Good morning, ladies and gentlemen, and welcome today to Legrand's 2022 First Quarter Results Conference Call. All participants are in a listen-only mode, and later there will be a question and answer session. For your information, this conference is being recorded. At this time, I would like to hand the call over to CEO, Mr. Benoît Coquart, and CFO, Mr. Franck Lemery. Please go ahead, sir. Thank you. Hello, everybody. Good morning. Franck, Ronan, and myself are happy to welcome you to the Legrand Q1 2022 results conference call and webcast. Please note that this call is recorded as usual. We have published today our press release, financial statements, and a slideshow to which we will refer. Those documents are available on the Legrand website. I will start with a few opening remarks and then Franck and I will comment the results in more detail. I begin on page four of the deck with the three key takeaways of this Q1. First, Legrand recorded strong growth in sales. Second, results held firm amid strong inflationary trends. Third takeaway, we have confirmed our 2022 full-year targets. We will also briefly come back on our last ESG investor event and share two points on governance in view of our next shareholder meeting. Moving now to page 6 and 7 with an overview of sales on this quarter. Our sales grew by close to 18%. This includes a strong +11.2% organic rise that reflects our successful sales and marketing initiatives, as well as an effective management of supply chain pressures. On top of organic growth, the scope effect is of +3.2%. Based on acquisitions completed and their likely date of consolidation, this impact should be close to +3% for the full year in 2022. Now, last component regarding sales is FX effect. It was also favorable at +2.6% on the first quarter and would be close to +3.5% on the full year 2022 based on April average exchange rates. On page seven now, if we focus on organic growth by area, each of the three regions achieved a high level of growth. In Europe, the pace was upbeat at +12.9%, with both mature and new economies growing double digits. A few words here regarding the conflict between Russia and Ukraine. It had a limited impact on our sales in the first quarter, and both countries represented together around 2% of group sales in 2021 on the full year. In North and Central America, sales were up +11.2%, with a sustained level in the United States at +11.1%, where business for non-residential applications recorded a marked growth. Finally, the rest of the world area grew +7.5%, driven by strong achievements in many countries and notably in India. I am now passing the mic to Franck to provide insights on our results that showed good resistance. Thank you, Benoît. Good morning to all of you. I will start on page 9 with the adjusted operating margin. Before acquisitions, it stood at 20.6%. This is a limited retreat of -minus one point versus the same period of 2021, which, as a reminder, was a demanding and exceptional basis for comparison. The group's good resistance highlights the efficiency of the management of our expenses, sales prices, and in a widespread inflationary environment. As an example, the rise in raw material and components was around +18% on the quarter compared to the same period of 2021. Including acquisitions, the adjusted operating margin for the first quarter of 2022 was 20.3%. Now turning to page 10 regarding the net profit attributable to the group. With EUR 258 million, this represents a growth of +13%. It was essentially linked to the rise in the operating profit of EUR 38 million. I am moving now to page 11 with a few comments on cash and balance sheet. As a percentage of sales, cash flow from operations was down 0.4 points at 18.4% of sales. The free cash flow stood at 2.3% of sales of the first quarter. This includes a continued strengthening of our inventory coverage. This is done in order to serve our customers in this context of tension and shortages in the supply chain. On the balance sheet structure side, net debt to EBITDA ratio was 1.6 at the end of March. This is the key financial topics I wanted to share with you, and I'm now passing back the mic to Benoît. Thank you, Franck. As you can see, despite rising uncertainties, these Q1 results testify once again the effectiveness of our business model, which drives profitable and responsible value creation. On this basis, we have confirmed our targets for 2022 as detailed on page 13. Taking into account the achievement in the first quarter of 2022 and the current macroeconomic outlook, Legrand has confirmed the full year targets it set for 2022, i.e., growth in sales at constant exchange rates of between +5% and +11% with organic growth of between +3% and +7% and a scope of consolidation effect of between +2% and +4%. Number two, an adjusted operating margin of about 20% of sales with a margin of between 19.9% and 20.7% before acquisitions, i.e., a 2021 scope of consolidation and dilution from acquisitions of between -20 and -40 basis points. The group also aims to reach around 100% of CSR achievements for the first year of its 2022-2024 roadmap, testifying to its bold and exemplary approach to ESG. I will now comment very quickly the two last items of today's call. I'm starting with a few words on our last investor event held in March, which was dedicated to ESG on page 15 to 17. Starting with page 15, a brief reminder of the strong commitment we have taken to ESG with ambitious and consistent