Rexel – First-Quarter 2023 Sales

• Strong start to the year with same-day sales up +10.1%, driven by both volume and price increases 
• Quarter boosted by sustainable electrification trends across the group 
• FY 2023 guidance confirmed

Sales of €4,927.9m in Q1 2023, up +10.1% on a same-day basis

• Positive trends in all geographies, benefiting from strong demand in energy transition activities
• Electrification products represented c.22% of Group revenues and grew by c.+31% in the quarter, c.560bps contribution to Group sales

Same-day sales growth supported by both volume increase (410bps contribution) and increased selling prices (604bps including -60bps on copper-based cable products)

Sales up +12.6% on reported basis, benefiting from a favorable calendar effect (+1.0%) and scope effect (+0.5%) with positive impact from acquired companies more than offsetting disposal effects

Digital sales represented 27.4% of total sales in Q1, up +320 bps

Full-Year 2023 guidance confirmed

“Rexel has gotten off to a good start this year, with double-digit growth in sales, driven by positive trends in all geographies and solid increases both in volumes and in prices, reflecting the excellent work of our teams across the Group. Growth was also supported by powerful electrification trends. We continue to see high and growing demand in all geographies for energy efficiency and electricity generation solutions, electrification usages and industrial automation. These trends are supported by several drivers, including government stimulus plans and regulations, corporate energy transition agendas and general concerns from our customers over the price of energy and its availability. This strong and resilient electrification tailwind allows us to confirm our full-year 2023 guidance.”
Guillaume Texier, CEO of Rexel

SALES REVIEW FOR THE PERIOD ENDED MARCH 31, 2023 

• Unless otherwise stated, all comments are on a constant and adjusted basis and, for sales, at same number of working days.

SALES 

In Q1, sales were up +12.6% year-on-year on a reported basis and +10.1% on a constant and same-day basis, reflecting positive momentum in all three geographies.

In the first quarter 2023, Rexel posted sales of €4,927.9m, up +12.6% on a reported basis, including:

• A positive currency effect of €32.3 million (i.e. +0.7% of Q1 2022 sales), mainly due to the appreciation of the US dollar against the euro
• A positive net scope effect of €23.9 million (i.e. +0.5% of Q1 2022 sales) from our active portfolio management, with favorable impacts from acquired companies offsetting disposals.
  • Acquisitions of Horizon and Buckles-Smith, two specialists of Industrial Automation distribution in the US, as well as Trilec, the number 3 player in Belgium, and LTL in Canada, contributing to the positive scope effect
  • Disposal effects reflecting the sale of Rexel’s activities in Spain and Norway (closing completed ahead of schedule on March 1st), as well as of activities in Portugal and Russia, to a lesser extent
• A positive calendar effect of +1.0%.

On a constant and same-day basis, sales were up +10.1%, as a result of:

• An excellent performance in Europe and North America on more difficult base effects, offsetting lower growth in Asia-Pacific.
• Strong underlying trends from electrification and growing demand for energy efficiency solutions, boosted by government subsidies and corporate agendas, as illustrated by the growth of product categories such as PV, EV, Industrial Automation or HVAC, which grew by c. +31% in Q1, above Group average, and represented c.22% of sales. This more than offset signs of slowdown in the new residential component of our end demand.
• A favorable pricing environment for non-cable products (6.6% contribution in the quarter), resulting from a carryover effect of price increases passed in 2022 and an additional rise recorded in the beginning of 2023.
• A slightly negative copper-cable pricing contribution ((0.6)% in Q1 2023 vs 4.1% in Q1 2022) resulting from lower copper prices in Q1 23 compared to Q1 22. Assuming copper prices remain unchanged, we anticipate a more favorable copper cable contribution in H2 23.
• Further growth in digitalization in all three geographies, with digital sales now representing 27.4% of sales, up 320bps compared to Q1 2022. Trends were positive in Europe (37.3% of sales, an increase of +183bps), North America (18.8% of sales, an increase of +436bps) and Asia-Pacific (5.8% of sales, up +126bps).

Europe (51% of Group sales): +12.7% in Q1 on a constant and same-day basis

In the first quarter, sales in Europe increased by +10.6% on a reported basis, including:

• A negative currency effect of (0.8)%, or €(18.3) million, mainly due to the depreciation of the British pound and the Swedish Krona against the euro
• A negative scope effect of (2.3)%, or €(53.0) million, mainly resulting from the disposal of our activities in Russia, Spain & Portugal in 2022 and Norway in 2023

On a constant and same-day basis, sales were up +12.7%, including a positive volume contribution of 4.3% and a price effect of +8.3% (including 0.3% contribution from copper-based cable prices in the quarter).

In Europe, electrification trends continued to support our growth, with our three product families (solar, EV charging infrastructure and HVAC) growing by +57% (contributing for 770bps of same-day sales growth in Europe in Q1 23) and representing 19% of sales. Germany, Benelux and Sweden were the biggest beneficiaries of sustained electrification growth in the region.

• Sales in France (39% of the region’s sales) were up +10.8%, outperforming the market, with positive trends in all markets except in the traditional ED business in residential. We saw positive momentum in HVAC and Solar activities.
• Benelux (13% of the region’s sales) grew by +12.5%, with a good performance in Belux and Netherlands. More specifically, Solar, HVAC and EV infrastructure remain the key growth drivers in the Netherlands.
• Sales in Scandinavia (11% of the region’s sales) were up +17.4% with accelerating trends in electrification, notably in Sweden (Solar).
• Sales in Germany (11% of the region’s sales) posted strong +22.7% growth, with further market share gains, supported by the residential & commercial markets. Residential was again boosted by solar demand.
• In the UK (9% of the region’s sales), sales increased by +2.7%, on a difficult comparable base due to the lower revenues generated in the quarter with the Department of Education (school air filtration and CO2 equipment – contribution of -270bps in Q1 23). Underlying growth was supported by favorable trends in industry.

