Ferguson Continues Strategic Growth With Four New Acquisitions

Rhea-AI Summary

Ferguson plc (NYSE: FERG; LSE: FERG) has announced the closure of four new acquisitions: Southwest Geo-Solutions, AVCO Supply, GAR Engineering, and Safe Step Tubs of Minnesota. This brings Ferguson's total acquisitions to eight for the fiscal year ending July 31, 2024, with a combined annualized revenue of approximately $350 million.

Southwest Geo-Solutions broadens Ferguson's Waterworks presence in the central and southwest regions. AVCO Supply strengthens Ferguson's position in the commercial pipe, valve, and fitting market in Philadelphia. GAR Engineering expands Ferguson's fire protection design services. Safe Step Tubs of Minnesota enhances Ferguson's offerings in the senior/aging-in-place market.

CEO Kevin Murphy highlights these acquisitions as a strategic fit, enhancing Ferguson's geographic footprint and product offerings while adding valuable talent and customer relationships to the organization.

Positive

• Annualized revenue from acquisitions is approximately $350 million.
• Eight acquisitions completed in the fiscal year ending July 31, 2024.
• Expands Ferguson's Waterworks footprint in the central and southwest regions.
• Strengthens Ferguson's position in the Philadelphia market for commercial pipe, valve, and fitting products.
• Enhances fire protection design and engineering services.
• Expands offerings in the senior/aging-in-place market.
• Adds talented associates with strong customer relationships.
• Proven track record with over 50 acquisitions in the last five years.

Negative

• No specific financial performance or profitability metrics disclosed for the recent acquisitions.

Financial Analyst

Ferguson's recent acquisitions highlight a strategic move to consolidate and expand its presence in different market segments. The aggregate annualized revenue from these acquisitions adds up to approximately $350 million, reflecting a significant growth opportunity. However, it is important to examine the cost of these acquisitions, as the company must ensure that the returns outweigh the investments. This strategy of acquiring businesses in fragmented markets could potentially boost Ferguson's earnings by increasing its market share and diversifying revenue streams.

For retail investors, it's worth noting that such acquisitions can lead to synergies and operational efficiencies, improving profitability in the long term. Yet, caution is advised as the integration of multiple new businesses can sometimes be complex and resource-intensive, possibly impacting short-term margins.

Market Research Analyst

From a market perspective, Ferguson's acquisitions are strategically planned to expand product offerings and enter new geographical areas. For instance, Southwest Geo-Solutions enhances their presence in the erosion control sector, while AVCO Supply strengthens their position in the Philadelphia market. The diversity in the acquired companies—from fire protection to senior living solutions—demonstrates Ferguson's focus on tapping into varied growth markets with strong demand projections.

This approach can mitigate risks associated with market fluctuations in any single sector. Retail investors should observe how these acquisitions drive Ferguson's overall market penetration and whether the company can sustain and grow the new customer base effectively.

Business Strategist

Ferguson's continuous acquisition strategy highlights their commitment to organic and inorganic growth. The mention of cultural alignment indicates a thoughtful approach to integration, which is often a key factor in the success of mergers and acquisitions. By acquiring companies like Safe Step MN, they position themselves in the senior/aging-in-place market, which is projected to grow due to demographic trends. Such strategic positioning could provide Ferguson with a stable and growing revenue stream.

However, the challenge lies in seamlessly integrating these diverse businesses into Ferguson's existing operations. Effective integration will be important for realizing the projected revenue and achieving the desired market expansion. Investors should pay attention to the company's upcoming quarterly reports and any integration-related updates to gauge the success of these acquisitions.

Welcomes talented associates through bolt-on geographic and capability acquisitions

WOKINGHAM, England--(BUSINESS WIRE)-- Ferguson plc (NYSE: FERG; LSE: FERG) announces the closing of four acquisitions: Southwest Geo-Solutions, Inc., AVCO Supply, Inc., GAR Engineering and Safe Step Tubs of Minnesota, Inc. In total, the company has closed on eight acquisitions this fiscal year, ending July 31, 2024. Aggregate annualized revenues for all acquisitions this fiscal year is approximately $350 million.

Southwest Geo-Solutions, Inc.
Southwest Geo-Solutions is a full-service distributor of erosion control, containment, geotextile and geogrid products headquartered in Austin, TX. This acquisition expands Ferguson’s Waterworks footprint in the central and southwest regions, and supports business diversification in erosion control and stormwater management.

AVCO Supply, Inc.
Located in Levittown, PA, AVCO is a leading distributor of boilers and hot water heaters and offers design and specification services to both commercial and residential contractors. The acquisition of AVCO reinforces Ferguson’s commitment to providing engineered solutions to the mechanical contractor and complements our strengths in the commercial pipe, valve and fitting product and hydronic categories in the Philadelphia market.

