Wesco International Inc: Form 10-Q for the period ended Sep 30, 2026

The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in Item 1 of this Quarterly Report on Form 10-Q and WESCO International, Inc.’s audited Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2025. The matters discussed herein may contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from expectations. Certain of these risks are set forth in Item 1A of WESCO International, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as well as WESCO International, Inc.’s other reports filed with the Securities and Exchange Commission. In this Item 2, “Wesco” refers to WESCO International, Inc., and its subsidiaries and its predecessors unless the context otherwise requires. References to “we,” “us,” “our” and the “Company” refer to Wesco and its subsidiaries.

In addition to the results provided in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), our discussion and analysis of financial condition and results of operations includes certain non-GAAP financial measures, which are defined further below. These financial measures include Organic sales growth, Earnings before interest, taxes, depreciation and amortization (“EBITDA”), Adjusted EBITDA, Adjusted EBITDA margin, Financial leverage, Adjusted selling, general and administrative expenses, Adjusted income from operations, Adjusted other non-operating (income) expense, Adjusted provision for income taxes, Adjusted income before income taxes, Adjusted net income, Adjusted net income attributable to WESCO International, Inc., Adjusted net income attributable to common stockholders, and Adjusted earnings per diluted share. We believe that these non-GAAP measures are helpful to users of our financial statements as they provide a better understanding of our financial condition and results of operations on a comparable basis. Additionally, certain non-GAAP measures either focus on or exclude items impacting comparability of results, allowing users to more easily compare our financial performance from period to period. Management uses certain non-GAAP financial measures in its evaluation of the performance of the Company’s operating segments and in the determination of incentive compensation. Management does not use these non-GAAP financial measures for any purpose other than the reasons stated above.

Company Overview

Wesco, headquartered in Pittsburgh, Pennsylvania, is a leading provider of business-to-business distribution, logistics services and supply chain solutions.

We employ approximately 21,000 people, maintain relationships with more than 35,000 suppliers, and serve nearly 130,000 customers worldwide. With millions of products, end-to-end supply chain services and significant digital capabilities, Wesco provides innovative solutions to meet customer needs across commercial and industrial businesses, technology companies, telecommunications providers, and utilities. Our 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. We operate more than 700 sites, including distribution centers, fulfillment centers and sales offices in approximately 50 countries, providing a local presence for customers and a global network to serve multi-location businesses and global corporations.

We have operating segments comprising three strategic business units: Electrical & Electronic Solutions (“EES”), Communications & Security Solutions (“CSS”) and Utility & Broadband Solutions (“UBS”). These operating segments are equivalent to our reportable segments. The following is a description of each of our reportable segments and their business activities.

Electrical & Electronic Solutions

The EES segment, serving customers in over 50 countries, is a North American leader, and supplies a broad range of products and solutions primarily to construction, industrial and original equipment manufacturer (“OEM”) 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 (“MRO”) products from industry-leading manufacturing partners. 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 to improve safety and productivity.

Communications & Security Solutions

The CSS segment, serving customers in over 50 countries, is a global leader in data center, network infrastructure and security solutions. CSS sells directly to end-users or through an extensive network of channel partners, including data communications contractors, security and network integrators, professional audio/visual integrators, and systems integrators. CSS also provides a wide range of professional A/V, safety, facilities, and energy management solutions. The full CSS product portfolio is frequently coupled with services designed to enhance efficiency and productivity across all customer segments globally. These services include data center services, advisory, installation enhancement, project deployment, supply chain solutions, and management platforms.

Utility & Broadband Solutions

The UBS segment is a leader in North America, serving customers primarily in the U.S. and Canada, and 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. The products sold include wire and cable, transformers, transmission and distribution hardware, switches, protective devices, connectors, lighting, conduit, fiber and copper cable, connectivity products, pole line hardware, racks, cabinets, safety and MRO products, and point-to-point wireless devices. UBS also offers a complete set of service solutions to improve customer supply chain efficiencies.

Business Highlights

Our financial results reflect continued sales momentum in the first nine months of 2026, highlighted by a 14.5% year-over-year increase in reported Net sales driven by volume growth across all three segments. For the first nine months of 2026 compared to the first nine months of 2025, organic sales increased by 13.9%, which adjusts for fluctuations in foreign exchange rates. All three of our segments contributed to growth, led by our CSS segment's data center solutions business. Our EES segment experienced continued growth across its OEM and construction businesses, driven by ongoing demand for data center projects, infrastructure investment and continued momentum across key end markets. Our UBS segment also delivered sales growth, driven by strength in its utility business, continued utility infrastructure investment, and grid services activity, as well as an increase in its broadband business. We also saw record year-over-year backlog growth driven by all three segments.

On July 1, 2026, we acquired Newark Engineering Group (“Newark”), a Singapore-based provider of engineered cooling solutions and lifecycle services for data centers. Newark brings specialized expertise in designing, installing and maintaining advanced thermal management systems critical to data center performance and reliability. This acquisition expands our participation in the data center value chain while strengthening our presence across Southeast Asia.

During the first quarter of 2026, we issued 5.250% Senior Notes due 2031 (the “2031 Notes”) and 5.500% Senior Notes due 2034 (the “2034 Notes” and, together with the 2031 Notes, the “2031 and 2034 Notes”) in part to support the redemption of our 7.250% senior notes due 2028 (the “2028 Notes”) which occurred in the second quarter of 2026. Following the redemption of the 2028 Notes, we have no significant debt maturities until 2029.

