Scienza e Tecnologia
SECOND QUARTER SALES & H1 2022 RESULTS
→ Sales of €4,705.4m in Q2 2022, up +12.0% on a same-day basis. Robust activity notably driven by electrification trends, increased digital penetration, volume growth in North America and higher non-cable selling price in all geographies
→ Record H1 adj. EBITA of €703.7m up +63.4% and adjusted EBITA margin at 7.7% (up +228 bps) from robust activity (actual-day sales growth of +15.3%) coupled with continued effects of our operational excellence program as well as price pass-through. Adj. EBITA includes c. 86 bps of positive one-off effects from inventory price inflation on non-cable products, net of higher performance-linked bonuses
→ Recurring net income of €471.1 million, up +94.9% in H1 2022 , reaching an all-time high
→ Record positive Free Cash Flow before interest and tax of €231.6m in H1 2022 (€116.3m in H1 2021). Lowest-ever first-half indebtedness ratio at 1.26x
→ FY 22 guidance confirmed, supported by record-high backlog, easier base effect in Europe in H2 and China back to positive territory
→ Active portfolio management with 2 acquisitions and 2 disposals , fully in line with our strategy. The combined net effect is positive on sales, profitability and ROCE
→ SBTi validated our 2030 & 2050 Greenhouse Gas emission targets to reach net-zero across the value chain
→ Implementing Power Up 2025 plan to strengthen the organization and further increase the resilience of our model
See definition in the Glossary section of this document Change at comparable scope of consolidation Adjusted for non-recurring copper effect
SALES
In Q2, sales were up +26.3% year-on-year on a reported basis and up +12.0% on a constant and same-day basis.
In the second-quarter, Rexel posted sales of €4,705.4 million, up +26.3% on a reported basis, including:
Sales were up +12.0% a constant and same-day basis (or +12.1% on a constant and actual-day basis), notably driven by robust volumes in North America and additional selling price increases on non-cable products in all geographies, offsetting the situation in China and a more difficult volume base effect in Europe.
In addition, during the quarter, we have also:
In H1 2022, Rexel posted sales of €9,082.8 million, up +28.7% on a reported basis. On a constant and same-day basis, sales were up +13.9%, including a positive impact of +3.1% from the change in copper-based cable prices (vs. a positive impact of +4.6% in H1 2021) and a positive impact from non-cable copper prices of +9.2%.
The +28.7% increase in sales on a reported basis included:
Europe (50% of Group sales): +10.4% in Q2 and +11.9% in H1, on a constant and same-day basis
In the second quarter , sales in Europe increased by +10.5% on a reported basis, including a positive currency effect of +0.3%, or €7.5 million, mainly due to the appreciation of the Swiss Franc and the British pound against the euro and a limited scope effect of (0.1)%, or €(3.2) million. On a constant and same-day basis, sales were up +10.4%, including a slightly negative volume contribution (0.5)%
North America (42% of Group sales): +17.2% in Q2 and +19.2% in H1 on a constant and same-day basis
In the second quarter , sales in North America were up +59.8% on a reported basis, including a positive currency effect of +11.7%, or €144.8 million, due to the appreciation of the US and Canadian dollars against the euro and a positive scope effect of €301.5 million, or +24.3%, from the acquisition of Mayer in the US. On a constant and same-day basis, sales were up +17.2%, including +5.1% volume growth.
Asia-Pacific (8% of Group sales): (2.6)% in Q2 and +1.2% in H1 on a constant and same-day basis
In the second-quarter , sales in Asia-Pacific were up +3.3% on a reported basis, including a positive currency effect of +7.2%, or €24.3 million, due to the appreciation of all currencies against the euro and more specifically the Australian dollar and the Chinese renminbi. On a constant and same-day basis, sales were down (2.6)%.
PROFITABILITY
Adjusted EBITA margin at 7.7% in H1 2022, up 228 bps compared to H1 2021
The +15.3% actual sales growth in H1 22 translated into a gross margin improvement of +131 bps year-on-year, at 26.4% of sales, and an adjusted EBITA margin at 7.7%, up +228 bps year-on-year, including a non-recurring impact of c.86 bps that benefited H1 2022 (c.109 bps of positive one-off from inventory price inflation on non-cable products net of a negative 23bps impact from higher performance-linked bonuses).
