WESCO INTERNATIONAL INC

WESCO International, Inc. is a leading provider of business-to-business distribution, logistics services and supply chain solutions headquartered in Pittsburgh, Pennsylvania. The company employs approximately 21,000 people ¹, maintains relationships with more than 35,000 suppliers ², and serves nearly 130,000 customers worldwide ³. Wesco operates more than 700 sites ⁴, including distribution centers, fulfillment centers and sales offices in approximately 50 countries ⁵. The company has three strategic business units: Electrical & Electronic Solutions (EES), Communications & Security Solutions (CSS), and Utility & Broadband Solutions (UBS). The EES segment is a North American leader serving customers in over 50 countries ⁶ and operates in highly fragmented markets that include thousands of small, regional and locally based privately owned competitors, as well as several large, multi-national companies. The CSS segment is a global leader in data center, network infrastructure and security solutions serving customers in over 50 countries ⁷. The UBS segment is a leader in North America serving customers primarily in the U.S. and Canada ⁸.

Wesco's top ten customers accounted for approximately 15% of its sales in 2025 ⁹, and no single customer accounted for more than 5% of its sales in 2025 ¹⁰. The company purchases products from a diverse group of more than 35,000 suppliers ¹¹ who are located predominantly in North America. In 2025, the ten largest suppliers accounted for approximately 32% of purchases ¹², and no single supplier accounted for more than 6% of total purchases ¹³. Wesco has commercial agreements with more than 450 preferred suppliers ¹⁴ and approximately 68% of purchases are made pursuant to these arrangements ¹⁵. The company believes its business possesses strengths including a broad portfolio of products from top brands, customized solutions, a unique position to benefit from secular trends of digitalization including AI-driven data centers and automation, electrification including increased power generation and reliability, and supply chain resiliency including reshoring, as well as an innovative digital roadmap, global reach with local expertise, and comprehensive value-added services.

Wesco generates revenue through the distribution of a broad range of products and the provision of logistics services and supply chain solutions to commercial and industrial businesses, technology companies, telecommunications providers, and utilities. The company's revenue arrangements generally consist of single performance obligations to transfer a promised good or service, or a combination of goods and services. Revenue is measured as the amount of consideration Wesco expects to receive in exchange for transferring goods or providing services, and is recognized when control has transferred to the customer, which is generally when the product has shipped from a Wesco facility or directly from a supplier. For products that ship directly from suppliers to customers, Wesco generally acts as the principal in the transaction and recognizes revenue on a gross basis. When providing services, sales are generally recognized over time as control transfers to the customer, which occurs as services are rendered. The company's innovative solutions include supply chain management, logistics and transportation, procurement, warehousing and inventory management, as well as kitting and labeling, limited assembly of products and installation enhancement.

The EES segment supplies a broad range of products and solutions primarily to construction, industrial and original equipment manufacturer customers. The EES product portfolio includes a broad range of electrical equipment and supplies, automation and connected devices, security, lighting, wire and cable, safety, and maintenance, repair and operating products. The EES service portfolio includes solutions to improve project execution, direct and indirect manufacturing supply chain optimization programs, lighting and renewables advisory services, and digital and automation solutions. The CSS segment offers data center, network infrastructure and security solutions. Its network infrastructure portfolio includes cabling and connectivity, power systems, wireless technologies, connected devices, and related products. In the security business, CSS offers on-premise, cloud or hybrid comprehensive solutions for video surveillance, fire and intrusion detection, access control, door locking, and other technologies. The UBS segment provides products and services to investor owned utilities, electric power cooperatives and municipalities, as well as global service providers, wireless providers, broadband operators and the contractors that service these customers. Products sold include wire and cable, transformers, transmission and distribution hardware, switches, protective devices, connectors, lighting, conduit, fiber and power cable, connectivity products, pole line hardware, racks, cabinets, safety and MRO products, and point-to-point wireless devices. UBS also offers service solutions including fiber project management, high and medium voltage project design and support, pre-wired meters and capacitor banks, meter testing and advanced metering infrastructure installation, personal protective equipment, dielectric testing, tool repair, emergency response management, storage yard management, materials management, and logistics management.