short, mid, and long-term targets. Our three-year fifth CSR roadmap is focusing on what truly matters in terms of effective impact. It is organized through four key domains, promotion of diversity and inclusion, the reduction in our carbon footprint, the development of circular economy, and last, continued actions as a responsible player. It is structured around 15 concrete priorities. At last, our ESG policy is in keeping with our strategic roadmap and of course embedded in our medium-term financial targets. On the following two pages, 16, 17, we provide more details on targets, including in the next CSR roadmap. I will not detail them as they were presented comprehensively during our recent CMD dedicated to ESG. Of course, we will be more than happy to answer any questions you would have. Now, some final words on governance on pages, 19 and 20. First, on the proper evolution of the board of directors on page 19, the appointment of Mr. Florent Menegaux as independent director will be put to shareholders during the general meeting to be held on May 25. As CEO of Michelin, he's backed by proven track record as head of a major listed industrial company. As a result, our board would continue to be amongst the industry's best practices with 83% of independent members, 42% of women, and five nationalities. Second element on page 20. As announced in February, the proposed dividend for 2021 is EUR 1.65, i.e., up +16.2%. This will also be put to the shareholders' approval on May 25. We are now ready to open to questions. Thank you very much. Thank you. Ladies and gentlemen, if you wish to ask a question, please press zero one on your telephone keypad. Thank you. First question from Daniela Costa from Goldman Sachs. Please go ahead. First, can you give us a little bit of a color in terms of the organic growth in more detail, if you could disclose, or maybe I missed it during the speech, the pricing that you've had, and also, what's in store. I guess last year you mentioned you had a little bit of room that you didn't use for coming forward. Second point, distributor inventories, if you can talk about whether you think those are normalized by now or are still low. Third point, can you talk a little bit about how you see the balance both in resi and non-resi with, like, all the overall construction costs going up a lot? Do you see any point at which there would be demand destruction risks? Are they different between resi and non-resi? Those are my three points. Thank you so much. Hello, Daniela. A couple of elements. As far as the Q1 pricing was concerned, it was +7.8%. Price was close to 8% and volume was slightly above 3%. There has been a clear ramp-up, very consistent with what we told you in February, i.e., that we prefer a sort of a very careful step-by-step approach as far as pricing is concerned, rather than a strong up in one shot. To give you the numbers, H1 2021 pricing was up 1.9%, Q3 +4.2%, Q4 +5.9%, and now Q1 2022 +7.8%. You can really see a sort of phasing of the pricing. Well, we'll see in the coming quarters what we need to do. I don't believe that we have consumed all our margin for maneuver in terms of pricing, and if needed, then we still have the ability to do a little bit more if needed. When I'm comparing myself to what some of my competitors have publicly announced, I'm not amongst the companies that have increased the most my prices. I still retain some margin for maneuver if needed. As far as the distribution inventory is concerned, we haven't seen in Q1 any significant inventory build-up from our distributors. I believe that the level of inventory at our distributors remain pretty low. The reason being that, because of the supply chain constraints, it has been a problem for most of our distributors to build some inventory back. It has not really supported, one way or the other, our Q1 performance, and I don't believe that the level of inventory are particularly high. The other way, I think that they remain pretty low. As far as the split between resi and non-resi, well, of course it depends on the countries and on the areas. If you take, for example, the US, it is clear that our growth in non-resi, excluding data center, has been the high teens in Q1 2022. It has been more supportive than resi, and this was expected. I remind you that we've been telling you for a couple of quarters that at some point the non-resi nation in the US would rebound. The fact that I don't know if it's currently happening, but at least Q1 performance was good, even though both resi and data center grew in Q1. In the US, non-resi is in pretty good shape and growing faster than the resi. As far as Europe is concerned, it's a mixed bag of situations, but it is clear that the basis for comparison in resi was pretty high. You remember that starting mid-2020, sorry, there's been a rebound in the residential market in Europe, prompted by do it yourself, small works, blah, blah. Of course, this is a demanding basis for comparison, which has impacted our performance. Now, the key question is whether the pricing will ultimately have a negative impact on the market itself. I don't know. Yes, indeed, the cost of building is increasing, but at the same time, you also have the significant savings made by a lot of people due to the inflow of money coming from the stimulus plan that were implemented during the COVID-19 period. You have a number of trends which are pushing the market up, including the need to renew