WESCO INTERNATIONAL INC

Previous wording

In addition to the results provided in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), our discussion and analysis of financial condition and results of operations includes certain non-GAAP financial measures, which are defined further below. These financial measures include organic sales growth, earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, adjusted EBITDA margin, financial leverage, adjusted selling, general and administrative expenses, adjusted income from operations, adjusted other non-operating expense (income), adjusted provision for income taxes, adjusted income before income taxes, adjusted net income, adjusted net income attributable to WESCO International, Inc., adjusted net income attributable to common stockholders, and adjusted earnings per diluted share. We believe that these non-GAAP measures are helpful to users of our financial statements as they provide a better understanding of our financial condition and results of operations on a comparable basis. Additionally, certain non-GAAP measures either focus on or exclude items impacting comparability of results, allowing users to more easily compare our financial performance from period to period. Management uses certain non-GAAP financial measures in its evaluation of the performance of the Company’s operating segments and in the determination of incentive compensation. Management does not use these non-GAAP financial measures for any purpose other than the reasons stated above.

Current wording

In addition to the results provided in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), our discussion and analysis of financial condition and results of operations includes certain non-GAAP financial measures, which are defined further below. These financial measures include Organic sales growth, Earnings before interest, taxes, depreciation and amortization (“EBITDA”), Adjusted EBITDA, Adjusted EBITDA margin, Financial leverage, Adjusted selling, general and administrative expenses, Adjusted income from operations, Adjusted other non-operating (income) expense, Adjusted provision for income taxes, Adjusted income before income taxes, Adjusted net income, Adjusted net income attributable to WESCO International, Inc., Adjusted net income attributable to common stockholders, and Adjusted earnings per diluted share. We believe that these non-GAAP measures are helpful to users of our financial statements as they provide a better understanding of our financial condition and results of operations on a comparable basis. Additionally, certain non-GAAP measures either focus on or exclude items impacting comparability of results, allowing users to more easily compare our financial performance from period to period. Management uses certain non-GAAP financial measures in its evaluation of the performance of the Company’s operating segments and in the determination of incentive compensation. Management does not use these non-GAAP financial measures for any purpose other than the reasons stated above.

Previous wording

We employ approximately 20,000 people, maintain relationships with more than 35,000 suppliers, and serve nearly 140,000 customers worldwide. With millions of products, end-to-end supply chain services, and leading digital capabilities, Wesco provides innovative solutions to meet customer needs across commercial and industrial businesses, contractors, educational institutions, government agencies, technology companies, telecommunications providers, and utilities. Our innovative solutions include supply chain management, logistics and transportation, procurement, warehousing and inventory management, as well as kitting and labeling, limited assembly of products and installation enhancement. We operate more than 700 sites, including distribution centers, fulfillment centers, and sales offices, in approximately 50 countries, providing a local presence for customers and a global network to serve multi-location businesses and global corporations.

Current wording

We employ approximately 21,000 people, maintain relationships with more than 35,000 suppliers, and serve nearly 130,000 customers worldwide. With millions of products, end-to-end supply chain services and significant digital capabilities, Wesco provides innovative solutions to meet customer needs across commercial and industrial businesses, technology companies, telecommunications providers, and utilities. Our innovative solutions include supply chain management, logistics and transportation, procurement, warehousing and inventory management, as well as kitting and labeling, limited assembly of products and installation enhancement. We operate more than 700 sites, including distribution centers, fulfillment centers and sales offices in approximately 50 countries, providing a local presence for customers and a global network to serve multi-location businesses and global corporations.

Previous wording

The CSS segment, serving customers in over 50 countries, is a global leader in data center, enterprise network infrastructure and security solutions. CSS sells directly to end-users or through an extensive network of channel partners, including data communications contractors, security and network integrators, professional audio/visual integrators, and systems integrators. CSS also provides a wide range of professional A/V, safety, facilities, and energy management solutions. The full CSS product portfolio is frequently coupled with services designed to enhance efficiency and productivity across all customer segments globally. These services include data center services, advisory, installation enhancement, project deployment, supply chain solutions, and management platforms.

Current wording

The CSS segment, serving customers in over 50 countries, is a global leader in data center, network infrastructure and security solutions. CSS sells directly to end-users or through an extensive network of channel partners, including data communications contractors, security and network integrators, professional audio/visual integrators, and systems integrators. CSS also provides a wide range of professional A/V, safety, facilities, and energy management solutions. The full CSS product portfolio is frequently coupled with services designed to enhance efficiency and productivity across all customer segments globally. These services include data center services, advisory, installation enhancement, project deployment, supply chain solutions, and management platforms.