Throughout 2026, we continued to execute on our multi-year, phased development and implementation of a new Digital and Data Platform (“DDP”). The DDP is 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.

Taking the above highlights into consideration, we believe we are well positioned to benefit from enduring secular growth trends of AI-driven data centers, increased power generation, electrification, automation and reshoring.

Results of Operations

Third Quarter of 2026 versus Third Quarter of 2025

Net Sales

The following table sets forth Net sales and organic sales growth for the periods presented:

(In millions)

Note: Organic sales growth is a non-GAAP financial measure of sales performance. Organic sales growth is calculated by deducting the percentage impact from acquisitions and divestitures for one year following the respective transaction, fluctuations in foreign exchange rates and number of workdays from the reported percentage change in consolidated Net sales. Workday impact represents the change in the number of operating days period-over-period after adjusting for weekends and public holidays in the United States; there was no change in the number of workdays in the third quarter of 2026 compared to the third quarter of 2025.

Net sales were $7.2 billion for the third quarter of 2026 compared to $6.2 billion for the third quarter of 2025, an increase of 16.6%. Organic sales for the third quarter of 2026 grew by 16.6%. This growth reflects an approximate 14% increase in volume driven by all three segments (CSS, EES and UBS), and an approximate 3% benefit from price.

Cost of Goods Sold

Cost of goods sold for the third quarter of 2026 was $5.7 billion compared to $4.9 billion for the third quarter of 2025, an increase of 16.0%. The increase primarily reflects the increase in volume in all three segments primarily driven by large project activity, particularly in the data center business, as well as the OEM, construction and utility businesses. Cost of goods sold as a percentage of Net sales was 78.3% and 78.7% for the third quarter of 2026 and 2025, respectively. The favorable impact reflects improved gross margins in the EES and CSS segments, while the UBS segment remained flat.

Selling, General and Administrative Expenses

SG&A expenses for the third quarter of 2026 totaled $1,062.4 million versus $922.9 million for the third quarter of 2025, an increase of $139.5 million, or 15.1%.

The following table reconciles SG&A expenses to Adjusted SG&A expenses, which is a non-GAAP financial measure, for the periods presented:

(In millions)

(1) Digital transformation costs include costs associated with certain digital transformation initiatives.

(2) Restructuring costs include severance costs incurred pursuant to an ongoing restructuring plan.

SG&A payroll and payroll-related expenses for the third quarter of 2026 were $656.2 million, an increase of $85.8 million compared to the same period in 2025, which primarily reflects increases of $41.2 million in commissions and incentives, $24.7 million in salaries, $10.0 million in stock-based compensation expense, and $7.5 million in benefits. The higher commissions and incentives expense was aligned with the increase in Company performance.

SG&A expenses not related to payroll and payroll-related costs for the third quarter of 2026 were $406.2 million, an increase of $53.8 million compared to the same period in 2025, which primarily reflects increased transportation costs of $11.8 million, increased costs to operate our facilities of $11.0 million, increased professional and consulting fees of $9.3 million, and increased IT costs of $7.9 million. Additionally, digital transformation costs increased by $14.4 million year-over-year primarily due to increased costs associated with DDP deployment resources.

Income from Operations

Income from operations was $450.8 million for the third quarter of 2026 compared to $345.4 million for the third quarter of 2025, an increase of $105.4 million, or 30.5%. The increase reflects higher Net sales, lower Cost of goods sold as a percentage of Net sales, and lower SG&A expenses as a percentage of Net sales.

Interest Expense, net

Net interest expense totaled $93.6 million for the third quarter of 2026 compared to $99.0 million for the third quarter of 2025. The decrease of $5.4 million, or 5.5%, was primarily driven by the issuance of the 2031 and 2034 Notes at lower rates as compared to the 2028 Notes, as well as lower rates on our accounts receivable securitization facility (the “Receivables Facility”) and our revolving credit facility (the “Revolving Credit Facility”) throughout the third quarter of 2026 compared to the third quarter of 2025.

Other Expense, net

Other non-operating expense totaled $1.9 million for the third quarter of 2026 compared to no Other expense, net for the third quarter of 2025. We recognized a net foreign currency exchange loss of $3.9 million for the third quarter of 2026 compared to a net loss of $2.1 million for the third quarter of 2025. We also recognized a $2.0 million gain related to the partial settlement and remeasurement of the EECOL Canada pension plan in the third quarter of 2026. In the third quarter of 2025, we recognized $1.8 million of income from an adjustment to the fair value of the contingent consideration liability related to an acquisition.

The following table reconciles Other non-operating expense to Adjusted other non-operating expense, which is a non-GAAP financial measure, for the periods presented:

(In millions)

(1) Pension settlement gain represents income as a result of the partial settlement and remeasurement of the Company's EECOL Canada pension plan.

Income Taxes

The provision for income taxes was $86.8 million for the third quarter of 2026 compared to $57.8 million for the corresponding quarter of the prior year, resulting in effective tax rates of 24.4% and 23.5%, respectively. The higher effective tax rate for the third quarter of 2026 is largely driven by a higher annual effective tax rate resulting from higher non-deductible compensation expense as compared to the prior year period.

