Ferguson (FERG) 4 Jun 242024 Q3 Earnings call transcript

Good morning, ladies and gentlemen. My name is Harry, and I will be your conference operator today. At this time, I would like to welcome you to Ferguson's Third Quarter Conference Call. [Operator Instructions]

Thank you. to call like to now would turn over the Mr. I Relations Ferguson's VP Lantz, and of Brian Investor Communications.

begin may You your conference call.

made Good call Third website our page. Quarter in the Hopefully, welcome and this morning. to on Call we section will is earnings and of available chance Recording Webcast. available announcement the a you've later morning, and web had of issued SEC review announcement Investors be filings The Earnings today. this everyone, Conference to Ferguson's our corporate

SEC's to only any remind company's to may including that projected, risks represent differ want the of risks subject everyone I to website. as update our statements and disclaim discussed on Also, that those uncertainties these statements be our uncertainties to forward-looking any expectation the in some various today could and and Form today, are results from of we XX-K cause actual forward-looking obligation and materially statements. the certain available

In call, we presentation discuss to directly financial refer our measures. including also addition, regarding non-GAAP on financial website measures, comparable to earnings on announcement most those and measures. reconciliations today's additional certain Please information our the non-GAAP for GAAP will

and today Kevin call the now on me With our Murphy, Bill our CFO. the over are to CEO; call Brundage, turn will I Kevin.

end I'll I On questions. some comments market Thank to performance you, performance. at I'll call Brian, come Bill a give over customer for view closing turning call, provide I'll today's the financials. before and then quarter call. highlights and take the Bill end the Ferguson's cover our back by before conference your to of and groups and welcome, quarter also everyone, more results of third third our detailed

volume needs have remained to professional our we specialist of executing project for relentless associates complex have well service in returned focused growth the as customers, Our the quarter. customer delivering on

profit delivered We was Adjusted continued environment, X.X% against quarter, the the X%. of X.X% appropriately diluted year. managed cost increase of and million, revenue to $X.XX deflation growth of share approximately resilient an we saw adjusted gross of up of $XXX the volume operating despite per margins In prior earnings generating X.X%.

the increase a our to confidence pleased quarterly program in ordinary of to our a extend the repurchase X% we're dividend declare business, by $X additional As and result share billion. an

Looking in both and nonresidential forward, leverage tailwinds markets. we end well positioned remain multiyear to residential

just a Turning sequential to second markets by in improvement end revenue by our performance Overall, revenue, end residential in half muted over but remain X% showed third approximately grew quarter. grew comprised by end U.S. United markets as improvement. the States. saw sales from all the of Residential which quarter. the Net markets, sequential X.X% slight

slightly net Nonresidential Industrial growth were nonresidential We've the Overall, markets projects. continued in quarter. slightly to Commercial capital in and saw mid-single-digit sales were against civil comparables. up good while were nonresidential sales bidding strong large levels revenues of more activity infrastructure resilient. down during see X%

over expect end positions well. our us balanced we will exposure market rates fluctuate growth While time, intentional

Residential States. the X% Plumbing customer residential Trade to we comparables to our to begin easier by new United begin Moving markets groups stabilize. in as lap grew and

quarters. been as in have permits improvement While starts, residential we expect indicators, somewhat mixed, further new leading and future such

trade in as relative X% overall pressured. the and Remodel by grew resilience HVAC growing Trade Plumbing on grew we HVAC dual our by and X% the to market showing the high-end contractor. Residential service build of maintenance, market Building and the improvement of Residential repair, strengths groups portion remains as the continue with customer of revenues

technology, works, water up weak. broadly X%. across revenues has diversified mix, public residential, consumer were wastewater urban as continued be plants, meters Waterworks Commerce demand including our and business infrastructure. and remained treatment commercial, Digital Residential XX% soil activity stabilization, declined green metering and Bidding by to healthy municipal,

work pivot group customers customer data as see such to large X% Commercial/Mechanical continued our we The grew centers as projects. and towards capital

net Supply Industrial, & comparable. of sales growth XX% Our delivered combined and strong growth X% a Fire against a Fabrication Facilities businesses

of groups positions to customer we end to broad value a also project the bring while total breadth and Our us maximize balanced exposure. market maintaining the

let more cover the pass me in Now to results Bill financial to detail.

and Kevin, Thank you, good morning, everyone.

of a finished of net certain of price was day and in Acquisition driven revenue of sales Overall pricing ahead declined contribution. growth by comprised offset were revenue by X.X% categories, the X.X% to remained approximately sales flat. volume half Third continued additional X.X%, X.X% last has one added while deflation goods commodity similar weakness first Organic deflation X% broadly year. approximately remained X%, of quarter X%.