Previous wording

The UBS segment is a leader in North America, serving customers primarily in the U.S. and Canada, and provides products and services to investor-owned utilities, public power companies, including municipalities, as well as global service providers, wireless providers, broadband operators and the contractors that service these customers. The products sold include wire and cable, transformers, transmission and distribution hardware, switches, protective devices, connectors, lighting, conduit, fiber and copper cable, connectivity products, pole line hardware, racks, cabinets, safety and MRO products, and point-to-point wireless devices. UBS also offers a complete set of service solutions to improve customer supply chain efficiencies.

Current wording

The UBS segment is a leader in North America, serving customers primarily in the U.S. and Canada, and provides products and services to investor-owned utilities, electric power cooperatives and municipalities, as well as global service providers, wireless providers, broadband operators and the contractors that service these customers. The products sold include wire and cable, transformers, transmission and distribution hardware, switches, protective devices, connectors, lighting, conduit, fiber and copper cable, connectivity products, pole line hardware, racks, cabinets, safety and MRO products, and point-to-point wireless devices. UBS also offers a complete set of service solutions to improve customer supply chain efficiencies.

Previous wording

Our financial results reflect continued sales momentum in the third quarter of 2025, highlighted by a 5.1% sequential and 12.9% year over year increase in reported net sales. For the first nine months of 2025 compared to the first nine months of 2024, reported sales increased by 6.9% and organic sales increased by 8.3%, which adjusts for the impact of acquisitions and divestitures, fluctuations in foreign exchange rates and number of workdays. Our CSS data center business is primarily driving this growth in sales, but also contributing to lower gross margins as compared to prior years due to several large project sales. Our EES segment experienced continued growth across its construction, industrial and OEM businesses in the third quarter, fueled in part by rising demand for data center projects and increased infrastructure activity. Our Utility business also continued to show signs of improvement with increased investor-owned utility sales growth in the third quarter. Additionally, the Broadband business saw continued acceleration in the third quarter, which reflects an increased growth rate in the United States. We have seen year over year backlog growth driven by our CSS and UBS segments.

Current wording

Our financial results reflect continued sales momentum in the first quarter of 2026, highlighted by a 13.8% year over year increase in reported Net sales driven by volume growth across all three segments. For the first quarter of 2026 compared to the first quarter of 2025, organic sales increased by 12.3%, which adjusts for fluctuations in foreign exchange rates. Our CSS segment data center solutions business is primarily driving this growth in sales. Our EES segment experienced continued growth and improved gross margin across its construction and OEM businesses, fueled in part by strong wire and cable demand, as well as continued demand for data center projects and increased infrastructure activity. Our UBS segment also delivered sales growth, driven by year-over-year increases in its utility business from investor-owned utility sales and continued momentum in grid services, along with growth in the United States broadband business. Our UBS segment experienced lower gross margin primarily driven by public power utility customers. We also saw record year-over-year backlog growth driven by our CSS and EES segments.

Previous wording

Net Income and Earnings per Share

Current wording

During the first quarter of 2026, we issued 5.250% Senior Notes due 2031 (the “2031 Notes”) and 5.500% Senior Notes due 2034 (the “2034 Notes” and, together with the 2031 Notes, the “2031 and 2034 Notes”) in part to support the planned redemption of our 7.250% senior notes due 2028 (the “2028 Notes”) in June 2026. Following the redemption of the 2028 Notes, we will have no significant debt maturities until 2029. We expect this redemption to create substantial net income, earnings per share, and cash flow benefit.

Previous wording

During the third quarter of 2025, we continued to execute on our multi-year, phased development and implementation of a new Digital and Data Platform (“DDP”). The DDP is intended to be a unified, technology-enabled operating model that spans all business functions, maintains and enhances the flow of financial information, and improves resource efficiency.

Current wording

We continued to execute on our multi-year, phased development and implementation of a new Digital and Data Platform (“DDP”). The DDP is intended to be a unified, technology-enabled operating model that spans all business functions, maintains and enhances the flow of financial information, and improves resource efficiency.

Previous wording

Note: Organic sales growth is a non-GAAP financial measure of sales performance. Organic sales growth is calculated by deducting the percentage impact from acquisitions and divestitures for one year following the respective transaction, fluctuations in foreign exchange rates and number of workdays from the reported percentage change in consolidated net sales. Workday impact represents the change in the number of operating days period-over-period after adjusting for weekends and public holidays in the United States; there was no change in the number of workdays in the third quarter of 2025 compared to the third quarter of 2024.

