Legrand Sa Unsp/Adr

Good morning, ladies and gentlemen, and welcome to today's Legrand 2025 nine-month 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 Coucart, and CFO, Mr. Franck Lemery. Please go ahead, sir.

Thank you very much. Good morning, everybody. Franck, Lemery, Roland-Marc, and myself are happy to welcome you to the Legrand 2025 nine-month result conference call and webcast. Please note that, as usual, this call is recorded. We have published today our press release, financial statements, and a slideshow to which we will refer. I begin on page four with the three key highlights of this release. First, Legrand delivered robust sales growth and very solid margins over nine months. Second, we are sustaining a strong acquisition momentum. And third, our 2025 full-year targets, right in July, are confirmed. So moving to page six, I will start with another view of sales. Over nine months, excluding FX, our sales grew by plus 14.5%. This includes an organic growth of plus 8.2%, driven by an outstanding performance in data centers of well above plus 30%. This also includes a positive scope effect of plus 5.8%, and based on acquisitions announced and their likely dates of consolidation, the full impact of scope changes should be around plus 5%. For exchange rates, effect was a negative minus 2.2% in the first nine months of 2025, and based on the rates of the month of October, it would be around minus 3% for the full year. On page 7, you will find the key takeaways per geography on a like-for-like basis. In Europe, in a market that remains overall contrasted, sales were up plus 1.5% over the first nine months of 2025. In North and Central America, sales were up a strong plus 18%, driven by an outstanding performance of data center offerings. Finally, in the rest of the world, sales increased by plus 2.5%, with growth in Asia Pacific and the Middle East, partially offset by a retreat in South America and Africa. Overall, at group level, as expected, most of the organic growth is coming from data centers that represent 25% of our sales at the end of September, while our sales in residential and other non-residential buildings are flattish, with residential slightly down. These were the main comments I wanted to share 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. with adjusted operating margin. At center per hand, we recorded a solid adjusted operating margin of 20.7% after acquisition. These represent 20 bps of increase year on year, including 10 bps on organic improvement and 10 bps favorable impact coming from acquisitions. The group's profitability over the first nine months demonstrates the strength of our strategic model and the solid capacity for execution and adaptation, notably amid evolving global trade policies. Going now to page 9, the net profit stood at 892 million euros, representing 12.8% of our sales. The increase coming from operating profit is partially offset by the impact of financial results and a modest rise in corporate income tax. the free cash flow came to 871 million euros, growing plus 16.3% over the same period of last year. This concludes our key financial topics that I wanted to share with you this morning. And I'm now handing over back to Benoit.

Thank you, Franck. We are now moving to page 11, detailing our recent acquisitions. Since Jan, we have announced seven acquisitions, all in buyout markets tied to the energy and digital transition, for a total acquired annualized sales of approximately 500 million euros. It includes Aftron, page 12, a very promising leader in North America and a highly strategic acquisition. First, Aftron's trend takes a presence in growing data centers, gray space, and energy transition in North America. Second, financial metrics are robust, close to 300% $50 million of sales with high profitability. Third, the transaction is fully compliant with our usual financial criteria of value creative deals. By the way, I'm happy to confirm that we have just closed the deal a couple of days back. These transactions illustrate our ability and expertise in continuously strengthening our leadership in buy-in fields of activity. To conclude this section, on page 14, we confirm the 2025 full-year targets we raised in July 2025. Building on the achievements we've just mentioned and taking into account the first nine months of 2025 results, we target for the full year sales growth, organic and through acquisitions, excluding currency effects of between plus 10% and plus 12%. This includes expected organic growth of plus 5% to plus 7% and growth from acquisitions of approximately plus 5%. an adjusted operating margin after acquisitions of 20.5% to 21% of sales and at least 100% CSR achievement rate for the first year of the 2025-2027 roadmap. Those were the key topics of this release. I suggest we now switch to Q&A.

Thank you. To ask a question, please press star 1 and 1 on your telephone. and wait for your name to be announced. To answer your question, please press star 1 and 1 again. We will now take the first question. From the line of Daniela Costa from Goldman Sachs, please go ahead.

