Good morning. This is the conference operator. Welcome, and thank you for joining the Rexel third quarter 2022 sales conference call. As a reminder, all participants are in listen only mode. You can register for questions at any time by pressing star and one on your telephone. Should anyone need assistance during the conference call, then they signal an operator by pressing star and zero. At this time, I would like to turn the conference over to Mr. Guillaume Texier, Group CEO. Please go ahead, sir. Thank you very much. Good morning, and welcome to this call to present Rexel's third quarter 2022 sales. I'm here today with Laurent Delabarre, our CFO. You know, like always, we know you have a busy day with many calls, so we will make it short and to the point. I will do the highlights and the guidance, and Laurent will walk you through the details of our figure. If I summarize, going to slide three, Rexel posted a very solid quarter, building on the first half momentum and even accelerating. We actually posted a record third quarter with sales of EUR 4.8 billion of 16.3% on the same-day basis. Beyond the fact that this was our best ever quarter in terms of sales in nominal terms, there are a number of qualitative reasons to be particularly satisfied with this performance. First of all, we saw growth across the board. This is true for our three end markets, residential, commercial and industrial, which all posted double-digit growth. It is also true for our three geographies, which also all reported double-digit growth. I'd like to highlight particularly North America, which recorded growth of 17.3%, driven both by strong underlying demand but also by our internal transformation. Secondly, while we are operating in an inflationary environment, our growth is volume driven. Volumes contributed for about 750 basis points to our Q3 growth. As we outlined at our Capital Markets Day in June, this demonstrates that Rexel is positioned on growing market segments such as photovoltaic products, which benefit from the acceleration of spending on electrification. It also shows that we have become more agile and able to seize opportunities to help our customers with end-to-end solutions in a labor scarce environment. Thirdly, we have operated well in Q3 in the continued inflationary environment I mentioned. We've been able to pass through to selling price the overall rise in production cost on non-cable products in all our geographies, and pricing contributed 880 basis points to our Q3 growth. Lastly, also in line with what we presented at our CMD, we continue to see a ramp up of our digital sales, which grew by 240 basis points and account for one quarter of our total sales. All of this combined allows us today to upgrade our full year guidance for the second time this year, as we will discuss later in the presentation. It's also a very strong confirmation of the strategic direction that we have started to implement through our plan, Power UP 2025. Slide four shows you the different building blocks of our growth. As you can see, it is well balanced between organic growth and M&A, leading to 35.5% growth on a reported basis. As shown on the graph, organic same day growth reached 16.3%, driven by the combination of volume and price that I described before. We also had a positive net scope effect of 10.7% of our Q3 2022 sales, or almost 8% expected in full year 2022. This is for me an opportunity to underline the contribution of our recent acquisitions, mostly Mayer, but also Horizon Solutions in the U.S., an automation business that we closed in July, and Trilec in Belgium. Let me tell you that we are very happy with those acquisitions, about their timing and about also the way the integration is happening. They are excellent examples of the disciplined approach to M&A that we presented to you in June, and they further strengthen our core electrical distribution positions. After this short introduction, let me hand over to Laurent to detail our figures. Thank you, Guillaume, and good morning to all of you. Starting on slide 6, the bar chart shows that we continue to operate at high levels in terms of same-day growth with double-digit progression in each of our three quarters this year on top of high growth in each quarter in 2021, making Q3 2022 the seventh consecutive quarter of positive organic development. Here too, we are displaying a very good balance between volume and price. The volume effect in Q3 was 7.5%, while the price effect on non-cable product was a strong 9%. We had a broadly neutral cable price effect in Q3 of -0.2%, reflecting the lower copper price in the quarter compared to the same period last year. Going forward, we believe we have entered into a more inflationary environment that will last and notably, inflate product cost. This will support selling price on non-cable products. On slide seven, you see the breakdown of our growth by geography. As Guillaume mentioned, we saw double-digit same-day sales growth in each of our three regions in Q3, accelerating compared to Q2 2022 and resulting in strong growth over nine months. In North America, accounting for 44% of group sales, we posted growth of 17.3% in Q3 and 18.5% over nine months. In Europe, representing 48% of group sales, we grew by 15.9% in Q3 and 13.2% over nine months. In Asia Pacific, Q3 saw a return to positive territory with growth of 12.7% and over nine months growth stands at 5%. On the slide, we also see the breakdown by end markets in each geography, showing you that we have a different growth profile by region with a stronger emphasis on commercial in North America, residential in Europe and industrial in APAC, notably due to China. At group level, commercial represents 43% of our sales, industrial 30% and residential 27%. Moving to slide 8, you see that the quarter recorded an acceleration in volumes both at group level and in all three geographies, demonstrating our ability to fully capture rising electrification trends. For the group as a whole, volumes rose sharply with a contribution of 750 basis points to our Q3 growth after 60 basis points in Q2, reflecting favorable underlying demands, notably for energy efficient solutions amid rising energy costs. We saw above group average growth of product category such as PV, EV or HVAC. This growth was driven by each of our three geographies. Volume in North America grew by 10.1% in the quarter, twice the Q2 2022 level of 5.1%, notably thanks to growth acceleration in the project business coupled with system demand in proximity activity. In Europe, volume were up +5.7%, reversing a negative -0.5% in Q2 2022 on strong demand for electrification solution. In Asia Pacific, volume expanded by 4.1%, a very sharp recovery after a negative -13.6% in Q2 2022. This was notably driven by the post-lockdown recovery in China. Volumes were also boosted by demand in commercial in Australia amid labor scarcity. Moving to pricing on slide 9, its contribution to same-day sales growth was 8.8% entirely from non-cable products with a natural impact from cable