Operator: Good evening. This is the conference operator. Welcome, and thank you for joining the Rexel Q3 2026 Sales Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Guillaume Texier, Group CEO. Please go ahead, sir.
Guillaume Texier: Good evening, everyone, and thank you for joining us today for our third quarter 2026 sales presentation. I will start with the key highlights of the quarter and our progress on M&A, and Laurent will then take you through the sales performance by region before I come back to discuss the outlook. Then we will obviously open the line for your questions. Let me start on slide three with the headline. Rexel delivered same-day sales growth of +11.4% in the tQ3. This is our strongest quarterly performance since 2022. This is not an isolated good quarter. It is a continuation of a clear acceleration from +3.4% in Q1 to +6.7% in Q2, and now double-digit growth in Q3. Three things make us confident about the quality of this growth. First, where this growth comes from.
Guillaume Texier: Our growth segments, data centers, energy transition, and industrial automation are visibly driving the growth. This is exactly the repositioning we have been working on with our Axelerate 2028 strategic plan, being where electrification is happening with more value-added services. Second, how the growth is built. Growth is well-balanced between volume and price, and all three geographies contributed with double-digit growth in both North America and Asia-Pacific, and solid progression in Europe. Third, what lies ahead. Our North American backlog stands at a record level, which gives us visibility going forward. With that, we are raising our full-year guidance for the second time this year. I will come back to that at the end of the presentation. Moving to slide 4. Our second key message is about M&A, which is a core lever of our strategy.
Guillaume Texier: This year we have completed four acquisitions in North America, TC 360 in Canada, Revere in Illinois, and DEE Electronics in Iowa. On 25 September, we announced the acquisition of GCG, based in Chicago, our largest transaction in more than 15 years. What I would like you to take away from this slide is the consistency of our acquisition criteria. Every single target strengthens our service capabilities, increases our exposure to fast-growing segments, is also accretive to our EBITDA margin, and is acquired at a synergized multiple below Rexel's own EV/EBITDA ratio. In other words, we are further driving the group transformation, and we are doing so with financial discipline. GCG is a great illustration. It has the largest exposure to structural growth markets and the deepest value-added content of any business we have acquired. The financing is already fully secured.
Guillaume Texier: We successfully completed a capital increase of EUR 500 million at the end of September at excellent conditions, highlighting the strong support from our shareholders. We confirm our ambition to close the deal by year-end. With that context overall in mind, I will now hand over to Laurent, who will go through the sales review.
[Company Representative] (Rexel): Thank you, Guillaume, and good evening, everyone. I am on slide 6. Our Q3 sales reached EUR 5.4 billion, up 14.6% on a reported basis and 11.4% on a constant and same-day basis. Let me focus on the organic growth as it remains the main driver of the quarter, with a good balance between volume and price. Indeed, volumes contribute to 6.3%, more than half of our organic growth. Prices contribute to 5.1 points, split between 2.2 points from non-cable and 2.9 more points from cable products. The acceleration compared to Q2 is driven by both volumes and price. Moving to the other key items of the bridge, the scope effect, which is the second growth engine, added +2.1 points with Revere, Techno-Contact, and DEE Electronics. Lastly, FX turned positive and brought +1.2% thanks to the appreciation of the USD and Australian dollar.
[Company Representative] (Rexel): I am now on slide 7, putting the quarter into perspectives. At group level, growth has accelerated every quarter this year, and this is against increasingly demanding comparables since Q3 last year was already up +3%. North America, now representing 51% of the group sales, is a main contributor with +17.4% in Q3 after +7.8% in Q2. Europe, which accounts for 43% of sales, has confirmed the recovery with 4.5% growth, a four consecutive positive quarter after a difficult 2025. Asia Pacific, 6% of our sales, continues to deliver double-digit growth at +15.8%. More specifically, Australia was up +13.1%, notably supported by solar activity and the industrial segment. China and India grew by respectively 19% and 15%, supported by industrial automation activities, mainly manufacturing, logistic, and electronics robotics. I will now go into more detail on North America and Europe in the next slides.
[Company Representative] (Rexel): North America grew +17.4% in Q3, more than doubling the pace of Q2. All three markets were positive, with non-residential and industrial automation as the main contributors. The acceleration is mainly volume-driven, while the pricing environment remains favorable and similar to Q2. Let me provide more details on the US, where same-day sales were up +18.2%. Data centers grew in triple digits and now represent around 13% of our US sales. This brought circa 11.5% to the country's same-day sales growth. Two points to highlight here. One, we are outperforming a market which is itself very strong. Two, we are moving upstream in the value chain. With lead times increasing and supply chains under pressure, customers come to us earlier in projects. Beyond data centers, industrial automation was up around 20%, contributing to circa 3%, driven by industrial projects and OEMs.
