Ferguson (FERG) 6 Dec 222023 Q1 Earnings call transcript

Good morning, ladies and gentlemen. My name is Daisy, and I'll be your conference operator today. At this time, I would like to welcome you to Ferguson's First Quarter Conference Call. All lines have been placed on mute to prevent any interference with the presentation. At the end of the prepared remarks, there will be a question-and-answer session. now Mr. turn would to call I host, your Instructions] like the to over [Operator Lantz. Brian

our morning, Good chance available uncertainties web SEC welcome everyone The of certain recording webcast. earnings and A our of of everyone, we announcement today page. Hopefully, call projected. quarter announcement and the you've and is that, today. conference remind corporate to want to risks cause will forward-looking made available had this be those Investors results this I later be to website filings some materially a issued to and in that the to review statements may morning. Ferguson's section subject first from differ our actual call on are could and

also company's these website. of the only on included our on XX-K our the earnings SEC today. in information matters represent announcement expectations Form statements, in and Additional available as Any forward-looking is

we our those also certain website including Murphy, announcement In addition, earnings additional to will the and discuss reconciliations measures. CEO; measures, on the on Kevin regarding With directly and non-GAAP information comparable Please on me call to today now are Bill Kevin. GAAP measures. call turn will most for financial presentation our CFO. our Brundage, refer non-GAAP call, the to today's financial I our over

welcome and Brian, everyone to call. Ferguson's you, results Thank quarter first conference

over end remarks our and particularly to back thoughts our how on call I'll we're your end, share closing financials to of view provide conclude cover before fiscal QX to today, before our more On our strategy XXXX. relates highlights the Bill and groups, for outlook take at the questions. for it turning and by I some I'll acquisitions of markets, come with executing year then as I'll some call by and performance. detailed the Bill a customer performance the also

customers, growth, performance. over strong XX%. consultative simple, we delivery sincere and of support scale, We dividend profit with customer's teams through and appropriately associates disciplined $X.XX our their our our cost, deliver supply and the earnings from remarkable managed to increasing projects. First adjusted our as their saw increase XX% sheet, We'd to revenue We've as implying to our profit transition X% quarterly another a for year, sustainable. to XX% thanks our to express passed balance projects like operating were quarter declared strong our chain, annualized leverage prior distributions. approach, dividend our helping a serve make strong we share to This per continued price when increasing and to drove historical adjusted per with ensure We've semiannual inflation. share, away global successful efforts

sheet and execute through and balance Our investing to strategy of consolidating is returning for our to we organic fragmented growth shareholders. markets acquisitions continue strong capital our

we revenues during the On strength end. the to of confident we in model detail annualized in approximately subsequent these but one to business and two, as these later, results, go as welcome on pleased we're million. M&A of and more acquisitions the acquisition which quarter I'll were quarter, we proud of $XXX We're expected, in forward. came bring our touch front,

increasingly slightly robust up markets our against across challenging Turning remained comparables. as to the Demand came end with our performance we by US. moderating markets in growth

solid share growth. non-residential US both revenue Residential continue residential half saw to end comprises across take markets. over just We which our and

has started repair residential maintenance new more been has and growth to slow, improvement resilient. While

four over due industrial civil but across to markets. year Our eased end commercial, grew residential of and revenue growth grew XX% comparables, by growth with approximately XX%. nonresidential pace prior quarter the The broad tough from

market mix, maintain we this end continue will we fluctuate expect time, As seek rates previously, will growth we've discussed and our balance. over to focus while healthy balanced to maintaining we on

in trade customer where strong business remodel the customer over to and largest against very as by a HVAC and residential across by grew the US. repair our building It's while saw Waterworks challenging a XX%. do-it-yourself and and in stack XX% by project. of strong improvement nine end All to facility customer to to we've more our comparables. consumer. needs broad strong continued Residential these In other market allows grew price that the Turning groups the value with with commercial we slowdown groups grew commerce growth the XX% maintenance majority driven and prior in supply through market XX% total of fire of comparable a saw end deliver revenue exposure. and to grew bring grow two-year customer and aggregate, of digital growth. XX%, serve XX% activity. on seen comparable industrial, next of fabrication, modestly serves groups the and quarter growth residential despite mechanical a within continued growth more businesses our inflation way customers' a The very top balanced and achieve year non-residential us revenue strong group our holistic in this

little hand detail. me now who Let through you will the Bill, to financials a take more over in