Net Income and Earnings per Share

Net income and Earnings per diluted share attributable to common stockholders were $267.8 million and $5.43, respectively, for the third quarter of 2026 compared to $187.5 million and $3.79, respectively, for the third quarter of 2025. Adjusted for the non-GAAP adjustments above and the related income tax effects, Net income and Earnings per diluted share attributable to common stockholders were $284.4 million and $5.77, respectively, for the three months ended September 30, 2026, and $193.9 million and $3.92, respectively, for the three months ended September 30, 2025.

The increase in Adjusted earnings per diluted share primarily reflects the increase in Net sales and lower Cost of goods sold as a percentage of Net sales, partially offset by higher Adjusted SG&A expenses.

Adjusted EBITDA

Adjusted EBITDA, a non-GAAP financial measure, was $561.5 million for the third quarter of 2026, compared to $423.0 million for the third quarter of 2025, an increase of $138.5 million, or 32.7% year-over-year. The increase primarily reflects higher Net sales and increased gross margin, partially offset by higher Adjusted SG&A expenses.

Segment Results

The following is a discussion of the financial results of our operating segments comprising three strategic business units consisting of EES, CSS and UBS for the three months ended September 30, 2026. As further described below and in Note 13, “Business Segments” of our Notes to the unaudited Condensed Consolidated Financial Statements, the Chief Operating Decision Maker (the “CODM”) allocates resources and evaluates the performance of the Company’s reportable segments based on Adjusted EBITDA, which is the Company’s measure of segment profit or loss. Adjusted EBITDA and Adjusted EBITDA margin percentage are non-GAAP financial measures.

Electrical & Electronic Solutions

(In millions)

EES reported Net sales of $2.8 billion for the third quarter of 2026 compared to $2.4 billion for the third quarter of 2025, an increase of $412.8 million, or 17.5%. EES organic sales for the third quarter of 2026 increased by 17.8%, reflecting volume growth of approximately 13%, driven primarily by the OEM and construction businesses, and by the impact of changes in price, which favorably impacted organic sales by approximately 5%.

EES Adjusted EBITDA increased $60.8 million, or 30.7% year-over-year. The increase primarily reflects an increase in volume, as described above, as well as gross margin expansion driven primarily by a $12.2 million increase in supplier volume rebates. Cost of goods sold increased $309.0 million primarily due to the increase in volume, which was partially offset by improved gross margin. SG&A payroll expenses increased $26.7 million as compared to the prior year, which was primarily attributed to increased salaries of $11.6 million and increased commissions and incentives of $11.4 million. Other segment items increased $16.1 million as compared to the prior year, reflecting increased transportation costs and other volume-related costs.

Communications & Security Solutions

(In millions)

CSS reported Net sales of $2.9 billion for the third quarter of 2026 compared to $2.4 billion for the third quarter of 2025, an increase of $522.6 million, or 21.7%. CSS organic sales for the third quarter of 2026 grew by 21.4%, primarily reflecting volume growth of approximately 20%, driven primarily by the data center solutions business, as well as the impact of changes in price, which favorably impacted organic sales by approximately 1%.

CSS Adjusted EBITDA increased $92.9 million, or 42.1% year-over-year. The increase primarily reflects an increase in volume, specifically within the data center solutions business as described above. Cost of goods sold increased $394.2 million primarily due to the increase in volume, which was partially offset by improved gross margin. SG&A payroll expenses increased by $19.5 million, which is primarily attributed to higher salaries of $9.1 million as well as higher commissions and incentives of $9.1 million. Other segment items increased by $16.3 million as compared to the prior year, which included increased volume-related costs, and to a lesser extent, bad debt expense.

Utility & Broadband Solutions

(In millions)

UBS reported Net sales of $1,520.5 million for the third quarter of 2026 compared to $1,428.6 million for the third quarter of 2025, an increase of $91.9 million, or 6.4%, reflecting volume growth of approximately 5% driven by the utility and broadband businesses, as well as the impact of changes in price, which favorably impacted organic sales by approximately 2%.

UBS Adjusted EBITDA increased $9.4 million, or 6.3% year-over-year. The increase primarily reflects an increase in volume, as described above. Cost of goods sold increased $75.7 million primarily due to the increase in volume, which was partially offset by lower gross margin. SG&A payroll expenses increased by $5.1 million as compared to the prior year, which was primarily attributed to higher salaries, commissions, and incentives.

The following tables reconcile Net income attributable to common stockholders to Adjusted EBITDA and Adjusted EBITDA margin % by segment, which are non-GAAP financial measures, for the periods presented:

(In millions)

30

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

(In millions)

Note: Adjusted EBITDA and Adjusted EBITDA margin % are non-GAAP financial measures that provide indicators of the Company's performance and its ability to meet debt service requirements. Adjusted EBITDA margin % is calculated by dividing Adjusted EBITDA by Net sales.

The following tables reconcile SG&A expenses, Income from operations, Other non-operating expense, Provision for income taxes, Net income attributable to common stockholders and Earnings per diluted share to Adjusted SG&A expenses, Adjusted income from operations, Adjusted other non-operating expense, Adjusted provision for income taxes, Adjusted net income attributable to common stockholders, and Adjusted earnings per diluted share, which are non-GAAP financial measures, for the periods presented:

(In millions)

(1) Digital transformation costs include costs associated with certain digital transformation initiatives.