[Company Representative] (Rexel): Other segments grew mid-single digits and contribute for circa 3.5%. This is a net effect between positive momentum in aerospace, hospitals, and residential, and the decline at Talley due to high base effects. Canada was also strong, up 13.4%, with data centers now around 10% of Canadian sales, making a strong contribution and low single-digit growth in the rest of the business, driven by utilities, industrial automation, and oil and gas. Moving to Europe on slide 9, same-day sales grew +4.5%. The key driver was the energy transition. HVAC, solar, and EV charging were up circa 13%, supported by electrification plans in a context of energy price volatility. Pricing was also supportive in both cable and non-cable products. More specifically, France grew +3.6%, a very resilient performance in an uncertain macro environment, thanks to our value-added HVAC offer and our EV charging solutions.
[Company Representative] (Rexel): The DACH region accelerated to +6.4%, driven by solar business in Germany and first positive signs in industrial automation. Benelux was up +7.5%, driven by HVAC, solar, and EV in the Netherlands. UK and Ireland were stable but improving sequentially, with strong growth in Ireland in solar, EV, and datacom, while the UK is still slightly negative but improving sequentially. Sweden grew +4.8%, a sequential improvement driven by residential and infrastructure. With this, let me now hand back to Guillaume for some concluding remarks and our outlook.
Guillaume Texier: Thank you, Laurent. Before talking about the guidance, let me explain also why we are confident beyond the quarter. Our North American backlog that you see on the picture on slide 11 remains above $3 billion and reached a new record, up 42% since the end of 2025. It represents 3.4 months of total sales or 8.3 months of project activity. Data centers account for around 25% of the US backlog. That gives us a level of visibility we have rarely had. On this basis and on the basis of the excellent results that we delivered in Q3, we are raising our full year 2026 guidance for the second time this year. We now expect same-day sales growth of around 7% versus around 5% upgraded in July.
Guillaume Texier: A current adjusted EBITA margin of at least 6.4% versus at least 6.2%, which was the upgraded guidance in July, and free cash flow conversion is confirmed above 65%. I know most of you will immediately calculate that the top-line guidance means a Q4 that is lower than Q3. Bear in mind that we are facing a higher 2025 base effect in data centers and also in copper. Rest assured that this doesn't mean in any way that we see signs of a slowdown of the activity, quite the opposite. To conclude, Rexel has delivered one of its strongest quarterly sales performance built on volumes and on the right segments. We have unprecedented visibility in North America. We are executing a disciplined M&A strategy with GCG as a landmark deal, and we are raising our targets for the second time this year.
Guillaume Texier: We are fully on track with our Axelerate 2028 roadmap and our medium-term ambitions. Thank you. Laurent and I are now happy to take your questions.
Operator: Thank you. 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 telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone with a question may press star and one at this time. The first question is from Daniela Costa, Goldman Sachs.
Daniela Costa: Hi, good afternoon. I have two questions, please. First, you had a very steady acceleration, I guess a volume-driven acceleration in the quarter. When you look through what caused that, do you think there was any signs of your customers are building up any inventory or pre-buying, or you think like the sales are largely tied to projects? Just wondering on the pace of acceleration, basically.
Guillaume Texier: I can answer this one very quickly, Daniela. There is absolutely no sign of that. Absolutely no sign of customers building inventory. The only occasion over the last 5 years where we have seen customers building a little bit of inventory was not because of price or inflation, it was about the general availability crisis that we had in 2022. Some OEMs in the industrial automation business had built a little bit of inventory because it was vital for their business. We are not in the same situation today. No, absolutely no, we do not see any sign of inventory building at our customers.
Daniela Costa: Mm-hmm. Thank you. Because I know you have a lot of data internally, and I remember during the pandemic you showed weekly charts and everything. Just curious in terms of the progression within the quarter, particularly in Europe and especially in France. Have things accelerated throughout the quarter? Have you seen any signs of the higher rates and the worries with that kind of starting to have any impact on Europe, or how is the progression within quarter?
Guillaume Texier: No, look, it has been steady over the quarter. As you know, our growth in Europe is mostly driven by electrification trends, which dominates the results of the quarter much more than the overall macroeconomy. We have not seen particular evolution that I could really mention, Laurent?
[Company Representative] (Rexel): No. We are at HVAC and hot summer, and quite steady over the 3 months.
Guillaume Texier: Yeah. So no particular growth. That being said, Daniela Costa, we know very well that the high interest rate environment is not good for construction. But in a way, not a particular change compared to the down cycle environment that we are operating in since 1 year, basically.
Daniela Costa: Great. Thank you very much.
Operator: The next question is from Akash Gupta, JPMorgan.
