Zinger Key Points
- Ferguson reported Q4 net sales of $7.946B, up 1.4% YoY, with a 40bps adjusted gross margin increase to 31%.
- FY25 guidance includes low-single-digit sales growth, a 9.0%-9.5% operating margin, and $400M-$450M in capital expenditure.
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Ferguson FERG shares are trading slightly higher after it reported fourth-quarter results.
The company reported net sales of $7.946 billion, which was 1.4% higher year over year, missing the consensus of $7.993 billion. Organic revenue fell by 0.2%, with a 0.1% negative impact from foreign exchange.
The company witnessed price deflation of around 2% due to weakness in certain commodity categories, which was partially offset by a 2% increase in organic volumes.
Net sales in the U.S. business increased by 1.3%, while that in Canada grew by 2.0%.
Adjusted gross margin expanded by 40 basis points to 31.0% in the fourth quarter. Adjusted operating margin increased 40 basis points year-over-year basis at 10.8%. Adjusted EBITDA rose 5.6% Y/Y to $906 million.
Adjusted EPS of $2.98 exceeded the consensus of $2.82.
The company declared a quarterly dividend per share of $0.79. The dividend will be paid on November 8 to stockholders of record as of September 27, 2024.
Ferguson repurchased shares worth $213 million in the quarter. As of July-end, the company had about $900 million remaining under the current share repurchase program.
Outlook: Ferguson expects FY25 net sales growth to be in low-single-digits, adjusted operating margin of 9.0% – 9.5% and capital expenditure of $400 million – $450 million.
Kevin Murphy, Ferguson CEO, said, “Our fiscal 2025 guidance reflects modest full year growth with continued market 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 dual-trade plumbing and HVAC contractor.”
Investors can gain exposure to the stock via Invesco Water Resources ETF PHO and Global X Clean Water ETF AQWA.
Price Action: FERG shares are up 1.33% at $199.84 premarket at the last check Tuesday.
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