Why Ferguson Shares Are Slumping After Q2 Earnings

Ferguson Plc FERG shares are trading lower on Tuesday.

The company reported second-quarter adjusted earnings per share of $1.74, missing the analyst consensus of $1.84.

Quarterly sales of $6.67 billion missed the street view of $6.76 billion. Net sales in the U.S. business declined 2.2%, with an organic revenue decline of 3.7% partially offset by a 1.5% contribution from acquisitions.

In the Canada business, net sales compressed by 3.7%, with an organic revenue decline of 3.3% and a 0.4% adverse impact from foreign exchange rates.

The company reported operating profit of $477 million (7.1% operating margin), 13.1% lower than last year. Adjusted operating profit of $520 million was 10.7% lower than last year.

The second quarter adjusted gross margin pegs are at 30.4%, higher than 30.2% a year ago. Adjusted EBITDA in the quarter under review stands at $568 million, down from $630 million a year ago.

Ferguson completed two acquisitions during the quarter and one subsequent to the quarter with aggregate annualized revenues of approximately $220 million.

Dividend: The company declared a quarterly dividend of $0.79, which will be paid on May 7, 2024, to shareholders on the register as of March 15, 2024.

During the quarter, the firm completed share repurchases of $142 million.

Outlook: Ferguson expects full-year 2024 sales to remain broadly flat year over year (unchanged). The company continues to see adjusted operating margin of 9.2% – 9.8%, with capital expenditures of $400 million – $450 million.

Price Action: FERG shares are trading lower by 5.47% to $203.75 on the last check Tuesday.