Revenue beat: net sales of $7,226.4 million came in 5.2% above the $6,869 million estimate and rose 16.6%, with organic growth also 16.6%.
Adjusted EPS beat: $5.77 against a $4.70 estimate, 22.8% ahead and up 47.2%; GAAP diluted EPS was $5.43 against $3.79.
Backlog is the standout: a record, up approximately 80% against the end of the third quarter of 2025, and at a record level in each of the three business units.
Data center sales of $1.8 billion grew about 55% while the rest of the portfolio grew 7%; profitability followed, with adjusted EBITDA margin at 7.8% from 6.8% and operating margin at 6.2% from 5.6%.
The one thing that matters: the backlog claim is corroborated by the cash flow rather than resting on management's word. Of the $276.6 million swing in operating cash flow, $227.3 million came from deferred revenue on customer advances and milestone billings, so customers are prepaying for work not yet recognised.
Key metrics
Metric
Reported
Prior year
Change
Net sales
$7,226.4
$6,199.1
16.6%
Organic sales growth
16.6%
12.1%
—
Data center sales
$1.8 billion
—
up ~55% YOY
Total company backlog
up by approximately 80% compared to the end of the third quarter of 2025
—
—
Adjusted EBITDA margin
7.8%
6.8%
100 basis points
Free cash flow
$184.2
$(89.3)
306.3%
Guidance changes
Item
New guidance
Prior guidance
Full-year 2026 outlook
again significantly raising our full-year 2026 outlook
—
Quality of earnings
The earnings are operationally clean. Adjusted EPS of $5.77 sits $0.34 above GAAP $5.43, a gap almost wholly explained by $24.8 million of digital transformation costs, and adjusted EBITDA grew 32.7% to $561.5 million on 16.6% revenue growth.
Cash has caught up with earnings, though it still trails them. Operating cash flow swung to $193.9 million from negative $82.7 million and free cash flow to $184.2 million from negative $89.3 million, at 64.6% of adjusted net income against negative 45.8% a year ago.
Working capital is where the growth is being funded. Trade receivables rose to $5,050.2 million from $4,069.6 million at year-end and inventories to $4,687.1 million from $4,008.8 million, against accounts payable up to $4,166.1 million from $3,030.5 million.
Gotchas & watch items
The operating cash flow swing is more timing than trading: $227.3 million of the $276.6 million increase came from deferred revenue and $326.9 million from accounts payable, offset by $169.3 million from inventories and $90.0 million from receivables.
Growth is narrower than the headline: UBS grew only 6.6% organically to $1,520.5 million while CSS rose 21.4% and EES 17.8%, and excluding data centers the portfolio grew 7%.
Digital transformation costs are still climbing, not tapering: $24.8 million in the quarter against $10.4 million a year ago, $65.5 million for nine months against $24.1 million, plus $12.6 million of cloud computing amortisation, all added back to adjusted EBITDA.
The leverage improvement is earnings, not debt reduction: total debt net of cash is $5,215.7 million against $5,224.6 million at year-end, so the fall to 2.8 times from 3.4 comes from trailing adjusted EBITDA rising to $1,846.0 million from $1,536.5 million.