buildings. The cost of energy is high, so even with more expensive products, it might make sense to implement a better and newer electrical installation in order to do a significant energy cost, I mean, savings on energy cost. Yes, of course, it is a constraint, a financial constraint for builders, whether in resi or in non-resi, but there are also a number of long-term trends that could make it interesting to keep building, even though the prices are pretty high. Got it. Very clear. Thank you. Thank you. Next question from Gael de-Bray from Deutsche Bank. Please go ahead. Yes. Thanks very much. Good morning, everybody. I was wondering if you could give us some details on your supply chain organization on the sourcing you have from China, as well as on your manufacturing footprint. Basically, how many factories, how many distribution centers do you have in China and in Shanghai in particular? More broadly speaking, including sourcing, what is the share of your global COGS, which is China-related today? Well, it's a difficult question to answer because, of course, we have our own factories or some suppliers in China. What is difficult to assess is the second and third level. We might buy some components from a U.S. or European manufacturer, which is in turn incorporating some Chinese components, for example. It's difficult to have a clear vision. The only very significant flow we have from China to outside of China is between China and the U.S. Of course, we have small flows from China to Australia or China to Europe, but the only meaningful flow is from China to the U.S., and on a number of product families, including traditional ones. The biggest industrial facility we have by far in China is based in Wenzhou, which is 1 hour from Shenzhen, which is currently not under lockdown. We have a couple of factories elsewhere. We only have one factory in Shanghai, which is not a big factory. It's about, I think, 10% of what we manufacture in China. Ninety percent of what we manufacture in China is manufactured elsewhere. This being said, even though it's only 10%, it had some impact on our performance in the US. The supply chain issues, not only actually the zero-COVID policy in China, but also the fact that supplying electronic components remain extremely difficult in Q1—not to mention the customs issues to import goods in the US and the transportation issues. All those issues probably had some meaningful impact on the US performance in Q1. We believe overall that the growth should have been higher or could have been higher in Q1 in the US, especially in volume, if we hadn't faced these supply chain issues. Do you think you have enough inventory on hand to cover the situation going into the second quarter? As you could see, our level of inventory to sales at the end of Q1 is 18.4%. It's slightly above the level of inventory we had at the end of December, which, top of my mind, was 17.9%. It remains in the 18% range. Well, you know where we go. You know that it is significantly above our historical ratios, and we were used to operate the company with a ratio of inventory to sales of about 12%. We moved from 12%-18%, and as we said in February, when we commented our Q4 sales, this is partly coming from the rising price of raw materials and components, of course, has a mechanical impact in the first inventory. Partially also coming from the coverage, the fact that we wanted to increase our level of inventory in order to better service our customers. If we look at the end of March numbers, the increase of about 4 points of our level of inventory to sales is coming one third from these raw materials impact and two-thirds from the coverage. Now, if your question is, should we expect this 18% to become 19%, 20%, 21%? Well, I don't think so. I believe that 18 or 18 point something is already quite a significant level. Our mid-term target is rather to decrease that back to historical level. I cannot commit to a pace. I don't know how long it will take. It will depend on the availability of supplies. What we really want is not to put at stake the service to our customers, so it might take a couple of quarters or more. Our goal is progressively to come back from 18 point something to historical levels. No, our plan is clearly not to put a lot more inventory to our balance sheet. Okay. Thanks very much. Maybe a final question from me. Sure, sure. Based on the current situation with the war in Ukraine and the lockdowns in China, based on what you know regarding the input cost, how much more do you think you need to pass on to customers to fully cover cost inflation, including freight and wage inflation? Well, what I can give you is the carryover. The mechanical impact, if we just apply to the entire year or to the remaining nine months, the price level and the cost level, how much would it be? It would imply pricing for the full year between +5%-+6%, and it would imply rise in raw materials and components between +12% and +14%. This is a pure mechanical impact. To answer straight your question, Gael, I don't know. It will really depend on what is needed to deliver our commitment. We could very much do a couple of more points if needed. Now again, we are monitoring that extremely carefully because we don't want to do too much pricing. And you know that it's always a difficult exercise to balance profitability and competitiveness. We've been very keen for the past 12 months of not doing silly things that would damage our