Good morning or good afternoon all, and welcome to the Electrocomponents trading update. My name is Adam, and I'll be your operator today. If you'd like to ask a question on today's Q&A, please press Star followed by One on your telephone keypad. I will now hand you over to David Egan to begin. David, please go ahead when you are ready. Thank you very much, and good morning, everyone. This is David Egan, Chief Financial Officer of Electrocomponents plc. I'll be hosting the call today. Lindsley is in the U.S. at present, with time zones making it 2 A.M. in the morning. We do hope that you had some quality downtime over the festive season, and that you and your families remain safe and well. Welcome to our Q3 trading update covering our performance during the three-month period ended 31st of December, 2021. Trading during the third quarter continued to be strong and ahead of expectations. We outperformed our markets as our offer continues to resonate. We provide security supply, which is critical to many businesses. The market has been supportive too, especially in our electronics product range, but our performance has been strong with our industrial product ranges where we are delivering robust market share gains. Firstly, I want to thank our people for their ongoing hard work and enthusiasm. Our teams, especially those within our distribution centers, have been delivering strong volume growth while navigating all the challenges the pandemic, Brexit, and industry supply chain shortages have brought. Our people are the number one reason we are generating the strong performance. We have seen a significant change in culture and mindset within the group, and we also know how hard everyone has worked. To that end, we gave all permanent employees a well-earned one-off bonus in December. Moving on to the details of our third quarter. Our like-for-like revenue increased by 21%, with acquisitions contributing a further 5%, trading days 1%, and foreign exchange of 4% headwind to deliver total revenue growth of 23%. In the first half of this financial year, we focused on reporting two-year like-for-like revenue growth as this stripped out the negative impact of COVID-19. However, we've now annualized against positive growth, with last year's Q3 delivering 8% like-for-like revenue growth after a 7% decline in the first half. We will revert back to reporting one-year performance. For your reference, however, our two-year like-for-like revenue growth in Q3 was 31%. We are outperforming the industrial market and growing our share, which we measure through industrial production figures, supplier information, and results reported by peers. Our industrial product ranges, which accounts for circa 75% of our group revenue, grew quarter three like-for-like revenue by 20%. We believe our outperformance is due to working closely with our suppliers to ensure we have appropriate levels of inventory and the range breadth to provide alternative products. Our omni-channel offer for customers to order any which way they want and an industry-leading customer service despite all the challenges from external supply constraints. Our main own brand product range, RS PRO, grew revenue by 11%, reflecting very strong comparatives last year when the brand was growing at broadly twice the rate of the group, minimal participation in the Americas, that's much smaller participation in electronics and automation control product ranges than the group and the delay in supply of some of our best sellers due to strong demand, although product is due to land later this month. Web revenue, which excludes e-procurement and so is a truer representation of our digital demand, grew revenue by 27% like for like. Total like for like digital participation was 64%. Our omni-channel proposition has been a key differentiator during the supply uncertainties as our customers have wanted to interact and talk to our sales teams to ensure supply continuity and if need be, discuss alternative products. We are focusing on maximizing the return on our marketing investment towards organic rather than paid advertising and away from low returning visitors. As such, we've seen an improvement in both conversion and average order value through this channel, driving better returns. At the start of COVID-19, we saw a significant increase in B2C customers, which are less profitable than B2B. We have focused across all regions on higher value and higher returning customers. This has led to a slight slowing of our rolling 12-month total customer growth rate, but an increase in our average order values, frequencies, and returns. Moving on now to the regions. EMEAR, which is roughly 62% of group revenue, saw like-for-like revenue grow 14% in the third quarter. The U.K., which accounts for roughly 40% of the region's revenue, performed well. We saw market conditions strengthen as customers returned. Business confidence rose and new business grew. However, manufacturing backlogs were at record levels. Exports into Europe continued to suffer from post-Brexit challenges, and there were some signs of labor shortages dampening customer demand. Germany continues to deliver very strong growth and significant market share gains. This has been driven largely by the new management team, a more focused sales-led approach at a higher exposure to electronic products than the remainder of EMEAR. We completed the expansion of our German distribution center. At the end of September, early stage commissioning has been successful, and we are now gradually increasing our inventory holdings so that we can support an enhanced service offer to our European customers going forward. As with our DC expansion in America, we are bringing