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Record first-quarter sales of $6.1 billion were driven by a 70% year-over-year surge in data center demand, which now represents 24% of total company revenue.

Organic sales growth outpaced normal seasonality, reflecting broad-based strength across CSS and EES segments and improving trends in UBS.

Backlog reached a record level, up 22% versus the prior year, providing high visibility into secular growth trends and the effectiveness of cross-selling initiatives.

Adjusted EBITDA margin expanded 60 basis points to 6.4% due to gross margin expansion and strong operating leverage on double-digit sales growth.

While the industrial segment declined low single digits in Q1 due to project timing, management remains optimistic about a long-term 'industrial super cycle' driven by AI infrastructure, power generation needs, and reshoring trends.

The CSS segment achieved a 9% EBITDA margin, benefiting from stable gross margins and significant operating cost leverage despite large project mix.

Full-year 2026 organic sales growth guidance was raised to 5% to 8%, with CSS outlook increased to low double-digit growth based on data center visibility.

Data center sales are now projected to grow 20%+ for the full year, though management notes that quarterly growth rates will be calibrated by project timing and customer labor constraints.

Second-quarter EBITDA margins are expected to be approximately flat year over year, impacted by a 25-30 basis point headwind from higher incentive compensation.

The company anticipates generating $500 to $800 million in free cash flow, with approximately 70% typically occurring in the second half of the year.

Interest expense assumptions remain unchanged, factoring in a 'higher-for-longer' rate environment with no anticipated rate cuts in 2026.

A successful $1.5 billion bond refinancing is expected to generate more than $20 million in annualized interest expense savings and improve the debt maturity profile.

The company reached a milestone in its digital transformation, fully deploying one end-to-end P&L operation within its CSS segment on its new digital platform at the end of Q1.

Supply chain lead times remain extended for critical categories like switchgear (40-60 weeks), though management believes they are navigating these shortages effectively.

Macroeconomic risks, including Middle East volatility and tariffs, are currently viewed as manageable with less than 1% of sales generated in the affected region, the majority of which are related to the CSS business.

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Management clarified that while industrial projects saw some timing delays, the short-cycle 'stock-and-flow' business grew mid-single digits, acting as a positive leading indicator.

The EES segment's double-digit backlog growth supports an improving trend for the remainder of the year.

WESCO is outperforming the market by leveraging its 'OneWESCO' approach, combining CSS (white space), EES (gray space), and UBS (power/grid services).

Gray space data center sales in EES grew over 100% in Q1, though they currently represent only 10% of that segment's total sales.

The company is using a phased deployment for its new ERP to avoid enterprise risk; design and build activities will continue through early 2027.

Management expects a 'step-function' increase in margin expansion once one-time investment costs cease following full deployment.

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