WCC

Looking back on maintenance and repair distributors stocks’ Q2 earnings, we examine this quarter’s best and worst performers, including WESCO (NYSE:WCC) and its peers. Supply chain and inventory management are themes that grew in focus after COVID wreaked havoc on the global movement of raw materials and components. Maintenance and repair distributors that boast reliable selection and quickly deliver products to customers can benefit from this theme. While e-commerce hasn’t disrupted industrial distribution as much as consumer retail, it is still a real threat, forcing investment in omnichannel capabilities to serve customers everywhere. Additionally, maintenance and repair distributors are at the whim of economic cycles that impact the capital spending and construction projects that can juice demand. The 9 maintenance and repair distributors stocks we track reported an exceptional Q2. As a group, revenues beat analysts’ consensus estimates by 4%. Thankfully, share prices of the companies have been resilient as they are up 5.9% on average since the latest earnings results. Based in Pittsburgh, WESCO (NYSE:WCC) provides electrical, industrial, and communications products and augments them with services such as supply chain management. WESCO reported revenues of $6.67 billion, up 13% year on year. This print exceeded analysts’ expectations by 3.7%. Overall, it was a stunning quarter for the company with a solid beat of analysts’ organic revenue estimates and an impressive beat of analysts’ EBITDA estimates. "We delivered another exceptional quarter marked by continued market outperformance and accelerating business momentum. " said John Engel, Chairman, President, and CEO. Interestingly, the stock is up 16.1% since reporting and currently trades at $359.25. Is now the time to buy WESCO? Access our full analysis of the earnings results here, it’s free. Serving the pharmaceutical, industrial manufacturing, energy, and chemical process industries, Transcat (NASDAQ:TRNS) provides measurement instruments and supplies. Transcat reported revenues of $92.95 million, up 21.6% year on year, outperforming analysts’ expectations by 7.4%. The business had an incredible quarter with a beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates. Transcat achieved the biggest analyst estimate beat of the whole group. The market seems content with the results as the stock is up 3.2% since reporting. It currently trades at $94.86. Is now the time to buy Transcat? Access our full analysis of the earnings results here, it’s free. Founded in 1967, Fastenal (NASDAQ:FAST) provides industrial and construction supplies, including fasteners, tools, safety products, and many other product categories to businesses globally. Fastenal reported revenues of $2.39 billion, up 14.7% year on year, exceeding analysts’ expectations by 1.9%. It may have had the worst quarter among its peers, but its results were still good as it also locked in EPS in line with analysts’ estimates. Interestingly, the stock is up 9.3% since the results and currently trades at $51.44. Read our full analysis of Fastenal’s results here. Founded as a supplier of motors, W.W. Grainger (NYSE:GWW) provides maintenance, repair, and operating (MRO) supplies and services to businesses and institutions. W.W. Grainger reported revenues of $5.02 billion, up 10.3% year on year. This print beat analysts’ expectations by 1.2%. Overall, it was a strong quarter as it also logged a solid beat of analysts’ organic revenue estimates and full-year EPS guidance beating analysts’ expectations. W.W. Grainger had the weakest performance against analyst estimates among its peers. The stock is down 3.4% since reporting and currently trades at $1,324. Read our full, actionable report on W.W. Grainger here, it’s free. Founded in NYC’s Little Italy, MSC Industrial Direct (NYSE:MSM) provides industrial supplies and equipment, offering vast and reliable selection for customers such as contractors MSC Industrial reported revenues of $1.05 billion, up 7.8% year on year. This result surpassed analysts’ expectations by 1.6%. Overall, it was a very strong quarter as it also put up a beat of analysts’ EPS estimates. The stock is up 1.9% since reporting and currently trades at $121.23. Read our full, actionable report on MSC Industrial here, it’s free. Over the past year, investors have been forced to repeatedly answer the same question: what is the market’s biggest risk? The answer has changed several times, and each shift has reshaped market leadership. Late in 2025 and early 2026, artificial intelligence became the market’s primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products. By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market’s dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals. Want to invest in winners with rock-solid fundamentals? Check out our Hidden Gem Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

Interested in WESCO International, Inc.? Here are five stocks we like better. 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. 3 Companies That Just Started Paying Dividends 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. → Microsoft Just Flipped the AI Spending Narrative Overnight 3 Mid-Caps with Bullish Candlesticks and Analysts “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. → 2 Unique Space ETFs That Could Upend the Industry Wesco Clears Buy Point On Continued Revenue & Earnings Strength 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. → MarketBeat Week in Review – 07/27- 07/31 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. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "WESCO International Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Image source: The Motley Fool. Thursday, July 30, 2026 at 10 a.m. ET Senior Vice President, Investor Relations - Scott Gaffner Chairman, President, and Chief Executive Officer - John J. Engel Executive Vice President and Chief Financial Officer - Indraneel Dev Operator: Hello. And welcome to Wesco's 2026 Second Quarter Earnings Call. If you would like to ask a question, please press star followed by 1, on your telephone keypad. Please note this event is being recorded. I will now hand the call over to Scott Gaffner, SVP, Investor Relations to begin. Scott Gaffner: Thank you, and good morning, everyone. Before we get started, I want to remind you that certain statements made on this call contain forward-looking information. Forward-looking statements are not guarantees of performance and by their nature are subject to uncertainties. Actual results may differ materially. Please see our webcast slides in the company's SEC filings for additional risk factors and disclosures. Any forward-looking information speaks only as of this date, and the company undertakes no obligation to update the information to reflect changed circumstances. Additionally, today, we will use certain non-GAAP financial measures. Required information about these measures is available on our webcast slides and in our press release, both of which you can find on our website at wesco.com. On the call this morning, we have John J. Engel, Wesco's chairman, president and CEO, and Indraneel Dev, executive vice president and CFO. Now I will turn the call over to John. John J. Engel: Thank you, Scott. Good morning, everyone. Thank you for joining our call today. Delivered exceptional results in the second quarter. And it reflects continuing strong execution, market outperformance, and accelerating momentum across our entire business. We achieved record sales, record backlog, record adjusted EBITDA, and record adjusted earnings per share. All of which exceeded our plan. Free cash flow generation was also positive and exceeded our expectations. Key milestones and highlights for the second quarter included the first highlight was sales. Record sales were up 13%. We have now posted four consecutive quarters of double-digit sales growth for our Wesco enterprise. Fueled by data centers. Beyond our outsized growth in data centers, demand remains strong across the rest of our diversified portfolio and end markets. As customers continue to invest in major infrastructure projects. Sales growth was broad-based across all three of our business units. Very importantly, x data centers, we delivered mid-single-digit sales growth across Wesco in the second quarter. This highlights the strength of our diversified portfolio, and it provides another proof point that we are benefiting from the multiple secular trends in CSS, EES, and UBS. Our second highlight of this exceptional quarter was profitability. Record adjusted EBITDA was up 24%. Record adjusted EPS was up 35%. And adjusted EBITDA margin expanded 60 basis points to 7.3% for Wesco overall. Even more importantly, we significantly improved the profitability of each of our three business units. CSS achieved a record 10.2% EBITDA margin. Establishing itself as a double-digit EBITDA margin business. it is great to get to CSS above the 10% mark. EES expanded operating margins 110 basis points to 9.2% EBITDA. it is great to get EES back above 9% EBITDA. And UBS returned to a 10% EBITDA margin business. it is great to have UBS returned above 10% too because I think, as you know, we fell below 10% over the last two quarters. Our third major highlight again for this exceptional quarter was backlog. Record backlog, which we have posted now for three quarters in a row. And backlog was up a whopping 60% in the second quarter. This was driven by strong double-digit growth across all three business units. And reflects the continued effectiveness of our OneWesco cross-selling strategy. CSS backlog was up 95%, essentially doubling. EES backlog was up 30%. And UBS backlog was up 80%. All three SBUs posted record backlogs. This impressive backlog growth was fueled by multiyear customer commitments demonstrating our transformation into a leading infrastructure solutions provider. Serving the communications, the security, the electrical, the utility, and the power markets. Another major milestone I wanted to call out this quarter was a significant multiyear grid services award in our UBS business and this award was from a hyperscale data center customer. This win represents a very important step in diversifying our UBS customer base and expanding our comprehensive data