Gross margin associates. basis from year strong XX over driven execution prior was points the pricing of up by XX.X% our

We are the against volume growth. managing appropriately cost base

core We in invest continue productivity to focus for while on capabilities we initiatives growth. future

prior than share per Adjusted diluted adjusted Xx of debt million increase with or at of earnings And to program. to up impact X.X% operating repurchase grew by year. profit profit due balance net the million $XX higher strong continued higher EBITDA. share remains our operating $XXX our the adjusted the Adjusted X.X% and was sheet

decline of additional sales of our profit by X.X% X.X% Adjusted over offset X.X%, and increased sales X.X% over the million improving acquisitions of prior the operating prior margin delivering contribution $XXX X day. an from operating basis to Moving year. results. U.S. segment an points grew adjusted X.X%, XX X.X% from year, Net in with a organic

the additional foreign of ahead the United net from X.X% Canada, with offset day been last to similar of sales of exchange that operating impact X.X%, million in Adjusted was quarter. organic were from X.X% In and X profit contribution sales and of decline a impact of have rates. Markets the the States. $X year X.X% combined an acquisitions by

of from sales an were and year-to-date Turning last below extra offset The contribution X.X% year sales our additional year an of Net acquisition as largely X.X% progressing decline expected. partially to day. organic results. X.X%, with an is X.X% by the

basis associates disciplined managing our XX.X%, through commodity was in been price have as period margin prices deflation. a points of up Gross XX

the through the labor operating We delivering market managed compared down Adjusted nonlabor X.X% X%. a profit was environment X.X% year, And return quarter. of adjusted share adjusted earnings to have the near-term demand was balancing billion in to and operating prior against the growth year, $X.XX $X.XXX margin. third per operating of volume the diluted expenses down

year tax more the X generate $XXX to operating of timing resulting payments, $X.X year prior continue months capital due the seasonal flows growth billion. the of in continued strong the the outflows down net we flows. in of trends. year-to-date tax invest year-to-date, strong historical on of through were last returned unwind working in $XX to and million inventory We timing year. the investing normal investments. prior in inflow slightly saw to Next, first due lower we to of business After CapEx, the organic cash year, to million cash have a than certain positions of Interest And

cash $X.X As flow we approximately of a result, free billion. generated

capital to allocation. Moving

opportunities position capacity operate cycle of as Our net to net to well leverage Xx. with EBITDA ensure have resilient strong to is the Xx, to low debt that X we the of adjusted to range intend growth range end as We and maintain to towards through balance advantage sheet of of we a balance take target a sheet.

priorities. across capital clear allocate We four

CapEx, year-to-date, network have we to focused growth. Previously distribution the invested in into on investing mentioned, above-market centers, programs. technology we're organic drive principally million business and $XXX First, market branch

Second, sustainably grow to our we dividend. continued ordinary

generation. a cash year, confidence reflecting declared in and quarterly Board increase our Our over $X.XX per the a business dividend, X% share the prior

consolidating we're fragmented our Third, bolt-on markets and geographic capability through acquisitions.

Engineering, GAR to AVCO are Minnesota, Step We third of welcome during subsequent pleased the associates Southwest Supply, Yorkwest and Safe weeks. from and quarter Tubs Geo-Solutions,

revenue. of We deals $XXX X completed in have approximately year, now bringing this million annualized

allowing Our consolidation executing continue strategy. to us remains healthy, our pipeline deal

returning $XXX we share extension And to program are finally, to and our below today. of in range. the to the million are our announce year-to-date, share repurchase We via repurchases shareholders billion target approximately surplus pleased end And to million. we a shareholders we are fiscal returned share count to $X committed reducing our leverage by X.X low capital

a sequential We trend performance the line we against our year. conclude comparables continue the turning revenue fiscal as positive our trending which is this to growth on in attention of will Organic basis volume our expectations. turn strengthened easing sequential business QX. let's with has believe revenue Now in with

Now updated view our turning fiscal to of XXXX guidance.

