Rexel’s US Activity Outperforms Corporate

Rexel’s North American group was the star performer for the company in Q3. While the overall business was up only 3%, North America more than doubled the group’s performance, coming in at 7.4%.

Some key highlights from their press release and presentation:

• North America
  • Up 7.4% driven by technology / infrastructure defined as data centers and broadband infrastructure which were 50+% of the growth in the US (highlighting a trend for national chains such as Graybar and Wesco.)
    • North American sales were $2.2 billion euros for the quarter, $7.05 for 9 months
      • The US is 83% of this, so Rexel US is $1.85 billion euros or $2.125 USD
        • Datacenters represented 5% of sales, or $106M dollars (yes, 10% of Wesco’s data center sales but a different product mix.)
        • Rexel’s proximity sales (local business, mostly stock and flow, grew at a faster rate than projects, which also could be read that it grew faster than datacenter business as datacenter business would be projects. (And perhaps the emphasis on mentioning datacenters is the investor interest in this vertical market?)
        • Residential had some activity, although in the Northwest (Platt), California (wildfire area), and Southeast (Carolinas to Florida).
      • The company has a 2.6 month backlog in the US
    • Canada was up about the same amount, 7.5% with growth in the project side of the business … a different business model?
  • Rexel now has DCs focused on its data center business. They opened in Reno (80,000 sq’) and Atlanta. This is another indication of distributors investing to have dedicated services for selected customers.
  • The expansion of Talley into Canada helps build upon Rexel’s infrastructure vertical and technology commitment to drive this business.
  • They passed through much of tariff-related price increases (so, with copper increases plus tariff increases, the company still had some organic growth.)
• Europe and Asia were both essentially flat (up .5% each on same store basis.)
• Rexel has a company-wide focus to increase “digital penetration” and to promote these services to its customers. Corporate-wide they are at 33% of sales. US lags this.

Overall, decent performance but it is also notable that the company did not comment about performance in New England, MidAtlantic, Midwest, nor the Southwest. While 7.4% increase, given the macro-economic environment, is decent, given its other national competitors, Rexel underperformed. Versus independents, perhaps on par AD’s average.