center offerings to include power solutions. End-to-end power solutions. And that is in addition to our extensive white space and gray space product and service offerings. Finally, as recently announced, we strengthened our end-to-end capabilities and cooling solutions for data center customers through the acquisition of Singapore-based Newark Engineering, and that acquisition closed on July 1, 2026. We are very pleased with our exceptional second quarter results and our accelerating business momentum. The power of our customer value proposition, our global capabilities, and our leading portfolio of product services and solutions is very clear. and it is very clear as we continue to outperform the market. As a result, we are significantly raising our full-year outlook for sales, EBITDA and EPS. And this reflects the favorable secular growth trends and our confidence in continued strong execution. As a market leader, and with positive momentum building across our business, I am bullish that Wesco will continue to outperform our markets and deliver superior value to our customers, our suppliers, and our shareholders in the second half of 2026 and beyond. So with that, I will turn it over to Neil to take you through our second quarter results. And our raised full-year outlook in more detail. Neil? Indraneel Dev: Thank you, John and good morning, everyone. As John highlighted, we delivered a record quarter. Reflecting strong demand across our end markets with excellent execution, and strong momentum across the portfolio. Before turning to the quarter in more detail, let me start with a few highlights. We delivered record sales, adjusted EBITDA, and adjusted earnings per share. Growth was broad-based across the portfolio. With contributions from all three business units and strength across multiple end markets. Highlighting the diversified nature of our growth profile. Margin expansion continued. Driven by gross margin improvement, and strong operating leverage on higher sales growth. As a result of our exceptional first half results, and accelerating business momentum, we are raising our full-year outlook for sales, adjusted EBITDA, and adjusted EPS. With that, let me turn to our second quarter results. Starting on Slide 4. Both the top line and profitability stepped up meaningfully in the second quarter. Sales reached $6.7 billion with both reported and organic growth of 13%. Driven by an estimated 3% price benefit and solid volume growth across all three SBUs. While data center remains a key growth driver for the company, growth this quarter was broad-based and diversified. With mid-single-digit year-over-year sales growth excluding data center. Adjusted EBITDA grew 24% to a record $487 million, and margin expanded 60 basis points to 7.3% of sales. Gross margins expanded by 70 basis points as a result of favorable sales mix during the quarter and continued execution of our margin improvement initiatives. SG&A for the quarter was 14.5% of sales compared to 14.4% for the year-ago quarter. Primarily driven by higher incentive compensation partially offset by operating leverage in the core business. Turning to slide 5. Adjusted earnings per share increased 35% to a record $4.57. The improvement was driven primarily by strong operating performance including higher sales and margin expansion. EPS growth also benefited from a lower tax rate, the absence of preferred dividends and a lower share count, partially offset by higher interest expense. Turning to CSS on slide 6. CSS delivered an outstanding quarter. With reported and organic sales growth of 18%. Driven by continued data center momentum. Sales for Wesco data center solutions increased approximately 45% driven by broad-based growth across our data center customer base. Security and enterprise network infrastructure, grew low-single-digit and both grew high-single-digit, including data center projects. Backlog ended the quarter at a record level. Up approximately 95% versus the prior year. Underscoring the durability of demand in data center projects, and providing meaningful revenue visibility. Adjusted EBITDA increased 37% and adjusted EBITDA margin expanded 140 basis points to a record 10.2%. This was our first double-digit EBITDA margin quarter in CSS history. Moving to slide 7. A key strategic highlight in the quarter was our acquisition of Newark Engineering Group. Which further strengthens our position in a mission-critical data center infrastructure. Newark expands our capabilities in engineered cooling solutions and lifecycle services while strengthening our presence in the fast-growing Southeast Asia region. The addition of Newark enhances our ability to serve customers across the full data center lifecycle. From design and installation through ongoing operations, maintenance, and optimization. Turning to EES on slide 8. EES delivered an excellent quarter. With sales growth of 11%. Volume was up approximately 6% and price contributed approximately 5%. With about 1 point coming from commodity inflation. Construction grew high-single-digit on robust data center infrastructure investments and project activity. Industrial grew low-single-digit on solid MRO demand and increased project activity. OEM was up strong double-digits supported by strength across semiconductor electrification, and data center customers. Data center sales increased more than 70% year-over-year and remained a strong growth driver now representing about 8% of EES sales. Excluding data center, EES grew high-single-digit supported by ongoing infrastructure investment industrial project activity, and strength in OEM. This performance further highlights the diversified growth profile of our business. Backlog ended the quarter at a record level, up approximately 30% versus the prior year. With double-digit backlog growth across industrial, OEM, and construction. Adjusted EBITDA increased 27% and adjusted EBITDA margin expanded 110 basis points to 9.2%. The margin improvement was driven by strong gross margin expansion to a record 24.4%. Partially offset by slightly higher SG&A expense. Associated with variable compensation on increased sales and profit growth. Turning to UBS on slide 9. Sales increased 7%. Reflecting strengthening demand trends across the business. Utility delivered mid-single-digit growth. Supported by strong investor-owned utility performance, improving public power trends, and increased traction for power solutions from our grid services portfolio. Broadband posted strong mid-teens growth. Driven by increased project activity and customer share gains. With strength across both U.S. Canadian operations. Adjusted EBITDA increased 2%, and the business returned to a 10% EBITDA margin this quarter. As expected and discussed on prior calls, public power competitive dynamics, remained a margin headwind in the near term. However, the combination of strengthening demand trends record backlog, and accelerating momentum in grid services, positions UBS well. Backlog ended the quarter at a record level up approximately 80% year-over-year, driven by a significant multiyear grid services award. With a hyperscale data center customer. As John mentioned, this win represents an important milestone for UBS. Expanding our customer base beyond traditional utility and broadband end markets into data center, powered infrastructure. Moving to slide 10. We believe that our grid services offerings position us well to benefit from the significant power infrastructure investments that will be needed over the coming years. Notably, our capabilities span a broad set of power solutions that support utilities, data centers, high-voltage industrial applications, renewables, and other power-intensive end markets. As demand for power-intensive AI data center infrastructure continues to increase, Customers are engaging Wesco earlier in the lifecycle to help solve complex power and infrastructure challenges. This is creating new opportunities to cross-sell into existing customer relationships and expand our participation across large-scale projects. Moving to slide 11 and 12. In the second quarter, data center sales reached $1.5 billion, up approximately 45% year-over-year. As we discussed last quarter, Wesco's differentiated power to compute model positions us across the full data center lifecycle. From the grid to the building to the rack and equipment. This integrated approach continues to create growth opportunities across all three business units, while expanding the scope of products, services, and solutions we provide to our customers. We will continue to enhance our value proposition with organic investments, and targeted bolt-on acquisitions. Turning to slide 13. During the second quarter, free cash flow was $32 million. Despite double-digit top line growth, over the past four quarters, our working capital intensity remained at approximately 20% of sales. For the first half of the year, we generated $246 million in free cash flow. Moving to slide 14. We are raising our full-year sales growth outlook across all three business units. Reflecting accelerating momentum throughout the portfolio. Within CSS, we now expect reported sales growth of mid to high teens year-over-year on a percentage basis. Which is primarily driven by our higher expectations for our data center business. We are raising our CSS data center sales outlook to more than 30% year-over-year. Reflecting continued strength in hyperscale and data center related demand. We are also raising our outlook for EES to high-single-digit sales growth year-over-year reflecting diversified strength across construction, industrial, and OEM. Finally, we are raising our outlook for UBS to mid-single-digit sales growth year-over-year, reflecting improving trends across all of our utility businesses and for our broadband business. Moving to slide 15 and our outlook for the remainder of the year. For the full-year 2026, we are raising our outlook for sales growth, profitability, and earnings per share. Reflecting our exceptional first half performance and continued momentum across the business. We now expect organic sales growth in the range of 9% to 11%, up from 5% to 8% previously. Reported sales growth is now expected to be 10% to 12% with total reported sales of $26 billion at the midpoint of the range. Consistent