competitiveness. To answer your question, beyond carryover, we still have the ability to do a bit more pricing if needed. Okay, thanks very much. Thank you. Thank you. Next question from Lars Brorson from Barclays. Please go ahead. Oh, hi. Thank you. Good morning, Benoît, Franck, Ronan. Can I maybe follow up first on Gael's question and just ask about the impact in the quarter from quote-unquote supply chain constraints and lost sales? It sounds like it was primarily in the U.S. Are we talking a few tens of EUR millions, so-called a couple of hundred basis points of growth impact in Q1? And how to think about Q2, Benoît? It seems to me things are getting a lot worse in the short term. I know you're not in the habit of giving monthly disclosure, but I wonder what the development in April and May so far on your Chinese supply chain is telling you in terms of the likely impact in Q2. Maybe just finally to that, what's your assumption in terms of catch up, from this lost sale in the first quarter and in Q4? Thank you. Well, look, clearly, if we look at the supply chain issues, there are areas where things are getting better. I don't want only to have a negative message. If you look at the plastics and metals, except of course, aluminum, because of the Ukraine and Russian war. If you look at most of the metals and plastics, it's a lot easier to source, and we have a lot less difficulty to get the products. Really, the supply chain issues are coming from two main issues. Electronic components. It is, yes, indeed, a big fight and a big struggle for everybody to get electronic components and chips. Number two, the Chinese zero-COVID policy, which is not only having a direct impact if you have to close your factory because of lockdown, but on top of that, which is bringing a lot of mess into the logistic chains between China and the U.S., the ability to go quickly to customs, and so on and so forth. Those are the two issues. Yes, they have cost us some sales. We could have grown faster in what we call the faster expanding segments. Even though we had good performance, for example, in energy efficiency products in Europe, I'm convinced that we could have grown faster in green products, in connected products, in data centers, because most of those products do include electronic components, and they were sometimes difficult to source. Number two, we could have grown faster in the U.S., because of those issues. It's always super complicated to quantify, because you have to get the net impact of, number one, the supply chain issues, and the orders you have in hand that you are not able to deliver. Number two, the fact that your customers are trying to order twice what they need because they know that it's gonna be difficult to source and right. The net impact is difficult to estimate. It's probably at least a couple of EUR 10 million of sales in Q1. It has clearly had you know some visible impact on our backlog and on our sales. Yes. Going forward for Q2, I have no idea. It probably depends on. Well, let's split the issue. As far as electronic components are concerned, nobody expects the situation to improve. You can ask a specialist, but I'm hearing that things won't get better between H1 2023, H2 2023. There are a couple of quarters during which we're gonna have to operate in such an environment where it is tough and difficult to source. Well, I don't wanna sound too pessimistic. We are working hard in order to get the chips and semiconductors we need. We are successful getting some. Not enough, but we are successful getting some. As far as the Chinese issue is concerned, so far, lockdowns are limited to Shanghai and potentially to Beijing, and not to the areas in which we're so Wenzhou, especially to the areas where we have a lot of our facilities. It will remain a difficulty in Q2, possibly in Q3. So far, there's no reason to believe that the impact will be a lot tougher than in Q1. Now again, I'm putting a big question mark to this comment because I'm not, you know, living in China, of course, and nobody really knows what the policy is gonna be. Semiconductor, it will remain difficult for a couple of quarters. China, so far, it's difficult. It will not worsen unless, for Legrand, more strategic places such as Wenzhou, where we have our facilities will be touched. As far as any potential catch-up is concerned, I don't know. You know, the orders you cannot deliver are sometimes switched to somebody else. Even though everybody is experiencing a lot of problems to deliver, I cannot guarantee that this backlog will be recovered or will be sold in Q2 through to Q4. I have no idea. Understood. Can I finally just ask to your 2022 guidance? I'm just trying to understand a bit better the maintained guidance just given the underlying movements versus what you told us on the tenth of February. So if I were to summarize what you said around supply chain, I could assume there could perhaps be about 100 basis points of impact on the growth from supply chain, who knows? Am I to assume that Russia comes out, so the EUR 130-140 million of Russia sales comes out, and all of that you know, adverse impact, call it 300 basis points or so, is perhaps all offset by incremental pricing from what you expected back in February, three months ago? Or how to think about those underlying pieces within that maintained guidance, please? Well, should I let you do your simulation? What I can give you is, well, mechanically, the fact that we have