Net pleased over rates. margins the indicating of or revenue XX year from as with with prior price XX% but XX.X% the Organic offsetting were foreign up volume enabling Thank XX.X%. deliver Adjusted controlled to in growth additional afternoon, operating points basis sales We profit to above year-on-year prior stepping morning expected. the inflation to Kevin. This to a X.X% line impact down during growth the profit million Acquisitions expected. partially the margin in X.X% an were a driven year was QX impact contributed quarter sales the buyback was price day quarter. as EPS small driven margin constraints. supply diluted our XX.X% from a remains in year with $XX sheet of by growth one QX, gross you, operating principally balance XX.X% a as decline And QX further through of prior rapid rates deliver over offset the strong And inflation slowing good EBITDA. by from XX.X% debt-to-adjusted million partially costs, well last decline adverse to with exchange everyone. year. X.X% times by of period as operating adjusted share at primarily program. chain was adjusted commodity grew or XX% comparables Adjusted of $XXX strong net gross our and Tightly us by down

business Moving performance. delivered solid to results. our The another US segment

revenue further margin. X.X% growth with of growth bolstered XX.X% acquisitions adjusted was million a delivered growth additional an take to continue year sales million, and profit operating net increase operating $XX day, by the XX% XX.X% over market operating We share of of with cost driving an from from adjusted $XXX or prior an XX.X%. X.X% leverage of Organic sales

year, from performed was adverse performed to Adjusted non-residential to million growth growth growth day The adverse rates. business well $X in $XX organic end segment. markets growth revenue year profit foreign exchange X.X% a Canadian foreign One with lapped additional exchange of the added better Turning as sales we operating X.X%, million residential below revenue impact X.X%. than was including by our similar rates of prior last the revenue million quarter. to but X.X% revenue comparable. US $X XX.X% a reduced Total

a continues take be our in generation. model. We flow. cash and important quality disciplined an was to Adjusted the approach business million. priority to to EBITDA quarter It cash of Turning $XXX

reduce begun $XXX million prior As to year. as down the the cash than investment lower first inventory of $XXX to as constraints in was during start approximately $XXX working prior over million flow, the expected our we quarter. year, ease. capital generated $XXX of million increase have We chain was supply million operating an Inventory

We to in invested and centers growth principally programs. organic distribution invest in continue technology market our branch CapEx, network through

$XXX flow As an $XXX over prior a was year. of free result, the million million, cash increase

balance strong of net with one Our position is times. debt-to-adjusted sheet EBITDA

We allocate advantage have continue two of through as operate we times resilient the to a low we of well end clear priorities. to We capital as across balance opportunities target to intend leverage to ensure that maintain sheet. the net and capacity four of growth cycle towards a range to take to range one

our modernization split CapEx distribution drive and branch of mentioned rollout, the driven our in investments investments both flow between the in organic are network. front-end our on of customer-facing a market cash side, organic in the investing broadly to which working center were systems as capital investments, previously above-market combination technology support growth to we're First, growth. by I as well our and investments back-end business capabilities our

of X% the dividend $X.XX year, have dividend. grow previously cash a dividend. annualized ordinary we reflecting the today share over our a from to and confidence to Second, generation. a intention in an to announced transition This business implies increase our continue our per semiannual dividend and quarterly sustainably declared prior when We

and businesses of annualized We acquisitions. Third, we're $XXX consolidating purchased bringing of revenues. start our million fragmented markets bolt-on geographic capability since approximately three fiscal incremental in the year the through

