Plumbing, HVAC and industrial products giant Ferguson’s fiscal 2022 ended on July 31, and the company reported its fourth quarter and full-year results on Sept. 27.
The 4Q numbers — covering the May-July period — were led by continued strong sales growth of 21.4% year-over-year to $7.97 billion, with core product lines driving market share gains. Ferguson’s 4Q operating profit of $814 million likewise jumped 23.1% on margin of 10.2% that increased 10 basis points year-over-year. The company’s 4Q gross margin was 30.5%, down 90 basis points from a year earlier.
Newport News, Virginia-based Ferguson is No. 4 on MDM’s 2022 Top Industrial Distributors list, along with No. 1 in plumbing, No. 2 in HVAC and No. 2 in industrial PVF — all based on its 2021 calendar sales within those verticals.
In the U.S., where 94.6% of Ferguson’s 4Q business occurred, sales increased 22.1% year-over-year. Canada sales of $432 million increased 10.5%, driven by 14.2% organic growth, partially offset 3.7% due to currency headwinds. The company said U.S. organic growth was 19.8% year-over-year in 4Q, while acquisitions contributed 2.3 percentage points of growth.
“Our associates delivered another quarter of strong financial performance driven by continued market share gains and our ability to appropriately manage and pass through price inflation,” commented Kevin Murphy, Ferguson CEO. “Ongoing cost control ensured a robust profit performance in the quarter as we ran up against tough prior year comparables. For the full year, our teams achieved excellent results despite labor and supply chain challenges.”
Just over half of Ferguson’s 4Q U.S. revenue came from residential end markets, which the company said remained robust during the quarter. “New residential housing start and permit activity has eased but RMI work has remained resilient,” the company satiated. Overall, 4Q residential revenue grew by approximately 17%, while non-residential revenue grew by about 28%.
Ferguson completed seven acquisitions during 4Q, with combined annualized revenues of approximately $470 million. These included Aaron & Company, a plumbing and HVAC distributor in New Jersey and Minka Lighting, an own brand lighting and fan company. “Geographic bolt-on and capability acquisitions, such as these, remain core to our growth strategy as we continue to consolidate our fragmented markets,” the company noted.
Within its Waterworks customer group, Ferguson expanded its capabilities in geosynthetic and erosion control solutions by acquiring D2 Land & Water Resource and Triton Environmental, geotextile and erosion control specialists operating across the Midwest, Colorado, Pennsylvania and Texas. Additionally, Ferguson acquired STE, giving broader distribution rights for certain geotextile products that remove contaminants from polluted water.
For its full fiscal 2022, Ferguson netted total sales of $28.57 billion, up 25.3% from 2021, which the company primarily attributed to organic growth and further consolidation of its markets through acquisitions. Operating profit of $2.82 billion soared 44.6%, with operating margin of 9.9% growing 130 basis points from a year earlier. Fiscal 2022 gross margin finished at 30.7%, up 10 basis points from 2021.
U.S. total 2022 sales increased 26.0% from 2021, while Canada sales increased 14.1%.
Ferguson said it invested $650 million in 17 acquisitions during its fiscal 2022, with combined annualized revenues of approximately $750 million.
Looking ahead, Ferguson is forecasting fiscal 2023 net sales growth in the low single digits, driven by market outperformance and completed acquisitions.