with our stronger growth outlook, we are raising our adjusted EBITDA margin outlook to 6.9% to 7.1% representing an EBITDA raise in dollar terms at the midpoint of over $100 million compared to the previous outlook. We are also increasing our adjusted diluted EPS range. To $16 to $17.50. Representing a $0.75 raise at the midpoint. Given the continued growth in the business, and the associated working capital requirements, we now expect free cash flow of $300 million to $600 million for the year. The midpoint of our guidance implies mid-single-digits sales growth sequentially in the second half of the year compared to the first half of the year. Which will require incremental working capital investments. As a reminder, we run a CapEx-light business model with attractive returns on working capital deployed. Over the past few months, we have made several operational and organizational changes to drive more accountability around initiatives to improve working capital intensity and cash flow conversion. There are now a number of initiatives in flight around improving days sales outstanding and days inventory outstanding. As reflected on the slide, we have made some adjustments to D&A stock-based compensation, interest expense, and effective tax rate. As detailed last quarter, we completed the redemption of our 2028 notes and significantly improved and extended our debt maturity profile. We also repurchased $50 million of Wesco shares in the first half of the year. Including $25 million in the second quarter. Largely due to dilution from equity compensation. Additionally, the strength of our operating performance drove another quarter of leverage improvement. Ending the quarter at approximately 3.0x net debt to adjusted EBITDA compared to 3.4x at year-end. Turning to slide 16. As we reflect on our second quarter outperformance, compared to our outlook, The drivers were increased bidding activity and win rates, cross-selling enabled by our oneWesco value proposition resonating with existing customers. Favorable project and customer mix and strong execution across the business. We continue to see favorable demand trends across the business. To start the third quarter with preliminary July month-to-date sales per workday up approximately mid-teens on a percentage basis. Based on current customer forecasts, and the backdrop of record sales per workday in September 2025. We expect third quarter sales to grow low double-digits year-over-year. Adjusted EBITDA margin is expected to be slightly lower sequentially reflecting the anticipated mix of business expected in the quarter. We have covered a lot of material this morning. So let me briefly recap. The key points before we open up the call to your questions. In summary, we delivered double-digit top line growth for four consecutive quarters. We delivered record results across the company. Including record sales, adjusted EBITDA, and adjusted earnings per share. While continuing to expand margins. Data center remained a key growth driver for the company. Growth was broad-based across the portfolio. With strong sales growth excluding data center. A major multiyear grid services win represents a major milestone for UBS. in terms of customer diversification, and meaningfully expands our data center product portfolio to now include power solutions. We have made meaningful progress towards our long-term margin goals. With two of our three business units at double-digit EBITDA margin this quarter. We further strengthened our balance sheet during the quarter with lower leverage and an improved debt maturity profile. We are raising our full-year outlook for sales adjusted EBITDA, and adjusted earnings per share. Despite higher working capital to support double-digit sales growth, we expect to continue to deliver solid free cash flow. As we lean in to support growth, there is no change to our previously communicated capital allocation priorities and guiding principles. With that, operator, we can now open the call to questions. Operator: Thank you. We will now begin the question-and-answer session. If you would like to ask a question, please press star followed by 1 on your telephone keypad. First question will come from Deane Dray with RBC Capital Markets. Please go ahead. Deane Dray: Thank you. Good morning, everyone. Morning, Deane. Hey. Morning, Deane. This obviously lots of excitement about the data center growth and how that continues. But your growth this quarter is so much more broad-based. So it really begs the question, John, what do you see as the drivers here? Does it say about the macro? And any sense about, you know, the sustainability visibility that you have on this growth rate? John J. Engel: Thanks, Deane, and thanks for that question. I addressed some of that in my opening comments, but let me let me come back and hit it more broadly. First, I have to say we feel terrific about our position, our positioning, you know, to capture the-- I will use the term hyper sales growth for these AI-driven data centers. No doubt about it. We are getting great momentum across our entire business. it is not just a CSS-driven opportunity. it is a OneWesco play. With that said, we are not a one-trick pony. We are benefiting from multiple secular growth trends and you are seeing that starting to contribute meaningfully to our results. In the second quarter, our nondata center sales were up mid-single-digits. And I will remind everyone that data centers as a mix of our total sales are little over 20% on a trailing 12-month basis. So that says there we have got a remainder portion of the portfolio, 75% to 80% of the business, and that is diversified. And it is very well positioned to benefit from multiple secular trends. The infrastructure build out, all things power around the power chain supporting increased demand for electricity, The reshoring, which we see kicking into gear as well, back to US and North American markets, And then what we think is and I have spoken about this at length. An impending industrial super cycle. I think we are in the early innings. So in terms of our outlook and our visibility, Deane, I think that is why I spiked out backlog growth, all three SBUs at record levels. These are eye popping growth numbers for us. You have covered the company a long time. This is just very telling. And I think our confidence is reflected in our raise for the year. I think it sets the table for a very strong 2027 as well. that is really good color. And, you know, my follow-up question, you know, I am tempted to talk about the margin improvements because that is fabulous, and congrats to the team there. But I actually want to put the spotlight on this acquisition of Newark Engineering. Because, you know, the strategic rationale that you list there really should enhance your capabilities in data center globally. But just can you talk about where this what does this mean for your international aspirations? I know your name is Wesco International. So just what does that say about the data center opportunities globally? And how does this have parallels with Rahi? Because Rahi was such a good acquisition. Right at the doorstep of all this, the data center growth spike that you have been part of. So you know, a lot to unpack there, but love to hear. Thanks. Well, good. And for tying it back to David because I think that really is the first where I wanted to start, D and A. You know, by putting Anixter and Wesco together, which that actually preceded Rahi, you know, in the beginning of the pandemic, we did create a new company we are seeing the benefits of this strong and diverse portfolio. As I kind of outlined earlier. But as you looked about as you look at what we have done on the in the acquisition front post Anixter, It started with Rahi. It was back in 2022. And that gave us increased end-user customer access. Rahi was also global. Which I will remind everyone. But it did allow us to add some additional capabilities to our portfolio. It was end-user-driven like Core Anixter was. We added interest in them. Following Rahi. Facility services, we added Ascent. And then we now add Newark Engineering which is cooling solution. And so what we have been doing systematically is expanding our end-to-end solutions capabilities to support the data center customers across the entire lifecycle. it is really an important point. And, know, we are in 55 countries around the world. If you look at our end-user relationships with hyperscale data center customers, the MTDCs, the multitenant data center customers, and our enterprise class customers. Where they have captive data centers. All of those companies are very large, are global, and they are running a global expansion play And global deployment play. And so we are uniquely positioned with our global footprint the breadth of our portfolio, to really serve them around the world And this is really, you know? So we are focused on that expansion. Expanding the portfolio. We have got the global execution capabilities. And Newark adds to that. So Newark, again, expands the portfolio meaningfully Yes. it is in the Southeast Portion Of Asia today, Very strong end-user customer relationships. Our same customers that we have So we essentially expanded the portfolio. We have dramatically strengthened and you know, across Southeast Asia, those markets. The way that the data center growth market is incredibly exciting, growing at a rapid rate. But we have the opportunity now to expand and do the OneWesco play for Newark across broader geographies. And then bringing the strength of Wesco. Into Newark. And so what we are specifically adding, though, and I will just end on this point, is mission-critical cooling and thermal management expertise. We did not have that in our portfolio. And it allows us to engage the customer a little bit earlier in the data center lifecycle. Which will be very helpful Again, I talked about very nice cross-selling opportunities and the capabilities they have design engineering capabilities around mission-critical HVAC systems. In house fabrication and assembly capability, installation, after sales servicing and support. So a little longer answer, Diane, but I think I wanted to clearly address the question by saying this is think of this as a continuum. We have got a leading position to serve