Rexel Sa Unsp/Adr

Good morning, everyone, and thank you for joining us today for our first quarter 2025 sales presentation. I appreciate you making the time to be with us. And as always, I'm joined by Laurent Delaba, our group CFO, who will walk you through the detailed sales figure in just a few minutes. But first, I'd like to take a look at the key highlights of the quarter and share how our transformation continues to support our growth and performance, even in a complex and evolving environment. Returning to slide 3, I'm pleased to say that Rexel has returned to positive growth after five consecutive quarters of same-day sales decline. In Q1 2025, we delivered a solid plus 1.4% same-day sales growth, driven by sustained strength in North America and encouraging improvements across Europe. Digital continues to be a key growth lever. In this quarter, digital sales reached 33% of total revenue, an increase of over 240 basis points year-over-year. This reflects the growing adoption of our digital tools across all geographies and customer types. On pricing, we saw an 80 basis point contribution to growth with improving conditions in all regions. In particular, solar pricing recovered sequentially versus the end of last year. though conduit pricing in North America remains deflationary. Altogether, this performance highlights the resilience of our model and the engagement of our teams as we continue to execute our strategy. Let me briefly touch on tariffs. While the impact on our Q1 numbers was limited, we began to see early supplier price increases linked to new tariffs. We will come back to that at the end of the presentation. Turning now to slide four, let me take a moment to discuss our capital allocation strategy. In line with the roadmap we shared at our 2024 Capital Market Day, we continue to actively manage our portfolio in Q1 through both acquisition and divestment. On April 1st, we acquired Schling Electrical Supply, a well-regarded player in the U.S. Northeast with approximately $70 million in annual sales, six locations, and a workforce of around 100 people. Later in the month, we also signed an agreement to divest our operations in Finland, a well-run business but operating subscale and at lower profitability than our European average. This move is aligned with our strategy to focus on markets where we can lead with scale and operational leverage. And we also continue to return capital to shareholders through our share buyback program. And all these actions reflect our disciplined approach to capital deployment while keeping an eye on shareholder return. With that, let me now hand over to Laurent Delaba, who will take you through the detailed number for the first quarters.

Thank you, Guillaume, and good morning to all. Let's start on slide six, the different building blocks of our Q125 sales performance. Our sales of 4.8 billion euros were up 2.5% on a reported basis, a positive performance achieved thanks to our acquisition strategy, which contributed for plus 1.9% net of disposals, and the same day sales grew up plus 1.4%. The scope impact included the positive contribution of Itesa in France, Tally and Electrical Supply Inc. in the U.S., as well as the disposal of New Zealand. For full year 2025, we anticipate the scope effect to be close to zero, based on an already completed acquisition and disposal on both New Zealand and Finland. The currency effects stood at plus 1% in Q1 2025, but the euro significantly strengthened versus the US dollar at the end of the quarter, and assuming unchanged spot rates until year end, we now anticipate the currency impact of minus 1.4% for the full year 25. On slide seven, you see the selling price impact and the breakdown of our sales evolution by geography. First on pricing, selling prices contributed for 0.8% to the sales growth in the quarter. Non-cable selling prices, were flat, with positive price increases in the majority of our product families, offset by the deflation, mainly in piping in North America and in solar to a lesser extent. Cable pricing contributed for plus 0.9% in the quarter, benefiting from a more favorable copper price versus last year. And by geography, we saw North America maintaining its high level of growth at plus 3.8%, Europe remaining negative but accelerating sequentially versus Q4, and APAC was positive at plus 1.4%. I will detail Europe and North America in the next slide. And more specifically for Asia Pacific, accounting for 5% of group revenues, China returned to positive territory, up 7.5%, boosted by customer gains, particularly in distribution and chemical markets. The initial automation activity that was deflationary in 24 returned to positive territory. In Australia, sales declined by 0.7%, similar to Q4 24, but the quarter was impacted by the cyclone called Alfred in March and restated from that weather impact, sales would have been flat. The overall business was supported by industrial markets, particularly mining and manufacturing. Slide 8 focused on our performance in Europe. Our Q1-25 7-day sales were still negative down 0.7%, but with a significant sequential improvement compared to the minus 3.8 in Q4-24. Overall core ED and business accelerators both contributed positively to the sequential improvement compared to Q4-24. And more specifically, let me highlight the key evolutions of the quarter. In France, we continued to significantly outperform the market. Our growth was mainly driven by non-residential and HVAC markets. The dark regions were back to break-even, significantly improving compared to the minus 4 in Q4-24 in an uncertain environment in Germany. Austria did very well in the quarter, boosted by the solar business. Benelux was down minus 1.7%. mainly due to industrial and solar segments, while we saw first signs of recovery in non-residential. In addition, the Dutch regulation was less favorable for heat pumps and solar activities. Lastly, the UK and Ireland were down minus 5.9%, with good momentum in Ireland, and the UK remained impacted by turnaround measures, including 24 branch closures completed end of 24, and the increased selectivity on projects. On slide 9, we turn to our performance in North America, where same-day sales were up 3.8%, confirming the good trend recorded in Q4 24. While project activity continued to be the main growth driver of the quarter, it was interesting to see the improvement in the proximity business. All three markets were positive in the quarter. In the business accelerator families, the strong demand in datacom was offset by the initial automation that was negative in the quarter, but sequentially improving compared to Q4-24. And let's summarize the key highlights for our two countries. In the US, same day sales rose to that plus 4%, boosted by non-residential and industrial markets, and more specifically, data centers and manufacturing. Canada saw same-day sales growth of 2.9%, thanks to non-residential markets, and notably distribution and datacom. Let me add that, of course, the tariff introduced mid-March, notably on steel and aluminum, had a limited impact on the quarter. And we are closely monitoring the various effects, and notably the impact on selling prices. It's still too early to share an aggregate number, but we currently see price increases from our supplier in the US and on most product categories ranging from 4 to 20%. On slide 10, as in previous quarter, we continue to enjoy a strong level of backlogs. One more time, high backlogs result from the combination of a strong backlog execution driving the growth in our project business. but also a robust order intake during the quarter, as illustrated by the backlog in the US at the end of March, which took 6% higher than end of December 24. Before leaving the floor to Guillaume, let me finish with a slide that we usually use during our half of full year results. But as we have received many questions related to the refinancing needs in the current uncertain credit environment, and even though credit market seems to have reopened recently for our credit rating names, we wanted to remind you the flexibility that we have and the absence of short-term refinancing needs. First, our bonds have a 28 and 20-30 maturity, and second, Part of our accounts receivable securitization financing has a 25 maturity, and we are talking about an asset-backed financing covered by our receivable. We have renewed similar lines during the GFC in 2009 and during COVID, and we will finalize the agreement to extend the line by three years in the coming months. With that, let me hand back to Guillaume to discuss our outlook. Thank you, Laurent.

