Q1 2025 Ferguson Enterprises Inc Earnings Call
With seven 5% lower than last year, driven by lower adjusted operating profit, partially offset by the impact of share repurchases and our balance sheet remains strong at one two times net debt to adjusted EBITDA.
Moving to our segment results net sales in the U S grew by 0.5% with an organic decline of <unk>, 4% offset by a <unk>, 9% contribution from acquisitions.
Adjusted operating profit of $697 million decreased $69 million over the prior year delivering an adjusted operating margin of nine 5%.
In Canada net sales were six 3% ahead of last year with organic growth of one 3% and a five 6% contribution from acquisitions, partially offset by a <unk>, 6% adverse impact from foreign exchange rates.
Markets have been broadly similar to that of the United States with nonresidential activity remaining more resilient than residential.
Adjusted operating profit of $23 million in the quarter was flat to last year.
Moving to our cash performance working capital investments of $376 million. During the first quarter were a touch higher than historical seasonal trends due to timing and investments in HVA SEC to support our growth initiatives as well as the transition to new efficiency standards.
As a result operating cash flow was $345 million in the quarter.
We have continued to invest in organic growth through capex investing $77 million.
Resulting in free cash flow of $274 million in the first quarter.
Turning to capital allocation.
As previously noted we invested $77 million of Capex into the business in the first quarter to build on our competitive advantages and drive above market organic growth.
We're investing in areas such as counter convergence to sell both HVAC and plumbing material to a growing segment of dual trade professionals.
We're also investing to optimize our supply chain network for a combination of automation efficiency and expansion and we continue to invest in digital tools and technology.
We raised our dividend 5% over the prior year to <unk> 83 per share for this quarter, reflecting our confidence in the business and cash generation.
We continue to consolidate our fragmented markets through bolt on geographic and capability acquisitions.
We are pleased to announce two completed acquisitions president of pipe and supply and Templeton.
And finally, we are committed to returning surplus capital to shareholders. When we are below the low end of our target leverage range of one to two times net debt to adjusted EBITDA.
We returned $256 million to shareholders via share repurchases this quarter.
Our share count by approximately $1 3 million.
We ended the quarter with approximately $600 million outstanding under the current share repurchase program.
Speaker Change: Moving on to our fiscal 2025 guidance as Kevin said the year has started largely as we expected and as a result, our guidance is unchanged.
Speaker Change: We expect net sales to grow in the low single digit range based on our market being down low single digits inclusive of pricing being slightly down for the year driven by ongoing deflation in commodity based products.
Speaker Change: We expect continued market outperformance of approximately $3 to 400 basis points.
Speaker Change: And just under a 1% contribution from already completed acquisitions.
Speaker Change: Which is partially offset by one fewer sales day in the third quarter.
Speaker Change: We expect an adjusted operating margin range between nine to nine 5%.
Speaker Change: Interest expense will be between $180 million to $200 million.
Speaker Change: Our adjusted effective tax rate will be approximately 26% and we expect to invest between $400 million to $450 million in capex.
Speaker Change: We believe that our strong balance sheet agile business model balanced end market exposure and continued investment positions us well for the future.
Thank you and I'll now pass back to Kevin.
Speaker Change: Your bill.
Speaker Change: As we conclude our remarks, let me first reiterate how proud we are of our associates, who have displayed disciplined execution, an environment characterized by market headwinds and commodity price deflation.
Speaker Change: Our focus remains steadfast on the principles that underpin our strategy for sustained growth and market leadership.
Speaker Change: Our fiscal year has started largely as we expected.
Speaker Change: Our strong balance sheet enables us to invest in organic growth.
Speaker Change: Consolidated fragmented markets through acquisitions.
Speaker Change: Our capital to our shareholders.
Speaker Change: We will continue to operate at the lower end of our target leverage range maintained the flexibility to capitalize on strategic opportunities as they arise.
Speaker Change: Our commitment to delivering productivity for our customers remains unwavering.