you know, global data center customers. And if you look at the acquisitions we have done post Anixter, they are tuck ins, but they are more than tuck ins because they actually have been expanding the portfolio, and we are leveraging them our oneWesco selling model across the globe. Great. It was great color. Thank you, and congrats to the team. Thank you. Operator: The next question will come from Sam Darkatsh with Raymond James. Please go ahead. Sam Darkatsh: Good morning, John. Good morning, Neil. How are you? Morning, Sam. So a couple questions. The first topic would be gross margins specifically around data center. I mean, I am noticing CSS and EES gross margins were up pretty materially year-on-year. And I am wondering, has the data center gross margin dynamic switched I mean, it is now more stock and flow? Is the price cost turning positive, which may overwhelm the lower project mix? And I guess related to that, you could address the gross margin for the grid services award versus your overall UBS gross margins. John J. Engel: Yeah. Thanks for that, Sam. Again, good morning. The I will take you back 6 quarters and 6 to 7 quarters, and that is when the CSS sales started to meaningfully inflect up. And we had a bit of gross margin pressure in CSS. And if you go back, you know, 7 quarters ago, we were very clear that we had very high confidence we would be able to improve margins. As we start executing those projects with customers. That these were front end margins only, but as we start executing the projects, there will be other products that are pulled through and we will be increasing our services content over time. As the through the project execution and in post-project deployment. that is what you are seeing. So we have been working hard at that. If you look at CSS gross margins, the heart of your question, first part of your question, look at that. I think we are building a very nice trend And so we are basically seeing now that the result of what I outlined 6 to 7 quarters ago. And, you know, it speaks to our value proposition with those end user customers and the fact that we are able to be more of a one-stop shop solving their critical needs through project design, project implementation, construction, and deployment. And those phases are critical for data center build. For EES, I could not be more pleased with kind of the broad-based gross margin momentum we are getting. I will tell you both CSS and EES is that, I have to highlight it, We have a New leader effect You know, we got a new leader in CSS. he is got this is his fifth quarter under his belt. We have a new leader, and he was promoted from within. So he came out of the Anixter side of the equation. And we have a new leader in EES, This is his fourth quarter under his belt. And we went outside to, you know, to bring him onto the team. And I think you are seeing a special cause driver, quote, unquote, is a New leader effect in both sales growth and profitability for those 2 businesses. And then finally, on UBS, which is your final part of your question, I remain incredibly bullish on the outlook for UBS overall. And especially utility, both utility and broadband. But in terms of utility, we are seeing margins stabilize on a sequential basis, you know, it is nice to get EBITDA margins back up above 10. But I think what you are going to see very clearly, and we wanted to signal this, the margins for grid services are accretive at the operating margin line to UBS. So as grid services kicks into gear, and it will kick into gear very strongly, it is going to be margin accretive. And we have now strung 2 quarters in a row of double-digit growth for grid services. And as we outlined in our original outlook for 2026, we expect double-digit growth for grid services across the entire year. So message is public power has stabilized and improving. We actually returned to growth in public power this quarter. investor-owned utilitys are chugging along nicely double-digit growth in the quarter. Still got the margin pressures in public power, but grid services is really accelerating we talked about the big new win that will ship over multiple years, and that is margin accretive. That rounds it out then. Yeah. Terrific comprehensive answer. Thank you. My second question and I recognize that this is going to sound like looking a gift horse in the mouth, so apologies. But I was a little surprised that the third quarter EBITDA margin guide being a bit lower than the second quarter. I recognize you are calling mix out, but you are also going to have, I do not know, $300 million, $400 million of extra sales incrementally. So what is happening there that margins are coming in a little bit? And then related to that, at what point are you expecting OpEx leverage on a year-on-year basis? Thanks. So Sam, I think it is the short answer is it is largely mixed. So if you look at second quarter, we had a significant margin improvement. Right? And one of the drivers was mix. So obviously, you know, as we grew the revenue base, across the different business units, mix plays a big part with some of the bigger chunkier projects that we now deliver on. And so that is the dynamic that we see going into third, quarter. So it is largely mix. And then you had the on the operating leverage comment, Sam, look. You know, we also had some true-up of incentive compensation in this quarter. So we are we are clearly we are exceeding our internal plan commitment So it is it is a nice problem to have. But just in terms of operating model, look. We are we have geared up, and you can see us now operating at a much higher organic sales growth rate on the top line to string four quarters in a row at double-digits is strong. Operating model wise, we do absolutely expect to get very strong operating cost leverage as you look out, you know, 2027, 2028, and 2029. that is that is a key part of our recipe. And just 1 other thing I would add, Sam, is just what John highlighted in his comments about data center, the operating leverage really is important to look at the EBITDA line for us now. Because of some of the services that we are wrapping in So it is a combination of SG&A and really focusing on the EBITDA line, which you are seeing clearly come through. Operator: The next question will come from David Manthey with Baird. Please go ahead. David Manthey: Morning, David. First on grid services, John. who is the buyer here? Do you sell this direct to the customer? Is there an integrator involved? And then second, how does this type of grid to data center connection application get purchased in the past before you stood up this operation? John J. Engel: Yeah. Thanks, David. it is not through an integrator. it is direct to a very large, very, very large hyperscaler end-user customer. So that is the first point. And we cannot disclose who the customer is. Not at liberty to do that. But we are we are thrilled, though, again, that it is direct with the end user. And by the way, the this business, Grid Services, is working with a series of end users. You know, how did this develop? I would tell you if you take a multidecade look at this product's and services in this full solution that comprises what we call our grid services business. It was served direct. David, to the heart of your question. It was manufacturers direct to the end user. And we organically built up this grid services business over the last five to six years. If you go back to our last Investor Day a couple years ago, we did reference it I pointed to it as a kind of inside the house. No acquisition served at you know, organic build. Jim Cameron touched upon it at our Investor Day as well. Again, that was a few years ago at our Investor Day. Was a $300-plus-million business last year, so we grew it, you know, over the last five to six years. We have now struck we have strung three quarters of double-digit growth in a row. Q4, Q1, Q2. We expect that to continue, as I said, And so it is it is just a terrific set of service capabilities. Why you know, kinda right to win there and right to continue to win it is our global supply base it is our global supply chain management capabilities. it is our global project execution capabilities. And stitching our logistical capabilities as well. Stitching that all together with our services abilities to support major construction builds, we have those capabilities in the power portion of the value chain. what is really important here is that grid services again, we are we are five to six years in the making here of this organic build, has really been serving utilities principally till now. And so this is a this is a landmark win, quite frankly, which is why we spiked it out. And it is also why I profiled grid services when we gave our Q4 earnings results earlier this year when we outlined our initial guide. This is a long-cycle business. This, you know, drove the 80% growth rate in backlog for UBS. But even if you strip this out, UBS growth was still well above, you know, 20% to 30% backlog growth. So still good backlog growth in utility. But this will ship over multiple years it is with this. it is, you know, we have got some other wins, but this is a notable single win with a data center end-user customer. And I will end on this note. The grid services value proposition and this and what we are providing to customers working with our supplier partners, and these are global supplier partners, It applies to utilities and the utility industry. It applies to data centers It applies to any and all high-voltage, medium to high-voltage industrial applications. It applies to renewables. So think of this grid services play. Even though it is tucked under UBS, it is absolutely a oneWesco play. So, like data centers are a oneWesco play, but it is bigger than data centers. So we spiked it out purposely. Obviously, it is a big driver of backlog growth. And it the margins again are accretive to UBS. So this just sets us up very well, I think, especially as we move into next year because this is a longer cycle business. Of getting that margin accretive growth for UBS. Sounds good. Thanks, John. Then on the core EES trends ex data centers, one of your big competitors noted that their progression was more limited in the core electrical outside of DC. So it is encouraging to see Wesco growing high-single-digits outside of that specific vertical. Could you just talk a little bit more broadly about where you are seeing acceleration and if there is any markets that are yet to inflect in that sort of core OEM and medium voltage market Yeah. Yeah. it is a it is a it is a great question, David. Know, I could not be more pleased with really EES accelerating this quarter. 