WESCO International(US:WCC)2025-10-30 15:02Financial 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]