Ferguson Enterprises Inc. · NYSE:FERG
Ferguson Enterprises — FY2020 Earnings Presentation
40 slides from Ferguson Enterprises's earnings presentation, Sep 29, 2020
Slide 1: 2019/20 Full Year Results Presentation
2019/20 Full Year Results Presentation Twelve months to July 31, 2020
Slide 2: Highlights and COVID-19 update
1 Highlights and COVID-19 update Kevin Murphy, Group Chief Executive Ferguson plc | 2019/20 Full Year Results presentation | September 29, 2020 2
Slide 3: Agenda
2019/20 Full Year Results Presentation Agenda 1. Highlights and COVID-19 update Kevin Murphy, Group Chief Executive 2. Financial review Mike Powell, Group CFO 3. Update on strategy Kevin Murphy, Group Chief Executive 4. Q&A Ferguson plc | 2019/20 Full Year Results Presentation | September 29, 2020 3
Slide 4: Thank you to our associates
2019/20 Full Year Results Presentation Thank you to our associates placeholder Delivering essential products and services to critical industries Ferguson plc | 2019/20 Full Year Results Presentation | September 29, 2020 4
Slide 5: Financial highlights
2019/20 Full Year Results Presentation Financial highlights Revenue growth1 Underlying trading profit growth1 Proposed total dividend Cash generated from operations2 +2.0% +4.1% 208.2c $1,904m (2019 : 208.2c) Gross margin1 Headline EPS growth Net debt EBITDA Recordable injury rate3 30.0% (1.1%) 0.6x
Slide 6: COVID-19 approach
2019/20 Full Year Results Presentation COVID-19 approach • Demonstrated resilient, diversified business model • Critical focus on: • Protecting the health and wellbeing of our associates Covid-19 Ferguson image required Example – do not use • Continuing to serve our customers during the initial phas
Slide 7: COVID-19 – positioning for recovery (May onwards)
2019/20 Full Year Results Presentation COVID-19 – positioning for recovery (May onwards) • Cautious approach to bringing back associates • US returned to growth in August • Consistent market share gains • US residential markets held up well • US commercial looks more challenging, but upside in some
Slide 8: Market update: US end-market revenue growth
Section Full 2019/20 heading Year Results Presentation Market update: US end-market revenue growth H1 2020 H2 2020 FY 2020 FY 2020 Estimated Estimated Estimated Organic % of US market market market revenue revenue growth growth growth growth Residential 54% +1% (3%) (1%) +2% Commercial 32% +1% (6%)
Slide 9: Financial review
2 Financial review Mike Powell, Group CFO Ferguson plc | 2019/20 Full Year Results presentation | September 29, 2020 9
Slide 10: Financial highlights
Section Full 2019/20 heading Year Results Presentation Financial highlights 2020 2019 Change Ongoing revenue 19,940 19,549 +2.0% Ongoing gross margin % 30.0% 30.0% - Ongoing underlying trading profit 1, 2 1,595 1,532 +4.1% Headline earnings per share 511.6c 517.4c (1.1%) Total ordinary dividend per
Slide 11: Revenue and trading profit growth
Section Full 2019/20 heading Year Results Presentation Revenue and trading profit growth 2020 Ongoing underlying Ongoing trading revenue profit1 Organic growth (0.1%) +2.0% Acquisition growth +1.8% +1.0% FX and trading day impact +0.3% +1.1% +2.0% +4.1% Trading profit growth continues to outpace rev
Slide 12: USA
Section Full 2019/20 heading Year Results Presentation USA $m 2020 2019 Change Revenue 18,857 18,358 +2.7% Organic revenue growth +0.4% +6.2% Underlying trading profit ¹ 1,587 1,508 +5.2% Underlying trading margin % ¹ 8.4% 8.2% 2020 Underlying trading Revenue profit1 Organic growth +0.4% +3.1% Acqui
Slide 13: USA revenue growth
Section Full 2019/20 heading Year Results Presentation USA revenue growth Revenue Total Customer group $m growth Blended Branches 10,510 +0.4% (see regional analysis right) West Central Waterworks standalone 3,162 +9.1% (1.4%) +2.5% HVAC standalone 1,478 +9.4% East 0.0% eBusiness, Industrial standal