Hi, good morning. Thank you so much. I have three questions, but they are quick. But the first one is in terms of looking at your guidance and given what you've done already in the first nine months, I guess if you take the midpoint of the organic sales growth, you're expecting a flat Q4, which seems to imply sequentially even more deceleration than what a tough comp means. Can you talk through what would be the things that would get you to that level and why? The other two questions are quicker, are just what was data center growth and what was your pricing and tariffs headwind?

Okay. Hello, Daniela. I will take the three questions. I will start actually by the data center growth because it explains a lot about our performance in 2025. So... As I told you, over the first nine months of the year, we grew well above 30% in data center. For the full year, we are somehow raising our guidance target for data center growth. We expect now that we should grow in data centers by about 30% in 2025, full year. As you remember that we started the year hinting that we would grow from 10 to 20%. Then we narrowed that and we increased it three months back by saying that we should grow 20 to 25%. And we now believe that given what your orders enhance and so on and so forth, that we should grow 30%, which is a good performance because at the end it would imply that over two years, compounded, we would have grown 50% in data centers. 50%, five years old. Plus 1515 in 2024, plus 3030 in 2025. So plus 50%, which, by the way, is pretty in line with what our listed peer has released, because iTrust is also at about plus 50% over two years. So it's a very good performance, probably slightly above what the data center market growth is doing. and we believe that nice growth will continue into 2026. Now, the fact is that we have a demanding basis for comparison. You remember that in 2024, we started the year very flattish in data center in Q1, and then we did plus 10, plus 20, plus 30%. In other words, in H2 2024, we had a plus 25% growth. with an even higher Q4. So, the visible deceleration, if I may say, is purely visible. We are at about plus 50% over two years. We're going to be close to plus 50% in Q4, but we have to acknowledge the fact that the basis for comparison in H2, and especially in Q4, is demanding for for data center. So that's the story of this year as far as data center is concerned. Very sustained growth all over the year. No deceleration, but the demanding basis for comparison. So it explains clearly the perceived deceleration that you are mentioning. Now, if you look beside data center as a total of our sales, year to date, over two years, we are at plus 7%, and the midpoint of Q4 would imply two years plus 6%. Now, it's not forbidden to think that we could do better than the midpoint, but again, the whole visible deceleration, if I may say, is coming from a base for comparison, not from a weaker data center business. As far as The building piece is concerned because I remind you that, of course, 25% of our sales is going fast, but we also have 75% of our sales made in buildings. It is pretty flattish. As I said in my introduction, with commercial being slightly better than resi, mostly because resi is very down in China, a little bit down in the U.S., but overall it remains pretty flattish, and we don't expect it to recover in Q4. So, So to make a long story short, the story of 2025 is going to be very strong, sustained growth in data centers of about 30%, and somehow quite a flattish building business, which is probably a little bit better than that. As far as pricing is concerned, which was your last question, we have a selling price over the first nine months of the year of plus 1%. And for the full year, we will continue to do a bit of pricing. So for the full year, our pricing should be at about plus 1.5%. So if you look at the quarter by quarter basis, you will basically have Q1 pretty flat, Q2 plus 1, Q3 plus 2, Q4 plus 4. This is more or less, let's say, with rounded numbers, the pattern of pricing. So our strategy has been, since the beginning of the year, to do progressive pricing, not too aggressive, because, of course, we want to keep our competitive positioning. We are doing it to compensate the impact of tariff, can share another number which is interesting. Our purchase price are up by about plus 4% of the first nine months of the year, entirely due to, entirely due to tariff. Yeah, Q4 is, sorry, plus 3%. Franck is mentioning, so pricing, again, zero in Q1, plus one in Q2, plus two in Q3, plus 3 into 4. And the net of all that, let's say, over 12 months is approximately plus 1.5% of the full year. Does it answer your questions? Sorry, it was a bit long, but I thought it was interesting to give you as much granularity as possible.

Perfect. Thank you very much. Just on the Q3 data center growth, I got the full year at 50, but I'm not sure. Maybe I got lost.

Well, it's... For the first nine months, it's well above 30%, so it remains above 30% in Q3, and it will be above 30% for the full year.

Got it. Thank you. Thank you. We will now take the next question from the line of Gaël Debray from Deutsche Bank. Please go ahead.

