WESCO International(US:WCC)2026-02-10 16:00Financial Data and Key Metrics Changes - In Q4 2025, the company reported record sales of $6.1 billion, a 10% increase year-over-year, with 9% organic growth [6][12] - Adjusted EBITDA for Q4 was $409 million, up 10% year-over-year, with an adjusted EBITDA margin of 6.7% [12][14] - For the full year, sales reached $23.5 billion, an 8% increase, with organic sales also up 9% [13] - Adjusted EPS for Q4 grew 8% to $3.40, while full-year adjusted EPS increased 6% to $12.91 [14][15] Business Line Data and Key Metrics Changes - Communications and Security Solutions (CSS) saw organic sales growth of 17% for the full year, driven by strong demand in data center solutions [17][18] - Electrical and Electronic Solutions (EES) reported organic sales growth of 8% for the full year, with notable strength in construction and OEM segments [22][23] - Utility and Broadband Solutions (UBS) experienced a decline in full-year sales of 5%, with organic sales down 1%, primarily due to challenges with public power customers [24][25] Market Data and Key Metrics Changes - Data center sales reached $4.3 billion for the full year, up approximately 50%, representing about 18% of total sales [19][20] - The backlog increased by 19% year-over-year, indicating strong demand across various sectors [7][12] - The company expects continued growth in 2026, with reported sales growth projected between 5%-8% and organic sales growth between 4%-7% [30][32] Company Strategy and Development Direction - The company is focused on capital allocation, prioritizing debt reduction and share repurchases while investing in technology-enabled business transformation [9][35] - Plans to increase the annual common stock dividend by over 10% to $2 per share, reflecting a commitment to shareholder returns [9][35] - The company aims to leverage digital transformation to enhance operational efficiency and margin expansion [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in outperforming the market in 2026, driven by strong demand in data centers and improving trends in other business units [8][38] - The company anticipates continued challenges in the public power segment but expects a return to growth by the end of 2026 [25][58] - Management highlighted the importance of grid services, which is expected to grow at a double-digit rate in 2026 [25][59] Other Important Information - The company has made significant progress in its digital transformation, recognized by Fortune as one of the top AI companies [10] - Free cash flow for 2025 was $54 million, with expectations for improvement in 2026 as working capital initiatives take effect [29][35] Q&A Session Summary Question: Clarification on pricing and its impact on EBITDA margins - Management explained that while they are seeing an increase in price notifications from suppliers, they do not include these in their outlook due to uncertainty in timing [39][40] - If price increases are realized, they could provide a transitory benefit to gross margins and operating leverage [42][43] Question: UBS segment performance and future outlook - Management clarified that challenges in the UBS segment are primarily driven by public power customers, with expectations for a return to growth by year-end 2026 [44][45][56] Question: Data center growth expectations - Management indicated that data center sales are expected to grow mid-teens in 2026, with consistent activity levels anticipated throughout the year [46][48] Question: Free cash flow expectations for 2026 - Management provided a range of $500 million-$800 million for free cash flow in 2026, highlighting improved cash generation and working capital management [49][51] Question: Order book trends and backlog growth - Management noted that all business units grew their backlog in Q4, with CSS showing the strongest growth at 40% [52][53]