products. Specifically on non-cable products, the 9% effect is similar to Q1 and Q2 2022 despite lower expected carryover effect fully compensated by additional price increases during the quarter. It is indeed interesting to note that we passed additional selling price in a context of lower raw material price. This result from the overall inflation of production costs borne by our suppliers will then need to be offset. In addition, looking at the graph on the right-hand side, you see that after 10 years during which average price were up +1.2%, we have entered into an area since 2021, and we anticipate that it will last. Moving to cable products, the absence of contribution in Q3 is directly linked to the lower copper price from circa $9,400 per ton in Q3 2021 to circa $7,700 per ton in Q3. For Q4, assuming copper price remain at current spot price, we anticipate the contribution to turn slightly negative. Slide 10 focus on the contribution of our three geographies to the group +16.3% same-day sales growth. You have all the details in the press release on a country-by-country basis. I'll just highlight the key evolution of the quarter. In Europe, Q3 sales were up +15.9%, accelerating compared to the +10.4% in Q2 2022 as a result of the acceleration in volumes contributing to 570 basis points as mentioned previously. More specifically, growth was driven by overall market outperformance, a favorable base effect and our strong ability to capture the electrification trends with PV, EV and HVAC product families accounting for 12% of sales growing by more than 80%. By country, we recorded strong momentum in Benelux, Germany, Nordics and Italy. In North America, we posted same-store sales growth of 17.3% in the quarter. More specifically for the US, the three end markets grew at similar pace. By region, the country benefited from strong overall growth in California, Mountain Plains and Gulf Central, notably driven by oil and gas, as well as robust growth in commercial. Our growth in pure industrial automation business identified that one growth segment during our Capital Markets Day is up 20%. In Canada, the good performance was still driven by industrial end markets and more specifically oil and gas and mining activity. Finally, our high level of backlogs provide visibility in both countries. In Asia Pacific, sales were up 12.7% in Q3 '22, largely from the post-lockdown recovery in China and from good momentum in Australia driven by robust commercial business. Let me now focus on slide 11 on the acceleration in electrification trends that we have captured over the recent quarter with a focus on photovoltaic activity, which accounts for 7% of our sales in Europe. As illustrated on the graph on the right-hand side, the sales growth has accelerated in recent quarters. It started first to accelerate in Europe on the back of growing energy issues. We anticipate this trend to follow in North America in coming quarters with the adoption of the Inflation Reduction Act. We have a unique value proposition to capture the boost in this growing segment. It includes, of course, the panels themselves, but also the entire ecosystem of the solution with the inverters, the batteries or the protecting equipment. This can account for up to 30% of the price of the total solution. We have also developed a unique set of services in order to offer end-to-end solution to our customers. Our value proposition includes energy audits we provide, strong sales expertise, as well as dedicated logistic organization able to handle large items. As an illustration, we have adapted logistic facilities in most countries, including Germany, France, Sweden, the Netherlands and Finland. In this environment, the boost in sales growth is fostered by growing sustainability concern, the scarcity of energy, and also the accelerated payback from the rise in energy prices. Indeed, on photovoltaic installation, the payback has been reduced from circa nine years to up to one year in countries where energy prices have risen the most. On slide 12, we see that we continue to have a record level of backlogs, as illustrated by North America, France or China, in an environment that remains constrained by product scarcity. It is interesting to note that in North America, we have maintained a stable backlog while sales growth accelerated in the project business. This illustrates a positive trend in those countries and give us some visibility for part of our business in the coming quarters. I now hand back to Guillaume for his closing remarks. Thank you, Laurent. Before concluding, I would like to talk a little bit about the current environment we are seeing, as I know most of the questions will be about that rather than about past performance. First of all, to focus on the end of the year. As you read in the press release, and as you can see on slide 14, we are upgrading our guidance for the second time this year. This reflects our strong performance since the beginning of the year, but also the belief that we will continue to benefit in Q4 from good tailwinds, such as our important backlog, especially in North America, and also the electrification trends that Laurent was mentioning in Europe. This is the reason why we are upgrading our full year targets for 2022, which should be another record year. We now anticipate a comparable scope of consolidation and exchange rates, same-day sales growth of circa 12% versus 7%-9%, which was the current or the past guidance. An adjusted EBITDA margin of circa 7.2%, including 70 bps of non-recurring items, to be compared to the previous guidance of 6.7%, including 50 bps of non-recurring items. Free cash flow conversion above 60%, which is unchanged. Going beyond this 2022 horizon, I would like, first of all, to remind you that now is not the time to talk about guidance in case you have questions about 2023 for the Q&A. Let me make, however, two general comments. The first one to say that we are at Rexel, in the mindset to harvest growth while being prepared for anything, given the level of uncertainty in the economy. We have a growth plan which we are implementing actively and with success, up to now, as you could tell, in the results. We also have a plan B, which is much more focused on resilience, which we discuss and update continuously with the Rexel countries. For the moment, really no warning sign. To the opposite, things are going pretty well, as you can tell by the results. We won't be caught, unprepared. The second thing, I wanted to underline, the second remark I wanted to make is illustrated on slide 15. It is to highlight the fact that many of the current trends which are at play in the economy, which could be perceived as a macroeconomic negative globally, also create opportunities for our business, and I think this is quite specific to our sector. You have seen, for example, how the price of electricity had created opportunities for us in photovoltaic systems, but also fuel cells, building automation or industry automation. In a way, compared to what we said in the Capital Markets