Rexel Sa Ord

Good morning. This is the conference operator. Welcome and thank you for joining the Rex Health third quarter 2025 sales conference call. As a reminder, all participants are in a listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Guillaume Texier, Group CEO of Rexel. Please go ahead, sir.

Good morning, everyone, and thank you for joining us today for our third quarter 2025 sales presentation. I appreciate you making the time to be with us so early. As always, I'm joined by Laurent Delabarre, 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. So let's get started. We delivered a solid top-line momentum with Q3 2025 being the sixth consecutive quarter of sequential improvement. We are also maintaining a rigorous pricing and we keep investing with discipline where demand is strongest. At the same time, we are progressing on our Accelerate 2028 roadmap, raising digital adoption, deploying AI to improve speed and accuracy across commercial and operations, and reinforcing the balance sheet. You saw in our press release that we delivered 4.8 billion euros of sales in Q3 2025, up 3% on a same-day basis, with North America continuing to be our primary growth engine. Three key highlights to keep in mind. First, the momentum is driven by high growth segments where we are investing with success. Data centers and broadband infrastructure represent 12.5% of US sales and contributed for more than half of our Q3 growth. We are scaling to support this demand, including the opening of a new 80,000 square foot distribution center in Reno to better serve the Western U.S. Second, on pricing, notably in the U.S., we maintain strong discipline with effective pass-through of tariff-related increases in a competitive market. And lastly, in Europe, despite a softer backdrop, we saw sequential improvements, notably driven by an acceleration in France, Benelux, and Dark Region, with market share gains in key markets. Overall, Europe was positive in the quarter if you exclude solar, reflecting the strengths of our diversified food trades. Turning now to slide four, let me take a moment to discuss our capital allocation strategy. Our Accelerate 2028 roadmap continues to pass important milestones. First, digital penetration stood at 33% of sales in Q3 2025, reflecting sustained adoption of our e-commerce and omnichannel tools. Second, we are accelerating initiatives to harness AI across pricing, sales enablement, customer service procurement, and logistics, improving speed, accuracy, and the customer experience. Third, we remain disciplined in our capital allocation. We completed the disposal of our activities in Finland in September, issued a new €400 million senior note due 2030 to optimize our debt profile, and deployed €50 million in share buybacks since the beginning of the year. These actions clearly strengthen our operating model and sharpen our portfolio. On slide five, let me spend some time to update you on our COMEX executive committee. As you know, we are a decentralized model with the country CEO being owners of their business and the common best practices and governance. As you can see, the leadership team is very close-knit, which helps us to be both agile and fully aligned to accelerate our transformation. And let me comment on the recent changes. As you know, we have reinforced a cluster organization to favor best practices sharing between countries. So Thomas Moreau has extended his responsibility and is now in charge of a European cluster, including France, UK, the Netherlands, and Italy. Thomas Stadelhofer is currently CEO for Austria and will lead the Dark Cluster in January 2026, replacing Robert Favaler, who is retiring after having done a great job for Excel. Roger Little is still in charge of North America. And Pierre Benoit, who underwrites Cluster to Thomas, is our CEO for Belgium until he retires at the end of the year. Isabelle Hoffner has also taken on HR, in addition to her previous responsibilities as General Secretary. And Julien Neuschwander is now in charge of digital. He was at Rexel France and replaces Guillaume Dubrul, who is now in charge of Germany. And of course, Laurent maintains his remit as Group CFO, as well as leading on China and India. And talking about Laurent, with that, let me now hand over to Laurent, who will take you through the detailed numbers for the third quarter.