Thanks very much. I have a couple of questions, please. The first one on pricing, it appears that the 1.5% price increase for the full year is a bit lower than what you had suggested previously. So do you think the price negotiations have changed versus a couple of quarters ago? I mean, have they become any harder or is it still the same environment, especially in the U.S. where data center customers are paying for the speed of delivery? So that's question number one.

Well, yes, you are true. When we released our six-month number, we said that we would be close to 2%. Now we are more, let's say, guiding for 1.5%. The key difference is coming from tariff, actually. So it's not that we have more difficulties to pass on price increases, but three months back we told you that the tariff impact on a yearly basis should be somewhere between 140 and 180 million U.S. dollars on a full-year basis. We now believe that it's going to be between $110 and $130 million. So less negative impact, if I may say, coming from tariff. Well, I'm not sure I have to explain why. It's a very fluid situation. Things are moving almost from one week to another. So total impact, $110 to $130 million, of which, let's say, $70 to $80 million are already in the nine-month numbers. So we still have a bit to come in the last quarter, hence less need to do pricing. Now, if I take one step back, I can confirm that the pricing environment hasn't changed. Our customers are always looking carefully at the price increases. They want to make good deals, whether it's data centers or S-Wealth. This hasn't changed, but at the same time, we keep our ability to do a bit of pricing because we have many other topics in which to play. Availability, as you rightly mentioned, reliability of our solutions, quality of our after-sales service, and so on and so forth. So no change in pricing environment, but a little bit less impact from time.

Okay, understood. And then the second question is on the incremental margin. I'm just curious as to kind of the outlook for incremental margins. I mean, in Q3, the margin was flat. But if revenues are looking better, let's say, in the course of 2026 in the European residential market, can we assume that we will also see much higher incremental margins with support from a better mix?

Well, Gaël, you are becoming greedy. Always. We have a long-term guidance which is 20%. For the fifth year in a row, we'll be above this guidance because we are shooting for 20.5% to 21% EBIT margin, which we believe is a pretty healthy level of margin. For 26%, let's discuss that later. in February, if you don't mind. What I can confirm during this call is that, as you know, we raised our margin target in July, and we are confirming that we will be between 20.4 and 21%. And by the way, we are right in between over the first nine months of the year with this 20.7% margin. For the 26 topic, let's just say that in February.

And is there any reason to think that the usual negative margin seasonality in Q4 will not apply?

Well, you know our targets.

We have a year-to-go margin, which is between 19.9% and 21.8%. If you look at what we did over the past five or six years, we've done both. So there's no reason to believe why our guidance margin wouldn't be met. So we were comfortable with the fact that it would be between 20.5% and 21%. Okay. Now, if you want me to give you a bit more color on what happened in nine months, it's a very clear story. As you could see in the numbers, we have a margin which is up 20 bps, right? At 20.7%, with a bit of a solution coming from acquisitions. So without acquisitions, our margin would be up 10%. Well, it would be up, I'm sorry, not 10%, 10 bps. It would be up 30 bps if we take out the other expenses, as you know, because you know Le Grand Well, you know that our EBIT margin is after... one-off, exceptional, and so on. So it's plus 30 bps, of which minus 40 bps from gross margin, plus 70 bps from leverage on SG&A. All those numbers being like-for-like. So minus 40 bps gross margin is the fact that our pricing is not fully compensating in margin inflation, which was expected, and plus 70 bps on SG&A is leverage coming from the gross margin. So it's a pretty clear-cut story, and I confirm that our P&L is well under control and that we will learn where we said we would learn.

Okay. Do I have time for just one more question?

Well, a quick one, Gaël, because you have a couple of colleagues that are queuing.

Yeah, I know. So a very quick one. I mean, Eaton and Schneider have made big moves into liquid cooling recently. And I know you have, well, some kind of an offering here in Rio d'Or heat exchangers. I'm just wondering if you can increase the scale of that business so that it can really compete against the likes of Schneider, Eaton, and Vertiv.

Well, it's increasing fast, and the growth rates are pretty impressive on this business, even though it's a small one. Of course, we are always looking at opportunities to expand our portfolio and to grow faster. So if we find good opportunities for additional customer catch, for capacity expansion, or even for M&A, why not? Now, it is a fact that in this business, specifically this one, the price of the assets have gone up very significantly. And you know that at Legrand, we are not fond of deals where you have a return on invested capital of 2% or 3%. So, yes, we are growing fast already from a small base. We look at opportunities to expand, but, of course, we will do it with our traditional value-attractive approach.