11% sales growth. Really nice to see. By the way, if you strip out data centers, it is still 8 plus percent growth. So EES is 8 plus percent high-single-digit growth x data centers. That speaks to the breadth and strength of the portfolio. Multiple secular growth trends. So let's double click on EES. OEM being up over 20%, and that is always been a leading indicator for us for the industrial market. it is again, really healthy margins. Having that 20 that 20 plus percent growth is very strong. And that is an in that is an indicator of the beginning of this, I will call it, broader industrial super cycle because of where we play in the value chain. Industrial was only up low-single-digits. So as good as EES was with the 11% growth, you know, that is with industrial being up low-single-digits. that is the future is our future is very bright. I am bullish on industrial. As that improves and kicks in, and by the way, the backlog growth, we have backlog growth for industrial OEM. And for construction, all three, you know, elements of EES at a double-digit growth rate, but very strong backlog growth in book to bill ratio in industrial. So I think the future is bright. Again, I think we are at the beginning of early innings of this super cycle. Then if you look at construction was up high single-digits. So and, yes, you know, data centers helps that, but it is these-- it is the broader infrastructure investments. David, that we have been reading about quite frankly for not one year, but two to two-and-a-half years-plus. And where EES plays in that cycle, you know, the gear goes in earlier, but there is a whole series of other electrical products and supplies that get installed as part of the major infrastructure projects you know, after gear, much later than gear. So I think you are starting to see that kick in. So I am really pleased with the breadth and strength across EES. Perfect. Thanks, John. Operator: The next question will come from Guy Drummond Hardwick with Barclays. Guy Hardwick: Hi, good morning. Congratulations on outstanding results. Just to be maybe a little bit pejorative, John, has there been any sign of any of your end markets being kind of crowded out by data center AI spend? I mean, you look at ENI and security, they only grew low-single-digits. And maybe if there is a bit of inflation there, then maybe they are flat. Are there any examples you think of where some of your businesses may be being impacted by resources being switched to data center and AI investment. John J. Engel: Yeah. I would not call out our business guy. I guess the way I would answer it is this. And I think it is more of an industry-wide phenomenon. So when you think about the amount of capital that is being spent in this rising demand curve, for data centers, where is it driving demand? it is driving power demand significantly increasing energy demand, and it is also driving the need for construction labor. So it is not a Wesco-specific item, and we are not really-- I would not call that out as driving any parts of our business x data center. Again, that is why I spiked out You know, EES was 8 plus percent growth ex data center. Overall, Wesco is 6-plus, you know, mid-single-digit growth, let's say. X data center, But the but the constraint is power and labor. And so what is happening is when you look across the entire construction value chain, getting you know, solving the power solution. And there is a variety of in front of the meter and behind the meter solutions that are being worked. Is the is the ultimate largest governor but then the next closest governor is construction labor. And so to the extent the data center ends up consuming that labor, you know, demand exceeds supply, you know, it could it could just shift the timing around of other construction projects. With all that said, we are not seeing that. Because look at our EES business. We are not residential construction. We are nonresidential construction. And we grew again, you know, high-single-digits in construction. In the second quarter. Which we feel really good about. And so but it is a great question because I think it is important for everyone to understand that from an industry standpoint. Bottom line is this, You know, demand's outstripping supply across the value chain. Starts with power. Followed by labor, and then there is some other constraints as well. Thank you. Guy Hardwick: Just quickly, Neil, could you possibly expand on what those initiatives to improve DSOs and DIOs are? It does look like the reduction work in the free cash guidance is entirely accounted for by the increase in the top line. So maybe there is a target for where you think you can get working capital to sales and say, one year’s time, two years’ time? Indraneel Dev: Sure. So we have a series of initiatives You know, it starts with the commercial front end. And so we are being very diligent in a lot of our payment terms with customers. Thinking through, you know, not only the payment term, but thinking through how long we hold inventory, having protections in the contracts to make sure we limit that etcetera, etcetera. So there is a big effort on the commercial front. We have made some other organizational changes to put focus on just the pure collections engine, if you will, So we are compressing timelines. We are resolving customer disputes faster. So a number of you know, tactical initiatives, Guy, that we expect to bring in some of our DSO days. And similarly, also on the inventory side, you know, as we invest more in digital transformation and now layering in AI, we have tools that we have never had before in terms of looking at our entire data lake and analyzing what can be done in terms of compressing that cycle. And, you know, I will just underline that point by saying that is one of my top priorities, and I am personally spending a lot of time in that area. Thank you. Operator: The next question will come from Steve Volkmann with Jefferies. Please go ahead. Steve Volkmann: Neil, I think you said that there would be a little bit of a mix impact on margins in the third quarter since it is kind of hard to see into that on our side. Any words of wisdom relative to the different segments and how we should think about that? Indraneel Dev: Oh, okay. you know, Steve, sometimes it is hard for us to see that, you know, in terms of the timing of these large projects. But that is our best estimate at this point. Given what we anticipate in terms of, you know, project mix across all the SBUs. And, you know, there is some variability to that, but you know, that is the best guidance I can give you at this point. Steve Volkmann: Okay. Maybe a bigger picture question then. Back to grid services, John. So I am curious how you think about the competitive dynamic there. So is it the same competitive group in grid services that you would see in kind of your standard distribution business, business? Is there a different set of folks And what does the pipeline look like for additional orders? John J. Engel: So right now, I would ask you to think about this as some significant unmet customer needs that given the breadth of capabilities we have across Wesco and particularly what we build up in grid services, we are able to solve their-- address their needs, solve their problems. So in terms of there is no one we are competing with directly one-for-one for what we are doing in grid services. There are different companies that do different pieces of what we do. And these are not our you know, these are not of our traditional competitors. So that is the first part of the answer. The second part of the answer is because it is a long-cycle business opportunity, We have a very robust pipeline I am not gonna get into the size and scale of that, but suffice to say, it is a very large pipeline of opportunities that we are working And, you know, again, this win is just an example of one we have been working for some time. And so the future is very bright for us for grid services. Again, this is why you know, we outlined it at Investor Day a few years ago. it is also why we spotlighted it when we did our Q4 release. So anyway, we are you know, that is-- I will just kind of end on that note. it is it is it is a positive momentum vector. it is long-cycle. So when we get these wins, you know, they will not show up in, what, you know, in weeks to one or two quarters. But they will be over a duration of you know, many, many quarters to a few years. And that is that is the kind of the characteristics of this win. And it is very notable. So we are we are kind of off to the races there. Okay. I appreciate it. Operator: The next question will come from Nigel Coe with Wolfe Research. Please go ahead. Nigel Coe: Thanks. Good morning, everyone. And, yeah, yeah, it is really good to see the broad-based momentum here. I did wanna just touch back on gross margins? margins because, you know, it is they are up materially. We have not talked about price? I am just wondering, was there any, you know, price inflation benefits coming through, on gross margins? And then just double-clicking on the data center business, John. You know, we I think we have been trained to believe that is gross margin dilutive. Does not look like that is the case anymore for the CSS segment. Just maybe just touch on that as well. Indraneel Dev: Just starting on your question on price. Indraneel Dev: I think overall, it was about a 3% benefit: CSS, 1%; EES, 5%. About a point of that was commodity driven and UBS, plus 3%. If we step back and really, you know, stare at the underlying activity, you know, we would characterize that as back to business as usual. We are not seeing anything out of the ordinary. And so nothing really out of the ordinary to highlight, Nigel, on the on the pricing side. I think our supplier partners are being very measured about it. And, they are testing the markets. So I think it would be classified as back to