Ferguson's ($FERG) fiscal first-quarter earnings showed a decline on an annual basis, with sales falling short of Wall Street estimates amid ongoing weaknesses in specific commodity categories, while the company reaffirmed its full-year revenue growth expectations. The UK-based plumbing and heating products company reported adjusted earnings of $2.45 per share, a decrease from $2.65 in the same period last year.
Sales for the quarter ending October 31 increased by 0.8% year-over-year to $7.77 billion; however, this figure fell short of the consensus estimate of $7.81 billion compiled by FactSet. The company's stock declined by 7.4% in premarket activity. Persistent weaknesses in certain commodity categories have led to an overall price deflation of approximately 2%.
On an organic basis, revenue decreased by 0.3%, although volume saw a modest rise of about 2%. “Our associates have remained focused on execution, delivering revenue growth in the quarter despite the ongoing market challenges and commodity price deflation,” stated Chief Executive Kevin Murphy. “The year has commenced largely as expected, and our balanced business mix and our ability to leverage scale locally instill confidence in our continued market outperformance.” Sales in the United States increased to $7.37 billion from $7.33 billion in the previous year's quarter, while residential revenue remained steady.
Non-residential revenue displayed slightly more resilience but experienced a year-over-year decline. Sales in Canada experienced an improvement of 6.3% year-over-year, reaching $403 million, though this was somewhat countered by a 0.6% foreign exchange headwind. Ferguson maintains its forecast for sales growth to rise by low single digits for fiscal 2025.
Analysts are projecting total sales for the year to reach $30.41 billion. The company also reiterated its guidance for adjusted operating margins between 9% and 9.5%, along with capital expenditures of $400 million to $450 million. “Our fiscal 2025 financial guidance remains unchanged, indicating modest full-year revenue growth alongside continued outperformance,” Murphy commented.
“While we expect to face an ongoing challenging market environment in the near term, we will persist in investing in scale and capabilities to leverage multi-year structural tailwinds such as underbuilt and aging US housing, large capital projects in the non-residential sector, and our opportunities within plumbing and specialized HVAC (heating, ventilation, and air conditioning).”.