WOKINGHAM, UK / ACCESSWIRE / June 14, 2022 / Ferguson PLC
Three months ended April 30, | ||||||
US$ (In millions, except per share amounts) | 2022 |
| 2021 |
| Change | |
| Reported(1) | Adjusted(2) | Reported(1) | Adjusted(2) | Reported | Adjusted |
Net sales | 7,284 | 7,284 | 5,916 | 5,916 | +23.1% | +23.1% |
Gross margin | 30.3% | 30.3% | 30.9% | 30.9% | (60) bps | (60) bps |
Operating profit | 712 | 747 | 520 | 559 | +36.9% | +33.6% |
Operating margin | 9.8% | 10.3% | 8.8% | 9.4% | +100 bps | +90 bps |
Earnings per share - diluted | 2.50 | 2.50 | 1.65 | 1.78 | +51.5% | +40.4% |
Adjusted EBITDA |
| 795 |
| 602 |
| +32.1% |
Net debt(2) : Adjusted EBITDA |
| 0.8x |
| 0.4x |
|
|
Third quarter highlights
- Strong sales growth of 23.1% on top of tough prior year comparables.
- Operating margin of 9.8% expanded by 100 bps (adjusted operating margin of 10.3%, up 90 bps), driven by disciplined cost control.
- Completed four bolt-on acquisitions in the quarter; acquired an additional three post quarter end; and signed a definitive purchase agreement to acquire an own brand lighting and fan business, subject to regulatory approval. Annualized revenue for these acquisitions is approximately $450 million.
- Share repurchases of $501 million during the quarter, with $918 million of our $2.0 billion buy back program completed during the first nine months of the year.
- Achieved primary listing move to the NYSE on May 12, 2022.
Kevin Murphy, Ferguson CEO, commented:
"Our associates continued to drive outstanding service and support for our customers, delivering further market share gains and a strong financial performance. Disciplined cost control ensured earnings growth continued to outpace revenue growth as we ran up against strong prior year comparables. We continue to execute our strategy of investing for organic growth, consolidating our fragmented markets through acquisitions and returning capital to shareholders.
"Near term market demand remains supportive and we have increased our full year expectations for adjusted operating profit to $2.85 - $2.95 billion. While we are mindful of broader macroeconomic headwinds, our balanced business mix, agile business model and strong balance sheet position us well for the future."
(1) The results are presented in accordance with U.S. GAAP on a continuing operations basis.
(2) The Company uses certain non-GAAP measures, which are not defined or specified under U.S. GAAP. See the section titled "Non-GAAP Reconciliations and Supplementary Information."
Summary of financial results
Third quarter
Net sales of $7,284 million were 23.1% ahead of last year, and the same on an organic basis, as a 1.7% contribution from acquisitions was fully offset by one fewer trading day and the impact of foreign exchange rates. Inflation in the third quarter was approximately 20%.
Gross margins of 30.3% were 60 basis points lower than last year driven primarily by strong prior year comparables and changes in business mix. Operating expenses continued to be well controlled, resulting in an operating margin increase of 100 basis points (adjusted operating margin +90 basis points). We remain focused on productivity and efficiencies while investing in our talented associates, supply chain capabilities and technology.
Reported operating profit was $712 million (adjusted operating profit: $747 million), 36.9% ahead of last year (adjusted operating profit growth: 33.6%) as strong revenue and good cost control led to continued operating leverage.
Reported earnings per share on a diluted basis was $2.50 (adjusted earnings per share - diluted: $2.50), an increase of 51.5% (adjusted earnings per share - diluted growth: 40.4%) with the increase due to the strength of the profit performance in the period and the lower share count arising from share buy back programs.
USA - third quarter
The US business grew net sales by 23.9% which comprised 23.7% organic growth with 1.8% from acquisitions offset by 1.6% from one fewer trading day.
Residential end markets, which comprise just over half of our US revenue, remained robust during the quarter. New residential housing start and permit activity has continued at elevated levels. Overall, our residential revenue grew by approximately 20% in the third quarter.
Non-residential end markets, representing just under half of our US revenue, experienced strong growth. Our non- residential revenue grew by approximately 29% in the third quarter.
Adjusted operating profit of $736 million was 31.4% or $176 million ahead of last year.
We completed four acquisitions during the quarter with annualized revenues of approximately $50 million. We acquired two bolt-ons within our residential building and remodel customer group, Lighting Plus, a lighting business based in Alabama, and Founders Kitchen & Bath, a cabinetry design and install business serving the greater Atlanta region. We also acquired Adirondack Piping Solutions and AP Supply Co., both industrial distributors of PVF products in upstate New York and the southern US respectively.
Canada - third quarter
Net sales grew by 8.8%, with organic revenue growth of 11.3% offset by 1.8% from one fewer trading day and a further 0.7% due to the adverse impact of foreign exchange rates. Both residential and non-residential end markets saw good growth and adjusted operating profit of $20 million grew by 66.7%, significantly outpacing revenue growth as a result of good operating leverage.
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SOURCE: Ferguson PLC