Thank you very much.

And by the way, it's worth mentioning that even though we are less exposed to cooling than Vertiv, overall, those were the numbers I was mentioning a little bit earlier, over one year and two years, we are growing as fast as Vertiv. So we don't need to be much bigger in liquid cooling in order to sustain very, very rapid growth.

Understood.

Thanks. Thank you. As a reminder, it is star one and one to ask a question, and we kindly ask participants to limit to one question and one follow-up per person. We will now take the next question from George Featherstone from Barclays. Please go ahead.

Hi. Morning, everyone. So I just wanted to start with a bit of a follow-up on the fourth quarter implied guidance. Because given your message on pricing up 3% in the quarter, it sort of implies that you're expecting volumes to come down based on your four-year guidance. So what would be the reason for that would be the first question, please.

Well, it depends where you put yourself in the guidance. If you are in the mid, yes. If you are up, no. Well, again, I don't want to spend too much time on that. It's purely basis for comparison. To give you the numbers, Q4 was up by more than 6% last year. first nine months were down about 1% last year. So there's a significant basis for comparison, which we highlighted already three months back, and which we are highlighting again today. No change in trend. Really, I cannot say it louder than that. No change in trend as far as data center is concerned. No change in trend, neither actually positive nor negative when it comes to the building site. So it's purely basis for comparison. It was factored in our initial guidance back in February. It was factored in our upgraded guidance back in July, and it is factored in the fact that we are confirming the guidance today.

Okay, thank you. And then maybe just on the data center business, you've been quite helpful in the past giving us some color on

backlog and your visibility you have is there any color you can give on that again and then maybe on on the orders for the quarter just sort of growth rate so we can frame that thank you it's a it's a it's a it's a fair question well the kpis are pretty well uh positively uh uh positive we have a book to build in q3 which is still above uh one percent uh sorry one by one percent one We have a backlog which is above a billion US dollars, so no worries at all when it comes to, let's say, the leading indicator of our data center business. We have a good inflow of orders. We are looking with great interest at all the investments which have been announced by the big guys. and which says a lot about the potential business in 26 and 27. So, again, I read a few notes this morning saying that our sales are a bit disappointing, but I want to say clear and loud that we are extremely confident on the fact that we're going to grow nicely our data center business in 2025, again, by about plus 30%. and that this trend should continue going into 2026. No worries at all of the fact that this business would slow down. It will not.

Okay, just maybe if I could just press you a little bit more on that. Some of your peers have talked to order growth in the third quarter of over 65-70% year over year and the more exposure you have to white space and those like cooling the stronger that number is. Can you give us some context where your orders year-over-year have landed relative to those peers?

The comparison is a bit difficult from one player to another because either you are on product families where you have shortage, in which case orders are placed sometimes a year or two in advance, or you are in business families where you don't have shortage because the companies have managed to increase capacity in the right pace, in which case the orders do not need to be placed a year or two in advance. So I'm not sure it is, you know, relevant to compare the order growth of the company X to the order growth of the company Y. What matters is really the book to build, number one, and at the end, what matters is the actual sales. And again, we've been consistently telling you for five years now that our sales growth in data centers were at worst comparable to what our peers were releasing and quite often better. And again, looking at what we're going to do in 2025 and what we did in 2024, this is exactly what we are demonstrating. So there's no worry at all. Again, on the data center front, we have a very good inflow of orders from all customers. There's no customers missing, if I may say, from all geographies. It's not solely U.S. stuff, but we have a good inflow of orders coming in Southeast Asia, in Western Europe, in Eastern Europe, in Africa, and so on and so forth. And we are confident in the fact that this business is going to continue to perform very well in the quarters to come.

Okay, thank you.

Thank you. We will now take the next question. From the line of Jonathan Monte from BNP Paribas Exxon, please go ahead.

