A decent closure to FY22/23; momentum to pick-up from H2 FY23/24 onwards!

Ferguson’s FY22/23 performance was slightly ahead of market expectations. The group’s organic sales came in at +1.5% yoy (vs consensus of +1.0%), led by the market share gains in the US segment. As expected, both the residential and non-residential businesses softened further. Adjusted operating profit was 2.7% ahead of consensus, with the margin at the top-end of management’s guidance. We believe the FY23/24 outlook is achievable and we will slightly raise our financial estimates. Positive reco

No major surprises in the Q3

Ferguson’s Q3 FY22/23 performance was largely in line with the street’s expectations ¬– revenue and adjusted EPS were 0.8%% and 1.9% ahead of consensus. The US residential sector remained in the red (-6% yoy) and non-residential remained in the black. The slump in Canadian profitability was worse than we had expected. While we expect the near-term pressure to continue, the company should continue to gain market share. We maintain our positive stock recommendation.

Decent show in Q2!

Ferguson’s Q2 FY23 performance was in line with our estimates but below the street’s expectations. Although the group’s organic revenue grew 2.7% yoy, the adjusted EPS of $1.91 was 5% below the consensus. The weakness in the residential segment was offset by non-residential in the US. We expect organic sales to soften further in H2 FY22/23, as the volume will remain in the red and price inflation moderates gradually. Management should be able to walk the talk (guidance). Positive recommendation

Good closure to FY21/22; tricky times ahead!

There were no surprises in Ferguson’s FY21/22 performance – both organic sales and adjusted operating margin were in-line with market expectations. However, the final dividend of $1.91 per share was below consensus. Although Ferguson has clocked up a good start to Q1, we expect FY22/23 performance to come under pressure due to a tough comparable base and softening customer demand (especially during H2). We will trim the financial estimates slightly but continue to see Ferguson as solid business

Robust momentum in Q3; tougher times ahead!

Ferguson’s Q3 performance was ahead of our as well as the market’s expectations. The sales momentum was once again led by the US, and has continued in the current quarter. Despite the strong margin improvement, we expect tougher times ahead. Higher inflationary headwinds are likely to dent the end-consumer demand gradually. Despite being a healthy business, the stock price is likely to remain under pressure in the near term.

A strong start to Q1 FY21/22

Ferguson’s Q1 FY21/22 performance was ahead of our as well as market expectations. While organic revenue grew 24.5%, the adjusted EBIT surged 58.5% during the quarter. We expect the company to continue gaining market share, even if the inflation-led tailwinds moderate in the coming times. Although the profitability is likely to soften in the near term, it should also witness a gradual improvement in subsequent years. We will improve the financial estimates and target price.

Ending FY20/21 on a high

Ferguson reported better-than-expected FY20/21 results, with revenue coming in >14% higher, driven by robust residential demand and the recovery in commercial and industrial end-markets. Superior operational performance supported profitability with underlying trading profit outpacing revenue growth. FY20/21 dividend was raised by c.15%, while a $1.0bn share buy-back programme was announced. Ferguson sees healthy sales momentum in the near term, but flagged a tough comparable in H2 with inflation

Temporary positives amplify a strong performance

Strong Q3 as momentum accelerates

Ferguson’s Q3 FY20/21 results came in ahead of market expectations. Organic sales growth of c.21% was a result of the strong US residential market, with trading profit further benefiting from a combination of factors, including a favourable channel sales mix and operational improvements. Management raised its FY20/21 outlook on the back of a strong Q3 and early-May momentum. While we will raise our estimates, the recommendation should remain unchanged given the company’s expensive valuation and

Super strong Q3 results and profit boost

Healthy exposure to US housing market underpins H1 performance

Ferguson reported H1 FY20/21 results which were largely in line with market expectations. Organic revenue growth of >3% was aided by robust residential markets, while trading profit also improved, benefiting from cost control measures such as store closures and headcount reduction. Management remains cautious about H2 citing uncertainties, but still expects a market outperformance. The interim dividend was raised to $0.729 per share, and the company also announced the resuption of the share buy-

Kicking off 2021 with the disposal of the UK business

Ferguson has announced the disposal of the UK business for $420m. While we were expecting a higher price tag (c.$600m), the deal is unlikely to be a needle-mover due to the insignificant size of this segment (accounts for c.2% of the group’s valuation). However, this sale is a step in the right direction from a strategic perspective.