Current wording

Note: Organic sales growth is a non-GAAP financial measure of sales performance. Organic sales growth is calculated by deducting the percentage impact from acquisitions and divestitures for one year following the respective transaction, fluctuations in foreign exchange rates and number of workdays from the reported percentage change in consolidated Net sales. Workday impact represents the change in the number of operating days period-over-period after adjusting for weekends and public holidays in the United States; there was no change in the number of workdays in the first quarter of 2026 compared to the first quarter of 2025.

Previous wording

Net sales were $17.4 billion for the first nine months of 2025 compared to $16.3 billion for the first nine months of 2024, an increase of 6.9%. Organic sales for the first nine months of 2025 grew by 8.3%. This growth reflects an approximate 6% increase in volume driven by the CSS and EES segments, and an approximate 2% benefit from price.

Current wording

Net sales were $6.1 billion for the first quarter of 2026 compared to $5.3 billion for the first quarter of 2025, an increase of 13.8%. Organic sales for the first quarter of 2026 grew by 12.3%. This growth reflects an approximate 9% increase in volume driven by all three segments (CSS, EES and UBS), and an approximate 3% benefit from price.

Previous wording

Selling, general and administrative (“SG&A”) expenses for the third quarter of 2025 totaled $922.9 million versus $831.1 million for the third quarter of 2024, an increase of $91.8 million, or 11.0%.

Current wording

Selling, general and administrative (“SG&A”) expenses for the first quarter of 2026 totaled $947.6 million versus $836.3 million for the first quarter of 2025, an increase of $111.3 million, or 13.3%.

Previous wording

SG&A payroll and payroll-related expenses for the third quarter of 2025 of $570.4 million increased by $50.3 million compared to the same period in 2024 primarily as a result of an increase of $24.2 million in salaries and $14.1 million in commissions and incentives.

Current wording

SG&A payroll and payroll-related expenses for the first quarter of 2026 of $584.9 million increased by $65.5 million compared to the same period in 2025. The increase was driven primarily by $26.4 million in salaries and $22.3 million in commissions and incentives; the higher incentives expense was due to an increase in management incentive plan accruals and higher sales compared to the prior year.

Previous wording

SG&A expenses not related to payroll and payroll-related costs for the third quarter of 2025 were $352.5 million, an increase of $41.4 million compared to the same period in 2024, which primarily reflects increased costs to operate our facilities of $11.5 million, increased transportation costs of $9.8 million and increased IT costs of $7.8 million.

Current wording

SG&A expenses not related to payroll and payroll-related costs for the first quarter of 2026 were $362.7 million, an increase of $45.8 million compared to the same period in 2025, which primarily reflects increased transportation costs of $12.3 million, increased IT costs of $11.6 million, increased professional and consulting fees of $10.7 million, and increased costs to operate our facilities of $10.4 million. Additionally, digital transformation costs increased by $11.3 million year over year primarily due to increased costs associated with DDP deployment resources.

Previous wording

Net interest expense totaled $99.0 million for the third quarter of 2025 compared to $86.5 million for the third quarter of 2024. The increase of $12.5 million, or 14.5%, was primarily driven by the issuance of the 2033 Notes, partially offset by lower borrowings and lower interest rates on the Receivables Facility and the Revolving Credit Facility throughout the third quarter of 2025 compared to the third quarter of 2024.

Current wording

Net interest expense totaled $96.7 million for the first quarter of 2026 compared to $86.3 million for the first quarter of 2025. The increase of $10.4 million, or 12.1%, was primarily driven by higher net term debt throughout the first quarter of 2026 compared to the first quarter of 2025, partially offset by lower borrowings on our accounts receivable securitization facility (the “Receivables Facility”) and our revolving credit facility (the “Revolving Credit Facility”) throughout the first quarter of 2026 compared to the first quarter of 2025.

Previous wording

The provision for income taxes was $57.8 million for the third quarter of 2025 compared to $69.3 million for the corresponding quarter of the prior year, resulting in effective tax rates of 23.5% and 25.3%, respectively. The lower effective tax rate for the third quarter of 2025 is due to higher discrete income tax benefits relating to the exercise of stock-based awards as compared to the prior year period.

Current wording

The provision for income taxes was $43.1 million for the first quarter of 2026 compared to $36.1 million for the corresponding quarter of the prior year, resulting in effective tax rates of 21.8% and 23.4%, respectively. The lower effective tax rate for the first quarter of 2026 is largely driven by higher discrete income tax benefits relating to the exercise and vesting of stock-based awards.

Previous wording

Net income and earnings per diluted share attributable to common stockholders were $187.5 million and $3.79, respectively, for the third quarter of 2025 compared to $189.9 million and $3.81, respectively, for the third quarter of 2024. Adjusted for the non-GAAP adjustments above and the related income tax effects, net income and earnings per diluted share attributable to common stockholders were $193.9 million and $3.92, respectively, for the three months ended September 30, 2025, and $178.1 million and $3.58, respectively, for the three months ended September 30, 2024.