Hi, everybody. Thanks for letting me ask a question. I just want to understand how the business mix, maybe pricing power ultimately is evolving. I mean, we all know that I think you've delivered price rises every year, at least going back to the 90s. And this pricing power has obviously protected margins in many environments. But I'm just wondering now over the long term going forward, you know, one quarter data centers seems to me the business model, the go-to-market is not the traditional construction building go-to-market, you know, via distributors to selling to electricians. Instead, you're competing for tenders into hyperscalers, et cetera. I'm just wondering what that means for the through cycle pricing power. It seems to me that While things are great today, and I'm not calling the end to that, at some point when volume growth maybe slows or industry capacity catches up with the growth, is this really altering the through-cycle pricing power of your group to have an increasing proportion of it dominated by data centers?

Well, I don't believe that the pricing power came from the fact that we are selling our building stuff through distributors. Pricing power is coming from the fact that price matters a lot for our customers, contractors whether big or small, but it's not the number one criteria. Number one criteria is, or let's say two or four first criteria, are the products reliable? Will I have to come back on site to fix a quality issue? Are the products available very easily? Can I save time when installing the product? And so on and so forth. And the same applies to data center customers. I can tell you that Amazon, Google, Microsoft of the world are very price sensitive. They've always been very price sensitive. But on top of price, or even before pricing, they want to make sure to have the product on time. They want to make sure that once the product is installed, things will work because any Service interruption is a loss of money. They want to make sure that if there is an issue, somebody will fix it quickly on site within a few hours, and so on and so forth. And of course, they want to have all that in a cost competitive way. So in other words, I don't believe that the fact that we're doing 25% of our sales in data center change anything when it comes to pricing power. And going forward, I'm confident in our ability to pass on small pricing phases year on year, providing, of course, we are doing things well when it comes to product quality, service, and so on and so forth. So, no, I don't believe it will change anything as far as pricing is concerned. And actually, if you look at the past couple of years, we've not done a lot more pricing nor a lot less pricing in data centers and in buildings. So the pricing pattern has been more or less similar.

Okay. Just as a follow-up, thinking about the inherent lumpiness of data centers, I mean, we can see that consensus maybe struggles somewhat to forecast the growth rate, at least on a quarterly basis, as we see this quarter. I'm just trying to think, maybe give us some color on the largest customers and projects. I mean, after all the growth we've seen over the last 12 months, what's the kind of typical mix in terms of hyperscalers, say, or the top five projects that you sell into, I mean, do they represent a considerable amount of the data center's exposure? And, you know, how fast does that sort of mix evolve? You know, in a couple of quarters, could it look radically different? Just trying to understand what the sales mix looks like on those two axes, and therefore maybe better understand how the sales bridge works for data centers. Do you basically just track data center capex, or... Is our revenues, at least on a quarterly basis, often quite concentrated around, say, a few big projects and customers?

Well, we'll give you probably a bit more color in February because, of course, we are performing this kind of analysis, but not necessarily on a quarterly basis. Now, to be a bit candid, the difficulty to forecast is your difficulty to forecast, not our difficulty to forecast. Because from the very beginning of the year, we highlighted the basis for comparison. the number one, and number two, again, I'm saying it clear and loud, and I cannot be clearer and louder, but the plus 30% growth in data center in 2025, following a plus 15% growth in 2024, is very good performance, slightly above the market, and completely consistent with what the only other peer releasing its numbers, i.e. Vertiv, has announced. Mid-term, we are... We said in July that we expected the market to grow in the low teens. I don't know if it's going to be 10, 12, or 14% throughout 2030. So, you know, we've been very clear on the numbers. We've been very clear on the basis for comparison. Now, to be a bit more precise, the performance the first nine months of the year is not coming from one single customer, nor from one or two big projects that could have been game changers as far as performance is concerned. So, It's, of course, pulled a lot by hyperscalers because those are the guys, you know, spending the most money, but it's not the only one. Co-location is growing nicely. We are also active on other types of customers. We also have some business going through distributors to data center guys, especially aftermarket or smaller type of data centers. The growth is about the same in the three geographies, North America, Europe, and Australia. and the rest of the world. Of course, data center represents 40% represented the first nine months of the year, 40% of all sales in North Central America. So the total impact on our global performance is much higher in North Central America than elsewhere. But as far as the growth is concerned, it's pretty the same between the three zones. So again, it's nothing special to mention except that the market has been growing nicely and we will grow but by a great plus 30% and going forward we expect some growth to continue. And we try to give you more color in February where we will have more detailed analysis by type of customers and so on and so forth.