(2) Restructuring costs include severance costs incurred pursuant to an ongoing restructuring plan.

(3) Pension settlement gain represents income as a result of the partial settlement and remeasurement of the Company's EECOL Canada pension plan.

(4) The adjustments to Income from operations and Other expense, net have been tax effected at rates of 27.1% and 26.7% for the three months ended September 30, 2026 and 2025, respectively.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

(In millions, except per share data)

Note: For the three months ended September 30, 2026, SG&A expenses, Income from operations, Other non-operating expense, Provision for income taxes, Net income attributable to common stockholders, and Earnings per diluted share have been adjusted to exclude Digital transformation costs, the gain recognized from the partial settlement of the EECOL Canada pension plan, and the related income tax effects. For the three months ended September 30, 2025, SG&A expenses, Income from operations, Provision for income taxes, Net income attributable to common stockholders, and Earnings per diluted share have been adjusted to exclude Digital transformation costs, Restructuring costs, and the related income tax effects. These non-GAAP financial measures provide a better understanding of our financial results on a comparable basis.

Nine Months Ended September 30, 2026 versus Nine Months Ended September 30, 2025

Net Sales

The following table sets forth Net sales and organic sales growth for the periods presented:

(In millions)

Note: Organic sales growth is a non-GAAP financial measure of sales performance. Organic sales growth is calculated by deducting the percentage impact from acquisitions and divestitures for one year following the respective transaction, fluctuations in foreign exchange rates and number of workdays from the reported percentage change in consolidated Net sales. Workday impact represents the change in the number of operating days period-over-period after adjusting for weekends and public holidays in the United States; there was no change in the number of workdays in the first nine months of 2026 compared to the first nine months of 2025.

Net sales were $20.0 billion for the first nine months of 2026 compared to $17.4 billion for the first nine months of 2025, an increase of 14.5%. Organic sales for the first nine months of 2026 grew by 13.9%. This growth reflects an approximate 11% increase in volume driven by all three segments (CSS, EES, and UBS), and an approximate 3% benefit from price.

Cost of Goods Sold

Cost of goods sold for the first nine months of 2026 was $15.7 billion compared to $13.8 billion for the first nine months of 2025, an increase of 13.8%. The increase primarily reflects the increase in volume in all three segments. Cost of goods sold as a percentage of Net sales was 78.4% and 78.9% for the first nine months of 2026 and 2025, respectively. The favorable impact reflects improved gross margin in the EES and CSS segments, partially offset by a decline in the UBS segment.

Selling, General and Administrative Expenses

SG&A expenses for the first nine months of 2026 totaled $3.0 billion versus $2.6 billion for the first nine months of 2025, an increase of $401.3 million, or 15.3%.

The following table reconciles SG&A expenses to Adjusted SG&A expenses, which is a non-GAAP financial measure, for the periods presented:

(In millions)

(1) Digital transformation costs include costs associated with certain digital transformation initiatives.

SG&A payroll and payroll-related expenses for the first nine months of 2026 were $1,869.3 million, an increase of $238.0 million compared to the same period in 2025, which primarily reflects increases of $96.9 million in commissions and incentives, $76.5 million in salaries, $32.5 million in benefits, and $26.6 million in stock-based compensation expense. The higher commissions and incentives expense was aligned with the increase in Company performance.

SG&A expenses not related to payroll and payroll-related costs for the first nine months of 2026 were $1,163.4 million, an increase of $163.3 million compared to the same period in 2025, which primarily reflects increased transportation costs of $35.8 million, increased professional and consulting fees of $35.3 million, increased costs to operate our facilities of $32.4 million, and increased IT costs of $28.6 million. Additionally, digital transformation costs increased by $41.4 million year-over-year primarily due to increased costs associated with DDP deployment resources.

Income from Operations

Income from operations was $1,126.5 million for the first nine months of 2026 compared to $908.5 million for the first nine months of 2025, an increase of $218.0 million, or 24.0%. The increase primarily reflects higher Net sales and lower Cost of goods sold as a percentage of Net sales.

Interest Expense, net

Net interest expense totaled $300.7 million for the first nine months of 2026 compared to $278.2 million for the first nine months of 2025. The increase of $22.5 million, or 8.1%, was primarily driven by higher net term debt throughout the first nine months of 2026 compared to the first nine months of 2025, as well as a $10.0 million non-cash loss on extinguishment of the 2028 Notes. These increases were partially offset by the issuance of the 2031 Notes and 2034 Notes at lower rates as compared to the 2028 Notes, as well as lower rates on our Receivables Facility and our Revolving Credit Facility throughout the first nine months of 2026 compared to the first nine months of 2025.

Other Expense (Income), net

Other non-operating expense totaled $1.3 million for the first nine months of 2026 compared to income of $7.0 million for the first nine months of 2025. We recognized a net foreign currency exchange loss of $7.8 million for the first nine months of 2026 compared to a net loss of $0.2 million for the first nine months of 2025. We also recognized net periodic pension benefits of $4.8 million and $2.5 million for the nine months ended September 30, 2026 and 2025, respectively, which included a $2.0 million gain related to the partial settlement and remeasurement of the EECOL Canada pension plan in the first nine months of 2026. In the first nine months of 2026 and 2025, we recognized $1.1 million and $4.2 million of income, respectively, from adjustments to the fair value of the contingent consideration liability related to an acquisition.

