WESCO Intl Q3 2026 Earnings Call Transcript

WESCO Intl (NYSE:WCC) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.

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View the webcast at https://edge.media-server.com/mmc/p/z4va83d6/

Summary

WESCO Intl reported record third quarter results with double-digit increases in sales backlog, operating profit, and earnings per share, driven by strong customer demand across diversified markets.

The company has raised its full-year 2026 outlook due to strong execution and positive market momentum, expecting mid to high single-digit sales growth and continued margin expansion in 2027.

Organic sales increased by 17%, with notable growth in data center sales, up 55%, and non-data center sales, up 7%. Adjusted EBITDA rose 33%, with a margin expansion of 100 basis points.

Backlog reached new record levels in all three business units, driven by multi-year customer commitments and strong order activity in communications, security, electrical, utility, and power markets.

The digital transformation initiative is progressing well, with expectations of at least 100 basis points of EBITDA margin expansion as a result of the transformation, and AI applications are being effectively integrated.

WESCO Intl plans to host a Virtual Investor event on November 10th to discuss its leadership in data center solutions and its OneWesco strategy.

Full Transcript

OPERATOR

To ask a question, please press star followed by one on your telephone keypad. Please note that this event is being recorded. I will now hand the call over to Scott Gaffner, SVP, Investor Relations, to begin.

Scott Gaffner (Senior Vice President, Investor Relations)

Thank you and good morning everyone. Before we get started, I want to remind you that certain statements made on this call contain forward-looking information. Forward-looking statements are not guarantees of performance and by their nature are subject to uncertainties. Actual results may differ. Please see our webcast slides and the Company’s SEC filings for additional risk factors and disclosures. Any forward-looking information speaks only as of this date and the Company undertakes no obligation to update the information or reflect changed circumstances.

Additionally, today we will use certain non-GAAP financial measures. Information about these measures is available on our webcast slides and in our press release, both of which are posted on our website at wesco.com. On the call this morning we have John Engel, WESCO Intl’s Chairman, President and Chief Executive Officer, and Neil Deb, Executive Vice President and Chief Financial Officer. And with that I’ll turn the call over to John.

John Engel (Chairman, President and Chief Executive Officer)

Thank you very much Scott. Well, good morning everyone and thank you for joining our call today. We’re very pleased with our record third quarter results and we carry positive business momentum into the fourth quarter. Once again, sales backlog, operating profit and earnings per share all increased double digits versus the prior year and importantly they achieved records that exceeded our expectations. We are particularly pleased with our free cash flow generation during the quarter which was strong given the sales growth that we delivered.

The past five consecutive quarters of double digit sales growth demonstrate WESCO Intl’s higher growth profile which extends well beyond our important data center positioning. Customer demand is strong across the rest of our diversified portfolio and end markets with sales up high single digits excluding data centers. Our customers continue to invest in major capital and infrastructure projects and they’re increasingly relying on WESCO Intl to manage their needs.

And this is all happening while we add more services to our portfolio and demonstrate the continued effectiveness of our OneWesco cross selling strategy. Especially noteworthy, our backlog was up over 80% to a new record level for each of our three business units. The power of our customer value proposition, our global capabilities and our leading portfolio of product services and solutions is clear as we continue to outperform the market. Our backlog growth is being fueled by multi year customer commitments as our large customers recognize our unique capabilities across the communications, security, electrical, utility and power markets. As a result, we are again significantly raising our full year 2026 outlook, reflecting our continued confidence in our continued strong execution. Given the positive market momentum that we are seeing, I’m bullish that WESCO Intl will continue to outperform our markets and deliver superior value to our customers, suppliers and shareholders to close out 2026 and in 2027.

With regards to 2027, we will provide our full year outlook when we report our fourth quarter earnings in February of next year. With that said, we expect to continue to outperform our markets again next year with sales up mid to high single digits along with continued margin expansion. Before turning it over to Neil, I would like to highlight that we will be hosting a Virtual Investor event on Tuesday, November 10th from 10:00am to 11:30am Eastern Time where we’ll discuss our leadership position in the data center space and our differentiated solutions across the data center life cycle. WESCO Intl is uniquely positioned with our comprehensive product services and solutions offerings for data center white space, gray space and power infrastructure applications.

