FERG - Earnings call transcript Q3 2022

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Operator

Hello and welcome to Ferguson Q3 Results Conference Call. My name is Elliot and I will be coordinating your call today. [Operator Instructions] I'd now like to turn the call over to Brian Lantz, Vice President of Investor Relations and Communications. The floor is yours. Please go ahead.

Brian Lantz

welcome Third and Call Earnings everyone Webcast. and morning, to Quarter Ferguson's Conference Good a review chance we had you've Hopefully, to morning. issued the this announcement earnings This our section our the filings is and SEC website on of page. web available in corporate Investors call recording available later be today. A will made this of I remind results those uncertainties and that some cause actual everyone of may from statements today risks want forward to looking certain differ to to projected. materially be and that our are subject could

the under included Additional disclaimer in is information announcement. earnings legal our

With today's CEO; the addition, Murphy, certain those turn including are Kevin and regarding Bill website me and the today In Kevin. our the will a non-GAAP our I to financial financial on call call, information presentation on we appendix most non-GAAP also measures, reconciliation call will our their measures. the our directly earnings to Brundage, CFO. comparable to on additional now discuss earnings announcement Please refer over measures. GAAP for of

Kevin Murphy

to take to remainder end Bill and York Exchange. the before the provide over New your of Thank Bill highlights then highlights you, call, and before of call back deployment, update some welcome, several capital the And questions. Quarter a also acquisition at for Third recent a results. cover I'll view On I'll outlook markets Ferguson's year financials. Stock the our the Conference of on to Call. our the our provide our I Results journey a today's for QX including fiscal turning end come I'll listing brief Brian activity to primary on of set I'll everyone, and on the

helping to thanks make in their another simple customers, We'd quarter. and our for efforts successful projects our to express delivered exceptional associates the third teams remarkable their sustainable. Our to sincere serve to performance like

drove approach, to our on XX% global our customers' our leverage supply year tough This sheet prior balance scale, projects. support and top comparables. our of We strong continue our revenue to consultative chain growth

us to pricing coupled go execution XX%. our with adjusted Our over This and are of growth XX%. buyback proud operating adjusted of with discipline profit share We're performance, profit and leverage per share our earnings operating in strong drove productivity program of drive enabled confident diluted of we the business gains these up results model as the technology-enabled forward. operating strength

allows on Our returning acquisitions consolidating and balance growth, through associates we our our to more of quarter markets shareholders. our intend to strong bolt-on is a continue capital priorities. shortly. execute and M&A strategy investing We touch four we capital deliver and detail for in us fragmented to during strong performance welcomed to on little sheet This the organic acquisitions from

to shares corporate for value people, operations listing world. environmental continuing report listing to our New for repurchase are XX We inclusive our minimize ESG May This stand-alone and and our is associates. pleased help that communities and the impact showcases to we billion associates. within share at first suppliers create highlighting local report our publish last were Exchange our culture better chain with safe, perspective, structure on engaging positive operations underway well our location dedication are and customers, pleased buyback our geographic the how were transition York build with and pace. to to From a we a a as our our aligning fostering program expertise $X the of and week, our the We our our also primary and position of our Stock impacts

and and outgrow and our these continue over markets which Nonresidential our U.S. markets. our approximately remained faster construction and XX% Both grew strong grew quarter. across to remained residential has we the demand end markets Demand revenue half robust. markets. remained revenue supportive strong remains in comprises new residential end our to Residential last than by markets. Turning our just RMI

Our nonresidential by revenue significant contribution Waterworks grew approximately a from Group. our XX% with

remain nonresidential heavier to mix discussed end our of committed with previously, related residential a exposure and balance market As of work. we we've RMI

While of our our sheet balanced broader and the agile us strong business we're model mindful this balance macroeconomic headwinds, position for well mix, future.