The following table reconciles Other non-operating expense (income) to Adjusted other non-operating expense (income), which is a non-GAAP financial measure, for the periods presented:

(In millions)

(1) Pension settlement gain represents income as a result of the partial settlement and remeasurement of the Company's EECOL Canada pension plan.

(2) Loss on termination of business arrangement represents the loss recognized as a result of management's decision to terminate a business arrangement with a third party.

Income Taxes

The provision for income taxes was $192.3 million for the first nine months of 2026 compared to $155.7 million in last year's comparable period, resulting in effective tax rates of 23.3% and 24.4%, respectively. The lower effective tax rate for the first nine months of 2026 is largely driven by higher discrete income tax benefits relating to the exercise and vesting of stock-based awards and return to provision adjustments primarily attributable to lower U.S. tax on foreign income, partially offset by higher non-deductible compensation expense in 2026 as compared to 2025.

Net Income and Earnings per Share

Net income and Earnings per diluted share attributable to common stockholders were $630.6 million and $12.77, respectively, for the first nine months of 2026 compared to $480.6 million and $9.71, respectively, for the first nine months of 2025. Adjusted for the non-GAAP adjustments above and the related income tax effects, and the $27.6 million gain recognized as a result of the Company's redemption of its outstanding Series A Preferred Stock, Net income and Earnings per diluted share attributable to common stockholders were $676.8 million and $13.70, respectively, for the first nine months of 2026 and $470.9 million and $9.51, respectively, for the first nine months of 2025.

The increase in Adjusted earnings per diluted share primarily reflects the increase in Net sales and lower Cost of goods sold as a percentage of Net sales, partially offset by higher Adjusted SG&A Expenses.

Adjusted EBITDA

Adjusted EBITDA, a non-GAAP financial measure, was $1,437.5 million for the first nine months of 2026 compared to $1,127.8 million for the first nine months of 2025, an increase of $309.7 million, or 27.5% year-over-year. The increase primarily reflects higher Net sales and increased gross margin, partially offset by higher Adjusted SG&A expenses.

Segment Results

The following is a discussion of the financial results of our operating segments comprising three strategic business units consisting of EES, CSS and UBS for the nine months ended September 30, 2026. As further described below and in Note 13, “Business Segments” of our Notes to the unaudited Condensed Consolidated Financial Statements, the CODM allocates resources and evaluates the performance of the Company’s reportable segments based on Adjusted EBITDA, which is the Company’s measure of segment profit or loss. Adjusted EBITDA and Adjusted EBITDA margin percentage are non-GAAP financial measures.

Electrical & Electronic Solutions

(In millions)

EES reported Net sales of $7.5 billion for the first nine months of 2026 compared to $6.7 billion for the first nine months of 2025, an increase of $844.6 million, or 12.6%. EES organic sales for the first nine months of 2026 grew by 12.1%, reflecting volume growth of approximately 7%, driven primarily by the construction and OEM businesses, and by the impact of changes in price, which favorably impacted organic sales by approximately 5%.

EES Adjusted EBITDA increased $151.6 million, or 28.9% year-over-year. The increase primarily reflects an increase in volume and price, as described above, as well as gross margin expansion driven primarily by a $29.0 million increase in supplier volume rebates. Cost of goods sold increased $584.4 million primarily due to the increase in volume, which was partially offset by improved gross margin. These increases were partially offset by an increase in SG&A payroll expenses, which increased $68.7 million as compared to the prior year, which was primarily attributed to increased salaries of $33.2 million, and increased commissions and incentives of $25.8 million. Other segment items increased $39.2 million as compared to the prior year, which was primarily attributed to increased volume-related costs such as transportation costs and operations expenses.

Communications & Security Solutions

(In millions)

CSS reported Net sales of $8.1 billion for the first nine months of 2026 compared to $6.7 billion for the first nine months of 2025, an increase of $1,417.2 million, or 21.2%. CSS organic sales for the first nine months of 2026 grew by 20.2%, primarily reflecting volume growth of approximately 19%, driven primarily by the data center solutions business, as well as the impact of changes in price, which favorably impacted organic sales by approximately 1%.

CSS Adjusted EBITDA increased $231.5 million, or 40.1% year-over-year. The increase primarily reflects an increase in volume, specifically within the data center solutions business as described above. Cost of goods sold increased $1.1 billion primarily due to the increase in volume, which was partially offset by improved gross margin. These increases were partially offset by an increase in SG&A payroll expenses of $55.8 million. The increase in SG&A payroll expenses is primarily attributed to increased salaries $27.2 million, increased commissions and incentives of $21.7 million, and increased benefits expense of $5.7 million. Other segment items increased by $50.7 million as compared to the prior year, which was primarily attributed to increased volume-related costs such as transportation expenses and operations expenses, as well as increased bad debt expenses.

Utility & Broadband Solutions

(In millions)

UBS reported Net sales of $4.4 billion for the first nine months of 2026 compared to $4.1 billion for the first nine months of 2025, an increase of $267.4 million, or 6.5%. UBS organic sales for the first nine months of 2026 grew by 6.5%, reflecting volume growth of approximately 4% driven by the broadband and utility businesses, as well as the impact of changes in price, which favorably impacted organic sales by approximately 3%.

