10-QPeriod: Q1 FY2025

Ferguson Enterprises Inc. /DE/ Quarterly Report for Q1 Ended Oct 31, 2024

Filed December 10, 2024For Securities:FERG

Summary

Ferguson Enterprises Inc. reported a slight increase in net sales for the first quarter of fiscal year 2025, reaching $7.8 billion, a 0.8% rise compared to the prior year period. This growth was primarily driven by higher sales volumes and incremental revenue from acquisitions, which offset an approximate 2% price deflation in certain commodity categories. The United States segment was the main contributor to this sales increase. However, operating profit experienced a notable decline of 10.0% (8.7% on an adjusted basis) due to increased operating costs stemming from sales volume growth and inflationary pressures, particularly in labor and infrastructure. This resulted in a decrease in diluted earnings per share to $2.34 from $2.54 in the prior year period. Financially, the company maintained a strong liquidity position with $601 million in cash and cash equivalents and $2.4 billion in available liquidity from undrawn debt facilities as of October 31, 2024. Net cash provided by operating activities saw a significant decrease, primarily due to changes in working capital and lower net income. The company also continued its share repurchase program, buying back $256 million worth of shares during the quarter. Notably, Ferguson completed a merger in August 2024, establishing a new corporate structure domiciled in the United States.

Financial Statements
Beta

Key Highlights

  • 1Net sales increased by 0.8% to $7.8 billion, driven by sales volume and acquisitions, partially offset by price deflation.
  • 2Operating profit decreased by 10.0% to $665 million, with adjusted operating profit down 8.7%, primarily due to increased operating costs and inflation.
  • 3Diluted earnings per share fell to $2.34 from $2.54 year-over-year.
  • 4Net cash provided by operating activities decreased significantly to $345 million from $557 million, impacted by working capital changes and lower net income.
  • 5The company issued $750 million in new senior notes due in 2034, while repaying $500 million in term loans.
  • 6Share repurchases totaled $256 million during the quarter, as the company continues its $4.0 billion authorization.
  • 7The United States segment remains the primary revenue driver, with growth in non-residential sales, while residential sales were flat.

Frequently Asked Questions

Net sales increased by 0.8% to $7.8 billion, primarily due to higher sales volumes and incremental revenue from acquisitions. This growth was partially offset by approximately 2% price deflation, mainly in certain commodity categories. The United States segment was the primary driver of this sales increase.

Operating profit decreased by 10.0% to $665 million, and diluted earnings per share fell to $2.34 from $2.54. This decline was primarily attributed to higher operating costs, including labor and infrastructure cost inflation, as well as an increase in associates related to sales volume growth. These factors more than offset the modest increase in net sales.

Ferguson issued $750 million in new unsecured senior notes due in October 2034, carrying a 5.00% interest rate. Concurrently, the company repaid its $500 million term loan in full and made net repayments under its receivables facility. Total debt remained largely stable quarter-over-quarter.

The company maintained a strong liquidity position with $601 million in cash and cash equivalents and $2.4 billion in available liquidity from undrawn debt facilities as of October 31, 2024. While net cash provided by operating activities decreased significantly, management believes its current cash position, expected operational cash flow, and access to capital are sufficient to meet its obligations and fund its strategic initiatives for the next 12 months and beyond.