Ferguson's Shares Have An Upward Trajectory After Q4 Earnings: What Investors Need To Know

Ferguson PLC FERG reported a fourth-quarter FY23 sales decline of 1.7% year-over-year to $7.8 billion, beating the consensus of $7.6 billion.

Adjusted EPS was $2.77, above the consensus of $2.46.

Reductions in residential drove the sales decline; organic revenue declined 5.3% Y/Y.

Net sales in the U.S. business declined 1.5%, with Canada's net sales down 5.1%.

The adjusted gross margin for the quarter expanded by 10 bps to 30.6%, and the adjusted operating margin contracted by 30 bps to 10.4%.

Adjusted EBITDA declined by 4.2% Y/Y to $858 million for the quarter.

The company exited the quarter with $601 million in cash and equivalents. Long-term debt as of the end of the quarter was $3.711 billion.

The company repurchased shares worth $124 million during the quarter, with an outstanding balance of approximately $500 million remaining under the current share repurchase program on July 31, 2023.

"Our balanced end market exposure positions us well to leverage emerging multi-year structural tailwinds such as non-residential megaprojects," said Kevin Murphy, Ferguson CEO. 

Dividend: Ferguson declared a quarterly dividend of $0.75, having transitioned from a semi-annual distribution schedule earlier in the fiscal year. 

This implies a 9% increase, as compared to a quarter of the prior year's total dividend, and will be paid on Nov. 15, 2023, to shareholders on the register as of Oct. 6, 2023.

FY24 Guidance: Ferguson sees net sales to be broadly flat Y/Y. The company sees an adjusted operating margin between 9.2%-9.8%. Capital expenditures are expected to be between $400 million and $450 million.

FERG Price Action: Ferguson shares are trading higher by 4.29% at $157.59 at publication Tuesday.

Photo: Courtesy Hansgrohe at Ferguson Bath, Kitchen & Lighting Gallery