GAR Engineering, Inc.
GAR Engineering, Inc. is a fire protection engineering service and design firm located in Concord, NC. The acquisition of GAR Engineering allows Ferguson to expand its fire protection design and engineering services.

Safe Step Tubs of Minnesota, Inc.
Safe Step MN is an independent dealer licensed to sell and install Safe Step walk-in tubs and showers in the Midwest, serving the growing senior/aging-in-place market. This acquisition builds on the successful acquisition of Safe Step Walk-in Tub Company in 2018, the number one provider of walk-in tubs in the U.S., and the subsequent acquisitions of two independent dealers in 2022, bringing all Safe Step nationwide dealers and install services into Ferguson.

“We continue to complement our organic growth strategy through capability and bolt-on acquisitions that are a cultural fit with our organization,” said Ferguson CEO Kevin Murphy. “These four companies not only expand our geographic footprint, product offering and capabilities, but also add talented associates to Ferguson. Their knowledge and strong customer relationships are an invaluable asset that will help deliver results and grow marketshare.”

Ferguson has a proven track record of successful acquisitions and has completed more than 50 acquisitions in the last five years. The large, fragmented markets in which Ferguson operates comprise 10,000+ small to medium ($10-300 million revenue) independent companies across Ferguson’s nine customer groups in North America.

About Ferguson

Ferguson plc (NYSE: FERG; LSE: FERG) is a leading value-added distributor in North America providing expertise, solutions and products from infrastructure, plumbing and appliances to HVAC, fire, fabrication and more. We exist to make our customers’ complex projects simple, successful and sustainable. Ferguson is headquartered in the U.K., with its operations and associates solely focused on North America and managed from Newport News, Virginia. For more information, please visit www.corporate.ferguson.com or follow us on LinkedIn linkedin.com/company/ferguson-enterprises.

Cautionary note on forward-looking statements

Certain information in this announcement is forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995, and involves risks, assumptions and uncertainties that could cause actual results to differ materially from those expressed or implied by forward-looking statements. Forward-looking statements cover all matters which are not historical facts and speak only as of the date on which they are made. Forward-looking statements can be identified by the use of forward-looking terminology such as “will,” “continue,” or other variations or comparable terminology. Many factors could cause our plans to differ materially from those in such forward-looking statements, including, but not limited to: the risk that the initiatives and priorities described in this announcement may be delayed, cancelled, suspended or terminated; weakness in the economy, market trends, uncertainty and other conditions in the markets in which we operate, and other factors beyond our control, including disruption in the financial markets and any macroeconomic or other consequences of political unrest, disputes or war; failure to rapidly identify or effectively respond to direct and/or end customers’ wants, expectations or trends, including costs and potential problems associated with new or upgraded information technology systems or our ability to timely deploy new omni-channel capabilities; unsuccessful execution of our operational strategies; adverse impacts caused by a public health crisis; and other risks and uncertainties set forth under the heading “Risk Factors” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on September 26, 2023, and in other filings we make with the SEC in the future. Forward-looking statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Other than in accordance with our legal or regulatory obligations, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240522745315/en/

Investor Inquiries

Brian Lantz

Vice President, IR and Communications

+1 224 285 2410

Pete Kennedy

Director, Investor Relations

+1 757 603 0111

Media Inquiries

Christine Dwyer

Senior Director, Communications and Public Relations

+1 757 469 5813

Christine.dwyer@ferguson.com

Source: Ferguson plc

FAQ

What recent acquisitions has Ferguson plc (FERG) made?

Ferguson plc has acquired Southwest Geo-Solutions, AVCO Supply, GAR Engineering, and Safe Step Tubs of Minnesota.

What is the annualized revenue from Ferguson's recent acquisitions?

The annualized revenue from Ferguson's acquisitions this fiscal year is approximately $350 million.

How many acquisitions has Ferguson plc (FERG) completed this fiscal year?

Ferguson plc has completed eight acquisitions this fiscal year.

How does the acquisition of AVCO Supply benefit Ferguson plc (FERG)?

The acquisition of AVCO Supply strengthens Ferguson's position in the commercial pipe, valve, and fitting market in Philadelphia.

What market does Safe Step Tubs of Minnesota serve after being acquired by Ferguson plc (FERG)?

Safe Step Tubs of Minnesota serves the senior/aging-in-place market.

What services does GAR Engineering provide that Ferguson plc (FERG) can now offer?

GAR Engineering provides fire protection design and engineering services.

What is Ferguson plc's (FERG) strategy for growth?

Ferguson plc's strategy includes organic growth and bolt-on acquisitions that fit culturally with the organization.

How many companies has Ferguson plc (FERG) acquired in the last five years?

Ferguson plc has acquired more than 50 companies in the last five years.