normal. John J. Engel: On the back to data centers, it is two drivers. Plain and simple. New leader effect, Our new leader there, this is his fifth quarter under his belt. And he is very much driving all our margin initiatives. And secondly, to what I answered earlier, in that you know, we are adding additional products and services to these end user relationships. Increasingly, we are becoming a one-stop shop. So as, you know, as we get the initial awards that were more traditional, I am actually going back six or seven quarters ago. When I started making these comments, you get a piece of that construction project but not everything's specified at that point. And so once you are there, you are doing a good job direct with the end user. You pick up other products, and then we are we now have the capabilities across the entire data center lifecycle, even post construction phase, And so that is where our services increasingly come in. So we are able to drive a richer margin mix post the initial award on these projects. Great. And just quickly, I will be I will be curious about hiring. You know, when you are when you are growing high-single-digits, it is it is a very labor intensive, you know, business. So tight labor market, any constraints on hiring? No. I think, look, we have you know, this kind of goes back to and I have been with Wesco more than a year or 2. You know, it is it is actually been two decades-plus. I would and, you know, we were originally a leveraged spin out at a Westinghouse leveraged recap in 1994, leveraged recap in 1998 public in 1999. I joined in 2004. Why do I start with that? We still are very, very focused on our operating cost structure. And ensuring operating cost leverage. I mean, that is that is in our DNA. it is always been in our DNA. it is in our DNA of all the new team members we have and so we are selectively adding where we see very strong opportunities. opportunities. If we end up being constrained, A lot of our additions, though, quite frankly, are technical resources because we are technically we are doing some engineering and helping to spec these solutions for our customers. Given the requirements that they have. So we have been injecting technical talent Again, we are doing it at a fraction of our sales growth rate, though. And so that is the recipe we are running. We are gonna continue to run Honestly, we are not having too much of a trouble for that for that group of folks because I think they are seeing the success we are having. You know, the really interesting work we are doing. We are directly with end users, so you know, the speed and agility that is required as you work with these customers We are kind of at the front end. it is really exciting stuff. So we have been able to really attract some very interesting talent. I like the question a lot because I do not talk about it much, but we have meaningfully strengthened our technical resources that are part of the broader Wesco team. Alright. Thanks, John. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to John J. Engel for any closing remarks. John J. Engel: Thank you. I think we have addressed most of your questions. I will bring the call to a close. I know we have many follow-ups scheduled for today, tomorrow, even into early next week. So we look forward to engaging with you. And we expect to announce our third quarter earnings on Thursday, October 29, 2026. Again, thank you for your support. Have a great day. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Before you buy stock in Wesco International, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Wesco International wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $397,081!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,166,221!* Now, it’s worth noting Stock Advisor’s total average return is 889% — a market-crushing outperformance compared to 203% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of July 30, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Wesco International. The Motley Fool has a disclosure policy. Wesco (WCC) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Electrical supply company WESCO (NYSE:WCC) reported Q2 CY2026 results topping the market’s revenue expectations , with sales up 13% year on year to $6.67 billion. Its non-GAAP profit of $4.57 per share was 15.2% above analysts’ consensus estimates. Is now the time to buy WCC? Find out in our full research report (it’s free). Revenue: $6.67 billion vs analyst estimates of $6.43 billion (13% year-on-year growth, 3.7% beat) Adjusted EPS: $4.57 vs analyst estimates of $3.97 (15.2% beat) Adjusted EBITDA: $487.2 million vs analyst estimates of $436 million (7.3% margin, 11.7% beat) Operating Margin: 5.7%, in line with the same quarter last year Organic Revenue rose 12.6% year on year (beat) Market Capitalization: $16.69 billion WESCO’s second quarter results were greeted with a strong positive reaction from the market, following broad-based sales growth and margin improvement across its business units. Management emphasized that while data center solutions remain a key growth driver, non-data center segments also delivered mid-single-digit growth. CEO John Engel highlighted, “Our results reflect continuing strong execution, market outperformance, and accelerating momentum across our entire business.” The company credited strong backlog growth, margin expansion, and a diversified end-market exposure as primary contributors to the quarter’s outperformance. Looking ahead, management raised its full-year outlook for sales, adjusted EBITDA, and earnings per share, citing accelerating demand in data center infrastructure, robust grid services momentum, and ongoing infrastructure investments. Engel stated that WESCO is “well positioned to benefit from multiple secular growth trends,” with a particular focus on expanding its presence in high-growth segments such as data center power solutions and international cooling capabilities. The company expects further operating leverage and improved working capital efficiency as it continues to execute on these strategic initiatives. Management attributed the quarter’s outperformance to strong demand for data center solutions, expansion into grid services, and operational improvements across its portfolio. Several business updates and strategy shifts set the stage for continued momentum. Data center sales momentum: WESCO experienced approximately 45% year-over-year growth in data center solutions, with all business units benefitting from this trend. CEO John Engel noted that data center sales now account for over 20% of company revenue, driven by demand for AI-driven infrastructure and the company’s integrated “power to compute” approach spanning the entire data center lifecycle. Record backlog growth: The company posted record backlog for the third straight quarter, up 60% year-over-year, fueled by double-digit increases across all segments. Backlog strength was attributed to multiyear customer commitments, particularly in data center and grid services, providing greater revenue visibility for future quarters. Expansion of grid services: WESCO’s Utilities and Broadband Solutions (UBS) segment secured a significant multiyear grid services contract with a major data center customer. This award marked a step-change in customer diversification and expanded WESCO’s offerings to include end-to-end power solutions for data centers and utility customers. Acquisition of Newark Engineering: The company closed its purchase of Singapore-based Newark Engineering, enhancing its capabilities in engineered cooling solutions for data centers and strengthening its presence in the fast-growing Southeast Asia region. This acquisition supports WESCO’s global expansion and ability to serve the full data center lifecycle. Margin improvement initiatives: Margin expansion was observed across all three business units, with both the Communications & Security Solutions (CSS) and Electrical & Electronic Solutions (EES) segments posting double-digit EBITDA margins for the first time. Management credited new leadership in these units and the increasing mix of services and cross-selling as drivers of improved profitability. WESCO’s updated outlook is propelled by sustained data center demand, infrastructure investment, and a growing grid services pipeline, but management highlighted working capital management and project mix as ongoing variables. Data center and grid services tailwinds: Management expects continued strength in data center infrastructure spending, especially for AI-driven projects, to drive high growth in both the CSS and EES units. The UBS segment’s grid services are forecast to deliver double-digit growth, with new wins providing long-term revenue streams and margin accretion. Broader infrastructure and industrial cycle: The company anticipates robust demand from infrastructure build-outs, reshoring initiatives in North America, and what Engel described as an “impending industrial super cycle.” Growth in the OEM and construction sub-segments, as well as diversified end-markets beyond data centers, are expected to support sustained top-line momentum. Operational and working capital execution: Management is prioritizing improvements in days sales outstanding and inventory management, leveraging digital tools and AI for efficiency. While higher working capital is needed to support growth, WESCO aims to compress cash conversion cycles and generate solid free cash flow, with continued focus on operating cost leverage. Looking ahead, the StockStory team will watch (1) continued execution and backlog conversion in data center and grid services contracts, (2) evidence of sustained margin expansion across all business units as new leaders implement operational improvements, and (3) progress in working capital initiatives, especially the impact of digital and AI-driven efficiency tools. The pace of global expansion and integration of the Newark Engineering acquisition will also be key markers for future performance. WESCO currently trades at $353.30, up from $309.36 just before the earnings. Is there an opportunity in the stock? Find out in our full research report (it’s free for active Edge members). WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses. But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.

