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WESCO delivered record second-quarter results: Sales rose 13% to $6.7 billion, adjusted EBITDA increased 24% to $487 million, and adjusted EPS climbed 35% to $4.57. Margins expanded across the company, supported by favorable mix and improvement initiatives.
Data center demand remained the primary growth driver, with sales up approximately 45% to $1.5 billion. All three business units reported higher sales and backlogs, while the Newark Engineering acquisition added cooling, engineering and lifecycle-service capabilities in Southeast Asia.
WESCO raised its 2026 outlook, now forecasting 9%–11% organic sales growth, adjusted EBITDA margins of 6.9%–7.1% and adjusted EPS of $16.00–$17.50. The company expects low-double-digit sales growth in the third quarter, although margins may decline slightly sequentially due to business mix.
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WESCO International (NYSE:WCC) reported record second-quarter results and raised its full-year outlook, citing continued data center demand, broad-based growth across its business units and expanding profitability.
Chairman, President and CEO John Engel said the company achieved record sales, backlog, adjusted EBITDA and adjusted earnings per share in the quarter, all above its internal plan. Sales rose 13% from a year earlier, extending WESCO's streak of double-digit sales growth to four consecutive quarters.
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"Beyond our outsized growth in data centers, demand remains strong across the rest of our diversified portfolio," Engel said, pointing to customer investment in infrastructure projects. Excluding data centers, WESCO posted mid-single-digit sales growth during the quarter, according to the company.
Executive Vice President and CFO Indraneel Dev said quarterly sales reached a record $6.7 billion, up 13% on both a reported and organic basis. The increase included an estimated 3% benefit from pricing, while volume growth was positive across all three business units.
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Adjusted EBITDA increased 24% to a record $487 million, and adjusted EBITDA margin expanded 60 basis points to 7.3%. Gross margin increased 70 basis points, which Dev attributed to favorable sales mix and margin-improvement initiatives. SG&A expense was 14.5% of sales, compared with 14.4% a year earlier, reflecting higher incentive compensation that was partly offset by operating leverage.
Adjusted diluted earnings per share rose 35% to a record $4.57. The company said operating performance, margin expansion, a lower tax rate, the absence of preferred dividends and a lower share count supported earnings growth, partially offset by higher interest expense.
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Free cash flow totaled $32 million in the second quarter and $246 million in the first half. Dev said working-capital intensity remained approximately 20% of sales despite the company's double-digit revenue growth.
WESCO's Communications and Security Solutions, or CSS, business posted 18% reported and organic sales growth. Sales within WESCO Data Center Solutions increased approximately 45%, while security and enterprise network infrastructure grew at a low-single-digit rate. CSS backlog rose approximately 95% year over year to a record level.
CSS adjusted EBITDA increased 37%, and its adjusted EBITDA margin expanded 140 basis points to a record 10.2%, marking the segment's first double-digit EBITDA-margin quarter.
The Electrical and Electronic Solutions, or EES, segment recorded 11% sales growth, including approximately 6% volume growth and approximately 5% from pricing. Construction sales increased at a high-single-digit rate, industrial sales rose low single digits, and OEM sales grew at a strong double-digit rate. EES data center sales climbed more than 70% from a year earlier and represented about 8% of segment sales.
Excluding data centers, EES sales grew at a high-single-digit pace. Segment backlog increased about 30% and adjusted EBITDA rose 27%, while EBITDA margin expanded 110 basis points to 9.2%.
The Utility and Broadband Solutions, or UBS, segment grew sales 7%. Utility sales increased at a mid-single-digit rate, while broadband sales rose at a mid-teens pace. UBS adjusted EBITDA increased 2%, and the segment returned to a 10% EBITDA margin. Dev said competitive dynamics in public power remained a near-term margin headwind.
UBS backlog rose approximately 80%, driven in part by a significant multiyear grid-services award from a hyperscale data center customer. Engel said the direct customer win expands UBS beyond its traditional utility and broadband markets and is expected to be margin-accretive for the segment as work progresses over multiple years.
Data center sales reached approximately $1.5 billion in the quarter, up about 45% year over year. WESCO said its "power to compute" model spans the data center life cycle, from grid infrastructure and building systems to racks and equipment, creating cross-selling opportunities across its business units.
The company also completed its acquisition of Singapore-based Newark Engineering Group on July 1. Engel said Newark adds mission-critical cooling, thermal-management, engineering, installation and lifecycle-service capabilities, while strengthening WESCO's presence in Southeast Asia.
Engel characterized Newark as part of a series of acquisitions following the Anixter combination that have expanded WESCO's ability to serve data center customers globally. He said the company operates in 55 countries and is working with hyperscale, multi-tenant and enterprise data center customers pursuing global expansion.
Based on first-half performance and continued momentum, WESCO raised its full-year 2026 outlook. The company now expects:
Organic sales growth of 9% to 11%, compared with prior guidance of 5% to 8%.
Reported sales growth of 10% to 12%, implying approximately $26 billion in sales at the midpoint.
Adjusted EBITDA margin of 6.9% to 7.1%.
Adjusted diluted EPS of $16.00 to $17.50, a $0.75 increase at the midpoint.
Free cash flow of $300 million to $600 million, reflecting growth-related working-capital requirements.
For the third quarter, Dev said preliminary July sales per workday were up approximately in the mid-teens percentage range. WESCO expects low-double-digit year-over-year sales growth in the third quarter, while adjusted EBITDA margin is expected to be slightly lower sequentially because of anticipated business mix.
The company ended the quarter with net debt to adjusted EBITDA of approximately 3 times, improved from 3.4 times at year-end. WESCO also repurchased about $50 million of shares in the first half, including roughly $25 million in the second quarter, primarily to offset equity-compensation dilution.
WESCO International, Inc is a leading global distributor of electrical, industrial, communications and utility products, serving a diverse customer base across maintenance, repair and operations (MRO), original equipment manufacturing (OEM) and construction markets. The company offers a comprehensive portfolio of products ranging from power distribution and automation solutions to data communications, security systems and lighting controls. Through an extensive branch network, WESCO provides critical components and value‐added services that help organizations streamline operations and improve reliability in their facilities and infrastructure.
In addition to its broad product offering, WESCO delivers advanced supply chain management and logistics solutions designed to optimize inventory levels, reduce downtime and lower overall procurement costs.
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The article "WESCO International Q2 Earnings Call Highlights" was originally published by MarketBeat.
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