Thank you, Guillaume, and good morning to all. Let's start on slide seven with the different building blocks of our Q325 sales performance. Our sales of 4.8 billion euros were stable on a reported basis, with organic and M&A our two main pillars, both at work but offset by currency effects. Indeed, while the organic growth to that plus 2.7% on an actual day basis, our acquisition strategy contributes to plus 0.5% net of both New Zealand and Finland disposals. And we have closed the disposal of Finland in September, which has been excluded from our scope as of September 1st. The scope impact includes the positive contribution of ITESA in France, TechnoBI in Italy, as well as Schwing and Warschauer in the Northeast region of the US, and Jacquemart in Canada. For full year 2025, we anticipate the scope effect to be close to 0.9%, based on already completed acquisitions and the two disposals I mentioned. The currency effects to that minus 3.3% in Q3 2025 mainly due to the depreciation of the US dollar against the Euro. Assuming unchanged spot rates until year-end, we now anticipate a currency impact of minus 2.3% for the full year 2025. On slide H, you see the selling price impact and the breakdown of our sales evolution by geography. Our trajectory is clearly improving, with six consecutive quarters of better same-day sales growth. And at group level, we progressed regularly from minus 4.6 in Q124 to plus 3 in Q325, demonstrating consistent execution and pricing discipline. And first, on pricing, selling prices contributed to plus 1.4% to the sales growth in the quarter, including cable and non-cable, a similar effect compared to Q225. Non-cable selling price were up plus 0.9%, mainly driven by the tariffs in the US. We still have two product families that are deflationary, solar products with an effect broadly similar to Q225, and steel conduits in the US, sequentially improving with the second wave of tariffs on steel and aluminum. Cable pricing contributed for plus 0.5% in the quarter, similar to Q225. And by geography, we saw North America remaining the main growth engine, up plus 7.4%. Europe stood at minus 0.5%. And APAC improved sequentially, now close to break-even. I will detail Europe and North America in the next slide. And more specifically on Asia-Pacific, accounting for 6% of group revenues. China was down minus 4.1%. in a still challenging industrial market environment, with export activities facing headwinds following the introduction of the US tariff. The sequential improvement versus Q2 2025 is supported by a slightly better volume and easier base effect from last year. In Australia, sales were close to breakeven, improving compared to Q2 2025, thanks to residential and non-residential markets. boosted by solar activity, supported by the introduction of subsidies on batteries. And lastly, India, which is small but grew very significantly, with sales up 26% as we capture the growth in industrial automation. The next slide, slide nine, focus on our performance in Europe. Our Q3 25 same day sales to a minus 0.5%, a resilient performance driven by market share gains in an environment that remains soft. As Guillaume said, this performance is positive, up plus 0.6, excluding the solar segment. As a reminder, Q2 2025 was down 3%. The sequential improvement is mainly explained by better trends in residential, excluding solar, in several countries like Sweden, France, Netherlands, Austria, and Germany. And more specifically, let me highlight the key change in the quarter. France continued to progress, supported by strong demand from small contractors, especially air conditioning, plus further market share gains and a favorable base effect since summer 24 was impacted by the Olympic Games. Benelux returned to positive territory, helped by air conditioning in the Netherlands and solar business in Belgium. The DACH region remains negative but improved sequentially thanks to Switzerland and Austria. while Germany stayed soft mainly due to the difficult environment plus the selectivity strategy implemented to protect profitability. Sweden was broadly stable excluding solar and restating from September 24 one-off as we benefited last year from a cyber attack affecting one of our competitors. Lastly, the UK was still impacted by a tough market along with business selectivity and branch closure. On slide 10, we turn to our performance in North America, where same-day sales were up a robust 7.4%, with similar trends in both countries. While projects activity continued to be the main growth driver of the quarter in Canada, it was interesting to see the proximity business above projects in the US. The level of backlog remains overall at a good level, representing 2.3 months of sales at the end of September, very similar to the level at the end of June. And let's summarize the key highlights for our two countries. In the US, same-day sales growth stood at plus 7.4%, driven by non-residential demand and continued strength in high-growth segments, with data center and broadband infrastructure up almost 50%. Selling price excluding piping were up mid-single digit in the quarter. The pricing of steel conduit products is still negative but improved sequentially. Canada saw same-day sales growth of 7.5%, a very strong performance, still driven by non-residential and industrial projects. And we saw datacom accelerating, boosting by our commercial initiative. And let me now hand back to Guillaume before we move to our questions. Thank you, Laurent.

