WESCO International, Inc. ( WCC ) shares fell on Thursday after the company reported first-quarter results.

The company reported adjusted earnings per share of $2.21, missing the analyst consensus estimate of $2.32. Quarterly sales of $5.34 billion outpaced the street view of $5.26 billion.

In the first quarter, reported net sales declined 0.1% year over year, while organic sales rose 5.6% after adjusting for M&A, currency effects, and one fewer workday. Data center sales surged 70% during the quarter.

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Gross margin was 21.1% in the first quarter, down 10 basis points sequentially and 20 basis points year over year. The decrease in gross margin primarily reflects a decrease in CSS and EES gross margins.

“Our increased inventory will help manage the potential supply chain impact of global tariffs on our customers,” said John Engel, Chairman, President, and CEO.

Operating cash flow totaled $28 million for the quarter. The company exited the quarter with cash and equivalents worth $681.6 million, with inventories worth $3.740 billion.

Adjusted EBITDA fell 8.7% year over year to $310.7 million, compared with $340.4 million a year ago.

At the end of December 2024, the company’s long-term debt (net) increased to $5.136 billion from $5.045 billion.

“We also issued $800 million of notes to redeem our preferred stock in June. This will strengthen our balance sheet and improve both our cash flow and earnings per share run-rates,” Engel added. 

Outlook: Wesco reaffirmed its 2025 outlook, projecting 2.5% to 6.5% organic sales growth and $600 million to $800 million in free cash flow.

Price Action: WCC shares closed lower by 6.71% to $152.03 on Thursday.

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