Wesco Raises 2026 Outlook as Q3 Sales Rise 17%

Wesco International Inc. (NYSE: WCC) raised its full-year 2026 sales, adjusted EBITDA margin and adjusted earnings outlook after third-quarter sales rose 17% to a record $7.23 billion, supported by growth across all three business units and continued strength in data center demand. The company’s backlog reached another record, while margin expansion helped adjusted earnings grow substantially faster than sales.

For 2026, Wesco now expects reported sales of $26.8 billion to $27.0 billion, up 14% to 15%, compared with its July forecast of $25.9 billion to $26.3 billion and growth of 10% to 12%. The organic sales growth forecast increased to 13% to 14% from 9% to 11%.

The company also raised its adjusted diluted EPS outlook to $18.00 to $18.50 from $16.00 to $17.50 and now expects an adjusted EBITDA margin of about 7.2%, compared with the previous range of 6.9% to 7.1%. Its free cash flow forecast remained unchanged at $300 million to $600 million.

Sales and earnings reach third-quarter records

Third-quarter organic sales increased 16.6%, nearly matching reported growth, as acquisition and foreign-exchange effects largely offset each other. Wesco estimated that pricing contributed about three percentage points to growth, with higher volumes across all three business units. Sales were also 8.4% higher than in the second quarter.

Gross profit rose to $1.57 billion from $1.32 billion, while gross margin expanded about 40 basis points to 21.7%. Adjusted selling, general and administrative costs declined as a percentage of sales, reflecting what the company described as productivity and disciplined cost management alongside higher revenue.

Adjusted EBITDA increased 33% to a record $561.5 million, and the adjusted EBITDA margin widened by about 100 basis points to 7.8%. Net income attributable to common stockholders was $267.8 million, up from $187.5 million a year earlier. Adjusted diluted EPS climbed 47% to $5.77 from $3.92, with the company identifying core operating performance as the main source of the increase. Lower interest expense provided a modest benefit, while acquisitions and foreign exchange were modest net headwinds and a higher effective tax rate partly offset lower preferred-dividend expense.

Data center activity supports growth across the portfolio

Communications and Security Solutions posted sales of $2.93 billion, up 22% on a reported basis and 21% organically. Adjusted EBITDA increased 42% to $313 million, with the margin expanding 160 basis points to 10.7% as gross margin improved and operating costs were spread over a larger sales base.

Within the unit, Wesco Data Center Solutions sales rose about 40%, led primarily by hyperscale and multi-tenant data center customers. Enterprise Network Infrastructure recorded mid-single-digit growth, while security sales increased by a high-single-digit percentage. The unit’s backlog rose about 140% to a record, driven by data center projects.

Electrical and Electronic Solutions generated sales of $2.77 billion, an 18% increase on both a reported and organic basis. Adjusted EBITDA grew 31% to $259 million, and the margin increased 90 basis points to 9.3%.

Construction sales rose by a mid-teens percentage, supported by infrastructure investment and data center projects. Industrial sales increased by a mid-single-digit percentage, while original equipment manufacturer sales grew about 30% across data center and semiconductor markets. Sales to data center customers more than doubled, and non-data center sales recorded high-single-digit growth. The unit’s backlog increased about 40% to a record level.

Utility and Broadband Solutions reported sales of $1.52 billion, up 6% as reported and 7% organically. Utility sales increased by a high-single-digit percentage, reflecting investor-owned utility performance, improving public power trends and continued infrastructure investment. Broadband sales were flat against a comparison period in which sales had risen more than 20%.

The unit’s adjusted EBITDA increased 6% to $158 million, while its 10.4% margin was unchanged from a year earlier but 40 basis points above the second quarter. Wesco said public power competitive conditions stabilized during the year, although year-over-year margin pressure remained a headwind. UBS backlog rose about 90%, driven by Grid Services adoption and underlying order activity.

Companywide data center sales reached $1.8 billion in the quarter, up about 55% from $1.2 billion a year earlier. On a trailing-12-month basis, the business generated approximately $6 billion and represented about 23% of Wesco’s sales. The company now expects full-year data center sales growth of more than 40%, compared with its prior expectation of more than 30%.

Backlog, cash flow and fourth-quarter outlook

Wesco’s total backlog increased about 80% to a record, with each business unit also reaching a record level. The company raised its 2026 sales expectations for Communications and Security Solutions to approximately 20% growth and for Electrical and Electronic Solutions to low-double-digit growth. Its mid-single-digit growth outlook for Utility and Broadband Solutions was unchanged.

Third-quarter free cash flow, a non-GAAP measure, was $184.2 million, compared with negative $89.3 million a year earlier. Operating cash flow was $193.9 million, and net working capital averaged 20.2% of trailing-12-month sales, broadly stable with the preceding two quarters.

Net leverage declined to 2.8 times adjusted EBITDA from 3.4 times at the end of 2025. Wesco ended the quarter with $842.5 million of cash and cash equivalents and net debt of $5.22 billion.

For the fourth quarter, management expects reported sales to increase by a low- to mid-teens percentage and adjusted EBITDA margin to improve by about 50 basis points. Preliminary October sales per workday were up by a high-teens percentage. The full-year forecast assumes pricing will contribute about three percentage points to sales growth and that the Federal Reserve will not implement additional rate increases during 2026.

Wesco cautioned that its outlook remains subject to risks including tariffs and trade tensions, currency movements, borrowing costs, acquisition integration, supply-chain disruption, demand volatility, inflation and material-cost increases. Cybersecurity incidents, technology implementation challenges, geopolitical conflicts and changes in regulation or export controls could also cause actual results to differ from management’s expectations.