UBS Adjusted EBITDA increased $5.0 million, or 1.2% year-over-year.

The following tables reconcile Net income attributable to common stockholders to Adjusted EBITDA and Adjusted EBITDA margin % by segment, which are non-GAAP financial measures, for the periods presented:

(In millions)

37

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

(In millions)

Note: Adjusted EBITDA and Adjusted EBITDA margin % are non-GAAP financial measures that provide indicators of the Company's performance and its ability to meet debt service requirements. Adjusted EBITDA margin % is calculated by dividing Adjusted EBITDA by Net sales.

The following tables reconcile SG&A expenses, Income from operations, Other non-operating expense (income), Provision for income taxes, Net income attributable to common stockholders and Earnings per diluted share to Adjusted SG&A expenses, Adjusted income from operations, Adjusted other non-operating expense (income), Adjusted provision for income taxes, Adjusted net income attributable to common stockholders, and Adjusted earnings per diluted share, which are non-GAAP financial measures, for the periods presented:

(In millions)

(1) Digital transformation costs include costs associated with certain digital transformation initiatives.

(2) Pension settlement gain represents income as a result of the partial settlement and remeasurement of the Company's EECOL Canada pension plan.

(3) Loss on termination of business arrangement represents the loss recognized as a result of management's decision to terminate a business arrangement with a third party.

(4) The adjustments to Income from operations and Other expense (income), net have been tax effected at rates of 27.2% and 26.4% for the nine months ended September 30, 2026 and 2025, respectively.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

(In millions, except per share data)

Note: For the nine months ended September 30, 2026, SG&A expenses, Income from operations, Other non-operating expense (income), Provision for income taxes, Net income attributable to common stockholders, and Earnings per diluted share have been adjusted to exclude Digital transformation costs, the gain recognized from the partial settlement of the EECOL Canada pension plan, and the related income tax effects. For the nine months ended September 30, 2025, SG&A expenses, Income from operations, Other non-operating expense (income), Provision for income taxes, Net income attributable to common stockholders, and Earnings per diluted share have been adjusted to exclude Digital transformation costs, Restructuring costs, the loss on termination of business arrangement, the related income tax effects, and the gain on redemption of the Company's Series A Preferred Stock. These non-GAAP financial measures provide a better understanding of our financial results on a comparable basis.

Liquidity and Capital Resources

Our liquidity needs generally arise from fluctuations in our working capital requirements, information technology investments, capital expenditures, acquisitions, the payment of dividends, and debt service obligations. We finance our operating and investing needs primarily with borrowings under our Revolving Credit Facility and Receivables Facility, as well as uncommitted lines of credit entered into by certain of our foreign subsidiaries to support local operations, some of which are overdraft facilities. The Revolving Credit Facility has a borrowing limit of $1,850 million and the purchase limit under the Receivables Facility is $1,750 million. Our international lines of credit generally are renewable on an annual basis and certain facilities are fully and unconditionally guaranteed by Wesco Distribution. Accordingly, certain borrowings under these lines directly reduce availability under our Revolving Credit Facility. The maximum borrowing limits of our international lines of credit vary by facility and range between $1.0 million and $12.0 million. As of September 30, 2026, we had $1.4 million outstanding under our international lines of credit.

As of September 30, 2026, we had $496.3 million outstanding and $1,312.1 million in available borrowing capacity on the Revolving Credit Facility after giving effect to outstanding letters of credit and certain borrowings under our international lines of credit. Additionally as of September 30, 2026, we had $1,430.0 million outstanding and $320.0 million of available borrowing capacity under our Receivables Facility, which combined with available cash of $433.1 million, provided liquidity of approximately $2.1 billion. Cash included in our determination of liquidity represents cash in certain deposit and interest-bearing investment accounts held in the United States and Canada. We monitor the depository institutions that hold our cash and cash equivalents on a regular basis, and we believe that we have placed our deposits with creditworthy financial institutions.

For information regarding amendments to the Receivables Facility and Revolving Credit Facility as well as disclosure of our debt instruments, including our outstanding indebtedness as of September 30, 2026, see Note 9, “Debt” of our Notes to the unaudited Condensed Consolidated Financial Statements.

On February 27, 2026, Wesco Distribution issued $650 million aggregate principal amount of 2031 Notes and $850 million aggregate principal amount of 2034 Notes. We used the net proceeds from the issuance of the 2031 and 2034 Notes to redeem all of our outstanding 2028 Notes on June 15, 2026. Prior to redeeming the 2028 Notes, we used the net proceeds to temporarily repay a portion of the outstanding borrowings under our Receivables Facility and Revolving Credit Facility. We subsequently redrew under the Receivables Facility and the Revolving Credit Facility in an aggregate amount sufficient to redeem the 2028 Notes.

We regularly review our mix of fixed versus variable rate debt. As of September 30, 2026, approximately 67% of our debt portfolio consisted of fixed rate debt. We may, from time to time, issue or retire borrowings and/or refinance existing debt in an effort to mitigate the impact of interest rate and foreign exchange rate fluctuations, and to maintain a cost-effective capital structure consistent with our anticipated capital requirements. Interest rates remained stable for the majority of the first nine months of 2026, with the Federal Reserve increasing its benchmark interest rate by 25 basis points at the end of the third quarter of 2026. Future interest rate changes could raise or lower the rates we pay on our variable rate debt and contribute to fluctuations in interest expense versus prior periods. We believe our capital structure has an appropriate mix of fixed versus variable rate debt and secured versus unsecured instruments.