We albeit the through slightly broadly year continue volumes the we as with flat continue now expect revenue for be to fiscal believe will stronger year. deflation to end modest of

outlook deflation only expect that quarter for adjusted and are Given drag the between end the by adjusted We the now operating the of margin narrowing margin top X.X% operating to for X.X% to trimming of remaining, deliver range. we year. X with

$XXX between debt net lowered our guidance cash have of to million. million expense strong and result our a to As position, interest we $XXX flow

$XX be year. effective lowered expected capital adjusted million expecting factors due expected it And we unchanged outflows, Our $XXX $XXX investment of is this to and rate the between to by million to now year. XX% million have timing land tax to our approximately for CapEx

and the well. combination end our focused on progressed expected, largely positions balanced has believe exposure summarize, market we model, flexible of as sheet, We remain to balance us the So execution. year strong business and

Kevin. I'll back you you. pass to Thank now And

Thank you, Bill.

serving and me Let projects continued associates make sustainable. for our our their again helping customers, dedication to successful more thank their simple, them complex

is progressing the the expected. our We're year in with pleased execution quarter, and largely as

the impact continued reflects year of volume remainder mild for deflation growth fiscal despite and the resilient updated continuing year. Our the margin guidance of gross 'XX fiscal expected

residential well repair, improvement. As business a balanced positioned between construction we between and we look mix forward, maintenance, with and and new are nonresidential;

to changing market business model us an have agile flexible We to cost that conditions. adapt base allows and

a to consolidate invest organic markets Our strong do maintaining our cash-generative to of acquisitions our leverage target while for return through this shareholders. to balance the us range. end low intend model We sheet, and capital fragmented allows continue at growth, operating to

long-term We have this deployment. disciplined outperformance of on track cash and consistently priorities, a record supported executed has and these

remain breadth on position customer our from markets capitalize opportunities. benefit over our and scale end the of term our strength across multiyear allows expect to the to our in groups in We leverage order emerging growth tailwinds medium and us competitive markets. in longer to confident and Our

today. for your I Bill and now take you happy your questions. are Thank time to

the to hand over you. back call I'll Operator,

of today of Phil [Operator Jefferies. Instructions] And from our the first question is Ng line

you better flip to on seeing to that a some think heavy coming looking start is about the expected out the are do on you the resi fourth tracking starting uptick called to out us and Are for see than quarters this I'm Waterworks of business. the Commercial/Mechanical when higher-for-longer your curious, how interest you [ ], unpack environment. through? just come XXXX? more these certainly was activity all and a of little And side, in activity quarter you rate muted last for in -- notably industrial you commercial Volume in certainly few into little bidding year,

I'll bit Thank Maybe you about that, markets, Waterworks of play in. and Appreciate and the comments the Commercial/Mechanical then and certainly, traditional for commercial. the through offset projects believe to And talking we're question. some are follow a the those take to distribution, volume. those the around on office, the things warehouse, can large starting beginning Bill that be like see we activity the that strength going knock-on capital

valve, inside & the Waterworks, saw so Fabrication And that Commercial/Mechanical, of despite our of tail of then fitting; and the deflation inside Fire we inside even pipe, growth headwind -- of and business. industrial

construction And are very before, way with making we're manager, helping look and supply revenue, selection you has tight at us product contractor, our that pleased we're activity deflation the groups impacts that that together if And make still general that with playing that seeing heard And you've sure looks than closer timelines, say what source in pretty through and funds source to we've even the some with that nonres supportive guide it's that on to of that were we activity. credible business the to bidding our of this residential. actually got more the sure group, owner working like.

supportive. still of particular. And to and turn we're lack and existing gains performance sale performance you certainly, over-market the pretty inventory in around still single-family is But our pleased in yes, residential, means our with home construction demand Clearly, we've concerns it's muted. If somewhat that for space. share the new got affordability

pretty we the If forward, their us with spear look as of our we're our pleased. And side point as Trade that a Plumbing contractor conversations world, at Residential business, base us having of about the quite that quarter. really we're place you that into which forward growth activity on leaves volume look moving the in leaves fourth is the good

Kevin's to when up better Bill. the step And back, a residential. on Phil, to your we then we fourth year, Taking a on quarter. is this to guidance Maybe hold point, touch into than came bit nonres question the expected

little overall we mid-single with markets we resi to to As sides both bit better. down what And playing a to has performance a QX, a and in more our And our the of we be markets little be continue year. see down particularly would expect, pressured, I held would bit you expected QX. know, throughout Nonres we up into digits, bit nonresi think that's the that expect out given better.