The progression is supported by:
Those tailwinds more than offset opex inflation notably on Salaries & Benefits and Transportation costs.
The graph below details the +228 bps improvement in Adjusted EBITA margin:
See bridge in the PDF file attached.
By geography:
As a result, adjusted EBITA stood at €703.7 million, up +63.4%, in H1 2022 and reported EBITA stood at €708.7 million (including a positive one-off copper effect of €+5.0 million), up +60.2% year-on-year.
Focusing on the bridge from EBITDA to Reported EBITA:
NET INCOME
Net income of €459.8 million in H1 2022
Recurring net incom e up +94.9% to €471.1 million in H1 2022
Operating income in the half-year stood at €683.6 million, up from €435.1 million in H1 2021.
Net financial expenses in the half-year amounted to €(51.9) million (vs. €(59.8) million in H1 2021), split as follows:
Income tax in the half-year represented a charge of €(171.9) million (vs. €(104.7) million in H1 2021):
Net income in the half-year was €459.8 million (vs. €270.6 million in H1 2021).
Recurring net income amounted to €471.1 million in H1 2022, up +94.9% compared to H1 2021 (Appendix 3).
FINANCIAL STRUCTURE
Free cash-flow before interest and tax of €231.6 million in H1 2022
Indebtedness ratio of 1.26x at June 30, 2022
In the half-year, free cash flow before interest and tax was an inflow of €231.6 million (vs. an inflow of €116.3 million in H1 2021). This net inflow included:
Below FCF before interest and tax, the cash flow statement took into account:
At June 30, 2022:
On July 18th, 2022, taking into account our recent transformation and updated mid-term guidance, S&P upgraded our bond rating and our issuer rating to BB+.
With the launch of Power Up 2025, we are writing a new strategic chapter aiming at solidifying our base and accelerating our profitable growth by seizing opportunities from rising electrification and enhancing our differentiation on selected key topics.
This strategy will enhance our growth profile and also improve Rexel's resilience.
Rexel announced 4 transactions to reinforce its portfolio and its local footprint in key regions. They include :
The combined operations will contribute positively to our sales, earnings and Return On Capital Employed in year 1. More specifically, they will add c. €75m in sales (FY 2021) on a net basis and be accretive in adjusted Ebita margin.
Acquisition of Trilec in Belgium
On July 4th, Rexel Belgium closed the acquisition of Trilec, a Belgian family-owned electrical distributor operating mostly in Flanders, with 15 branches, 172 employees and a semi-automated distribution center.
Trilec is a high-quality asset with a number 3 position in Belgium, and €80m of sales generated in 2021. Its commercial footprint and supply chain organization are very complementary to our existing base, as reflected by the high level of targeted synergies.
Acquisition of Horizon Solutions in the US
On July 7th, Rexel USA signed a definitive agreement to acquire Horizon Solutions headquartered in Rochester, New York with 10 branches and 219 employees. The Industrial automation business specialist generated sales of USD 170m in 2021.
With the acquisition, Rexel USA will benefit from a strong management team with deep industry expertise and a sound culture and strengthen its presence as an Industrial automation distributor in the Northeast Region.
The transaction is projected to be accretive to Rexel's Earnings Per Share in year 1 and value-creating in year 2, fully in line with the Group's commitment, notably thanks to targeted synergies.
The transaction is expected to close in Q3 22.
Disposal of Rexel in Spain & Portugal
Rexel has entered into a binding agreement with Sonepar for the sale of Rexel Spain and Rexel Portugal. In 2021, the combined entities generated revenues of €170 million, were dilutive to Group profitability, employed 560 people and had 60 branches.
In those two countries, Rexel does not have critical mass, and sees better opportunities for capital allocation elsewhere.
The transaction is subject to approval by the Spanish competition authority and is expected to close by October.
In a context of growing macroeconomic uncertainties, we are confident we will reach our recently upgraded FY 22 guidance, with H2 2022 benefiting from an all-time high backlog notably in North America, an easier volume base effect in Europe and a return to normal in China, which should be back to positive territory.
Leveraging our transformation and enhanced efficiency, we target for 2022, at comparable scope of consolidation and exchange rates:
Excluding (i) amortization of PPA and (ii) the non-recurring effect related to changes in copper-based cable prices.