Speaker Change: By enhancing our value added solutions and our digital tools, we're creating efficiencies reducing costs enhancing quality to provide real benefits for our customers.
Speaker Change: This is especially important in the current challenging macroeconomic environment given the pressures on the trade Labor force.
Speaker Change: We expect to continue to outperform our markets as we leverage multiyear structural tailwind.
Speaker Change: Our size scale and strategy. We believe we are well positioned to take advantage of opportunities in the under built an aging U S housing market nonresidential large capital projects.
Speaker Change: The growing demand for plumbing and HVAC specialized professionals.
Speaker Change: Thank you for your time today, Bill and I are now happy to take your questions operator, I'll hand, the call back over to you.
Thank you.
Speaker Change: The lines for Q&A.
Speaker Change: We would like to ask a question. Please press star followed by one telephone keypad now and to make yourself Atlanta questioning will be staff by two.
Speaker Change: Our first question comes from Keith Hughes from Truest, Keith Your line is now.
Keith Hughes: Yes. Thank you.
Speaker Change: SG&A deleverage in the quarter, if you could talk about that.
That would look like.
Speaker Change: For the remainder of the fiscal year.
Bill: Yes. Good morning, Keith This is bill thanks for the question I'll, Let me start with that one.
Bill: If you go back to when we set out guidance for the full fiscal year, we expect it to come into the year.
Bill: Seeing some market headwinds on the topline and continued commodity deflation.
Bill: We acknowledge that that was going to put some pressure on SG&A, particularly deleverage, particularly in the first half of the year and effectively that's what we've seen.
Bill: If you look at volume growth in the quarter.
Bill: Total volumes were up about 3% and the teams have done a really nice job managing head count and full time equivalents.
Bill: At a rate below that so we are driving productivity in the underlying business, but with 3% volume growth. Our total cost base is up about 5% that difference is driven by wage inflation and continued investment. So we are investing in areas like our typical trainee class we brought.
Bill: And roughly a 150 trainees through the start of the fiscal year, we're continuing to invest in our HVAC counter expansion.
Bill: We talked a bit about.
Bill: The Mega project large project teams that we've invested in.
Bill: It's really a combination of volume growth and a reminder, that we have been back to volume growth now for three quarters combined with continued investment.
Keith Hughes: Yeah and Keith.
Speaker Change: We're going to continue to invest to make sure that we can execute on that volume growth for our customers, but also as we expect our markets to return to growth, we want to be ready to capitalize on that and as bill indicated from a market tailwind perspective, we're seeing very good activity levels as we build out our HVAC capabilities.
Speaker Change: Across our plumbing counters, where we've got over 400 counters built out today on the way to over 500, adding greenfield locations and it's starting to pay real dividends as you look at HVAC up 10% on a 4% growth comparable from the prior year.
Speaker Change: You add to that what we're dealing with large capital projects and building out teams.
Speaker Change: B aggressively up funnel to make sure that we're able to capitalize across customer groups from waterworks to commercial mechanical to fire suppression to industrial on some really good project work that's out there that's offsetting traditional nonresidential activity.
Speaker Change: Okay, and then one other question on margins prices down.
Speaker Change: About what it's been for several quarters.
Speaker Change: Gross margin flipped from you were seeing some modest improvements in gross margin only down 10 basis points improvement stop anything specific in this quarter that caused a little more compression with the same pricing environment.
Speaker Change: Yes, Keith I think the continued commodity deflation continues to put a bit of pressure on gross margins, but also when you look at seasonality and business mix.
Speaker Change: I'll go back to kevins comment on HVA see growing at 10%, our waterworks business up 3%. So the businesses that are growing the fastest for US right now have a slightly lower overall gross margin and thats, putting a bit of mixed pressure.
Speaker Change: Gross margin in the short term as we stepped into the quarter as we sat here today. Keith we are pleased with the gross margin profile of the commodity business as <unk>.
