WESCO INTERNATIONAL INC

Previous 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.

Current wording

Our financial results reflect continued sales momentum in the first six months of 2026, highlighted by a 13.4% year-over-year increase in reported Net sales driven by volume growth across all three segments. For the first six months of 2026 compared to the first six months of 2025, organic sales increased by 12.5%, which adjusts for fluctuations in foreign exchange rates. All three of our segments contributed to growth, led by our CSS segment's data center solutions business. Our EES segment experienced continued growth across its OEM and construction businesses, fueled in part by 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 United States and Canadian broadband businesses, along with growth in its utility business and increased grid services activity. We also saw record year-over-year backlog growth driven by all three segments.

Previous 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.

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 redemption of our 7.250% senior notes due 2028 (the “2028 Notes”) which occurred in the second quarter on June 15, 2026. Following the redemption of the 2028 Notes, we 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

We are monitoring and evaluating the potential effects of the February 20, 2026 U.S. Supreme Court ruling that invalidated tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”); however, due to uncertainty regarding the availability and timing of any potential refunds, we have not recorded any related amounts as of March 31, 2026.

Current wording

We are actively monitoring and evaluating the potential effects of the February 20, 2026 U.S. Supreme Court ruling that invalidated tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”). IEEPA tariff refunds are not expected to materially impact our unaudited Condensed Consolidated Financial Statements.

Previous 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.

Current wording

During the second quarter of 2026, 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 first quarter of 2026 compared to the first quarter of 2025.

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 second quarter of 2026 compared to the second quarter of 2025.

Previous 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.

Current wording

Net sales were $6.7 billion for the second quarter of 2026 compared to $5.9 billion for the second quarter of 2025, an increase of 13.0%. Organic sales for the second quarter of 2026 grew by 12.6%. This growth reflects an approximate 10% increase in volume driven by all three segments (CSS, EES and UBS), and an approximate 3% benefit from price.

Previous wording

Cost of goods sold for the first quarter of 2026 was $4.8 billion compared to $4.2 billion for the first quarter of 2025, an increase of 13.5%. Cost of goods sold as a percentage of Net sales was 78.8% and 78.9% for the first quarter of 2026 and 2025, respectively. The favorable impact reflects improved gross margin in the EES segment partially offset by a decline in the UBS segment and to a lesser extent, the CSS segment.

Current wording

Cost of goods sold for the second quarter of 2026 was $5.2 billion compared to $4.7 billion for the second quarter of 2025, an increase of 11.9%. Cost of goods sold as a percentage of Net sales was 78.2% and 78.9% for the second quarter of 2026 and 2025, respectively. The favorable impact reflects improved gross margins in the EES and CSS segments, partially offset by a decline in the UBS segment.

Previous 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%.

Current wording

Selling, general and administrative (“SG&A”) expenses for the second quarter of 2026 totaled $1,022.7 million versus $872.2 million for the second quarter of 2025, an increase of $150.5 million, or 17.3%.

Previous 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.

Current wording

SG&A payroll and payroll-related expenses for the second quarter of 2026 were $628.1 million, an increase of $86.6 million compared to the same period in 2025, which primarily reflects increases of $33.4 million in commissions and incentives, $25.3 million in salaries, $15.6 million in benefits, and $10.7 million in stock-based compensation expense. The higher commissions and incentives expense was largely driven by increased commissions and management incentive accruals aligned with Company performance.

Previous 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.

Current wording

Net interest expense totaled $110.4 million for the second quarter of 2026 compared to $92.9 million for the second quarter of 2025. The increase of $17.5 million, or 18.8%, was primarily driven by higher net term debt throughout the second quarter of 2026 compared to the second quarter of 2025, as well as a $10.0 million non-cash loss on extinguishment of the 2028 Notes. These increases were partially offset by lower borrowings and lower rates on our accounts receivable securitization facility (the “Receivables Facility”) and our revolving credit facility (the “Revolving Credit Facility”) throughout the second quarter of 2026 compared to the second quarter of 2025.

Previous 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.

Current wording

The provision for income taxes was $62.4 million for the second quarter of 2026 compared to $61.8 million for the corresponding quarter of the prior year, resulting in effective tax rates of 22.9% and 26.1%, respectively. The lower effective tax rate for the second quarter of 2026 is largely driven by higher discrete income tax benefits relating to the exercise of stock-based awards.