Our three business leaders will discuss our OneWesco strategy, our leading value proposition and our end to end capabilities for our data center customers during this upcoming Virtual Investor event. With that, I will now turn it over to Neil to take you through our third quarter results and our raised full year outlook in more detail. Neil

OPERATOR

We will now begin the question-and-answer session. If you would like to ask a question, please press star followed by one on your telephone keypad. Please limit your questions to one question and one follow‑up. Our first question today comes from David Manthy with Baird. Please go ahead.

David Manthy (Analyst at Baird)

Thank you. Good morning, everyone.

John Engel (Chairman, President and Chief Executive Officer)

Morning, Dave.

David Manthy (Analyst at Baird)

Everything looked really good. I’m sure you’ll get a lot of questions on data center, so I’ll go on a tangent here. To start off, could you give us an update on the digital transformation? And I believe you have 100 basis points of EBITDA margin benefit targeted. Is that expected to start to materialize in 2027? Is that a part of your mid, mid‑single digit, high‑single digit top‑line and margin expansion outlook in broad strokes you gave us, John, here on 2027?

John Engel (Chairman, President and Chief Executive Officer)

Yeah, Dave, thanks for that. Look, we’re making very good progress on our digital transformation, and we remain committed to the long-term vision we outlined in our last full investor day back in 2024. All three SBUs are running an initial build on the new digital platform in multiple locations. So that gives us a strong foundation as we continue to expand the capabilities, and over the past year we’ve continued to build out the functionality while deploying the platform across additional locations.

In the first half of this year we successfully deployed the platform in a much more complex operation, really an end-to-end business, and it’s been successfully converted to the new platform, which gives us even, you know, gives us the confidence it works. We’re on track and will realize material benefits of our digital transformation. So we’re on great progress. I will tell you, we’re not going to give you the composition of the ’27 outlook or guide yet. We’ll do that when we deliver the fourth quarter earnings release. I will say this though: the 100 basis points that we targeted as a result of digital transformation, it will be at least 100. I think as we’ve made progress on the deployment we see material opportunities and upside. So I’ll just say that without updating the number: let’s say it’s at least 100 basis points of EBITDA margin expansion.

And Dave, we’ll give that a little more color when we provide the full year outlook for ’27 in the Q4 earnings release.

David Manthy (Analyst at Baird)

That sounds good. And then as a follow-up, I think when people think data centers they sort of think AI data centers, and I know you have a broader business than that. Can you talk about, beyond that specific vertical, your exposure to general cloud providers, on-prem, et cetera, in terms of your capabilities?

John Engel (Chairman, President and Chief Executive Officer)

David, that’s an outstanding question. And look, this is a really important question, and I think that everyone’s getting painted with the AI, you know, hyperscaler data center brush. This is why we chose to do a deep dive on data centers in our virtual investor day week after next. So just to address your question directly, we have been in the data center business for decades, so our business is broad-based. Yes, we obviously serve the hyperscalers, and we have, again, a terrific—we think a leading—value proposition, global execution capability, and we serve end-user customers directly, not through intermediaries. And that includes the hyperscalers and includes MTDCs, it includes the emerging AI players, but very importantly includes all the enterprise-class customers—of which that’s where our deep roots are in data centers.

We’ve been serving them for decades not just in the U.S. and North America but around the world. Our data center demand remains strong and very broad-based, and what I see happening for data centers—and we’ll double-click this and go in much more detail in our deep dive—enterprise AI investment is expanding well beyond the hyperscalers, with the large enterprise customers building out hybrid and private AI infrastructure and deploying AI closer to the edge.

So that sets up exceptionally well for WESCO Intl given our history, our leading capabilities in terms of the value prop across white space, gray space, and power and infrastructure, and our global execution model. And for us specifically, our bookings and sales accelerated in the third quarter, and the backlog growth is exceptional, far surpassing the sales growth. And it’s important to note that, as we had expected—and we said this would happen as we move through the cycle—the data center business is now margin accretive.