Before continuing to the guidance, let me give you a bit more color on our data center business, because it was an important topic of discussion during our latest world shows, obviously. I'm on slide 12. Data centers are a major growth engine in which RECCEL's scale and capabilities give us a clear advantage. Three years after launching the initiative with the major acquisition and a dedicated national account team, data centers now represent about 5%. of our US cells and are growing rapidly, up more than 50% over the first nine months of 2025, with double-digit sequential growth in Q3 versus Q2. Our value proposition there combines national coverage, strong product availability, and deep expertise in great space and power distribution. offering a complete portfolio with cable, bus bar, gear, conduits, and more. We are adding logistics capability in Atlanta and Reno to further boost product availability and customer service. And as you can see on the map, our DC network is well positioned to serve leading data center markets. Lastly, the demand that was initially concentrated in the eastern U.S. is spreading to Texas and California, giving us confidence in continued momentum and share gains in these high growth segments. Moving to slide 14, we have confirmed our 2025 guidance. On sales guidance, we have narrowed the range with a 2.1% same day sales growth in the first nine months of the year. We are now targeting slightly positive same day sales growth for full year 2025. As you know, we benefited in the US from good momentum in high growth segments and the higher selling prices that resulted from tariffs. On profitability, we have confirmed the 6% adjusted EBITDA margin target. This represents a strong achievement as it compares with the 4.2% reached at the low points of previous cycles. Overall, while we are clearly benefiting from the tariffs in the U.S., the competitive environment remains intense. We are therefore maintaining our strong focus on cost initiative and productivity to be much leaner and agile compared to the past and reach our guidance. And lastly, we continue to target a free cash flow conversion of approximately 65%. excluding the 125 million euros fine mentioned earlier. And lastly, on slide 15, you'll be hearing, for those who participate, more from us tomorrow during our strategic update from the Rexel Expo in Paris. So a few words about that. We'll take the opportunity to reaffirm our mid-term ambition and showcase Rexel's transformation across energy efficiency and transition technologies, services, innovation, and digital offerings. With 25,000 expected visitors and more than 200 exhibitors, Rexel Expo offers a unique opportunity to engage our customers and partners and to show them Accelerate 28 in action. We'll be delighted to welcome those of you who are able to join us during the Paris Expo, a major event in our calendar. And thank you for your attention for this short sales presentation. And Laurent and I will now take your questions.

This is the conference operator who will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Martin Wilkie, of Citi. Please go ahead.

Thank you. Good morning. This is Martin from Citi. The question I had was just coming back on pricing, particularly in the U.S. You talked about mid-single-digit pricing excluding piping, but when we think about the pattern going into the fourth quarter, I think you'd previously said that piping could be close to flat year on year, just given the comp from last year. Is that still the case? And also just to clarify on the tariff benefit in the quarter, should we see some incremental benefit of that, particularly from Section 222 in Q4, so we can expect non-cable pricing higher, both on the comp from piping, but also incremental tariff? Thank you.

Yeah, so in terms of piping, it's true that as the year progresses and the comparison base becomes a little bit easier, and as the sequential pricing of piping is slightly going up, you will see improving figures on the piping category, which is one of the main detractors to the price figures in the US. Is it going to be positive? I don't think so. In Q4, based on our calculations, it's still going to be slightly negative, but improving. Now, when it comes to tariff benefits, what we are seeing is a full quarter effect of the price increases which have been implemented, so we are still seeing an appreciation of pricing, but not that much in reality. So you will see a sequential improvement, a slight sequential improvement, I think, of pricing in the US based on those two elements in Q4. Is it going to be super meaningful? I'm not sure. So I don't know, Laurent, if you want to add anything to that?

No, no. I mean, we have this improvement in the piping, but the rest will remain overall

overall flat between Q3 and flat or slightly positive as we have the full effect of the recent price increases. Now, is there any additional price increases based on the recent events in terms of tariffs not at this stage?

Thanks, and that's really helpful. And if I could just Clarify also, you talked about intense competition in certain markets. Is that just in certain categories? And is that more intense competition now than earlier in the year?