Current wording

Net income and Earnings per diluted share attributable to common stockholders were $153.8 million and $3.11, respectively, for the first quarter of 2026 compared to $104.0 million and $2.10, respectively, for the first quarter of 2025. Adjusted for the non-GAAP adjustments above and the related income tax effects, Net income and Earnings per diluted share attributable to common stockholders were $166.8 million and $3.37, respectively, for the three months ended March 31, 2026, and $109.6 million and $2.21, respectively, for the three months ended March 31, 2025.

Previous wording

The following is a discussion of the financial results of our operating segments comprising three strategic business units consisting of EES, CSS and UBS for the three months ended September 30, 2025. As further described below and in Note 14, “Business Segments” of our Notes to the unaudited Condensed Consolidated Financial Statements, the Chief Operating Decision Maker (the “CODM”) allocates resources and evaluates the performance of the Company’s reportable segments based on adjusted EBITDA, which is the Company’s measure of segment profit or loss. Adjusted EBITDA and adjusted EBITDA margin percentage are non-GAAP financial measures. As previously described in Note 2, “Accounting Policies,” the reportable segment information for the three months ended September 30, 2024 for the EES and CSS reportable segments has been recast to conform to the current year presentation.

Current wording

The following is a discussion of the financial results of our operating segments comprising three strategic business units consisting of EES, CSS and UBS for the three months ended March 31, 2026. As further described below and in Note 13, “Business Segments” of our Notes to the unaudited Condensed Consolidated Financial Statements, the Chief Operating Decision Maker (the “CODM”) allocates resources and evaluates the performance of the Company’s reportable segments based on Adjusted EBITDA, which is the Company’s measure of segment profit or loss. Adjusted EBITDA and Adjusted EBITDA margin percentage are non-GAAP financial measures.

Previous wording

EES reported net sales of $2.4 billion for the third quarter of 2025 compared to $2.1 billion for the third quarter of 2024, an increase of $249.2 million, or 11.8%. EES organic sales for the third quarter of 2025 increased by 11.9%, with volume growth of approximately 8% driven primarily by the construction, industrial and OEM businesses. Price favorably impacted organic sales by approximately 4%.

Current wording

EES reported Net sales of $2.2 billion for the first quarter of 2026 compared to $2.1 billion for the first quarter of 2025, an increase of $178.9 million, or 8.7%. EES organic sales for the first quarter of 2026 increased by 7.0%, driven by the impact of changes in price, which favorably impacted organic sales by approximately 4%, and by volume growth of approximately 3%, driven primarily by the construction and OEM businesses.

Previous wording

CSS reported net sales of $2.4 billion for the third quarter of 2025 compared to $2.0 billion for the third quarter of 2024, an increase of $415.0 million, or 20.8%, which is inclusive of a favorable impact from the acquisition of Ascent of 2.1%. CSS organic sales for the third quarter of 2025 grew by 18.3%, primarily reflecting volume growth of approximately 17%, driven primarily by the data center solutions business, as well as the impact of changes in price, which favorably impacted organic sales by approximately 2%.

Current wording

CSS reported Net sales of $2.5 billion for the first quarter of 2026 compared to $2.0 billion for the first quarter of 2025, an increase of $478.6 million, or 23.9%. CSS organic sales for the first quarter of 2026 grew by 21.9%, primarily reflecting volume growth of approximately 21% as a result of growth in the data center solutions and security solutions businesses, as well as the impact of changes in price, which favorably impacted organic sales by approximately 1%.

Previous wording

CSS adjusted EBITDA increased $40.3 million, or 22.4% year-over-year. The increase primarily reflects an increase in volume, specifically within the data center solutions business, as described above, partially offset by an increase in SG&A expenses of $32.4 million. The increase in SG&A expenses is primarily attributed to increased salaries of $9.3 million, increased transportation costs of $7.9 million consistent with higher sales, as well as individually immaterial increases in various other operating expenses.

Current wording

CSS Adjusted EBITDA increased $64.7 million, or 40.8% year-over-year. The increase primarily reflects an increase in volume, specifically within the data center solutions business, as described above, as well as lower SG&A expenses as a percentage of Net sales.

Previous wording

(1)Loss on termination of business arrangement represents the loss recognized as a result of management's decision to terminate a business arrangement with a third party.

Current wording

(3)Loss on termination of business arrangement represents the loss recognized as a result of management's decision to terminate a business arrangement with a third party.