Thank you. We will now take the next question from the line of Alistair Leslie from Barnstein. Please go ahead.

Yeah, thank you. Good morning. Just a sort of follow up questions, really. Sorry, I don't want to relitigate this too much, but I know you say no change in data centre trends quarter on quarter. But can we just kind of definitively rule out any kind of mixed impact in the quarter in terms of project deliveries? I know it's lumpy, so maybe last quarter was just kind of had a lot of larger orders, just the kind of mixed impacts or any capacity issues? capacity constraints, execution issues in Q3, just so we're absolutely clear.

You're trying to understand whether there was a problem in Q3 or there will be a problem in Q4. The answer, again, read on my lips, if you could, the answer is no. Everything is going very fine. The business is great. We have very strong sales, very strong orders, and we're going to grow 30%. Now, you may have included in your model a growth of 40% or 50%, but we've never guided for that. Our previous guidance for data center was 20% to 25%, and we're even upgrading this guidance, telling you that it won't be 20% to 25%, it will be closer to 30%. So there's nothing specific happening, except that Again, I can only remind you the pattern of last year, 0, plus 10, plus 20, plus 30% when it comes to data center sales, quarter by quarter in 2024. So it's purely, entirely for comparison. Things are going very nicely in the data center business.

Fantastic. Thanks for confirming that. And I guess just a follow-up question. I think you've got 12 months visibility from your backlog. You know, that obviously stretches now, I guess, across most of 2026. So I guess are you seeing indications in that pipeline that maybe deployment growth could be even higher in 2026 than 2025?

Well, be careful. I'm not sure I would call that visibility. Yes, indeed, our backlog is mostly over a year. It doesn't extend much beyond one year. Now, we've always been very careful in mechanically extrapolating a backlog into cells, for many good reasons, because backlog orders can be pushed, they can be cancelled, they can be doubled down, actually. So, I wouldn't go as far as extending the backlog, I mean, mechanically, let's say, converting the backlog into sales. When it comes to a 2026 guidance, both for total sales and for its two components, i.e., building and data center, we will do that in February. We are releasing our nine-month numbers. It's a bit too early to give you a guidance for 2026.

Okay. Thank you, Benoit.

Thank you. We will now take the next question. from the line of Phil Puller from JP Morgan. Please go ahead.

Hi, good morning. Thank you for the question. Can I ask why you've chosen not to narrow the range at this point in the year? It sounds like you're very confident about landing above the midpoint, the data center outlook in Q4. You sound very confident about, it sounds like actually you just upgraded the data center outlook underlying for H2. So I'm struggling to understand what end markets has led you to keep the lower end of the range unchanged. And the follow up to that is I know it's a bit early to talk about 2026. Of course, I was hoping you could offer your current thoughts or what you're seeing on the EU resi and market and the US office market going forward. Are there signs of green shoots? Or have you seen anything this quarter that has made you more or less positive on the outlook for those two key markets?

Thanks. it's not a good practice to to narrow the range in in in in november and you know we still have a quarter to go we still have 75 percent of ourselves in the building where we have absolutely zero visibility um so uh we decided to keep the guidance as it is i'm not sure it would have helped a lot uh the the market to now against so so you know we we talk a lot about data center because it's a It's the most exciting piece of the business today. It's growing fast and so on and so forth. But don't forget that 75% of our business, we have no visibility. As far as the building is concerned, I cannot, of course, comment on 26. I can do the same comment as three months back. We see some positive signs. I can give you an example, France, for example. If you look at the building permits, In France, there has been a sequential improvement quarter on quarter for the past four quarters. And if you look at the last 12 months ending September, it's up mid-single digit, which is a good signal. And we like to see that. And it's consistent with the fact that 2025 will be the third year in a row of market going down. Now, of course, When will it translate in our search? This is always the same question mark. We are quite late in the cycle, and we love to see the early signs of improvement, but we prefer, of course, to see them flowing into our P&L. And the same would apply for the commercial building in the market. We see also positive signs. You all have seen, especially you, some iconic building being built and opened in the U.S., which we love to see, those are signs that the market is not dead and that, you know, some investors are starting to come back. But again, those are early signs, not yet flowing into our P&L. As far as guidance on 26 is concerned, of course, we'll discuss that in February when we release our full year numbers.

