $2.21, down 4% from the prior year [15] Business Line Data and Key Metrics Changes - The data center business was a significant growth driver, up 70% year-over-year, while OEM and broadband businesses also saw high single-digit growth [5][14] - EES organic sales increased by 3%, but reported sales were flat due to foreign exchange headwinds and one less workday [17] - CSS sales grew 18% year-over-year on an organic basis, with data center solutions up more than 65% [19][20] Market Data and Key Metrics Changes - The utility market continued to experience softness due to customer destocking and lower project activity levels, with expectations for growth returning in the second half of the year [26][27] - Broadband business showed high single-digit growth, particularly in Canada, while UBS backlog was down 13% year-over-year but up 13% sequentially [27] Company Strategy and Development Direction - The company is focused on debt reduction and stock repurchases while investing in tech-enabled business transformation and managing M&A opportunities [8][41] - The strategic emphasis on data centers is expected to drive growth, with a reaffirmed full-year outlook for reported sales growth increased from mid-teens to about 20% [36][37] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertainty surrounding tariffs and their potential impact on the global economy but emphasized a focus on controllable factors such as cross-sell initiatives and operational improvements [9][39] - The company expects to deliver between $600 million to $800 million in free cash flow for 2025, with a focus on high-return opportunities [40] Other Important Information - The company issued $800 million in senior notes to redeem preferred stock and strengthen its balance sheet, with an estimated annualized net income and cash flow benefit of approximately $30 million [6][30] - Backlog increased sequentially in all three business units, indicating positive momentum moving into the second quarter [9][38] Q&A Session Summary Question: Clarification on revised outlook regarding tariffs - Management confirmed that no tariff-related price increases were incorporated into the outlook, which assumes organic growth rates of 2.5% to 6.5% [47][48] Question: Supplier price increases and their impact - Management noted that supplier price increases were down in Q1 but have significantly increased in Q2, with average price increases moving to high single digits [60][61] Question: Confidence in utility market recovery - Management expressed confidence in a return to growth in the utility market in the second half of the year, supported by ongoing customer engagement and new account wins [64][68] Question: Data center growth and customer engagement - Management highlighted strong momentum in the data center business, with customers increasing their scope of business with WESCO, including a focus on AI-driven data center builds [76][83] Question: Pricing dynamics across business units - Management indicated that pricing pressures are more pronounced in the EES and utility businesses compared to CSS, which has a more stable supplier base [100][102]