Previous 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.

Current wording

Net income and Earnings per diluted share attributable to common stockholders were $209.0 million and $4.23, respectively, for the second quarter of 2026 compared to $189.2 million and $3.83, respectively, for the second 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 $225.6 million and $4.57, respectively, for the three months ended June 30, 2026, and $167.5 million and $3.39, respectively, for the three months ended June 30, 2025.

Previous wording

Adjusted EBITDA, a non-GAAP financial measure, was $388.8 million for the first quarter of 2026, compared to $310.7 million for the first quarter of 2025, an increase of $78.1 million, or 25.1% year-over-year. The increase primarily reflects higher Net sales, lower Cost of goods sold as a percentage of sales as described above, and lower SG&A expenses as a percentage of sales, as described above.

Current wording

Adjusted EBITDA, a non-GAAP financial measure, was $487.2 million for the second quarter of 2026, compared to $394.2 million for the second quarter of 2025, an increase of $93.0 million, or 23.6% year-over-year. The increase primarily reflects higher Net sales and gross margin.

Previous 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.

Current wording

EES reported Net sales of $2.5 billion for the second quarter of 2026 compared to $2.3 billion for the second quarter of 2025, an increase of $252.9 million, or 11.2%. EES organic sales for the second quarter of 2026 increased by 10.9%, reflecting volume growth of approximately 6%, driven primarily by the construction and OEM businesses, and by the impact of changes in price, which favorably impacted organic sales by approximately 5%.

Previous 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%.

Current wording

CSS reported Net sales of $2.7 billion for the second quarter of 2026 compared to $2.3 billion for the second quarter of 2025, an increase of $416.0 million, or 18.4%. CSS organic sales for the second quarter of 2026 grew by 17.5%, 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 1%.

Previous 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.

Current wording

CSS Adjusted EBITDA increased $74.0 million, or 37.2% year-over-year. The increase primarily reflects an increase in volume, specifically within the data center solutions business as well as improved gross margin and lower SG&A expenses as a percentage of Net sales.

Previous 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.

Current wording

Note: For the three months ended June 30, 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 June 30, 2025, 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, Restructuring costs, and the related income tax effects, and the Gain on redemption of the Company's Series A Preferred Stock. These non-GAAP financial measures provide a better understanding of our financial results on a comparable basis.

Previous 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.

Current wording

SG&A expenses not related to payroll and payroll-related costs for the first six months of 2026 were $757.3 million, an increase of $109.7 million compared to the same period in 2025, which primarily reflects increased professional and consulting fees of $26.0 million, increased transportation costs of $24.1 million, increased costs to operate our facilities of $21.3 million, and increased IT costs of $20.6 million. Additionally, digital transformation costs increased by $26.9 million year-over-year primarily due to increased costs associated with DDP deployment resources.

Previous wording

The increase in Adjusted earnings per diluted share primarily reflects the increase in Net sales, lower Cost of goods sold as a percentage of Net sales as described above, and lower SG&A expenses as a percentage of Net sales as described above.

Current wording

The increase in Adjusted earnings per diluted share primarily reflects the increase in Net sales and lower Cost of goods sold as a percentage of Net sales.

Previous wording

EES Adjusted EBITDA increased $42.4 million, or 29.7% year-over-year. The increase primarily reflects an increase in price and volume as discussed above, as well as improved gross margin and lower SG&A expenses as a percentage of Net sales.

Current wording

CSS Adjusted EBITDA increased $138.7 million, or 38.8% year-over-year. The increase primarily reflects an increase in volume, specifically within the data center solutions business, as well as improved gross margin and lower SG&A expenses as a percentage of Net sales.

Previous wording

UBS reported Net sales of $1,357.0 million for the first quarter of 2026 compared to $1,278.1 million for the first quarter of 2025, an increase of $78.9 million, or 6.2%. UBS organic sales for the first quarter of 2026 grew by 5.8%, reflecting volume growth of approximately 3% driven by the utility and broadband businesses, as well as the impact of changes in price, which favorably impacted organic sales by approximately 3%.

Current wording

UBS reported Net sales of $2.8 billion for the first six months of 2026 compared to $2.7 billion for the first six months of 2025, an increase of $175.5 million, or 6.6%. UBS organic sales for the first six months of 2026 grew by 6.4%, reflecting volume growth of approximately 3% driven by the broadband and utility businesses, as well as the impact of changes in price, which favorably impacted organic sales by approximately 3%.