Akash Gupta: Yes. Hi, I got 2 as well. My first one is a follow-up on France. I think a lot has changed in the recent days and weeks with ongoing protest. Maybe if you can talk about what are you hearing from your customers, because I guess your exposure is more to electricians. So curious to hear your thoughts and how do you expect French growth to play out in Q4. The second one I have is on pricing. When we look at inflation, I think we are still seeing sequential increase in inflation. So when we look at your absolute pricing, do you see further room for sequential increase in Q4, or you are expecting more or less flat pricing sequentially? Thank you.
Guillaume Texier: Okay. Comments on France, I don't know if you refer to the economic situation or the civil unrest in some cities in France. It is true that the news are not very encouraging in France. That being said, to answer your question directly, when we talk to our customers, for the moment, it doesn't have a meaningful impact. It is not a booming environment, but we don't see a confidence crisis which would affect our business. Once again, one of the effect is that the very same causes which are creating the issue, which is basically inflation and especially inflation in fuel price, are also the same trends which are driving electrification demand.
Guillaume Texier: In France, like in many other European countries, the sales of electrical vehicle are now the majority of vehicles sold in the country, which is something which is completely new and which obviously has an impact, in terms of the EV charging infrastructure, and therefore the demand for electrical jobs. Same is a little bit true, for example, for heat pumps. For heat pumps, any new renovation happening is now including, or at least it is part of the discussion, a switch from gas-fired heating to electrical-fired heating. So in a way, you have on one hand an economy which we hoped at the beginning of the year, as you remember, would recover but is not recovering for many reasons. But on the other hand, the headwinds on the economy are also tailwinds on electrification.
Guillaume Texier: At the end of the day, no, we don't hear from our customers at this stage any loss of confidence. In terms of pricing has been strong all over the year. We are now starting, especially on copper, to hit more higher comparison basis, and so we expect the pricing to be more or less flat sequentially in Q4.
[Company Representative] (Rexel): Is that right?
Guillaume Texier: Yeah.
Akash Gupta: Thank you.
Guillaume Texier: I'm checking with Laurent.
Operator: The next question is from Aaron Ciccarelli, Bank of America.
Aaron Ciccarelli: Hello. Hi. Congrats on the quarter and very strong results. The first question I have is on US industrial automation. I think it grew in North America 3% in Q1. It went up to 15% in Q2 and now around 30% in Q3. Can you talk a little bit about this acceleration? Is it driven by few large industrial projects? Is it a reflection of what you see in data center or anything else which has driven that?
Guillaume Texier: Yeah. It is a mix of three factors, two of them you mentioned. One of them is that a part of this acceleration of industrial automation is probably linked to data centers, which means that we are also selling industrial automation products to OEMs, manufacturing cooling systems, for example. Those ones are obviously our control panels for utilities, and those ones are very probably driven by the data center demand. That is one component. The second component is that we had a few large orders in some specific verticals, aerospace being one, which is influencing the figures in the quarter.
Guillaume Texier: The third component of the industrial automation growth is that indeed, we are seeing a cyclical recovery of industrial automation, which is driven by, first of all, the fact that when you look at the PMIs, they are overall positive in many countries in the world and including in North America. I think the level of confidence in the industry is okay, not great, but okay. The second thing is, I believe that we are seeing a little bit of, I would call it a reshoring effect, which is that companies have not in a world where free shipping without tariffs of goods is no more certain, people are hedging their bets and debottlenecking or increasing capacity in North America and especially in the US. We are seeing a little bit of that too. So three components. One, data centers. Two, a few large projects.
Guillaume Texier: Three, I think, overall, a strong trend in the direction of investment in the US.
Aaron Ciccarelli: Thank you. My second question is on the EBITDA guidance upgraded today. I think H1 North America margins expanded, I think just 6 basis points despite strong growth. We are now seeing an acceleration in terms of organic growth with strong volume growth as well. Are the incremental margins weaker than expected because of just this 6.4% EBITDA margin guidance, or is there anything else related to data center contracts which perhaps can affect profitability in H2?
Guillaume Texier: Look, I am not going to transform this call into a margin discussion call. That being said, to come back on North America, it is true that in H1 we had a drop through which was adversely. I will comment on the results of H1 so that you understand a little bit what is still part of the picture and what is less part of the picture. The first thing is, at the same time as we are seeing inflation of our products, which is obviously beneficial, we are also seeing inflation of our costs. That is true in terms of sales commissions. In North America, sales commissions are usually a little bit higher and a little bit more variable than what we have in Europe. That is one thing.
