PITTSBURGH — Wesco International announces its results for the third quarter of 2025.
“We delivered very strong results in the third quarter and again outperformed the market with our leading portfolio of products, services, and solutions. Sales growth accelerated this year, with organic sales up 6% in the first quarter, 7% in the second quarter, and 12% in the third quarter. Our record sales performance was led by 18% organic growth in CSS, 12% organic growth in EES, and a return to growth in UBS. Total data center sales were $1.2B, setting another new quarterly mark, and were up about 60% versus the prior year. Our Utility business also continued to show signs of improvement with increased investor-owned utility sales growth in the third quarter. Adjusted EPS grew 9.5% versus the prior year and 16% versus the second quarter, with both gross margin and operating margin improving sequentially. Working capital days continued to show improvement versus the prior year, with record sales per workday in September resulting in an increase in accounts receivable. We are building on our positive business momentum as we enter the fourth quarter and begin to prepare for continued market-leading growth in 2026,” said John Engel, Chairman, President, and CEO.
Engel concluded, “We are raising our full-year outlook for organic sales growth, adjusted EBITDA, and adjusted EPS based on our increasing business momentum in the third quarter. We now expect organic sales growth of 8% to 9%, up from our previous organic sales growth range of 5% to 7%, and expect adjusted EPS in the range of $13.10 to $13.60. We are reducing our full-year free cash flow outlook to reflect an increase in working capital dollars associated with our rising demand curve and increased sales growth rate, but expect to generate significant positive cash flow in the fourth quarter consistent with our normal seasonal pattern. We remain firmly focused on executing our cross-selling initiatives and enterprise-wide margin improvement program while delivering operational improvements enabled by our technology-driven business transformation. As the market leader, the strength of our portfolio and the enduring secular trends of AI-driven data centers, increased power generation, electrification, automation, and reshoring fuel my confidence that Wesco will continue to outperform our markets and deliver exceptional value to our customers and shareholders in 2026 and beyond.”
Key Financial Highlights
Net Sales
- On an organic basis, which removes the impact of the Ascent, LLC (“Ascent”) acquisition and differences in foreign exchange rates, sales for the third quarter of 2025 grew by 12.1%. The increase in organic sales reflects volume growth in all three segments (CSS, EES and UBS), as well as a favorable impact from changes in price. Sequentially, net sales increased 5.1% and organic sales grew by 4.8%. Backlog at the end of the third quarter of 2025 increased by 7% compared to the end of the third quarter of 2024.
- For the first nine months of 2025, organic sales, which removes the impact of the Wesco Integrated Supply (“WIS”) divestiture and Ascent acquisition, differences in foreign exchange rates, and the impact from the number of workdays, grew by 8.3%. The increase in organic sales reflects volume growth in the CSS and EES segments, partially offset by a volume decline in the UBS segment, as well as a favorable impact from changes in price.
Gross Profit and Gross Margin
- The decrease in gross margin for the three and nine months ended September 30, 2025 reflects the impact of increased large project activity with lower margins and higher inventory adjustments, partially offset by favorable supplier volume rebates. Sequentially, gross margin increased by 20 basis points.
Selling, General, and Administrative (“SG&A”) Expenses
- The increase in SG&A expenses for the third quarter of 2025 is driven by higher salaries, incentives, increased costs to operate our facilities, an increase in transportation costs and higher IT costs. SG&A expenses for the third quarter of 2025 include $8.8 million of digital transformation and restructuring costs, compared to $5.9 million for the third quarter of 2024. Adjusted for these costs, SG&A expenses were 14.7% and 15.0% of net sales for the third quarter of 2025 and 2024, respectively, reflecting operating cost leverage on sales growth.