While on pipeline the our good of remain potential has we we a pace activity executing deals deal the of maintain strategy. market slowed, in focused and consolidation

under to through end target Finally, remain we capital the committed we leverage returning our principally of low range. share surplus buybacks when shareholders, are to

repurchase shareholders leaves the count the share During program million of outstanding, buybacks, approximately approximately $XXX This quarter. quarter, end through the returned $XXX $X to share share million. the million we our by using at on

which remains of market expect our low-single growth unchanged, to driven the on last digits. Turning organic for of guidance, share to expect we low in which we revenue XXXX year, of completed acquisitions, single-digit top continued the and markets by decline to gains fiscal view deliver the benefit

operating range stepping compressing in volumes. deterioration between driven over last We the move the by difficult by reduction inflation years, continue envision of adjusted X.X%. margins X.X%, After we some expect to XXX comparables, through growth two market increasingly up in rates normalization have and a provided points to we and year, basis as a

to expense We between be expect million. to $XXX million $XXX interest

XX% Our broadly CapEx in and adjusted between tax expected million. should $XXX rate to stay million come consistent, to is approximately $XXX at effective

of we executing the sheet business the positions Kevin. back the and well summarize, focused year. the well fiscal business strategy. to flexible performing strong I'll for remainder Thank pass remain to balance is you. So our us you believe We of now on and And combination our

you, Thank Bill.

outperformance, to market build end investing the drive advantages term. for longer our while continue to competitive ongoing We on

translate strengths value. long-term and to strategy, our Our

fragmented with revenue our and growing large, in from number or markets positions last leading year. approximately hold one market generated positions of XX% our two we number First,

base grown highly have XX,XXX above our we Our also the GDP. competitors. in supplier compete base And there macroeconomic is medium-sized mostly is our privately-held while competitor are base and markets than quite customer historically horizon, is fragmented more and with fragmented fragmented, headwinds on small

our our suite ability XXX Secondly, delivered customer complex and supply omnichannel the of need help outperformance. supplier We're On delivers they past when we our and value-added people, and sustainable, make continue and organic relationships experience U.S. simple, years. in customers chain basis tools outperform to scale customers average, market digital the over a fiscal delivers successful long-standing of our that that the depth that outperformance points offer customers market solutions, to an confident leveraging five leveraging by sustainable our and to our and it where within a breadth communities. projects

growth from complement by As annual acquisitions consistent our fragmented acquisitions, growth incremental organic in this revenue years. I talked past the about bolt-on markets five with earlier, fiscal driving we X.X% consolidating model

All and has in of by team the outperformance business. a track generation record dedicated experience with this long-term a of long-term produced cash

allowing our highly drive at scale returns. algorithm, discussed, growth we consolidating markets. and companies are revenue, continue to and operating acquire key to generate then profit, multiples part acquisitions gross cost As to synergies leverage us strong our fragmented attractive a We of

expand relationships. targets and two consolidate geography, to existing our and types geographic associate which fill acquisitions; of bring Our and allow customer in our strategy markets, expertise in us

ability generate while process acquisitions, X,XXX and acquisitions Capability the have these integrate and products, we're offering. relationships and acquiring or in services in in to trucks which and across best the to existing targets, the acquisition. lot to to and proven their our offer our that spend good real industry we company new these million associates have customer associates, our locations fit beyond We services Therefore, inventory, such to cultural have. we than gain choice physical our capabilities we believe scale a their potential a allows we customer that leverage talented we a successful that grow expertise, bring and assets acquirer present make a And ensuring they we're repeatable both rapidly of quickly us and values up we to locations in sure can and associate to that access expand time that leverage align the industry we synergies. and these expertise, and we cases, as X relationships value In that have platform as far is we a platform of customers to their from and those more products opening the the our careers opportunities. then

principal serve and five estimated their and customers. initiatives areas maintaining The with year area the strategic make key XXX acquisitions accelerates of locations another our attractive let strengths, we'll we've better strategy HVAC geographic also our who vendor to This contractors building projects with America. as already. of HVAC, locations various with associates group expansion efforts $XX thank a to organic was particularly New in examples for the of in very partner the of focus both the be and strengthening investing North relationships great operating distributor HVAC is HVAC of dual-trade with plumbing the for fiscal XX,XXX strong customer a and Pacific Carrier associates customer areas. XXXXs as to relationships we is within business. to Gulf fronts. the well successful Northwest. since and welcome year the again than highly serve HVAC parts to operating of the our Mississippi, fragmented help added to look service One billion from an more inorganic positions the key and vendors To Coast is Orleans start on leading a We're regional acquisition the our remarkable result more while Trading Airefco culture is well-aligned two the the strong XX strong in close, while region. across this with distributor as our and our to use future ethic, market-leading closely Marino other with our partners. market the Airefco space This me equipment their due continue while Ferguson. pleased on base our metro Louisiana The in continues to and across