Slide 14: Canada
Section Full 2019/20 heading Year Results Presentation Canada Change (in local $CADm 2020 2019 currency) Revenue 1,458 1,576 (7.5%) Organic revenue growth (8.0%) (1.1%) Underlying trading profit ¹ 58 89 (34.8%) Underlying trading margin % ¹ 4.0% 5.6% • Challenging markets in H1 became tougher in H2
Slide 15: UK (non-ongoing)
Section Full 2019/20 heading Year Results Presentation UK (non-ongoing) Change (in local £m 2020 2019 currency) Revenue 1,490 1,725 (13.6%) Organic revenue growth (16.0%) (6.1%) Underlying trading profit 1 6 54 Underlying trading margin % 1 0.4% 3.1% • Refocused business on clear customer propositio
Slide 16: Exceptional items, financing and tax
Section Full 2019/20 heading Year Results Presentation Exceptional items, financing and tax 2020 P&L $m 2020 2019 $m total Financing US restructuring costs 65 Net finance costs - pre-IFRS 16 91 74 Canada and UK restructuring costs 28 - IFRS 16 charge 53 - UK business separation 18 Reported P&L charg
Slide 17: Cash flow
Section Full 2019/20 heading Year Results Presentation Cash flow $m 2020* 2019 Adjusted EBITDA from continuing operations 1,797 1,788 Working capital 209 (77) Exceptionals, pension & other (102) (102) Cash generated from operations 1,904 1,609 Interest & tax (331) (319) Capex (302) (418) Dividends (
Slide 18: Capital structure
Section Full 2019/20 heading Year Results Presentation Capital structure 2020 2019 Net debt1 $1,012m $1,195m Group adjusted EBITDA1 $1,802m $1,793m Net debt : Adjusted EBITDA1 0.6x 0.7x Lease liabilities $1,355m Net debt including leases $2,367m Net debt including leases : EBITDA including leases 1.
Slide 19: Update on strategy
3 Update on strategy Kevin Murphy, Group Chief Executive Ferguson plc | 2019/20 Full Year Results presentation | September 29, 2020 19
Slide 20: Strategic update
2019/20 Full Year Results Presentation Strategic update Key strategic themes – ‘How Tomorrow Works’ • Value added distributor • As trusted supplier and partner, we provide innovative products and solutions to make our customers’ projects better • Ensuring scale delivers customer benefits where and w
Slide 21: Strategy: Where we invest
Section Full 2019/20 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 22: Strategy: Expanding our role in the value chain
Section Full 2019/20 heading Year Results Presentation Strategy: Expanding our role in the value chain Ferguson plc | 2019/20 Full Year Results Presentation | September 29, 2020 22
Slide 23: Strategy: USA – diversified business with attractive market structure
Section Full 2019/20 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 24: Strategy: USA - attractive market structure
Section Full 2019/20 heading Year Results Presentation Strategy: USA - attractive market structure RMI revenue accounts for 59% of total revenue 11% 7% Highly fragmented industry 34% Organic sales growth culture 58% Bolt-on acquisition opportunities 59% The RMI market now represents Benefits of scal
Slide 25: Projects are better with Ferguson – a differentiated service offering
2019/20 Full Year Results Presentation Projects are better with Ferguson – a differentiated service offering Bidding Sourcing Customised Delivery Sales channels Pick-up • Own Brand solutions • Take off software • Same day • Inside sales • 24/7 secure access • Exclusive • Valve and • Value engineerin
Slide 26: Growth - bolt-on M&A
2019/20 Full Year Results Presentation Growth - bolt-on M&A Columbia Pipe and Supply • Established in 1935 • Largest privately held PVF distributor in the Midwest. • Revenue of $220 million (2019) with 16 locations in 5 midwestern states: IL, WI, MI, IN, MN • Commercial plumbing, PVF and valve and a