Speaker Change: Deflation is happening and our teams are out growing share and also growing volume in those categories and again, we're pretty pleased with where that sits from a gross margin perspective.
Speaker Change: Okay. Thank you.
Speaker Change: Thanks, Steve.
Speaker Change: Thank you very much.
Speaker Change: Our next question comes from Phil <unk> of Jefferies.
Speaker Change: Your line is not open.
Speaker Change: Hey, guys.
Speaker Change: Piggybacking on Keith's question on op.
Speaker Change: Margins when I look at <unk> on balance top line was pretty much down the line and gross margins were pretty impressive. Despite deflation. It was the op margins that was a little lighter at closer to the low end of your full year guide and certainly Q1 and Q4 typically your bigger margin quarters, I guess, so kind of bill help us kind of think.
Speaker Change: Through.
Speaker Change: How do you envision your op margins kind of shaking out more towards the mid point is it a function of some of these investments that you've talked about on the HVAC counter side of things kind of paying more.
Speaker Change: I guess dividends to your results are you taking more opex and then perhaps maybe pricing could look a little better in the back half kind of help us think through how do you envision the op margin progression through the year.
Speaker Change: Yes, sure Phil and so when you take a step back again the quarter was largely in line with our expectations and our full year expectations of operating margins in that nine to nine 5% range are unchanged yes.
Speaker Change: Again, certainly we expected more pressure on SG&A deleverage in the first half.
Speaker Change: Particularly as we step through the first half with that continued commodity deflation and when we sit here today looking at the second quarter.
Speaker Change: Recognizing that we still have some commodity headwinds and we are still facing a low growth environment and our seasonally lightest quarter I would expect some continued pressure on Q2 operating margins, but we do expect improvement as we move through the year.
Speaker Change: We noted a couple of those reasons first off we.
Speaker Change: Our volume growth, we have been at volume growth for three quarters in a row, we expect that volume growth to continue.
Speaker Change: Our open order volumes do continue to build and those have inflected positive, which gives us some confidence that that growth will improve as we move through the fiscal year.
Speaker Change: And then lastly, we do expect deflationary pressures.
Ease as we move through the year.
Speaker Change: A couple of reasons for that first off from a finished goods perspective, we.
Speaker Change: You've talked a lot about the finished goods pricing environment and price increase environment being a bit spotty here than traditional year in the past, we're starting to see as we turn into the calendar year. Some more traditional returns to price increase announcements. So we would expect our finished goods pricing.
Speaker Change: Which again is about 85% of our overall revenue we would expect that to inflect positive as we move through the second half of the year and then commodities, yes, while it's very difficult to predict what's going to happen with commodity pricing.
Speaker Change: <unk>, particularly on a two year stack basis, the deflationary comparable as we will continue to ease as we move through the year.
Speaker Change: So sat here today.
We are still expecting pricing overall to be slightly down for the year, we were down about 2% in the first quarter again. So we are expecting some improvement to pricing as we move through the year.
Speaker Change: That should help along with improved volumes should help second half operating margins, which is why we sit here today with the with the guide on the full year that's unchanged.
Speaker Change: Okay, that's great color Bill.
Speaker Change: It's very encouraging to hear and see the shrink in your civil infrastructure markets in the quarter, you've also talked about how bidding activity for some of these.
Speaker Change: Heavy.
Speaker Change: <unk> has been pretty good so that's encouraging.
Speaker Change: We've heard from some of our private insurance companies will cover calling out.
Larger projects potentially put on pause ahead of the election curious if you see if you saw that and have you seen bidding activity, perhaps stepped up.
Speaker Change: Post election, and with a Trump presidency, how do you kind of see it impacting your different businesses end markets, whether it's U S manufacturing, which is probably a good guide, but perhaps on the other end, maybe edie Edie IRA stuff might be more hampered kind of help us think through what youre seeing and what a Trump presidency.
Good Brian.