So it’s a great question. We’ll bring this to life in much more detail again week after next. Thanks, Dave.

David Manthy (Analyst at Baird)

We’ll look forward to it. Thanks, John.

OPERATOR

The next question comes from Sam Darkash with Raymond James. Please go ahead.

Sam Darkash (Analyst at Raymond James)

Good morning, John. Good morning, Neil. How are you?

John Engel (Chairman, President and Chief Executive Officer)

Good morning, Sam.

Sam Darkash (Analyst at Raymond James)

Yeah, we’ll repeat what Dave said. It was a hell of a quarter. Obviously my first question, as it relates to the implied fourth quarter guide, it seems as though the margins—there’s probably some conservatism, I think, in your margins. I’m just trying to understand: the decremental margins sequentially are like 20 to 30% or so, if my math holds, and the incremental margins year on year are only around 10% or so. Is there something structural keeping the margins lighter than a normal flow-through, or is that just normal conservatism?

Neil Deb (Executive Vice President and Chief Financial Officer)

So, Sam, I think just to put the outlook in context, right, we’re guiding to solid fourth-quarter growth year over year. But if you think about fourth quarter, you have the December dynamic—potentially weather, there’s holidays, et cetera—and so we’re factoring that in. But having said that, very solid growth. So if you think about it sequentially, you’ve got one less business day, and so there is a slight step down in revenue, and so operating leverage goes slightly different direction.

And then we’re also continually investing in the business as we look forward to next year. We’ve got longer-term customer commitments, long-cycle project builds. So, all in all we factored all of that in, and so it really is the leverage in the business that’s driving that.

Sam Darkash (Analyst at Raymond James)

Got it. My—

John Engel (Chairman, President and Chief Executive Officer)

Nothing structural. Yeah, nothing structural, Sam. Or anything to highlight.

Sam Darkash (Analyst at Raymond James)

Gotcha. And then my follow-up—sort of kind of similar—with this kind of growth that’s likely to be sustained at least for a fairly extended period of time, John, how do you view your labor and your physical footprint capacity right now, especially knowing that the digital transformation is still in its early stages?

John Engel (Chairman, President and Chief Executive Officer)

Yeah, great question, Sam. We haven’t talked much about that, but we’ve been continuously managing that since Anixter and WESCO Intl came together six years ago in the beginning of the pandemic. So we’ve been going through a continuous process where we’ve been optimizing that. Again, we haven’t really put a spotlight on that externally for all the investors, but we’ve been continuously combining facilities where it makes sense. Our new facilities that we added to our footprint are materially larger, and they also have a kind of a different scope and expanded mix that supports more of our value-added services.

We had a press release recently on a very large facility down in Texas that’s new, that we stood up and expanded, and that includes level 10, level 11, and level 12 data center testing capability for the, you know, for the full-up server racks. We’ll double-click on that in much more detail in our investor day week after next. So we’ve been investing, Sam, since we put Anixter and WESCO Intl together while pruning and optimizing the footprint, and so I feel very good about what we have right now.

Look, we’ve kicked into a much higher gear in terms of growth. I’ve said for a number of years now that this portfolio mix shifted to a higher growth profile. We’re really seeing it kick in now. As strong as data centers are—and look, they’re terrific; we’re exceptionally well positioned with a leading set of capabilities and we’re taking advantage of that—it’s terrific. I’m especially pleased with the growth across the balance of the portfolio being high single digits.

It stepped up from Q2 to Q3, and that just shows the breadth and depth of the portfolio. And, Sam, we’re leveraging really the optimization moves we’ve made on our footprint over the last several years. So I think we’re exceptionally well positioned to continue to see the operating cost leverage—that gearing, I’ll say—as we drive to these higher sales growth numbers. Thank you much.

OPERATOR

The next question comes from Tommy Mall with Stevens. Please go ahead.

Tommy Mall (Analyst at Stevens)

Morning, and thank you for taking my questions.

John Engel (Chairman, President and Chief Executive Officer)

Morning, Tommy.