Understood. Thanks very much.

Thank you. We will now take the next question from the line of Max Yates from Morgan Stanley. Please go ahead.

Hi. Good morning. I just wanted to ask around pre-buying. And, you know, I guess you've continued to talk about prices rising into the fourth quarter. And I guess I just want to understand your sort of level of confidence around whether you have seen in perhaps your kind of non-data center business, any pre-buying from your distributors and to what extent can you actually have good visibility on this? Is it an easy thing to check or is it really sort of something qualitatively that you have conversations with your distributors about, particularly in the US, obviously, where the price rises are most significant?

No, it's quite difficult to measure. because we don't have two distributors. We have a lot of them. So it's more based on conversations we have with them rather than on a solid, fully reliable KPI that we would track. Based on our conversation, we don't believe there's been any pre-buy. So no pre-buy. The reason being that, or no significant pre-buy, let's say, the reason being that it's super complicated to estimate what the impact of the tariff is going to be see what happened with China 100% additional tariff then negotiations it was cancelled so my feeling is that all distributors are not playing this game of pre-buying all the more as they have the ability to pass on price increases pretty quickly to the market so I think no significant pre-buy no significant other, let's say, technical impact in 2025. So the number of days is not really playing significantly. We haven't seen any inventory building or destocking from our distributors in a given geography, no significant. So I don't believe that any of those technical factors, if I may say, has played on the performance.

Okay, thanks. And maybe just a very quick clarification. When you were talking about your data center business for next year, I wasn't sure if I heard you say we're going to grow 30% in 2025. No, no, no. And that is a good expectation for next year in 20 things. Did I hear you say that or not?

No, no, no. I didn't say that at all. Good that you asked the question. So sorry to guys if it wasn't clear. I said we grew. significantly higher than plus 30% over the first nine months of the year. We're going to grow 30% in 2025 for the full year. For 2026, we don't know yet, and we will give you guidance in February 2026. And for the market throughout 2030, we still expect people mid-teens. Of course, I'm not guiding for a plus 30% in 2016 data centers.

Okay, very clear. Thank you very much.

Thank you. We will now take the next question from the line of Ben Aglow from OXCAP. Please go ahead.

Morning, guys. Thank you for taking the question. Within North America, and obviously I'm trying to back out the portion of non data centers. Is it correct to think that your underlying growth rate outside the data center business is year over year down, you know, down mid single digit or more and it does look as though that that's worse than the preceding quarter. I may have gotten the wrong end of the stick and these these mini models don't really work. But I did want to understand your take on what the underlying trend, year-over-year growth trend is in the non-data center portion in North America. And if there is a change, is that due to residential or office or what's going on there? Thank you.

Well, actually, if you look at the first nine months of the year, In North America, the residential is down, the non-residential is slightly up. And given the relative size of each of the two, overall it's probably about flat. Flat plus, if I may say, because we have... We have a bigger exposure to non-resis and to resins in the US. So, which implies, of course, that the last century is going nicely.

Yeah. Thank you, Benoit. I guess my question is, sequentially, is there any divergence, i.e. between 2Q and 3Q, and I apologize for being unbelievably short-term, but is there any change in that trend, or would you say it's the same?

No, it's about the same. No significant change in trend. Now, of course, the numbers can slightly change one way or the other, but we are not seeing any significant change in trend between H1 and Q3.

Understood. Thank you. And then my follow-up is just on North America in terms of the operating margin, could you give us a sort of sense or a flavor of the margins that come into your data center backlog versus you know, what your let's call it traditional business has been. How potentially accretive or non-accretive to the divisional margin could that be?

Well, I don't want to be too specific on North America or the rest of the, so let me take this question at the group level. There's no significant difference between a data center business margin and our non-data center business. So, of course, let's say the geography of the profitability could be a bit different. In other words, you can have a lower , but the net of that is that we have approximately the same profitability between data center and . This is at group level. There's no reason to believe that it's different at a geographical level.

Okay. Understood. Thank you very much.

Thank you. We will now take the next question from the line of Eric Lemarier from CIC Market Solutions. Please go ahead.

