Ferguson (NYSE: FERG) reported its fourth-quarter and full-year results, showcasing earnings growth despite some economic challenges.
Fourth Quarter Results
Ferguson reported fourth-quarter sales of $7.9 billion, a 1.4% increase compared to the same period last year. Despite experiencing a price deflation of approximately 2%, the company managed to achieve this growth through a combination of organic revenue and acquisitions. The operating margin for the quarter stood at 10.2%, a 20 basis point improvement from the previous year. On an adjusted basis, the operating margin was 10.8%, up by 40 basis points. Diluted earnings per share (EPS) for the fourth quarter were $2.23, but on an adjusted basis, the EPS was $2.98. The company declared a quarterly dividend of $0.79 per share and completed four acquisitions during this period. Additionally, Ferguson repurchased shares worth $213 million in the fourth quarter, demonstrating its commitment to returning value to shareholders.
Annual Performance
Full-year performance showed net sales of $29.6 billion, a slight decrease of 0.3% from the previous year. The gross margin improved by 10 basis points to 30.5%, and the operating margin remained flat at 8.9%. On an adjusted basis, the operating margin was 9.5%, down 30 basis points. The full-year diluted EPS was $8.53, while the adjusted EPS was $9.69. The company generated strong cash flow, with $1.9 billion in net cash from operating activities.
2025 Outlook
Ferguson has issued its guidance for FY2025, projecting modest full-year growth with continued market outperformance. The company anticipates net sales to grow in the low single digits, assuming market conditions remain challenging and pricing slightly down for the year. The adjusted operating margin is expected to be between 9.0% and 9.5%. Interest expenses are projected to range between $180 million and $200 million, while the adjusted effective tax rate is estimated to be around 26%. Capital expenditures are expected to be between $400 million and $450 million. These projections reflect Ferguson’s strategy to invest in scale and capabilities, aiming to capitalize on multi-year structural tailwinds such as underbuilt and aging U.S. housing, non-residential large capital projects, and opportunities with dual-trade plumbing and HVAC contractors.
CEO Kevin Murphy expressed confidence in the company’s ability to outperform the market as it returns to growth. He highlighted the balanced business mix and the ability to deploy scale locally as key factors that will enable Ferguson to navigate the ongoing challenging market environment. The company plans to continue its investment in organic growth, sustainable dividend growth, and market consolidation through acquisitions.
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