North America (42% of Group sales): +8.7% in Q1 on a constant and same-day basis

In the first quarter, sales in North America increased by +17.4% on a reported basis, including:

• A positive currency effect of +3.3%, or €58.0 million, due to the appreciation of the US dollar against the euro  positive scope effect of +4.4%, or €76.9 million, from the acquisition of Horizon Solutions and Buckles-Smith in the US as well as LTL in Canada.

On a constant and same-day basis, sales were up +8.7%, including +4.6% from volume growth and +4.1% from price effect (including (1.7)% contribution from copper-based cable prices in the quarter).

In North America, electrification trends continued to support our growth, with our four product families (solar, EV charging infrastructure, HVAC and industrial automation) growing by c.+19% (contributing for 370bps of same-day sales growth in North America in Q1 23) and representing c. 22% of sales.

• In the US (82% of the region’s sales), sales posted solid +8.6% growth on a same-day basis, driven by robust demand in our diversified Commercial and Industrial end-markets, offsetting the declining trend in residential activity and the more difficult base effect in the Southeast.
  • Rexel’s Industrial automation business grew in double digits
  • Rexel was awarded a multi-year U.S. Postal Service contract for the supply of up to 41,500 electric vehicle charging stations.
• In Canada (18% of the region’s sales), sales grew by +9.3% on a same-day basis. The robust growth in Q1 was largely driven by diversified industrial segments such as mining, transportation, OEM, farm & food, sawmills…
• Stable backlogs in North America at end-March 2023 compared to end-December 2022, reflecting good project execution and robust underlying order intake in the quarter.
• Smooth integration of recently-acquired companies: Buckles-Smith and Horizon in the US as well as LTL in Canada.

Asia-Pacific (7% of Group sales): +1.3% in Q1 on a constant and same-day basis

In the first quarter, sales in Asia-Pacific were up +0.4% on a reported basis, including:

• A negative currency effect of (2.3)%, or €(7.4) million, mainly due to the depreciation of the Chinese renminbi and the Australian dollar against the euro
• A neutral scope effect

On a constant and same-day basis, sales were up +1.3%, including a slight (0.5)% volume decline and +1.8% price effect (including 0.1% contribution from copper-based cable prices in the quarter).

• In the Pacific (52% of the region’s sales), sales were up +8.0% on a constant and same-day basis. More specifically:
  • In Australia (83% of Pacific’s sales), sales increased by +9.1%, with good volume growth driven by Industrial and, to a lesser extent, Commercial. Solar activity remained supportive.
• In Asia (48% of the region’s sales), sales decreased by (5.1)% on a constant and same-day basis:
  • In China (87% of Asia’s sales), sales were down (3.5)% due to increased business selectivity in a favorable business environment.

FY 2023 OUTLOOK

Leveraging our transformation and enhanced efficiency, we target for 2023, at comparable scope of consolidation and exchange rates:

• Same-day sales growth of between 2% and 6%
• An adjusted EBITA1 margin of between 6.3% and 6.7%
• Free cash flow conversion2 above 60%

1 Excluding (i) amortization of PPA and (ii) the non-recurring effect related to changes in copper-based cable prices.

2 FCF Before interest and tax/EBITDAaL

NB: The estimated impacts per quarter of (i) calendar effects by geography, (ii) changes in the consolidation scope and (iii) currency fluctuations (based on assumptions of average rates over the rest of the year for the Group’s main currencies) are detailed in appendix 2.

FINANCIAL INFORMATION 

A slideshow of the first quarter 2023 sales is available on the Group’s website.

GLOSSARY

REPORTED EBITA (Earnings Before Interest, Taxes and Amortization) is defined as operating income before amortization of intangible assets recognized upon purchase price allocation and before other income and other expenses.

ADJUSTED EBITA is defined as Reported EBITA excluding the estimated non-recurring net impact from changes in copper-based cable prices.

EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is defined as operating income before depreciation and amortization and before other income and other expenses.

EBITDAaL is defined as EBITDA after deduction of lease payment following the adoption of IFRS16.

RECURRING NET INCOME is defined as net income restated for non-recurring copper effect, other expenses and income, non-recurring financial expenses, net of tax effect associated with the above items.

FREE CASH FLOW is defined as cash from operating activities minus net capital expenditure.

NET DEBT is defined as financial debt less cash and cash equivalents. Net debt includes debt hedge derivatives.

APPENDIX

Appendix 1: Segment reporting – Constant and adjusted basis*

* Constant and adjusted = at comparable scope of consolidation and exchange rates, excluding the non-recurring effect related to changes in copper-based cable prices and before amortization of purchase price allocation

Appendix 2: Calendar, scope and currency effects on sales

Based on the assumption of the following average exchange rates:

€ 1.00 = USD 1.09

€ 1.00 = CAD 1.47

€ 1.00 = AUD 1.62

€ 1.00 = GBP 0.88

and based on acquisitions/divestments to date, 2022 sales should take into account the following estimated impacts to be comparable to 2023:

Appendix 3: Analysis of change in revenues (€m)

Appendix 4: Historical copper price evolution

Source
Rexel