Legrand SA

Good morning, ladies and gentlemen, and welcome to today's LaGrange 2023 nine-month results conference call. All participants are in a listening mode. Later, there will be a question and answer session. For your information, this conference is being recorded. At this time, I would like to hand the call over to CEO Benoit Cocard and CFO Frank Lemary. Please go ahead, Seth.

Thank you. Hello, everybody. Thank you for connecting to this call. So as usual, Franck, Renaud, and myself are happy to welcome you to the nine-month conference call and webcast. Please note that this call is recorded. We have published today, as you know, a press release, financial statements, and a slideshow to which we will refer. Those documents are available on the Legrand website. After a few opening remarks, we'll comment the results into more details. I begin on page four of the deck with the three key takeaways of this release. First, Legrand recorded very solid results in a contracting building market. Second, we actively pursue our growth strategy through dynamic external growth in buy-in segments. Third, we have specified our full year targets. So moving to page six to seven, I will start with an overview of sales. In the first nine months of 2023, excluding Russia and FX, our sales grew by plus 5.8%, driven by an organic rise of plus 3.7% and a scope of acquisitions of plus 2.1%. In a contracting building market, these figures point to our resilience. It is driven by faster expanding segments, energy efficiency, data centers, and connected products, pricing, robust commercial performance, and active M&A. Regarding the two other elements on sales, the negative scope effect from Russia was minus 0.7%, and is expected to be minus 1.0% on the full year. The exchange rate effect was a negative minus 2.4%, that should be close to minus 3% for the full year based on average rates of October. On page 7, you will find the key takeaways per geographies on a like-for-like basis. In the first nine months of 2023, the group achieved overall a solid level of growth despite the global building market in retreat. Europe grew a very solid plus 7.1%. With a third quarter alone delivering plus 7.6%, this remarkable performance is driven by a strong growth in each faster expanding segment. In the U.S., we recorded a decline of minus 1.6%. In an environment that saw building markets lose ground overall, we resist thanks to strong double-digit growth in sales to data centers. Finally, the rest of the world area, sales marked an organic rise of plus 6.2% over nine months, driven by very sustained growth in India, Africa, and in the Middle East. These were the main comments I wanted to make on top line, on sales. I will now hand over to Franck for more color on Robert's financial performance.

Thank you, Benoit. Good morning to all of you. I will start on page nine, commenting the adjusted operating margin. Before acquisitions and excluding Russia, we recorded a high adjusted operating margin of 21.9% over nine months, representing a remarkable plus 1.7 points increase versus last year. The high profitability level of the period demonstrates, once again, Legrand's strong resilience in an unfavorable market environment. The impact of acquisition and of Russia was of minus 0.3 points, meaning that the adjusted operating margin all-in over nine months stood at 21.6%. Going now to page 10 and highlighting two main points. First, with a net income of €937 million, representing 14.9% of our sales, Earning per shares were up plus 15.9%, showing very strong value creation. It benefited from the favorable trend of operating profit, favorable trend of financial results, as well as a lower income tax rate. Second, the cash generated during the nine-month period is remarkable. with cash flow from operations up plus 9.6% at 1.3 billion euros. And despite a still strengthened coverage of inventory, free cash flow stood at 19.2% of sales. These strong financial indicators demonstrate continued best-in-class profitability and cash flow generation. Moving now to page 11, we have a sound balance sheet testified by two indicators. First, the net debt to EBITDA ratio stood at 1.1. More than 90% of our debt is at fixed rate, and the maturity is 4.4 years. And second, we have 3.2 billion of available cash. This concludes the key financial topics I wanted to share with you, and I'm now handing over back to Benoit. Thank you, Franck.