Day, we are leapfrogging a few years in the natural evolution towards electrification. The same is true when you look, for example, at a trend like labor scarcity or increased cost of labor, which are two trends accelerating in many economies in which we operate. Because of these trends, we see many customers paying much more attention to what their employees spend their times on, and being therefore much more interested in two things. First, externalizing more services to us. Second, revisiting automation projects to save labor. Here again, a negative trend, which is an opportunity for Rexel. Finally, we know that material and product scarcity is also an important feature of today's environment. Obviously, it's a headwind for us and for our customers, and our backlog illustrates that. It is also an opportunity to provide more added value to customers by suggesting alternatives. It's instrumental in boosting certain sectors of the economy we are largely exposed to, like mining in Canada, for one example. Once again, this is not the moment to discuss 2023, but let me say that in line with our 2022 guidance, we are confident about the rest of the year, and we see interesting midterm tailwinds materializing in an environment which remains globally uncertain. As a reminder, those trends are the same we had highlighted in June at the Capital Markets Day, and amid which we have been working for several months, so we feel we are in a good position here. I'm going to stop here our initial remarks. Thank you for your attention, and Laurent and I are now happy to take your questions. Excuse me. This is the conference operator. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. The first question is from Alexander Virgo with Bank of America. Please go ahead. Thanks very much. Good morning to you. Thanks for taking the question. I wondered if you could talk a little bit around inventory levels and stocking dynamics given your backlogs, the visibility that that gives you, but given the broader customer trends and concerns I guess we have particularly around residential construction markets. That would be my first question, and then I have a second one as a follow-up, please. You know, inventories are, I mean, first of all, inventories have been during the last few quarters relatively stable with a slight increase which was due to the mechanical effect of replenishing inventories during a scarcity situation. They are now reducing, and they are two days below the level of September 2021 at approximately 60 days. The reduction is effective both in Europe and in North America. We see a slight trend down in terms of inventory. To come back to your question, you were mentioning residential. I'd like, once again, I mean, you know that, but to highlight the fact that our exposure to residential is relatively limited, especially in North America. In North America, which is a question I very often have, we have an exposure of, like, is highlighted on our slides, of less than 10%. Laurent, do you want to mention to make additional remarks on inventory levels or on end markets? Well, we are quite cautious and we are reviewing our inventory level. We had invested and because of the scarcity we had today more inventory at the end of June and we start to engage with the country to reduce that gap and we are now the first result having two days less than a year ago at the end of September. That's I think a good trend. Yeah. I think overall we are comfortable with inventory level. We are very cautious about that, but I don't think it is an issue going forward. Your second question? Okay, great. Thank you. My second question is for Laurent. Good morning. Laurent. Your comment there on a sort of sustainable non-cable pricing environment and the support that would imply for your own profitability as well, I guess. Just wondering if you could expand a little bit upon that with respect to the moving parts, I guess. Where are you seeing the greatest strength? Where are you seeing the risk of having to give some of that back up? No, I mean, that was a question for Laurent, so I will let Laurent answer. Yeah. As explained, I mean, we saw until now strong inflation on the top line coming from the rise in raw material price. We see at this moment this effect slowing down, but offset by other line that continue to increase, which is the input cost from our suppliers, so salary and benefits, transport, energy costs that will continue to sustain the high level of selling price. Look, I mean, right now, this is trade show season, so we spend a lot of time talking with our suppliers. What I hear from them is that their own cost base is continuing to experience some inflation. Especially as Laurent mentioned, the effect of labor inflation, the effect of energy inflation, especially in Europe, and the effect of all of that in their own supply chain, because it also has an impact on the price of components. From what I hear, there is a high degree of confidence about the fact that they will need to continue to increase price going forward. Where there is obviously a little bit more uncertainty is on the commodity part, especially on copper, where we know very well that, you know, if we look midterm, we are, I think, all in the industry, persuaded that, there is going to be, a difficulty to procure the adequate amount of copper. But that is midterm, and we know that short-term, those commodities are impacted by things like, for example, the overall demand in China, which are quite difficult to predict. So, I would be much more cautious, like I've said in the previous calls about, the evolution of copper. I really don't know. As far as non-commodity pricing, which is the bulk of our business, we are quite confident that we are going to continue to operate in an inflationary environment backed by the cost situation of our suppliers. That's great. Thanks very much, both of you. The next question is from Martin Wilkie with Citi. Please go ahead. Yeah. Thank you. Good morning. It's Martin from Citi. The first question, you talked about solar being potentially very positive for you. Could you talk about in the past, I remember a few years ago when solar was very strong in countries like, you know, Germany in particular, there was a lot of volatility around installations to do with timing of incentives, these kind of things, and that caused a lot of challenges for Rexel at the time in terms of how to manage your cost base. Is it, you know, that solar is just gonna be consistently strong and therefore we don't need to worry about sort of big sort of waves of investment that come and go with incentives or how are you managing the growth in that market? Then I have a second follow-up after that. Thank you. No, that's a very good question, Martin. It's right that 10 years ago, solar was a shaky market for the distributors in general and for Rexel in particular. I think many, many things have changed in the solar environment. As you mentioned, 10 years ago, the rise or the bubble, let's put it this way, of solar was driven by