Distributor Wesco International announced record quarterly earnings results for its fiscal Q2 ended June 30, citing swelling demand from its artificial intelligence (AI) data center customers.
Altogether, Wesco recorded $6.7 billion in net sales, up 13% from a year earlier. In the meantime, the business-to-business (B2B) distribution, logistics services and supply chain solutions provider saw its operating margin increase to 5.7%, increasing by 20 basis points year over year.
“We delivered another exceptional quarter marked by continued market outperformance and accelerating business momentum,” said John Engel, chairman, president and CEO of Wesco. “Sales, backlog, adjusted EBITDA, and adjusted earnings per share all increased versus the prior year and achieved records that exceeded our plan.”
Engel specifically called out the outsized role data centers were playing for Wesco, as its sales backlog and other infrastructure demand helped strengthen its sales.
How data center clients lifted Wesco Q2 earnings results
“We have now posted four consecutive quarters of double-digit sales growth fueled by data centers,” Engel stated. “Beyond our outsized growth in data centers, demand remained strong across the rest of our diversified portfolio and end markets as customers continue to invest in major infrastructure projects.”
Engel noted that Wesco had expanded its data center offerings, adding power solutions, alongside new product and service offerings.
“As recently announced, we also strengthened our end-to-end capabilities and cooling solutions for data center customers through the acquisition of Singapore-based Newark Engineering,” he said.
Moreover, Engel praised “broad-based” sales growth across all three of its business units:
- Electrical and electronic solutions (EES), where organic sales grew 11% year over year.
- Communications and security solutions (CSS), where organic sales grew 18% year over year.
- Utility and broadband solutions (UBS), where organic sales grew 7% year over year.
“As demand for power-intensive AI data center infrastructure continues to increase, customers are engaging Wesco earlier in the life cycle to help solve complex power and infrastructure challenges,” said Indraneel Dev, executive vice president and chief financial officer at Wesco, during its July 30 earnings call. “This is creating new opportunities to cross-sell into existing customer relationships and expand our participation across large-scale projects.”
Where Wesco is investing in AI for its own operations
During Wesco’s Q2 earnings call with investors, Dev also articulated Wesco’s internal ambitions for leveraging AI as it pursues other digital transformation goals for its inventory management.
“As we invest more in digital transformation and now layering in AI, we have tools that we’ve never had before in terms of looking at our entire data lake and analyzing what can be done from — in terms of compressing that cycle,” he explained.
Dev joined Wesco in February, replacing previous chief financial officer Dave Schulz. He told analysts that “compressing timelines” through these and other means would be a significant priority.
“And I’ll just underline that point by saying that’s one of my top priorities, and I’m personally spending a lot of time in that area,” he added.
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