Legrand SA

Good morning, ladies and gentlemen, and welcome to today's Legrand's 2024 First Quarter Results Conference call. For your information, this conference is being recorded. All participants are in a listen-only mode. Later, there will be a question and answer session. At this time, I would like to hand the call over to CEO, Mr. Benoit Cucart, and CFO, Mr. Franck Lemery. Please go ahead, sir.

Thank you very much. Good morning, everybody. Franck, Ronan, Marc, and myself are happy to welcome you to the Legrand 24 Q1 conference call and webcast. As you know, we have published today our 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 will comment the results into more details. I begin on page 24. four of the deck with the three key highlights of this press release. First, in a building market in retreat as expected, Legrand reports lower sales and good margin resilience. Those results are in line with our expectations. Second, we are actively executing our strategic roadmap. Third, we confirm our full year targets. As a reminder, we will host the Capital Market Day in September 2024 in London. So moving to pages 6 and 7, I will start with an overview of sales. In the first quarter of 2024, excluding exchange rates and Russia, our sales decreased by minus 3.7%, with an organic trend of minus 5.4%, and a positive scope from acquisitions of plus 1.8%. Considering that the building market, which represents 80% of our sales, is experiencing, as expected, a market slowdown across most geographies, this limited decline in revenue highlights the strength of our business model, the solidity of our market positions, and the execution capabilities of our teams. Regarding the two other elements On sales, the negative scope effect from Russia was minus 1.1% on the quarter and will be minus 0.6% on the full year 2024. The exchange rate effect was a negative minus 1% on the quarter, and based on average rates of April, it will be close to 0% for the full year. On page seven, you will find the key takeaways per geographies on the Life4Life basis. The quarter was overall impacted by, first, difficult building markets, as expected, including in Europe, US, and China, and second, by some technical shifts, including less number of days, significant basis for comparison, and to a lesser extent, slight destocking. We expect a sequential improvement of the Life4Life sales evolution with Q2 being better than Q1 and H2 better than H1. In total, the light for light decline in sales was minus 4.7% in Europe, minus 6% in North America, and minus 5.8% in the rest of the world. These were the main comments I wanted to make on sales. I will now hand over to Franck for more color on our financial performance.

Thank you, Benoit, and good morning to all of you. I will start on page 8, commenting the adjusted operating margin. Before acquisition, we recorded a solid adjusted operating margin of 20.6%. The level of profitability of the group, once again, demonstrates Legrand's ability to protect its margin in the context of declining sales, thanks to its intact pricing power and a solid cost control. the impact of acquisition was of minus 0.1 points, meaning that the Q1 2024 adjusted operating margin all-in stood at a 20.5%. Going now to page 9 and 10. First, the net profit stood at 266 million euros, representing 13.6% of our sales. And second, The free cash flow came to 146 million euros at 7.2% of sales for the quarter. It's in line with group historical seasonality. On page 11, two figures to illustrate the robustness of our balance sheet. We have a net debt to EBITDA ratio of 1.2 at the end of the quarter and a high cash position. Our cash generation and our balance sheet are clear enablers of the M&A development that Benoit will comment soon. This concludes the key financial topics I wanted to share with you this morning. I'm now handing over back to Benoit. Thank you, Franck.