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 (9.1% margin), with adjusted diluted EPS at $2.45, both down 7.5%-8% year-over-year due to higher costs and inflation.

• Strong balance sheet supports ongoing investments, acquisitions, and capital returns, including a 5% dividend increase and $256 million in share repurchases.

• One acquisition completed in Q1 and another post-quarter; continued expansion in HVAC counters and digital tools.

• Cash flow from operations declined to $345 million, reflecting increased working capital and lower net income.

Financial highlights

• Gross margin was 30.1%, down 10 basis points year-over-year; adjusted EBITDA was $758 million, down 7.4%.

• Free cash flow was $274 million, with $77 million invested in CapEx.

• SG&A expenses increased 4.8% to $1.59 billion, representing 20.4% of sales.

• Net debt to adjusted EBITDA at 1.2x, within the 1-2x target range; net debt at $3.4 billion.

• Net income for the quarter was $470 million, down from $519 million last year.

Outlook and guidance

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

• Pricing expected to be slightly down for the year, with deflationary pressures easing in the second half.

• CapEx investment planned at $400-$450 million; interest expense $180-$200 million; effective tax rate ~26%.

• Management expects sufficient liquidity to meet operating and strategic needs for the next 12 months.