confirmed our guidance implies that we do between 0% and +6% for the remaining nine months. This is mechanical, given the +11.2% like-for-like growth we had in Q1, right? Between 0% and +6%. Well, clearly, internally, we are shooting more to be close to the high end of the guidance than to the low end. The low end of the guidance would imply, given the price impact we're gonna have in 2022, the low end of the guidance would imply strong drop in volume, which nobody actually expects today. Whereas the higher end of the guidance would imply stable volume or slightly growing volume given the pricing effect we can foresee. We are clearly shooting more for the high end of the guidance. Now, there are still nine months to go and of course, there are a lot of uncertainties ahead. This is the streaming line. I think it disconnected for a moment. +17% in Q4 and more than slightly above +18% in Q1 2022. You can really see the trend. There's no reason to believe that prices will go down significantly the months to come. We should have still a very sustained negative impact coming from the price of raw materials and components, at least in Q2 and possibly for H2 too. I cannot give you a precise guidance because it really depends on, let's say, the day-to-day prices of steel, plastics, copper and so on and so forth. What number I can give you is a carryover, so +12%-+14%, but again, it can very much be a +15% or +20% in Q2. I don't really know. As far as the margin for the rest of the world is concerned, it is true that, it's a pretty healthy improvement in margin. If you look at the rest of the world, the margin improvement in Q1 excluding acquisitions is plus 440 basis points. So margins are slightly decreasing in Europe and in North and Central America on the back of, strong increase in raw materials and components. It is indeed increasing sharply in the rest of the world. Well, two comments. Number one, the rest of the world, it's a mixed bag of many different countries. Well, we've discussed China and India, but you also have Middle East, Australia, Latin America and so on. It's difficult to have, say, a common pattern between all those countries. Number two, this being said, this is the area where the gross margin dropped the most in 2021. In the +440 basis points improvement, you actually have an improvement in gross margin, which well was not obvious, given the context, but again, from a very low base. As usual, you have some leverage of SG&A, which is significant, thanks to good control of costs, and as well as some support. Almost half of this increase is coming from other operating expenses. You know that those other operating expenses can be up or down in a given quarter. It's not very significant. The main reason, if I may say, is the fact that the gross margin was held steady and even increased a little bit, but it was mostly due to base of comparison. Okay. Thank you very much. Thank you. Next question from James Moore from Redburn. Please go ahead. Yes. Morning, everybody. I hope you can hear me. I've got two. Maybe I could start with, if you look across your portfolio, could you talk about which categories of products are showing the most visible premium growth above the underlying cycle due to energy efficiency and the current cost of electricity and people post Russia, Ukraine pushing incrementally to save on cost? And is there any way you can quantify any of those premium growth rates that we're seeing for really strong categories? That's my first question. Maybe one at a time, if that's helpful. Well, it's a difficult question to answer on a quarterly basis, and you know, we have more than 100 different product families, and 300,000 SKUs, so it's super difficult to have a detailed explanation on a quarterly basis and in Q3. What I can tell you is that in Europe, the energy efficiency-related product grew faster than the rest. Sometimes for some product categories, while including of course EV charging stations, climate control products, a number of products to optimize energy consumption in data centers, all the products grew significantly faster than the average of Europe. They really pulled the demand. The other way, a number of traditional products for residential, especially in DIY, grew not as much as the rest, but this was more coming from the fact that the DIY market has been extremely supportive for a year and a half, so the basis for comparison was really tough rather than any specific issues in the product family. This was for Europe. As far as North America was concerned, all or most of non-residential product grew a lot, whether they were related to energy efficiency or to something else. It was really connected to the rebound in the non-residential market. Take product families such as audio video, for example, such as underfloor trunking, such as, I mean, architectural lighting fixtures and a number of others. All those products went up the high peaks, if I may say. Data center product and residential product also grew, but less than non-resi. As far as the residential is concerned, the residential market is probably smoothing a little bit in the U.S. You know that it has been supported by a lot of incentive plans to fight against the COVID-19 with some cash given to the U.S. households, which probably positively impacted the residential market. It's smoothing a little bit. As far as data center market is concerned, the underlying demand remained very strong, but we had such a