Previous wording

The following tables reconcile 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 to Adjusted selling, general and administrative expenses, Adjusted income from operations, Adjusted other non-operating (income) expense, Adjusted provision for income taxes, Adjusted net income attributable to common stockholders, and Adjusted earnings per diluted share, which are non-GAAP financial measures, for the periods presented:

Current wording

The following tables reconcile Selling, general and administrative expenses, Income from operations, Other non-operating income, Provision for income taxes, Net income attributable to common stockholders and Earnings per diluted share to Adjusted selling, general and administrative expenses, Adjusted income from operations, Adjusted other non-operating income, Adjusted provision for income taxes, Adjusted net income attributable to common stockholders, and Adjusted earnings per diluted share, which are non-GAAP financial measures, for the periods presented:

Previous 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.

Current wording

(4)The adjustments to Income from operations and Other income, net have been tax effected at rates of 27.2% and 26.3% for the six months ended June 30, 2026 and 2025, respectively.

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 $1.0 million and $12.0 million. As of March 31, 2026, we had $1.2 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 June 30, 2026, we had $2.1 million outstanding under our international lines of credit.

Previous 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.

Current wording

As of June 30, 2026, we had $578.9 million outstanding and $1,110.7 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 June 30, 2026, we had $1,275.0 million outstanding and $275.0 million of available borrowing capacity under our Receivables Facility, which combined with available cash of $302.0 million, provided liquidity of approximately $1.7 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

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.

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 used 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 subsequently redrew 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 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.

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 six months of 2026, after the Federal Reserve reduced its benchmark interest rate by 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 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.

Current wording

As of June 30, 2026, approximately 68% 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.

Previous 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.

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 second 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 3.2x as of March 31, 2026 and 3.4x as of December 31, 2025.

Current wording

We also measure our ability to meet our debt obligations based on our financial leverage ratio, which was 3.0x as of June 30, 2026 and 3.4x as of December 31, 2025.

Previous wording

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

Current wording

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

Previous 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.

Current wording

Net cash provided by operating activities for the first six months of 2026 totaled $275.1 million, compared to $135.8 million for the first six months of 2025. The $139.3 million increase is driven by a $170.4 million impact from changes in other current and noncurrent liabilities, primarily driven by increases in deferred revenue due to advance payments from customers and milestone billings. Accounts payable additionally contributed to the increase, with a $151.3 million impact primarily driven by increased inventory purchases, as well as the timing of inventory purchases and payments to suppliers as compared to the prior year. 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 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.

Current wording

Net cash used in investing activities for the first six months of 2026 was $48.0 million compared to $76.9 million in the first six months of 2025. Included in the first six months of 2026 were capital expenditures of $51.6 million compared to $42.2 million in the first six months of 2025. Capital expenditures in the first six 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 six months of 2025 was $36.3 million paid to acquire Industrial Software Solutions, net of cash acquired.

Previous 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.

Current wording

Net cash used in financing activities for the first six months of 2026 was $21.9 million, compared to $108.3 million during the first six months of 2025. During the first six months of 2026, financing activities primarily comprised the redemption of our $1,325 million aggregate principal amount of 2028 Notes, net repayments of $25.0 million related to our Receivables Facility, payment of debt issuance costs of $19.1 million related to the issuance of the 2031 and 2034 Notes, net borrowings of $5.4 million related to our Revolving Credit Facility, and proceeds of $650.0 million and $850.0 million related to the issuance of the 2031 and 2034 Notes, respectively. The first six months of 2026 also included $48.8 million of dividends paid to holders of our common stock, $48.1 million of payments for taxes related to the exercise and vesting of stock-based awards, and $39.9 million of common stock repurchases.

Previous 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.

Current wording

During the first six 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 $150.0 million related to our Receivables Facility, net repayments of $50.0 million related to our Revolving Credit 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 six months of 2025 also included $540.3 million paid to redeem our Series A Preferred Stock, $50.0 million of common stock repurchases, $44.2 million and $27.3 million of dividends paid to holders of our common stock and Series A Preferred Stock, respectively, and $18.4 million of payments for taxes related to the exercise and vesting of stock-based awards.