Guillaume Texier: This is true also for salaries and for medical benefits, which are increasing, and we are not the only company in this situation, which are increasing relatively fast. There is a specificity of North America where the OpEx has a tendency to be more variable than what you would see in Europe. That is one thing. The second thing is, and I do not want to get too technical into that, but in North America, the second aspect of that is that we said several times that the data center overall EBITDA margin was probably slightly dilutive to North American EBITDA profitability, but positive on Rexel EBITDA profitability. I have to say that we are working on that and the situation is progressing. We are getting closer and probably very close today to the overall profitability of North America when it comes to data centers, which is good news.
Guillaume Texier: The third effect is a little bit technical, but I want to mention it, which is that we have two specific mix effects, which are slightly adverse to EBITDA. One is about Talley. It was mentioned, I think, in the press release. We had an outstanding year in Talley in 2025. Because the investment plans of the big telecom operators are usually cyclical, the year 2026 is a little bit weaker in terms of Talley contribution. Still an outstanding acquisition. Because Talley is quite profitable, it has an impact on the profitability of North America. The same to some extent, mix effects in the northwest of the US, where you know, or you may not know, but it is the only part of the US where we are exposed to residential in a meaningful way.
Guillaume Texier: It so happened that it is a quite profitable part of the US for us. Because residential over the last few years was a little bit weaker and continues to be a little bit weaker, there is a little bit of mix effect here. Many moving parts. At the end of the day, I think the important message, the two important messages when it comes to the future are one, the drop through naturally because of the increase of OpEx to being a little bit more variable is probably more limited than what you have in Europe. But two, what we mentioned in the past about data centers being dilutive in profitability to North America is probably something which is on the process of being fixed.
Aaron Ciccarelli: Very clear. Thank you very much.
Operator: The next question is from Delphine Brault, Oddo BHF.
Delphine Brault: Yes. Good evening. Thanks for taking my questions. I have also two. The first one is on the cable price, which seems a bit more complex to anticipate as compared to what it used to be in recent years. How should we think about cable price going forward, assuming a stable copper price from now? I know it is a big assumption. That is the first question. Second one on data center. Can you comment maybe on your backlog rotation? I suspect everything will translate into 2027 revenue, but how quickly does it translate into sales? Thank you.
Guillaume Texier: On the first one, on cable price. Look, first of all, that is a question which would be easier to answer for cable manufacturers than for me, because the pricing policy is in their hands, mostly. What we have seen in the past is roughly a cable price evolution, which is on the midterm proportional to raw materials evolution, copper, et cetera. There was an exception in North America, where we had a sequence which was a little bit unusual, with the cable price going up with copper. I think it was one year and a half ago. Then the copper price dropping a little bit, but the cable price staying at a high level, and then the copper price re-inflating. But the cable price not inflating at the same speed because the gap which had been created got basically smaller and smaller with time.
Guillaume Texier: So there was a little bit of disconnect for some time, but I think overall, what we are seeing on a midterm basis is that it is fairly consistent with the copper price evolution. Look, my best assumption if copper was stable would be that cable would be stable. But the second thing is, let's not forget that there is also in the cable manufacturing, a little bit of oil-related raw materials as well as energy. So that plays a little bit a role too. But at the end of the day, difficult for me to say much more about the cable pricing policies of my suppliers. The second question about the speed of execution of data centers. Laurent, do you have any idea on that? Because it varies very much.
Guillaume Texier: It is from data centers which are very short in terms of execution, to things which are several months to one year or more. What we are seeing is a trend for data center project managers to contact distributors earlier and earlier because of the fear that availability would become an issue. But
[Company Representative] (Rexel): We look at our book to bill as the execution of our backlog, which stay at a good pace as well.
Guillaume Texier: Delphine, to answer your question on how fast will those 3.4 months translate into activity. I think the majority is going to be into next year, but not all.
[Company Representative] (Rexel): Yeah.
Delphine Brault: Okay. Thank you.
Operator: The next question is from George Featherstone, Barclays.
George Featherstone: Hi. Good evening, everyone. Thanks for taking the questions. I will go one at a time. First one just on price. On the non-cable side, it looks to be a little bit below what we are seeing from some of your suppliers at the minute that have reported in Q3. I just wondered a little bit about what the mechanics are that are driving that. Should we expect to see a catch up? It sounded like in Q4, you are guiding flat price. Just on that one, can you just give us a bit of context? That would be good.
Guillaume Texier: Yeah. It depends on what suppliers you are looking at. Understand that we have a relatively wide range of products, and you may look at the usual suspects in terms of suppliers, the Schneider, the ABB, et cetera. We also have lighting, we also have photovoltaics panels, we also have heat pumps, et cetera. We also have conduits, piping. The mix is a little bit wider than what you may be exposed to in terms of listed companies. In terms of pass through, when one of our suppliers announces a price increase of 3%, usually 3% goes to the market. We should be completely proportional like for like for the same segments, to what our suppliers are doing.