the some guidance that changed in QX. level growth flat overall on out implies top the top on And at of we set of broadly that the line, Our since that that line beginning hasn't modest of the have we'll overall guidance year. clearly

side more the I guess, year, a great deflation way That's you're seen things? fourth stabilize, Is to quarter? some on commodity about X% down think prices good your modest for have And full you now the Okay. color. Bill, of expecting particularly

have behaved? And commodities, you inflation? finished copper recent in and effect? what inflation X prices, seeing a terms for margins for line? months your top does like actual any that how like look lag seen has your X as we of does and that kind good rise in you the out all months. to We've next zinc the some Like And of noticeably prices Are mean

some I to predicting as -- difficult. and pretty the deflationary as know, as year those to year, over first year. sure. we the commodity roll pressures lessen, is this mean, as deflationary we start particularly prices prior comparables of But we you expecting, we exiting the were from through start moved for Yes, off,

in On still prices, to that stability it's commodities, some down. are they're but we note year-over-year, still seeing important --

you take So if you -- mentioned copper.

in us, direction prices If for more you been an have tube moving look at but copper recently year-over-year. still upward down

deflationary one sideways. steel still even has year-on-year there's sequentially copper, been pressure in moved too. So more some that's Carbon

of from to so year-over-year pipe that And the lessen then And is the we on starting plastic a have side pressure deflationary still pressure perspective. some world.

year-on-year beginning still now expect than perhaps lessen still we our We expected of continue to future, the some there's we -- we initially bit fiscal So that or that at to level deflation expect and move the the we into into do the a start now modest pressure. of as expect year. of longer but year

year-over-year a of what as seen and the finished price On our the side, about industry finished We're finished in some What held that total spottier have better, goods expected. goods normal. than typical is goods. has pricing flagged we've we increases flat annual think just would we up bit in been I that normally see

So still expected expected longer finished may at of what world on taking inflation. than year. bit the of to goods fiscal side have we the outset some the return just a It's the

goods And spottier Bill, pricing any stand that little that's categories finished a a the on side standpoint? out from

like take spottier in faucet category. HVAC maybe areas appliances, we've Well, a if been you recent increases, maybe we've the seen it where bit at of look more units. seen has the some Where on

typically we So more a bit of than bag it's see. would mixed a just

line question the of next UBS. Lovallo is today of Our John from

one out those is much And prior can pieces us walk could through well? the the outlook updated please? organic two some incremental part on is I so, of you of first of outlook? mean, moving is of your M&A if volume? view break by headwind The the that sort fully as And price? versus revenue Or this how help a you there that's components, offset is

offset John, the would more by a I organic flat has broadly Yes. touch the majority you, tell that volume. guidance been of deflation,

handful we going into a enter total, last a of overall while materially that's look that next guide year, the an the nice deals. from the you perspective to And doesn't change as deals of be We rest acquisitions done have tail fiscal week. We in four announced if for very year.

back, step revenue If $XXX range. a be you in take full acquisition somewhere the will the year, million for probably

So that significantly. hasn't changed

a that more been offset modest by deflation bit it's we lasting volumes, than So expected. longer slight in increase a

can table. the the Was of risk off operating outlook think us end like do it about Understood. help that sort table the top range? taken What the the And then that you drivers to the It not just to off drove And of across that? was the you seems of Why -- get what end the range take attributable of as was well? bottom now? solely the to you deflation? end of all sort range bottom the margin would

Yes.

deflation revenue the In terms a range, is has changed side trimming the that the what changed touch guide. hasn't of more is pressure the of on top the end longer, of bit puts SG&A world. a again, lasting What

that's X% headcount on clearly So of million leverage. deflation quarter, We that so on and to costs at a input the line. care that about in have I of mean, and look to volume, have and you count that the associate $XXX the bit top take puts worth the if the pressure OpEx

sitting X we're that operating margin recognizing Then quarters. a at through X.X%

deliver Our guide QX. range, QX last of midpoint an XX% wide X.X% but X.X%, the X.X% implies the upper at to year somewhere of margin XX.X% between that our we'll X.X%, versus end to in for operating

So that's quarter. to at pretty reasonable fourth we look bookend the as a think approach we take

how in the we that what it's deflationary good not Again, table? which next of of that difficult come of range, end the that have to quarter. come off over end In will would closer QX, the Quite range terms bit be. could honestly, cause that pressure a little the bottom why bottom we to predict us always as a will through think into the pretty what be take additional window to

today next Sam of of Reid the from is line Our question Fargo. Wells

more detail. bit the maybe to quarter wanted a in I unpack

basis. one I around of flattish kind provided recall, was already more organic maybe some You've trending this. but color from If an February question just more here,

how of since So remainder looked the quarter, maybe easier comps lapping talk trends through those the have might you through in just were especially months.