Turning acquisitions. back to

geographic through to growth continue opportunities attractive acquisitions. We see bolt-on selective and capability

Lighting residential the into customer building welcomed Kitchen quarter, we and Bath our group. and Founders During remodel & Plus

York industrial our offering the Additionally, AP respectively. Adirondack and New U.S., Southern and in Supply broadened Upstate

large undertake in strong acquisition this to business. We a choice quarter their value With We consolidate All New of and completing they future continue deals will plumbing Company three our acquisition additional & from the and businesses expands offering the fragmented definitive closing product Aaron continue fuel growth. organic a to customers our pleased the the revenues own pipeline, trade Minka a lighting annualized of This bringing these to healthy anticipate acquire portfolio, and to we as expanding in Jersey. maintain fan in, purchase to HVAC agreement benefit relationships broader have and quarter. professional. in step markets also signed $XXX our that regulatory growing residential a as million an dual since subject plumbing while generate HVAC end yet of another Lighting, for approval. projects. approximately range in We're is our fourth local brand

over numbers to me financial you a Bill, detail. more let in who Now will take you our bit pass through

Bill Brundage

a morning moved quarter the continuation good second and of XX.X%. We've remaining volumes price year comparables. from XX% to gains everyone. on in touch revenue high trends afternoon, QX approximately Kevin with contributing seen the or positive from of market prior a share tough to growth teens with inflation you, up Thank The

to our and in changes talented investing and improved XX business As strong capabilities operating margin gross operating controlled in or leverage gross impact million Diluted million year. buyback tightly extent, guided, costs to to $XXX led resulting with profit remains strong in a adjusted associates, basis lesser net $XXX XX.X%, our principally and operating X.Xx. programs. XX.X% share EBITDA XX.X%, up comparables of strong of driven Adjusted balance growth adjusted previously prior year-on-year debt the of the the EPS margins over our sheet we the some margin mix to of and by overall adjusted in chain supply And programs. by compression, driving points XX.X%, technology grew operating while by profit was

XX% Headcount from take X.X% revenue U.S. Markets growth of sales strong Moving continue across with majority trade the grew to to revenue largest U.S. where of the our saw and business of we and the a breakout in profit expanding and quarter, increase over prior margins operating support market, business groups XX% outlined, the strong strength year, serves XX.X% with demand in strong continued variable to adjusted comparable from operating $XXX well well. Digital residential million a groups and with prior costs which comparable. points The residential growth further Commerce both appropriately provided revenue grow revenue of XX.X%. the had delivered X.X% consumer growth we a and growth an of and day. both offset project-minded RMI. or acquisitions, $XXX see end Kevin XX HVAC, the XX%. serves of of fewer continued share we new decorative XX.X%. year the nonresidential organic the on performing were to basis our Residential top results. across customer light on pro and with of all markets our over segment results prior overall and a sales with performance. XX.X% to a mirrors Waterworks growth Residential growth We grew adjusted year supportive customer in million one end We construction of by to top of

organic profit strong customer markets. works growth supportive total XX.X% exchange The Nonresidential by growth XX% growth in the rates, nonresidential resulting customer saw of in controlled demand, in we growth was good driven as of revenue This inflation, sales with with end quarter supported operating fewer markets groups Residential revenue costs our was the comparable. growth business impact by well residential Commercial, nonresidential and performed prior a significantly performed QX X.X%. leverage. public day mechanical good quarter's lapped in of across as year customer and tightly adverse in by offset operating also This Waterworks predominantly groups. Canadian with markets. growth strong end other XX.X% we grew outpaced Adjusted our operating revenue strong well growth well with generating good particularly growth one of and growth foreign group. growth

pleased on performance, gross up outpaced are revenues are profit year-to-date and in XX.X% XX EPS basis of And XX.X% grew our earlier, XX.X%. a organic to Adjusted our XX%. points with up of improvement at in we basis basis sales, we mentioned resilience margins significantly growth point operating XXX diluted with expanding our as by an the Adjusted Kevin performance nearly As the operating margins. with confidence business. strength look XX.X%. the

Turning to important cash was year-to-date flow. It billion. be of approach and take cash disciplined an generation. Adjusted We priority EBITDA a business to continues $X.X our model. to quality

continue higher to of programs. profit $XXX of As year and growth. Tax quarters, in million customers invest strong best this to $XXX working organic our supply capital. CapEx, technology exceptional we've for as on and discussed invested over the growth supported operating flow driven in challenges flow. invest investment both prior we we Consequently, generated to by timing cash our returns continued availability receivables of principally overall increased we time inventory growth cash of supply in to and and chain sales over our in the levels free several during last we million capital, well through payments and has the as This chain ensure have due generated

