Ferguson Enterprises (FERG) Q1 2025 earnings summary

Executive summary

• Net sales for Q1 FY2025 increased 0.8% year-over-year to $7.8 billion, driven by 3% volume growth and acquisitions, partially offset by 2% price deflation and market headwinds.

• Adjusted operating profit was $706 million (margin 9.1%), with adjusted diluted EPS at $2.45, both down 7.5%-8% year-over-year due to higher costs and inflation.

• Free cash flow was $274 million, down from $473 million in Q1 2024, mainly due to higher working capital.

• Continued investment in digital tools, value-added services, and growth initiatives, supported by a strong balance sheet.

• Share repurchases totaled $256 million (~1.3 million shares); quarterly dividend increased 5% to $0.83 per share.

Financial highlights

• Gross margin was 30.1%, down 10 basis points year-over-year; SG&A expenses rose to 20.4% of sales.

• Adjusted EBITDA was $758 million, down 7.4% year-over-year.

• Net income for the quarter was $470 million, down from $519 million last year; net income margin at 6.0%.

• Net debt to adjusted EBITDA at 1.2x, within the target range; net debt at $3.4 billion.

• Cash flow from operations was $345 million, down from $557 million in the prior year.

Outlook and guidance

• FY2025 guidance unchanged: net sales expected to grow low single digits, with adjusted operating margin of 9.0%-9.5%.

• Capital expenditures planned at $400–$450 million; interest expense $180–$200 million; effective tax rate ~26%.

• Anticipates easing deflation and improved volumes in the second half, supporting margin improvement.

• Management expects sufficient liquidity for the next 12 months, supported by cash, operations, and access to capital.