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    WCC
    Earnings call· Mar 2026(Q1 FY26)

    WESCO INTERNATIONAL Q1 FY26 earnings call WCC

    Apr 30, 2026 Source

    Executive summary

    WESCO Q1 FY26 — Exceptional Start Driven by Data Center Demand and Raised Full-Year Outlook

    WESCO delivered an exceptional Q1 FY26, driven by booming data center demand and strong execution across its portfolio, leading to double-digit sales growth and significant profit expansion. The company raised its full-year outlook, confident in its market outperformance and disciplined capital allocation, despite ongoing macroeconomic uncertainties. Strategic investments in digital transformation and a focus on profitable growth are set to further enhance future performance.

    Highlights

    6

    • Record first quarter sales of $6.1 billion, up 14% year-over-year.

    • Data center sales up approximately 70% year-over-year to $1.4 billion, representing 24% of total sales.

    • Adjusted EBITDA grew 25% to $389 million, with margin expanding 60 basis points to 6.4%.

    • Adjusted diluted earnings per share increased 52% year-over-year to $3.37.

    • Free cash flow generation of $213 million, representing 128% of adjusted net income.

    • Record backlog, up 22% versus prior year, providing clear visibility.

    Concerns

    4

    • UBS adjusted EBITDA decreased 5% versus prior year, with adjusted EBITDA margin down 120 basis points to 9.6%.

    • Enterprise network infrastructure (within CSS) declined mid-single digits due to weakness in the service provider market.

    • Industrial (within EES) was down low single digits, primarily reflecting project timing impacts.

    • Public power (within UBS) was flat year-over-year, with competitive market and expected gross margin pressure.

    Guidance & targets

    13
    CategoryTargetConfidence
    Full-year 2026 Reported Sales Growth
    6% to 9%
    high materiality
    High
    Full-year 2026 Organic Sales Growth
    5% to 8%
    high materiality
    High
    Full-year 2026 Reported Sales
    $24.9B to $25.6B
    high materiality
    High
    Full-year 2026 Adjusted EBITDA Margin
    6.6% to 7%
    high materiality
    High
    Full-year 2026 Adjusted Diluted EPS
    $15 to $17 per share
    high materiality
    High
    Full-year 2026 Free Cash Flow
    $500M to $800M
    medium materiality
    High
    CSS 2026 Growth Outlook
    low double-digit growth
    medium materiality
    High
    Data Center Sales Growth (within CSS) 2026 Outlook
    up 20-plus percent
    high materiality
    High
    EES 2026 Outlook
    unchanged
    low materiality
    High
    UBS 2026 Outlook
    unchanged
    low materiality
    High
    Q2 Reported Sales Growth
    high single digits
    medium materiality
    High
    Q2 EBITDA Margin
    about flat year-over-year
    medium materiality
    High
    Q2 Adjusted EPS Growth
    double-digit growth
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    CSS
    Growth driven by WESCO data center solutions. Modest pressure on gross margin from large data center projects, but generally healthy and accretive EBITDA margins. Adjusted EBITDA increased 41% to $223 million, and adjusted EBITDA margin expanded 110 basis points.
    Data center sales growth: >60%Security growth: high single-digitEnterprise network infrastructure decline: mid-single digitsEnterprise network infrastructure (including data center): high teens growthVolume growth: ~21%Price contribution: ~1%Backlog growth: ~40% YoY
    		—24% reported, 22% organic—9% Adjusted EBITDA margin
    EES
    Growth driven by OEM (semiconductor, data center) and construction (wire and cable, infrastructure). Industrial backlog up double digits, supporting improving trend. Adjusted EBITDA increased 30% to $185 million, and adjusted EBITDA margin expanded 130 basis points.
    OEM growth: mid-teensConstruction growth: low double digitsIndustrial decline: low single digitsIndustrial stock and flow growth: mid-single digitsData center sales growth: >100%Data center sales as % of EES sales: ~10%Volume contribution: ~3%Pricing contribution: ~4%Backlog growth: ~14% YoY
    		—9% reported, 7% organic—8.2% Adjusted EBITDA margin
    UBS
    Growth supported by improving demand. Utility driven by investor-owned utilities and grid services. Public power flat and competitive. Adjusted EBITDA was $131 million, down 5% versus prior year, and adjusted EBITDA margin decreased 120 basis points, primarily due to gross margin pressure and higher SG&A as a percentage of sales.
    Utility growth: high single-digitInvestor-owned utilities growth: strong double-digitPublic power growth: flatBroadband growth: mid-single-digitVolume growth: ~3%Pricing contribution: ~3%Backlog growth: ~16% YoY
    		—6% organic—9.6% Adjusted EBITDA margin

