Ferguson Enterprises Inc. · NYSE:FERG
Ferguson Enterprises — FY2022 Earnings Presentation
27 slides from Ferguson Enterprises's earnings presentation, Sep 27, 2022
Slide 1: Fourth Quarter & Year End Results Presentation
FY2022 Fourth Quarter & Year End Results Presentation RESULTS TO JULY 31, 2022
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: FY2022 Financial Highlights
FY2022 Financial Highlights 25.3% +41.1% 44.6% 40.4% Net Sales growth Adjusted operating profit* growth Adjusted EPS – Diluted* growth Return on capital employed* 17 $2.1b +15% 1.0x Number of acquisitions Shareholder returns** Proposed total dividend increase Net debt : adjusted EBITDA* * This is a
Slide 5: Acquisitions
Acquisitions Geographic Bolt-ons Capability * $650m invested in acquisitions in FY2022 Approx. $750m annualized revenue * In FY2022, the Company acquired two independent Safe Step tub dealers: Safe Step California; and Safe Step Canada and Pacific Northwest 5
Slide 6: Fourth Quarter Highlights
Fourth Quarter Highlights • Net sales grew 21.4% • Adjusted operating margin* of 10.7% • Adjusted diluted EPS* of $2.85, increased 20.3% • Completed 7 acquisitions • Share repurchases of $627m in the fourth quarter Executing our strategy * This is a non-GAAP measure. See our earnings announcement da
Slide 7: Market Update: US End-Market Revenue Growth
Market Update: US End-Market Revenue Growth FY2022 FY2022 US organic % of US revenue Estimated market growth* revenue growth** Residential 54% Approx. 17% +20% Non-residential 46% Approx. 25% +30% 100% Approx 20-21% +24.2% Continued market outperformance * Derived from management estimates ** For fu
Slide 8: Financial Review
02 Financial Review Bill Brundage, CFO
Slide 9: Fourth Quarter Financial Highlights
Fourth Quarter Financial Highlights $m (except per share amounts) Q4 2022 Q4 2021 Change Net sales 7,971 6,567 +21.4% Gross margin 30.5% 31.4% (90) bps Adjusted operating profit* 849 699 +21.5% Adjusted operating margin* 10.7% 10.6% +10 bps Adjusted earnings per share – diluted* $2.85 $2.37 +20.3% A
Slide 10: USA Fourth Quarter
USA Fourth Quarter $m Q4 2022 Q4 2021 Change Net sales 7,539 6,176 +22.1% Organic revenue growth +19.8% +23.8% Adjusted operating profit* 829 688 +20.5% Adjusted operating margin % 11.0% 11.1% (10) bps Continued growth from share gains and ability to manage price inflation Operating cost leverage de
Slide 11: USA Fourth Quarter Net Sales Growth
USA Fourth Quarter Net Sales Growth % of US net Q4 2022 Customer Group sales* Total growth Residential Trade 19% +21% Residential Building and Remodel 14% +21% Residential Digital Commerce 9% +3% HVAC 11% +18% Commercial / Mechanical 13% +17% Waterworks 21% +36% Other** 13% +27% USA 100% +22.1% Broa
Slide 12: Canada Fourth Quarter
Canada Fourth Quarter $m Q4 2022 Q4 2021 Change Net sales 432 391 +10.5% Organic revenue growth +14.2% +20.1% Adjusted operating profit* 35 28 +25.0% Adjusted operating margin % 8.1% 7.2% +90 bps Good revenue growth against tough comparables Solid cost control delivered strong operating leverage Sig
Slide 13: FY2022 Financial Highlights
FY2022 Financial Highlights $m (except per share amounts) FY2022 FY2021 Change Net sales 28,566 22,792 +25.3% Gross margin 30.7% 30.6% +10 bps Adjusted operating profit* 2,951 2,092 +41.1% Adjusted operating margin* 10.3% 9.2% +110 bps Adjusted earnings per share – diluted* $9.76 $6.75 +44.6% Adjust
Slide 14: Cash Flow
Cash Flow $m FY2022 FY2021 Adjusted EBITDA* 3,153 2,259 Working capital (1,271) (492) Interest and tax (764) (508) Other items 31 78 Net cash provided by operating activities of continuing operations 1,149 1,337 Capex (290) (241) Proceeds from the sale of assets and divestitures 4 18 Free cash flow*
Slide 15: Balance Sheet and Capital Allocation
Balance Sheet and Capital Allocation 1. Invest in above market organic growth 1.0x Net debt : Adjusted EBITDA* 2. Sustainably grow the ordinary dividends at July 31, 2022 3. Invest in bolt-on geographic and capability acquisitions 4. Return of surplus cash to shareholders 1-2x Target net leverage ra
Slide 16: Balance Sheet and Capital Allocation
Balance Sheet and Capital Allocation Surplus 1 Organic Growth 2 Dividends 3 Acquisitions 4 Capital Returns Working Capital • $1.5 billion share repurchases • $538 million dividends • 17 completed in FY2022 paid in FY2022 completed during year* FY2022 Cash flows $m • 8 Geographic bolt-ons Inventory (
Slide 17: FY2023 Guidance
FY2023 Guidance • Net sales growth of low single digits driven by market outperformance and completed acquisitions * • Adjusted operating margin of 9.3% to 9.9% • Interest expense of $170 - $190 million * • Adjusted effective tax rate of approximately 25% • Capital expenditures of $350 - $400 millio
Slide 18: Closing Remarks
03 Closing Remarks Kevin Murphy, CEO
Slide 19: Executing our strategy to create long term value
Leading positions Additional growth in large, growing and from bolt-on fragmented markets acquisitions Executing our strategy to create long term value through… Scale delivers Long-term track sustainable market record of outperformance outperformance and cash generation Continued value creation
Slide 20: Leading positions in large, growing and fragmented markets
Leading positions Additional in large, growing and growth from fragmented markets acquisitions Scale delivers Long-term track sustainable market record of outperformance outperformance and cash generation Continued value creation
Slide 21: Leading positions in highly fragmented North American markets
Leading positions in highly fragmented North American markets Balanced approach to attractive end markets ~$340b North American Opportunity 54% 46% RESIDENTIAL NON-RESIDENTIAL 60% 40% RMI NEW CONSTRUCTION $29b Revenue in FY2022 Residential / Non-Residential and RMI / New Construction proportions der
Slide 22: 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 / $18b 2
Slide 23: Closing Remarks
Closing Remarks Thank you to our associates. 1. Excellent financial performance in the quarter and full fiscal year 2. Balanced business mix 3. Flexible business model 4. Underpinned by a strong balance sheet 23
Slide 24: Join us for Q&A
Join us for O&A #3 FERGUSON’
Slide 25: Appendix
04 Appendix #3 FERGUSON
Slide 26: Return on Capital Employed Reconciliation FY2022
Return on Capital Employed Reconciliation FY2022 US$ (In millions) July 31, 2022 Adjusted operating profit* $ 2,951 Amortization, acquired intangible assets (114) Adjusted EBIT $ 2,837 Depreciation, amortization & impairment 316 Adjusted EBITDA $ 3,153 Net debt: Long-term debt $ 3,679 Shor
Slide 27: Ferguson
45 FERGUSON