Guillaume Texier: There is no leakage anywhere, and there is not really. In terms of a delay, there may be a few months of delaying because on large projects, there is sometimes price protection or specific agreements on pricing, but it is not really meaningful. I think you should make the assumption overall, that maybe with 2 or 3 months delay, we are exactly in line with what our suppliers are doing or experiencing. With the particularity of Rexel, which is that compare, I think to the field of all the distributors, we are probably the strictest in terms of pushing price increases. That would be my answer. If you see a disconnect, it is probably that you do not have all the mix.
George Featherstone: Perfect. No, that is great. Thank you very much for the clarity on that. Just in the past several quarters, you have touched on in some of the maybe softer markets, that you are seeing some commercial margin pressure. Can you just talk us through whether that is still something that persists in the H2 of the year or whether that is kind of been resolved now because the volumes have stepped up?
Guillaume Texier: Look, we continue to see a little bit of pressure, and I think it has to do with 2 things. Whenever volumes are low and you tend to have other competitors who are more eager to catch volumes. You tend to have customers who have a little bit more time to compare price, and therefore there is a little bit more pressure on margins. That is something that we have seen in the past, and it goes the opposite way when volumes recover. Despite the fact that we have very strong volumes, there are still pockets where those volumes are not particularly active. If you look at Europe, for example. We have solid growth in Europe, but if you subtract the price, basically, we are around zero in terms of volume year to today. We are still in an environment which is a low-cycle environment.
Guillaume Texier: At some point it will recover. But in the low-cycle environment, you have that. The second effect is that any time when you are in an environment with price increases, you have different ways of implementing those price increases. Coming back to your first question, we tend to be very fast at saying, "You know what? If there is a price increase announced, we are going to implement it to our customers." Sometimes, some of our local competitors may decide that they have inventory, and it is in their best interest to try to gain a little bit of market share by delaying, a little bit, the price increases. We always see a little bit of that, which usually goes away when the pricing environment becomes more normalized. I think there is a little bit of that.
Guillaume Texier: When it comes to the US, you have a little bit of mixed effect also, which is that whenever we are in a situation with more large projects and less of the rest, you have pressure on gross margin because of the large projects being usually lower gross margins than the proximity business. That is a little bit the moving parts. It is obviously a strong priority of ours. I think when you look at our results in Europe, for example, there are several countries where we would have been in a position to deliver slightly even higher volumes, and we have not done that to protect our margin.
George Featherstone: Thank you very much for all that information. Two then follow-ups, if that is all right. The first is on the cost inflation side. I imagine you have quite a bit of logistics expense, and obviously that is increasing. Is that something we should factor in? To what extent should we do that? The second thing is, you talked about a few large pieces of business you are working on specifically in this quarter. Are you able to give us a context for that? How much does it contribute to the organic growth in Q3 specifically? Thank you.
Guillaume Texier: For transportation costs, look, overall, it is around 1% overall of total sales. It is not major, but it is not nothing either. We have experienced inflation. Sometimes the contract that we have with our transporters protect us for some time of that. If it is not the case, we have done in several countries, we have passed it through fuel surcharges to customers. At this stage, it is a slight headwind, but I would not flag that as a major issue. We are working on that, and when necessary, we are passing it through to our customers.
Guillaume Texier: On the topic of the large contracts, look, I am not going to get into the details of our customers, but let us say that in Q3, the large contracts that we had, probably out of the 17% of growth of Q3 in North America, that represents probably between 1% and 2% of this growth, which are linked to what I would call not one-offs, because large contracts are part of the life, but exceptional contracts. They are a little bit everywhere. We have things in aerospace, we have things in data centers, which are a little bit out of the normal. That is a little bit the context.
George Featherstone: Okay. Thank you very much. Appreciate all the color, and bearing with me on all the questions. Thank you.
Guillaume Texier: Thank you.
Operator: As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question is from Andre Kukhnin, UBS.
Andre Kukhnin: Yes, good evening. Thank you very much for taking my questions. I will just go one at a time. You mentioned at the beginning that we will be quick to calculate the implied Q4 growth in your new guidance, and I think if the numbers are right, it does imply somewhere around 6.5%. So appreciate comment on comp being a bit higher, but off the Q3 base last year, I think the comp is kind of barely a point higher. I just wanted to check if there is anything particular there that kind of implies this slowdown from 11%, 12% in Q3 to sub 7% in Q4, or is it just prudence?