    Operational metrics

    17
    Adjusted EBITDA
    $389Mup 25% YoY
    Q1 FY26
    Adjusted EBITDA margin
    6.4%up 60 bps YoY
    Q1 FY26
    Adjusted diluted EPS
    $3.37up 52% YoY
    Q1 FY26
    Free cash flow conversion
    128%
    Q1 FY26
    Organic sales growth
    12%YoY
    Q1 FY26
    Reported sales growth
    14%YoY
    Q1 FY26
    Price benefit
    3
    Q1 FY26

    estimated price benefit contributing to sales growth

    Gross margin
    21.2%up 20 bps YoY
    Q1 FY26
    SG&A operating leverage improvement
    40
    Q1 FY26
    Data center sales
    $1.4Bup ~70% YoY
    Q1 FY26

    WESCO's largest end market

    Data center sales
    $4.8B
    TTM

    Trailing 12-month basis

    Net debt to adjusted EBITDA
    3.2x
    Q1 FY26
    Share repurchases
    $25M
    Q1 FY26

    towards offsetting dilution

    Annualized interest expense savings
    $20M
    annual

    expected from bond refinancing

    Incentive compensation impact
    25headwind YoY
    Q2 FY26

    accounts for most of the year-over-year pressure on Q2 EBITDA margin

    April month-to-date sales per workday growth
    10%up YoY
    April FY26 month-to-date

    growth continuing to be led by CSS

    Cost of goods sold (WESCO as importer)
    low single digits
    Q1 FY26

    small percentage of total COGS

    Industry KPIs

    3
    MetricValueDetails
    Daily sales rate10%%
    End market growth mix—
    Market volume mro market benchmarkmid-single-digit growth

    Orderbook & backlog

    4
    Total backlogRecord levelQ1 FY26 end

    up 22% versus prior year

    Reflecting continued effectiveness of cross-selling program and providing clear visibility of secular growth trends. Includes projects shipping in 2027.

    CSS backlogRecord levelQ1 FY26 end

    up ~40% versus prior year

    Reflecting continued strong data center project activity and order rights.

    EES backlogRecord levelQ1 FY26 end

    up 14% versus prior year

    Supported by strong order activity and pipeline conversion.

    UBS backlogIncreasingQ1 FY26 end

    increased 16% year-over-year

    Seeing increasing interest in grid services enabled power capabilities from hyperscalers and other data center customers.

    Deals & partnerships

    1
    Investors$1.5 billion bond refinancing$1.5B5-year note

    Upsized relative to initial launch, reflecting strong investor demand and record pricing. Net proceeds used to redeem 2028 senior notes, improve liquidity, and strengthen balance sheet.

    Capital programs

    1
    Digital Transformation Programunderway
    Start: prior to Investor Day a year before last

    Benefit: increased capabilities, step function increase in margin expansion post-completion

    Phased deployment to avoid business disruption. One end-to-end P&L operation (CSS) fully deployed on new digital platform in Q1 FY26.

    Risks & headwinds

    5
    Macroeconomic uncertaintyongoing

    no meaningful disruption to our revenue or profitability through Q1 and into April

    Mitigation: monitoring closely, kept in mind for outlook

    Middle East geopolitical situationongoing

    less than 1% of sales in the region

    Mitigation: secondary impacts on transportation costs manageable; passing cost increases to customers; limiting quote validity

    Tariff impactongoing

    not material

    Mitigation: WESCO is importer of record for small percentage of COGS; typically increases prices to maintain margins; no material recoveries from IEPA decision expected

    Public power market competitivenessongoing

    flat year-over-year

    Mitigation: expected gross margin pressure given weak sales in transformers and wire and cable

    Higher incentive compensationQ2 FY26

    approximately 25 basis points

    Mitigation: expected to cause Q2 EBITDA margin to be about flat year-over-year

    What to watch in Q2 FY26

    5

    Industrial segment growth

    next quarter
    Currentlow single-digit decline (Q1 FY26)
    Targetimproving trend

    Why it matters

    Management expects an industrial super cycle, and Q1's decline was attributed to project timing, with strong backlog supporting future growth.

