Ferguson plc Baird Global Industrial Conference Kevin Murphy, Group CEO
Baird Industrial Conference
Ferguson is a leading value added distributor of plumbing and heating products Geographic presence Ongoing revenue (+2.0%)
$19,940m
Ongoing revenue* Canada 5%
Ongoing underlying trading profit (+4.1%)
$1,595m
Revenue by customer group Facilities Fire and Supply, 5% Fabrication, 4%
eBusiness, 8%
Residential Showroom, 15%
HVAC, 10%
USA 95%
Ongoing underlying trading profit* Canada 3%
Headline EPS (-1.1%)
Waterworks, 18%
Underlying operating cash flow (+18.3%) USA 97%
Ferguson plc
* UK revenue of $1,879m and underlying trading profit of $8m in 2020 non-ongoing operations.
Commercial, 14%
Revenue by end market Civil/Infrastructure, 7%
511.6c $1,904m
Residential Trade, 19%
Industrial, 7%
Continuing adjusted EBITDA (+0.5%)
$1,797m
USA key segments and end markets
Commercial, 32%
Industrial , 7%
Residential, 54%
2
Baird Industrial Conference
Our specialist products and services are used in almost every stage of building and infrastructure development Commercial
Facilities supply
Provides commercial contractors with products and services including bidding and tendering support to assist with their projects
Provides products, services and solutions to enable reliable maintenance of commercial facilities across multiple RMI markets
Residential trade Serves the residential RMI and new construction sectors providing plumbing and sanitary supplies, tools, repair parts and bathroom fixtures to plumbing contractors
Ferguson plc
Residential showroom
eBusiness
Display products and assist customers by providing advice and project management services for their home improvement projects
Sells home improvement products directly to consumers and trade customers online through various websites
HVAC Provides HVAC and refrigeration equipment, parts and supplies to specialist contractors.
Fire and Fabrication Fabricates and supplies the protection products, fire protection systems and bespoke fabrication services to commercial contractors
Industrial Waterworks Distributes pipe, values and fittings (“PVF”), hydrants, meters and related water management products alongside related services
Supplies PVF and industrial maintenance, repair and operations (“MRO”) specializing in delivering automation, instrumentation, engineered products and turn-key solutions
3
Baird Industrial Conference
USA: a diversified but connected business with attractive market structure #3 30
$50bn
25
#6 #3
$90bn
#1 #2 #4
Market size ($bn)
20
15
#1
#1 5
5
3
10
5
Home Depot 5
7
6
4
4
MRC 18%
12%
21%
25%
Ferguson Ferguson plc
Residential Showrooms
Commercial
Market Leader if not Ferguson
Waterworks
6
HD Supply
4%
5%
22%
1%
9%
HVAC
Industrial
Fire & Fabrication
Facilities Supply
Standalone eBusiness (formerly B2C)
Residential Trade
Amazon
#1
Watsco
Number of other large competitors >1%
Other small competitors
#1 Ferguson Market Position
4
Baird Industrial Conference
We connect thousands of suppliers and customers with a unique business model Key resources and relationships
Source
Sell
Distribute
How our customers buy
How we fulfil orders
2% through central
Our people
50%
39,000 Suppliers
Delivered from branches
Our customers
18% via
account management and call centres
e-commerce
Our suppliers
15 Distribution centers
25% Collected from branches
Channels to market
10% in showrooms
+1 million Customers
16% Delivered from suppliers
Technology
2,194 Branches
Distribution network
70%
9% Delivered from distribution centers
Capital
in branches
What makes us different? Best associates
Ferguson plc
Customers value scale
Differentiated service offering
5
Baird Industrial Conference
…with supportive structural characteristics RMI revenue accounts for 59% of total revenue
Highly fragmented industry
7%
11%
34%
Organic sales growth culture 58%
Bolt-on acquisition opportunities
Benefits of scale
31%
Customer relationships are local
2008 RMI
Ferguson plc
The RMI market now represents 59% of US revenue
59%
2020 New construction
Civil infrastructure
6
Baird Industrial Conference $19.9bn
Great growth opportunities: Consistent revenue, gross margin and profit growth
30.0% $1.6bn
$9.1bn
27.5%
$0.3bn ‘10
‘11 Group ongoing revenue
Ferguson plc
‘12
‘13
Group ongoing gross margin
‘14
‘15
‘16
‘17
‘18
‘19
‘20
Group ongoing trading profit
7
Baird Industrial Conference
Strategic update
Key strategic themes – ‘How Tomorrow Works’
•
Value added distributor
•
As trusted supplier and partner, we provide innovative products and solutions to make our customers’ projects better
•
Ensuring scale delivers customer benefits where and when they need
•
Investing in technology to drive productivity for our business and our customers
•
Innovating and always reimagining our business to serve our customers
Our strategy is delivering – we’re firmly focused on execution Ferguson plc
8
Baird Industrial Conference As trusted advisers, we provide innovative products and solutions to make our customers’ projects better.
Strategy
Where we invest
We will expand our role in the value chain to build durable competitive advantages to achieve profitable growth
We will focus on key capabilities that lay the groundwork for our path to tomorrow
Changing landscape Changing customer expectations Shifting channels Industry disruptors Labor shortage Vertical integration
People Ferguson plc
Safety
Culture of best associates
Innovation and Ferguson Ventures
Omni channel and digital capabilities
Technology and data capabilities
Supply chain and value added services
Salesforce evolution
Running a great business First in safety Customer service Strategic growth Gross margin improvement Operational leverage Capital discipline Environmental, social and governance
Integrity
Innovation
Service
Results 9
Baird Industrial Conference
Strategy: Expanding our role in the value chain
Ferguson plc
10
Baird Industrial Conference
Summary: Why invest in Ferguson?
Great returns Good trading profit margins*
Excellent returns on capital**
Dependable ordinary dividends*
8.0%
24.9%
208.2c
Ongoing underlying trading margin
Return on gross capital employed
Total ordinary dividend
* Figures are for the year ended 31 July 2020 ** On a pre-IFRS 16 basis Ferguson plc
11