well-positioned RMI. balanced between new construction, We and and with mix non-residential, residential are a business

us range. fundamentally more model of you markets and back to changing business to questions. happy to balance cost we're and slowing flexible for continue a we operating low comparables, challenging end have outperform Operator, end We I'll our today. Bill a term allows time to adapt longer end target position and the maintaining Thank call market the a strong base that market leverage ourselves are demand. Despite sheet your conditions and to you. solid I now over your to hand take at

Instructions] from is [Operator open. line Matthew today go question Please first from you. Bouley your Thank Matthew, is Our ahead. Barclays.

Good morning.

if Matt your single-digit Are if Elizabeth talk changes just today. wondering, you helpful? that or have markets for low a the or underlying bit to be for growth? And year cadence [ph] commercial? inflation You there expectations, Landan your about throughout have I would on resi your little expectations on with you specifically, the any any really was the could end within your guidance within details

QX. Bill. Elizabeth for this Yes. the through question. if prepared QX it what we And expectations. for the line rates to as volume our Good saw those was Kevin about you in growth we Really, really out remarks, is year, both stepped you right and think how with inflation compress in exactly that's his as expecting said morning, us, played and Thank in

change year we to line full So our outlook. year finished really full really with guidance no in as expectations, and that

the step that low ending the in volume the high That in single stepping Inflation QX. and full rates was in lap with and then expect to we to in the digits likely the inflation double-digit that, the think through those that the year, stepped comparables have for year to full would year to inflation quarter. We expect decline. through XX% up in embedded talked down high year, you the If about ending about single as mid- for volume down fact also tougher compress. we about what's we

expectation those to continue the full markets, together of growth low for guidance acquisitions tail to year. then, up market back single full for And that You comes expect single-digit the our us plus we add gets low the our that to year. digits the outperform decline in revenue to

no but really you. hopefully change, assumptions So, the for that frames underlying

Thank you. or inventory destocking more or That's as really verticals are channel you're of groups? kind excess in any there certain in helpful. the And as which seeing dynamics far go, less any

on Waterworks inventory in if current year. going have But we sheet pipe levels continue to as we proper the expect What inventory not supply We're to with those about $XXX are from saw dynamics. talked iron still is, QX, bringing our ensure that that appliances, some our need But that by and remain product strength, done we our pressure ensure be, we There bring down constraints generally million a focused We've areas categories. starting have flexible reducing mindful to see And supply you customers. levels chain and channel absolutely vendor of seeing availability remain sheet our HVAC, product inventories our as really side. that some down pressured a of things large the chain amount are in perspective high-end destocking started end our you and still use product balance balance the and the on our like improved, improve. we're availability. ductile through to of improve to have about like like market should we

a inventory, in demand shipment To ordering for a is point, some supply systems committed our ordering place. of activity. chain activity. to our of forward with done reducing inventory Bill's we We patterns a exceptions, getting inside on good reducing customers Yes, good during more we have forward to Elizabeth, of this that, projects a build see did of pull pressures pull job Kevin. see back normalized and by didn't And

much. Thank you, very

Thank you, Elizabeth.

you. Thank

question your Our go is is from next Please Mike, Markets. Dahl ahead. from line open. Mike Capital RBC

our actually for taking Chris Mike. Hi. It's on questions. calling Thanks for

that going new the into outlook? help, year non-res Just guide, double-digit Could of you're kind implied market all thinking split back low 'XX full outlook the decline. how to digit between volume break RMI high you single the residential baked for about the that how that out,

of pressure in what side about more new on to terms is our are total, do. digits. low In single, we XX% expecting Remember, res new res price res expecting certainly, only volume, Yes, of the new high double of business. be and down we