Over the next several quarters, we expect that our excess liquidity will be directed primarily at debt reduction, the payment of dividends, share repurchases, digital transformation initiatives, and potential acquisitions and related integration activities. We expect to maintain sufficient liquidity through our credit facilities and cash balances. We continue to monitor the sufficiency of our liquidity given the potential impact of current economic conditions and uncertainty, including tariffs, interest rates, and inflation. While we did not face significant challenges with our sources or uses of cash in the first nine months of 2026, future market disruptions could occur which could potentially affect our liquidity. We believe cash provided by operations and financing activities will be adequate to cover our operational and business needs for at least the next twelve months.

We communicate on a regular basis with our lenders regarding our financial and working capital performance, and liquidity position. We were in compliance with all financial covenants and restrictions contained in our debt agreements as of September 30, 2026.

We also measure our ability to meet our debt obligations based on our financial leverage ratio, which was 2.8x as of September 30, 2026 and 3.4x as of December 31, 2025.

The following table sets forth our financial leverage ratio, which is a non-GAAP financial measure, for the periods presented:

(In millions, except ratios)

(1) Digital transformation costs include costs associated with certain digital transformation initiatives.

(2) Cloud computing arrangement amortization consists of expense recognized in SG&A expenses for capitalized implementation costs for cloud computing arrangements to support our digital transformation initiatives.

(3) Debt is presented in the unaudited Condensed Consolidated Balance Sheets net of Debt discount and debt issuance costs.

Note: Financial leverage ratio is a non-GAAP measure of the use of debt. Financial leverage ratio is calculated by dividing total debt, excluding debt issuance costs and debt discount, net of cash, by Adjusted EBITDA. EBITDA is defined as the trailing twelve months earnings before interest, taxes, depreciation and amortization.

Most of the undistributed earnings of our foreign subsidiaries have been taxed in the U.S. under either the one-time tax imposed on the deemed repatriation of undistributed foreign earnings (the “transition tax”), or the global intangible low-taxed income tax regime imposed by the Tax Cuts and Jobs Act of 2017 renamed, along with other changes, under the One Big Beautiful Bill Act signed into law on July 4, 2025, to net controlled foreign corporation tested income. The distribution of earnings, however, by our foreign subsidiaries in the form of dividends, or otherwise, may be subject to additional taxation. We believe that we are able to maintain sufficient liquidity for our domestic operations and commitments without repatriating cash from our foreign subsidiaries. Therefore, we continue to assert that the remaining undistributed earnings of our foreign subsidiaries are indefinitely reinvested.

An analysis of cash flow for the first nine months of 2026 and 2025 follows:

Operating Activities

Net cash provided by operating activities for the first nine months of 2026 totaled $469.0 million, compared to $53.1 million for the first nine months of 2025. The $415.9 million increase is driven by a $478.2 million impact from changes in accounts payable, primarily driven by increased inventory purchases, as well as the timing of inventory purchases and payments to suppliers as compared to the prior year. Other current and noncurrent liabilities additionally contributed to the increase, with a $397.7 million impact primarily driven by deferred revenue due to advance payments from customers and milestone billings. An increase in net income as adjusted for certain non-cash items also contributed to the increase in operating cash flows.

These favorable impacts were partially offset by a $299.9 million impact from changes in trade accounts receivable and a $261.6 million impact from changes in other current and noncurrent assets. The impact from trade accounts receivable was primarily due to sales growth in all three segments, as well as the timing of receipts from customers as compared to the prior year, and the impact from other current and noncurrent assets was primarily driven by increases in supplier prepayments related to arrangements requiring advance payments from customers and advance payments to suppliers. A $198.6 million impact from inventories also offset the increases, primarily due to an increase in volume related to growth in large projects as compared to the prior year.

Investing Activities

Net cash used in investing activities for the first nine months of 2026 was $203.8 million compared to $100.4 million in the first nine months of 2025. Included in the first nine months of 2026 was capital expenditures of $80.7 million compared to $55.4 million in the first nine months of 2025. Capital expenditures in the first nine months of 2026 and 2025 primarily comprised leasehold improvements and equipment to support our global network of locations, and internal-use computer software and information technology hardware to support our digital transformation initiatives. The first nine months of 2026 also included $127.7 million paid to acquire Newark, net of cash acquired, and the first nine months of 2025 included $36.3 million paid to acquire Industrial Software Solutions, net of cash acquired.

Financing Activities

Net cash used in financing activities for the first nine months of 2026 was $22.0 million, compared to $94.2 million during the first nine months of 2025. During the first nine months of 2026, financing activities primarily comprised the redemption of our $1,325 million aggregate principal amount of 2028 Notes, net repayments of $77.0 million related to our Revolving Credit Facility, payment of debt issuance costs of $22.7 million related to the issuance of the 2031 and 2034 Notes and amendments to the Revolving Credit Facility and Receivables Facility, proceeds of $650.0 million and $850.0 million related to the issuance of the 2031 and 2034 Notes, respectively, and net borrowings of $130.0 million related to our Receivables Facility. The first nine months of 2026 also included $75.0 million of common stock repurchases, $73.1 million of dividends paid to holders of our common stock, and $50.5 million of payments for taxes related to the exercise and vesting of stock-based awards.