No, maybe the word intense was a little bit too intense. There is competition. It's something that we have liked since the beginning of the year. So there is pressure which leads us to carefully select the business that we are doing to maintain growth margin at the right level. But no sequential change compared to what we have seen earlier in the year. So it's not a signaling that anything specific is happening there. And this competition level is true for all businesses. It's true especially in Europe, obviously, as the volumes being low, everybody is eager for volume. And it's also true to some extent in the U.S., where even though we have much better figures, there is competition in all spaces, including data centers. Once again, Martin, no particular change compared to what we have experienced in H1 and last year.

Great. Thanks very much.

The next question is from Daniela Costa of Goldman Sachs. Please go ahead.

Hi. Good morning. I have two questions, one more on the short term and the other one more on the medium term. I'll start with a shorter term one. We've seen during pandemic that you have great data with weekly trends and so on. And France seemed to have been very strong on the quarter. But given all the political things, can you talk a little bit of what you are seeing sort of like in your data throughout the quarter and towards the end of it? That's the first one. And then I'll ask the second one shortly after.

Look, I mean, first of all, you've seen the figures for France in the third quarter. They were quite good, 3.8%, if I remember well. They were boosted by a specific demand in air conditioning during the summer. But that being said, still, those are good figures compared to other European countries. I think it's also due to the fact that we are gaining market share, as we said previously. Now, are the recent political changes going to change anything? Look, Daniela, unfortunately, we've been living in this environment since one year, with limited duration, governments, difficulties to have a budget. and frozen initiatives, economic initiatives a little bit everywhere. So I'm not sure the new evolution of politics in France is changing anything to the business environment. And as we are looking at our order intake, it continues to be very good and in line with what we have seen in Q3. That being said, I should say also that we are in the middle of what we saw in the last slides, which is Rexel Expo. which is usually a short-term booster to the activity. So I'm not sure we have enough data to say that something is going to change in either direction. I would say that the political recent evolutions are an event for France in terms of business.

Got it. And then just more, you're doing some investments organically in data centers in the U.S. I guess there's a lot of talk about data center growth also spreading more globally into Europe. How do you view sort of the need for CapEx and for more reinvestment to fulfill that growth potential in the U.S. and more broadly organically and inorganically going forward?

I mean, look, as we have explained, we are investing a little bit in there, but investing means constituting a team of centrally dedicated people. I think we have no more than 10 people. And investing also in distribution centers, but those distribution centers are mid-sized distribution centers. And for the moment, we have done one in Atlanta. and one in Ueno. So you're not talking big capex, nothing which would change as the overall trends in terms of the capex of Rexel in percentage of cells, even at the North American level. So you're talking relatively limited investment at the end of the day.

Got it. Thank you.

The next question is from William Mackey of Kepler-Chevreux. Please go ahead.

Good morning, Guillaume. Morning, Laurent. Thanks for the time. A couple of questions. One about the DC business generally in terms of how you grow it. Could you maybe just describe a little bit about how your data center business differs from your proximity business with regard to your obligations to carry working capital and fulfill? Maybe that leads on to the second area of the questioning, which is the composition of backlog. Maybe just to talk a little bit more about how the backlog has been developing and how you see that evolving into the second half.

No, absolutely. So the distribution center's business doesn't differ that much in terms of working capital requirements. I think, I mean, Laurent, do you want to expand?

Your question is on data center? Yeah. Yeah. Well, it's similar to large projects. Meaning that we don't use the footprint. Sometimes it goes direct. Sometimes we may use for specific projects small dedicated warehouses to serve our DC customer. Usually at the end, the gross margin is slightly lower than the one of the proximity, but the cost to serve is lower as well. So the EBITDA contribution is very close.

But I think that William's question was probably more about working capital. And in terms of working capital, yes, we have distribution centers dedicated to that. But the way it works is that we stage all the material which is necessary for the data center job. This material usually is paid for and bought and is owned by the customer, which means that in terms of working capital profile, it doesn't change much to what we are doing. So you will not see any particular evolution of the working capital profile based on data centers. What was your second question again? Backlog. Backlog. Backlog evolution in the US. Backlog evolution in the US is relatively stable. It's at 2.6 months of sales, similar to what we had in Q2 2025. So no particular evolution. We are executing the backlog, but in the same time, we are replenishing it with data centers, but not only with data centers, with a little bit of everything, including commercial and infrastructure jobs. So it's a relatively healthy business at this stage with good order intake and good quoting activity also. So at this stage, the question is about Q4. I don't see any particular signal of that slowing down. I have no concerns about any evolution of this kind for Q4. It's stable. That's the only thing I can say.