Guillaume Texier: Look, there is a little bit of copper base effect. There is a little bit of data center base effect. There is what I just talked about, which is the large contract that we benefited from in Q3. There is also a little bit of the HVAC effect in Europe. As you know, we benefited in France and in the Netherlands from a strong demand in air conditioning. I do not expect this strong demand to be the same in the winter, except surprises. So this also is an explanation for the sequential slowdown. But as I said in my introductory comments, when we look at the trends, when we look at the absolute numbers, when we get the feedback from our customers, we are at this stage not seeing any sign of a slowdown.
Guillaume Texier: And maybe the last thing that I could comment on is that, like always, it can be better than what we have put in guidance if things align well. So that is a little bit what I would say about the overall top-line guidance. Yeah.
Andre Kukhnin: That is very helpful. Thank you very much. And just a quick follow-up on that. I guess in terms, you mentioned that Q3 was relatively steady in terms of monthly cadence. What about October so far?
Guillaume Texier: What about? Excuse me.
Andre Kukhnin: What about the month of October, the last kind of 3 weeks?
Guillaume Texier: Well, the month of October is good.
Andre Kukhnin: Thank you.
Guillaume Texier: Okay.
Andre Kukhnin: The other question I had was just on France. Before you made it very clear that the growth that you are generating there was largely or really held by market share gains rather than being market-driven, so market is still tough. Is this now more kind of market-driven, what you are seeing now in the growth, 4.6%?
Guillaume Texier: Yeah. I guess, we have difficulties to hear you, but I would assume that it is about France.
Andre Kukhnin: Yes, for sure.
Guillaume Texier: The growth this year is more market-driven. We are not gaining market share anymore. One of the reasons also is that this is one of the countries where we are quite active in protecting margin. What you see today is very reflective of the market in our figures. We may be more exposed than many others in the market to air conditioning or to HVAC, et cetera. But overall, this is very reflective of what is happening in the market, which is a good figure, but volumes which are basically neutral with probably core market-driven volumes negative compensated by electrification trends, which are positive.
Andre Kukhnin: Great. Thank you. If I may, just very quick last follow-up to the question on inventories. You said you are seeing absolutely no evidence of customers building inventory. Could you comment on what you are doing with your own inventory, please?
Guillaume Texier: On our own inventory, we do not speculate on pricing. So our inventory is like clockwork in terms of number of days. Even thanks to the mix, it is even slightly decreasing in terms of number of days. So we are not building any particular inventory. The only occasion in which we would do a little bit of that would be to protect ourselves against availability. But usually, when you see an availability crisis coming, the product is already not available anymore. No, bottom line is we do not do that. We have never done that, and we are not doing that at this stage.
Andre Kukhnin: Perfect. Thank you very much.
Operator: The next question is from Eric Lemarié, CIC Market Solutions.
Eric Lemarié: Good evening. Thanks for taking my question. The first one on data center. You are strong in the US and Canada. When do you think Rexel sales in data center will start to maybe accelerate outside North America, maybe in Europe first or Asia? Or maybe the markets are too different? I do not know.
Guillaume Texier: There are two things about the data center opportunity in Europe. First of all, it is a little bit early because we have seen many announcements, but in terms of actual construction it is only starting. The second thing is, according to all the studies that I see, the size of the market is going to be much lower than what we have in North America. Anyway, the size of the opportunity is going to be one order of magnitude lower than what we are seeing in North America. The third thing is, as you know, Rexel is much more exposed to very large projects, including sometimes medium voltage in North America, much less exposed to that in Europe and much more exposed to the proximity business. We will probably be exposed to the data center opportunity, but in different ways.
Guillaume Texier: I would expect you to see a little bit of that starting next year. But it is never going to move the needle as much as it does in North America.
Eric Lemarié: Okay. In Asia, I suppose it will never be the case.
Guillaume Texier: In Asia, you know that our business is very focused, at least for China and India, it is very focused on industrial automation. Even though we sell a little bit of industrial automation, which ends up being in data centers, the bulk of what we sell in the US is switchgear, busbars, cable, and things which are not industrial automation. I would expect us to be much less exposed in China and India. When it comes to Australia, at this stage, I have not seen many opportunities in data centers, but maybe we will look more into that.
Eric Lemarié: Okay. Still on data centers, the evolution of electrical architectures within data center, the 800 VDC or even everything around modular offering, is it something that you can benefit from?
Guillaume Texier: Yeah. Look, anything which is making things more complex, is something that we like in general. So the evolution to 800 volt DC, if it happens, and frankly, there are many steps from now to it really coming into reality in the field, would probably be a positive opportunity for us. Even more important, I think the intermediate situation where you would have hybrid solutions with cars to provide the continuous current to the data centers, is something that we would probably benefit from. So, like always, we are relatively agnostic to technologies. We like it when things become more complex. It's always an opportunity to bring more services. But I think at this stage, it's a little bit early to see that transforming into clear reality anytime soon.
