Wesco International ((WCC)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Wesco International’s latest earnings call painted a generally positive picture, with the company reporting strong sales growth and record performance in its data center segment. The call also highlighted improved profitability and a strengthened balance sheet, although challenges in the UBS segment and pressures on gross margins were noted. The overall sentiment was optimistic, supported by an increase in full-year guidance, reflecting confidence in sustained growth.
Accelerated Sales Growth
Wesco International experienced accelerated sales growth, with organic sales increasing by 7% in the second quarter of 2025, following a 6% growth in the first quarter. Notably, July sales per workday saw a significant year-over-year increase of approximately 10%, showcasing the company’s robust market performance.
Record Data Center Sales
The company’s data center segment achieved a milestone, with total sales surpassing $1 billion in the second quarter of 2025, marking a 65% year-over-year increase. This segment accounted for approximately 18% of Wesco’s sales during the quarter, underscoring its critical role in the company’s growth strategy.
Strong Performance in CSS and EES
Wesco’s CSS and EES segments demonstrated strong performance, with CSS delivering 17% organic growth and EES growing by 6% year-over-year. The Ascent acquisition contributed 1.5 percentage points to CSS growth, highlighting the strategic benefits of recent acquisitions.
Improved Profitability
The company reported improved profitability, with the adjusted EBITDA margin increasing by 90 basis points sequentially. Additionally, adjusted EPS rose by 6% compared to the prior year, reflecting effective cost management and operational efficiencies.
Balance Sheet Strengthening
In June, Wesco completed the redemption of its preferred stock, which reduced total financing costs and improved net income, EPS, and cash flow run rates. This move significantly strengthened the company’s balance sheet, positioning it for future growth.
Raised Full-Year Outlook
Wesco raised its full-year organic sales growth outlook to a range of 5% to 7%, driven by strong data center growth and favorable trends in electrical sales. This upward revision reflects the company’s confidence in its growth trajectory and market opportunities.
Decline in UBS Sales
Despite overall positive results, the UBS segment faced challenges, with sales declining by 4% year-over-year. This decline was attributed to customer destocking and slower project activity in the utility market, highlighting areas for potential improvement.
Gross Margin Pressure
The company experienced an 80 basis point year-over-year decline in gross margin, impacted by project and product mix in the CSS and EES segments. This pressure on margins indicates areas where the company may need to focus on cost management.
Tariff-Related Challenges
Wesco faced tariff-related challenges, with a significant number of supplier price increases due to tariffs. These increases have potential impacts on customer demand and gross margin, presenting a challenge for the company’s pricing strategy.
Forward-Looking Guidance
Looking ahead, Wesco International provided optimistic forward-looking guidance. The company expects continued strong momentum in data centers and anticipates a rebound in the utility sector in the second half of the year. The full-year outlook for organic sales growth has been raised, while the EPS range is maintained at the midpoint, indicating a balanced approach to future growth and profitability.
In summary, Wesco International’s earnings call reflected a positive outlook, driven by strong sales growth, record data center performance, and improved profitability. While challenges in the UBS segment and gross margin pressures were noted, the company’s raised full-year guidance underscores its confidence in continued growth. Investors and market watchers will be keen to see how Wesco navigates these challenges and capitalizes on its growth opportunities in the coming quarters.