in new product ranges in a measured way based on customer data and demand. IESA has expanded its integrated supply offer further into Europe, a result of major client wins over the last year. Implementation has taken longer than normal due to COVID-19 restricting on-site access, and a function of us building out our integrated supply operation within Europe organically. Now that the groundwork has been done, we're able to accelerate the rollout of our more recent European client contract wins. The pipeline remains very strong, and IESA is working in partnership with Synovos on some global contracts. Turning to the Americas, which is roughly 28% of group revenue, they delivered a 37% like-for-like growth in the third quarter. Investment into our proposition continues to drive market share growth. We have a more targeted sales and service focus, strong product availability, and improved digital marketing campaigns, which are delivering our outperformance, supported by a strong market. Over 80% of our industry segments grew by double digits with all industrial product categories strong. Our proposition is starting to benefit from a wider and deeper product offer being stocked within our enlarged distribution center. We have much more opportunity within the facility to drive further operational upgrades and increase capacity. This should help drive a larger RS PRO contribution, which accounts for under 1% of the Americas revenue currently. Web revenue continues to grow its participation within the region, a result of ongoing optimization of both our paid and organic digital media channels, plus new customer acquisition. Synovos continues to win new clients, including a global contract with a major healthcare provider. Implementation of a couple of our more recent contract wins were delayed, but have since been resolved. We're looking at bringing the Synovos operating model more in line with IESA, and are excited about the opportunity Synovos is already bringing to our Americas business. Asia Pacific, which is circa 10% of group revenue, grew by 25% like-for-like in the third quarter. Asia Pacific has benefited from a change in culture and mindset as the team has focused on more profitable opportunities and customers. The electronics market has been strong, but more importantly, we have delivered robust growth in our industrial product ranges and have been taking market share. Performance within the region has been varied, depending upon COVID-19 restrictions within each country and the electronics exposure. However, all four sub-regions delivered over double-digit growth during the quarter. Our digital business has increased its revenue participation materially within this region, and this has been driven by a strong performance in organic marketing, which is delivering improved returns. Moving on to gross margin and costs. Product inflation driven by commodity price increases has been offset by price rises, which has only contributed low single digits to our revenue growth in the quarter. Our gross margin has benefited from a tighter discount and pricing policy and greater product elasticity work, especially on our tail end products. However, we remain mindful of ensuring our customers receive ongoing value and that we remain competitive. Some of these gross margin benefits are being offset by regional and product mix dilution, inbound freight inflation, and dilution from last year's acquisitions. Cost inflation continues to put pressure on the business, but we are looking to mitigate as much of that as possible. Labor pressures have become more challenging over recent months. Lindsley, I, and the leadership team have worked hard to drive a culture within the group to train, promote, and reward our people, which has resulted in lower than average employee turnover. However, we are mindful of the general employment shortages and how hard our existing teams are working to deliver our growth. We awarded a pay rise earlier in the year, have given a one-off bonus in December totaling circa GBP 5 million, and improved our benefit schemes even further. We're trying to remain an attractive employer, but are mindful of external pressures. Freight rates remain elevated. We've been working hard to redirect our transportation away from air and onto sea, and minimize freight miles by buying and storing products closer to the customer. This is a fundamental part of our For a Better World ESG action plan for twenty thirty. We're hopeful that these and other initiatives can offset some freight inflation, but it will take some time. We continue to invest in our operating model to support current strong volume growth and ensure our platform is well positioned for the future opportunities we see. This includes strengthening our expertise, technological capabilities, product and service capacity to improve our operating basics. Our RISE program to simplify the group remains on track. However, we see opportunities to unblock profitable growth further and move from being good to great operationally. We have a program of activity underway across our group to identify how well our processes work, where we can operate better, what the bottlenecks are, and what is required for us to become a great business. This has incurred some additional operating expense during the course of the current year. Taking a quick look at cash. Cash generation continues to remain strong despite ongoing investment in our inventory position as we bring forward orders to mitigate some of the supply shortages within the industry. This has meant that our availability rates to our customers have been only marginally affected and remain industry-leading. We are targeting a higher