Wendel

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to Vendor's Q1 2024 Results Conference Call and Webcast. At this time, all participants are in listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. You can also ask your questions on the webcast Olivier Allou, Director of Financial Communications and Data Intelligence, will read them. I must advise you that this conference is recorded today. I would now like to hand the conference over to your speaker, Mr. Jérôme Michel, Vendor Executive Vice President and Director of Vendor Growth. Please go ahead, sir.

Thank you and good afternoon and welcome to this Q1 2024 trading update. I'm very happy to be here today with Olivier Allot and Lucille Roque from our investor relations team to go through the key highlights of this quarter. I'm on page three of the presentation, and I will start with the consolidated sales that we are reporting at 1,848,000,000, which is 11.7% overall in terms of growth. and 6.9% organic growth. So solid quarter for this Q1 2024. The net asset value is also up by roughly 11% since December 31st, 2023 at 178.1 euros per share. As you will see, the increase is fully attributable to the appreciation of the share price of Bureau Veritas by more than 20% since the beginning of the year. We have carried out the deployment of our new strategic orientations with the disposal of 9% of Bureau Veritas share capital that generated around 1.1 billion euros of proceeds to us at a price which is in line with March 31st 24 net asset value and at a tight discount of 3%. We are moving forward with the closing of IK Partners that we expect to finalize in the coming weeks. And lastly, we've carried out our share buyback program with 475,000 shares bought back as of April 2024, which is about 39 million euros within the 100 million euros program that we've announced for share buyback. Let's now turn to the consolidated sales on page 4. As I said, they are up 11.7% overall and 6.9% organically. When you look line by line, I'm sure you will have seen the very good performance of Pure Veritas announced yesterday. Q1 posted 8% organic growth. which is a very good start of the year, especially when you look at the different divisions, with notably consumer products resuming a good level of organic growth, slightly north of 6%, as well as the other divisions that have performed extremely well over the first quarter. Stahl has also had a very positive quarter, at 0.5% organic growth, which is a recovery compared to the last quarter with a volume growth recovery after the second half of 2023, where we have seen some destocking effect. This quarter starts in a positive territory with more than 3% volume growth for the quarter. We are extremely pleased with the integration of ISG, the ICP packaging business, coatings for packaging that we bought from ICP, and this generated a scope effect of 10.9% for STAL during Q1. Scallion, as you might remember, Scallion has a different reporting period than Vandel. And in this chart, in this table, what you see, 137.5 are the sales for the three months ended December 31st. If you were to consider the sales for the first quarter, they came in at 140.6 million euros. That's the small number you see underneath the Scallion line. A total growth of 1.3% and an organic growth of 0.2%. The market is difficult, and Scalion has done better than most of its peers, but as you might be aware, the engineering and IT services market is less favorable during this first quarter, and we are pleased with the performance of Scalion that has also been affected by a seasonal effect, so this 0.2%, as I said, is better than the market, especially when you take into account this seasonality effect. CPI is up 9.7%, strong organic growth, continuing on very good momentum. And lastly, ACAMs at minus 3.5% organically. This is the result of the continuous growth in the core North American banking sector as well as market share gains in Europe that have been offset by delayed agreements with certain large enterprise customers that have shifted to Q2. We are confident that the company will resume growth Well, we typically see it, but this Q1 has been affected by delayed signatures of agreements. So in total, 1.8 billion, 11.7% total growth, and 6.9% organic. External growth at 9.8%, mostly as a result of the integration of ICP and some scope effect at Bureau Veritas, and minus 5%. foreign exchange impact largely as a result of the foreign exchange impact at Bureau Veritas. If we now turn to the net asset value on page 5, 178.1 euros per share. This includes 4.6 billion of listed equity investment. This was before the disposal of 9% of Bureau Veritas that we carried out early April. So if you were to strip that out, you would be looking at 3.5 roughly listed investments. And obviously the cash balance that you see there of 2.3 would have to be increased by 1.1 billion to 3.4 billion. Unlisted assets, 3.3 billion. This takes into account the disposal of Constantia that has been carried out earlier this year. The rest is unchanged versus December pretty much. So in total, 178.1 euros. The discount has slightly contracted at 48% versus around 50% at the end of last year, so still at the high level. When you compare to the December 2023 NAV on page 6, we are showing the components of the growth on this chart. So it mostly results and substantially results from the increase in Bureau Veritas share price, which has been of 23.4% year-to-date. Unlisted assets are pretty much unchanged. with a progression of less than or around one euro per share which is the result of both the change in multiples as you know we calculate NAV at the end of the quarter based on peer multiples and some very slight changes in the re-forecast from our unlisted companies that we have taken into account as well resulting in a NAV per share of 178 euros at the end of March. From a liquidity and net debt standpoint, we are in a very strong position at the end of March with 2.3 billion of cash supplemented by our RCF ungrown of 875 fully ungrown. So the average cost of our debt is pretty low at 2.4%, especially in current markets where interest rates are much higher. Our average maturity is beyond four years, and we have strong ratings with stable outlooks both at Moody's and S&P. Our loan-to-value ratio is at 0.6% at the end of March. Again, this was computed without taking into account the disposal of a 9% stake in Bureau Veritas, nor does it take into account the acquisition of IK that we expect to close in the next weeks, the sponsor money commitments associated with our investment in IK, on the acquisition of IK, and the CPI dividend that we received early April for around $100 million. So if we were to include all of the above, we would be looking at a negative loan-to-value ratio, so minus 5.1%, which means that we are in an excess net cash position based on all of the above, again, and our total liquidity would be of $3.6 billion in total, taking into account the closing of IK, including the sponsor money commitment, the disposal of BV, the CPI dividend, and the remainder of our share buyback program of $100 million, which is around $60 million still to be carried out within this program. So very strong liquidity, long average maturity, and low cost of debt. So in a nutshell, Q1 has been quite dynamic in terms of the performance of our portfolio companies as well as for Vandel. We have energetically deployed our new strategic directions that we have detailed that are invested in late last year. So we are now in a very strong position in terms of liquidity with $3.6 billion invested at the end of March and we have at the end of March adjusted for what I've just mentioned which means that we have the firepower to invest both in permanent capital and to continue building an asset management platform. We are actively looking at opportunities obviously to create more value for our shareholders and in the end sustain double digits a total shareholder return. Thank you very much for your attention, and I will now be very happy to take your questions.

Thank you, sir. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To wait for your question, please press star 11 again. Once again, please press star 11 on your telephone and wait for your name to be announced. If you wish to ask a question via the webcast, please type them in the question box and click submit. We are now going to proceed with our first question. And the questions come from the line of Geoffrey Michellet from UdoBHS. Please ask a question. Your line is opened.