Ferguson PLC FERG shares are trading higher after it reported Q1 FY24 results. Sales declined 2.8% Y/Y to $7.71 billion, beating the consensus of $7.65 billion.
The sales decline was due to lower residential sales. Organic revenue fell 4.9%, with foreign exchange rates having a 0.1% adverse impact.
Net sales in the U.S. business fell 2.7%, with an organic revenue decline of 5.0%, and net sales in Canada business fell by 5.0%, with an organic revenue decline of 3.3% and a 1.7% unfavorable impact from foreign exchange rates.
The gross margin for the quarter contracted by 30 bps to 30.2%, and the adjusted operating margin contracted by 90 bps to 10.0%.
Adjusted EBITDA declined by 10.2% Y/Y to $819 million for the quarter. Adjusted EPS was $2.65 (-10.2% Y/Y), above the consensus of $2.62.
As of October 31, 2023, net debt was $3.0 billion, and cash and cash equivalents totaled $743 million—net debt to adjusted EBITDA of 1.0x.
Net cash provided by operating activities for the three months totaled $557 million, compared to $498 million a year ago.
Dividend: Ferguson declared a quarterly dividend of $0.79, implying an increase of 5% over the prior year. The dividend will be paid on February 6, 2024, to shareholders on the register as of December 15, 2023.
FERG repurchased shares worth $108 million during the quarter and had an outstanding balance of about $400 million remaining under the program as of October 31, 2023.
"Our FY2024 financial guidance is unchanged and our balanced end market exposure positions us well to leverage emerging multi-year structural tailwinds such as non-residential megaprojects. We remain confident in the strength of our markets over the medium and longer term and expect to capitalize on attractive growth opportunities," said Kevin Murphy, CEO.
FY24 Guidance Reiterated: Ferguson expects net sales to be broadly flat and an adjusted operating margin of 9.2% - 9.8%.
Also Read: Ferguson's Shares Have An Upward Trajectory After Q4 Earnings: What Investors Need To Know
Price Action: FERG shares are trading higher by 4.46% at $175.75 on the last check Tuesday.
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