Previous wording

(4)The adjustments to income from operations and other expense (income), net have been tax effected at rates of 26.7% and 24.3% for the three months ended September 30, 2025 and 2024, respectively.

Current wording

(4)The adjustments to Income from operations and Other (income) expense, net have been tax effected at rates of 25.8% and 26.4% for the three months ended March 31, 2026 and 2025, respectively.

Previous wording

Note: For the three months ended September 30, 2025, SG&A expenses, income from operations, the provision for income taxes, net income attributable to common stockholders, and earnings per diluted share have been adjusted to exclude digital transformation costs, restructuring costs, and the related income tax effects. For the three months ended September 30, 2024, SG&A expenses, income from operations, other non-operating expense (income), the provision for income taxes, net income attributable to common stockholders, and earnings per diluted share have been adjusted to exclude digital transformation costs, restructuring costs, the gain recognized on the divestiture of the WIS business, the reduction to pension settlement cost, and the related income tax effects. These non-GAAP financial measures provide a better understanding of our financial results on a comparable basis.

Current wording

Note: For the three months ended March 31, 2026, Selling, general and administrative expenses, Income from operations, Provision for income taxes, Net income attributable to common stockholders, and Earnings per diluted share have been adjusted to exclude Digital transformation costs and the related income tax effects. For the three months ended March 31, 2025, Selling, general and administrative expenses, Income from operations, Other non-operating (income) expense, Provision for income taxes, Net income attributable to common stockholders and Earnings per diluted share have been adjusted to exclude Digital transformation costs, Restructuring costs, the Loss on termination of business arrangement, and the related income tax effects. These non-GAAP financial measures provide a better understanding of our financial results on a comparable basis.

Previous wording

Our liquidity needs generally arise from fluctuations in our working capital requirements, information technology investments, capital expenditures, acquisitions, the payment of dividends, and debt service obligations. We finance our operating and investing needs primarily with borrowings under our Revolving Credit Facility and Receivables Facility, as well as uncommitted lines of credit entered into by certain of our foreign subsidiaries to support local operations, some of which are overdraft facilities. The Revolving Credit Facility has a borrowing limit of $1,725 million and the purchase limit under the Receivables Facility is $1,550 million. Our international lines of credit generally are renewable on an annual basis and certain facilities are fully and unconditionally guaranteed by Wesco Distribution. Accordingly, certain borrowings under these lines directly reduce availability under our Revolving Credit Facility. The maximum borrowing limits of our international lines of credit vary by facility and range between $0.6 million and $9.5 million. As of September 30, 2025, we had $5.1 million outstanding under our international lines of credit.

Current wording

Our liquidity needs generally arise from fluctuations in our working capital requirements, information technology investments, capital expenditures, acquisitions, the payment of dividends, and debt service obligations. We finance our operating and investing needs primarily with borrowings under our Revolving Credit Facility and Receivables Facility, as well as uncommitted lines of credit entered into by certain of our foreign subsidiaries to support local operations, some of which are overdraft facilities. The Revolving Credit Facility has a borrowing limit of $1,725 million and the purchase limit under the Receivables Facility is $1,550 million. Our international lines of credit generally are renewable on an annual basis and certain facilities are fully and unconditionally guaranteed by Wesco Distribution. Accordingly, certain borrowings under these lines directly reduce availability under our Revolving Credit Facility. The maximum borrowing limits of our international lines of credit vary by facility and range between $1.0 million and $12.0 million. As of March 31, 2026, we had $1.2 million outstanding under our international lines of credit.

Previous wording

As of September 30, 2025, we had $425.0 million outstanding and $1,253.9 million in available borrowing capacity on the Revolving Credit Facility after giving effect to outstanding letters of credit and certain borrowings under our international lines of credit. Additionally as of September 30, 2025, we had $1,425.0 million outstanding and $125.0 million of available borrowing capacity under our Receivables Facility, which combined with available cash of $258.6 million, provided liquidity of approximately $1.6 billion. Cash included in our determination of liquidity represents cash in certain deposit and interest-bearing investment accounts held in the United States and Canada. We monitor the depository institutions that hold our cash and cash equivalents on a regular basis, and we believe that we have placed our deposits with creditworthy financial institutions.

Current wording

As of March 31, 2026, we had $251.5 million outstanding and $1,437.8 million in available borrowing capacity on the Revolving Credit Facility after giving effect to outstanding letters of credit and certain borrowings under our international lines of credit. Additionally as of March 31, 2026, we had $120.0 million outstanding and $1,430.0 million of available borrowing capacity under our Receivables Facility, which combined with available cash of $353.0 million, provided liquidity of approximately $3.2 billion. Cash included in our determination of liquidity represents cash in certain deposit and interest-bearing investment accounts held in the United States and Canada. We monitor the depository institutions that hold our cash and cash equivalents on a regular basis, and we believe that we have placed our deposits with creditworthy financial institutions.