Thank you very much. And just a small follow-up with regard to your activity levels in M&A, which have been very high this year with five successful acquisitions and two disposals. Could you throw a little more color on your thoughts or what we should expect in the next three or four months with regard to your pipelines for additional M&A or perhaps your view on the rest of the portfolio and if there are further assets or businesses which may be non-core? Thank you.

Okay, so in terms of further acquisitions, we have a pipeline which is not extremely full, so I don't think that you're going to see anything meaningful during the rest of the year. You're going to maybe see small or mid-sized acquisitions, but you're not going to see any, I mean small acquisitions, but certainly not anything meaningful at your level. When it comes to disposals, yes, since the beginning of the year we have disposed Finland and earlier New Zealand. Now at this stage we have no process taking place, but it's always part of the strategic levels at some point if needed. But at this stage I would say that we have no particular plans to divest anything. Thank you.

The next question is from George Weatherstone of Barclays. Please go ahead.

Yeah, thank you for the questions. Morning, everyone. Just wanted to touch on India. It's been a pretty good bright spot for you guys in the third quarter. Just wondered if you had some plans to expand at all in the region in line with the plans from some of your suppliers?

Look, I mean, in India, first of all, we have made a decision several years ago for India and China to be fully dedicated to industrial automation. So when it comes to construction, commercial buildings, etc., you're not going to see us anytime soon. Getting into this space which is a complex space in those countries where the credit management topics is difficult And sometimes the compliance topic can be difficult too. So we will continue to stay focused on industrial automation You're right that we had a very good evolution over the last few years in India with good success in progressing this industrial automation business and And I think you will see us continuing to build on that organically and maybe through acquisitions if need be. That being said, it's a small business and it will continue to remain relatively small. So you're not going to see it expanding and growing 10 times because, once again, because we have no plans in entering those big volumes activities which are construction-related businesses. So you will see the kind of growth rate that you are seeing in India, which is very often double-digit growth rate. So we are happy with that. We will try to expand on it, but no plans to change the profile of our business and to go into construction.

Okay, thank you. And then just a second one on... restructuring plans. You've been doing some FT reduction through the year and as well last year, but clearly now some of the volume trends are looking a little bit more encouraging. Do you think you've done the right level of restructuring now and we shouldn't expect any more plans in the year ahead?

I mean, there is always, I mean, we are in the middle of, we are in continuous transformation and we always try to optimize. It's true that the bulk of the adaptation that we needed, especially in the UK and Germany, is now behind us. You're going to see a little bit of that during the rest of the year, but less in proportion to what we have seen before. Laurent?

Yeah, and in terms of restructuring costs, We said around 25 million in H1 for the full year, and we have no very big plan, but at the end of the year, because of phasing, we have accelerated some measures in some countries. I would be a bit north of 30 million. Okay, thank you.

The next question is from Delphine Brault of OdooBHF. Please go ahead.

Yes, good morning, everyone. Thanks for taking my questions. I have two, and we'll ask them one at a time. First, can you be a bit more specific on the electrification segment by segment, so heat pumps, solar, and EV, and how this has evolved in the recent months?

In recent months, what we have seen in terms of electrification is... Laurent, maybe you can take the question?

Global electrification is slightly up, 3.8% overall, with a very different mix of activity. Solar is still negative. around minus seven. And where we are booming is the HVAC, especially in France and Netherlands, as we pointed out. Datacom also, this is the Tally case. This is the two big fish. Industrial automation is still mute. progressing, but around zero line so far. So that's the big bucket.

Thank you. And then from what we see, Europe has not really started to rebound on the residential segment. What is your soundtrack scenario as regards to the timing of the recovery in the residential market in Europe? I know that in some countries it has started, but some are still lagging behind.