- The increase in SG&A expenses for the first nine months of 2025 is driven by higher salaries and benefits, increased costs to operate our facilities and an increase in transportation costs. SG&A expenses for the first nine months of 2025 include $24.1 million of digital transformation and restructuring costs. SG&A expenses for the first nine months of 2024 include $27.0 million of digital transformation and restructuring costs, a $17.8 million loss on abandonment of assets and $4.8 million of excise taxes on excess pension plan assets. Adjusted for these costs, SG&A expenses were 14.9% of net sales for the first nine months of 2025 and 2024.
Adjusted EBITDA and Adjusted EBITDA Margin
- The increase in Adjusted EBITDA for the third quarter of 2025 primarily reflects an increase in net sales, partially offset by an increase in cost of goods sold related to large project sales with lower margins, and a $91.8 million increase in SG&A expenses as described above. Sequentially, Adjusted EBITDA margin increased 10 basis points.
- The slight decrease in Adjusted EBITDA for the first nine months of 2025 primarily reflects lower gross margin due to large project sales with lower margins, and a $142.5 million increase in SG&A expenses as described above.
Effective Tax Rate
- The lower effective tax rates for the three and nine months ended September 30, 2025 are due primarily to higher discrete income tax benefits relating to the exercise of stock-based awards as compared to the prior year periods.
Adjusted Earnings Per Diluted Share
- The increase in adjusted earnings per diluted share in the third quarter of 2025 primarily reflects the favorable impact of the June 2025 Series A Preferred Stock redemption and the corresponding decrease in preferred dividends, as well as higher adjusted EBITDA, partially offset by a $3.4 million decrease in adjusted other income primarily due to fluctuations in the U.S. dollar against certain foreign currencies. We recognized a net foreign currency exchange loss of $2.1 million for the third quarter of 2025 compared to a net gain of $2.5 million for the third quarter of 2024. The increase in adjusted earnings per diluted share was further offset by a $12.5 million increase in interest expense primarily driven by the issuance of the 2033 Notes, partially offset by lower borrowings and lower interest rates on the Receivables Facility and the Revolving Credit Facility. There was a positive impact from the reduction in outstanding common shares during the third quarter of 2025 as compared to the third quarter of 2024.
- The increase in adjusted earnings per diluted share in the first nine months of 2025 primarily reflects the favorable impact of the June 2025 Series A Preferred Stock redemption and the corresponding decrease in preferred dividends, as well as a $23.1 million increase in adjusted other income primarily due to fluctuations in the U.S. dollar against certain foreign currencies, in which we recognized an immaterial net foreign currency exchange loss for the first nine months of 2025 compared to a net loss of $18.2 million for the first nine months of 2024. Further, there was a decrease of $15.8 million in preferred dividends as a result of the preferred share redemption in the second quarter of 2025. There was a positive impact from the reduction in outstanding common shares during the first nine months of 2025 as compared to the first nine months of 2024.
Operating Cash Flow
- Net cash used in operating activities for the third quarter of 2025 totaled $82.7 million compared to $302.1 million in cash provided by operating activities in the third quarter of 2024. The $384.8 million decrease is primarily driven by a $313.3 million impact from changes in trade accounts receivable, due to the timing of receipts from customers, and a $36.7 million impact from changes in accounts payable, due to the timing of payments to suppliers for inventory purchases.
- Net cash provided by operating activities for the first nine months of 2025 totaled $53.1 million, compared to $824.6 million for the first nine months of 2024. The $771.5 million decrease is primarily driven by a $485.7 million impact from changes in trade accounts receivable, and a $421.3 million impact from changes in inventories. The impact from trade accounts receivable was primarily due to sales growth in the EES and CSS segments as well as the timing of receipts from customers as compared to the prior year. The impact from inventories was primarily due to an increase in volume related to growth in projects as compared to the prior year. These decreases were partially offset by a $196.1 million impact from changes in accounts payable. The impact from accounts payable increased primarily due to the increase in inventory, as well as the timing of purchases and payments to suppliers as compared to the prior year. Additionally an increase in net income as adjusted for certain non-cash items offset the decreases in operating cash flows.