Ferguson's Q3 Margins Expand Despite Continued Deflation - Details Here

Ferguson Plc FERG shares are trading slightly lower in the morning session on Tuesday.

The company reported third-quarter net sales of $7.308 billion, which was 2.4% higher year over year, driven by volume improvement despite continued deflation of approximately 2%.

Ferguson said weakness in certain commodity-related categories persisted, driving modest overall price deflation in the quarter under review.

Net sales in the U.S. business increased by 2.2%, while that in Canada grew by 6.7%.

Adjusted gross margin expanded by 50 basis points to 30.5% in the third quarter. Ferguson associates’ ‘strong pricing execution’ improved the metric.

Adjusted operating margin remained flat on a year-over-year basis at 9.2%. Adjusted EBITDA rose 2.4% to $722 million.

“We remain well positioned to leverage multi-year tailwinds in both residential and non-residential end markets as we support the complex project needs of our specialist pro customers,” said CEO Kevin Murphy.

The company’s adjusted earnings per share of $2.32 increased 5.5% due to the increase in adjusted operating profit and impact of share repurchases. The metric was in line with the street view.

Dividend: The company declared a quarterly dividend of 79 cents per share. The dividend will be paid on July 31 to shareholders on the register as of June 14.

Outlook: Ferguson continues to expect FY24 net sales to be broadly flat on a year-over-year basis. The company projects an adjusted operating margin of 9.2% – 9.6% (prior view: 9.2% – 9.8%).

Price Action: FERG shares are trading lower by 0.31% to $202.26 at last check Tuesday.

Read Next: Intel Steps Up AI Game With Lunar Lake Chips For Microsoft Copilot+ PCs, New Data Center Rivals To AMD