Previous wording

For information regarding amendments to the Receivables Facility and Revolving Credit Facility as well as disclosure of our debt instruments, including our outstanding indebtedness as of September 30, 2025, see Note 9, “Debt” of our Notes to the unaudited Condensed Consolidated Financial Statements.

Current wording

For disclosure of our debt instruments, including our outstanding indebtedness as of March 31, 2026, see Note 9, “Debt” of our Notes to the unaudited Condensed Consolidated Financial Statements.

Previous wording

On March 6, 2025, Wesco Distribution issued $800 million aggregate principal amount of 6.375% senior notes due 2033 (the “2033 Notes”). We used the net proceeds from the issuance of the 2033 Notes to redeem all of the Company’s outstanding Series A Preferred Stock and all of the related depositary shares representing fractional interests in the Series A Preferred Stock in June 2025, and to repay a portion of the amounts outstanding under the Revolving Credit Facility. Prior to redeeming the Series A Preferred Stock, we used the net proceeds to temporarily repay all of the outstanding borrowings under our Revolving Credit Facility and to repay a portion of the amounts outstanding under our Receivables Facility. We subsequently redrew under the Receivables Facility and the Revolving Credit Facility in an aggregate amount sufficient to redeem the Series A Preferred Stock.

Current wording

On February 27, 2026, Wesco Distribution issued $650 million aggregate principal amount of 2031 Notes and $850 million aggregate principal amount of 2034 Notes. We intend to use the net proceeds from the issuance of the 2031 and 2034 Notes to redeem all of our outstanding 2028 Notes on June 15, 2026. Prior to redeeming the 2028 Notes, we used the net proceeds to temporarily repay a portion of the outstanding borrowings under our Receivables Facility and Revolving Credit Facility. We intend to subsequently redraw under the Receivables Facility and the Revolving Credit Facility in an aggregate amount sufficient to redeem the 2028 Notes.

Previous wording

We regularly review our mix of fixed versus variable rate debt, and we may, from time to time, issue or retire borrowings and/or refinance existing debt in an effort to mitigate the impact of interest rate and foreign exchange rate fluctuations, and to maintain a cost-effective capital structure consistent with our anticipated capital requirements. Interest rates remained stable for the majority of the first nine months of 2025, with the Federal Reserve reducing its benchmark interest rate by 25 basis points at the end of the third quarter, after a reduction of its benchmark interest rate by a total of 100 basis points in the second half of 2024. Future interest rate changes would raise or lower the rates we pay on our variable rate debt and would contribute to fluctuations in interest expense versus prior periods.

Current wording

We regularly review our mix of fixed versus variable rate debt, and we may, from time to time, issue or retire borrowings and/or refinance existing debt in an effort to mitigate the impact of interest rate and foreign exchange rate fluctuations, and to maintain a cost-effective capital structure consistent with our anticipated capital requirements. Interest rates remained stable in the first quarter of 2026, after the Federal Reserve reduced its benchmark interest rate twice in the fourth quarter of 2025 by 25 basis points, respectively, for a total reduction of 50 basis points in the fourth quarter of 2025. Future interest rate changes would raise or lower the rates we pay on our variable rate debt and would contribute to fluctuations in interest expense versus prior periods.

Previous wording

As of September 30, 2025, approximately 67% of our debt portfolio consisted of fixed rate debt. We believe our capital structure has an appropriate mix of fixed versus variable rate debt and secured versus unsecured instruments.

Current wording

As of March 31, 2026, approximately 92% of our debt portfolio consisted of fixed rate debt. As noted above, we used the net proceeds from our issuance of the 2031 and 2034 Notes to repay a portion of the amounts outstanding under our Receivables Facility and Revolving Credit Facility, which are both variable rate facilities. We intend to subsequently redraw under our Receivables Facility and Revolving Credit Facility in June 2026 in an aggregate amount sufficient to redeem the 2028 Notes, which represents fixed rate debt. We believe our capital structure has an appropriate mix of fixed versus variable rate debt and secured versus unsecured instruments.

Previous wording

Over the next several quarters, we expect that our excess liquidity will be directed primarily at share repurchases, the payment of dividends, debt reduction, digital transformation initiatives, and potential acquisitions and related integration activities. We expect to maintain sufficient liquidity through our credit facilities and cash balances. We continue to monitor the sufficiency of our liquidity given the potential impact of current economic conditions and uncertainty, including tariffs, interest rates, and inflation. While we did not face significant challenges with our sources or uses of cash in the first nine months of 2025, future market disruptions could occur which could potentially affect our liquidity. We believe cash provided by operations and financing activities will be adequate to cover our operational and business needs for at least the next twelve months.