Speaker Change: Yes, Phil Thank you Ann.
Speaker Change: Youre right large capital projects have largely offset that traditional nonresidential, we said that for the last couple of quarters. If you then start to go down deeper into that we're seeing continued good bidding activity on the commercial side of the world for large capital that plays through our waterworks business into commercial mechanical and the like.
Speaker Change: As you can imagine that's fairly heavy inside of the data center work.
Speaker Change: I mean, the data center activity it would refer to it as a 100% go 100% funded and go as fast as you can and that work is very attractive to us on a couple of different fronts number one.
Speaker Change: Product set over indexes for us versus a traditional non res projects and candidly our share has been attractive as we approach those especially as we've approached them in a more holistic way across water fire industrial and commercial mechanical so we continue to see bullish stance on that on.
Speaker Change: The EV battery side, the pace is not as fast and it really does depend on the project as well as some of the onshoring activity that were seeing maybe the construction activity in our shipments are.
Speaker Change: Meeting the press release, if you will on what that announcement looked like but really it's about a realistic timeline for construction activity.
Speaker Change: And some of that's affected by the Labor force being a limiting factor some of it around the geography of some of these projects combined with the Labor force. So I think it's just the natural gestation period of those projects in terms of what can happen with a change in administration.
Speaker Change: We don't think that there'll be a slowdown in data center activity in fact quite the opposite when.
Speaker Change: When you look at what's happening from an EV perspective, as we said there's going to be some spotty.
Speaker Change: Fits and starts in that world, but generally speaking we think the large capital project.
Speaker Change: Base continues to grow.
Speaker Change: And we will continue to be attractive for us as we go forward.
Speaker Change: Really appreciate the color guys. Thank you.
Speaker Change: Thanks, Paul.
Speaker Change: Thank you very much.
Speaker Change: Our next question comes from Matthew Bouley with Barclays. Matthew Your line is now open.
Matthew Bouley: Good morning, everyone. Thank you for taking the questions I wanted to ask back on the Opex side with that sort of 5% year over year growth.
Matthew Bouley: Is there a scenario, where you would either kind of pull back on that depending on how the end markets end up shaking out.
Matthew Bouley: Or is there a case that maybe some of these investments from a timing perspective happened to be a little more frontloaded.
Matthew Bouley: Just curious I mean, just if we're thinking about a 5% year over year growth in Opex.
Matthew Bouley: How that kind of plays into the full year operating margin guide. So just curious again around what that year over year growth could look like there. Thank you.
Speaker Change: Yes, Matt Thank you and as we look over the longer term.
Speaker Change: To continue to invest in.
Speaker Change: Volume opportunity, we're seeing today, maybe as importantly, you look at the medium term outlook for our market.
Speaker Change: Talk about the residential side of the house, which is about half of our business. We're under built from a housing perspective, we need single family growth to happen in the market. We're starting to see some signs of that even though the long end of the curve and the 30 year.
Speaker Change: So the place where we think we can really start to accelerate we are seeing some good sparks and bidding activity on the waterworks side of our business for single family across the West South Central and the southeast.
Speaker Change: That gives us some encouragement we're going to continue to build the right volumetric opportunity case for our Labor force, but also not short changing our ability to continue to accelerate out of a downturn as we look at this business more medium term, yes, Matt some of those investments you could argue are a bit front loaded to use.
Speaker Change: Your term I mean in terms of the trainee class we brought in in terms of how we are rolling out HVAC across our counter network. Obviously those are a bit upfront investments and then the returns on that come over time.
Speaker Change: And so we are.
Speaker Change: Very optimistic about the return profile of that we're seeing great early returns on the HVAC business in those growth initiatives and so we're going to press forward with that if the.
Speaker Change: And the environment turns dramatically against what were expecting at volumes turned negative.
Speaker Change: If the markets get worse, we'll take different cost cutting and cost reduction actions, but we don't expect that today and we are continuing to invest as we move through the fiscal year.