incentives. When anything is strongly driven by incentives, then you have issues about the timing of incentives, the government stopping incentives, et cetera. Where the situation has changed a lot is that today the payback without incentives of solar is becoming very competitive. I mean, when you look at the average cost of production, including CapEx, of electricity by solar, it is now completely competitive, which means that the calculation is not a calculation about, or am I going to get this preferred rate from the utility or am I going to get this government incentives, but it's a pure economic calculation. From this perspective, it is much more stable. To this payback calculation, in general, and particularly in Europe, companies and operators tend to add the argument of security of supply, which is obviously something which is a new trend, a new concern, which is probably going to be here to stay. In terms of the underlying drivers of demand, I think things are much more stable. The second thing is about technical evolution. Ten years ago, we were at the early beginnings of the technological evolution of solar panels, for example, which means that you had improvement in the efficiency of the panels month after month. This was also creating issues with distributors. Today, I think in terms of technology, in terms of overall pricing, it is a much more stable environment. I think we are not talking the same market as the one we were exposed to ten years ago. That being said, it's an emerging market. I mean, not emerging, but it's a fast-growing market. Like any fast-growing market, we are cautious about what we do when it comes especially to supplier relationship, to inventory building, and to credit management. We put an additional amount of caution, if it's possible, to this specific business because we are always doing that for fast-growing businesses. I think fundamentally, what you remember is not what is happening today. Great. That's helpful. Thank you. If I can have a follow-up just on the business more broadly. Now, I know you're obviously not gonna talk about 2023 at this stage, but some parts of your business do have, you know, there is quotation work. I know obviously it's not firm, but it does give some indication. I mean, you touched a little bit on it during your opening remarks, that there's not been any sort of change in the end market. You know, are there any warning signs in any end markets where quotations have significantly fallen off a cliff or anything like that? No, I mean, not really. I mean, you know, where we have important backlogs is mostly in North America, and North America happens to be the place where our business is doing extremely well with a good level of order intake. I mean, you see that the backlog is stabilized because mostly the availability of materials is slightly improving. That being said, the intake level remains quite high. When we talk to our customers, which we did very systematically over the last few months, the degree of confidence in North America of- Excuse me, this is the operator. Maybe the speaker line is on mute. Hello? Please go ahead, gentlemen. Can you hear us? Yes, please go ahead. Martin Wilkie is still on the line. Okay. Martin, did you hear my answer on photovoltaics? Yes, you heard that. We heard the solar one. Yeah, okay. Your second question, and I will repeat in case we were cut, was about our backlog business. What I was mentioning is that, the main countries and the main geography where we have backlog business in North America. In North America, we don't see any signs of negative trends in our backlog business. To the opposite, what we see, first of all, is a strong intake in orders in our commercial and industrial markets. Where we can see a weakness, but you know that we have very small exposure in the residential part in North America, and especially the new construction part in North America. It is a single digit part of our business. For the rest, the North American market is very active. No, at this stage, we made a survey of all of our, I mean, of a big proportion of our customers in the last two months. You know, in North America, 90%, almost 90% of them have an optimistic vision or neutral vision about the future. In Europe, this proportion is slightly lower, but it's between 70% and 80%. We are still in an environment of strong and sustained demand. Thank you. If I could just squeeze in one more. Your guidance for the full year implies sort of mid-single digit growth in Q4. Is it fair to assume that that's what you're seeing so far in October? Or is it too much to join those two numbers together? On this calculation, I mean, Laurent, do you want to answer maybe? Yeah, yeah. I mean, we have been quite cautious, I would say, on the second half and on the third, on the fourth quarter. We have also a base effect on copper that will impact negatively the Q4. We are a bit more than a mid-single digit in Q4. Yeah. I mean, there is a copper effect which is mechanical. For the rest, circa 12% for me means between 11% and 13%. Yeah, yeah. Like always, we like to be on the cautious side. We don't see any signs of- We're into it, yeah, from change in October or anything like that? Excuse me, I didn't get you. We shouldn't necessarily. We don't expect any material change in volume, going forward. Okay, thank you. You know, October is a good month. Great. Thank you. The next question is from Akash Gupta with JPMorgan. Please go ahead. Yes. Hi, good morning, everybody, and thanks for your time. My first question is on the non-recurring item in the margin guidance that you have upgraded from 50 basis points to 70 basis points. We saw last year it was 40. Given your comments on pricing, will it be fair to expect some of it lasting in 2023, or shall we expect it to go zero next year? That's question number one. On this one-off is really the exceptional part. We consider that in our business, we have a slight percentage of inflation that is recurring. So at this stage, we believe there will be a slight level of inflation next year. We are not going to get dragged into questions about next year. Yeah. Good try. You know, in terms I would come back to the answer I was making on the expectation on inflation next year. We think that overall and for the big bulk of our market, we will continue to operate in an inflationary environment. Like, it's a little bit too early to tell how much, et cetera, but we think this inflationary environment is going to remain with us. That's the only thing we can tell about that, I guess. Thank you. My second one is on the share buyback. I mean, you announced this in the CMD in June, and since then, we have seen very strong performance, and some of the drivers might continue for longer, which means that you may end up with higher cash generation than we thought before. Maybe two questions here. The first one is that on the timing of your share buyback, would you consider it frontloading, given the share price hasn't reflected the earnings dynamics? Secondly, could there be