On January 2, 2025, the Company acquired 100% of the equity securities of Industrial Software Solutions I, Inc. and Industrial Software Solutions ULC, an industrial automation consulting company, software distributor, and AVEVA Select Partner, for total cash consideration of $36.3 million ¹⁶, net of cash acquired. On December 5, 2024, through its wholly-owned subsidiary Anixter Inc., the Company acquired 100% of the equity securities of Ascent, LLC, a provider of data center facility management services with more than 300 employees ¹⁷ in the U.S. and Canada, for total purchase consideration of $186.6 million ¹⁸. Effective July 1, 2024, the Company acquired 100% of the equity securities of Independent Electric Supply Inc., a full-line electrical distributor headquartered in Ontario, Canada for $13.2 million ¹⁹, net of cash acquired. On June 3, 2024, the Company acquired the assets and liabilities held by Warez, LLC and Hepta Systems, LLC, which owned and operated the entroCIM business, an innovator in data center and building intelligence software, for total fair value of consideration of $36.5 million ²⁰. On April 1, 2024, the Company completed the sale of its Wesco Integrated Supply business for total consideration of $354.9 million ²¹, which was adjusted for net working capital, closing cash, and closing indebtedness. On March 6, 2025, Wesco Distribution issued $800 million ²² aggregate principal amount of 6.375% Senior Notes due 2033. The Company used the net proceeds from the issuance of the 2033 Notes to redeem all of the Company's outstanding Series A Preferred Stock and all of the related depositary shares representing fractional interests in the Series A Preferred Stock in June 2025, and to repay a portion of the amounts outstanding under the Revolving Credit Facility. As of June 22, 2025, the Company redeemed all 21,612 ²³ outstanding shares of its Series A Preferred Stock, and the related depositary shares, each representing 1/1,000th of one share of Series A Preferred Stock, at a redemption price of $25,000 ²⁴ per share, for a total payment of $540.3 million ²⁵. The Company recognized a $32.9 million ²⁶ gain from the redemption as income attributable to common stockholders. During the year ended December 31, 2025, the Company repurchased 419,570 ²⁷ shares of its common stock in the open market for cash totaling $75.2 million ²⁸, including excise taxes. During each of the quarters in the fiscal year ended December 31, 2025, the Company paid a quarterly cash dividend of $0.454 ²⁹ per common share to its shareholders.

Net sales were $23,510.9 million ³⁰ for 2025 compared to $21,818.8 million ³¹ for 2024, an increase of 7.8% ³². Organic sales for 2025 grew by 8.6% ³³ year over year. Net income attributable to common stockholders was $645.8 million ³⁴ for 2025 compared to $660.2 million ³⁵ for 2024. Diluted earnings per share attributable to common stockholders was $13.05 ³⁶ for 2025 compared to $13.05 ³⁷ for 2024. Adjusted EBITDA, a non-GAAP financial measure, was $1,536.5 million ³⁸ for 2025 compared to $1,509.1 million ³⁹ for 2024, an increase of $27.4 million ⁴⁰, or 1.8% ⁴¹ year-over-year. Net cash provided by operating activities for 2025 totaled $125.0 million ⁴², compared to $1,101.2 million ⁴³ in 2024. As of December 31, 2025, the Company had cash and cash equivalents of $604.8 million ⁴⁴ and total debt of $5,829.4 million ⁴⁵.

Wesco's long-term growth potential benefits from secular trends of digitalization, including AI-driven data centers and automation; electrification, including increased power generation and reliability; and supply chain resiliency, including reshoring. The CSS data center business is primarily driving growth in sales, but also contributing to lower gross margins as compared to the prior year due to several large project sales. The EES segment experienced continued growth across its Original Equipment Manufacturer and construction businesses, fueled in part by rising demand for data center projects and increased infrastructure activity. Within the UBS segment, the Utility business experienced a year-over-year sales decline driven by reduced public power activity, while the Broadband business delivered year-over-year growth supported by continued network investments. The company has also seen year-over-year backlog growth driven primarily by its CSS and UBS segments, with its EES segment contributing as well. The company is executing a multi-year, phased development and implementation of a new Digital and Data Platform intended to be a unified, technology-enabled operating model that spans all business functions, maintains and enhances the flow of financial information, and improves resource efficiency.

The filing does not contain a dedicated paragraph on margin and cost outlook with specific quantitative targets for margin trajectory or cost structure evolution beyond what is discussed in the financial results.