Tommy Mall (Analyst at Stevens)

John, I want to push a little bit on the comment you made regarding 2027 sales. If we just look at the acceleration in the non–data center business, which you’ve highlighted a couple times, was a 7 in the most recent quarter. Presumably you’re dialing in something similar in Q4, so you’re exiting very strong into next year. And then I don’t know what you assume for data center, but something accretive to that. I mean almost any way you cut it, you’re going to get to a solid high singles kind of outlook.

So is there some kind of conservatism in your comment, or something I’ve overlooked here?

John Engel (Chairman, President and Chief Executive Officer)

Tommy, I’ll stand with my comments because we’re not providing the outlook yet, but I think it’s been our history that with the Q3 results we at least try to give you a sense of how we’re beginning to think about it. And just—we do have very strong positive momentum. We carried it into the fourth quarter. We expect that will continue through the quarter, and we’ll exit with that very strong momentum entering next year. And then we’ll give our full outlook when we do our Q4 results.

Tommy Mall (Analyst at Stevens)

Fair enough. And I also wanted to ask on the digital investment today versus when you kicked off that initiative—there’s a lot more opportunity to deploy AI now across the enterprise. So I’m just curious, have you needed to update your planning on how you execute this big investment cycle, or what can you tell us there?

John Engel (Chairman, President and Chief Executive Officer)

Yeah. So you know, one of my quotes is timing is everything in life and business. And so when you think about when we started down our digital transformation journey, that strategy was clearly articulated back in an Investor Day in 2019. Some of you will recall that, and that’s captured in the history books. And so we said very strongly that we wanted to invest and be the leader in digitally transforming the B2B distribution value chain and do it by leading that transformation of our company.

And we said we would have to acquire a big or bigs and get the synergies to pay for that, but then take a piece of those synergies and reinvest it in the business. And that’s the playbook we’ve been running over the last five to six years. We absolutely picked the right architecture. It’s a new tech stack wrapped around one world-class data lake that we’ve been hydrating all our data in. And we’ve made substantial progress on leveraging AI. We focused inside our four walls, quite frankly, as we’re learning and developing and expanding our AI applications.

It started as standard AI applications several years ago. We moved to generative AI. Now we have a combination of generative and true agentic AI applications running inside our environment with our new tech stack and against our big data set that’s in our data lake. The data lake really is the core. I’ve said many times, the greatest asset we have that’s not on the balance sheet is our big data. That’s our data on all our transactions. And remember we’re the market leader, so it’s that plus uniquely customer data, supplier data, and then we use other external data sources as well. So we’ll talk much more about this as we move into next year. But I’m really pleased with the value we’re already getting out of AI in terms of enhanced analytics, driving some productivity.

It’s starting to support the operating cost leverage. We didn’t spike out the contribution, but it’s clearly a contributor. Which tags on to Sam’s comment. And look, this is why we did this. But we’re in the early days of starting to realize these benefits. And by the way, bottom line too, we don’t have to wait for the digital new tech stack to be quote unquote deployed to every location around the globe. We’re getting these benefits of AI implementation, both generative and agentic AI along the way. So I’m more bullish than ever in terms of the operating levers, the productivity. It’ll actually help accelerate our sales growth as well, with some unique insights we’re gaining across our big data set.

And so with 2010 hindsight, we absolutely had the right strategy. And I’m really happy that we launched this years ago as opposed to just trying to get started now. And again, maybe my final point is the quality and fidelity of the AI implementation and the ability to get the benefits is directly proportional to the quality and fidelity of your big data. And again, it’s the greatest asset we have that’s not on the balance sheet. So thanks for that question.

Sam Darkash (Analyst at Raymond James)

Thank you, John. I’ll turn it back.

OPERATOR

The next question comes from Christopher Glynn with Oppenheimer. Please go ahead.

Christopher Glynn (Analyst at Oppenheimer)

Thanks. Good morning, John, and congrats on the quarter here. So interesting, the comment that data center sales now accretive to enterprise margins. It’s great to hear. We’ve been seeing them deliver great incrementals for a while now. But particularly interesting to hear that comment in a context where CSS is reporting 1% growth and ESS is reporting 5%. So just curious about the pricing differential there, what you could say about that and if that’s a pricing opportunity to come.