So as you saw in the figures, we had a very solid first quarter. Now, one of the big questions, obviously, is discussed on slide 13, which outlines the possible implications of the evolving U.S. tariff environment for Excel. So as we are all aware, new tariffs have been introduced since mid-March with the potential for more to follow. It's clearly too early to tell you precisely what the impact of this unexpected development is going to be for us, but we can say a few things on a qualitative basis. First of all, tariffs are not a major direct topic, as what we sell in North America is almost entirely manufactured within North America. And beyond that, tariffs can be both a tailwind and a headwind, which we try to clarify on this slide. On the sales front, tariffs could obviously lead to incremental price increases, which may support top-line growth in certain categories. Reshoring trends and domestic investment initiatives may also strengthen demand in segments like data centers, infrastructure, and industrial projects. However, we are also mindful of broader macroeconomic risks such as potential slowdowns in U.S. trade partners and reduced investment appetite that could weigh on demand and confidence level. There are also risks and upsides in terms of margin. If we are able to pass through cost inflation, especially on imported goods, We could see a positive one-off impact on margins. This, of course, depends on market conditions and our ability to adjust pricing effectively. At the same time, there is a risk of margin pressure if pass-through proves difficult or if demand becomes more volatile in response to higher prices. In terms of operating costs, there could be some relief through better fixed cost absorption, obviously, if we are able to maintain volumes at higher prices. And overall, while the situation remains fluid, Rexel's diversified portfolio and strong execution capabilities position us well to manage this complexity. We are monitoring development closely and will remain agile in our response to both risks and opportunities as they emerge. Now, one of the tools we will rely upon on the next slide, slide 14, to make the most of this fast-evolving situation is our new strategic plan, Accelerate 28. This new plan is designed to support the delivery of Rexel's mid-term ambitions, succeeding and complementing our previous plan, Power Up 25. Accelerate 2028 builds on the foundations laid over the past several years and introduces a clear structure for how we will scale value creation over the coming cycle. The plan is built around two key pillars, amplifying our clients' impact and striving for operational excellence. On the customer side, we are evolving beyond product distribution to deliver a more comprehensive value-added service experience. It includes tailored solutions, advanced logistics, data-driven insights, and sustainable energy services. We are also scaling up innovative monetizable services with an increasing focus on digital platforms, automation, and AI tools to deliver smarter and more efficient outcomes for our clients. And operationally, on the other side, We are deepening our investments in technology-driven supply chain enhancements and strengthening our omnichannel capabilities, allowing customers to engage with us seamlessly across digital, in-person, and hybrid channels. We are also putting significant emphasis on data and AI deployment, which will help improve forecasting, optimize pricing, and streamline internal processes. Together, these initiatives form a disciplined, agile framework for growth. And even in a low visibility environment, Accelerate 2028 will provide us with the tools to enhance resilience, sharpen execution, and deliver against our mid-term financial targets. And so finally on slide 15, let me conclude with our outlook and a few closing remarks. In a context that remains uncertain, marked by a soft macroeconomic backdrop inflation and the recent changes in US tariff policy, we are confirming our 2025 full-year guidance As you saw in the figures, we had a solid first quarter. We also have talked at length that for us, the new macroeconomic situation is both a tailwind and a headwind, so there is no particular reason to scale down or up our ambition. We continue to expect stable to slightly positive same-day sales growth with stronger growth in North America than in Europe, an adjusted EBITDA margin of around 6%. and free cash flow conversion of approximately 65%, excluding the €124 million fine that we paid in April related to the French Competition Authority ruling. Now, what is clear is that the world has become more uncertain, and we will continue to monitor developments carefully. To conclude, Q1 marks a clear improvement over the end of 2024, with growth returning, pricing stabilizing, digital acceleration continuing, and backlog solids. Our teams remain fully mobilized behind Accelerate 28, our strategic plan, and we are executing our strategy with discipline and clarity. Rexel is well positioned to meet its short-term and mid-term objectives and continue creating value regardless of the near-term environment. And with that, Laurent and I are happy to take your questions. Thank you.