The company continues to address supplier price increases in response, in part, to global tariffs, including but not limited to, passing through price increases, leveraging scale to provide locally sourced products, reducing imports from high tariff countries, optimizing supply chain logistics, and re-engineering its global supply chain. Although the long-term impact remains uncertain, tariffs did not have a material effect on the Company's financial results for 2025. The company expects to spend approximately $100 million ⁴⁶ in 2026 on capital expenditures for information technology investments and to support its global network of distribution centers, fulfillment centers and sales offices.

The filing does not contain specific R&D spending levels. The company expects to spend approximately $100 million ⁴⁷ in 2026 on capital expenditures for information technology investments and to support its global network of distribution centers, fulfillment centers and sales offices. On May 31, 2022, Wesco's Board of Directors authorized the repurchase of up to $1 billion ⁴⁸ of the Company's common stock. The share repurchase authorization has no expiration date and may be modified, suspended, or terminated at any time without prior notice. During each of the quarters in the fiscal year ended December 31, 2025, the Company paid a quarterly cash dividend of $0.454 ⁴⁹ per common share to its shareholders. The payment of dividends is within the discretion of the Board of Directors and any decision to pay dividends in the future will depend on an evaluation of a number of factors.

The company faces structural headwinds including adverse conditions in the global economy and disruptions of financial and commodities markets which could negatively impact the company and its customers. Volatile trade policies, including a shift toward a reciprocal tariff regime in the U.S., and retaliatory measures by foreign governments, could materially increase costs, disrupt supply availability and lead times, reduce price competitiveness, and adversely affect demand for products and services. The company's global operations expose it to political, economic, legal, currency and other risks, as approximately 26% ⁵⁰ of revenues are derived from sales outside of the U.S. The company also faces risks related to supply chain challenges, including product shortages, delays and price increases, which could decrease sales, profit margins and earnings.

The company faces execution risks related to its strategic and operational initiatives, including its digital transformation initiatives, which are subject to various risks and uncertainties. The design, development, and implementation of new systems and applications carries inherent risks, including potential technical failures, integration challenges, inadequacy of internal controls, and business disruptions. The company may not be able to fully realize the anticipated benefits and cost savings of mergers and acquisitions, as the success of acquisitions depends on the successful combination and integration of the companies' businesses. The company also faces risks related to its increasing use and reliance on artificial intelligence, including machine learning, generative AI, agentic AI and large language models, which may expose it to significant risks that could adversely affect its operations, financial condition, and results of operations.

The company faces material risks from volatile trade policies, including a shift toward a reciprocal tariff regime in the U.S., and retaliatory measures by foreign governments, which could materially increase costs, disrupt supply availability and lead times, reduce price competitiveness, and adversely affect demand for products and services. The company's global operations expose it to political, economic, legal, currency and other risks, as approximately 26% ⁵¹ of revenues are derived from sales outside of the U.S. and approximately one-third of its employee population are non-U.S. employees. The company's 10 largest suppliers in 2025 accounted for approximately 32% ⁵² of purchases by dollar volume, and the loss of or a substantial decrease in the availability of products from any of these suppliers could have a material adverse effect on the business. As of December 31, 2025, the company had $5.8 billion ⁵³ of consolidated indebtedness, and a substantial portion of cash flow from operations must be dedicated to the payment of principal and interest on this indebtedness, reducing funds available for other purposes. The company's debt agreements contain restrictive covenants that limit its ability to incur additional indebtedness, create liens, engage in mergers, make loans or investments, pay dividends, and repurchase equity interests.

Management's message emphasizes that the company's financial results reflect strong sales in 2025, highlighted by a 7.8% ⁵⁴ year-over-year increase in reported net sales and organic sales growth of 8.6% ⁵⁵ year over year. Management highlights that the CSS data center business is primarily driving this growth in sales, but also contributing to lower gross margins as compared to the prior year due to several large project sales. The EES segment experienced continued growth across its OEM and construction businesses, fueled in part by rising demand for data center projects and increased infrastructure activity. Within the UBS segment, the Utility business experienced a year-over-year sales decline driven by reduced public power activity, while the Broadband business delivered year-over-year growth supported by continued network investments. Management notes that after redeeming the Series A Preferred Stock in June 2025, the company has no significant debt maturities until 2028 and has strong liquidity to execute its capital allocation priorities of debt reduction, stock buybacks and acquisitions. Management believes the company is well positioned to benefit from enduring secular growth trends of AI-driven data centers, increased power generation, and supply chain re-shoring. The strategic priorities emphasized for the period ahead include extending leading scale and value proposition, further developing the organization and culture of excellence, and digitalizing and transforming the business.