Plumbing and industrial supply distributor Ferguson on Tuesday said sales climbed by 3% in its latest fiscal quarter, but earnings and operating profits each declined amid “continued subdued markets and persistent commodity price deflation.”
The Virginia-based company reported net sales of $6.87 billion in its fiscal second quarter, up from $6.67 billion in the same quarter of 2023. Net income, however, declined from $322 million to $276 million year-over-year, which translated to diluted earnings that slid from $1.58 per share down to $1.38 per share.
Gross profit rose slightly — from $2.03 billion to $2.04 billion — but gross margin dropped from 30.4% in the previous second quarter down to 29.7%. Operating profit, meanwhile, fell from $477 million to $410 million as operating margin dipped from 7.1% to 6%.
Ferguson CEO Kevin Murphy said in the company’s earnings release that its sales outperformed the market as a whole, while its gross margin numbers suffered from “subdued” demand, commodity deflation and sales mix.
“We are navigating a unique time with continued subdued markets and persistent commodity price deflation that drove lower-than-expected adjusted operating margin in our seasonally lightest quarter,” Murphy said.
The company maintained its forecast for a “low single digit” increase in full-year net sales, but lowered its annual projections for adjusted operating margin from 9% to 9.5% at the end of the previous quarter to 8.3% to 8.8% halfway through the fiscal year.
Ferguson also said that it completed one acquisition during its latest quarter and signed a definitive agreement to acquire a “leading commercial/mechanical distributor in the Northeast” subsequent to the end of the period.