John Engel (Chairman, President and Chief Executive Officer)

Yeah, so great question, Chris. Here’s what I’d focus you on. If you go back several years ago when we started seeing the acceleration in data centers, you’ll recall that we had a few quarters in CSS where the margins weren’t moving. They were kind of flattish, maybe a little bit of pressure. I was very clear that given where we fit in the construction cycle, the data center life cycle, and where we sit in terms of the value chain, that this was the front end of that business.

And as we secured these bigger construction projects that as we progress through and manage them, there’d be additional products that we would pull through and we would increasingly add services. So that’s what you’re seeing. Like for like, the products, there’s not tremendous inflation for what we do. Again, we’re not doing, you know, Nvidia chips and the core compute solution that does not go through distribution to the end customer. We’re doing everything else wrapped around it. We’ll deep dive this the week after next. But the way you should look at it is it’s not that price is going to be a huge lever to gross margin expansion.

It’s our conscious strategy of adding additional products once we’re in at the beginning, through the life cycle of the build, and increasing the services content while the project’s being built and post deployment of the project, which again we’ve done a series of acquisitions that give us additional capabilities to manage day two through day N of the data center, not just up to day one. So this is really an important point I would really focus you on. The gross margin improvement is because of our services content increasing over time and we’re continuing to drive and accelerate that. And the operating cost leverage is inherent because we’re getting this exceptional growth and we’re getting great leverage off our operational footprint. Which tags back to what I mentioned in response to Sam’s question. The one-two punch we’re seeing in CSS is really remarkable.

And to get CSS above the 10% EBITDA margin two quarters in a row, this quarter in particular represents really terrific momentum.

Christopher Glynn (Analyst at Oppenheimer)

Sounds good. And I’ve also got a question on the UBS margins. Just given the peculiar dynamics of the trough that that’s moving off of and the PPU recovery, you’ve had two or three quarters sequential margin expansion, is that kind of just a natural course of the next few quarters where that trend of sequential expansion prevails as a function of the PPU headwinds dissipating?

John Engel (Chairman, President and Chief Executive Officer)

Yeah, so I’ll address that question, but expand it a little bit in terms of the different dynamics occurring there. But remember, UBS had been an 11% EBITDA business. So you know, we think we have a terrific set of capabilities, unique leading market position, value proposition. And you know, we are in a very interesting period because we’re seeing very good accelerating momentum. First of all, the backlog being up over 90%, I’ll come back to that as just a terrific indicator.

But fundamentally we’ve got improving sequential momentum. IOUs grew double digits in the third quarter, that’s the fourth quarter in a row of double-digit growth for IOUs. And Public Power grew in the third quarter. Okay. And that is the second quarter in a row that Public Power grew. Core margins have stabilized. Bridge Services is up double digits the last four quarters in a row. We told you that would grow double digits this year. And fundamentally this recipe has an improved EBITDA margins profile as we move forward.

And we’ve improved EBITDA margins successively over the last three to four quarters on a sequential basis. And Grid Services will increasingly contribute as we move through time. So I remain very bullish on utility and the required power chain investments that are going to have to be made across to support not just AI-driven data centers, but all the other mega projects and the infrastructure buildout. And look, I’ve mentioned before and I have a very strong belief that utilities become a secular growth industry. And when I say utilities a secular growth industry, I will include the IPPs, the independent power producers, where I mean basically the way I look at this is all things power is what we’re focused on due to the increasing energy demand and that bodes exceptionally well for us.

Christopher Glynn (Analyst at Oppenheimer)

Great color.

OPERATOR

The next question comes from Ken Newman with Keybanc Capital Markets. Please go ahead.

Ken Newman (Analyst at KeyBanc Capital Markets)

Hey, good morning guys. Thanks for taking the question. Congrats on the solid quarter. Maybe first, John, I appreciate the color on the support for mid to high single-digit sales growth for next year. I’m assuming that comment is primarily just being driven by what’s currently in the backlog today. So I guess first is that a fair assessment? And then secondly, is there a way to help us think about the stock and flow side of the business and how that performed this quarter relative to the backlog side?