an upside on EUR 300 million total share buyback if the total cash flow in the next three years would be higher than what you were planning at the time of your Capital Markets Day? You know, I think on the share buyback, I would stick more or less to the guidance that we have given at our Capital Markets Day for the moment. You know, we consider that buying back share is something which makes sense. We still consider that the share price of Rexel is undervalued, and it's a good deal. That's the rationale behind that. In terms of the global amount, we have said we would do EUR 400 million between now and 2025. We are doing that based on opportunity, based on share price, based also on our cash situation, and also based on how the market is doing in capital allocation. We continue to think, if we come back to capital allocation, that our first priority is to do smart M&A. We are, as I mentioned, extremely happy with the acquisitions that we have made over the last year. You know, if at some point and I hope it's going to be the case, we generate even more cash than what we had anticipated, you know, we'll have the discussion again with the board. But at this stage, we stick with our plan. In terms of timing, we give ourselves a little bit of freedom to juggle between the various constraints, one being the cash and two being the opportunity in the market. We're not going to announce in advance what we do. You know, as you mentioned, we were quite active during the summer, and we bought back more than 1% of our shares, which is an additional dilution and an additional tailwind to EPS, absolutely. Thank you. My final one is on your SG&A cost next year. I mean, we saw in the quarter your digital sales grew quite sharply. Given the growth in digital, how do we see inflation there? Like, can you bring down your SG&As, especially employee cost, if the share of digital keep on rising in line with your expectations? I mean, first of all, I mean, you know, on SG&A, 50% of our SG&A is approximately salaries and benefits. This year, a little bit more than 50%. This year, we are seeing at the end of H1, around 2% increase of salaries and benefits. At the end of the year, because it's ramping up during the year, it's going to be more something like mid-single digit. You know, directionally, I would expect that to be also the case in 2023. That being said, once again, let's wait until February to give a more precise guidance on that. I think your question is the right one. Because of the rise of digital, we are more flexible, and we are able to push more productivity. That being said, it doesn't happen instantly. Clearly, the fact that we are much more digital than in the past compared to previous situations makes us much more flexible and much more able to adapt our workforce quickly. That's something which is a plus for us in terms of resilience. Very clearly. Thank you. The next question is from William Mackie with Kepler Cheuvreux. Please go ahead. Good morning, Guillaume, Laurent, and Ludwig. Thanks for the time. A couple of questions. Firstly, could you provide, at least from your perspective and within the confines of what you can, an update on your perspective of the judicial investigation, and the process that we've reached today, and what investors might be able to expect at least, or hope for, in the coming months or quarters. The second is perhaps more conceptual. You know, Rexel's business, I would think a lot of it is quite late in the construction-related cycle for residential and non-residential. If we concentrate at least on Europe, and you look across the portfolio of your business, I don't know if you have that terrible catchphrase, canaries in the coal mine, but earlier cycle products, which might suggest that you're seeing a slowdown across some of the residential ex electrification, which is sort of a call-out that we've heard from some competitors. Where are you in the cycle, and what should we expect in terms of the different timings of economic sensitivity across the business portfolio? The last question is just on M&A. You've highlighted the success so far with Mayer and the other deals. What's the sort of pipeline like? Do you have a lot of targets which are close to going live? Yeah. Okay. On the first one, on the judicial investigation, I think, you know, the only thing I can do is to stick to our press release from a few weeks ago. As you know, we were placed under investigation. We have a bail to pay before, or to constitute before, January fifteenth. We strongly believe that our case is very good and we will make it prevail. In terms of next events, I don't expect anything until at least mid-2023. Those things take time. The next event from this point of view shouldn't be before mid-2023. Something like that. It's difficult for me to elaborate much more on that, except the fact that we are very sure of our case, and that the next steps are probably going to take at least two quarters. Your second question was about the canary in the coal mine, which is a question that we often have also internally, because as I told you, we are both pursuing growth and happy that the electrification trends are here, but at the same time, obsessive about listening to the market and about being agile in case the market would turn. That's exactly the reason why I was mentioning the fact that you know, we survey our customers very extensively, very often to understand what they have in mind. Apart from what I was mentioning, for example, in the residential market in the U.S., which is relatively low, relatively small for us, you know, we see a tapering of the. I mean, if I try to strip out electrification, which is not so easy because, you know, we were talking about photovoltaics, but there are also categories like building automation, like HVAC, which are more difficult to strip out because you never know whether it's linked to an electrification trend or linked to a slowdown of the, or if there is behind the slowdown of the economy which is hidden by that. That being said, when we try to do that, we see a stabilization of growth at a high level in many European countries, but we don't see at this stage negative trends. You know, one thing I would highlight again. I mean, you understood that from the presentation, what is quite new and what is quite interesting is the fact that the environment we are in is also accelerating very substantially. I don't think it's something short-term. I think it's really something which is here to stay, is accelerating the trends towards electrification, which is quite exciting from this point of view. To answer your question, no, I don't have the canary in the coal mine dying somewhere in our closets. You know, the underlying market, as far as we can measure them by our customers and by anecdotal information, is relatively healthy. Yes, it's plateauing, but it's not turning, it's not drastically turning. Maybe because of the fact that we are not exposed very much to the high volatility markets. That's the situation right now. So far so