fantastic Q1 last year, growing a lot that the base comparison a bit tough. In India, in China, you have of course a different situation. That's what I can tell you. Getting more into the details would require a lot more time. That was very helpful. Great color. Thanks. The second question, if I could, is just to go back to the rest of the world margin being up 400 basis points or so, and Europe, North and Central America being down 200 basis points. Both of those Western businesses seeing double-digit growth and rest of the world high single digit growth. When you look at your internal EBIT bridges on a sort of clean basis, and you look at the pure net price cost picture across the three regions, are you seeing a material difference in net price cost? And is that also explaining some of the difference? And could you sort of qualify the net price cost on a regional basis? Be careful because the margin decrease that you see in Europe also includes acquisitions which tend to be dilutive. The decrease in margin in Europe between Q1 2022 was 180 basis points, excluding acquisitions, which is coming mostly from gross margin, whereas SG&A has a positive impact on margin as SG&A expenses are not growing as fast as sales. This being said, the fact that the gross margin is going down in Europe and gross margin is going up in the rest of the world has not much to do with difference in terms of pricing policy. Since we are as active in terms of pricing in Europe as in the rest of the world. It's really coming from the fact that the gross margin was held pretty steady last year in Europe, and it dropped a lot in the rest of the world. It's purely on the back of different margin for basis for comparison more than because we would have different pricing policy. I don't know, Franck, if you want to complement. No. Thank you, Benoît. That's. It's actually what Benoît said. In Europe you should consider the acquisition and you know that the acquisition is diluting by 30 basis points at the group level, and they are located in Europe. Except for that, the other operating items are negative in Europe when it's slightly beneficial for the group. Otherwise, the behavior of Europe is quite healthy with nice management of inflation and balance sheet and of inflation and prices. The last item, as Benoît said, look at the dynamic over the last two years, and you will see that Europe as the US held firmly their margin over the last two years when it was more difficult for rest of the world. That's good point. If I could just follow up with that. I mean, to look at it a different way, if the gross price is about 8% around the world, is it broadly similar? I ask because obviously inflation is such a key topic right now. Is it broadly similar around the world? Well, we usually don't comment the pricing per region. The only information which is interesting is that the volume is up on each of the three areas for the group on Q1. You can do your math and see what is the pricing dynamic in each places. Everyone is increasing prices and everyone is positive in the region. You can do the math, which implies a little bit less pricing the rest of the world. Probably. Because the rest of the world is also positive in volume. Now, it's not a policy to do less pricing the rest of the world than Europe. It's the result of 1,000 pricing decisions that were taken in tens and tens or hundreds of geographies. Hearing a case-by-case approach. That's very helpful. Thank you. Thank you. Next question from Eric Lemaire from CIC Market Solutions. Please go ahead. Yes. Good morning. Thanks. I got three questions, if I may. First, you mentioned you've been less aggressive regarding pricing than some of your competitors. Do you see any changes of market shares due to this various pricing policies? This is my first question. I got a second question on free cash flow. You mentioned this priority of use regarding inventories. Do you see regarding the free cash flow a chance that the free cash flow could maybe catch up with the normalized free cash flow before year-end? That's my second question. And last one, when you mentioned the faster expanding segments, could you maybe tell us more and give us the revenue generated by the faster expanding segments in Q1 and maybe the organic growth as well? Thank you. Well, as far as market shares are concerned, this is a debate I quite often have with the financial community. When we released our Q4 numbers last year, got the comment that our volume growth wasn't as strong as expected by many. The conclusion was that from some of you was that we were losing market share. I said, "Be careful, market share cannot be appreciated on a quarterly basis." In our trade, we are not in the automotive industry or whatever. Our market shares should be evaluated, appreciated on a yearly basis, not on a quarterly basis. Even though we've done a very good Q1 in terms of top line, but actually evaluating volume, I'm sticking to the speech. I can hardly tell you that we have gained or lost market share, just because evaluating market share on a quarterly basis in our trade doesn't make sense. We'll see midyear. What I think is that we are growing probably today a bit faster than our competition. It's still in Europe. Whether you take one year, two years, three years, we've been growing faster than anybody else. It's more of a mixed bag in the U.S. Take into account that our Q1 2021 base for comparison was very strong, number one. Our