Speaker Change: Got it that's super helpful color. Thank you both for that.
Speaker Change: And secondly, zooming into the price side.
Speaker Change: I guess I guess on the commodity side are you still seeing any kind of sequential declines in commodity or has it been a little more stable and then Conversely, as we think about your guide on the finished goods side I guess roughly what level of finished good inflation are you guys assume.
Speaker Change: In order to get the kind of the full year guide. Thank you.
Speaker Change: Yes.
Speaker Change: Finished goods finished goods were still broadly flat in Q1 in terms of year over year pricing.
Speaker Change: As I mentioned earlier on this call we are expecting as we turn into the calendar year that will have some additional price increase activity coming through and we get some sort of low single digit finished goods pricing as we move through the back half of the year that coupled with the <unk>.
Speaker Change: Commodity comparable is easing will.
Speaker Change: We will give us continues to give us a bit of confidence that there is overall deflationary pressures will ease in terms of within the commodity buckets.
Speaker Change: Still seeing a couple of commodity categories that have returned to inflation now. So we mentioned on the last call in Q4 copper tube and fittings, we're showing some inflation year over year that's continuing.
Speaker Change: Still have pressure on steel pipe and on PVC, I would say that thats, a little bit more sequentially stable, but theres still some pressure there. So as we sit here today and we look into the second quarter, we're still expecting some commodity deflation headwinds.
Speaker Change: That we need to work through but again, we expect those to improve as we move through calendar 'twenty five.
Alright, Thanks, Bill Thanks, Kevin Good luck guys.
Matt: Thanks, Matt.
Thank you very much as a reminder, if you wish to ask a question. Please press star followed by one kind of thing keypad and familiar so Atlanta questioning will be stuff on that.
Speaker Change: Next question comes from Mike Dahl of RBC capital markets. Mike. Your line is now open.
Speaker Change: Hey, good morning, everyone, you've actually got EMEA on for Michael Thanks for taking my question.
Speaker Change: The recent political shakeup was brought up earlier, but kind of given the recent focus on tariffs I think it could be helpful. If you could remind us of your international cost exposures and kind.
Speaker Change: And how your thoughts have managed by managing that has shifted since the election and the last administration.
Speaker Change: Thanks, Steven if you look at our overall Cogs and sourcing approach.
Speaker Change: We source products from over 37000 different suppliers, we've got as good of a breath of supplier base and product category.
Speaker Change: As anyone in the industry.
Speaker Change: Can you bifurcate that into.
Speaker Change: Brand and branded products, we source own brand products from over 30 countries and has largely mitigated some of.
China exposure as we said in past calls in areas like lighting and small appliances and the like we still have some China exposure, but generally speaking we have broadened out across multiple countries.
The U S is our second largest.
Speaker Change: Supplier for own brand products, and then the 90% of our business that is branded again, we're sourcing products from a wide variety of manufacturers and we will move our <unk>.
Speaker Change: Alex strategy.
Speaker Change: Based on price and value and we've shown the ability to pass through price.
Speaker Change: In terms of how that landscape changes if you look at overall.
Speaker Change: The macro market provided that it continues to move on as we believe it will.
Speaker Change: We believe can cause for some degree of price inflation in deflationary price environment for us which could be helpful.
Speaker Change: That's very helpful. Thanks, Thanks, guys.
Speaker Change: Thank you very much.
Speaker Change: Our next question comes from John level of UBS.
Speaker Change: Your line is now open Jonathan.
Speaker Change: Morning.
Speaker Change: Good morning, guys. This is actually Matt Johnson on for Jon I appreciate the time I.
Speaker Change: I guess first I'm, sorry, if you guys already hit on this but could you just talk about kind of how organic sales trended through the quarter and into November both volume and pricing basis.
Speaker Change: Yes, there wasn't a lot of variability on organic sales through the quarter or on on overall deflation that 2% overall deflation is.