Yes. Thank you. Good morning. Thanks for taking my question. I've got the first one on data center in the U.S. and on market shares. Could you tell us if Legrand still holds leadership position in the U.S. in Busbar and in Peru for data centers or Did you observe any change in market shares in data centers?

Well, we tend to assess our market shares on a yearly basis, more than a quarterly basis. But yes, I can confirm without any doubt that we are leaders in both Busway and PDUs as well as a few other product families, actually. So to make one step back, our market shares in the product families in which we operate have been pretty healthy. When we look at the growth rate compared to the market growth rate, I can confirm that we are doing pretty well. I don't want to be too specific on the number of product families, but yes, to answer your question, yes, we're even by far leaders in those two product families.

Thank you. And maybe if I can follow up still on data centers. If I'm not wrong, Legrand doesn't seem to be listed as an NVIDIA partner in the website of NVIDIA. And I was wondering if I was wrong or any thought why actually you don't list it.

Well, actually, you have a lot of people are releasing press releases about their partnership with NVIDIA. a lot are queuing to apply for being NVIDIA partners. We love NVIDIA. We work very, very well with NVIDIA, but we are maybe, you know, we have a different commercial approach. So we like partnerships. We like working together. We like developing concepts. We like selling products. We are a bit less obsessed by saying that clear and loud to the market.

Okay. Thank you very much.

Thank you. We will now take the next question from the line of Benjamin Hillen from Bank of America. Please go ahead.

Yeah, morning. Thank you for letting me in. I just wanted to ask a question on pricing again. Thank you for the phasing of pricing through the year. Is there a way to disaggregate how you're seeing pricing in data center and your data center exposure versus the rest of And the reason I ask is because some of the competitors in Europe have talked about deflation in certain parts of the market and also across the data center infrastructure kind of wider piece. you are seeing some very, very strong pricing trends in certain areas of that. So just interested in terms of how you're seeing your pricing in data center and how we should think about that medium term. Do you have pricing power? Do you think you can see good pricing there medium term? Thank you.

No, we haven't seen anything of specific pricing pressure, neither in Europe nor elsewhere on data center. Again, referring to what I was saying a bit earlier in this call of data center customers are price sensitive, but it hasn't changed. They were already price sensitive a year or two back, and they remain price sensitive, but it does not, it's a hamper ability to do price increase because, again, price is not the only criteria in the customer's mind. Now, be careful because, you know, there was huge price increases, apparently, in some spaces in the U.S., especially in gray space in the U.S., because of a lack of products, like transformers or stuff like that. So when people were ordering products, it could take as much as a year or two before they got delivered, and apparently a number of players have increased significantly their price. But, well, we are not in a gray space in the U.S. As far as our products are concerned, the lead time has always been pretty reasonable, you know, 8 weeks, 10 weeks, 12 weeks. And we've always had reasonable price increases, and we believe that because we are reasonable in doing it carefully, we believe that we keep our ability to do further price increases in the years to come. So no significant changes in trends when it comes to pricing vis-à-vis neither data center customers nor building customers.

Very clear. Thank you.

Thank you. We will now take the final question from the line of Nick Hosten from RBC Capital Markets. Please go ahead.

Yes, hi. Thank you for taking my question. Just a quick one. I was wondering if you could just give us an update on how your energy transition segment is performing. Any growth rates, regional commentary, some commentary in terms of product lines, just anything, that would be great.

Yeah, yeah. It's indeed a good question. The call has been much focused on data center, but the rest also matters. So as I said, for the first nine months of the year, apart from data center, all sets are flat, and it means slightly up in the energy transition segment, slightly down in what we call essentials, so the traditional product families of Legrand, and digital, and sorry, smartphone, or digital lifestyle. So energy transition are slightly up. Well, of course, why only slightly up? Well, it's because a lot of those products are exposed to the building market. So when you have a residential market being very down in China, for example, whatever the quality of your products and whatever the strength of your market share, UCS are going down also. So that's what I can tell you, slightly up versus essentials and digital lifestyle slightly down.

Great. Thank you very much. Thank you.

Thank you. I would like to turn the conference back to Benoit Cocard for closing remarks.

Well, thanks a lot for...

your time. I hope we answered all questions you had. If not, well, Renaud and the financial communication team are at your disposal for further clarification. Thanks a lot.

This concludes today's conference call. Thank you for participating. You may now disconnect.