Current wording

Over the next several quarters, we expect that our excess liquidity will be directed primarily at debt reduction, the payment of dividends, share repurchases, digital transformation initiatives, and potential acquisitions and related integration activities. We expect to maintain sufficient liquidity through our credit facilities and cash balances. We continue to monitor the sufficiency of our liquidity given the potential impact of current economic conditions and uncertainty, including tariffs, interest rates, and inflation. While we did not face significant challenges with our sources or uses of cash in the first quarter of 2026, future market disruptions could occur which could potentially affect our liquidity. We believe cash provided by operations and financing activities will be adequate to cover our operational and business needs for at least the next twelve months.

Previous wording

We also measure our ability to meet our debt obligations based on our financial leverage ratio, which was 3.5x as of September 30, 2025 and 2.9x as of December 31, 2024.

Current wording

We also measure our ability to meet our debt obligations based on our financial leverage ratio, which was 3.2x as of March 31, 2026 and 3.4x as of December 31, 2025.

Previous wording

(3)Cloud computing arrangement amortization consists of expense recognized in selling, general and administrative expenses for capitalized implementation costs for cloud computing arrangements to support our digital transformation initiatives.

Current wording

(2)Cloud computing arrangement amortization consists of expense recognized in Selling, general and administrative expenses for capitalized implementation costs for cloud computing arrangements to support our digital transformation initiatives.

Previous wording

(6)Debt is presented in the condensed consolidated balance sheets net of debt issuance and debt discount costs, and includes adjustments to record the long-term debt assumed in the merger with Anixter at its acquisition date fair value.

Current wording

(4)Debt is presented in the Condensed Consolidated Balance Sheets net of Debt discount and debt issuance costs.

Previous wording

Note: Financial leverage ratio is a non-GAAP measure of the use of debt. Financial leverage ratio is calculated by dividing total debt, excluding debt issuance costs, debt discount and fair value adjustments, net of cash, by adjusted EBITDA. EBITDA is defined as the trailing twelve months earnings before interest, taxes, depreciation and amortization.

Current wording

Note: Financial leverage ratio is a non-GAAP measure of the use of debt. Financial leverage ratio is calculated by dividing total debt, excluding debt issuance costs and debt discount, net of cash, by Adjusted EBITDA. EBITDA is defined as the trailing twelve months earnings before interest, taxes, depreciation and amortization.

Previous wording

Most of the undistributed earnings of our foreign subsidiaries have been taxed in the U.S. under either the one-time tax imposed on the deemed repatriation of undistributed foreign earnings (the “transition tax”), or the global intangible low-taxed income tax regime imposed by the Tax Cuts and Jobs Act of 2017. However, the distribution of earnings by our foreign subsidiaries in the form of dividends, or otherwise, may be subject to additional taxation. We believe that we are able to maintain sufficient liquidity for our domestic operations and commitments without repatriating cash from our foreign subsidiaries. Therefore, we continue to assert that the remaining undistributed earnings of our foreign subsidiaries are indefinitely reinvested.

Current wording

Most of the undistributed earnings of our foreign subsidiaries have been taxed in the U.S. under either the one-time tax imposed on the deemed repatriation of undistributed foreign earnings (the “transition tax”), or the global intangible low-taxed income tax regime imposed by the Tax Cuts and Jobs Act of 2017 renamed, along with other changes, under the One Big Beautiful Bill Act signed into law on July 4, 2025, to net controlled foreign corporation tested income. The distribution of earnings, however, by our foreign subsidiaries in the form of dividends, or otherwise, may be subject to additional taxation. We believe that we are able to maintain sufficient liquidity for our domestic operations and commitments without repatriating cash from our foreign subsidiaries. Therefore, we continue to assert that the remaining undistributed earnings of our foreign subsidiaries are indefinitely reinvested.

Previous wording

An analysis of cash flow for the first nine months of 2025 and 2024 follows:

Current wording

An analysis of cash flow for the first three months of 2026 and 2025 follows:

Previous wording

These decreases were partially offset by a $196.1 million impact from changes in accounts payable. The impact from accounts payable increased primarily due to the increase in inventory, as well as the timing of purchases and payments to suppliers as compared to the prior year. Additionally an increase in net income as adjusted for certain non-cash items offset the decreases in operating cash flows.