inventory position as we invest further in products in our American and German DCs. We continue to work on inorganic opportunities that will accelerate our growth strategy. Many of the opportunities we are looking at have been identified by our management teams and are not in an active sale process, meaning the timetable may be longer but potentially more rewarding. Our corporate development team is very busy. The pipeline is full, but we are retaining our strict cultural, strategic, and financial criteria. Looking forward, our Q3 trading performance was stronger than expected, and thus we anticipate full-year profit to be slightly ahead of consensus estimates. However, external challenges look likely to intensify in the fourth quarter due to rising cost inflation, ongoing supply chain shortages, and potential trading disruption due to COVID-19 variants on our customers, our suppliers, and potentially even our own DCs. Additionally, our comparatives toughen further. Despite this, however, we remain confident of our own abilities to drive further market share gains, increase operating efficiencies, deliver ongoing adjusted operating profit margin growth towards our Destination 2025 mid-teens target, and generate long-term value creation through organic and inorganic growth. With that, I'll be happy to take Q&A. As a reminder, if you'd like to ask a question, please press star followed by one on your telephone keypad now. Our first question comes from Rory McKenzie of UBS. Rory, your line is open. Please go ahead. Morning, all. It's Rory here. Hope all is well with everyone. Two questions on growth please first. I know it's time to move away from the two-year stack analysis soon, but for now it does suggest that activity accelerated with that Q3 up 31% after H1, 21%. Yeah, firstly, how much of that revenue growth can you attribute to the new product range expansion in the DCs? And would you say that's one of the most important drivers? And then also what's the pipeline for further introductions? And secondly, you mentioned the continued challenges in getting product from suppliers. Are there any areas where you think you're, you know, losing out on business or not able to deliver for customers? Are you just trying to get customers to understand the longer lead times in those areas? Thank you. Thanks, Rory. In terms of new products and really the growth we've seen very good growth being delivered in Q3, both on a one-year and also a two-year basis, 21% on a one-year, 31% on a two-year basis. For us, you know, that growth has been delivered across all three regions, more pronounced in the Americas. In the Americas, that growth is being delivered by a combination of factors, and that's really, you know, the initiatives and the activities that have been brought into play over the last couple of years. You know, it's a change in leadership team, a refocused sales force that's focused on new customers as opposed to farming older or existing customers. We've seen a significant improvement in our digital performance. Finally, we've also then seen an improvement and increase in our new product ranges within the stocked category, and that's really off the back of the DC expansion. In terms of new products, we've added about just over 30,000 new products during the course of this financial year in the Americas. The revenue from that that's been generated from that is, you know, is less than GBP 20 million. You know, it's important and will continue to be important, but it does take time to generate revenue from those new product additions. As we look forward, the pipeline for new products remains very robust, both in the Americas and then also in Germany. Germany has only now just gone live. We would see, you know, a good strong pipeline of opportunity to introduce new products, new suppliers, and ultimately over the medium term to generate improving revenue generation. With regards to suppliers and supply challenges, what we have seen is that, you know, some of our key metrics, you know, have continued to deteriorate during the course of the quarter. You know, we have seen lead times from suppliers continue to increase. We've seen our backlog of orders to our customers increase. We've also seen, you know, some challenges with regards to the availability of product from certain parts of the world, depending upon their own lockdown restrictions. I think we are in a fortunate position. We have low inventory turns. We tend to have quite a lot of inventory in stock, and so that does give us a safety buffer even though those metrics have deteriorated somewhat. You know, we are working with our suppliers. We tend to pay a sensible price to our suppliers, so we tend to come, you know, further up the curve in terms of availability to product when that becomes available. We're working hand in glove with our suppliers to try and drive as much momentum as possible from our suppliers and ultimately then driving revenue to our customers. We would say that we are certainly outperforming, you know, our competitors in this regard, and that is really a competitive advantage. Yeah. Yeah, definitely. Then just lastly, if I can, on operating margins. You delivered 12.0% margins in the H1. I think at the interims, you did expect H2 margins to come back slightly given the rise in cost inflation. Just wondering if that's still the case, given that the revenue growth has been, you know, a good bit stronger than expected so far. Yeah. We've continued to invest in the business in the second half of the year, you know, Q3, and we'll continue to do so in Q4. As I called out in the script, we paid the one-off bonus to our staff, about GBP 5 million in Q3. We're