Speaker Change: Been quite consistent overall for the last five quarters and as we step into the second quarter here from November revenue trend perspective.
Speaker Change: The overall growth and commodity deflation has been pretty consistent with Q1.
Speaker Change: I appreciate that and then I guess just touching on M&A. So you guys completed one acquisition in the quarter could you guys just give us an update on how the pipeline and value valuation expectations look today relative to this time last year that you guys are expecting any sort of ramp up and activity into 2025.
Speaker Change: Yes, the pipeline is still quite healthy when you look at our industry made up of 10000, plus small to medium sized competitors.
Speaker Change: There is ample runway for us to go after from an M&A perspective.
Speaker Change: So we have an active pipeline.
Speaker Change: Valuation not a lot of changes over the last six to 12 months in terms of valuation expectations.
Speaker Change: And so I think we've got a very healthy and robust pipeline looking forward in terms of timing that's always the hardest thing to call.
Speaker Change: In terms of how these are going to come through at any given time. When you look at most of the acquisitions that we're doing these are small to medium sized businesses often family run.
Speaker Change: Businesses and the decision to sell their business as a once in a lifetime decision so calling timing in any given period is difficult, but as we look forward. We've got no doubt in terms of our ability to continue to consolidate our fragmented markets and add somewhere in that 1% to 3% annualized incremental revenue through acquisitions.
Speaker Change: Over time.
Speaker Change: Thanks, guys.
Speaker Change: Okay.
Speaker Change: Operator, do we have another question.
Yes next question comes from Brian <unk> of William Blair Bryan. Your line is now open.
Speaker Change: And our next question comes from David Manthey Fas Davis. Your line is now open.
Speaker Change: Thank you and good morning, everyone.
Speaker Change: Just to hit on the progression here in the guidance again, if opex grew 5% on 2% volume growth and flattish overall revenues this quarter without any major unusual expense items in the Opex should we then assume that as we look forward here.
Your opex is going to grow something in that mid single digit rate give or pay through the remaining quarters of the year and what your outlook assumes is that revenue growth accelerates in the back half of your fiscal year, and then Leverages those operating expenses am I hearing that right.
Speaker Change: Yes, Dave.
Speaker Change: Right.
Speaker Change: Look at overall volume in the quarter up about 3% inclusive of acquisitions, which certainly comparable with cost.
Speaker Change: But that's right.
Speaker Change: Take that volume growth of three.
Speaker Change: And you.
Speaker Change: Add the investments that we've made and add a bit of wage and infrastructure inflation. That's how you get to that mid single digit growth.
Speaker Change: We plan to keep a close watch on that as we move through the back half of the fiscal year, but as our markets returned to growth and particularly as those deflationary pressures ease.
Speaker Change: It should improve SG&A leverage as we move through the year.
Speaker Change: Mhm.
Speaker Change: But it's safe to say that you are looking for at least a bit of revenue growth acceleration as we move through the year is that correct.
Speaker Change: That's correct yes.
Speaker Change: We expect the back half of the year to improve from an overall revenue perspective volumes a bit and easing deflation.
Speaker Change: Okay and then.
Speaker Change: Ported out one fewer day in the third quarter could you talk about what what month that hits just so we get an idea of how impactful that is from a revenue standpoint, and then is there anything else bill that we should keep in mind as it relates to expenses and margins given that the delta in year to year selling days.
Speaker Change: Yes.
Speaker Change: One fewer day in the quarter and the third quarter, Dave I'd have to pull out the month, it's not that relevant which month. It is I think its February because we had 29 days last year in the leap year.
Speaker Change: And if I think about SG&A leverage progression, there's not anything really unique thats going to come in.
Speaker Change: As we move through the through the back of the year just more continued investment in managing the volumetric head count of the business.
Speaker Change: Okay. Thanks very much.
Thank you very much.
Our final question comes from Kathryn Thompson of Thompson Research Group Catherine Your line is now open.