Eric Lemarié: Okay. Understood. The last one, if I may. You maintain your midterm guidance unchanged. Is it just because it's not the right moment to move or to change this midterm guidance, and you prefer to wait another full year recent presentation or?
Guillaume Texier: Yeah. Anyway, a Q3 presentation is probably not the right time to talk about the midterm guidance. It is true that with the acquisition of GCG, with the evolution of the markets, many things are moving. So at some point, probably during next year, it will be time to update people about what our midterm vision is. But that's obviously not today.
Eric Lemarié: Yeah. Okay. Thank you.
Operator: The next question is a follow-up from Daniela Costa, Goldman Sachs.
Daniela Costa: Hi. Thanks again for taking me. Just wanted to ask a question just to clarify on the Europe electrification organic growth comment. You talked about sort of the specific situation around the hot summer and so on. When you look at solar and HVAC, how much of this year do you think was more one-off? As you look into next year, do you think there is a risk of normalization there, or you are sort of seeing these trends just continuing to sequentially improve? How should we think about that mechanical impact of the potential one-off from this year?
Guillaume Texier: Yeah. Look, year to date for Europe, all of those accelerators are providing basically half of the growth that we are seeing in Europe. That is the first element of answer to that. The second is about one-offs versus non one-offs. Look, those businesses are very sensitive to the overall environment. But when you think about it, solar is something which is triggered by the fear that more and more people, private buildings, public buildings, governments, have of being too dependent on the fluctuations of oil price. Granted, maybe there is a scare effect because the oil price is very high. But at the end of the day, it is the second time in five years. We had a first episode at the beginning of the Ukraine war. Now we have this episode.
Guillaume Texier: For many of the customers that we are talking to, it is becoming a risk management topic and not anymore a short-term reaction to a spike. I would expect this trend to continue. The same is true for EVs and the same is true for heat pumps. There is a part which is probably triggered by the short-term high fossil fuels price. But there is a part also which is now starting to be deep in the minds of people. In many countries, starting with France, there are electrification plans with subsidies to push the penetration of electricity in the economy, which is quite encouraging. I want to be cautious because in 2022, we also had a strong progression of photovoltaics, and then it receded a little bit. But that being said, the volume continued to progress.
Guillaume Texier: If you look at the long-term evolution, they continue to progress steadily. When it comes to air conditioning, look, it depends on how you believe in global warming, I guess. But when you look at the situation in many countries in Europe, there have been several summers now with very hot temperatures. The anecdotal evidence when you talk once again to homeowners or to building operators, et cetera, is that each next renovation that they are going to do is going to include air conditioning. I do not think this is just a short-term reaction. To be clear, we are not talking small mobile units, air conditioning units to fix a few weak situations. We are talking real, solid, permanent air conditioning units. Here again, I think people are realizing that the future is going to be more uncomfortable than the past, and they are taking actions accordingly.
Guillaume Texier: In a way, it is both a one-off and a trend that we have been unfortunately or fortunately expecting since a long time. Long story short, I think we will continue on those markets to see fluctuations because we know very well that they are super sensitive markets, sensitive to tax incentives, sensitive to subsidy systems, sensitive to price of oil and price of electricity. But I would expect to see continuous growth when you look at the midterm.
Daniela Costa: Thank you.
Operator: The next question is from Lucas Ferhani, Jefferies.
Lucas Ferhani: Hello. Thanks for taking the time. I have a couple as well. Maybe just the first one on the DACH region and the UK. Growth is improving there. Probably more Germany next to the UK, but I guess it is still a better volume environment and you want to turn around there. Any update on the progress there? Obviously it is probably a better situation to be doing a turnaround on volumes move this way. Any update there? Thank you.
Guillaume Texier: Yeah. Look, in both countries, in Germany and in the UK, our projects are progressing well. As you say, we are benefiting also from a market, at least in Germany, which is slightly better, and especially with the contribution of photovoltaics in Germany. So that helps a little bit. But when we look at our internal actions also, and we have obviously stronger KPIs for each one of those actions, we are progressing very well. In the UK it is a little bit the same story. The market remains difficult. That being said, the comparison basis obviously becomes more easy for us quarter after quarter. But beyond that, beyond this mechanical effect, the actions that we are taking are really progressing, and we are pleased with the way things are evolving.
Lucas Ferhani: Thank you. On data centers, obviously 2 quarters of now triple digit growth. Clearly it is going very well on the ground. I am just thinking, are you seeing anything in the pipeline? Just because we are hearing a lot of regulatory changes and that anti data center sentiment kind of potential issues in the supply chain. Are you seeing any moves in your discussion with hyperscalers? Because you mentioned you are going a bit higher in the value chain.