good. In terms of M&A, we have a pipeline which is mostly focused on North America for two reasons. First of all, because it's a market which is not consolidated and where there are opportunities. Secondly, because it's a market where the economy is quite solid. I mean, you've heard my comments about the backlog and about what we hear about the economy in North America. We feel quite confident. We have a backlog of small to mid-size targets, nothing of the size of Mayer in the pipeline. We are quite cautious about what we are doing here because we are also conscious that the time in the cycle is, in theory, not the best time to buy. We are cautious about the end market exposure of what we are getting interested in and in the strategic value and in the high quality of what we are buying. We will continue to do some M&A. It's going to be mostly small and mid-size. Don't expect huge deals in terms of M&A. But that's where we are and mostly focused on North America at this stage. Super. Thank you very much. The next question is from Aurelio Calderon Tejedor with Morgan Stanley. Please go ahead. Hi. Good morning, Guillaume, Laurent. Thanks for taking my questions. I've got two. I'll take them one at a time. First question, excuse me if my math is not correct, but if I look at your European business and the growth that you had in PV, EV, and HVAC, that would imply that the rest of the portfolio grew, give or take something like 8%. If we strip out price, that would imply a relatively flat volume. Just wanted to check if that's correct or if you are also seeing strong volume outside of PV, EV, and HVAC in Europe. No, I mean, that was exactly the comment I was making. We see a plateauing at high level of the European business when I look at volume. We don't see sequential growth in Europe. Yes, there is a plateauing. There is no reversal of the trend. Remember that the rebound post-COVID had been relatively high. There is a plateauing of volume in Europe very clearly, and mostly focused on the north of Europe. Yeah. You're right. Your math is right. Now, as I was mentioning, I don't see the contribution of electrification as something which is a short-term thing. I think we will continue to see a strong contribution of electrification trends because, as you mentioned, it's not only PV, but it's also other categories. The drive towards electrification is now driven by a strong price signal, and on top of that, by scarcity concerns which are making all players, all economic players, especially industries and owners of commercial buildings, and also governments quite concerned about that. I mean, I see in government, in countries, in industries, all actors, all players having energy reduction programs which involve each time the building automation, acquisition of sensors, heat pumps, et cetera. I think this trend is here to stay. You're right, if I strip it out, you know, the volumes will be relatively flat in Europe. Okay. That's helpful. Thank you. My second one is just more kind of big picture, trying to understand why the margins would be down 100 basis points or 110 basis points or so in the second half. What's fundamentally different? You've talked about the one-off and there's a bit of a delta there, but what's fundamentally different in the second half compared to the first half, given you did very strong margins in the first half and your guidance for 2022? You know, if I summarize, I mean, there are many moving parts. There is a contribution obviously of the one-offs which is linked to the timing of inflation. There is a copper effect which is also linked to the timing of inflation. When I try to strip that out, at the end of the day there is no meaningful evolution in margin. I mean, for example, in the commercial margin, in the pricing that we're able to make, in our margin with the suppliers, there is no real evolution. I mean, we continue to operate at a high degree of performance. The only thing which is moving a little bit is what we were mentioning about the timing of salaries increase. We see a little bit, but it remains quite under control of sequential inflation of our cost base. This is something that is also having an influence, but overall, this is not meaningful. I mean, we continue to operate at high levels of margin. I should mention also that there is a little bit of days effect. There are less days in H2, which is also impacting the margin. You know, at the end of the day, you know, a little bit of timing of inflation in the one-offs, a little bit of days, a little bit of copper. At the end of the day, when I try to strip those effects out, the only remaining one is a slight increase in our cost base, which was expected, which was programmed and which we are seeing. That's great. Thank you. It's not meaningful. I mean, I was mentioning the evolution of SMEs. You see that we are talking today, mid-single digit for the year compared to an H1, which was around 2%-3%. Mm-hmm. It's not something which is drastic. Yeah, no, that's clear. Thank you very much. The next question is from Andre Kukhnin with Credit Suisse. Please go ahead. Good morning. Thank you very much for taking my questions. Can I just start with just picking up a bit more on guidance along the lines of what we were just discussing. For Q4, from your 12%, I'm calculating implied around 6% organic. I just want to check if you agree with that. That does imply a bit of a slowdown as per the run rate if we look at ex comps, even if we throw in all of the copper effect in there on ex-copper basis as well. Would you agree with that? How does that reconcile versus what you said on strong October? No, I wouldn't agree with the message of a slowdown. You know, overall, I mean, first of all, in my book, circa 12% is because it's between 11 and 13. Okay. As we mentioned at the beginning of the call, we like to be on the safe side. On top of that, there is the mechanical effect of lower copper, which is an impact of circa 300 BPS on same-day sales `growth compared to the first nine months. You know, if I do the math and I remove the effect of copper, you know, overall, we see a growth rate, which continues to be in the same order of magnitude of what we have seen in terms of volume. Right. Okay. Yeah, good point on the 11-13. I guess if we go up to 13, then that, yeah. That changes a little bit the math. That's always an issue when we do a guidance on Q4. Yeah. Yes. Yeah. Thank you for this. Could you just, on labor, could you just repeat what you said there? Did I get that right, that you expect mid-single digit labor inflation for full year versus 2%-3% in H1? Yeah. In fact, the salary and benefit increase have been gradual over H1. At the end of H1, salary and benefits increase were around 2.4%. When we annualize this amount, and with the ongoing increase will be around 4% on a full year basis. Got it. Okay. It's not a sudden H1-H2 on H1 step up. It's a gradual increase through the year and then. Yeah. Perfect. Thank you. If I may, just on the U.S., acceleration in the quarter, which looks like sort