which adjusted net balance year from ago. position EBITDA is up we've strong, debt of stepped Our sheet X.Xx a X.Xx with to

of advantage to We we capacity we the to to target leverage We opportunities. growth range four Xx allocate a priorities. operate across have X and of end of to low take intend that towards capital clear range continue the to ensure

we're business capital principally First, drive the in working CapEx. growth, organic above-market to and through investing

which capital important last quarter and our a first closed surplus end after part and committed returning progress $XXX good our three dividend excess the months, completed and program on post are returning through target raised end pipeline. QX completed We strategy Friday. $X of we've of to And $XXX we and our leverage growth in dividend have We've buyback shareholders nearly further in healthy billion XX% in million through investing XX we previously million ordinary a are and was remain we made billion X now interim the paid range. below finally, an our of having we're sustainably if to program. future Acquisitions $X.X the May. growing quarter by the

a to continue buyback good execute he We at pace.

invest 'XX. to and approach So let We're cost into the the business on up. with business. our well year as taken pleased sheet We've continuing Disciplined delivered wrap and out Thank head the fiscal fiscal we us strong year base strong while in performance. 'XX you. balance me position results close we've

Now hand remarks. for back let me Kevin the an update outlook on you his closing and to

Kevin Murphy

Thank you, Bill.

have near-term we for between year and operating As and demand we billion billion. increased supportive go our $X.XX market full to forward, remains profit expectations $X.XX adjusted

strong headwinds, for balanced of we're While broader business well the our us sheet balance agile mindful mix, and macroeconomic future. business position model

So business delivering to I'll on today. positioned about leverage We for you. Operator, take is happy your our we're the remain you well strengths, and Thank time are gains. value excited continuing market over our performing our well. creation summarize, to now questions. focused your Bill to call opportunities. for back believe the growth strategy core to executing we're hand We're and I share and

Operator

Baird. My from Manthey today [Operator from first comes David Instructions] question

David Manthey

billion of and one, two, the remind you you talk On to is operating $X.XX the outlook? your billion. was then growth; increase also. continuation year higher to four there due if prior us And Could to: then about expectation of three, income better-than-expected much acquisitions? third an fine of qualitatively And is those quarter $X.XX guidance just full inflation; can how results; unit better what raised

Bill Brundage

prior guidance Bill. specific that with question. I'll this. out it's had Dave, operating set profit Yes. We to dollar start not

what about billion. $X.XXX market under it you billion, the just $X.X If consensus at look sat was,

So a of million $XXX increase. the range midpoint just of $X.X billion our is over

two first In the mentioned. the that terms is components, of you of it really combination a items

ticked largely QX ahead around teens our of the Inflation was by high from the to line. So expectations, top XX%. up driven

year, we the we comparables stepped in and that As given had be those slightly up QX fact of about QX that coming last expecting talked could rates significantly the QX out to were cost that the our lower bottom that operating up which we what ultimately discipline than QX. we maintain to And in ended delivering were able XX% drop was line. and through then growth growth

from half was other I'd in you, roughly QX half carrying is the the QX. momentum into that QX. uptick and QX So We're outlook of from on tell roughly our profit from

residential that near-term As for increase outlook. nonresidential demand to and outlined, gave remain Kevin that across the us both still signals us confidence strong and

very nice you be $X.XX for this billion is next somewhere profit $X.XX $XXX by quarter If significant a fourth little that Acquisitions point million. just perspective acquisitions. will into impact range not little -- look that that to of of from driven but revenue a us million fiscal that to was imply at outlook. $XXX last on a in year billion, a year's would Very profit the the tail of

Kevin Murphy

good work both and in different as from we're of quarter large industries project strength as perspective indicated following that well today. of as goods after the then ongoing really of supportive, played indicated, finished sat we seeing that here and commodities areas activity into inflation commercial nonresidential with there's as into unit through like supportive the future. inflation previously, we residential coming build-out, nonresidential balance growth Dave, And residential remains across continuing also happening and RMI And of inside new knock-on where, that's a a and both some growth as is variety that's that construction