Guillaume Texier: No, absolutely not. I can say that with assurance because I am right now in the US with the US teams, we have discussed that at length. In the probably order of magnitude 100 projects that we have in our backlog, none has been delayed, none has been canceled. In our discussions in the quoting activity with the hyperscalers, we do not see at this stage a sign of a slowdown. That is what I can say. I read the same newspapers as you. It is true that more and more there are intense discussions when it comes to new projects which force the hyperscalers to find good solutions to address those concerns. Those concerns are not something which is impossible to address, they are doing it.
Guillaume Texier: At this stage, what I can tell you is that when we look at our backlog, when we look at our activity, there is zero impact at this stage. Maybe one thing to tell you is that we tend to have very little exposure to the most interest rate sensitive part of the data center operators or project owners like the neoclouds, et cetera. We are not that exposed to that. We are more on the very established players.
Lucas Ferhani: Yeah. Thanks. Super clear. Thank you.
Operator: The last question is from William Mackie, Kepler Cheuvreux.
William Mackie: Yeah. Good morning to you if you're on the West Coast. Thank you for taking the time. My couple of basically clarifications. Firstly, on pricing. If I recall, in 2025, the price contributions in every quarter were probably around or below 1%, and now we have 5% in Q3. Running into the Q4 comparison, is there any reason to think that the price contribution would change? Specifically with the pricing that you've broken out as you do, could you give perhaps a bit more color on how that splits between regions? A number of your suppliers and other players acknowledge that there's more inflationary pressure and more positive price achievements in North America. How have you seen that price development evolve geographically?
Guillaume Texier: Yeah. So maybe let me take this question. You're right. In 2025, the price effect was in Q2, Q3, Q4, between 1% and 2%, relatively stable. Slightly higher in Q4, but not materially. I think it was 1.7% compared to 1.4% in Q3. Which is the basis of what I was saying, which is that basically we expect Q4 to be sequentially flat in terms of pricing. We would be around a 4% price effect for the year, maybe a little bit higher. But around 4%, I think. In our environment, the fact is that pricing is a little bit higher in Europe compared to North America, and that has to do with the cable situation.
Guillaume Texier: There is a little bit less cable pricing than in Europe, and I think it has to do with the history of price increases over the last two years, which are creating this very specific situation. If you look at non-cable, it's true that we have a little bit more pricing in Europe than in North America, but the difference is not major.
William Mackie: That's great. Thank you. Coming to the backlog. You mentioned a couple of times the backlog project timelines extending. Can you just clarify, is that purely related to your data center business, or are there other projects where you're seeing these timelines extend beyond normal levels?
Guillaume Texier: I don't. First of all, I think there was a comment in the press release saying that we tend to see customers discussing with us a little bit earlier to take into account the availability topic and to discuss alternatives, et cetera. But it doesn't translate into a longer backlog, a substantially longer backlog execution time. I don't think we are at this stage yet. It's more pre-discussions, which is a positive for us because we have a chance to be involved in the definition of the project. And each time we add more value, we are more interested. When it comes to the backlog overall, it's not only data centers. There is probably a little bit more than one quarter of this backlog, which is data centers, but you have also automation. You have large infrastructure projects, airport, aerospace projects, water and wastewater projects, et cetera.
Guillaume Texier: So it's relatively diverse in terms of the backlog. And at this stage, no, I don't see a meaningful trend of the backlog extending the execution time. No.
William Mackie: Thank you. The last question really is perhaps more conceptual. As the business mix, most certainly in North America, shifts more towards project, and you're facing this growth fulfillment at the same time that you need to keep delivery and service levels up, how should we think about net working capital development maybe as the business model shifts? You've reiterated the 65% conversion. You've beaten it cleanly the last two years. Is there some reason why it would perhaps go back towards the target you've given, or should we expect similar net working capital evolution that we've seen in 2025 and 2024?
Guillaume Texier: Because it's a conceptual question, I will leave it for Laurent.
[Company Representative] (Rexel): No, at this stage, we do not see any material change in our working capital. The pattern, yes, with large contracts is a bit different. Sometimes we are buying a bit early, but we have advanced payment from the customer, so it does not change so much the mix in term of our working capital at this stage. And we are very cautious also on the payment term, on the credit side, to make sure that it does not impact our cash flow.
William Mackie: Super. Thank you.
Operator: Mr. Texier, there are no more questions registered at this time. I will turn the call back to you for any closing remarks.
Guillaume Texier: Thank you for the discussion. Thank you for the interesting questions. As you can tell, we are very happy with our results in Q3. We are optimistic about the end of the year. And we will talk to each other in February, hopefully with the closing of GCG behind us and with an update on, obviously, the guidance of 2027. Thank you very much.
[Company Representative] (Rexel): Thank you very much.
Operator: Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.
