FOMAC rate decision on Wednesday is a big one. Expectation is a +25 basis point rise.

$ASML had a strong quarter:

• Net income grew 37.6%

• Raised its 2023 outlook

•China restrictions had no significant impact, but it’s missing out on a major market.

The stock is down today on China and broader semi market uncertainties (chip firms using ASML machines still face inventory challenges).

Wesco International, ticker symbol $WCC, is a prominent provider of B2B distribution, logistics services, and supply chain solutions. Despite its seemingly mundane nature, Wesco's services play a crucial role in several exciting growth trends, including electrification, grid modernization, green energy, automation, 24/7 connectivity, reshoring, and digitalization.

Beyond typical distribution services, Wesco offers value-added solutions to enhance customer operations. These include supplier vetting, technical product support, warehousing and inventory management, equipment assembly, kitting and labeling, and even AI-driven analytics for inventory optimization. With its scale and distribution capabilities, Wesco is an essential partner for its customers, with over 70% of revenue tied to services.

Wesco's history dates back to its establishment in 1922 as the in-house distribution arm of Westinghouse Electric Corporation. In 1994, Wesco's management team acquired the business and steadily expanded its customer base and product lines through organic growth, acquisitions, and a significant merger with Anixter in 2020.

The company currently serves three primary markets: Electrical & Electronic (42% of revenue), Communications & Security (30% of revenue), and Utility & Broadband (28% of revenue). Wesco provides a wide range of products and services in these sectors, encompassing electrical equipment, wire and cable, automation and connected devices, access control, lighting, power, safety, and security products.

Despite the challenging circumstances of the COVID-19 pandemic and the need to issue substantial debt for the Anixter merger, Wesco managed to weather the storm effectively. The countercyclical nature of its business model and low capital expenditure requirements enabled the company to generate nearly $500 million in free cash flow in 2020. The merger with Anixter also surpassed expectations, with cumulative cross-sell synergies reaching $966 million, targeting $1.4 billion by the end of 2023.

Wesco boasts several advantages that contribute to its success. First, its scale as the largest player in the $100 billion market grants access to volume purchasing discounts and reduced shipping costs. Second, its global distribution network comprising 800 branches, warehouses, and sales offices facilitates quick and widespread product delivery to over 400,000 locations in more than 50 countries. Lastly, its service capabilities, including integration within customer operations, provide recurring revenue and cross-selling opportunities.

The merger with Anixter not only increased Wesco's scale but also reduced revenue cyclicality and expanded its exposure to higher-growth and higher-margin end markets. With a long-term EBITDA margin goal of 10%, Wesco aims to surpass its typical mid-single-digit levels.

Wesco has demonstrated resilience amid the global economic slowdown, posting record sales, gross profit, and earnings per share in the third quarter. Additionally, all three business segments experienced double-digit growth and achieved record backlog levels. The company's heavy inventory investments are expected to result in a significant increase in cash flow, with over $4 billion in operating cash flow anticipated over the next four years. This cash flow will be utilized for share repurchases and the initiation of a $1.50 per share dividend.

John Engel, Wesco's CEO since 2009, has led the company with exceptional execution, including successful integration of acquired businesses. Debt reduction following the Anixter merger has improved Wesco's financial position, with a target leverage range now within reach. The company has also resumed making acquisitions, such as the recent purchase of Rahi Systems, a provider of data center solutions.

Looking ahead, Wesco aims for "mid-single-digit-plus" organic sales growth and EBITDA margins exceeding 10%. Given the company's track record and competitive advantages, an investment in Wesco is expected