Ferguson PLC Announces Results for Q3 ended April 30, 2022

Rhea-AI Summary

Ferguson PLC reported robust financial results for the third quarter ending April 30, 2022. Net sales surged by 23.1% to $7,284 million, aided by strong residential and non-residential demand. Operating profit increased by 36.9% to $712 million, while diluted earnings per share rose 51.5% to $2.50, driven by effective cost control and share buybacks. The company executed four acquisitions during the quarter, enhancing its market position and projecting adjusted operating profit for the full year between $2.85 billion and $2.95 billion.

Positive

• Net sales increased by 23.1% to $7,284 million.
• Operating profit rose by 36.9% to $712 million.
• Diluted earnings per share increased by 51.5% to $2.50.
• Operating margin expanded by 100 basis points to 9.8%.
• Completed four acquisitions, adding approximately $450 million in annualized revenue.
• Share repurchases totaled $501 million during the quarter.

Negative

• Gross margin decreased by 60 basis points to 30.3%.
• Inflation impact estimated at approximately 20%.

WOKINGHAM, UK / ACCESSWIRE / June 14, 2022 / Ferguson PLC

Three months ended April 30,
US$ (In millions, except per share amounts)	2022		2021		Change
	Reported(1)	Adjusted(2)	Reported(1)	Adjusted(2)	Reported	Adjusted
Net sales	7,284	7,284	5,916	5,916	+23.1%	+23.1%
Gross margin	30.3%	30.3%	30.9%	30.9%	(60) bps	(60) bps
Operating profit	712	747	520	559	+36.9%	+33.6%
Operating margin	9.8%	10.3%	8.8%	9.4%	+100 bps	+90 bps
Earnings per share - diluted	2.50	2.50	1.65	1.78	+51.5%	+40.4%
Adjusted EBITDA		795		602		+32.1%
Net debt(2) : Adjusted EBITDA		0.8x		0.4x

Third quarter highlights

• Strong sales growth of 23.1% on top of tough prior year comparables.
• Operating margin of 9.8% expanded by 100 bps (adjusted operating margin of 10.3%, up 90 bps), driven by disciplined cost control.
• Completed four bolt-on acquisitions in the quarter; acquired an additional three post quarter end; and signed a definitive purchase agreement to acquire an own brand lighting and fan business, subject to regulatory approval. Annualized revenue for these acquisitions is approximately $450 million.
• Share repurchases of $501 million during the quarter, with $918 million of our $2.0 billion buy back program completed during the first nine months of the year.
• Achieved primary listing move to the NYSE on May 12, 2022.

Kevin Murphy, Ferguson CEO, commented:

"Our associates continued to drive outstanding service and support for our customers, delivering further market share gains and a strong financial performance. Disciplined cost control ensured earnings growth continued to outpace revenue growth as we ran up against strong prior year comparables. We continue to execute our strategy of investing for organic growth, consolidating our fragmented markets through acquisitions and returning capital to shareholders.

"Near term market demand remains supportive and we have increased our full year expectations for adjusted operating profit to $2.85 - $2.95 billion. While we are mindful of broader macroeconomic headwinds, our balanced business mix, agile business model and strong balance sheet position us well for the future."

(1) The results are presented in accordance with U.S. GAAP on a continuing operations basis.

(2) 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

Third quarter

Net sales of $7,284 million were 23.1% ahead of last year, and the same on an organic basis, as a 1.7% contribution from acquisitions was fully offset by one fewer trading day and the impact of foreign exchange rates. Inflation in the third quarter was approximately 20%.

Gross margins of 30.3% were 60 basis points lower than last year driven primarily by strong prior year comparables and changes in business mix. Operating expenses continued to be well controlled, resulting in an operating margin increase of 100 basis points (adjusted operating margin +90 basis points). We remain focused on productivity and efficiencies while investing in our talented associates, supply chain capabilities and technology.

Reported operating profit was $712 million (adjusted operating profit: $747 million), 36.9% ahead of last year (adjusted operating profit growth: 33.6%) as strong revenue and good cost control led to continued operating leverage.

Reported earnings per share on a diluted basis was $2.50 (adjusted earnings per share - diluted: $2.50), an increase of 51.5% (adjusted earnings per share - diluted growth: 40.4%) with the increase due to the strength of the profit performance in the period and the lower share count arising from share buy back programs.

USA - third quarter

The US business grew net sales by 23.9% which comprised 23.7% organic growth with 1.8% from acquisitions offset by 1.6% from one fewer trading day.

Residential end markets, which comprise just over half of our US revenue, remained robust during the quarter. New residential housing start and permit activity has continued at elevated levels. Overall, our residential revenue grew by approximately 20% in the third quarter.

Non-residential end markets, representing just under half of our US revenue, experienced strong growth. Our non- residential revenue grew by approximately 29% in the third quarter.

Adjusted operating profit of $736 million was 31.4% or $176 million ahead of last year.

We completed four acquisitions during the quarter with annualized revenues of approximately $50 million. We acquired two bolt-ons within our residential building and remodel customer group, Lighting Plus, a lighting business based in Alabama, and Founders Kitchen & Bath, a cabinetry design and install business serving the greater Atlanta region. We also acquired Adirondack Piping Solutions and AP Supply Co., both industrial distributors of PVF products in upstate New York and the southern US respectively.

Canada - third quarter

Net sales grew by 8.8%, with organic revenue growth of 11.3% offset by 1.8% from one fewer trading day and a further 0.7% due to the adverse impact of foreign exchange rates. Both residential and non-residential end markets saw good growth and adjusted operating profit of $20 million grew by 66.7%, significantly outpacing revenue growth as a result of good operating leverage.

Click on, or paste the following link on to your web browser to view the full announcement.

http://www.rns-pdf.londonstockexchange.com/rns/7267O_1-2022-6-13.pdf

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

SOURCE: Ferguson PLC

View source version on accesswire.com:
https://www.accesswire.com/704988/Ferguson-PLC-Announces-Results-for-Q3-ended-April-30-2022

FAQ

What were Ferguson PLC's net sales for Q3 2022?

Ferguson PLC's net sales for Q3 2022 were $7,284 million, a 23.1% increase compared to the previous year.

How much did Ferguson PLC's diluted earnings per share increase in Q3 2022?

The diluted earnings per share for Ferguson PLC increased by 51.5% to $2.50 in Q3 2022.

What drove the operating profit increase for Ferguson PLC in Q3 2022?

The operating profit increase was driven by strong revenue growth and disciplined cost control, rising 36.9% to $712 million.

How many acquisitions did Ferguson PLC complete in Q3 2022?

Ferguson PLC completed four acquisitions in Q3 2022, contributing to an annualized revenue increase of approximately $450 million.

What is Ferguson PLC's adjusted operating profit outlook for the full year 2022?

Ferguson PLC increased its full-year adjusted operating profit expectations to between $2.85 billion and $2.95 billion.