It's a little bit early to talk about scenarios for 2026. What we can say is that, as you just mentioned, when we look at the residential part of our business, we see that, especially if you exclude solar, which is troubling a little bit the figures, In Q3, we were positive in France, in Belgium, in the Benelux, let's put it this way, and in Sweden and in Switzerland. So we are starting to see positive evolutions compared to last year, which is a good sign when we look at leading indicators, in several countries and some of them being the same one that I mentioned. We see also positive trends when it comes to transaction in housing and in terms of housing starts. So all of that is pointing in the direction of a progressive recovery. We are quite cautious about that, especially when it comes to our figures in Q3. As you know, they were also a little bit impacted by the summer and by the air conditioning demand, etc. So we shouldn't read too much into that. But when we look at those figures, it allows us to be cautiously optimistic about a progressive recovery in Europe. Now, when it comes to the scenario, I would prefer to wait until the end of the year to wait until we have budget discussions with the countries and to give you the guidance in February.

Thank you. The next question is from Andre Kuknin of UBS. Please go ahead.

Yes, good morning. Thank you for taking my questions. Sir, can you hear me okay?

Yes, we can hear you okay.

Okay, great. Thanks. Can I just come back to the non-cable pricing and that kind of sequential flat evolution versus Q2 in terms of the year-on-year growth? Could you talk about the moving parts in that? Because we thought that you should get some sequential improvement or step up from the point line that you saw in Q2 already, at least with the full effect of US tariffs. Was there something that moved negatively? And maybe in context of that, could you comment on what's happening in pricing in China, industrial automation?

Laurent, do you want to get a little bit more into that?

First, in China, the pricing between Q2 and Q3 is very similar, slightly positive. What impacts us in China is mostly the improvement in volume. Not that much that the market improves, but there was a big effect last year. the evolution of the non-cable pricing. If we exclude the conduit, it's up 4.4% in Q3, and it is slightly better than Q2. We were expecting a bit more inflation, but in fact, What has been passed through on the market with the competitive environment has been a bit lower on that. And for Q4, we expect that it should slightly improve, but not that much.

Very helpful, thank you. And just one more question. On the U.S. Performance X data centers, I think it implies that you grew about 4%. Was there a meaningful difference between the industrial versus commercial?

Excuse me, can you repeat the question, please?

I'm just looking at the U.S. growth at data centers and broadband. I think it implies it's about 4% growth, if you said half came from data centers and broadband. So I just wanted to check if that's similar between the industrial automation versus the rest, the commercial, or was there a meaningful difference?

Industrial automation is positive. It's a little bit lower than the rest, but it's positive, which is a progress compared to the beginning of the year, and that's what I would say.

And the rest is non-ready activity and a bit of ready, but only in the northwest of the U.S.

Great. Thank you very much.

The next question is from Ben Uglow of Oxcup. Please go ahead.

Good morning, Guillaume, Laurel, and Ludovic. Thank you for taking the questions. I had a couple. First of all, Guillaume, on the cluster, the organizational changes, can you just sort of explain some of that a bit more? I just wanted to understand what's the strategic rationale and how is it different? How is it going to be different in practice from how you've operated before? That was my first one.

No, I guess, Ben, first of all, this cluster organization is in place since two years. So we have changed a little bit the breakdown of countries between clusters. But the whole idea behind that is that the countries are still managed on a country-by-country basis. So the P&R is owned by the country CEOs. But that being said, what we wanted to do is to push a little bit more the synergies on some interesting topics like services, like also supply chain, procurement, et cetera. In most of those countries, there is a possibility to gain additional efficiency by doing more intense best practices sharing between countries. And really what our experience is that it's better done in small group of countries. So that's a little bit what we are doing here. So those clusters are not going to be managed as one country, for example. I mean, we're not going to manage Ireland and France together, for sure. But that being said, the intensity of best practices sharing between those countries, you're going to see it increase, and you're going to see more scale effect when it comes, for example, once again to purchasing, when it comes to services development, et cetera, et cetera. So that's a little bit the spirit behind that. We're not changing. the relatively decentralized way we are operating, but we are adding a layer of harvesting the scale effect of Rexel.

Understood. Thank you. And then on the, let's call it the go-to-market or the approach with data centers, At the moment, and please correct me if I'm wrong, but really what we're doing is essentially selling cables and bus bars sort of ad hoc into data centers. That's what you're doing. Is there scope to change that product offering? Is there scope to broaden the range beyond, dare I say, your sort of standard products into gray space?

