WESCO shared their Q3 2025 earnings on October 30, 2025, reporting strong top line performance, growing revenue to a record $6.2 billion driven by significant sales growth in data center product sales and strong organic growth across its business units. The company reported a 12% increase in organic sales year-over-year, with volume growth in each division

Wesco Q3 Report

• EES was up 12%, organically, driven by AI-driven data centers, electrification, automation, and reshoring
• CSS was up 18%, organically
• UBS was up 3%, driven by strength in investor-owned utility sales and data center, “our UBS business is getting pulled in and engaged on the front end because really the number one driver of what’s going to support data center growth is power.”
  • UBS sales are split about 60% investor-owned utilities, 10% direct to specialty utility contractors and 30% to public power companies.

Data Center Insights

• Growth driven by data centers, with overall data centers sales exceeded $1.2 billion in 3Q and $4 billion for the year.  Data center was a full 19% of WESCO’s total 3Q sales!  For Q3 data center sales grew 60%, following 65% growth in Q2 and 70% growth in Q1 2025.  Sales are split 80% “white” space and 20% “gray” space as shown below
  • For the electrical industry, electrical products fit into the gray space … only up to 20% of the spend!

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  Wesco Data Center Insights – Gray Space vs White Space

Key Wesco Data

• Price increases had a nominal effect, with the overall price benefit being about 3%, hence overall organic growth, excluding price, was 5%.
• Strong order activity with backlog growth up 7%; positive sales momentum continuing to start the fourth quarter with preliminary October sales per workday up about 9%.
• Overall gross margin contracted to 21.3% reflecting consistent “project and product mix dynamics”
• Wesco’s overall EBITDA was 6.8%, down 50 basis points y-o-y but up 10 bps sequentially
• Key secular growth trends driving the business are AI-driven data centers, increased power generation, electrification, automation and reshoring.

Wesco Key Earnings Call Take Aways

The following is a review of the earnings transcript, and presentation, with a focus on the EES division:

• EES sales were $2.36 billion, up from $2.258 billion in Q2 and up $250 million from 2024 Q3. They surpassed expectations and led to market share gains (in Wesco’s opinion), as this outperforms the national market.  EES’ EBITDA is 8.4%, excluding corporate allocation.
  • Construction was healthy and industrial was up mid-single digits (10% growth including data center) driven by improved day-to-day demand in the U.S. and increased project activity in Canada.  OEM was up mid-teens reflecting strong growth in the U.S. and Canada.
    • “Construction grew mid-teens, driven by strong wire and cable demand and continued infrastructure projects across the U.S. and Canada.” (And, as we know, wire / cable is lower margin as these types of large, sometimes super-large, projects. From a Wesco perspective, hopefully winning the wire business in Q2 is the 1^st phase of winning other, more profitable, elements of the project in later quarters, otherwise they are winning this but losing other future elements. Plus the increase in copper pricing helped drive growth.)
    • Backlog was flat, but “healthy, intact and strong”
  • Specific growth in big projects, infrastructure related including water, wastewater, hospitals, semiconductor, and public transit.
• EES represents 38% of Wesco in Q3 2025
• EES’ gross margin was 23.3%, up from 23% in Q2 but down from 24.3% in 2024 Q3. (Is the loss of 1 point mix, absorbing some price increases / timing of passing through price increases, customer dynamics or competitive pressures? With data center business up, and representing 19% of the overall business, this is project business and could be at lower margin.)
• CSS had sales of $2.411 billion, up 18% organically. Their Data Center Solutions group is based here and was up over 50%. Wesco Data Center Solutions (WDCS) growth was driven by large project activity with Hyperscale and multi-tenant data center (MTDC) customers (There may also be some data center business attributable to EES. And there may be some projects in the UBS segment for grid upgrades, transmission, transformers and generators.  Much depends upon the customer, the salesperson, the material purchased, and the phases of the project that Wesco is involved.)
• Backlog in CSS is up 18%, reflecting strength in data center.
• Regarding tariffs
  • Tariff impact on the utility market remains uncertain but they expect greater clarity soon
  • They are managing supplier price increases, as WESCO is the importer of record on less than 4% of cost of goods sold. (Direct sourcing)
  • Wesco says it passes through price increases, and there is a timing issue between price increase announcement and pass through
  • Supplier price increase notifications thru October are up over 60% versus all of Q4 2024, with an average increase in the mid-single digits.
  • Leverage scale to provide locally sourced products
  • They are reducing imports from high tariff countries
  • Overall, there was an estimated price benefit of about 3%
• Data Center details
  • EES business,” we deliver extensive power, electrical automation, and MRO solutions that support the build-out of high-performance, reliable, and scalable data centers. Some of our product offerings include electrical infrastructure such as medium voltage cables and cable trays alongside mechanical and cooling products like automated switches and sensors. Additionally, we supply MRO and safety products to help ensure safe, efficient, and reliable data center operations in the white space.”
  • “White space…through our CSS business, we deliver next generation infrastructure and services for always on connectivity. Our white space products include communications equipment, advanced IT infrastructure such as racks and enclosures, wireless technologies, access controls, and video surveillance equipment.”
  • “Beyond products, we offer extensive services and holistic solutions spanning the entire data center lifecycle from planning and design through installation and commissioning to ongoing operations through on-site services and decommissioning. We are there every step of the way”
    • Remember, the company acquired Ascent, a data center facilities provider last year. They also acquired entroCIM, which has software for the data center market. While these companies may not have been selling electrical / electronic equipment to data centers, the knowledge of the space and the access to contacts have presumably helped Wesco significantly. Other data center sales benefits include Wesco’s size and ability to financially handle large orders for suppliers and their access to the larger contractors.

Shareholder Concerns

Shareholders acknowledged strong top-line growth and guidance raises but expressed concern over profitability pressures, cash flow dynamics, and operational cost increases, such as higher SG&A expenses for digital transformation and restructuring as risks in the near term.

Wesco 2025 EOY Guidance

WESCO adjusted 2025 outlook to reflect increased business momentum, utility sales returning to growth, winning large projects (which increases margin).  The organic sales growth forecast for 2025 was raised to 8%–9%, up from the prior quarter view of the 5%–7% range.

Revenue guidance is in the range of $23.3 billion to $23.6 billion, exceeding the consensus estimate of around $23.0 billion, noting continued strong momentum driven by data center growth, electrification, and utility demand.

Take Aways

• Good performance with market share gains
• Wesco continues to benefit from its data center experience and relationships. The question becomes, is it going after the “shiny coin” or staying diversified on the end-user markets / different applications? Historically, a sales organization focuses on where it is having success, but markets can change quickly.  Other end user markets were strong.
• Wesco is not significantly impacted by changes in the residential market, so they are more “insulated” here vs a company like Rexel, which also has more smaller contractor customers.
• Little commentary on the industrial market, which historically has been a core revenue strength for Wesco (global / national accounts.)

So, as the data center / AI construction market goes, so goes Wesco at this time.