Ferguson Reports FY2025 First Quarter Results

Continued Volume Growth with Full Year Guidance Unchanged

First quarter highlights

Sales of $7.8 billion, an increase of 0.8%.
Sales volume grew 3%, partially offset by continued deflation of approximately 2%.
Gross margin of 30.1%, down 10 bps from prior year.
Operating margin of 8.6% (9.1% on an adjusted basis).
Diluted earnings per share of $2.34 ($2.45 on an adjusted basis).
Declared quarterly dividend of $0.83, reflecting a 5% increase over the prior year.
Completed one acquisition during the quarter and one subsequently.
Share repurchases of $256 million during the quarter.
Balance sheet remains strong with net debt to adjusted EBITDA of 1.2x.

Kevin Murphy, Ferguson CEO, commented, “Our associates remained focused on execution, delivering revenue growth in the quarter, despite continued market headwinds and commodity price deflation. The year has started largely as expected and our balanced business mix and ability to deploy scale locally give us confidence in our continued market outperformance. Our strong balance sheet and cash generative model allow us to continue to invest for organic growth, consolidate our fragmented markets through acquisitions and return capital to shareholders.”

“Our fiscal 2025 financial guidance remains unchanged, reflecting modest full year revenue growth with continued outperformance. While we anticipate an ongoing challenging near term market environment, we will continue to invest in scale and capabilities to take advantage of multi-year structural tailwinds such as underbuilt and aging U.S. housing, non-residential large capital projects and our opportunity with the plumbing and HVAC specialized professional.”

FY2025 Guidance (unchanged)

	2025 Guidance
Net sales*	Low single digit growth
Adjusted operating margin**	9.0% – 9.5%
Interest expense	$180 – $200 million
Adjusted effective tax rate**	~26%
Capital expenditures	$400 – $450 million

* Net sales guidance assumes our markets are down low single digits, inclusive of pricing slightly down for the year. We assume continued Company market outperformance and contribution from already completed acquisitions, offset in part by one fewer sales day.
** The Company does not reconcile forward-looking non-GAAP measures. See “Non-GAAP Reconciliations and Supplementary information”.

	Three months ended October 31,
US$ (In millions, except per share amounts)	2024		2023		Change
	Reported	Adjusted ⁽¹⁾	Reported	Adjusted ⁽¹⁾	Reported	Adjusted
Net sales	7,772	7,772	7,708	7,708	+0.8 %	+0.8 %
Gross margin	30.1 %	30.1 %	30.2 %	30.2 %	(10) bps	(10) bps
Operating profit	665	706	739	773	(10.0) %	(8.7) %
Operating margin	8.6 %	9.1 %	9.6 %	10.0 %	(100) bps	(90) bps
Earnings per share – diluted	2.34	2.45	2.54	2.65	(7.9) %	(7.5) %
Adjusted EBITDA		758		819		(7.4) %
Net debt ⁽¹⁾ : Adjusted EBITDA		1.2x		1.0x

⁽¹⁾ The Company uses certain non-GAAP measures, which are not defined or specified under U.S. GAAP. See the section titled “Non-GAAP Reconciliations and Supplementary Information.”

Summary of financial results

First quarter

Net sales of $7.8 billion were 0.8% ahead of last year driven by an organic revenue decline of 0.3%, offset by acquisition growth of 1.1%. On a volumetric basis, total volume increased by approximately 3% with organic volume up approximately 2%. Continued weakness in certain commodity related categories drove modest overall price deflation of around 2%.

Gross margin of 30.1% was 10 basis points lower than last year. Operating expense growth was driven by volumetric growth, cost inflation and continued investment in core capabilities for future growth.

Reported operating profit was $665 million (8.6% operating margin), 10.0% lower than last year. Adjusted operating profit of $706 million (9.1% adjusted operating margin) was 8.7% below last year.

Reported diluted earnings per share was $2.34 (Q1 2024: $2.54), a decrease of 7.9% compared to last year, and adjusted diluted earnings per share of $2.45 decreased 7.5% due to the lower adjusted operating profit, partially offset by the impact of share repurchases.

USA – first quarter

Net sales in the US business increased by 0.5%, with an organic revenue decline of 0.4% offset by a 0.9% contribution from acquisitions.

Residential end markets, which comprise just over half of US revenue, remained down year-over-year with market activity similar to the fourth quarter. Overall, our residential revenue was flat in the first quarter.

Non-residential end markets, representing just under half of US revenue, were slightly more resilient but also remain down year-over-year. We continue to take share with non-residential revenue growth of approximately 1% in the first quarter. Sales in civil/infrastructure and industrial end markets were stronger with commercial broadly flat. We continued to see good levels of shipment and bidding activity on large capital projects.

Adjusted operating profit of $697 million was 9.0% or $69 million below last year.

We completed one acquisition during the quarter, Fresno Pipe and Supply, a leading distributor of industrial pipes, valves and fitting products in California. Additionally, subsequent to quarter end we acquired Templeton and its affiliate, TEMSCO, which serve the water and wastewater industries in the southeast.

Canada – first quarter

Net sales grew by 6.3%, with an organic revenue growth of 1.3% and a 5.6% contribution from acquisitions, partially offset by a 0.6% adverse impact from foreign exchange rates. Markets have been similar to that of the United States with non-residential activity remaining more resilient than residential. Adjusted operating profit of $23 million was flat to last year.

Segment overview

	Three months ended October 31,
US$ (In millions)	2024	2023	Change
Net sales:
USA	7,369	7,329	+0.5 %
Canada	403	379	+6.3 %
Total net sales	7,772	7,708	+0.8 %

Adjusted operating profit:
USA	697	766	(9.0) %
Canada	23	23	Flat
Central and other costs	(14)	(16)
Total adjusted operating profit	706	773	(8.7) %

Financial position

Net debt to adjusted EBITDA at October 31, 2024 was 1.2x and during the quarter we completed share repurchases of $256 million with approximately $600 million remaining under our current share repurchase program.

We declared a quarterly dividend of $0.83 representing a 5% growth over prior year. The dividend will be paid on February 6, 2025 to stockholders of record as of December 20, 2024.

During the quarter, we completed a public offering of $750 million of senior unsecured notes due in 2034. We used a portion of the net proceeds from the sale of the notes to prepay certain outstanding term loans, with the remaining proceeds to be used for general corporate purposes.

There have been no other significant changes to the financial position of the Company.

For the complete press release, click here.

About Ferguson

Ferguson (NYSE: FERG; LSE: FERG) is the largest value-added distributor serving the specialized professional in our $340B residential and non-residential North American construction market. We help make our customers’ complex projects simple, successful and sustainable by providing expertise and a wide range of products and services from plumbing, HVAC, appliances, and lighting to PVF, water and wastewater solutions, and more. Headquartered in Newport News, Va., Ferguson has sales of $29.6 billion (FY’24) and approximately 35,000 associates in nearly 1,800 locations. For more information, please visit corporate.ferguson.com.

Contact:

Brian Lantz – Vice President IR and Communications – (224) 285-2410

Source: Ferguson plc

Most Read