Slide 27: Growth - capability M&A
2019/20 Full Year Results Presentation Growth - capability M&A Adding mobility bathing category • Acquired Safe Step in July 2018, revenue of $162 million • Own brand tubs / showering • Achieved revenue growth of over 30% • Sold and/or installed over 17,300 tubs in L12M • Expansion in shower busines
Slide 28: Technology: Customer experience
2019/20 Full Year Results Presentation Technology: Customer experience Helping customers track their deliveries ABC Plumbing • Recently rolled out geo location to our 5,000 vehicle fleet 02:00 PM • National alert service live • Brings live track order feature including item and quantity details 1 FE
Slide 29: Technology: Next generation mobile experience
2019/20 Full Year Results Presentation Technology: Next generation mobile experience Helping customers stay connected to Ferguson on the move • New release launched in 2020 • Rapid adoption by customers now 8% of total eBusiness accounts • Enables transactions plus range of other functionality • Buy
Slide 30: Corporate update
2019/20 Full Year Results Presentation Corporate update • Wolseley UK: the Board is assessing other separation options in parallel with the demerger. • Listing update • USA is the natural listing location for Ferguson • Two-step process remains Board’s preferred route to achieve primary US listing •
Slide 31: Summary
2019/20 Full Year Results Presentation Summary • Proud of our accomplishments in a challenging market because of COVID-19 • Strong and resilient performance to date but staying focused on execution • Model is delivering: • Investing in world class supply chain • Consultative approach with our custom
Slide 32: Appendix
4 Appendix Ferguson plc | 2019/20 Full Year Results presentation | September 29, 2020 32
Slide 33: Regional analysis
Section Full 2019/20 heading Year Results Presentation Regional analysis Underlying trading Trading Revenue Revenue profit profit $m 2020 2019 2020 2019 USA 18,857 18,358 1,587 1,508 Canada 1,083 1,191 43 67 Central costs - - (35) (43) Group ongoing 19,940 19,549 1,595 1,532 Non-ongoing - UK 1,879 2
Slide 34: Revenue and trading profit growth
Section Full 2019/20 heading Year Results Presentation Revenue and trading profit growth Ongoing revenue ($m) Ongoing underlying trading profit ($m) +1.8% 16 17 356 30 (0.1%) +0.4% (0.1%) - 81 (20) (26) 1,595 19,940 1,532 1,532 19,549 19,529 2019 Exchange 2019 inc. Organic Trading days Acquisitions
Slide 35: Technical guidance for the full year to July 2021
Section Full 2019/20 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 $130m of revenue Interest charge* Approx $135-140m Effective tax rate – FY21 onwards 25
Slide 36: Net debt reconciliation
Section Full 2019/20 heading Year Results Presentation Net debt reconciliation 2020 Pre- IFRS 16 2020 Post $m IFRS 16 adjustment IFRS 16 Adjusted EBITDA from continuing operations 1,797 337 2,134 Working capital 209 11 220 Exceptionals, pension & other (102) - (102) Cash generated from operations 1,
Slide 37: Committed Financing Facilities
2019/20 Full Year Results Presentation Committed Financing Facilities Maturity profile - July 31, 2020 Maturity Size Amount drawn Available 1,600 $m July 31, 2020 July 31, 2020 1,400 US Private Placement Nov 20 281 281 - US Private Placement Sep 22 250 250 - 1,200 US Private Placement Nov 23 150 150
Slide 38: Branch numbers and headcount
Section Full 2019/20 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, 2019 July 31, 2020 (closed) July 31, 2019 July 31, 2020 USA 27
Slide 39: IFRS 16 impact
2019/20 Full 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 opening financial statements (i.e. balance sheet as at 1 August 2019) and impact for yea
Slide 40: Ferguson
FERGUSON