February Sam, that about was answer I'll perspective. flat an organic Yes, one. from

it's and seasonally tried I is think we the out think I at slow month, that call a [indiscernible] second quarter. important to

The is the slightly delivered from an trend significantly and flat, Clearly, really organic we but down April. February organic and the March quarter. for that pretty didn't March if April were decline overall through to perspective, change close

in that would as that slight expected organic longer bit and a continued outlined. decline. Again, a the the significant movement longer no bit now quarter So pressure to a noting. continue month-to-month But quarter already through we've be worth deflationary

calibrated Maybe It's little something talk the are lot down how name. this well of be think, Kind a think SG&A. should into these perhaps about that helpful. maybe quarter. investors, of would with F a absolute thinking QX bit And let's at SG&A P&L That's just into say to that of and maybe kind some up? of about stronger coming quarters SG&A looking and you're pivot your And of into levels F I you respect kind are seasonally QX? about we

Sure. have been how line Yes, with business deflationary pressure. teams that time managed through our we're a top really pleased the has challenging what with

the moving SG&A sequentially that's and look SG&A about up about with at revenue you was to X%, QX If up overall cost QX, X%.

volumes. So equivalents to the an last perspective teams organic and about face great on increasing have headcount the a full-time flat in done We've basis, that is held job. of a year from

the So we've business generated through productivity quarter. the some volumetric in

QX. step You have level right into have and out the QX asked do think level? about we to we right we And the of do

base the actions to planned So fiscal and cost a cost year. this leverage we right of operating that step our take move fiscal point and months. seasonally go that an of we next improve we think will don't we into to care as to any year on cost But up we improving bit as through continue we at should market have this volumes strong out continue have because

we and basis that leverage, as back its I'd to If at XX again, gap work I to growth. to year the look points just SG&A flat get about XX in on points were down expect prior QX, to way we continue QX. go back down pure QX And to basis about in

Our from of Manthey of Baird. today is next question line Dave the

guidance Dave. starting even on Fredrickson you're or wondering, markets obviously Quinn that qualitatively, this fiscal your This which is just groups, or as better not into know I 'XX there a end But bit at stage. for of customer providing And feel conversely, conceptually to next about? year, little that see fiscal on? you're out kind more any starting pressure you of you're maybe to looking are

start actually at house of to you, the both look performance forward. residential and the nonresidential, Thank really pleased with when in We're and quarter Yes. Quinn. the we sides look you as

demand construction not levels that becomes earlier so new highlighted out that home and historically, the seen is We the single-family we've outlet. turnover happening there. Existing at fact there's

world we're the of into by that move on into and QX And energized we following our ability take so fiscal as of to fourth quarter share side the year.

business, repair the for residential improvement market, the residential that HVAC the plumbing some repair the and focus and trade pretty well residential inside and the our as us putting and professional trade dual energizing that both as on HVAC, the of activity. Additionally, contractor, the investment there maintenance of we're seeing with trade and does expansion side that provides we're that pro

then and chips, filling the tailwind. country's house, only data if to high And that think rise up 'XX are the health continues and at we of that centers, void we beyond, infrastructure is it it as that's now like in you right be history. activity. life continues and our distribution ramp manufacturing, and care, with investment, the look continues go a sciences, things a of supportive to into And and side multiyear really warehouse got nonresidential time unique And

three medium-term if areas, it energized those markets. So in you fairly we're be look by can what at

unpack help And maybe then think That's very us question I'm Bill, right. All quarter. you if on third the of mentioned, you second wondering margin I for that that? here pricing or gross helpful. could in seasonally things, execution. But in It's was really like rebates was seemed anything the terms just anything unusual good of side it on just there strong. like