Speaker Change: Hey, good morning, its actually Brian Biros on for Catherine. Thank you for taking my questions today.
Speaker Change: On the gross margin performance. There just can you touch on the things that are in your control help margin than our private label I think is that 10% of sales mother internal margin initiatives I think it'd be helpful to hear.
How those are helping to offset the downward pressures that you mentioned what is out.
Speaker Change: Out of your control.
Speaker Change: Yes, absolutely I mean private label, our own brand as we call it.
Speaker Change: Absolutely a lever and an investment area that should improve our gross margins over time to Kevin's point, it's just under 10% of our revenue today and we believe that.
Speaker Change: We will grow that over time. In addition to that if you look at areas that we're investing in around the pricing side of the business pricing analytics and pricing tools.
Speaker Change: And not to mentioned, we continue to add value added solutions and services and we continue to charge for that value.
Speaker Change: There are a number of levers that we have around improving those gross margins over time, the best thing for us and a challenging trade labor force environment is to continue to add productivity to that contractor base because gross margin is the best reflection of the value that we provide in the marketplace and to Bill's point that starts to manifest itself in areas like.
Speaker Change: Our product strategy and you highlighted one brand, but on brand is only one piece when you look at the partnerships that we have with our branded suppliers, making sure that we can take cost out of the supply chain such that we can grow our gross margins.
Speaker Change: When we sell through that product strategy to the contractor while enhancing their productivity. That's the best long term durable and sustainable path to gross margin expansion.
Speaker Change: And then last one on the on the APAC expansion plans.
Speaker Change: Maybe can you just frame how that's progressing here.
Speaker Change: In a down the residential environment and kind of what that could look like when revenue starts to come back more meaningfully I think it was up.
Speaker Change: Top 10% in the quarter I assume in that top end market just trying to think about we have an easier environment.
Speaker Change: Does that look like thank you.
Speaker Change: Yes, we were really pleased with the growth of the HVAC side of the business up 10% on a 4% comp from prior year.
Speaker Change: Certainly the mix of that business is a bit more attractive as you look at break fix repair and replace as well as new construction and so we were pleased with the way in which we were able to build out.
Speaker Change: Product and expertise on our existing counter locations to the tune of over 400, so far on a track to get over 500 by the end of the fiscal year and over the next 24 months over 650, but additionally, growing our greenfields in the HVAC space.
Speaker Change: Our HVAC expertise with our associate base and the outside sales professionals.
Speaker Change: And then obviously complementing that with the M&A landscape and so we're pleased with what that looks like certainly as we think about an improving economy. Overall that will also improve what the HVAC opportunity is today, we're skewing a bit more towards repair versus replace.
Speaker Change: Certainly as we see new construction start to ramp up that will help that HVAC side of the business as well, but generally really pleased with the approach and the traction that we've got in that space.
Speaker Change: Okay.
Speaker Change: Thank you very much.
Speaker Change: This concludes our questions for today I'd like to pass back to Kevin Murphy for any closing remarks.
Kevin Murphy: Yeah. Thank you yeah as we closed again, let me end by where we began in saying thank you to our associates for their focus and their execution on making our customers projects better because our customers were dealing with Ferguson and thats in the face of market headwinds and ongoing commodity deflation and as Bill has indicated during the Q&A.
Kevin Murphy: This year has started out largely as we expected, but we remain very committed to delivering productivity for our specialized professional customers.
Kevin Murphy: That involves continuing to invest so that we can outperform our markets as they returned to growth and we capitalize on some strong multi year structural tailwind in areas like the dual trade contractor for HVAC plumbing large capital projects like data centers and a multi customer group approach that's going to make those projects.
Speaker Change: Over faster on time and on budget. So thank you very much. We appreciate your time today and look forward to talking to you again very soon.
Speaker Change: We conclude today's call we'd like to thank everyone for joining Matt disconnect your lines.
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Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Alright.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Okay.
Speaker Change: Okay.
Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.