Operator

from question Thompson Group. Thompson comes Kathryn next Our Research from

Kathryn Thompson

as just post-COVID to about outlook about contributed case. given inventory And inventory of and with certain shipping a up see on that said, the demand models buying? much inflation. potentially share your you pricing do should that new a kind on you. having on we're what that to world. to in fringes, continues of tagging for coming inflation. how time are and advantageous just That distributor work just And bit down. the benefit top see in on We Of And and for -- is the lion's coming circling line managing to too from How are in thoughts parts growth, Just those starting back down two questions the talked really or Really going? from a model be long of your road? choppy much

Kevin Murphy

Yes.

thank you for the question. Kathryn, So

allowed from to now that the a consistent understand of incumbent activity what get today product to product, are strength that the and in basis making important. case customers making in In of like hugely we're supply we spotty so ordering perspective, and what gravitational to well versus DC with board time GC as the at that it compressed. in had bound. terms customers' continues we was on And that XXX back end market what that The to pressures it we by That XXX but have XX majority it, need in our in during what availability serve start more of ease us We not to the has points is chain is just of to chaos said, upon of That worth really general it of just early of quarters, time customer, and has past that areas, our product we're us. vendors seeing we're indicated well well that of to care which call it inventory XX. our outperformance. top you've to improved this sure communicating serve on as to an pressures as basis chain we're fill projects. rates looks seeing it on our need across that, to when improve pull to it's in they advance contractor, the sure supply That's take category north happening continuing we today. vendor really and owner, your by that growing XXX supply extremely with growth was gains our inventory inventory pattern and forward is having share are And and talked where working full customers us seen And about category, historical much XXX minimize sub-XX% chain top points. our been pull area ordering the to

so for when that And where sure is that customers they our projects have and we're completed making it. keeping we that need inventory

committed our of overall inventory growth of what for inventory in base fact, is excess inventory In project growth far is.

share perspective, line. driving a ordering yes, perspective, more is we a inventory project really So a from to pricing From that's gain much top back are to normalized availability the starting and us but helping drive pattern.

Bill Brundage

look a in to to quarter and delivered But that was did of in XX% of volume, there single-digit that we growth. price last to organic I think roughly which maybe on your majority the we around volume year vast question was pricing important tack from then perspective, about what QX The current at it low inflation X% price. is Kevin's XX just to back the Kathryn, growth. point, means And was

it, on that look it So two you that over at two priced period. stack, if year XX% year growth, roughly of a being XX% total call

stack increase good we volume still volume year. two growth, recognizing a that year large So had last

Operator

Our Hughes next Keith question from from Truist. comes

Keith Hughes

what quarter varies the growth you You was in that single in digits. between and unit talked talk the the about how nonresidential? about residential low Can

Bill Brundage

Yes.

consistent. that inflation nonresi higher growth, resi it In having different were with The and terms nonresi inflation. was slightly between dynamics of relatively Keith,

growth, roughly total at higher the look XX%. between inflation. quarter, those roughly was total resi you If in The growth XX%; non-resi largely two difference

relatively two consistent I'd volume the or was So X. the across say between growth

Keith Hughes

kind helpful. we inflation you view inflation. the at guess of do come of Are a the of you be of And -- hit just you when any -- year? end peak one the what not when know Or on will will other question, have too, just will fiscal today

Bill Brundage

the the at just about base inflation coming answer. are we question comparables the really up that things on Yes. and a effect is we It's But simply to or think obviously one against. of difficult that look

So QX, low to -- teens X% in if in was like year, that back now in up look you XX% around QX then inflation, teens and XX. stepped to about high last X% QX then and QX

start compress next there's could we So we that's over next would just the we expect the it progress that how will several to the lot that. impact think But because dynamics move over inflation quarters. Clearly, quarters, as of a several would would simply of comparables.

Operator

from comes question next Barclays. Matthew from Bouley Our

Ashley Kim

This is Ashley Matt on for today. Kim

XQ. about can into call maybe so, talk first of So any maybe with just of you're you specific question And challenged? you just pricing signs seeing end my fatigue? if customers accelerated kind pricing that Can out markets any or if particularly

Kevin Murphy

Yes, Ashley, in eye you. that's pricing on. something terms of And obviously, keep fatigue, a very thank we keen

incredibly is There certainly ability price new Waterworks to haven't nonresi any customer with pass of it's we hard growth that mindful real a customers. subdivisions, early RMI that. see But sales We residential fatigue. we And increase example. but that customers' seen and And keep up work challenging we resi, good point. from destruction for do our our is to heavy solid through lifting in this fact, perspective eye construction demand a still the on and inside team

to date, haven't seen we very we towards a keen so And demand but that. keep destruction eye

