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Ferguson PLC FERG

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Ferguson Reports Excellent Fiscal Third-Quarter Results Featuring 25% Top-Line Growth

Analyst Note

| Brian Bernard, CFA, CPA |

Ferguson's fiscal third-quarter (ended April 30) results came in well ahead of our expectations. Revenue from continued operations surged 25% year over year (21% organic) to $5.9 billion and adjusted operating margin expanded 250 basis points to 9.5%. Ferguson benefited from still-booming residential construction and repair and remodel spending in the United States and strong residential activity in Quebec and Toronto. Management called out 40% growth within its U.S. heating, ventilation, and air-conditioning market and 50% growth from its eBusiness strategy. The very strong residential HVAC growth is in line with figures quoted by HVAC manufacturers Carrier, Johnson Controls, Lennox, and Trane Technologies. Management also called out solid growth from its water infrastructure business, Waterworks, and a return to growth for its commercial/mechanical business. While sales from the U.S. industrial market were still down year over year, there was a sequential improvement, and we expect growth will return as social distancing restrictions ease.

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Company Profile

Business Description

Ferguson distributes plumbing and HVAC products primarily to repair, maintenance, and improvement (60% of U.S. revenue), new construction (32% of revenue), and civil infrastructure (8% of sales) markets. It serves over 1 million customers and sources products from over 45,000 suppliers. Ferguson engages customers through more than 2,200 branches globally (approximately 1,500 in the U.S.), over the phone, online, and in residential showrooms. In 2020, Ferguson derived over 86% of its $21 billion of sales in the U.S. According to Modern Distribution Management, Ferguson is the largest industrial and construction distributor in North America. The firm sold its U.K. business in 2021 and is now solely focused on the North American market.

1020 Eskdale Road, Winnersh Triangle
Wokingham, Berkshire, RG41 5TS, United Kingdom
T +44 1189273800
Sector Industrials
Industry Industrial Distribution
Most Recent Earnings
Fiscal Year End Jul 31, 2021
Stock Type
Employees 34,453

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