continuing to invest in the business with regards to people and driving operational efficiency and all of that sort of thing. We're putting a bit more cost into the business. Our best view at the moment is, you know, second half margins are probably gonna be just a tad below where they were in the first half. Overall, you know, for the full year, very high levels is the way we view at the moment. Love it. Thank you very much. The next question is from Keane Martin from Jefferies. Keane, please go ahead. Thank you. Morning. Happy New Year, David. I've got three or four. Do you wanna take them one by one or just read a long list? Let's go one at a time. Okay. Sure. Thanks. Firstly, on RS PRO, how much inventory arrives in January, and what sort of impact would that have on revenue growth, just when we think about comparing last quarter and Q4, please? It's not material in the scheme of things. It's for RS PRO, you know, we've seen sort of a longer lead times for some of those products, and also some of those products coming out of Asia Pacific. Overall, in the scheme of things, not material in the overall revenue. Sorry, overall inventory side of things, but for RS PRO, it will make a difference. We would expect to see some, you know, I guess, a bit of an uptick in terms of momentum in RS PRO in Q4. Okay. Maybe that impeded organic by 2%-3% in Q3, but provides a bit of a tailwind in Q4 just for RS PRO, year-on-year growth? Yeah, for RS PRO, there'll be a little bit of a tailwind as we get that inventory in. Yeah. Okay. Secondly, have you learned anything from ramping the U.S. distribution center that will allow you to ramp Germany more rapidly, or will it have a similar profile? Look, we've learned a considerable amount from the experience in the U.S., and there's been a huge amount of shared learning that's being passed over to Germany, both in terms of the build but also then the commissioning and then ultimately then bringing products into the range. Look, I can't promise at this point in time. It's, we're only a couple of months into the commissioning. We are gradually bringing product into the new facility or the new part of the facility, and we would look to accelerate as much as we can, but at this stage it's too early to promise an acceleration over and above what we've done in the U.S. Certainly that's our desire. Okay. I can't promise it yet. Yeah. Okay. Makes sense. Thank you. Synovos, you mentioned bringing the operational model more in line with IESA. In practice, what does that mean? We want to have a more consistent go-to-market approach to our customers. We also then want to look at the technology that we use and ultimately then have one operating model, you know, for the business in due course. You know, that will still mean that you know, there will be still you know, some degree of their own models within the countries in which they operate. There is operational leverage by just driving some efficiencies across the businesses and giving the customer you know, really that one face, that one approach as much as we possibly can. It's an ongoing program. The teams are working very well together. More and more customers are looking for that global approach and that global offer, and we believe that we are the only ones that can actually offer that in the marketplace. Okay. Thank you for that. Finally, just on inventory, and I appreciate this is an IMS rather than a sort of pre-close. You added about GBP 40 million-GBP 50 million worth of inventory sequentially in the first half. Obviously your organic has ramped a bit faster than expected. Presumably there's an inventory impact for that as well. How much more should we expect to be invested into the business in that inventory line in the second half, please? I think it's gonna be sort of, you know, around GBP 30 million-GBP 40 million in the second half. Brilliant. Okay. Thank you very much. Very clear. Thanks. Thank you. As a reminder, that's star one on your telephone keypad. The next question is from Henry Carver from Peel Hunt. Henry, please go ahead. Thanks. Yeah, morning, David. Just, actually I think you might have touched on this really answering Rory's question earlier. In terms of the market share gains, I just wanted to get a feel for whether you are enjoying a kinda trend where the bigger players generally are taking share from the mom and pops or whether you're seeing gains versus, you know, the larger peers as well as The rest of the market. I suppose more specifically U.S., but also generally across the business, it'd be interesting to get a feel for that. Thanks. Sure. For us, I think, you know, we view that our market share is being captured across each of the different customer types that we have, both small and large. Also, you know, from a competitive set, you know, we would say that, you know, our model is resonating from an end-to-end perspective and across the board, whether that be offline or online, and also the breadth of our product and the service and services that we offer. There isn't sort of one, you know, particular sort of silver bullet, Henry. For us, it's very much across the board. All the small elements matter, and it's being able to provide that consistency and continuity of supply through an omni-channel approach with breadth of product. That's really sort of winning out, and that's what we expect to continue to see going forward as well. That's great. Thanks, David. Our next question comes from David Brockton of Numis. David, please go ahead. Good morning. Actually, my question is very similar to the last one in terms of market share gain. Just in terms of the split between industrial and electronic components. Just wondering if