Slide 1: Third Quarter Results Presentation
FY2023 Third Quarter Results Presentation RESULTS TO APRIL 30, 2023
Slide 2: Legal Disclaimer
Legal Disclaimer Cautionary note on forward-looking statements Certain information included in this presentation and discussed on the conference call that this presentation accompanies is forward-looking, including within the meaning of the Private Securities Litigation Reform Act of 1995, and invol
Slide 3: Highlights and Introduction
01 Highlights and Introduction Kevin Murphy, CEO
Slide 4: Third Quarter Financial Highlights
Third Quarter Financial Highlights Q3 Net sales ($m) Q3 Adjusted operating profit* ($m) Q3 Adjusted EPS – diluted* 7,284 747 7,140 657 $2.50 5,916 $2.20 559 $1.78 2021 2022 2023 2021 2022 2023 2021 2022 2023 +23.1% (2.0%) +33.6% (12.0%) +40.4% (12.0%) Year progressing as expected * This is a non-GAA
Slide 5: Balanced approach to attractive US end markets
Balanced approach to attractive US end markets Q3 2023 % of US net sales* US net sales growth Residential 54% (6%) Non-residential 46% +3% - Commercial 32% +2% - Civil/Infrastructure 8% +2% - Industrial 6% +13% 100% (1.6%) Continued growth in non-residential end markets * Residential / Non-Residenti
Slide 6: USA Third Quarter Net Sales Growth
USA Third Quarter Net Sales Growth % of US net Q3 2022 Q3 2023 Customer Group sales* Total growth Total growth Residential Trade 19% +21% (11%) Residential Building and Remodel 14% +17% +3% Residential Digital Commerce 9% +9% (15%) HVAC 11% +28% (2%) Waterworks 21% +42% Flat Commercial / Mechanical
Slide 7: Financial Review
02 Financial Review Bill Brundage, CFO
Slide 8: Third Quarter Financial Highlights
Third Quarter Financial Highlights $m (except per share amounts) Q3 2023 Q3 2022 Change Net sales 7,140 7,284 (2.0%) Gross margin 30.0% 30.3% (30) bps Adjusted operating profit* 657 747 (12.0%) Adjusted operating margin* 9.2% 10.3% (110) bps Adjusted earnings per share – diluted* $2.20 $2.50 (12.0%)
Slide 9: USA Third Quarter
USA Third Quarter $m Q3 2023 Q3 2022 Change Net sales 6,827 6,938 (1.6%) Organic revenue growth* (2.5%) +23.7% Adjusted operating profit** 664 736 (9.8%) Adjusted operating margin % 9.7% 10.6% (90) bps Solid performance in more challenging end markets * For further details regarding organic revenue
Slide 10: Canada Third Quarter
Canada Third Quarter $m Q3 2023 Q3 2022 Change Net sales 313 346 (9.5%) Organic revenue growth* (1.5%) +11.3% Adjusted operating profit** 7 20 (65.0%) Adjusted operating margin % 2.2% 5.8% (360) bps Foreign exchange movements had a 6.2% adverse impact on revenue growth and a $1 million adverse impac
Slide 11: Year to Date Financial Highlights
Year to Date Financial Highlights $m (except per share amounts) YTD 2023 YTD 2022 Change Net sales 21,896 20,595 +6.3% Gross margin 30.2% 30.7% (50) bps Adjusted operating profit* 2,103 2,102 Flat Adjusted operating margin* 9.6% 10.2% (60) bps Adjusted earnings per share – diluted* $7.07 $6.93 +2.0%
Slide 12: Cash Flow – Year to Date
Cash Flow – Year to Date $m YTD 2023 YTD 2022 Adjusted EBITDA* 2,247 2,257 Working capital 187 (1,005) Interest and tax (685) (618) Other items 57 47 Net cash provided by operating activities of continuing operations 1,806 681 Capex (361) (195) Proceeds from the sale of assets 3 3 Free cash flow* 1,
Slide 13: Capital Allocation
Capital Allocation Surplus 1 Organic Growth 2 Dividends 3 Acquisitions 4 Capital Returns Working Capital • Quarterly dividend of $0.75 • Five completed since • ~$0.8 billion share per share, implies August 1st repurchases completed in fiscal • Positive cash flow impact of annualized increase of 9% y
Slide 14: FY2023 Guidance
FY2023 Guidance* Adjusted operating margin guidance tightened • Net sales growth of low single digits • Driven by market outperformance, completed acquisitions and one additional sales day. ** • Adjusted operating margin of 9.4% to 9.8% • Interest expense of $185 - $195 million ** • Adjusted effecti
Slide 15: Strategy and closing remarks
03 Strategy and closing remarks Kevin Murphy, CEO
Slide 16: US residential long term growth drivers
US residential long term growth drivers • New residential end markets •As expected, we continue to see near term pressure but believe fundamentals remain attractive over the longer term • Undersupply of ~2-4 million residential units* • Historically low rental vacancy rates • Aging housing stock • R
Slide 17: US non-residential long term growth drivers
US non-residential long term growth drivers • Megaprojects • Significant opportunity to leverage our advantaged growth platform across multiple customer groups as ‘One Ferguson’. • We believe the total addressable market on mega project related work is in excess of $30 billion over the next five yea
Slide 18: Closing Remarks
Closing Remarks Thank you to our associates. 1. Q3 performance as expected and strong year to date execution 2. Now in period of macro challenge 3. Balanced market exposure and flexible business model position us well for continued outperformance 4. Underpinned by strong balance sheet and cash gener
Slide 19: Join us for Q&A
Join us for O&A #3 FERGUSON’
Slide 20: Appendix
04 Appendix #3 FERGUSON
Slide 21: Leading positions in highly fragmented North American markets
Leading positions in highly fragmented North American markets ~75% of revenue generated from #1 or #2 market positions Residential 12% Current Share Building $33b market #1 Market Position and Remodel Waterworks $28b market 21% Current Share #1 Market Position $29b revenue with a Commercial / $18b 2
Slide 22: Reconciliation of Net Income to Adjusted Operating Profit and Adjusted EBITDA
Reconciliation of Net Income to Adjusted Operating Profit and Adjusted EBITDA Three months ended Nine months ended April 30, April 30, (In millions) 2023 2022 2021 2023 2022 2021 Net income $336 $546 $369 $1,305 $1,542 $798 Loss (income) from discontinued operations (net of tax) — — 3 — (25) 167 Inc
Slide 23: Net Debt
Net Debt Net debt comprises bank overdrafts, bank and other loans and derivative financial instruments, excluding lease liabilities, less cash and cash equivalents. Long-term debt is presented net of debt issuance costs. As of April 30, (In millions) 2023 2022 Long-term debt(1) $3,839 $3,221 Short-t
Slide 24: Adjusted EBITDA (Rolling 12-month)
Adjusted EBITDA (Rolling 12-month) Adjusted EBITDA is net income before charges/credits relating to depreciation, amortization, impairment and certain non-GAAP adjustments. A rolling 12-month adjusted EBITDA is used in the net debt to adjusted EBITDA ratio to assess the appropriateness of the Compan
Slide 25: Reconciliation of Net Income to Adjusted Net Income and Adjusted EPS-Diluted
Reconciliation of Net Income to Adjusted Net Income and Adjusted EPS-Diluted Three months ended Nine months ended April 30, April 30, 2023 2022 2021 2023 2022 2021 (In millions, except per share amounts) per share(1) per share(1) per share(1) per share(1) per share(1) per share(1) Net income $336 $1
Slide 26: Ferguson
44 FERGUSON