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 6
October 27, 2022 Third-quarter 2022 sales
February 16, 2023 Fourth-quarter sales & FY 2022 results
First-half 2022 financial report is available on the Group's website (www.rexel.com).
A slideshow of the second-quarter sales and half-year 2022 results publication is also available on the Group's website.
Rexel, worldwide expert in the multichannel professional distribution of products and services for the energy world, addresses three main markets: residential, commercial, and industrial. The Group supports its residential, commercial, and industrial customers by providing a tailored and scalable range of products and services in energy management for construction, renovation, production, and maintenance. Rexel operates through a network of more than 1,900 branches in 24 countries, with more than 26,000 employees. The Group's sales were €14.7 billion in 2021.
Rexel is listed on the Eurolist market of Euronext Paris (compartment A, ticker RXL, ISIN code FR0010451203). It is included in the following indices: SBF 120, CAC Mid 100, CAC AllTrade, CAC AllShares, FTSE EuroMid, and STOXX600. Rexel is also part of the following SRI indices: FTSE4Good, Dow Jones Sustainability Index Europe, Euronext Vigeo Europe 120 and Eurozone 120, STOXX® Global ESG Environmental Leaders, and S&P Global Sustainability Yearbook 2022, in recognition of its performance in terms of Corporate Social Responsibility (CSR).
For more information, visit www.rexel.com/en.
FINANCIAL ANALYSTS / INVESTORS
PRESS
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.
For appendix please open the PDF file.
The Group is exposed to fluctuations in copper prices in connection with its distribution of cable products. Cables accounted for approximately 17% of the Group's sales and copper accounts for approximately 60% of the composition of cables. This exposure is indirect since cable prices also reflect copper suppliers' commercial policies and the competitive environment in the Group's markets. Changes in copper prices have an estimated so-called "recurring" effect and an estimated so called "non-recurring" effect on the Group's performance assessed as part of the monthly internal reporting process of the Rexel Group: i) the recurring effect related to the change in copper-based cable prices corresponds to the change in value of the copper part included in the sales price of cables from one period to another. This effect mainly relates to the Group's sales; ii) the non-recurring effect related to the change in copper-based cable prices corresponds to the effect of copper price variations on the sales price of cables between the time they are purchased and the time they are sold, until all such inventory has been sold (direct effect on gross profit). Practically, the non-recurring effect on gross profit is determined by comparing the historical purchase price for copper-based cable and the supplier price effective at the date of the sale of the cables by the Rexel Group. Additionally, the non-recurring effect on EBITA corresponds to the non-recurring effect on gross profit, which may be offset, when appropriate, by the non-recurring portion of changes in the distribution and administrative expenses.
The impact of these two effects is assessed for as much of the Group's total cable sales as possible, over each period. Group procedures require that entities that do not have the information systems capable of such exhaustive calculations to estimate these effects based on a sample representing at least 70% of the sales in the period. The results are then extrapolated to all cables sold during the period for that entity. Considering the sales covered. the Rexel Group considers such estimates of the impact of the two effects to be reasonable.
This document may contain statements of future expectations and other forward-looking statements. By their nature, they are subject to numerous risks and uncertainties, including those described in the Universal Registration Document registered with the French Autorité des Marchés Financiers (AMF) on March 10, 2022 under number D.22-0083.These forward-looking statements are not guarantees of Rexel's future performance, Rexel's actual results of operations, financial condition and liquidity as well as development of the industry in which Rexel operates may differ materially from those made in or suggested by the forward-looking statements contained in this release. The forward-looking statements contained in this communication speak only as of the date of this communication and Rexel does not undertake, unless required by law or regulation, to update any of the forward-looking statements after this date to conform such statements to actual results to reflect the occurrence of anticipated results or otherwise.
The market and industry data and forecasts included in this document were obtained from internal surveys, estimates, experts and studies, where appropriate, as well as external market research, publicly available information and industry publications. Rexel, its affiliates, directors, officers, advisors and employees have not independently verified the accuracy of any such market and industry data and forecasts and make no representations or warranties in relation thereto. Such data and forecasts are included herein for information purposes only.
This document includes only summary information and must be read in conjunction with Rexel's Universal Registration Document registered with the AMF on March 10, 2022 under number D.22-0083, as well as the financial statements and consolidated result and activity report for the 2021 fiscal year which may be obtained from Rexel's website (www.rexel.com).
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