Ashley Kim

anything Do in amount might then follow-up. signs quick that customer of near And kind strong term? is a there visibility would you into the that in good a of result decline -- show And volume backlogs? just a any have

Kevin Murphy

Yes.

fiscal is and of the year the our backlog our of So end through year. limited, to quarter fiscal call into next somewhat it, our visibility first

in when a for forward of customers have ordering solid Again, project product partly need open to order that availability pulling of the ensure growth overall and it. that We they have their fairly activity where and substantial good partly their volume our seen demand is growth.

good bidding and like. the that We both plumbing, Waterworks activity. continues activity trade plumbing are throughout activity residential talking in business through with again, see bidding residential nonresidential our we And from finished solid customers and

overall can open So strong. as market and rates in there about still that and demand activity mean the wide what activity bidding still But is that today, curve on. macro. goes good that sat and here looks we reasonably and consumer certainly We're eyes price sentiment mindful

Operator

Redburn. Jones Will now from turn to We

William Jones

Three, if could, please. I

groups, think around little HVAC you you and you on and are highest Residential Digital doing on in in focus two its gross current The I first, area continue about at you're you Second, actually mix? that quarter. where levels given growers that peers. with an -- well? have market? think, hold put if one more last the the I Is couple Commerce, as was a the the that given around your And what the will quarters? can impact margins X%, few might have you I expected Waterworks, actually Was And just so, numbers in can trend lower, the around next please? of Do quarter the the think around happy achieved was think the customer a grew the then, last outperforming just headcount, you're you actually, some be that to that any retail if for

Kevin Murphy

Yes.

the of So Will, take thanks question. I'll for beginning the that,

the groups. of and of In terms those the HVAC customer groups pleased with of Waterworks, were of both we performance really

As solid and top that looks you in HVAC. are HVAC of XX% comparable prior what that is at solid in XX% on a construction good, repair, us like. year new for terms broad-based growing focus know, component they areas of growth growth replace from good, of

both trade HVAC country. organically we've the store, and the with that strong we talked a And HVAC a strong the up we particularly professional. also well, whole plumbing good that residential acquisition that that very component opening new think of equipment the grow for we market same have to at of look trade about is a the combined business, quite look business in plumbing to as focused serving be past, market dual will the large that having with manufacturers partner sure to exposure in make of terms as continue across strategy We and we locations broad

gross trend. we're of that the We're pleased continued that production group. pleased with So with margin

to plants. nonres, strong and out public activity, good And package see sector, mindful metering but mean we've for Waterworks distribution been and of what res in gross again, wastewater side, of technology, business can subdivision do meters impact in treatment Waterworks yet the mix but that the center also the performance that build nonres good the across of water and margin works activity strong. On absolutely and and to activity supportive that has growth perspective just what quite the a has tailwind multifamily can a been infrastructure from We're terms group.

On Digital piece, a that's the rate top Residential on of prior XX% Commerce comparable. growth X% year a

growth activity in like, double-digit it of still the seen do-it-for-me is professional market we've seen to the is So pro. consumer bit top a and well in portion do-it-for-me where to we're I'll tough that business the perform the strong What continuing activity versus and quite the for well. future numbers as comparable. impact a XX light extremely line the inside is sees we've look decorative quarters, performing Bill that our headcount. remodel on there quite still competing business at look project-minded we going the When see the take on of the to coming you less what [indiscernible] give

Bill Brundage

headcount, fiscal do year. growth base continue volume of We've the on Well, we're as start associate since our the taking the X,XXX revenue additional to and and associates business growth. after on Yes. about we the added going into invest in

So in roughly increase our base. XX% about a associate

William Jones

acquisition, there? it And the is that's including XX%

Bill Brundage

acquisition of are in just would over That those from the Yes, acquisition. be year-to-date. XXX including

Operator

Our from next from Gregor UBS. comes question Kuglitsch

Gregor Kuglitsch

seeing sort you're suppose, it's the I quarter of, where of end, date? the been questions. kind give quarter few I just run Can kind guess, in us color you A consistent. Since rate to what of some

Second question, to coming back inflation.