you could say whether you think you are now taking share in the electronic space or whether you think you're still trending in line with the market there. That's the first question. Then the second question, just in relation to the total customer numbers, I think you said that started to sort of tail off as you're now, you know, as the focus is still on the sort of the business customer. I'm just wondering, and obviously the sort of the consumer pickup that you saw through the pandemic sort of eases away. I just wondered if you could just say whether you still think you're still adding business customers at a similar rate to what you've been doing more recently. Thank you. Sure. Thanks, David. Industrial growth in Q3 was about 20%, +20%. Electronics, excluding OKdo, was sort of a bit higher than that. OKdo, because of lack of product and semi, or you know, single board computing, was in negative growth. You know, so you can probably do the math there. In terms of the market share position for electronics, we're probably trending and tracking the market with regards to electronics at this point in time, but significantly outperforming on the industrial side. In terms of customer numbers, we're focused on the quality of the customer, not just the absolute customer numbers. While we did see growth in B2B customers, it was single-digit during the period. You know, mid single digits is the growth that we saw in B2B. For us, it's you know, the important part was that we did see AOV and AOS improving on top of also customer numbers growing. It's quality of customers, not just absolute customer numbers that's important for us. Understood. Thank you very much. Nothing further in the queue at present, but as a reminder, that's star one on your telephone keypad to ask a question. We have a question from Rajesh Kumar from HSBC. Rajesh, your line is open. Please go ahead. Hi, good morning. Just looking at the growth rates, even if you strip out wage inflation in products, there's an underlying degree of volume growth, which seems to be ahead of quite a lot of industrial production figures or compared to what some of the other distributors selling in the industrial supply chains are implying. I mean, when you deliver better than your peers' volume growth, clearly it has a cost implication, but also for the service element, there's an implication for your customers and suppliers. Have you seen any change in the discussion around how people think of outsourcing to you guys based on your performance during the pandemic? Or is it more of a longer term story? Sure. Just in terms of the growth and the price effect, you know, we grew like for like 21% in Q3. Within that, about 4%-5% was price related and the balance was volume related. As I said, that was both across the industrial and also the electronics piece. With regards to, you know, what are our customers doing and the impacts of our suppliers, we've not necessarily seen a lot of impact from our suppliers, even though the ratios, as I called out just before, have deteriorated. The fact that we've got long inventory or broad inventory levels and low inventory turns is also, you know, a significant benefit to retain and maintain as much of that continuity. Our other key objective is to offer alternatives. If there isn't a product that's available that the customer's looking for, as much as possible, we have alternative or multiple alternatives available. The third piece for us is maintaining very strong supplier relationships where we become, and hopefully try and get to the front of the queue when product does become available. We can actually then get that product as quickly as possible. I guess sort of there isn't a silver bullet in terms of what we're seeing with customers. What we are seeing, though, is, you know, customers are looking for consistency. They're looking for, you know, some continuity of supply as much as possible. They're looking for ease of business. You know, our objective is to offer as many of those consistently and as much as possible all the time. That's really why customers are resonating towards, you know, our model. That's why we continue to see customer growth, AOV growth, AOF growth across each of our three regions. Understood. Very clear. Are there any assets out there which can help you accelerate the process, either on the supplier side or on, you know, in terms of customer market share? Or you can do it organically pretty much? Well, I think, you know, our strategy is very much one of both, you know, initially very much focused on the organic growth story. You know, our market share remains very low. Our opportunity set remains very high. But equally, you know, we are very focused on the inorganic story. We're focused on services extension, product extension and market share growth. The pipeline for those opportunities remains very strong, but equally our discipline around those opportunities is very, very strong as well. You know, we're not just going to spend the balance sheet willy-nilly. Our objective is to drive real value from those inorganic opportunities and use those inorganic opportunities to accelerate the organic growth that we have within the business. Thank you very much. Nothing further in the queues. As a final reminder, that's star one in the telephone keypad to ask a question. No further questions? No further questions. Well, thank you very much for your time, this morning or this evening, wherever you are in the world. Appreciate your support, and we look forward to updating you with regards to our Q4 performance, in due course. Thank you and good morning. Ladies and gentlemen, this concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.