John Engel (Chairman, President and Chief Executive Officer)

Again, I think what we’ve done with that commentary, Ken, is just consistent with the last couple years. And so I think you should put it into that context. And in terms of what really is the drivers and the composition, we’ll give that in great detail when we release our fourth quarter earnings results. And as we always do, we’re in the middle of the fourth quarter now. We do have positive momentum and that commentary was meant to reflect that we entered the quarter with great momentum.

We expect to exit the quarter with strong positive momentum and it’s more of a momentum comment as we move into next year. So that’s how you should take it. But in terms of the detailed guide, we’ll provide that again once 2026 is in the record books.

Ken Newman (Analyst at KeyBanc Capital Markets)

Okay. And then anything to comment on stock and flow versus project oriented.

John Engel (Chairman, President and Chief Executive Officer)

We’ve been getting a pickup actually mix-wise in stock and flow and it’s most notable in our EES business, which I made that comment last two quarters that has continued and it’s part of the broader commentary around EES just posted a record quarter, another record quarter. There’s accelerating business momentum, construction is accelerating, industrial is improving. OEM has further acceleration as represented by our Q3 results. And you know, I think we’re at the beginning of an industrial super cycle.

I made those comments before. So the best is yet to come on industrial. I’ll just tell you it’s great to see EES kicking into gear and one of the attributes of that is we’re getting this very strong growth in stock and flow.

Ken Newman (Analyst at KeyBanc Capital Markets)

That’s helpful. And then for the follow-up, I guess, it seems like you aren’t seeing or expecting any impact from the moratorium headlines from earlier this quarter and that seems like it jibes with what most of your suppliers and competitors have been seeing in project activity year to date. I guess when you think about where you play primarily in the timing of new data center construction, is there a higher-level way to think about the inherent lag of the new orders that you’re winning today for new greenfields and when they ultimately flow through the P&L? Just maybe asked another way, how much of the increase in the CSS backlog is for new data center projects that likely won’t be, you know, you won’t play for until like ’28 versus ’27?

John Engel (Chairman, President and Chief Executive Officer)

No, it’s a good point, and we’ve given that view before over the last few years, and this is something we’ll highlight in more detail week after next in our data center deep dive. But when you see the headline numbers from a hyperscaler, an MTDC, in terms of increased capex and where we play in the value chain, there is a meaningful time delay or time lag. Right? It’s just the nature of the beast. So you’ll see these reported headlines on capex increases.

The first thing that has to be done is the overall power solution, and then as the construction build cycle progresses, it’s gray space moving to white space. So you know, what we’re benefiting from now is projects that are spending that were announced quite some time ago on behalf of our end user customers. And it’s a really important point that you’ve called out and that we’ve cited before. And so again, when you look at our momentum vector, look at the backlog growth in CSS at 140% and look at the sales growth. Look at the backlog growth in EES at the 40% level, and then look at the sales growth. And look at the backlog growth in UBS at 90% and look at the sales growth.

So I think that answers your question at the high level in terms of the dynamics of brand-new projects being loaded in backlog and the time phasing. We’ll give a little more insight on that week after next because, again, I think as we peel the onion on our data center business, you’ll all appreciate to a much better degree — which is why we chose to do it — the depth and breadth of our data center positioning, our leading value prop, our global execution model, and that we are across all types of data center applications and now have capabilities across the whole life cycle. That’s the really important point.

It’s not just the build, but it includes day two through day end of running the data center.

Ken Newman (Analyst at KeyBanc Capital Markets)

Appreciate the color. Thanks.

OPERATOR

The next question comes from Guy Hardwick with Barclays. Please go ahead.

Guy Hardwick (Analyst at Barclays)

Actually, Ken asked most of what I was going to ask, but maybe I’ll ask the question a different way. John, is it possible to kind of parse the backlog as to how much is delivered next year? How much is in 2028 and beyond?

