Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported July 30, 2026 · Beat 4 of last 7 quarters
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WESCO's record backlog and 60% YoY growth, driven by multiyear commitments from hyperscale data center customers, underscore the sustained demand for AI infrastructure. The company's expansion into grid services and cooling solutions (via Newark Engineering) highlights the increasing complexity and scope of AI data center builds, requiring end-to-end power and thermal management capabilities. This positions WESCO as a critical enabler of the AI infrastructure buildout.
WESCO delivered record sales, backlog, adjusted EBITDA, and adjusted EPS in Q2 2026. Sales grew 13% YoY to $6.7B, with broad-based growth across all three segments. Data center sales reached $1.5B, up ~45% YoY. Adjusted EBITDA margin expanded 60 bps to 7.3%, with CSS reaching a record 10.2% EBITDA margin, EES expanding 110 bps to 9.2%, and UBS returning to 10%. Backlog grew 60% YoY, driven by a significant multiyear grid services award from a hyperscale data center customer. The company also closed the acquisition of Newark Engineering on July 1, 2026, to enhance cooling solutions capabilities.
Management raised full-year 2026 guidance significantly: organic sales growth now 9-11% (up from 5-8%), reported sales growth 10-12% (~$26B at midpoint), adjusted EBITDA margin 6.9-7.1% (a >$100M EBITDA raise at midpoint), and adjusted EPS $16.00-$17.50 (up $0.75 at midpoint). They expect Q3 sales to grow low double-digits YoY with adjusted EBITDA margin slightly lower sequentially due to mix. They also raised CSS data center sales growth outlook to >30% YoY and expect continued momentum in grid services. Management expressed confidence in the durability of demand, citing record backlog and early innings of an industrial super cycle.
“We achieved record sales, record backlog, record adjusted EBITDA, and record adjusted earnings per share. All of which exceeded our plan.”
on Record results
“This impressive backlog growth was fueled by multiyear customer commitments demonstrating our transformation into a leading infrastructure solutions provider.”
on Backlog growth
“We are not a one-trick pony. We are benefiting from multiple secular growth trends and you are seeing that starting to contribute meaningfully to our results.”
on Diversified growth
What do you see as the drivers of the broad-based growth, and what is the sustainability and visibility of this growth rate?
John Engel highlighted the strength of the diversified portfolio, with non-data-center sales up mid-single-digits. He cited multiple secular trends including infrastructure buildout, power demand, reshoring, and an impending industrial super cycle. He pointed to record backlog growth across all three SBUs as evidence of visibility and confidence, which is reflected in the raised guidance.
Has the data center gross margin dynamic switched? Is price-cost turning positive? And what about the gross margin for the grid services award versus overall UBS gross margins?
John Engel explained that CSS gross margins are improving as they execute projects and add more products and services over time, becoming a one-stop shop. He attributed margin gains to a 'new leader effect' in CSS and EES. For UBS, he noted that grid services margins are accretive to UBS operating margins and that public power has stabilized and returned to growth.
Who is the buyer for grid services? Is there an integrator involved? And how was this type of grid-to-data-center connection purchased before you stood up this operation?
John Engel said the grid services award is direct with a large hyperscaler end-user, not through an integrator. He explained that the business was organically built over the last 5-6 years, previously serving utilities. This landmark win expands their customer base to data centers and is a long-cycle business that will ship over multiple years.