|SECOND QUARTER SALES & FIRST-HALF 2021 RESULTS Same-day sales growth up +32.3% in Q2, accelerating after an already robust Q1 |
H1 Adj. EBITA margin at 5.6%, driven by sales growth and digital transformation
Recently upgraded FY 21 guidance confirmed thanks to robust growth drivers
→ Sales of €3,726.6m in Q2 2021, leveraging our capacity to ensure business continuity for our customers in an environment marked by strong price increases and product scarcity
→ H1 21 adj. EBITA margin up +232 bps at 5.6% (above H1 19 margin of 4.7%) from digital penetration (22.6% of sales in Q2 21, up +123, bps including 33.2% of sales in Europe), price increase management and operational excellence. It demonstrates the result of our profound transformation over the last 5 years.
→ Recurring net income of €241.7m up +192.9% in H1 2021, from all-time high EBITA performance and optimized balance sheet
→ Positive Free Cash Flow before interest and tax of €116.3m in H1 2021 (€-17.3m in H1 2019) from robust operational results and active management of Working Capital
→ Rapid deleveraging thanks to strong FCF, bolstering our confidence in reaching an indebtedness ratio of 1.5x to 2x in FY 21 depending on M&A opportunities
→ Confirmation of the recently upgraded FY 21 guidance, with strong upside potential in all geographies, notably in North America where volumes (excluding inflation) are still 15% below pre-crisis level
|Key figures1 (€m) - Actual||H1 2021||H1 2020||H1 2019||H1 2021 |
vs H1 2020
|H1 2021 |
vs H1 2019
|On a reported basis||+16.7||%||+3.8||%|
|On a constant and actual-day basis||+19.4||%||+7.3||%|
|On a constant and same-day basis||+19.9||%||+7.6||%|
|Gross margin2 3||1,805.6||1,486.7||1,698.6||+24.2||%||+9.8||%|
|As a percentage of sales||25.6||%||24.6||%||25.0||%||99 bps||59 bps|
|As a percentage of sales||5.6||%||3.3||%||4.7||%||232 bps||99 bps|
|Operating income (loss)||435.1||(296.8)||290.1||n/a||n/a|
|Net income (loss)||270.6||(439.8)||163.9||n/a||n/a|
|Recurring net income||241.7||82.5||167.7||+192.9||%||+44.1||%|
|FCF before interest and tax||116.3||176.8||(17.3)||(60.5)||+133.6|
|Net debt at end of period||1,523.0||1,690.3||2,172.6||€167m reduction||€650m reduction|
1 See definition in the Glossary section of this document 2 Change at comparable scope of consolidation 3 Adjusted for non-recurring copper effect
|Patrick BERARD, Chief Executive Officer, said: |
“After having demonstrated our resilience during the acid test of the pandemic, our H1 results confirm that the profound transformation initiated five years ago has made Rexel a more agile company. This allows us to fully capture the incipient recovery and adapt to the current environment, marked by price increases and growing product scarcity. Rexel’s journey since 2017 has resulted in a stronger and more digital business model, for the benefit of all its stakeholders. With Rexel well positioned to continue its growth trajectory, I am pleased to pass on the baton to Guillaume Texier on September 1 to execute the strategic plan presented at our last Capital Market Day, which aims to deliver a historically high level in terms of sales and profitability by continuously improving customer service.”
|FINANCIAL REVIEW FOR THE PERIOD ENDED JUNE 30, 2021|
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In Q2, sales were up +32.1% year-on-year on a reported basis and up +32.3% on a constant and same-day basis, reflecting our robust start to the year, and also helped by a favorable comparable base as Q2 2020 was the quarter most impacted by the pandemic in all geographies (same-day sales down -17.7% in Q2 2020).
In the second-quarter, Rexel posted sales of €3,726.6 million, up +32.1% on a reported basis, including:
|Key figures (€m)||Q2 2021||YoY change||Q2 2021 vs Q2 2019|
|On a reported basis||+32.1||%||+7.0||%|
|On a constant and actual-day basis||+33.9||%||+10.7||%|
|On a constant and same-day basis||+32.3||%||+9.6||%|
|Same-day sales growth by geography|
On a constant and same-day basis, sales were up +32.3%, as a result of:
At Group level, we saw same-day sales growth of +9.6% versus Q2 2019, with Europe at +15.2%, Asia-Pacific at +11.6% and North America now above its pre-crisis level for the first time at +0.6% versus Q2 2019. North America was notably helped by robust demand in proximity and favorable price increases.
More specifically, the quarter benefited from further growth in digitalization in all 3 geographies, with digital sales now representing 22.6% of Group sales, up +123 bps compared to Q2 2020. This comes despite a challenging base effect, as digital sales surged during the pandemic. Trends were positive in North America (up to 9.0% of sales, an increase of +83 bps) and in Europe (up to 33.2% of sales, an increase of +44 bps) offsetting a slight decline in Asia-Pacific (4.6% of sales down -42bps).
In H1 2021, Rexel posted sales of €7,057.8 million, up +16.7% on a reported basis. On a constant and same-day basis, sales were up +19.9%, including a positive impact of +4.6% from the change in copper-based cable prices vs. a negative impact of (0.5)% in H1 2020.
The +16.7% increase in sales on a reported basis included:
Europe (58% of Group sales): +37.8% in Q2 and +23.4% in H1 on a constant and same-day basis
In the second-quarter, sales in Europe increased by +41.1% on a reported basis, including a positive currency effect of +0.8%, or €+12.3m, mainly due to the appreciation of the Swedish Krona and the Norwegian Krone and a negative scope effect of (0.5)%, or €(8.0)m. On a constant and same-day basis, sales were up +37.8% (same day sales were down -16.7% in Q2 20, the most impacted quarter by the pandemic), positioning Rexel above the pre-crisis level in both volume and value.