John Engel (Chairman, President and Chief Executive Officer)

Yeah, Guy, we haven’t done that historically, so I won’t do that in Q&A. But we’ll take that input and see if we can provide some further insight as we move forward. I will just tell you that in general, what’s in backlog includes a broad mix of demand that can be tomorrow, next week, next month, next quarter, and typically it’s not five years out or four years out. But it can be a year to two years out for some very specific long-cycle products that are part of projects.

So that’s kind of the nature of the beast of our backlog for wholesale distribution.

Guy Hardwick (Analyst at Barclays)

Just as my follow-up, what percentage of UBS now is Grid Solutions given it’s grown? I think you said one point is 10%. Seems it’s higher than that now.

John Engel (Chairman, President and Chief Executive Officer)

So we were a 300-plus million dollar business last year, and when we gave our outlook and guidance, our original one for 2026, we said it would grow double digits. This year it’s grown double digits all three quarters. We expect it to grow double digits in the fourth quarter as well. We’ll update those mixes when we complete the, you know, when we close out 2026. So we’ll give you a sense of that then because it’s growing at a higher rate than UBS overall, clearly.

So it’s mix shifting up.

Guy Hardwick (Analyst at Barclays)

Thank you, I’ll pass it on.

OPERATOR

The next question comes from Chris Stancourt with DA Davidson. Please go ahead.

Chris Stancourt (Analyst at DA Davidson)

Good morning. Thanks for taking the question. I guess I did kind of want to hold on Grid Services for just a minute, John. I want to make sure I’m understanding your earlier comments when it comes to the profitability there. Is that accretive to UBS today? Is there opportunity to expand that to be even higher than the segment average, kind of similar to what we’ve seen in Data Center? Just some comments on the profitability of Grid Services would be great.

John Engel (Chairman, President and Chief Executive Officer)

It’s accretive to WESCO Intl for sure and will obviously help UBS. I mean, we’ve kind of given a profile of that business as we move through the year. I’ll just remind everyone that we first called it out at our last full Investor Day in 2024. Jim Cameron, who leads UBS, called it out during that Investor Day as part of Q&A, and when we announced our fourth quarter results for 2025, we did profile that business because it was an important part of our plan for 2026 because we had planned double-digit growth this year.

Now here we are, three quarters in the record books — it’s driving double-digit growth. And then last quarter we called out a very large win that’s multi-year in nature that kicks in — ostensibly kicks in 2027 — and starts to contribute meaningfully in 1H27. And the margin characteristics, because of the value proposition we’re delivering and we’re managing a global supply chain with some very challenging requirements, they’re attractive margins and it is margin accretive.

I thought I’d just give a little more color on what the drivers are there.

Chris Stancourt (Analyst at DA Davidson)

Yeah, no, thank you very much for the reminder and the color there. And I guess to zoom out a little bit, can you remind us — and forgive me if I missed it somewhere in the deck — but as far as the price-cost impact, are we kind of hovering at neutral right now? Is the same kind of price-cost neutrality expected in the fourth quarter in the guide there? Give us an update on price-cost.

John Engel (Chairman, President and Chief Executive Officer)

Yeah, Chris, you’re right. That’s usually our objective, so we’re generally neutral. And if you look at pricing, it’s not a factor in our CSS business like Jan touched on before. It’s really primarily in our EES business, and we manage that very closely and try to maintain margins.

Chris Stancourt (Analyst at DA Davidson)

Got it. Thanks so much. I’ll pass it back.

OPERATOR

This concludes our question and answer session. I’ll now turn the conference back over to John Engel for any closing remarks.

John Engel (Chairman, President and Chief Executive Officer)

So I think we addressed all your questions today. It’s great that we were able to get through all of them. Thanks for joining us. I’ll bring the call to a close. Thank you all for your support. It’s very much appreciated. And I’m going to remind you again that we’ll be hosting a Virtual Investor Event on Tuesday, November 10th from 10:00 am to 11:30 am Eastern Time, and I hope you’ll be able to make it. I know we’ve got a number of follow-up calls lined up with Scott and team, so we look forward to engaging with you in the coming days.

And finally, we expect to announce our fourth quarter earnings on Tuesday, February 9, 2027. Thanks again for your support. Have a great day.

OPERATOR

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

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