On the better. resi RMI hold side, we that expect to up

end the perspective. into of support in more likely towards in total of again fiscal low the and and strength fiscal some on with up as some offered expect non-resi from down the from out market year programs particularly our further look to will the we year. single ahead 'XX. be side, government expect non-resi to price year the for that volume we for But there's And digits some of play then be that a We the and there slightly

that all gets put year. together, of that the decline You negative low us for our single-digit implied market

price are the turning one today helpful. outlook significant kind factoring in That's pretty the marketplace more then maintaining declines mean, that just volume seeing of you commodity any quarter? increases, you time. the of I outlook into normalization, these outlook? guys materialize to elasticity given from side? And on to the are of Understood. are non-commodity on thoughts pricing your in the guys price terms What the And your how next the

Yes.

don't inflation. abnormal see with guess, price I we any I'll start So, further for catalyst --

said, at commodity believe, And remember movement business that trade the although, to As quarters, our world, see we've do of those XX% coming commodities is some on commodities. expect under will the that, we how just the as side see in together. we look move product we we'll in of not

the PVC, on levels generally side. steel we've iron speaking, pressure iron, ductile and But pretty stainless stainless steel ductile carbon steel, a iron. of iron, pricing touch we've cast cast example, supportive For PVC, seen seen on steel, polyethylene, carbon

of pressure to So, some commodity from expect or we a see degree change perspective. do

haven't we those are On the structural perspective, pricing seen finished do goods pricing significant From there impact. we believe, a that floors underneath, levels. any some side,

As labor of which we the through fiscal our with be the to and levels associated manufacturers coming look costs forward, those year. need what pricing would be their least not

discernible to started slow be, question to construction So, price on residential. short the haven't from movement demand answer a perspective would as any we elasticity seen new has

the Appreciate Understood. color.

you, Thank Chris.

Thank you.

line Kathryn is Our next today next appears Thompson ahead. from question. Thompson move the on open. Kathryn is Research Please go disconnected. question your from I'll has Group. It to Kathryn,

question Hayes & McClaran, is go McClaran from Associates. Zelman please next from ahead. Our

Your line is open.

wanted seen I there, or morning. non-res a on Have of get weakness any good cancellations? business. it's your Hey, to guys project indicators you the bit of leading side whether delays

Thanks, McClaran.

activity. activity small some different very seen energized of spotty are is of vehicle, activity. we the longer. have battery, it's as a by non-resi, We geographies. been like look mining build-out chemical been refinery delayed our projects semiconductors again Those hasn't large larger pharma, It LNG, What activity take and some albeit things on in bit and turnarounds electric very projects commercial we generally some scale even to downstream like normalized

construction. see so residential we expect, in new as some And softening we'll

spring fiscal we projects particular, together We as and also start we take and hold the look a Ferguson contractor those see XXXX as are take for engineer, at the our towards site. the customer those architect, summer. through approach, project as all our a that we go on believe into And as those one general to year projects we on groups in of projects more owner, good the company Ferguson bring whole, to will

we what some a we but call seen slowing of of activity go areas commercial in So nothing forward. good touch of knock-on as build-out megaprojects would a level discernible, in we've

XX to in sharing change been may looking months see that still activity Thanks. pace outlook but helpful. able a I to the think get prepared and you've has similar to you? deal as M&A be the done. you deals a of sellers' they're then remarks any in slowed your environment, it. for And they on expectations out clearly That's Got noted begun Have bit, you

pipeline We've a we're still this we Yeah. of we to our at into the rest as good seeing McClaran of activity, point year. fiscal good the seen, what future least deal still out terms pretty in earlier, look and through maintain

you're horizon potential cloudiness and expectation acquisitions. on perspective I from be recessionary a seeing the valuation back perspective, there's think certainly seeing peak from what XX environment you is more on profits as considered seller some could these potential facing of for a bit maybe valuation expectations looking months a what are

we're valuation, think terms maintaining so the And quite our about in bit slowing but a significant bit pipeline. value of we of marketplace, discipline as nothing a of really and but in

Got it. Thanks. Best of luck.

