Wesco International Inc. reported mixed first-quarter 2025 results, driven by surging demand in its data center business, while margin compression, continued utility sector softness, and tariff-related pricing uncertainty dampened investor sentiment.
For the quarter ending March 31, the Pittsburgh-based distributor posted net sales of $5.34 billion, down 0.1% year over year. The company cited foreign exchange headwinds, one fewer workday, and the 2024 divestiture of its integrated supply business as factors weighing on reported results.
“We are very pleased that the positive sales momentum we saw exiting 2024 carried through into the first quarter,” said CEO John Engel on the company’s earnings call. “Organic growth came in at the high end of our expectations, led by 70% growth in our total data center business, and high single-digit increases in OEM and broadband.”
The Communications and Security Solutions (CSS) segment led the way, with organic sales up 18% year over year. Growth was powered by a 65% surge in demand from hyperscale data center customers. Data center sales now account for 40% of CSS revenue, up from about 25% a year ago, according to Engel. Across the enterprise, data center sales represented 16% of total revenue, compared to 10% in the prior year period.
“Customers are expanding their scope with Wesco,” Engel said. “We’re not only supplying the white space infrastructure like racks and cabling, but increasingly the gray space—power distribution, services, and environmental monitoring. We’re becoming a one-stop shop for data center builds, upgrades, and ongoing operations.”
The Electrical & Electronic Solutions (EES) segment posted 3% organic growth, driven by demand in OEM and semiconductor markets. However, gross margins declined 60 basis points year over year, which CFO Dave Schulz attributed to a less favorable product mix and increased price competition in construction-related markets.
Utility and Broadband Solutions (UBS), the company’s third operating segment, continued to face headwinds. Organic sales declined 5%, while reported sales dropped 19%, reflecting the impact of the divested integrated supply unit and elevated customer inventory levels in the utility sector.
“We still see the utility downturn as temporary,” Engel said. “Budgets are locked in, and we expect to inflect back to growth in the second half as demand rebounds and new customer wins ramp.”
Broadband, by contrast, delivered high single-digit growth, particularly in Canada. “We’re seeing strong momentum across our Canadian business, which outperformed the market and gained share,” Engel added.
Despite ongoing margin pressure, Wesco reaffirmed its full-year 2025 guidance, projecting organic sales growth between 2.5% and 6.5%.
Wall Street’s response was mixed. Analysts cited Wesco’s strength in data center infrastructure and disciplined execution but flagged ongoing concerns around tariffs and margin compression.
“Wesco’s scale and integration into artificial intelligenceAI data center infrastructure is giving it a competitive edge,” said Jefferies analyst Stephen Volkmann. “The conservative outlook may set the stage for upward revisions if pricing and demand hold.”
Still, others noted industry-wide pricing challenges. “Wesco isn’t alone in facing compression—others like Graybar noted similar challenges,” said Sam Darkatsh of Raymond James.
Engel remained optimistic about the company’s long-term positioning. “Reshoring, grid modernization, and AI infrastructure are secular trends,” he said. “We’ve built the platform to support that transformation, and the results are just beginning to show.”
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