Or that? to unpack you're any of tools then that color to the drive there secondly on And help doing just Are Can associates? things. providing you you're side there. certain what execution

business one-off or really in a we throughout gross Yes, are that try margins time. sure. the terms execute there a Nothing the initiatives quarter. But look, over to of stronger driving to been unusual in number of have

Certainly, absolutely pricing tools pricing we there that a put perspective from out that a hands terms we've price. of of or price for a a are the in special of tools analytics associates setting quote. a number are for to rolled derive job price on relevant a There our a in a

overall drive In we best our strategy, product the which but most terms of are continue or selling is that also to approach, appropriate gives the individual gross products work project, that an for margin. us

focus lot owned And are a strategy. job So the brands. nice a we've had nice certainly, brand And to there's on got then we've our executing of product and core initiative is throughout which on that. that some teams that own organization, our improvement doing

there So aspects improved our to number a are of gross margins.

take as As year-to-date. gross larger margin we'd Typically, pressure But gross like our businesses, bit QX, tend margin lower the a of a gross there's share delivery we in HVAC of seasonal look total quite expect the and in to revenue. overall, pleased forward, with margins. continued strong Waterworks, the

build Yes, mix, think we that you our our gross incredibly margin. in reflected Bill saying. need do in that trade country value it's best can to time the in margin being to their that if valuable, we the anything professionals add Quinn, construction the and for gross We productivity is at the And of marketplace. bit the on reflection a and look we provide little think was what maybe to

their making the marketplace. And breadth do in time on and some Bill's lot of the with that, to are with that for point serving also in around and to product selection, that, sure and a product strategy; full needs needs their best of has depth unique we

And we're so think we reflection as that go gross we'll is that of what drive forward. a continue good we margin and doing, to

from line of Our is Keith Truist. the of Hughes next question today

to into talk see Could continuing about deflation individual Just affecting? and a you what what sectors the delve deflation to more. products that's are little

commodity like driven side world. us, the copper it's plastic to it's for sure. et Keith, cetera. we of products, the commodity all steel, pipe, just steel And talk pipe, -- when Yes, level Again, things tube, carbon set, again, about on

slightly it's total So revenue. our under of XX%

in are the of form some commodities moving deflation. direction, those all year-over-year same While are most in

trend to tube, before. it's couple -- up go just still started I but we But of quarters would see that couple again, we've it's Again, that continues, how for to year-over-year. inflation. move Copper expect to sequentially, back the next tube that to up, but over things copper that back of turn to a moves. still down highlighted difficult to down us If predict

steel, been flat. a more sequentially Carbon has steel stainless bit

to it out take move of a bit So longer will deflation.

still of line. deflation driving and plastic the we between different territory in there pressure top past the And overall. we've total that's in the which then plastics in while side is some it's deflationary talked still world, pipe, X% plumbing have the pipe basket some in that the in about that pressures But plastic there's Waterworks general, the commodity

important cost-led think out, that quarter. in the most commodity number I deflation that drove this is the X% And call input that that's is

pipe, back after any to question signs you final on high of particularly real remained there, one has And run. seeing deflation that down prices? coming diameter plastic Okay. the water this. pipe, substantial Are The of historical large

in nature of quarter pressure manufacturers, the PVC deflation supportive, year-on-year into plastic than those the vertical account. Waterworks. as inside have still pipe performed is of all the that But reasons more of terms of variety case, demand inside that whether the in the they the side has could how the play business. overall It to residential better of pipe plumbing being A different things be

question, numbers And trade Okay. final X%. were residential the very encouraging, positive that

volume. a little better a than mentioned? the I Was think volume comment number on the you made you there revenue

encouraged by are was. it we And Yes, volume. the

good that it, of Our in deflation just and the teams what to, even portion work inside a call market. performance of face large plastic are out driving attributed there pipe of doing you over-market

out they've So gaining job in market. done as and that of nice share, trade residential going repair both as in in a construction well new

Our is from Mike Markets. Capital Dahl of the line RBC today of next question

for Chris Mike. It's on Kalata

goods finished market? your Could pushing pricing on going maybe that's side. Just dynamic that? pressures the just your it and to competitive little the in causing back? flesh the back it a comments Is out customers conversation the around spottiness more you Is

last then expectation overall including And was be pricing, to quarter, I in commodity, XQ. your think positive

