Ferguson Reports 33.7% Increase in Diluted Earnings

Ferguson reports third quarter results with a return to volume growth driven by continued execution. Sales grew 2.4% driven by volume improvement despite continued deflation of approximately 2%. Operating margin was 8.6% (9.2% on an adjusted basis), and diluted earnings per share of $2.18 ($2.32 on an adjusted basis) grew by 33.7% over the prior year (up 5.5% on an adjusted basis).

Operating cash flow for the fiscal year to date amounted to $1,507 million. The company declared a quarterly dividend of $0.79, reflecting a 5% increase over the prior year, and completed three acquisitions during the quarter and two subsequent to the quarter. Share repurchases of $171 million were made during the quarter, and the share repurchase program was increased by an additional $1.0 billion.

Net sales for the third quarter were $7.3 billion, a 2.4% increase over the previous year. The organic revenue declined 0.9%, offset by acquisition contributions of 1.7% and one additional sales day that contributed 1.6% to growth. The gross margin of 30.5% was 50 basis points higher than last year, and reported operating profit was $625 million (8.6% operating margin), 25.8% ahead of last year.

In the US business, net sales increased by 2.2%, with an organic revenue decline of 0.9% offset by a 1.5% contribution from acquisitions and 1.6% from one additional sales day. Adjusted operating profit of $685 million was 3.2% or $21 million ahead of last year.

In Canada, third quarter net sales grew by 6.7%, with an organic revenue decline of 0.6% offset by a 5.1% contribution from acquisitions and 2.2% from the combined impact of one additional sales day and the impact of foreign exchange rates. However, adjusted operating profit of $6 million declined by $1 million compared to last year.

The net debt to adjusted EBITDA at April 30, 2024, was 1.0x, and during the quarter, share repurchases of $171 million were completed. The company has extended the share repurchase program by an additional $1.0 billion, resulting in a remaining outstanding balance of approximately $1.1 billion. The company declared a quarterly dividend of $0.79, reflecting a 5% increase over the prior year.

The company is domiciling its ultimate parent company in the United States, and a new board of directors has been appointed.

This article contains factual information derived from the press release received. The market has reacted to these announcements by moving the company's shares -3.5% to a price of $195.87. Check out the company's full 8-K submission here.

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