Contradictions Uncovered: Utility Growth, Tariff Strategies, and Margin Guidance in Q1 2025 Earnings Call

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Strong Sales Momentum:
- Wesco International reported 6% organic sales growth in Q1 2025, exceeding expectations.
- The growth was driven by a 70% increase in the data center business and high single-digit growth in OEM and Broadband segments.

Data Center Business Expansion:
- The company's data center segment experienced 70% growth, with strong contributions from hyperscale data center customers, representing nearly 40% of sales in Q1.
- This growth is attributed to increasing customer spend and expanding scope of supply with Wesco.

Utility Market Challenges:
- The utility business reported a 5% decline in organic sales due to customer destocking and lower project activity.
- Despite the current softness, expectations remain for a return to growth in the second half of the year.

Tariff Impact Mitigation:
- Wesco is addressing potential tariff impacts through increased inventory, leveraging global scale for lower-cost alternatives, and optimizing supply chain logistics.
- The company is passing supplier price increases through to customers and working with suppliers to adhere to minimum lead times.