North America (33% of Group sales): +29.6% in Q2 and +14.8% in H1 on a constant and same-day basis
In the second-quarter, sales in North America were up +23.5% on a reported basis, including a negative currency effect of (6.1)%, or €(61.6)m, mainly due to the depreciation of the US dollar against the euro and a positive scope effect of €+11.9m, or +1.2%, from the acquisition of Wesco Utility in Canada. On a constant and same-day basis, sales were up +29.6%, back to their pre-crisis level (Q2 21 up +0.6% vs Q2 2019).
Asia-Pacific (9% of Group sales): +12.3% in Q2 and +17.4% in H1 on a constant and same-day basis
In the second-quarter, sales in Asia-Pacific were up +15.5% on a reported basis, including a positive currency effect of +2.9%, or €+8.6m, mainly due to the appreciation of the Australian dollar against the euro. On a constant and same-day basis, sales were up +12.3%.
Adjusted EBITA margin at 5.6% in H1 2021, up +232 bps compared to H1 2020
In the first-half, gross margin was up +99 bps year-on-year, at 25.6% of sales, and opex (including depreciation) amounted to -19.9% of sales, representing an improvement of +133 bps year-on-year, resulting from price increase management, digital penetration and operational excellence. It demonstrates the result of our profound transformation over the last 5 years.
Overall, the first half also benefited from a balance of temporary tailwinds and headwinds:
As a result, adjusted EBITA stood at €398.2m, up +103.0%, in the first-half 2021.
Adjusted EBITA margin was up +232 bps at 5.6% of sales (above H1 2019 at 4.7%), reflecting:
In H1 2021, reported EBITA stood at €442.4 million (including a positive one-off copper effect of €44.3m), up +130.0% year-on-year.
Net income of €270.6m in H1 2021
Recurring net income up +192.9% to €241.7m in H1 2021
Operating income in the first-half stood at €435.1 million, reversing a loss of €(296.8) million in H1 2020.
Net financial expenses in the first-half amounted to €(59.8) million (vs. €(63.1) million in H1 2020) split as follows:
Income tax in the first-half represented a charge of €(104.7) million (vs. €(79.9) million in H1 2020), implying a c. 28% tax rate.
Net income in the first-half was positive at €270.6 million (vs. a negative €(439.8) million in H1 2020).
Recurring net income in the first-half amounted to €241.7 million, up +192.9% compared to H1 2020 (see appendix 3).
Inflow of free cash-flow before interest and tax of €116.3 million in first-half 2021
Indebtedness ratio of 1.79x at June 30, 2021
In the first-half, free cash flow before interest and tax was an inflow of €116.3 million (vs. an inflow of €176.8 million in H1 2020), representing a Free Cash flow conversion rate (EBITDAaL into FCF before interest and taxes) of 24.4%. This net inflow included:
At June 30, 2021, net debt stood at €1,523.0 million, down €-167.3m year-on-year (vs. €1,690.3 million at June 30, 2020).
It took into account:
At June 30, 2021, the indebtedness ratio (Net financial debt/ EBITDAaL), as calculated under the Senior Credit Agreement terms, stood at 1.79x, lower than the June 30, 2020 level of 2.59x.
At the end of April 2021, we successfully issued a €400m Sustainability-Linked-Bond (SLB) due in 2028 (coupon 2.125%). With this operation, Rexel was the first French non-investment grade corporate issuer of a SLB, confirming our ESG trajectory presented at our Capital Market Day on February 11, 2021.
|CONFIRMATION OF THE RECENTLY UPGRADED 2021 FY GUIDANCE|
Following a better-than-expected start of the year and capitalizing on robust growth drivers and the growing benefits of our digital transformation, we issued a trading update on June 29, 2021, raising our guidance for full-year 2021.
Leveraging on our continuous efforts, we target for 2021, at comparable scope of consolidation and exchange rates*:
* Assuming no severe deterioration of the sanitary environment (Delta variant)
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 6.
October 21, 2021 Third-quarter 2021 sales
The financial report for the period ended June 30, 2021 is available on the Group’s website (www.rexel.com), in the "Regulated information" section, and has been filed with the French Autorité des Marchés Financiers.
A slideshow of the second-quarter sales and half-year 2021 results publication is also available on the Group’s website.
|ABOUT REXEL GROUP|
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 25 countries, with more than 24,000 employees.
The Group’s sales were €12.6 billion in 2020. 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, STOXX600. Rexel is also part of the following SRI indices: FTSE4Good, Dow Jones Sustainability Index Europe, Euronext Vigeo Europe 120, STOXX® Global ESG Environmental Leaders, 2021 Global 100 Index, S&P Global Sustainability Yearbook 2021, in recognition of its performance in terms of corporate social responsibility (CSR). Rexel is rated A- in the 2020 CDP Climate Change assessment and ranked in the 2020 CDP Supplier Engagement Leaderboard.
For more information, visit www.rexel.com/en.
FINANCIAL ANALYSTS / INVESTORS
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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 appendices, please open the pdf file by clicking on the link at the end of the press release
The Group is exposed to fluctuations in copper prices in connection with its distribution of cable products. Cables accounted for approximately 15% 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 11, 2021 under number D.21-0111, and its amendment filed with the AMF, on March 29, 2021 under number D.21-0111-A01. 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 11, 2021 under number D.21-0111, its amendment filed with the AMF, on March 29, 2021 under number D.21-0111-A01, as well as the consolidated financial statements and activity report for the 2020 fiscal year which may be obtained from Rexel’s website (www.rexel.com).
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