Now of that's it this through through year. to -- the you're be negative expecting end

expecting to expect XQ some you you 'XX? eventual just pricing are color inflection. Or So do positive in there be when positive on price total

as the quarter commodity Chris, input by in the deflation was Yes. we deflation. driven indicated, cost

pressure increases of terms that. reasonably nature the are spotty competitive with that going finished number, manufacturers that on through. pleased of goods goods cycle In that's the increase not annual flat price It's driving finished we're down. It's our that

that if where X% so is look And you that the we're again, is, that cost deflation by input commodity experiencing. driven strictly at

bit for year in and The then what now, expect in combination our be deflation of finished level our so point, lasting a -- changed fiscal that Yes. fiscal a not we -- driven in overall commodity full longer. has deflation we a around to might spottier, similar much of versus deflation the terms year we expecting down that inflation to to say as goods as now And us X%, QX. price maybe it's Kevin's of bit expected, have expected has second what part

into start last lasts. call of perhaps to We the that comparables. that fiscal that which, But going hard of our over the inflects. the not we're it's roll to year. long again, into exactly when expect how to when to Again, step likely we Hard call deflation to lessen deflationary that as do those is future, turns, least

quantification can what called then in And to provide any exiting kind on some tailwind. And terms today just tailwinds of that next. you're I just you of mega And shifting of growth into maybe the year was projects Understood. in on you expectations curious this of out past. seeing the

Yes.

have we strong good to As continue we said, activity. bidding

that to as through together GC & well continue that Fire groups valve the and Our on owners with Fabrication, both work that's fitting. and well are Commercial/Mechanical infrastructure, the from as job quarter. And pipe, and project impacting then industrial specialist evident pros it's that the through individual the

up see You X%. Commercial/Mechanical

business. our nonres of deflation X% You despite see up the total business our X%, our having entirety of Waterworks than up book more

starts you're ramp move process. fits we to 'XX. starts that peaking we these construction to up, through going 'XX, And that said, see As as projects and we as longer. and look forward, take as probably the They we have start

but office, commercial center, So high-rise as of it it's warehouse, filling we've now, void suffice say a said. tailwind, knock-on to longer got that the distribution right activity, it's

we now of last our will of take Atlantic. line from Redburn the question And Will Jones

continued Can do through I just the QX might QX in When than X% talk year, you the please? better back implication improvement like-for-like? about come on is the of of there volume, that plus rest the you

around the secondly, maybe And you then of kind update DC just could rollout. if

that's trim Toronto year look with Presumably, million. spring. the think the remind this in $XX CapEx marry and coming I 'XX? the you what's year us pulled perhaps just by Could up that for DCs that the not opened later And about to as down we you themselves.

bit broadly flat just positive does full with there's if range a the a Well, more for to around broadly look we flat than a to would growth slightly somewhere continue that at get the Certainly, the as X% going step that, we're on Yes. you that of to imply that better midpoint. But year volume through that QX, imply at about have guide, fourth guide. to would X% X% quarter. deflation, midpoint

So that is our expectation.

we terms of open To rollout. last the MDC few the the within MDC your just did Toronto In months. point,

now open. X that are got we've So

have That that phase. in Dallas construction be Nashville, D.C. X the are in Washington, would and more We

of Front in of addition Florida. like in that some down automation those format that to large our we large-format we've and Fort in and building adding to then launched MDCs. buildings, then center and automation developed Royal are a And some in our Myers distribution newer areas that, adding existing We're

that continuing laid out plan with on execution we MDCs. we're the So

is perspective, flow So in estate in But door. real no out change strategy. and simply here. from strategy timing It CapEx there's a when change going to of no cash is that those investments the

today's over Thank I'll Q&A some you. This for session. Murphy hand now Kevin back concludes remarks. to closing

today. for Thank time the again thank you you, operator. And your call on

projects sincere thanks our associates. our work continue make successful our express They continue to to They and sustainable. to want customers. more to value to again We their simple, add to

look also to growth improvement operating the adjusted in it margin volume We're pleased year a X.X%. X.X% we've of by we quarter. the of in X.X% As We're to driven as the play achieve growing expected. pleased largely the EPS by and in out with at total, delivery revenue continues quarter

to We for your much time. very you. you very greatly. thank again, appreciate Thank talk it soon. So you We'll

for like thank Third Ferguson the you concludes That Call. Conference I'd Quarter to Results your participation.

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