of good 3 or 4 points when we try to adjust for comps. I know optically it's sort of 17.9% versus 18.1%, but it was on a higher comp. Could you just help a bit more on what drove it, and is that sustainable? You know, I mean, there are. That's a good question. I think there are many things. I mean, first of all, we see a good level of activity in the US. When we talk to customers, when we look at end markets, they are quite good. That's the first thing. I think we can expect to continue to see a good level of activity in the US. If I remember, last year was not a very tough comparison basis for the US because the third quarter was not extremely active in terms of volume last year, in terms of comparison basis. That may be one explanation of the acceleration we are seeing. But there are also fundamental accelerations, like, you know, for example, I think we have a good transformation momentum in the US. I would say that in many regions, we are gaining market share, and we are also exposed to end markets, which are quite brilliant. I would mention specifically the Gulf region, where we are benefiting from the reinvestment in the oil and gas industry. I would mention also our success in the Mountain Plains, and especially in Arizona, where we are seeing a good level of activity. It's a mix of many things. It's a mix of our exposure to end markets which are quite active, our transformation, which is making us more relevant to customers and probably gaining market share in many regions. Overall, a good level of economic activity on the end markets on which we are, which are mostly commercial buildings and industry or industrial activities. Laurent, do you want to add something? Lastly, in our H1 communication, we show you where we stand compared to our pre-crisis level, and we were still negative. The recovery in the U.S. came slower than in Europe. We are in this recovery trend with all that Guillaume just explained. I can say qualitatively that the degree of confidence of our teams and of our customers in the U.S. is quite high. That's really helpful. Thank you. Just the last one from me on M&A. We've talked about it quite a bit, and I think you've made it very clear that you've got the pipeline of further deals in the US. I just wanted to double-check, 'cause we've seen quite a flurry of acquisitions in the US from some of your peers, like, Sonepar I think announced three or so, and Graybar a couple, and Wesco as well. Are there any of these assets kind of would've been nice to have had you not gone for Mayer? Or is the backlog, as you said, or pipeline of deals that you have on your hands is so substantial that you really don't care about that, and have an opportunity to kind of catch up on these small deals as well? What was? I'm not sure. The deals done by the other, I mean No, we were not particularly. Those are not regretted losses, the deals which were done by the others. You know, I mean, we are seeing a big opportunity in terms of consolidation in the U.S. We have said that at the Capital Markets Day. We are not the only player in this space. It so happens that we don't bump so often into each other because we have different geographical priorities, and we have different thematic priorities. On the three deals by Sonepar, on the deal by Graybar, et cetera, those were not deals on which we were competitors. Okay. I don't know if it answers your question, but I mean, at some point, we will bump into each other. At this stage, the breadth of opportunities as well as our focus, each one of us on specific either segments or geographies, makes it not particularly competitive from this point of view. Got it. Yes, it does indeed answer my question. Thank you very much. The next question is from Éric Lemarié with CIC. Please go ahead. Yes, thank you, and thanks for taking my question. I've got two. The first one, regarding your end markets in buildings, do you start to observe a shift from new construction to renovation? If it's not the case today, do you think it might be the case in the future, you know, to balance the slowdown expected in residential? It's my first question, and I got a second question, more general, on the copper price. I was wondering, what's your view on the current copper price level? Do you think it might be due to an expected slowdown in the final demand, or do you think it's just due to China? Thank you. I have to say my stance on copper is relatively limited. We try to be very modest about our stance on copper, so I don't think I'm the best person to answer that. I mean, the copper price is a commodity, so it's made of many things, including speculation and so because of that, interpreting it short term is something that that is relatively difficult. You know, I will stick to what I was saying. I mean, midterm, I truly believe that the supply of copper is going to be under pressure, but that's midterm. Short term, what we try to do is to be as agile as possible with our inventory, with our way to manage both the pricing and the inventory. No, I cannot comment much more than that. On residential and the shift, I guess you mean the shift of our contractors from doing new construction to renovation? Yes. You know, I mean, first of all, as a reminder, residential for us, in North America, which is a big geography, is less than 10%. It's bigger in Europe. Our contractors, electrical contractors, tend to be, you know, it's not general, but they tend to be relatively flexible in terms of what they do generally. I mean, there are exceptions to that, but an electrical contractor who is doing new construction can also do renovations. That's relatively fluid. That's also the reason why, in the way we look at our end markets, we usually don't measure precisely what is the breakdown between renovation and new construction because I guess it's a little bit specific to electricity, but the job is relatively similar between new construction and renovation. I'm oversimplifying, but the fluidity is quite important. At this stage, it's difficult for me to see and to measure any movement from one direction to the other, et cetera. We see that as a whole because what we are, the people we are interacting with are electrical contractors who are usually exposed to both markets. Sorry not to be able to answer more precisely your question, but that's what we are seeing. Can we say that it's a positive thing for Rexel that the jobs for electricians are at least similar for the new or for renovation? Because I suspect that the renovation is, you know, less cyclical, et cetera, so. No, you could say that. I mean, we have no in terms of our exposure specifically to new construction, if that is your question, I think there is a lot of agility, so people are not going to get stuck in new construction because new construction would be slowing down. No. Yeah, yeah. Thank you. Okay. Okay. Okay. The next question. The next question. The next question is from Miguel Borrega with BNP Paribas Exane. Please go ahead. Hello, good morning, everyone. Thanks for taking my questions. I've