On balance, 2021 was a good year for France’s Rexel S.A. (OTCPK:RXEEY) (OTCPK:RXLSF). I didn’t see quite as much volume growth in the U.S. as I wanted, but the company did gain share in a sluggish commercial market and is still waiting for large industrial projects to move forward. Execution in Europe remains strong, however, and the company is well-leveraged to ongoing investment in electrification and renovation – drivers that I think will accelerate after Russia’s invasion of Ukraine.
The Europe-listed shares (the ones I own) are up almost 30% since my last update, lagging WESCO (WCC), but outperforming the broader industrial space and other distributors like Grainger (GWW) and Fastenal (FAST), as well as suppliers like Eaton (ETN) and Schneider (OTCPK:SBGSY). The performance of the U.S. ADRs has been less robust, but still a little better than most comps.
Given the potential for future share gains in the U.S., growth in large projects, and electrification and renovation in both North America and the EU, I’m still bullish on these shares. Long-term revenue growth of less than 4% and high-single-digit FCF growth can support a double-digit annualized total return from here, though I would like to see better volumes in the coming quarters.
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