Ferguson Enterprises Inc. · NYSE:FERG
Ferguson Enterprises — H1 2021 Earnings Presentation
36 slides from Ferguson Enterprises's earnings presentation, Mar 16, 2021
Slide 1: 2020/21 Half Year Results Presentation
2020/21 Half Year Results Presentation 6 months to January 31, 2021
Slide 2: Cautionary note on Forward-Looking statements
2020/21 Half Year Results Presentation Cautionary note on Forward-Looking statements Forward-Looking Statements In order to utilize the ‘safe harbor’ provisions of the United States Private Securities Litigation Reform Act of 1995 and the general doctrine of cautionary statements, Ferguson plc is pr
Slide 3: Highlights and introduction
1 Highlights and introduction Kevin Murphy, Group Chief Executive Ferguson plc | 2020/21 Half Year Results presentation | March 16, 2021 3
Slide 4: Agenda
2020/21 Half Year Results Presentation Agenda 1. Highlights and introduction Kevin Murphy, Chief Executive 2. Financial review Bill Brundage, CFO 3. Business update Kevin Murphy, Chief Executive 4. Q&A Ferguson plc | 2020/21 Half Year Results Presentation | March 16, 2021 4
Slide 5: Operational highlights
2020/21 Half Year Results Presentation Operational highlights Revenue growth Underlying trading profit growth Interim dividend per share Cash generated from operations1 +4.2% +12.2% 72.9c $559m (2020 : nil) Gross margin Headline EPS growth Net debt to adjusted EBITDA2 Recordable injury rate3 30.0% +
Slide 6: Corporate highlights
Section Half 2020/21 heading Year Results Presentation Corporate highlights • Restarted M&A program investing $224m in four bolt-ons in H1 • Reinstated share buy backs, new $400 million program announced today • Disposal of UK completed • Special dividend of 180 cents per share to be paid with inter
Slide 7: Market update: US end-market revenue growth
Section Half 2020/21 heading Year Results Presentation Market update: US end-market revenue growth H1 2021 H1 2021 Organic revenue % of US revenue Estimated market growth growth Residential 56% High single digit growth +12% Commercial 31% Mid single digit decline (4.0%) Civil / Infrastructure 7% Low
Slide 8: Financial review
2 Financial review Bill Brundage, Group CFO Ferguson plc | 2020/21 Half Year Results presentation | March 16, 2021 8
Slide 9: Financial highlights
Section Half 2020/21 heading Year Results Presentation Financial highlights H1 2021 H1 2020 Change (restated)1 Revenue 10,309 9,893 +4.2% Gross margin % 30.0% 30.2% (0.2%) Underlying trading profit 2 837 746 +12.2% Headline earnings per share 269.3c 235.1c +14.5% Interim ordinary dividend per share
Slide 10: USA
Section Half 2020/21 heading Year Results Presentation USA $m H1 2021 H1 2020 Change Revenue 9,704 9,318 +4.1% Organic revenue growth +3.3% +2.6% Underlying trading profit ¹ 823 740 +11.2% Underlying trading margin % ¹ 8.5% 7.9% +0.6% • Continued market share gains • Gross margins slightly softer du
Slide 11: USA revenue growth
Section Half 2020/21 heading Year Results Presentation USA revenue growth H1 2021 % of US Total Customer group revenue1 growth Residential Trade 19% +4% Residential Showroom 15% +8% eBusiness 8% +40% HVAC 10% +13% Commercial / Mechanical 14% (2%) Waterworks 18% +1% Other2 16% (11%) USA 100% +4.1% St
Slide 12: Canada
Section Half 2020/21 heading Year Results Presentation Canada $m H1 2021 H1 2020 Change Revenue 605 575 +5.2% Organic revenue growth +5.5% (6.6%) Underlying trading profit ¹ 36 29 +24.1% Underlying trading margin % ¹ 6.0% 5.0% +1.0% • Continued revenue growth • Good residential end markets partially
Slide 13: Financing, tax and exceptional items
Section Half 2020/21 heading Year Results Presentation Financing, tax and exceptional items H1 2021 H1 2020 $m (restated) Financing Net finance costs - pre-IFRS 16 51 43 - IFRS 16 charge 22 25 Reported P&L charge 73 68 Tax Adjusted tax charge 200 181 Adjusted effective tax rate 24.9% 25.4% • Excepti
Slide 14: Cash flow
Section Half 2020/21 heading Year Results Presentation Cash flow1 $m H1 2021 H1 2020 Adjusted EBITDA from continuing operations2 918 828 Adjusted EBITDA from discontinued operations2 57 48 Working capital (361) (386) Exceptionals, pension & other (55) (25) Cash generated from operations 559 465 Inte
Slide 15: Capital structure
Section Half 2020/21 heading Year Results Presentation Capital structure H1 2021 H1 2020 Net debt $1,097m $1,944m Net debt : Adjusted EBITDA 0.6x 1.1x Lease Liabilities $1,147m $1,445m Net debt including leases $2,244m $3,389m Net debt including leases : EBITDA including leases 1.2x 1.7x Net pension
Slide 16: Capital allocation
2020/21 Half Year Results Presentation Capital allocation • Target range of net debt to adjusted EBITDA of 1-2x • Capital allocation priorities unchanged: 1. Organic growth • Investment in generating profitable growth, particularly in our: • Digital front end • Overall technology journey • World cla
Slide 17: Technical guidance for the full year to July 2021
Section Half 2020/21 heading Year Results Presentation Technical guidance for the full year to 31 July 2021 One fewer trading day impact on trading profit ($15m) Full year FY21 impact from completed acquisitions Approx. $270m of revenue Interest charge Approx. $135 - 140m* Effective tax rate – FY21
Slide 18: Business update
3 Business update Kevin Murphy, Group Chief Executive Ferguson plc | 2020/21 Half Year Results presentation | March 16, 2021 18
Slide 19: Strategy: Where we invest
