Financial Data and Key Metrics Changes - Sales for the fourth quarter reached $8.5 billion, a 6.9% increase year-over-year, driven by organic growth of 5.8% and acquisition growth of 1.1% [3][4] - Gross margin improved to 31.7%, up 70 basis points from the previous year [3][4] - Operating profit for the quarter was $972 million, reflecting a 13.4% increase year-over-year [4][16] - Diluted EPS rose 16.8% to $3.48 compared to the prior year [4][16] - For the full year, revenue was $30.8 billion, a 3.8% increase, with operating profit of $2.84 billion, up 0.6% [7][8] Performance by Business Lines - HVAC revenue slightly declined due to market conditions, while commercial mechanical revenue grew 21% and waterworks revenue increased 15% [6][7] - Ferguson Home, a unified brand for residential building and remodel, saw a revenue growth of 3% in the fourth quarter [7][14] - The industrial, fire and fabrication, and facility supply customer groups delivered a combined net sales growth of 5% [7] Performance by Markets - U.S. net sales increased by 7.1%, with non-residential revenue growth of approximately 15% [5][16] - Residential end markets remained subdued, with flat revenue due to weakened new construction starts and soft demand in repair, maintenance, and improvement [5][6] - Canada saw net sales growth of 4.8%, with a 0.3% organic growth and a 4.9% contribution from acquisitions [16] Company Strategy and Industry Competition - The company is focused on HVAC expansion, waterworks diversification, and large capital projects, which are key growth areas [4][10] - The multi-customer group approach is emphasized as a competitive advantage in managing complex projects [12][35] - The company completed four acquisitions in the fourth quarter, enhancing its capabilities in HVAC and waterworks [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in medium-term market conditions despite current uncertainties, leveraging multi-year tailwinds in both residential and non-residential markets [5][24] - The outlook for calendar year 2025 anticipates mid-single-digit revenue growth, with operating margins expected to improve slightly [23][24] - Management acknowledged challenges in the residential market but highlighted strong performance in non-residential sectors, particularly large capital projects [30][80] Other Important Information - The company plans to change its fiscal year-end from July 31 to December 31, allowing for better focus during peak seasons [21][22] - A quarterly dividend of $0.83 per share was declared, representing a 5% increase over the prior year [18] Q&A Session Summary Question: Outlook on growth and end market dynamics - Management noted that while residential markets are expected to be down low to mid-single digits, non-residential markets showed resilience with a 7% growth in Q4 [29][30] Question: Details on large capital projects and bidding activity - Management confirmed strong bidding activity across various sectors, including data centers and biotechnology, with healthy backlogs in commercial mechanical and waterworks [41][42] Question: Pricing and margin expectations - Management indicated that pricing is expected to stabilize with modest inflation anticipated, while gross margins are expected to normalize around 30% to 31% [44][47] Question: Insights on residential remodel market - Management acknowledged continued pressure in the remodel market but noted that higher-end projects are performing better, with Ferguson Home showing a 3% growth [71] Question: Performance in the industrial market - Management explained that the industrial market is experiencing slower growth due to commodity deflation but remains optimistic about market share gains [81]

Financial Data and Key Metrics Changes - The company reported first quarter sales of $558 million, down 2% on both a reported and organic basis, primarily due to fewer shipping days and ongoing weakness in Europe [14][4] - Adjusted operating income reached a record $106 million, increasing by 2%, with adjusted operating margins at 19%, up 80 basis points [15][4] - Adjusted earnings per share rose to $2.37, reflecting a 2% increase year-over-year, supported by operational contributions and reduced interest expenses [15][16] Business Line Data and Key Metrics Changes - Americas organic sales decreased by 1%, while reported sales remained flat, benefiting from the Icon acquisition which added $5 million [14] - Europe experienced a significant decline, with organic sales down 9% and reported sales down 12%, attributed to fewer shipping days and destocking in the wholesale channel [14] - APMEA sales increased by 9% on a reported basis and 13% on an organic basis, driven by growth in China, the Middle East, and Australia [14] Market Data and Key Metrics Changes - The company anticipates continued weakness in Europe due to a slowdown in new construction, while the Americas are expected to show slight improvement [19][11] - The outlook for the second quarter suggests organic sales growth could be flat to up 3%, with low to mid-single digit growth in the Americas and low single-digit growth in APMEA [20] Company Strategy and Development Direction - The company is focused on mitigating the impact of tariffs through vertical integration and local manufacturing, which is expected to enhance competitiveness [6][12] - A 21% increase in dividends was announced, reflecting confidence in cash flows and a strong balance sheet [5][18] - The company is actively pursuing synergies from recent acquisitions and expects them to be accretive to adjusted EBITDA margins and adjusted EPS in 2025 [8][63] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current trade environment and maintaining full-year organic sales and adjusted operating margin outlook despite macroeconomic uncertainties [9][23] - The company noted that while first quarter performance was strong, there are concerns about potential demand reduction in the second half of the year due to tariff impacts [10][11] Other Important Information - The search for a new CFO is ongoing, with the current CFO remaining in place to ensure a smooth transition [13] - Free cash flow for the quarter was $46 million, an increase from $37 million in the same quarter last year, with expectations for continued improvement [17][18] Q&A Session Summary Question: Opportunities to gain market share and margin - Management highlighted the strategy of manufacturing products closer to customers, which positions the company favorably in the current tariff environment [32][33] Question: Impact of price increases and potential tariff reductions - The company implemented annual price increases in January and additional tariff-related increases in March and May, with future pricing strategies being closely monitored [35][37] Question: Margin expectations for the first and second halves of the year - Management indicated that while the first quarter was strong, there is caution regarding potential demand impacts in the second half due to tariffs [44][45] Question: Integration progress of recent acquisitions - Integration efforts with recent acquisitions are ahead of schedule, with positive synergy tracking and operational benefits being realized [63] Question: Utilization of North American manufacturing facilities - The company noted that North American facilities are not fully utilized, allowing for capacity expansion without significant capital expenditures [80] Question: Weaker guidance for Europe - Management attributed the weaker guidance for Europe to ongoing destocking and uncertainty in new construction markets [61][85]