just will us and time. But are on could of through, commodity over on color exposure little feeding sort of third time? you starting the some give that is I bit I on just there I element? If M&A. take a some question of out you guess how the the us like, commodities to see the I guess, help roll it think guess,

you think us, here I the did year? deals was remind we is before. think just sit as some $XXX annualized million do today, carryover could So So you just into you next what

mean, piece carryover a post if all on what's And elaborate XXX big in, I X.X%. call question. This I'm profit, the here spent how I obviously, very maybe think wrap let's And is it maybe know, it revenue X.X%, the go. to what all gain to I sort you maybe care your do high X.X%. of on quarter? don't mean much happened sustainable? just picture you've sort trading million just year, you're So of profit? then of that earnings looking you you that up, that seen level, saying

Bill Brundage

I'll to Gregor. Thanks, try those. hit

a broadly have may couple growth comparable of I entry up XX% rate, of QX those that does perspective, to off, would QX remind started rate first But quarter. we we we to with, me so as go. delivered the You QX. an from a tidbits similar step throughout rates say, bit our in the exit The

near-term revenue through us up take to QX. has our So we've the could we range. confidence think that really that growth said, given profit move But still, good and we very as demand could be -- develop a as operating bit outlook

that months, our in on sideways we've we've But and were past, that revenue trading calendar of largely our To seen In has plastic. prices in or category, several it the vary will commodity most we've last the XX% over in your inflation today. sequentially talking commodities whether as by this trade impact down. revenue sideways pandemic, as the depending come of seen terms talked seen steel over you're copper given year-over-year or year, of inflation have commodities, grown we that those to about about the of inflation we've seen commodities, XX% pre point,

to mid-XX% So tougher low we And in would that go to QX were in range. and the we over we the now talking compress about commodity probably would comparables continue quarters. where into QX, we inflation QX the XX% next move down several again against that, as think range, as up that's

for impact M&A into our 'XX probably about revenue. is we but QX about of plus close we on million is 'XX's of $XXX FY In did, the million annualized annualized of revenue. carryover $XXX for The also completed we $XXX in QX outlook million terms announced M&A, the numbers will that this the the of it's about year, annualized ones the acquisitions for irony revenue is that And results.

now So we've margins. the not been on to -- year-to-date at there. but last, in hopefully, years operating last pleased year. last the that being step-up from about margins And answers X.X% your also really with only We operating this question two profit. operating X% then profit And Look, over operating XX.X%. grew the in our

had we out operating operating have operating hold margins. step-up intend set we as So to profit on an do our From perspective, pretty dollar into year. a yet we've move significant we outlook 'XX to fiscal next but FY in profit that on

be we much a outlook up and as 'XX in September. wrap will we fiscal We QX results better give our our year-end to come you position when release back in on

Operator

Our from next America. from Lehmann Bank comes of question Arnaud

Arnaud Lehmann

Just guess, X question, gross the on margin. on my I side,

some we were You mentioned sort normalization. at expecting of not through. to that continue come time, much expecting necessarily were we same as inflation But to the

think your introduction, mix effect in margin. I you some the mentioned impacting gross

outlook that? fiscal to the the give coming low an right the you do So back think on about year? is And XXs maybe level mind us into

Bill Brundage

sure. Yes,

growth margins. that's to to at XX the in that XX in margin In to terms mix gross nonresidential but operating lower of growth driven range basis quantify more similar And point really and the impact by that tend which was XX very points. the like Waterworks QX, XX slightly year-over-year, basis we both have in

QX. at year-over-year you So point about basis look as XX XX to a impact

that said of inflation In believe our can a business gross to including lot the operate continue XX% mix. are we and including initiatives somewhere pricing, go-forward given manage margin, given that and think there and impact in gross is margins, gross that terms we've dynamics of we that a over strategy, that do between given the we grow past But XX% intend normalized good from. own to for to how margin brand the business. time, our And product to us Clearly, we

wrap we're a to delivery and our in in fourth So year. the pleased our margin XX.X% good with gross up are quite expecting QX quarter of fiscal

Operator

Varanasi from Goldman comes question next Our from Suhasini Sachs.

