01—Abstract
Summary
Summary of the 8-K filed July 31, 2025. Cited figures are marked; the original filing is the authoritative source.
WESCO International, Inc. reported second-quarter 2025 results on July 31, 2025, as described in Exhibit 99.1 (press release) and accompanying investor slides in Exhibit 99.2.
Net sales for the quarter were $5,899.6 milliona, up 7.7% year over year, with organic sales up 7.2%. Diluted EPS was $3.83 and adjusted diluted EPS was $3.39, up 5.6% year over year. Adjusted EBITDA was $394.2 million, down 1.5% year over year, with adjusted EBITDA margin of 6.7%, up 90 basis points sequentially.
Gross margin declined 80 basis points year over year to 21.1%, reflecting large project wins and hyperscale data center mix. The quarter's GAAP EPS benefited from a $27.6 millionb gain on the redemption of the Series A Preferred Stock, which was completed in June using proceeds from $800 million of 6.375% Senior Notes due 2033. The company states the redemption yields approximately $32 million in annualized net income and cash flow benefits and about $0.65 in annualized EPS benefit, and that no significant debt maturities remain until 2028.
Free cash flow was $86.5 millionc in the quarter and $95.9 million for the first six months. Management raised its full-year 2025 organic sales growth outlook to 5% to 7% from 2.5% to 6.5%, and reported sales growth outlook to 4% to 6%. Adjusted EPS guidance was narrowed to $12.50 to $14.00 from $12.00 to $14.50, maintaining the midpoint, and the adjusted EBITDA margin outlook was lowered to 6.6% to 6.8% from 6.7% to 7.2%.
Free cash flow guidance of $600 million to $800 milliond was unchanged. Preliminary July sales per workday were up approximately 10% year over year, and data center sales surpassed $1 billion in the quarter, up 65% year over year.
02—Key points
Key Highlights
- Q2 2025 net sales of $5,899.6 million, up 7.7% year over year; organic sales up 7.2%, with CSS organic growth of 17.3% and EES organic growth of 6.0%
- Data center sales eclipsed $1 billion in Q2 2025, up 65% year over year; backlog increased 11% year over year and approximately 5% sequentially
- Adjusted diluted EPS of $3.39, up 5.6% year over year; GAAP diluted EPS of $3.83 includes a $27.6 million gain on preferred stock redemption
- Adjusted EBITDA of $394.2 million, down 1.5% year over year, with margin of 6.7%, up 90 basis points sequentially
- Gross margin of 21.1%, down 80 basis points year over year, reflecting large project wins and hyperscale data center customer mix
- Full-year 2025 organic sales growth outlook raised to 5% to 7%; adjusted EPS range narrowed to $12.50 to $14.00 from $12.00 to $14.50
- Preferred stock redemption and 6.375% 2033 Senior Notes issuance expected to yield approximately $32 million in annualized net income and cash flow benefits; no significant debt maturities until 2028
03—Questions
Frequently Asked Questions
How did Wesco perform in the second quarter of 2025?
Net sales rose 7.7% year over year to $5,899.6 million, with organic sales up 7.2%. Adjusted EBITDA declined 1.5% to $394.2 million, and adjusted diluted EPS rose 5.6% to $3.39. Sales growth was led by CSS, where organic growth was 17.3%.
Why did gross margin decline?
The company attributes the 80 basis point decline in gross margin to large project wins in the EES segment and growth with hyperscale data center customers in the CSS segment, including higher inventory adjustments, partially offset by higher supplier volume rebates.
What is the effect of the preferred stock redemption?
Wesco redeemed its 10.625% Series A Preferred Stock in June and recognized a $27.6 million gain, which is excluded from adjusted results. The company estimates approximately $32 million in annualized net income and cash flow benefits and about $0.65 in annualized EPS benefit.
How did full-year 2025 guidance change?
Organic sales growth outlook was raised to 5% to 7% from 2.5% to 6.5%, and reported sales growth to 4% to 6% from 0% to 4%. Adjusted EPS guidance was narrowed to $12.50 to $14.00, maintaining the midpoint, and the adjusted EBITDA margin outlook was revised to 6.6% to 6.8%. Free cash flow guidance of $600 million to $800 million was unchanged.
What drove the momentum in sales for the start of the third quarter?
Preliminary July sales per workday were up approximately 10% year over year, and management expects Q3 reported sales to be up mid-single digits to high-single digits, with EBITDA margin down approximately 40 basis points year over year.
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