WESCO International WCC posted strong second-quarter 2026 results, with adjusted earnings of $4.57 per share rising 35% year over year. The bottom line topped the Zacks Consensus Estimate of $3.96 by 15.4%.Net sales of $6.67 billion increased 13% from the year-ago quarter. Revenues also surpassed the Zacks Consensus Estimate of $6.4 billion by 4.17%. Organic sales increased 12.6% year over year.Data center activity remained a key growth engine. Data center sales totaled $1.5 billion in the quarter, up about 45% year over year, and accounted for roughly 22.5% of quarterly sales. The total company backlog rose approximately 60% year over year to a record level. WESCO International, Inc. price-consensus-eps-surprise-chart | WESCO International, Inc. Quote The EES Segment (37.7% of net sales): Sales in the segment were $2.51 billion, up 11.2% year over year. Organic sales increased 10.9% year over year.CSS (40.2%): Sales in the segment were $2.68 billion, up 18.4% year over year. Organic sales rose 17.5% on a year-over-year basis.UBS (22.1%): Sales in the segment were $1.47 billion, up 7% year over year. Organic sales increased 7% year over year. The second-quarter 2026 gross margin was 21.8%, which improved 70 basis points year over year.The adjusted EBITDA margin of 7.3% improved 60 basis points year over year.Selling, general, and administrative expenses were $1.02 billion, up 17.3% year over year. As a percentage of revenues, the figure increased 50 bps year over year to 15.3%.The adjusted operating margin was 6.1%, which improved 50 bps year over year. As of June 30, 2026, cash and cash equivalents were $808.9 million, up from $696.6 million as of March 31, 2026.The long-term debt was $5.91 billion at the end of the second quarter compared with $5.74 billion in the prior quarter, reflecting the issuance of new senior notes used to redeem the 2028 Notes.Net cash provided by operating activities for the second quarter of 2026 totaled $53.7 million. Free cash flow reached $32.3 million. Given the exceptional first-half performance and accelerating business momentum, management significantly raised its 2026 outlook. WESCO now expects reported sales of $25.9 to $26.3 billion, organic sales growth of 9% to 11%, adjusted EBITDA margin of 6.9% to 7.1%, and adjusted earnings of $16 to $17.50 per share. Free cash flow guidance was revised to $300 to $600 million from the prior range of $500 to $800 million, reflecting higher working capital needs to support the double-digit sales growth. WESCO currently carries a Zacks Rank #3 (Hold).Some better-ranked stocks in the broader Zacks Computer and Technology sector are AppFolio APPF, Amkor Technology AMKR and Amphenol APH, each sporting a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Shares of AppFolio have declined 19.6% year to date. The Zacks Consensus Estimate for APPF’s 2026 earnings is pegged at $6.9 per share, up by 2.2% over the past seven days, indicating an increase of 30.4% year over year.Shares of Amkor Technology have jumped 8.2% year to date. The Zacks Consensus Estimate for AMKR’s 2026 earnings is pegged at $2.08 per share, unchanged over the past 30 days, indicating a rise of 38.7% year over year.Amphenol shares have surged 11.3% year to date. The Zacks Consensus Estimate for APH’s 2026 earnings is pegged at $4.87 per share, up 7 cents over the past 30 days, indicating an increase of 45.8% year over year. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report WESCO International, Inc. (WCC) : Free Stock Analysis Report Amphenol Corporation (APH) : Free Stock Analysis Report Amkor Technology, Inc. (AMKR) : Free Stock Analysis Report AppFolio, Inc. (APPF) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Find winning stocks in any market cycle. Join 7 million investors using Simply Wall St's investing ideas for FREE. WESCO International (WCC) drew investor attention after reporting second quarter 2026 results with sales of US$6.67b and net income of US$209m, alongside earnings surprises on both revenue and profit. See our latest analysis for WESCO International. Following the earnings surprise, WESCO International’s 1 day share price return of 10.77% at a latest share price of US$342.67 comes after a year to date share price return of 35.92%. The 1 year total shareholder return of 66.75% points to momentum that has built steadily over several years. If the earnings beat has you looking beyond WESCO International, this is a useful moment to broaden your search and check out the 35 power grid technology and infrastructure stocks After WESCO International’s jump on the earnings beat, investors are weighing a stronger operating picture against the possibility of sentiment getting ahead of itself. So how does the current valuation stack up against those fundamentals? The most followed narrative currently places WESCO International’s fair value at $285.75, which sits below the latest close of $342.67 and suggests stretched expectations against that framework. Read the complete narrative. Want to see what underpins that lower fair value for WESCO International? The narrative leans on specific revenue growth, margin lift, and a future earnings multiple that tells a very different story to the recent share price move. Result: Fair Value of $285.75 (OVERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, if AI driven data center demand stays stronger for longer or grid and utility spending remains resilient, WESCO International’s earnings picture could look more supportive than this bearish narrative assumes. Find out about the key risks to this WESCO International narrative. While the bearish narrative pegs WESCO International as overvalued at a fair value of $285.75, the current P/E of 24x sits below the US Trade Distributors industry at 25.2x and below a fair ratio of 30.3x. Peers average 21.8x, so is the premium a warning sign or a quality signal? See what the numbers say about this price — find out in our valuation breakdown. With sentiment mixed around WESCO International after the recent move, this is a good time to review the data quickly and form your own view with the 3 key rewards and 2 important warning signs. If WESCO International has sharpened your focus, do not stop here. Use this moment to scan wider opportunities before the next wave of investors catches on. Zero in on quality at a discount and review companies highlighted in the 56 high quality undervalued stocks that may offer stronger metrics than the headlines suggest. Prioritise resilience and assess businesses in the 89 resilient stocks with low risk scores that show lower risk profiles and steadier financial characteristics. Hunt for underfollowed opportunities by checking the screener containing 20 high quality undiscovered gems that combine fundamental strength with relatively limited market attention. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include WCC. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

This article first appeared on GuruFocus. Revenue: Record sales of $6.7 billion, up 13% reported and organic. Adjusted EBITDA: Record $487 million, up 24%. Adjusted EBITDA Margin: Expanded 60 basis points to 7.3%. Adjusted EPS: Record $4.57, up 35%. Gross Margin: Expanded by 70 basis points. Free Cash Flow: $32 million in the quarter; $246 million in the first half. Backlog: Record level, up 60% year-over-year. CSS Sales: Up 18% reported and organic. CSS EBITDA Margin: Record 10.2%, up 140 basis points. CSS Backlog: Up approximately 95% year-over-year. EES Sales: Up 11%. EES EBITDA Margin: Expanded 110 basis points to 9.2%. EES Backlog: Up approximately 30% year-over-year. UBS Sales: Up 7%. UBS EBITDA Margin: 10%. UBS Backlog: Up approximately 80% year-over-year. Data Center Sales: Approximately $1.5 billion, up approximately 45% year-over-year. Full-Year 2026 Sales Growth Outlook: Raised to 10% to 12% reported (9% to 11% organic). Full-Year 2026 Adjusted EBITDA Margin Outlook: Raised to 6.9% to 7.1%. Full-Year 2026 Adjusted Diluted EPS Outlook: Raised to $16.00 to $17.50. Full-Year 2026 Free Cash Flow Outlook: $300 million to $600 million. Warning! GuruFocus has detected 3 Warning Sign with WCC. Is WCC fairly valued? Test your thesis with our free DCF calculator. Release Date: July 30, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Record sales, adjusted EBITDA, and adjusted EPS in Q2 2026, with sales up 13% and EBITDA up 24%. Broad-based growth across all three business units (CSS, EES, UBS), with mid-single-digit sales growth excluding data centers. Record backlog up 60% year-over-year, driven by multi-year customer commitments and strong double-digit growth across all segments. Significant margin expansion: CSS achieved a record 10.2% EBITDA margin, EES expanded to 9.2%, and UBS returned to 10%. Major multiyear grid services award from a hyperscale data center customer, diversifying UBS customer base and expanding data center power solutions. Public power competitive dynamics remain a margin headwind for UBS, though stabilizing. Third-quarter EBITDA margin expected to be slightly lower sequentially due to anticipated project mix. Free cash flow guidance lowered to $300-$600 million due to working capital needs for double-digit sales growth. SG&A expense increased slightly as a percentage of sales due to higher incentive compensation. Data center growth may strain construction labor and power supply, potentially impacting project timing. Here are the key highlights from the WESCO International Inc (NYSE:WCC) Q2 2026 earnings call, focusing on the most significant Q&A exchanges. Q: Your growth this quarter is so much more broad-based. What do you see as the drivers here, and what is the sustainability and visibility of this growth rate?A: (John Engel, Chairman, President, and CEO) We feel terrific about our positioning for AI-driven data centers, but we are not a one-trick pony. Our non-data center sales were up mid-single digits, benefiting from