sales were up last year, and they were down for most of our competitors. Number two, also take into account that we are probably doing a bit less pricing than others. If you include that, you come to the conclusion that our performance is also good in the US. As far as the rest of the world is concerned, it's difficult to evaluate because everybody has a different positioning. Higher than the competition in Europe, good over two years in the US. But again, I insist on the fact that I wouldn't say that it's a clear cut win in market share, because market shares are not moving much on a given quarter in our trade. You have really to look at the overall yearly performance. As far as the free cash flow is concerned, Franck, you wanted to take this one? Yes, I can. So as far as free cash flow is concerned, the level of free cash flow at the end of Q1 is 2.3%. First, let's remember that traditionally, the first quarter for the group is a low level of free cash flow. Why? Because normally we are building some inventory to pass over the summer. There is also some yearly year-end rebates which are paid. If you look at 2017, 2018, 2019, free cash flow to sales was three, four, five, six percent. Normally, free cash flow in the Q1 basis is low. Here, it's a little bit lower than usual just for the reason that Benoît explained a few minutes ago. It's because of our decision, conscious decision made on inventory. Third information is that you asked if we would catch up. Well, as of today, we are still shooting for our mid-term guidance in terms of free cash flow, which is 13%-15% of sales. There is no reason why we wouldn't achieve that. Okay. Thank you. As far as the fastest spending segments are concerned, we are not giving growth rate on a quarterly basis. What I can tell you that I'm not super happy with growth rate. It's growing, of course, growing nicely, but I think it could have grown a lot more if we had the components. This is a bit of a disappointment, because I have a feeling that we are not fully realizing, if I may say, our growth potential on those products because it's super complicated to get some chips. We'll give you more precise feedback when we release the number, probably usually this. Okay. Thank you. Thank you. Next question from Andreas Willi from JPMorgan. Please go ahead. Yeah, good morning, everybody. Thanks for giving us a lot of time for questions this morning. My first question is on the volume growth. If you look versus the kind of pre-COVID base, we've seen a strong acceleration in Q1 after the weaker Q4. Is there a big difference between sell out and sell in between Q4 and Q1? Or is that a true underlying acceleration in demand? The second question, I have, if we look at receivables, that seems to have been a big drag on cash flow. Is there any specific thing we should be aware of there, or is that just temporary factors and the normal seasonality, and it should normalize again? Well, yes, indeed. The volume gross in Q1 is interesting, especially if you compare it with last year, 2019. It's significantly above 2019 levels. Well, again, I'm a bit embarrassed because I know it doesn't really fit your model, but commenting on a quarterly trend in volume is a bit misleading. I don't believe that the volume in Q4 was as weak as you thought. We said at the time that you have to take into account that it's the end of the year, that you have, you know, 2021 was a good year. Maybe the distributors are pushing as much as they should be. The non-resi in the US was a bit smooth. I wouldn't call that an acceleration. It's a good quarter in terms of growth. We'll see what we have ahead of us. Again, take into account that commenting on volume or actually the sales and market share on a quarterly basis is a bit complicated. Franck, you want to say a word on receivables? Yeah. Yes, thank you, Benoît. Hello, Andreas Willi. Yes, no nothing special about the trade receivable. The ratio to sales is at 14%, which is slightly above our usual ratio at the end of Q1. It's a mixed bag of scope, effects and other items, like for example, the factoring. Our DSO are really stable and well in hand. Second point, you have probably noticed that this slightly higher DSO versus historical level is fully compensated by slightly higher payables versus the usual ratio. To sum up really on the working capital requirement, the only specific item is inventory, and this is totally monitored and clear. Thank you very much. If I just could follow up on Russia for Q2, what we should maybe expect here, what part of the business of the roughly 2% of group sales in the area that we should assume is gone for Q2 then in the Europe region? Well, it's difficult to say, but you can assume, yes, of course, a very, very significant drop in this business over Q2. It's indeed 2% of our sales, most of it being in Russia, actually. It's probably 0.1% in Ukraine and the rest in Russia. I don't have a number to give you, but yes, you should assume a very strong drop in sales indeed. Thank you very much. Not 100% drop, but significant. Thank you. Next question from John Demonty from BNP Paribas Exane. Please go ahead. Hi. Yes. Thanks for letting me ask a couple of questions. Maybe the first one, just thinking about wages, I'm gonna assume they're gonna start increasing soon. I'm just wondering how you're thinking about that, your plans to deal with it when it begins, when you're having to pay your staff more. Is it gonna be purely dealt with