WESCO INTERNATIONAL (WCC)·Q4 2025 Earnings Summary
WESCO Delivers Record Sales But Misses EPS as Data Center Boom Continues
February 10, 2026 · by Fintool AI Agent
WESCO International (WCC) reported Q4 2025 results today with record annual sales of $23.5 billion but disappointed on profitability. While revenue beat consensus by 0.6%, adjusted EPS of $3.40 missed the Street's $3.89 estimate by 12.6%. The stock fell approximately 5.5% in after-hours trading as investors weighed strong top-line momentum against margin compression and a significant free cash flow shortfall.
The quarter capped a transformative year for WESCO, with organic sales growth accelerating each quarter—from 6% in Q1 to 9% in Q4. Data center sales surged over 50% for the full year, reaching approximately $4.3 billion and cementing WESCO's position as a critical infrastructure supplier in the AI buildout.
Did WESCO Beat Earnings?
WESCO delivered mixed results against consensus expectations:
The EPS miss reflects continued margin pressure from project and product mix, particularly in the Communications & Security Solutions (CSS) segment where large data center projects carry lower gross margins but higher asset velocity.
Full-year 2025 adjusted EPS of $12.91 came in below the company's prior guidance range of $13.10-$13.60, primarily due to weaker-than-expected Q4 profitability.
Ask Fintool AI AgentWhat Did Management Guide for 2026?
WESCO initiated 2026 guidance with expectations for continued growth acceleration:
The guidance midpoint implies approximately 20% EPS growth, driven by operating leverage and margin improvement as the company laps elevated working capital investments. Management noted January sales per workday were up approximately 15%, signaling strong momentum entering 2026.
How Did the Stock React?
WCC shares fell approximately 5.5% in after-hours trading following the release:
The negative reaction likely reflects:
- EPS miss magnitude — 12.6% shortfall versus consensus
- FY2025 free cash flow disappointment — Only $54 million versus $400-$500M guidance
- Margin concerns — EBITDA margin compression despite strong sales growth
However, the strong 2026 outlook and record backlog (+19% YoY) may provide support as investors digest the results.
What Changed From Last Quarter?
Several key trends evolved from Q3 2025:
Improvements:
- UBS returned to consecutive growth — Second straight quarter of positive organic sales (+3.1%), driven by investor-owned utilities
- Backlog hit all-time record — Up 19% YoY with CSS backlog surging ~40%
- EES maintained momentum — Organic sales +8.8%, construction up mid-teens on infrastructure projects
Concerns:
- Free cash flow collapse — FY2025 FCF of just $54 million vs. $400-$500M guidance
- Working capital investment — Net working capital increased to 20.1% of sales as inventory and receivables grew to support accelerating demand
- Public power still soft — Continued destocking impacts margin, though recovery expected in 2026
Segment Performance: Data Center Engine Keeps Firing
Communications & Security Solutions (CSS) — 39% of Sales
CSS remained the growth engine with 16.2% reported sales growth and 13.5% organic growth. Data center sales drove the outperformance, with hyperscale and multi-tenant customers continuing to expand capacity for AI workloads.
For 2026, CSS is expected to deliver high-single-digit-plus growth, with data center solutions continuing to lead.
Electrical & Electronic Solutions (EES) — 38% of Sales
EES delivered 9.1% reported and 8.8% organic growth, benefiting from construction activity (data centers, infrastructure) and OEM strength.
EES is expected to grow mid-single-digits in 2026 with contributions from construction, industrial, and OEM.
Utility & Broadband Solutions (UBS) — 23% of Sales
UBS returned to growth for the second consecutive quarter (+3.1% organic), driven by investor-owned utilities while public power remained challenged.
Margin compression reflects competitive pressure in public power markets. For 2026, UBS is expected to grow low-to-mid-single digits as utility demand recovers.
Ask Fintool AI AgentThe Data Center Story: Why It Matters
WESCO's data center business hit approximately $4.3 billion in FY2025, representing 18% of total company sales and growing over 50% year-over-year. This positions WESCO as a critical infrastructure supplier for the AI buildout, spanning both:
- White space (~80% of data center sales via CSS): IT infrastructure, racks, cabling, security systems
- Gray space (~20% via EES): Power distribution, electrical infrastructure, cooling systems
The company provides "holistic power-to-compute solutions" across the data center lifecycle, from power delivery through to rack and equipment installation.
Record backlog (+19% YoY overall, +40% in CSS) provides visibility into continued growth, though investors should monitor margin trajectory as large hyperscale projects can pressure gross margins.
Free Cash Flow: The Elephant in the Room
FY2025 free cash flow of just $54 million was the quarter's biggest disappointment, missing the $400-$500 million guidance by a wide margin.
The shortfall reflects heavy investment in working capital to support rapid sales growth:
Management guided to $500-$800 million free cash flow for 2026, implying a significant recovery as working capital intensity normalizes with more stable growth rates.
Key Risks and Watch Items
- Margin sustainability — Data center project mix continues to pressure gross margins; company targeting 20-30 bps annual EBITDA margin improvement
- Working capital efficiency — FCF conversion must improve from FY2025's ~8% of adjusted net income
- Public power recovery — UBS margins depend on destocking ending in 2026
- Leverage — Financial leverage ratio increased to 3.4x from 2.9x YoY due to debt-funded growth
The Bottom Line
WESCO delivered record sales growth but disappointed on profitability, reflecting the trade-off between capturing data center demand and preserving margins. The 12.6% EPS miss and free cash flow shortfall drove after-hours weakness, but the strong 2026 outlook (+20% EPS growth at midpoint) and record backlog suggest the fundamental growth story remains intact.
Investors should watch for:
- Q1 2026 margin trajectory as management targets sequential improvement
- Free cash flow conversion improvement toward the $500-$800M guidance
- Data center order momentum as AI infrastructure spending continues
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