During the first nine months of 2025, financing activities primarily comprised proceeds of $800.0 million related to the issuance of the 6.375% senior notes due 2033 (the “2033 Notes”), net repayments of $100.0 million related to our Revolving Credit Facility, net repayments of $25.0 million related to our Receivables Facility, and payment of total debt issuance costs of $14.0 million related to the issuance of the 2033 Notes and amendments to the Revolving Credit Facility and Receivables Facility. The first nine months of 2025 also included $540.3 million paid to redeem our Series A Preferred Stock, $75.0 million of common stock repurchases, $66.3 million and $27.3 million of dividends paid to holders of our common stock and Series A Preferred Stock, respectively, and $35.9 million of payments for taxes related to the exercise and vesting of stock-based awards.

Contractual Cash Obligations and Other Commercial Commitments

There were no material changes in our contractual obligations and other commercial commitments that would require an update to the disclosure provided in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Seasonality

Our operating results are not significantly affected by seasonal factors. Sales during the first and fourth quarters have historically been affected by a reduced level of activity and the impact of weather on projects. Sales typically increase throughout the first quarter, with slight fluctuations through the remainder of the year. During periods of economic expansion or contraction, our sales by quarter have varied significantly from this pattern.

Critical Accounting Estimates

There have been no significant changes to the critical accounting estimates disclosed in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2025.

Recent Accounting Standards

See Note 2, “Accounting Policies” of our Notes to the unaudited Condensed Consolidated Financial Statements for a description of recently issued accounting standards.

Forward-Looking Statements

All statements made herein that are not historical facts should be considered as “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. These statements include, but are not limited to, statements regarding business strategy, growth strategy, competitive strengths, productivity and profitability enhancement, competition, new product and service introductions, and liquidity and capital resources. Such statements can generally be identified by the use of words such as “anticipate,” “plan,” “believe,” “estimate,” “intend,” “expect,” “project,” and similar words, phrases or expressions or future or conditional verbs such as “could,” “may,” “should,” “will,” and “would,” although not all forward-looking statements contain such words. These forward-looking statements are based on current expectations and beliefs of Wesco's management, as well as assumptions made by, and information currently available to, Wesco's management, current market trends and market conditions and involve risks and uncertainties, many of which are outside of Wesco's and Wesco's management's control, and which may cause actual results to differ materially from those contained in forward-looking statements. Accordingly, you should not place undue reliance on such statements.

Important factors that could cause actual results or events to differ materially from those presented or implied in the forward-looking statements include, among others, the failure to achieve the anticipated benefits of, and other risks associated with, acquisitions, joint ventures, divestitures and other corporate transactions; the inability to successfully integrate acquired businesses; the impact of increased interest rates or borrowing costs; fluctuations in currency exchange rates; evolving impacts from tariffs or other trade tensions between the U.S. and other countries (including implementation of new tariffs and retaliatory measures); failure to adequately protect Wesco's intellectual property or successfully defend against infringement claims; the inability to successfully deploy new technologies, digital products and information systems or to otherwise adapt to emerging technologies in the marketplace, such as those incorporating artificial intelligence (AI); risks relating to our use or reliance on AI; failure to execute on our efforts and programs related to environmental, social and governance (ESG) matters; unanticipated expenditures or other adverse developments related to compliance with new or stricter government policies, laws or regulations, including those relating to data privacy, cybersecurity, competition, sustainability and environmental protection; the inability to successfully develop, manage or implement new technology initiatives or business strategies, including with respect to the expansion of e-commerce or AI capabilities and other digital solutions and digitalization initiatives; disruption of information technology systems or operations; natural disasters (including as a result of climate change), health epidemics, pandemics and other outbreaks; supply chain disruptions; geopolitical conflicts and issues, such as the ongoing Middle East and Russia/Ukraine conflicts; the impact of changing and expanding export controls, sanctions, and data localization rules; the failure to manage the increased risks and impacts of cyber incidents or data breaches; and exacerbation of key materials shortages, inflationary cost pressures, material cost increases, demand volatility, and logistics and capacity constraints, any of which may have a material adverse effect on the Company's business, results of operations and financial condition. All such factors are difficult to predict and are beyond the Company's control. Additional factors that could cause results to differ materially from those described above can be found in Wesco's most recent Annual Report on Form 10-K and other periodic reports filed with the U.S. Securities and Exchange Commission.

For a discussion of changes to the market risks that were previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, refer to Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and to Part II, Item 1A, “Risk Factors”.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)). Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures and internal control over financial reporting were effective as of the end of the period covered by this report.

There were no changes in the Company’s internal control over financial reporting that occurred during the quarterly period ended September 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

During the quarterly period ended September 30, 2026, the Company continued its multi-year, phased development and implementation of a new Digital and Data Platform (“DDP”). The DDP is 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 implementation, in certain cases, may affect the processes that constitute the Company’s internal control over financial reporting and will require testing for effectiveness.

The Company concluded, as part of its evaluation described in the above paragraphs, that the current quarter developments have not materially affected, or are reasonably likely to materially affect, its internal control over financial reporting and will continue to make such an assessment throughout the implementation period.

There have been no material changes to the risk factors previously disclosed in Part I, Item 1A of WESCO International, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025.