McClaran. Thanks,

Thank you.

next question go is David David, Our from is open. line from Baird. Please ahead. Manthey your

Yeah. you. morning, everyone. Thank Good

David. Good morning,

of the but that, of sure couple of mentioned pretty residential approximately percentage pro you could tell you it how A the on contractor. today? us business DIY your predominant And business versus DIY is pro, times is call I'm much

Thanks, Yeah. Dave.

consumer homeowner our considered or so call direct be it DIY about business direct-to-consumer. of X% would business, So,

it. Got

strategies. Okay. as for enter then XXXX, Thank maybe few a could your you here fiscal us broadly, and that. initiatives on we update of And more you

that MDC you You talk own couple talked touched broadly. progress you've some You the expect of that made bit maybe there these, you but initiatives could you and referenced for more about what And just One maybe brand about Durastar a about Ferguson approach on fiscal a talk XXXX? but the then rollout?

right – maintained we're Yeah, terms rollout MDC track Dave, that. on in with the we of

Houston the open next we year. set know, of Phoenix and in the couple last opened to you As is Denver months. within

XX We'll we're call come that. in next followed Dallas, which Nashville, the months. will into begin So over that to DC then area And receiving it couple now. the and product by be of out after Washington will next Houston shipping XX months Metro

really rollout that year, be and per that continuing in line with it is a multiyear-phased three clearly for to approach us. going two we're So call to that

gross product guide about for also it then right to towards the going owned that make potentially it help to of as customer, for products our overall a to them us project, part brand, which to a when their are for product associates make brand those accretive a is Ferguson, successful, company. be Yeah, more strategy, but and will unique to solutions we And margin Dave. think guide our owned

remember growth happened As side overshadowed its terms you last what in our of the bit was commodity because own year, of of business. a in brand

of That activity. As also minimized, expansion a in of like brought X% bring inside we across Even in companies M&A over of of progress some we're bricks brand Stephens, saw on categories expand like we then be of Jones revenue the potentially where our of bringing own we to activity. broad-based saw which had last through mortar. good price growth and that us range. we've driven can we and overall the organic about $XXX inflation QX. It's worth impact solid across in year, growth million our can good into though bricks that and own drove that our our label that commodities, up kept owned play continued in Hardware that $XXX across brand where brand already was we business. leverage our M&A, growth We believe own first the platforms, – our us drove that quarter. of Signature or of and side our mortar And our digital million X.X% that

during as So that we said approach, like wastewater the everything consultative involved but starting much And we One bring think mega again, chips piping how like better, through we to sure variety and of that's earlier what's make in vehicles, drive again been extension success electric across that suppression to that's non-res a to and projects, an from get HVAC, about good is mechanical process, systems construction a QX. up story project When like. of as and the to Ferguson the different that's group, uses those design the and up commercial to of energizing contractor from the around the things end owner. general side infrastructure we're fire water with storm happening the non-res underground trade process I customer for professional earlier, one the take it individual the that water,

be XXXX. So what been and fiscal the we what go with can to-date end pleased progress of towards that it has as

Kevin. All right. of appreciate it. luck. you, I Thank Best

you, Thank Dave. Take care.

Thank you.

is Thompson from Kathryn line next Kathryn, Group. Our go open. question Please is ahead. from your Research Thompson

Brian This for actually Biros question. is on Thank for Kathryn. taking you our

segment? can seeing there activity give in for the the about further one, you activity. read-through Waterworks is First talk Activity you're

Just segment there be in their funding commentary Any further seems general construction-wise are solids. that continuing on helpful. project would

us ground. good. put we're Yes. levels projects balance Thanks, and Waterworks now more of quarter. Act calendar We metering see Infrastructure the that just year spend, and is most growth municipal business in works well. terms a activity that control, activity the we technology, erosion inside to continue multi, out. single-family new commercial step was plays what serve are residential with our as across construction stabilization infrastructure, If to XXXX even out in residential starting tailwind great start about Waterworks' and the new mix continue XX% think metering, activity Felt the level. broad back take has to into I play see activity to being public levels soil We're multifamily Brian. good in we good will infrastructure, good pleased The from get of construction

group in customer supportive looks that So generally speaking very terms still what like. of

margin was Got follow-up compression gross question. you. on guess basis just And the quarter, it think, points. Thank it. I in a I XX

gap is you. categories in pre-buy there that just function pricing declines on to narrowing so any actual throughout call. this the cost touched guys But price other a clarify from purely was I dynamic, the that You of Thank or guess far? inventory

pricing Yes, Brian. No declines.