multiple secular trends like the infrastructure build-out, reshoring, and what we believe is an early-stage industrial super cycle. Our record backlog growth across all three business units provides strong visibility and confidence, reflected in our raised guidance for 2026 and setting the table for a strong 2027. Q: Can you talk about the strategic rationale for the Newark Engineering acquisition and what it means for your international data center aspirations?A: (John Engel, Chairman, President, and CEO) This acquisition is part of a continuum of expanding our end-to-end solutions for data center customers across the full life cycle, following Rahi and others. Newark adds mission-critical cooling and thermal management expertise, which we did not have, and allows us to engage customers earlier. It also dramatically strengthens our presence in the fast-growing Southeast Asia market, and we have the opportunity to expand Newark's capabilities globally through our One WESCO model. Q: Gross margins were up materially year-on-year. Has the data center gross margin dynamic switched? And can you address the gross margin for the grid services award versus your overall UBS gross margins?A: (John Engel, Chairman, President, and CEO) For CSS, we are now seeing the results of our strategy from six to seven quarters ago. As we execute projects, we add more products and services, becoming a one-stop shop and driving a richer margin mix. For EES, we are seeing broad-based gross margin momentum, partly due to a "new leader effect." For UBS, margins for grid services are accretive at the operating margin line, and as that business accelerates, it will be a positive driver. Public power margins are stabilizing and improving. Q: On grid services, who is the buyer? Do you sell this direct to customers? And how was this type of grid-to-data-center connection purchased in the past?A: (John Engel, Chairman, President, and CEO) This is a direct relationship with a very large hyperscaler end-user customer, not through an integrator. Historically, these solutions were sold by manufacturers directly to the end user. We organically built this grid services business over the last five to six years, and this landmark win with a data center customer is a significant milestone, diversifying our customer base beyond traditional utilities. The margins are accretive to UBS, and this long-cycle business will ship over multiple years. Q: On the core EES trends ex-data centers, you are growing high single digits outside of that vertical. Where are you seeing acceleration, and are there any markets yet to inflect?A: (John Engel, Chairman, President, and CEO) EES had 11% sales growth, and even excluding data centers, it was over 8%. OEM was up over 20%, which is a leading indicator for the industrial market and the beginning of a broader industrial super cycle. Industrial was only up low single digits, so the future is very bright as that improves. Construction was up high single digits, driven by broader infrastructure investments. The backlog growth for industrial, OEM, and construction is all at double-digit rates, signaling strong future momentum. Q: Has there been any sign of your end markets being crowded out by data center AI spend? For example, security and enterprise network infrastructure only grew low single digits.A: (John Engel, Chairman, President, and CEO) I wouldn't call that out as a WESCO-specific issue. The industry-wide constraints are power and construction labor. While data center demand can consume labor, we are not seeing it negatively impact our business, as our non-resi construction grew high single digits. Overall, demand is outstripping supply across the value chain, starting with power, followed by labor. Q: Can you expand on the initiatives to improve DSOs and inventory turns? Is there a target for working capital to sales?A: (Indraneel Dev, CFO) We have a series of initiatives, starting with the commercial front end, where we are being more diligent on payment terms and inventory holding periods. We have also made organizational changes to focus on the collections engine, compressing timelines and resolving disputes faster. On the inventory side, we are investing in digital transformation and AI tools to analyze our data lake and compress cycles. This is one of my top personal priorities. Q: You mentioned a mix impact on margins in Q3. Any words of wisdom on how to think about the different segments?A: (Indraneel Dev, CFO) The sequential margin decline is largely due to the anticipated mix of business expected in the quarter, particularly the timing of large projects. There is some variability, but that is our best estimate at this point. Q: How do you think about the competitive dynamics in grid services? Is it the same competitor group as your standard distribution business?A: (John Engel, Chairman, President, and CEO) There is no one we are competing with directly one-for-one for what we do in grid services. Different companies do different pieces, but none are our traditional competitors. Because it is a long-cycle business, we have a very robust and large pipeline of opportunities. This win is just one example, and the future is very bright for this positive momentum vector. Q: Were there any price inflation benefits coming through on gross margins? And can you double-click on the data center business, as we have been trained to believe it is gross margin dilutive?A: (John Engel, Chairman, President, and CEO) On price, there was about a 3% overall benefit, which we would characterize as back to business as usual. On data center margins, the improvement is driven by two factors: a "new leader effect" driving margin initiatives, and our strategy of becoming a one-stop shop. As we execute initial awards, we add additional products and services, including post-construction services, which drives a richer margin mix over the life of the project. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Wesco International (WCC) came out with quarterly earnings of $4.57 per share, beating the Zacks Consensus Estimate of $3.96 per share. This compares to earnings of $3.39 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +15.40%. A quarter ago, it was expected that this maker of electrical and industrial maintenance supplies and construction materials would post earnings of $2.88 per share when it actually produced earnings of $3.37, delivering a surprise of +17.01%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Wesco International, which belongs to the Zacks Electronics - Parts Distribution industry, posted revenues of $6.67 billion for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 4.17%. This compares to year-ago revenues of $5.9 billion. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Wesco International shares have added about 26.5% since the beginning of the year versus the S&P 500's gain of 6.9%. While Wesco International has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Wesco International was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $4.43 on $6.51 billion in revenues for the coming quarter and $15.94 on $25.36 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Electronics - Parts Distribution is currently in the top 9% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Avnet (AVT), another stock in the same industry, has yet to report results for the quarter ended June 2026. The results are expected to be released on August 5. This distributor of electronic components is expected to post quarterly earnings of $1.76 per share in its upcoming report, which represents a year-over-year change of +117.3%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Avnet's revenues are expected to be $7.45 billion, up 32.7% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report WESCO International, Inc. (WCC) : Free Stock Analysis Report Avnet, Inc. (AVT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

For the quarter ended June 2026, Wesco International (WCC) reported revenue of $6.67 billion, up 13% over the same period last year. EPS came in at $4.57, compared to $3.39 in the year-ago quarter. The reported revenue represents a surprise of +4.17% over the Zacks Consensus Estimate of $6.4 billion. With the consensus EPS estimate being $3.96, the EPS surprise was +15.4%. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health. Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance. Here is how Wesco International performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: Net Sales- EES (Electrical & Electronic Solutions): $2.51 billion compared to the $2.43 billion average estimate based on two analysts. The reported number represents a change of +11.2% year over year. Net Sales- UBS (Utility & Broadband Solutions): $1.47 billion versus the two-analyst average estimate of $1.45 billion. The reported number represents a year-over-year change of +7%. Net Sales- CSS (Communications & Security Solutions): $2.68 billion compared to the $2.51 billion average estimate based on two analysts. The reported number represents a change of +18.4% year over year. Adjusted EBITDA- Corporate: $-163.8 million versus the two-analyst average estimate of $-159.88 million. Adjusted EBITDA- UBS (Utility & Broadband Solutions): $146.8 million versus the two-analyst average estimate of $142.3 million. Adjusted EBITDA- CSS (Communications & Security Solutions): $272.9 million versus $236.29 million estimated by two analysts on average. Adjusted EBITDA- EES (Electrical & Electronic Solutions): $231.3 million compared to the $209.54 million average estimate based on two analysts. View all Key Company Metrics for Wesco International here>>> Shares of Wesco International have returned -3.5% over the past month versus the Zacks S&P 500 composite's -1.5% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report WESCO International, Inc. (WCC) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research