got a couple. The first one, just on the pricing trends. We just heard from one of your largest suppliers that implied pricing contribution in the quarter was 12%, which compares to yours around 9%. You also mentioned, you know, suppliers having more cost inflation. Will there be a period where perhaps you need to support your own suppliers and absorb a little bit more cost, or do you think the elasticity from your own customers remain very high, given even the availability of materials improving, so they will continue to accept more price increases without losing volumes? You know, in general, if I look at the historical perspective on Rexel, our commercial margin, which is the difference in between what we buy and what we sell, was in the past extremely stable. It's our business, our core business, to pass through to price. We are doing that in a very professional way. I guess the answer to that, I mean, first of all, the first answer is that we continue to pass price, and we continue to do that with a high degree of efficiency. Now, the second part of your question is, you know, at the end of the day, does this increase of the price of materials in general, because it's not limited to electricity, have an impact on the end demand? I think it's a macroeconomic question. It's the macroeconomic question about inflation in general, because it's really not limited to electrical supplies. You know, if I put myself in the shoes of a builder or an electrical contractor, you know, there was inflation in building materials. There was inflation also of labor. There was inflation including of electrical materials. The old equation between that, and the demand, and the elasticity to that is a macroeconomic question. For the moment, I mean, if I can answer, for the small window that I see, we have not seen cancellations of jobs or slowdown of jobs because of the higher cost of materials. Because I think one thing which is interesting to remark about electrical jobs also is that in many cases, and especially in those categories which we were talking about electrification, but not only, whenever you modernize an installation, there is a payback also in terms of the savings of energy or the better efficiency in terms of energy consumption. That also the payback, because the cost of energy, the cost of electricity is increasing in many geographies. The payback is remaining stable. Overall, the incentive to do it, to modernize, remains relatively the same because of that. There is a payback element, which is also where both the denominator and the numerator are inflating. Yeah. On top of that, our level of inflation is a contribution to the sales of the group. Non-cable product, it is 83%. If you recalculate, you will see that you will be very close to the number you give us for our large supplier. Oh, yeah. If the question was. That's right. Yeah. Yeah, yeah. Absolutely. Absolutely. Yeah. If it was a discrepancy between the 12% of Schneider and our 9%, there is no discrepancy, no. Great. You mentioned the cost environment. Can you maybe give us some flavor on the cable pricing, specifically in the U.S.? I think it was very high up until the summer in the first half. Has that come down somewhat, since the summer over recent months? Without talking about copper, of course. On the cable pricing in all? You want- Yeah. The cable pricing has been slightly declining with the evolution of copper. We are quite cautious on our inventory and no particular issue. Okay. My last question on the margin. I just wanted to understand how you're thinking about these one-off inventory gains going forward. I suppose there's about 50 basis points in the second half as well. When will that fade? Because you've been calling these one-offs since the second part of last year. In other words, will we see these inventory gains as non-recurring for as long as there's inflation? Help us understand whether this is now, you know, a recurring part of your business or not. Thank you very much. This one-off is coming from what we see as the extraordinary inflation we see, as we saw in the slide, that we are entering in a world where we continue to have a recurring level of inflation. I would say the first percentage point is what we consider as normative and are not restated in our one-off. It's too early to say how 2023 will evolve inflation-wise. I guess that this should phase out in the coming quarters. Yeah, maybe we should re-explain how mechanically it works. I mean, you could say it's a one-off, it's a one-off gain. You know, you could. I mean, there are many ways of explaining it, but it's a revaluation of the inventory or the lag between the time the price increase goes on the market and what we have in inventory. So it happens one time. It's not reversed when the price is stabilized. So I think that's something which is important to underline. If the price stays sequentially stable, there is not going to be a reversal of those one-offs. But if the prices stay stable next year, for example, there will be no one-offs of this kind. That's great. Thank you very much. Can you detail the price carryover for 2023? It's a little bit early to make those calculations. I mean, many of them you can do by yourself, but I think we will focus our explanations on the guidance about next year. There will in February, but there will be some carryover, you're right, of pricing into next year. I need to underline one thing, which is the one-off specifically. I was finishing the answer to your previous question. For example, let's assume that the prices stay completely flat starting from now, then next year you're going to have a carryover effect on pricing, but you're going to have no one-offs on pricing. I hope it clarifies what we mean by one-offs and what we mean by carryover on pricing. That's very clear. Thank you very much. The last question is from Supriya Subramanian with UBS. Please go ahead. Yes, hello. Good morning. Thank you for squeezing me in. Most of my questions have actually been answered now. Just one quick question on cost of finance. You know, given the higher interest rate environment, just wanted to check what part of your debt is coming up for renewal in the short term, and how do you see that impacting interest expenses into 2023? Thank you. Yeah. We are hedged on 65% of our debt, and we have no short-term refinancing to be made. We'll see a slight increase of our financial cost going forward, but nothing very material. Oh, perfect. Thank you very much. Thank you. Gentlemen, there are no more questions registered at this time. Well, thank you very much. I think we're going to see each other or to talk to each other again in February for the full year results as well as for the guidance for 2023, which I understand is a topic of interest for everybody. I hope you get out of this call with the feeling that we have a good degree of confidence about the rest of the year. We'll talk again in the first quarter of next year. Thank you very much. Bye-bye. Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.