any in As pricing significant and do price short-term. we indicated still inflation we nor experiencing we haven't deflation that -- we're seen expect the earlier price

margin peak last it's point sequential normalize XX really we inflation. for pricing commodity we gross a that think we of of year-on-year had was -- expected a basis. year And what And we XX.X% year performed really sideways as more delivered you traded last decline us. gross when about how more basis significant margin a If that on had to that that factor

the compress pleased but seen we've really So that QX. in delivery few that with XX.X% quarters, over last

you. Thank

you. Thank

Please open. ahead. from question Will Will, next Our is from line Jones your Redburn. go is

please. me from couple A you. could I Thank if

more in you that QX, I comps has which talk wage perhaps the small grew Does you a XX% And guidance, your and against might that around tough slightly where then in issue year-on-year been for do or HX of months inflation. higher the rate the start around decline given maybe implies around headcount just we is just like-for-like which year. think run have inflation a be remaining think expected nine of overhead, think? sales could first of The the quarter that I to

you to please? could keep about talk you. the taking measures of So you're that just check Thank some

start about a QX perspective, correct. the rest From slight for low-single-digit Yes. Well, questions. decline Look, step the our based in challenging I guidance does delivered year imply more range get to we you're the going those as take the up. on a progress we results. think where is It as revenue that I'll year growth of those through comparables

in the were growth QX just at rates in a and into let's up up low-XXs will you fiscal QX low-XXs the and of two-year inflation a in step XXs to -- and stepped step if QX range, in from QX, take and will comparable or XXXX, So, up a look the high combination volumes. stack, perspective, XXXX

the move that cost those of continue In taking from So, base to a the perspective ensure think of we're company making we're cost the the throughout path right year. will decline to that, growth base we light we appropriately. as I actions sure rates

So think basis. a to equivalent point, to have about on started reduce headcount full-time your headcount. really we We

by overtime between cascading reducing we to targeted in And to. actions effort by and temporary ultimately so taking where reduction then we through attrition need allowing start followed in a play associates, a followed

through continuing take QX path QX, you QX we're that and cost in we as we manage reduced equivalents to step the as base total said, some make from appropriately. expect we'd QX continue down cost slightly from that to targeted cost And I dollars as saw sure we And into the decreased we we to of about business. into October. actions actually July that So XXX full-time by have ensure the

extra Thank chains for just couple costs experienced not better supply couple about A some you of to been your in costs on, you. or maintain extra get the from supply order chains normalize, and again And peers the some last years Is in follow-up might chains their so they've logistics And that that have of might when of ease so customers. those incurred get a if much? something to tight, have of there. talked service out. start if you some benefit supply

Yes. yet. I I decreasing mean, years, inflationary those not look, pressures we some cost but are that inflationary cost submit had certainly over last of the would pressures couple

it rate. high well mid experiencing think inflation in well, to our you base, is We're you the cost XX% still about know wage labor. single-digit If

seeing in And inflation of we're such that inflation. that, truck so effectively to cost still offset rents, hard as we're everything some buy is areas other level still by costs, impacted we working but

but cost hard don't see pressures we inflation very significantly, that. alleviating offset working to we're So,

you. Thank

Thank you.