Yeah, look, I mean, I think what you're going to, first of all, you have to understand that our progression in data centers has been starting from not much at the beginning because we were organized in a very regional way for historical reasons, which had the effect of making it difficult for national contractors to deal with us because they obviously want one price list, one logistics organization, etc., We changed that two years ago and we are seeing very positive effects on that. And I would say that we are, in terms of service offering on this particular part of the data center needs, I think we are on par with competition or in some cases better in terms of the service level. So we have done that. Now, you're right that we are mostly in the gray space. I think, frankly, that we are going to probably in the near future stay in the gray space. Now, there are opportunities within the gray space to enrich what we are doing. And we are already seeing that. I mean, initially, we were mostly selling cable. And now we are enriching that to a little bit more switch gear, a little bit more complex materials, et cetera, as we are gaining credibility in the data center space. Now, are we going to get into the white room? I'm not so sure in the short-term basis. It's not part of our plans. We have ample opportunities to gain market share without doing that.

Understood. That's very helpful. Thank you.

The next question is from Miguel Borrega of BNP Paribas Exxon. Please go ahead.

Hi. Good morning, everyone. Thanks for taking my questions. The first one Just wondering with everything that is going on with aluminum and copper tariffs in the U.S., can you share how much was cable pricing specifically in the U.S. during Q3, please? I know it was 0.5% at the group level, but just wondering in the U.S. And then on non-cable pricing, I remember last quarter you mentioning that some suppliers were pushing price between mid-single digits and some ranging to 20%. You don't seem that excited about pricing anymore. Do you also see suppliers not pushing for pricing that much after all? And then one last question, just following up on data centers. If we take a step back, obviously this is a segment that is booming. Everyone wants a slice of it. Can you just broadly comment on your competitive environment here? You just mentioned that you are at par or even slightly better than competition.

how is the competitive environment here thank you very much okay so in terms of cable pricing which is in the U.S. mid-single digit in Q3. So it's still positive. You're right that there are many moving parts. There were tariff announcements at the end of July, followed by reduction of tariff announcements, followed by price increases in copper at the end of the quarter because of mine issues throughout the world. In all of that, the cable pricing saw a hike at the initial tariff announcement and stayed there more or less during the quarter, which is a consequence of the pricing policies of the manufacturers. So that's a little bit where we are today, and we have a strong positive pricing in cable in the US. Secondly, in terms of tariffs and the consequences of tariffs, you're right, Miguel, that compared to our initial expectations in Q2 or in Q1, we have seen a more, I would say, I don't know if it's reasonable or more modest price increase policies of manufacturers. I think manufacturers are trying to be as sensible as possible and to push price increases when the tariff situation is certain and trying to absorb a little bit of it in their margin. Because it's an environment which is good in the U.S., but which is not absolutely booming, which means that people want to pay attention to the way they push price. We still have healthy price increases, as we have said, but that being said, nothing in the range of the 20% that we probably were seeing in the initial announcement at the beginning. So the reality is that we are in the mid-single-digit range. It will probably continue to progress a little bit as we see the full effect of tariffs. Is it going to get to 10% or 20% in some categories? I don't think that. But that's okay because you know that there are two parts to this equation. On one hand, we tend to like price increases. On the other hand, it's always a hurdle to the volumes, etc. I think we are in this situation, and no change compared to what we were seeing at the end of H1, by the way. At the end of H1, we had already the same question and the same discussion about the fact that tariff price increases were probably more reasonable than what we had anticipated at the beginning. Data centers and data center competitive situation. Look, I mean, it's difficult for me to comment too much on that. I think we are not the leader in terms of data centers. If you look at the proportion of data centers that we have in our US business, we are at 5%, and I think some competitors are probably north of 10%. very clearly because of previous acquisitions, because of historical presence in this space. It's obviously a negative in a way and a positive, because the positive being that we have ample room to gain market share in this space once again. And it's all about the competition environment, obviously, like in any big opportunity is is a disputed competition environment. I mean, there is nothing where you wouldn't see competition with the big players, big national players. Data centers are usually installed by national contractors, which means that they pay a lot of attention to having a national offering which means that smaller regional players have more difficulties to play in this space. So that's one thing. So the competition is limited to the big nationals. And in this environment of the big nationals, are we better, are we worse? I would say we are starting from a situation where two years ago, we were probably at a disadvantage compared to other national competitors. As I mentioned in my previous answer, I think that now we are, in terms of the quality of service perceived by those contractors that we are talking to, from the feedback I get from them, it feels like we are on par or maybe slightly better depending on who you're talking to. It's difficult to give any more color to that, but I think we are in a good place, and we have the opportunity to continue to gain a little bit of market share in this fast-growing segment. Thank you very much.