Current wording

Net cash provided by operating activities for the first three months of 2026 totaled $221.4 million, compared to $28.0 million for the first three months of 2025. The $193.4 million increase is primarily driven by a $105.7 million impact from changes in accounts payable. The impact from accounts payable increased primarily due to the increase in inventory purchases, as well as the timing of inventory purchases and payments to suppliers as compared to the prior year. Additionally an increase in net income as adjusted for certain non-cash items also contributed to the increase in operating cash flows.

Previous wording

Net cash used in investing activities for the first nine months of 2025 was $100.4 million compared to $249.7 million provided by investing activities in the first nine months of 2024. Included in the first nine months of 2025 were capital expenditures of $55.4 million, which primarily comprised leasehold improvements and equipment to support our global network of locations, and internal-use computer software and information technology hardware to support our digital transformation initiatives, as well as $36.3 million paid to acquire Industrial Software Solutions, net of cash acquired.

Current wording

Net cash used in investing activities for the first three months of 2026 was $19.9 million compared to $54.4 million in the first three months of 2025. Included in the first three months of 2026 were capital expenditures of $23.4 million compared to $20.4 million in the first three months of 2025. Capital expenditures in the first three months of 2026 and 2025 primarily comprised leasehold improvements and equipment to support our global network of locations, and internal-use computer software and information technology hardware to support our digital transformation initiatives. Included in the first three months of 2025 was $35.2 million paid to acquire Industrial Software Solutions, net of cash acquired.

Previous wording

Net cash used in financing activities for the first nine months of 2025 was $94.2 million, compared to $874.3 million during the first nine months of 2024. During the first nine months of 2025, financing activities primarily comprised the proceeds of $800.0 million related to the issuance of the 2033 Notes, net repayments of $100.0 million related to our Revolving Credit Facility, net repayments of $25.0 million related to our Receivables Facility, and payment of total debt issuance costs of $14.0 million related to the issuance of the 2033 Notes and amendments to the Revolving Credit Facility and Receivables Facility. The first nine months of 2025 also included $540.3 million paid to redeem our Series A Preferred Stock, $75.0 million of common stock repurchases, $66.3 million and $27.3 million of dividends paid to holders of our common stock and Series A Preferred Stock, respectively, and $35.9 million of payments for taxes related to the exercise and vesting of stock-based awards.

Current wording

Net cash used in financing activities for the first three months of 2026 was $108.2 million, compared to net cash provided by financing activities of $2.3 million during the first three months of 2025. During the first three months of 2026, financing activities primarily comprised proceeds of $650.0 million and $850.0 million related to the issuance of the 2031 and 2034 Notes, respectively, net repayments of $1,180.0 million related to our Receivables Facility, net repayments of $326.6 million related to our Revolving Credit Facility, and payment of total debt issuance costs of $19.1 million related to the issuance of the 2031 and 2034 Notes. The first three months of 2026 also included $25.0 million of common stock repurchases, $24.4 million of dividends paid to holders of our common stock and $22.0 million of payments for taxes related to the exercise and vesting of stock-based awards.

Previous wording

During the first nine months of 2024, financing activities primarily comprised the redemption of our $1,500.0 million aggregate principal amount of 2025 Notes, proceeds of $900.0 million and $850.0 million related to the issuance of the 2029 Notes and 2032 Notes, respectively, net repayments of $468.0 million related to our Revolving Credit Facility, net repayments of $100.0 million related to our Receivables Facility, and payment of total debt issuance costs of $26.6 million related to the issuance of the 2029 and 2032 Notes and amendments to the Revolving Credit Facility and Receivables Facility. The first nine months of 2024 also included $375.0 million of common stock repurchases, $61.4 million and $43.1 million of dividends paid to holders of our common stock and Series A Preferred Stock, respectively, and $26.2 million of payments for taxes related to the exercise and vesting of stock-based awards.

Current wording

During the first three months of 2025, financing activities primarily comprised proceeds of $800.0 million related to the issuance of the 6.375% senior notes due 2033 (the “2033 Notes”), net repayments of $525.0 million related to our Revolving Credit Facility, net repayments of $175.0 million related to our Receivables Facility, and payment of total debt issuance costs of $14.0 million related to the issuance of the 2033 Notes and amendments to the Revolving Credit Facility and Receivables Facility. The first three months of 2025 also included $25.0 million of common stock repurchases, $22.1 million and $14.4 million of dividends paid to holders of our common stock and Series A Preferred Stock, respectively, and $18.0 million of payments for taxes related to the exercise and vesting of stock-based awards.

Previous wording

See Note 2, “Accounting Policies” of our Notes to the unaudited Condensed Consolidated Financial Statements for a description of recently adopted and recently issued accounting standards.

Current wording

See Note 2, “Accounting Policies” of our Notes to the unaudited Condensed Consolidated Financial Statements for a description of recently issued accounting standards.