through productivity, or are you gonna have to raise prices above and beyond what you've already done and what you already will do just to face the raw material and the components inflation? On the topic of Q4 versus Q1 volume, this is just a hypothesis, but is it fair to say you said the distributors weren't pushing as hard at the end of the year last year? Was that because basically they made their rebate targets early? Really what we've seen is them gaming the system and not buying so much from you in December last year and then obviously starting the year strongly and, effectively making it easier to make this year's rebate, if you see what I mean. Yeah, if you just give some color on those two things. Well, starting with the second question, I don't believe it has any material impact. Of course, you can have some from some distributors looking at a bit of tactics, saying I'm holding a couple of orders that I'm pushing from December to January in order to you know make my year 2022 a little bit easier, but it can only be a couple of million EUR. It cannot significantly impact your top line. I don't believe it had any meaningful impact. Again, I think that the good performance in Q1 is coming more from the structural topics, the fact that the non-resi in the U.S. is accelerating a bit. Again, this was expected. We told you that several times last year. The fact that the European business is not yet significantly impacted by the Ukraine-Russia war and that you have these energy efficiency products pulling a bit the demand. The fact that India is growing very significantly. Don't forget that in India, the COVID-19 crisis was last year in H1. The base comparison in India is pretty healthy. No, I think the Q1 performance is coming from good performance and not from something that would be a bit artificial, like significant orders pushed from December to January. As far as wages are concerned, well, so far it's under control. Inflation on personnel costs is just below mid-single digits in Q1. Below 5%, all in. Including, of course, the new economies, the US and so on. Of course, pressures are higher in the US and in a couple of emerging countries than in Europe, because of the level of unemployment and the competition on labor. I don't know what it will be for the full year, 2022, but I believe that we have ways and means to keep that under control. We have, of course, negotiation, we have productivity. For example, I can tell you that over one year, the number of people is almost stable. It's increasing by less than 1% like for like. With sales which are up 11%. Yes, of course, you have some inflationary pressure on wages. Again, especially in the US and especially on blue collars, you have hourly workers that just across the street they get $0.20 more from somebody else. I don't see that as a risk on our profitability for the full year. I think we have a number of leverage. Not to mention, of course, pricing, but on top of that, productivity, negotiation and so on. Brilliant. Maybe just a quick follow-up on M&A, the pipeline. I suppose how rising interest rates may be changing the dynamic. Do you see any evidence of owners keener to exit businesses to sell them to you, given that maybe valuations are probably gonna start coming down in a higher rate environment? Perhaps, I don't know how much you compete against private equity for acquisitions, but maybe less interest from them as rates start to rise. Are you seeing that? Are you anticipating it? What are your thoughts? Well, even in a very low interest rate environment, we could do, I mean, because if you look at the past two or three years, it happened in the M&A, but you probably have an average of 6% scope effect or something like that on a yearly basis. Even in such an environment where you have high valuation, very active bankers, very active fees and so on, we could do deals at a pretty reasonable price. If you look at our cash flow statements, last year, for example, you will see that we have on average bought companies at slightly less than 2x sales. If you look at the beginning of the year, you can see that it's even closer to 1.5 times sales. You can see that we could still buy interesting companies at reasonable price. To answer straight your question, we have a pretty active pipeline. We have many discussions going on. I don't believe that it is coming from the fact that interest rates are going up. It is just the fact that we have a lot of potential targets. The entire organization is geared to do M&A. Our country managers are incentivized the ability to do M&A. We have very good processes as far as negotiating, contracting, auditing, and integrating companies are concerned. Yes, I'm very optimistic on our ability to continue to do bolt-on acquisitions in the quarters to come. I'm sure that you will see a couple of big. Well, again, the Legrand type of deals. Don't expect to see mega deals. There will be small to medium sized companies, highly targeted, good leaders, fitting well into our overall plan. Understood. Thank you. Thank you. No more questions by phone. Speakers, back to you for the conclusion. Well, thank you very much. It was a pleasure as usual to talk to you. If you have further questions, don't hesitate to call Ronan, Sammy, or Francois or myself, we'll be happy to answer. Thank you very much. Thank you, ladies and gentlemen. This concludes the conference call. Thank you all for the participation. You may now disconnect.