The last question is from Eric Lemarier of CIC Market Solutions. Please go ahead.

Hi, good morning. Thanks for my question. I have a question on data centers. You mentioned this very strong growth of more than 50% for the nine months in the U.S. in data centers. Could you tell us how do you see Q4 sales in data centers in the U.S.? Still in data centers, is there a possibility for Excel to expand in data centers but beyond the U.S.? ? And the last question on these two segments, data center and datacom, I understand why data centers are very dynamic and I understand the megatrends behind, but regarding datacom and broadband infrastructures, is there any specific megatrends which could possibly explain the very strong growth in sales in datacom?

Yeah, so first of all, in terms of data centers, we have a good backlog and we'll continue to enjoy strong double-digit growth in Q4. I'm not going to give a precise forecast because it always depends on the timing of the projects, but you're going to see us continuing to see those very high growth rates in the foreseeable future, and especially in Q4. So that's one thing. The second question was about opportunities in other regions. Obviously, the data center and the artificial intelligence business is much bigger in the U.S. than it is in other parts of the world, but it's true also that this business is also developing in other parts of the world right now. So we have opportunities and we will have opportunities probably in Europe at some point. Now, with one element, which is that in Europe, as you know, large projects tend a little bit more than in the U.S. to go direct from manufacturer directly to the job site, which means that the participation of distribution in large projects is usually a little bit lower than what you would see in the US because of the organization of the industry in Europe compared to the US, basically. Which means that for hyperscaler equivalents in Europe, I don't think that distribution is going to participate a lot. Now, when it comes to collocation data centers, when it comes to smaller edge data centers, which are also going to be part of the equation, I think. I'm fully convinced of that at some point. then you're going to see a little bit more business going through distribution. And so, yes, it's going to be an opportunity. Is it going to be short-term? I don't think so. But you're going to see that as an additional opportunity in Europe in the mid-term. I think that's for sure. Now, your third question was about Datacom. We're going to have the opportunity tomorrow to talk about that and to expand specifically on the Tally acquisition. Now, I would say in this call that globally, there are several reasons why we are growing so fast in the broadband infrastructure space. Some of them are linked specifically to the way we are integrating Tally. Some of them have to do with the specific strengths of Tally in their market. But some of them have to do with megatrends. Because if you think about it, Artificial intelligence, there needs to be computing capabilities and here we are talking about data centers, obviously, but there needs also to be broadband networks to make sure that people who are using artificial intelligence on their mobile are able to access it. which means that the requirement for additional bandwidth is continuous in the U.S. and accelerating. And the equipment, the 5G equipment was more of a 4G plus equipment in most parts of the U.S. And so you're going to continue to see investment in the infrastructure by telecom operators to address those trends. In general, it's a trend about more data, which is also a little bit linked to artificial intelligence and the promises of artificial intelligence, because you need a terminal to be able to use artificial intelligence in the end.

Okay. Thank you. Okay?

Thank you. Mr. Texier, there are no more questions registered at this time.

Well, thank you very much. For many of you, I see, I mean, for the sell-side analyst, I think I'll see many of you tomorrow in Rexel Expo, and I'm looking forward to the discussion about how we make the mid-term goals concrete in terms of day-to-day actions, and so hopefully we're going to... see an interest in those discussions. And for the rest of the participants to the call, next time we see you is going to be the full year results and the guidance for 2026. Thank you very much.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.