Ferguson, a leading distributor in the North American construction market, reported its financial results for the first quarter ending October 31, 2024.
Key Financial Metrics
| Metric | Q1 FY2025 | Q1 FY2024 | YoY Change |
|---|---|---|---|
| Total Revenue (in billions USD) | $7.8 | $7.74 | +0.8% |
| Diluted EPS | $2.34 (Adjusted $2.45) | $2.54 | -7.9% |
| Gross Margin | 30.1% | 30.2% | -10 bps |
| Operating Margin (Adjusted) | 8.6% (9.1%) | 9.6% (10.0%) | -100 bps |
Interpretation: Ferguson's revenue saw a marginal increase driven by acquisitions, despite slight organic revenue decline and ongoing commodity price deflation. The gross and operating margins both faced pressure due to cost inflation and investments in core capabilities, leading to decreased earnings per share year-over-year.
Revenue Performance by Segment
| Segment | Q1 FY2025 Net Sales Growth | Comparison to Guidance |
|---|---|---|
| USA | 0.5% | In Line |
| Residential | Flat | In Line |
| Non-Residential | 1% | Slightly Above |
| Canada | 6.3% | In Line |
Interpretation: The U.S. segment showed modest performance, with residential revenues flatlining while non-residential revenue slightly outperformed expectations at 1% growth. Canadian operations delivered a more robust growth largely supported by acquisitions, despite forex headwinds.
Key Developments and Operational Highlights
- Completed acquisition of Fresno Pipe and Supply; Templeton and TEMSCO post-quarter.
- Declared a 5% increase in quarterly dividend.
- Share repurchases of $256 million executed with $600 million remaining in the repurchase program.
- Issued $750 million in senior unsecured notes for refinancing and general purposes.
- Net debt to adjusted EBITDA ratio at 1.2x, indicating a robust financial footing.
Officer Comments
CEO Kevin Murphy remarked on the resilient revenue growth despite challenging market conditions, attributing this to Ferguson's balanced business approach and capability investments. The unchanged guidance for FY2025 reflects cautious optimism around revenue growth amidst foreseeable market headwinds. Ferguson emphasizes leveraging structural tailwinds within the U.S. housing and non-residential sectors to bolster long-term prospects.
Dividend and Share Repurchase Information
Ferguson declared a quarterly dividend of $0.83 per share, enhancing shareholder returns. They remain active in the share repurchase program, contributing to capital efficiency.
Forward Guidance
The company maintains its FY2025 financial guidance, forecasting modest full-year revenue growth despite the potentially challenging market environment.
Ferguson continues to invest in growth, expand through acquisitions, and proactively return capital to shareholders, positioning itself for sustained performance despite economic and market headwinds.
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