Please Our today your from UBS. Gregor, line open. question from is Gregor go Kuglitsch is next ahead.

my Hi. questions. Thanks Good for morning. taking

So a please. have questions I few

give where first a us could currently you're the you trading. if So one sense just

just say think of us sort let's the I on give question appreciate margin. Second then So running gross be guess? a it's could slowing compared where at? I you that's to organic, would sense XX% slope And a I

to flagged Thank comes you think time impacting on margin? a remain whether that you be there's of gross trading in that's think, you that landed. going you'll going about for you. anything you or that So, picture Do mid-XXs the anything that's should is we the as coming sort is a the for where same, there through -- long quarters

go high to That organic in that was went range Yes, back a We organic the of XX% maybe rate through and October we Gregor growth expected. to as and in QX. stepped quarter. continued I'll exited about in the the has down XX% organically end That if in just QX you take down -- our the as growth QX. we're compress single-digit step quarter sequential pretty at to

So, of to growth for November, mid-single-digit I'd we're the say organic the low month range. the in

expected. face to stepping and tougher as comparables continuing we down So, those

we terms margin, quite XX.X% were to that of margin. pleased gross deliver In gross

that fact talked range. for that XX% be in the about the could we've that anywhere think in I XX% likely the to low year range XX%

that manage in recognizing dynamic to look price focused that. brand continue conducting operating and and we'll a in then which on and our environment. point we're of managing that product of marketplace the component on is a Kevin's So, big pretty strategy To

through gross we margin QX. impacts of lots in pleased with landed So, where factors and but can that play

to Gregor consistently our medium And construction better make price the the work the to supply expect to more hard think in over to XX take modestly foreseeable world-class for continue that it, to basis to along we'll value-added year the future. process add to look our we're We'll gross coming availability see customers. make call continue customers services and add points product term, we quarters. chain increase that margins productive to we But for more if going time, for a

helpful. really was That you. Thank Thanks.

Thanks Gregor.

Thank you.

question go line last Harry Harry, today ahead. comes from Berenberg. Our Goad open, from your is please

my Good taking for I've Thanks Yes. got please. morning. questions. two

actually one the you just first mid inflation or said -- about you towards were high talked about talking earlier The something single-digit. is you think year of when end over the rate checking I the to

Capital question XXXX was sort Markets guess second talking X.X%. that average XXXX? you as please an I [ph] as are talked for full full for I year clear or the for year the a about adjusted two exit the you talking that at this flow you of back earlier potential about then about year, Day be And please. things I to rate of Just operating the think margin are had

in low years think you what you that were a you've Thank of very why still then, number? just we much. sort has efficiency negative appreciate valid? fall is about changed range to remind a us, as the of scenario? more still below then, And I below where think of ago? it sensible that materially since guided is three business worst-case to, the Firstly, that a can't the number end And the two that's but also or

the year that from a full mid-to-high inflation market that perspective expectation rate Harry, single-digit a was Yeah, average.

that Given be at quarter in to a through QX and the continuing that down are it's we that XX% the fact average. step full year down would stepped

operating put adjusted stepped margin up point, efficiency the of this we In to this X.X%. is your terms out of that last operate we've to years. to that And we've below year, do that over can X.X% business the of the continue operating couple We the range. of in that, guidance believe X.XX

product been goods And good you in sales. to think price. has the we've step price on finished impact operating the has that more, of A represents tends of past about XX% portion If margin which about that finished goods, our pricing up been be in talked on a sticky. in part step-up as of

expect X.X%. operating into risk scenarios deflation got said, a different So Certainly, downturn, With this we that said, you are that which don't out, price could if don't play that there significant erode below scenario. significant we would we point. see that margin that worst-case at a

to full very range. we're So with what comfortable the That that we from to said QX, land the for of X.X% unchanged, guidance remains X.X% in year. out coming

you. clear. very Okay, Thank

you. Thank

is the you. This we have today. time all questions for Thank

So hand to back for any I'll remarks. closing Kevin,

today thank a operating with time them diluted EPS remarkable to XX% with and their Daisy, you, very with effort up to a our for were and thank make call. you successful you XX% the on serve all Really sustainable. the and make your Thank began, the and we I'll associates. way end better, pleased revenue projects profit more XX. customers up simple, And up we quarter, our

in expected. new progress solid markets. longer-term to And fundamentally the residential we we balance in model, business what headwinds year, of really And positioned outperform do we're go continue end mix and as so some as are business throughout extremely the macroeconomic our to believe well and came we construction, with it albeit, our particularly

much appreciate your So thank much you it. very Very for time.

joining for today's everyone, call. you Thank

lovely disconnect And your now day. You may have a lines.