Suhasini Varanasi

one please. me, Just from

up to on profit. Just on the follow operating outlook

quarter you and quarter given moderation that's you've the rest on expectations going the seeing line are over seems It though Can to you're trends beaten third levels your QX, XX% what for top estimates please? little with about a Given in how talk into bit what date. there. in margins of the caution the margin on plus actually as QX, of probable

in should anything inflation cost there can margins about or is worried So squeeze year-over-year? terms be we that of that

Bill Brundage

would given Yes. as well bit perspective operating comparables do be got that Nothing perspective. that I step Again, from wary a in the a the as fact margin up from QX. range, an We've revenue both about. a of

to range solid it, complement if put mid, margin in teens to XXs low I be then number revenue the had expecting a So that. and high somewhere a to operating the on we're to

So that $XXX that range of in to would million. kind million to $XXX rather your or of range our book

Operator

comes question next Our Jobber from Madeleine Morgan Stanley. from

Madeleine Jobber

parts. a One with of couple me for

view describe you've willing would just you're the in back end? How being, allocation billion strategy your been the how capital the Just deals this these the of your of how then on already have of the $X going you the pay kind doing place? quarter part completing view you your recently, do M&A buybacks policy, the you scope do second to thoughts and strong to this sort close which then post forward multiples does of target environment above of impact on companies the And some beyond especially for cycle? top for off maybe in and some

Bill Brundage

Madeleine. Thanks, Yes.

expect continue that our our year-end $X completing the terms And talked and today sit remarks, as in We'd much of quarters. here left billion run year. on million but through update on to first buyback again, buybacks, intend of with end just And back to program, that three $X.X outlined, results gives cash completed of to pleased $XXX leverage as under the billion shareholders. today, authorization. an to that and our $XXX range policy we then return executing remains, us In under come we'll we're which we about we our very give if $X up Xx, stepped prepared that we'll through the you million we pace capital as the and live about in with priorities Xx Kevin we're fiscal billion our we're below stated to that about this

only looking a talked M&A, had the past as deals In several healthy quarters the from last -- good we've a multiples the about that XX paying, in We that not had and operating to also over at we're months but remain many we're have a XX terms perspective profit of we've valuation over past pipeline. very fact the that disciplined businesses of run terms in performance.

towards tell that from that to M&A end typically in we've the I'd perspective, we terms of top remain range guided of So a a approach. we're taking that multiple multiples. you disciplined

closer in see that And companies we're top fiscal 'XX fiscal pipeline generated. of the pretty range have we're to good X% we move into of as look disciplined at that range, So collectively. that the still operating a out we But end as those profit we very and probably to XX% 'XX.

in the of in can markets consolidate revenue out continue annually So past guidance very that add we comfortable we've acquisition. to X% fragmented growth range we're X% the with the our somewhere set through that and to

Kevin Murphy

today very continues for the as capability geographic want bolt-ons. pipeline well as do, have that to we we both in what bolt-ons And be strategically to in complementary

Facility marketplace program help You and pro, digital which decorative it will saw relates then our project-minded to really our that after and dual own value Aaron take to to which HVAC great channels offering Minka, providing that New we Company bricks-and-mortar them. Ferguson customer. Jersey supply in and contractor consumer brand again across our for gets plumbing as trade And the & in

to that geosynthetics many go perspective. inside as see acquisitions to clearly, continue M&A of our of of we Waterworks those wanted the business We after an from which well as some areas is

Operator

session. Murphy today's I'll hand to closing concludes Q&A now remarks. Kevin for over This

Kevin Murphy

this continues we're extremely out close you the in managing your will fiscal And project strong we're gains especially cost to us the allow and sustainable. who morning, year as want agenda, And year share talk for pleased the just from to Yes. supply business business, invest and soon. a overall simple, make 'XX and the customers. Thank of hope you, continue of sure we the to position move this more technology our our results. deliver to to with our successful on our hard us approach business we sure fiscal time associates, are you that afternoon. our the making you to your We how while a base into with Again, delivered and customers' to for 'XX. make much working performance reiterate, them thank for perspective an well really everyone, world-class time organic to sincere very our ongoing that Thank you. to very deliver we and disciplined Thank chain support and to extend

Operator

you results. We'd the thank participation. QX to Ferguson for like That concludes your

You disconnect lines. your may now

Ferguson (FERG) 14 Jun 222022 Q3 Earnings call transcript