Legrand SA

Hello, everybody. Benoit speaking. Thank you for connecting. I'm with Franck Lemery, our CFO, and Ronan Mark, and we are happy to welcome you to the Le Grand 2024 full results presentation. Please note that this call is recorded. As you know, we have published today our press release, financial statements, and a slideshow to which we will refer. After a few opening remarks, we will comment the results into more details. I begin on page four with the three key takeaways of this release. First, we fully achieved our 2024 targets with both a nice growth coming from data centers and M&A and high levels of profitability and cash generation. Second, the many initiatives we pursued in 2024 are clearly putting us on track to meet our 2030 ambitions. Third, we are setting 2025 targets aimed at accelerating growth with sales up between plus six and plus 10% for the full year. Starting on page six, We fully achieved our targets for 2024 with organic plus M&A sales up plus 3.9%, 20.5% adjusted EBIT margin after acquisitions, and 113% of CSR achievement rate. Moving to page 7, I will comment the sales trend. In 2024, excluding FX and Russia, our sales increased by almost plus 4%, including an organic trend of plus 1% and a positive scope from acquisitions of plus 2.8%. In the fourth quarter alone, sales grew organically by plus 6.2%. Over the year, this is a remarkably good performance when considering the market environment. Regarding the two other demands on sales, the negative scope effect from Russia was of minus 0.6% in 2024, and the exchange rate effect was a negative minus 0.5% in 2024. Looking forward, the carryover of the acquisitions already announced should be close to plus 4% in 2025, based on their likely dates of consolidation, and based on average rates of Jan The FX effect will be around plus 1.5% for the full year 2025. You will read on page 8 the key takeaways per geographies on a like-for-like basis. In Europe, sales fell organically minus 2.3% full year. In a building market in retreat in most geographies, Q4 alone was flattish at plus 0.6%. In North and Central America, sales were up plus 4.5% in 2024, with an impressive plus 11.6% in Q4 alone. Over 12 months, this performance is due to the marked success of our data center offerings. Lastly, in the rest of the world, sales were up plus 1.3% in 2024, with a plus 7.2% increase in the fourth quarter alone. Sales grew well in India and other geographies, but we experienced a sharp fall in China, where construction markets remained in steep decline. These were the main comments I wanted to make on sales. I will now hand over to Franck to give you more color on our financial performance.

Thank you, Benoit. And good morning to all of you. I will start on page nine, commenting the adjusted operating margin. Before acquisitions, we recorded a very solid adjusted operating margin of 20.6% at your hand. This high level of profitability demonstrates, once again, the quality of Le Grand Commercial position and its strong ability to create value in a market environment that remained complex. The impact of acquisition was of minus 0.1 points, meaning the adjusted operating margin all-in stood at a high 20.5% at the end of the year. Going now to page 10. First, the net profit stood at 1.2 billion euros, representing 13.5% of our sales. And second, the free cash flow came to 1.3 billion euros at 14.9% of sales for the year and a conversion rate of 111%. On page 11, we can see the robustness of our balance sheet with a net debt to EBITDA ratio of 1.5 at the end of the year end. This level reflects the pace of acquisitions since the beginning of the year, as well as the group very solid generations of free cash flow. That concludes the key financial topics I wanted to share with you now, and I'm handing over back to Benoit.

Thank you, Franck. I will continue the presentation on page 13 regarding our 2024 proposed dividend of €2.2 per share, up plus 5.3% compared to last year. This proposal is fully in line with a consistent payout policy of close to 50%. Let me now move to our 2024 CSR achievements on page 15 and 16. On page 15, in 2024, Legrand reached an achievement rate of 113% on the targets set for the third and last year of its 2022-2024 CSR roadmap. We overall had strong showings, especially in our carbon footprint reduction achievements, and as expected, some challenges regarding circular economy. As you can see on page 16, we are particularly proud to have clearly outperformed our targets in terms of scope 1 and 2 CO2 emission reduction, down 53% at current perimeter over three years. We also enabled our clients to avoid the emission of 15 million tons of CO2 thanks to our energy efficiency offerings. Results on gender diversity are also very good, with now more than 30% management positions filled by women. Let's now move to page 18, where you will find a reminder of our 2025-2030 ambitions. In a nutshell, we target to combine organic and M&A yearly sales growth of plus six to plus 10% with sustained and consistent value creation and capital allocation. The main initiatives we pursued in 2024 are clearly putting us on track to meet those ambitions. From page 19 to 23, we are detailing our leading position in data centers, which will continue to significantly boost our growth in the years ahead. So page 19 and 20, data centers now represent 20% of our sales on a pro forma basis, with average annual sales growth over the last decade. five years of plus 19%, of which plus 13% was organic. Page 21 and 22, Legrand focuses on delivering high value, modular, customizable, and highly configurable products that are critical for data center to ensure business continuity and optimal performance. The best illustration of the unique position we have in the market is to give some examples of the highly technical projects we had in 2024, which we illustrate on page 23. As you can see, the size of such projects can be quite material. They involve many stakeholders, a very agile supply chain, and require highly customized offering and services to meet demanding decision makers' expectations. This is for data centers. We will, of course, be happy to provide you more granularity during the Q&A session. Let's move now to M&A. From pages 24 to 26, our pace of acquisition was particularly dynamic this year with nine acquisitions announced this last 12 months, adding around 430 million euros of acquired sales on an annual basis. These new companies allowed us, first, to complement our expertise in data centers with five additional companies for 240 million euros acquired sales. Second, to enter the promising connected health market with innovation and performance announced today. Lastly, to almost double our sales in Oceania with MSS and APP. Since 2020, we invested around 3 billion euros to acquire 25 companies for around 1.2 billion Euro annual sales. 60 of them were in the buy-in energy and digital transition field. We intend to pursue this momentum in the coming quarters, keeping our financial discipline intact, of course, in terms of value creation. This is for M&A. Another pillar of our development model is innovation. On page 27 and 28, Driven by a strong R&D representing 4.5% of sales in 2024, Legrand was very active in terms of new product launches in both energy and digital transition and essential infrastructure products. Lastly, we show on page 29 that the level of customer satisfaction, a key element of our strategy, is high and keeps improving thanks to the numerous initiatives we launched in this domain. We can now move to page 31 regarding 2025 full-year targets, taking into account the world current economic outlook and the customs policies effectively applied as of the date of this publication, Legrand has set the following full-year targets for 2025. Sales growth of between plus 6% and plus 10%, combining organic and acquisitions, and excluding currency effects. adjusted operating margin after acquisitions, holding stable overall compared with 2024, and at least 100% CSR achievement rate for the first year of the 2025-2027 roadmap. This is it for the key topics of this release. Just before we move to the Q&A session, let me remind you that you will find in pages 34 to 36 our corporate access agenda for 2025 should you wish to meet with Le Grand Management. Let's now switch to Q&A. Thank you.