Robust US residential market boosts Q1 FY20/21 performance

Ferguson kicks off FY20/21 strongly with a 3.1% increase in the top line and c.4x growth in operating profit, benefiting from the cost-cutting actions related to labour and branches – most of these are recurring in our view. For the full year, management remains cautious amidst the COVID-19 pandemic but has reiterated its guidance of outperforming the US Plumbing & Heating market, which is likely to remain flat. Bolt-on M&As, which resumed from this quarter, are also likely to continue in FY20/2

Resilient Ferguson resumes M&A and dividend payment

Ferguson closed its FY19/20 books (ending in July 2020) on a good note, as its trading/operating profit outpaced the resilient top-line, on the back of a healthy US performance and several temporary and permanent cost-cutting measures across the group. Moreover, management has announced it is to pay the full-year dividend (including the previously suspended interim instalment) and resume M&As. Also, while the de-merging process of the UK business carries on, the board is also now exploring other

Ferguson sheds just 1% of its sales during May-July 2020 quarter

Ferguson has shown good resilience in the COVID-19 pandemic – after losing c.10% of its sales in April, it ceded just c.1% of revenue in the following three months. This was mainly attributable to its strong digital capabilities and gradual re-opening of stores amidst relaxed lockdown restrictions. However, we maintain a cautious view on its FY20/21 performance, as the full impact of recent softness in the US housing / construction activity should be seen in Ferguson’s top-line with a 3-6 months

Morning Note – 22 April 2024

Headlam Group - Strategy for growth in tougher market

Headlam Group has laid out an ambitious long-term revenue target of between £900m and £1bn, as it seeks to grow its share of the UK floor coverings distributor market. Despite a challenging backdrop due to the low level of residential housing transactions, management is seeking to expand each of its sales channels: Trade Counters, Larger Customers, Regional Distribution and Europe & Other. The FY23 results reflected the more challenging environment and the group trades at a discount to its long-

SP Angel Spec Sits: FY Trading Update (LTHM)

Hardman & Co Insight: 2023 was an annus horribilis for Quoted UK Infrastructure and Renewable Energy

The focus of Hardman & Co Research is on the nine quoted Infrastructure Investment Companies (IICs) and on the 22 Renewable Energy Infrastructure Funds (REIFs): the stocks analysed are all members of the Association of Investment Companies (AIC). We are updating our publication of January 2023, assessing both the lacklustre share price performances during 2023 and the key issues, including interest rates, inflation and power prices. As a 31-strong group, its combined market capitalisation is no

SP Angel Morning View: Copper prices hit $9,700/t as China smelts concentrates for zero charge Tc/Rc

LIBERUM: Ilika: CMD confirms operational progression

LIBERUM: Severfield: Erratum: Better EPS and cashflow, and buyback

LIBERUM: CEO Video: Matt Wragg, Gattaca plc:

VSA Morning Flow Test 19/04/24 (Quadrise)

Quadrise (QED LN) has provided an update on its Utah project with Valkor. Valkor’s partner (Heavy Sweet Oil LLC) has received funding and approval to commence drilling enabling production of 20-40bopd of heavy sweet oil providing QED with samples for production of test scale quantities of MSAR and bioMSAR; the company’s key fuel decarbonising emulsion fuel products. This should derisk the commercial scale ramp up. QED management has highlighted that Valkor has not yet raised the minimum of US$

Hybridan Small Cap Feast - 22 April 2024

22nd April 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced Dish of the day Admissions: Delistings: What’s baking in the oven? ** Potential**** Initial Public Offerings: Reverse Takeovers: 16 April 2024: Electric Guitar (ELEG.L) Concurrent with its Admission to trading on AIM, Electric Guitar is proposing to acquire the entire issued share capital of 3radi

AUCTUS ON FRIDAY - 19/04/2024

AUCTUS PUBLICATIONS ________________________________________ Tethys Oil (TETY SS)C; target price of SEK100 per share: Increasing further the size of the prize/Considering Algeria – The South Lahan area on Block 58 is estimated to hold 55-523 mmbl prospective resources (P90-P10 case) with a mean case of 251.8 mmbbl prospective resources across six prospects in the Ara Carbonate. Combined with the previously disclosed prospective resources of the Fahd area in the north-eastern part of Block 58, Te

LIBERUM: Gattaca: Resilient contract performance, perm tough

LIBERUM: SigmaRoc: Solid Q1 performance

Q1 Operating Results

Another Good Year of Diversified Growth with More to Come in 2024 CCapital have released their Q1 operating results. Overall, revenue has come in slightly lower than expected at $80.2m vs TamE of $85.9m but is largely tracking in line with our FY24 annual estimate and we note the company has maintained guidance. Drilling revenue for this quarter was impacted by a fall in utilisaztion rates as well as general remobilisation geographically but we expect a strong recovery throughout the year as k

Morning Note – 26 March 2024