Slide 1: Second Quarter Results Presentation
FY2023 Second Quarter Results Presentation RESULTS TO JANUARY 31, 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: Second Quarter Financial Highlights
Second Quarter Financial Highlights Q2 Net sales ($m) Q2 Adjusted operating profit* ($m) Q2 Adjusted EPS – diluted* 6,825 588 582 6,508 $1.93 $1.91 4,937 350 $1.10 2021 2022 2023 2021 2022 2023 2021 2022 2023 +31.8% +4.9% +68.0% (1.0%) +75.5% (1.0%) Solid performance, year progressing as expected *
Slide 5: Balanced approach to attractive US end markets
Balanced approach to attractive US end markets Q2 2023 % of US revenue* US revenue growth Residential 54% +1% Non-residential 46% +11% - Commercial 32% +9% - Civil/Infrastructure 8% +7% - Industrial 6% +24% 100% +5.4% Continued growth in non-residential end markets while residential slowed meaningfu
Slide 6: USA Second Quarter Net Sales Growth
USA Second Quarter Net Sales Growth % of US net Q2 2023 Customer Group sales* Total growth Residential Trade 19% (5%) Residential Building and Remodel 14% +12% Residential Digital Commerce 9% (10%) HVAC 11% +10% Waterworks 21% +6% Commercial / Mechanical 13% +8% Other** 13% +17% USA 100% +5.4% Non-r
Slide 7: Financial Review
02 Financial Review Bill Brundage, CFO
Slide 8: Second Quarter Financial Highlights
Second Quarter Financial Highlights $m (except per share amounts) Q2 2023 Q2 2022 Change Net sales 6,825 6,508 +4.9% Gross margin 30.2% 30.6% (40) bps Adjusted operating profit* 582 588 (1.0%) Adjusted operating margin* 8.5% 9.0% (50) bps Adjusted earnings per share – diluted* $1.91 $1.93 (1.0%) Adj
Slide 9: USA Second Quarter
USA Second Quarter $m Q2 2023 Q2 2022 Change Net sales 6,504 6,172 +5.4% Organic revenue growth* +2.6% +29.4% Adjusted operating profit** 579 576 +0.5% Adjusted operating margin % 8.9% 9.3% (40) bps Compounding revenue growth against very strong comparables * For further details regarding organic re
Slide 10: Canada Second Quarter
Canada Second Quarter $m Q2 2023 Q2 2022 Change Net sales 321 336 (4.5%) Organic revenue growth* +3.0% +13.8% Adjusted operating profit** 14 23 (39.1%) Adjusted operating margin % 4.4% 6.8% (240) bps Foreign exchange movements had a 6.3% adverse impact on revenue growth and a $2 million adverse impa
Slide 11: Half Year Financial Highlights
Half Year Financial Highlights $m (except per share amounts) H1 2023 H1 2022 Change Net sales 14,756 13,311 +10.9% Gross margin 30.4% 30.9% (50) bps Adjusted operating profit* 1,446 1,355 +6.7% Adjusted operating margin* 9.8% 10.2% (40) bps Adjusted earnings per share – diluted* $4.87 $4.43 +9.9% Ad
Slide 12: Cash Flow – Half year
Cash Flow – Half year $m H1 2023 H1 2022 Adjusted EBITDA* 1,542 1,462 Working capital 115 (841) Interest and tax (502) (417) Other items 20 25 Net cash provided by operating activities of continuing operations 1,175 229 Capex (242) (122) Proceeds from the sale of assets and divestitures 3 2 Free cas
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 • ~$0.6 billion share per share, implies August 1st repurchases completed during • Positive cash flow impact of annualized increase of 9% firs
Slide 14: FY2023 Guidance
FY2023 Guidance Net sales growth and adjusted operating margin guidance remain unchanged • Net sales growth of low single digits • Driven by market outperformance, completed acquisitions and one additional sales day. * • Adjusted operating margin of 9.3% to 9.9% • Interest expense of $185 - $205 mil
Slide 15: Strategy and closing remarks
03 Strategy and closing remarks Kevin Murphy, CEO
Slide 16: Why Ferguson?
Leading positions Additional growth in large, growing and from bolt-on fragmented markets acquisitions Why Ferguson? Scale delivers Long-term track sustainable market record of outperformance outperformance and cash generation Continued value creation
Slide 17: 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 Market opportunity and Residential / Non-Residential and RMI / New Const
Slide 18: US residential long term growth drivers
US residential long term growth drivers 1. Undersupply of homes • Undersupply of ~2-4 million units with rental vacancy rates at historic lows 2. Age of housing stock • Median home is ~40 years old 3. Remodel investment • ~190 million housing starts since the Great Recession • Over half of remodel p
Slide 19: US non-residential long term growth drivers: Mega projects
US non-residential long term growth drivers • Mega projects • Non-residential projects over $400 million represent a growing number of starts (currently ~30% of starts). • 348 projects in excess of $400 million scheduled over the next 5 years with average project size of ~$1.9 billion. • Key areas i
Slide 20: US non-residential long term growth drivers: Legislative Acts
US non-residential long term growth drivers • Legislative Acts • Infrastructure Investment and Jobs Act - $1.2 trillion package including support for core waterworks infrastructure. • CHIPS and Science Act - $39 billion of manufacturing incentives. • Inflation Reduction Act - $0.5 trillion package i
Slide 21: US non-residential long term growth drivers: Aging infrastructure
US non-residential long term growth drivers • Aging infrastructure • Average age of US commercial buildings is over 50 years old. • Average age of US drinking water and wastewater pipes is ~45 years old • Majority of wastewater treatment plants are designed to have an average lifespan of 40-50 years
Slide 22: Closing Remarks
Closing Remarks Thank you to our associates. 1. Strong first half execution 2. Balanced market exposure and flexible business model positions us well for near term uncertainties 3. Our scale and advantaged platform positions us to capture growth from emerging structural trends in our end markets 4.
Slide 23: Join us for Q&A
Join us for O&A #3 FERGUSON’
Slide 24: Appendix
04 Appendix #3 FERGUSON
Slide 25: 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 26: 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 Six months ended January 31, January 31, (In millions) 2023 2022 2021 2023 2022 2021 Net income $374 $436 $94 $969 $996 $429 Income from discontinued operations (net of tax) — — 183 — (25) 164 Provision
Slide 27: 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 January 31, (In millions) 2023 2022 Long-term debt(1) $3,936 $2,749 Short
Slide 28: 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 29: Reconciliation of Net Income to Adjusted Net Income and Adjusted EPS
Reconciliation of Net Income to Adjusted Net Income and Adjusted EPS Three months ended Six months ended January 31, January 31, (In millions, except per share amounts) 2023 2022 2021 2023 2022 2021 Net Income $374 $436 $94 $969 $996 $429 Income from discontinued operations (net of tax) — — 183 — (2
Slide 30: Ferguson
44 FERGUSON