    Industrial was down low single digits, primarily reflecting project timing impact📎s. However, our industrial stock and flow business grew mid-single digits in the first quarter, and backlog was up double digits, supporting an improving trend.

    Q&A highlights

    6

    Inquired about specific issues causing the industrial segment's decline, particularly regarding extended lead times for components like switchgear, and if this relates to 'project timing.'

    John Engel confirmed extended lead times persist but stated the Q1 industrial decline was due to specific intra-quarter project timing. He highlighted strong book-to-bill rates and double-digit backlog growth in EES industrial, supporting an improving future trend, and expressed belief in an industrial super cycle driven by AI, power generation, and reshoring.

    “I really believe we're at the beginning of an industrial super cycle. In the U.S., in particular, it's driven by AI-driven infrastructure investments.”

    asked by David Manthey · answered by John Engel

    2 min read6 chapters

    Detailed Narrative

    01

    Data Center Momentum and Strategic Positioning

    WESCO's data center sales reached $1.4 billion in Q1 FY26, marking a 70% year-over-year increase and now constituting 24% of total company sales, making it WESCO's largest end market. On a trailing 12-month basis, data center sales are approximately $4.8 billion, representing 20% of total sales. This growth is driven by strong secular demand and WESCO's comprehensive offerings across its CSS, EES, and UBS segments, supporting hyperscale, multi-tenant colocation, and enterprise customers with power, connectivity, and operational solutions.

    02

    CFO Transition and Strategic Priorities

    Neel Dev joined WESCO as the new CFO, succeeding Dave Schulz. His immediate priorities include partnering with leadership to scale the business in attractive end markets, driving profitable growth, and enhancing working capital efficiency and cash conversion through tighter processes and analytics. This strategic focus aims to leverage WESCO's existing capabilities to achieve higher operating leverage and margin expansion, particularly within high-growth areas like data centers.

    03

    Industrial Market Trends and Outlook

    Despite a low single-digit decline in the industrial business within EES due to specific project timing issues in Q1, management expressed strong confidence in an emerging industrial super cycle. This cycle is anticipated to be driven by AI-driven infrastructure investments, increased power generation needs, and reshoring trends in the U.S. The industrial stock and flow business, a short-cycle segment, showed mid-single-digit growth, and EES industrial backlog increased double digits, supporting an improving future trend.

    04

    Digital Transformation Program Progress

    WESCO reported significant progress on its digital transformation program, which was initially outlined at its Investor Day. A notable milestone in Q1 FY26 was the full deployment of a new digital platform in one end-to-end P&L operation within the CSS segment. The company is pursuing a phased deployment strategy to ensure business continuity and manage change effectively, with design-build activities continuing through this year and into early next year, and benefits expected to phase in over a multi-year period.

    05

    Balance Sheet Strengthening and Capital Allocation

    During the quarter, WESCO successfully executed a $1.5 billion bond refinancing, achieving the lowest coupon rate in company history for a senior notes offering and for a BB-rated 5-year note since 2021. This refinancing is expected to generate over $20 million in annualized interest expense savings, improve liquidity, and strengthen the balance sheet, with net debt to adjusted EBITDA at 3.2x. The company also repurchased $25 million of shares to offset dilution.

    06

    Q2 Outlook and Macroeconomic Considerations

    For Q2 FY26, WESCO anticipates high single-digit reported sales growth and expects EBITDA margin to be approximately flat year-over-year, primarily due to higher incentive compensation (a 25 basis point headwind). The company is closely monitoring macroeconomic uncertainties, the manageable impacts of Middle East transportation costs, and tariffs, which are not material and are typically passed through to customers. No meaningful disruption to revenue or profitability has been observed through April.

    AI-generated summary of the company’s earnings call. Not investment advice.