Section Half 2020/21 heading Year Results Presentation We are more than a distributor. As trusted advisers, we provide innovative products and solutions to make our customers’ projects better. Strategy Where we invest We will expand our role in the value chain to build durable competitive We will fo
Slide 20: Strategy: Where we invest
Section Half 2020/21 heading Year Results Presentation We are more than a distributor. As trusted advisers, we provide innovative products and solutions to make our customers’ projects better. Strategy Where we invest We will expand our role in the value chain to build durable competitive We will fo
Slide 21: Sales Execution
2020/21 Half Year Results Presentation Sales Execution Large Residential / Commercial Development Project, Western US • 22,000 acre, $6 billion residential / commercial development • Worked with owner on enhanced design build, procurement process to offset labor and supply chain inflation • Ferguson
Slide 22: Strategy: Where we invest
Section Half 2020/21 heading Year Results Presentation We are more than a distributor. As trusted advisers, we provide innovative products and solutions to make our customers’ projects better. Strategy Where we invest We will expand our role in the value chain to build durable competitive We will fo
Slide 23: We connect thousands of suppliers and customers with a unique business model
2020/21 Half Year Results Presentation We connect thousands of suppliers and customers with a unique business model1 Key resources & relationships Our people Our customers Our suppliers Channels to market Technology Distribution network Capital >37,000 > 1 million customers suppliers 1,652 branches
Slide 24: Global Sourcing and Supply Chain
2020/21 Half Year Results Presentation Global Sourcing and Supply Chain Network optimization strategy • Global sourcing • A network capable of same day / next day delivery to 80% of the US population: • 2 import centers • 10 regional distribution centers • 4 regional pipe yards • Market distribution
Slide 25: Global Sourcing and Supply Chain: Denver Market Distribution Center
2020/21 Half Year Results Presentation Global Sourcing and Supply Chain Denver Market Distribution Center • $1.5 billion commercial / residential market serving 70 branches Richland • Ferguson’s first future state distribution center • 450,000 square foot facility Waterloo • Servicing all customer g
Slide 26: Strategy: Where we invest
Section Half 2020/21 heading Year Results Presentation As trusted advisers, we provide innovative products and solutions to make our customers’ projects better. Strategy Where we invest We will expand our role in the value chain to build durable competitive We will focus on key capabilities that lay
Slide 27: Digitally enabled customer relationships
2020/21 Half Year Results Presentation Digitally enabled customer relationships Pro pick-up – collect how you want • Faster collect service for the customer – no waiting in lines and access to product after hours • Multiple contactless pick-up options for social distancing – locker and curbside pick
Slide 28: Summary
2020/21 Half Year Results Presentation Summary • Associates’ health and wellbeing remains primary consideration • Strong operational delivery in H1 and staying focused on execution • Focused on investment in the model: • Consultative approach with our customers • Investing in global sourcing with wo
Slide 29: Q&A
Q&A Ferguson now has an additional listing on the NYSE under the ticker symbol NYSE: FERG
Slide 30: Appendix
4 Appendix Ferguson plc | 2020/21 Half Year Results presentation | March 16, 2021 30
Slide 31: Strategy: USA – a diversified but connected business with attractive market structure
Section Half 2020/21 heading Year Results Presentation Strategy: USA – a diversified but connected business with attractive market structure #3 #6 30 $50bn $90bn #3 25 #1 #2 20 #4 Market size ($bn) 15 #1 #1 5 5 3 10 5 Home Depot 4 5 4 Amazon 6 Watsco #1 7 MRC HD Supply 18% 25% 6 12% 21% 4% 5% 9% 22%
Slide 32: Regional analysis
Section Half 2020/21 heading Year Results Presentation Regional analysis Revenue Revenue Underlying Underlying H1 2021 H1 2020 trading trading (restated) profit profit H1 2021 H1 2020 $m (restated) USA 9,704 9,318 823 740 Canada 605 575 36 29 Central costs - - (22) (23) Continuing operations 10,309
Slide 33: Revenue and trading profit growth
Section Half 2020/21 heading Year Results Presentation Revenue and trading profit growth Revenue ($m) Underlying trading profit ($m) +1.5% +3.4% (0.8%) 153 340 (84) 103 (17) 6 7 (1) 10,309 837 9,893 9,900 746 745 2020 Exchange 2020 inc. Organic Trading days Acquisitions 2021 2020 Exchange 2020 inc.
Slide 34: Net debt reconciliation
Section Half 2020/21 heading Year Results Presentation Net debt reconciliation 2021 Pre- IFRS 16 2021 Post 2020 Pre- IFRS 16 2020 Post $m IFRS 16 adjustment IFRS 16 IFRS 16 adjustment IFRS 16 Adjusted EBITDA from continuing operations1 918 157 1,075 828 149 977 Adjusted EBITDA from discontinued oper
Slide 35: Branch numbers and headcount
Section Half 2020/21 heading Year Results Presentation Branch numbers and headcount Branch numbers Headcount1 Brought Carried Net joiners / Brought Carried forward Acquired forward Net opened / (leavers) forward Acquired forward July 31, 2020 Jan 31, 2021 (closed) July 31, 2020 Jan 31, 2021 USA 26,0
Slide 36: IFRS 16 impact
2020/21 Half Year Results Presentation IFRS 16 impact • First applied to year ending 31 July 2020 for Ferguson • No impact on economics of lease transactions, cash payments made or capital allocation • Impact on financial statements for half year ended January 31, 2021, excluding the UK: Income $m B