Former manager at Ferguson Enterprises
- Ferguson’s (NYSE: FERG) competitive positioning and industry consolidation
- Technology and manufacturing innovation update
- Ferguson’s HVAC (heating, ventilation and air conditioning) offering and high-value growth opportunities
- 2023 demand outlook
Are you monitoring any trends in the HVAC [heating, ventilation and air conditioning] industry or plumbing distributor industry for 2023? Will 2023 look different when compared to past years?
How do you think the slowing housing starts – both residential and commercial – will materially affect Ferguson in 2023? Historically, what does a down cycle look like for the company?
Residential housing starts are slowing and there’s not much you can do about that, but if you were at Ferguson, how would you strategise to work off other revenue streams? As you said, would you focus on diversified segments and areas to try and build up your revenue there to offset the losses that you’ll take in residential?
Could you give a business overview of Ferguson, highlighting the company’s key end markets, projects and geographies?
A PE firm took a 6% share in Ferguson in 2019. Did the perception of the company change within its culture or efficiency after this? You mentioned activist investors, so could you elaborate there?
Have we seen the Amazonification of the distributor industry? In your or Ferguson’s mind, would that look like bricks-and-mortar closing? Are we seeing this in the industry in 2023?
Watsco does about 32% of its total sales currently through an e-commerce site. Could you contextualise this? What might make the company be more successful than Ferguson in terms of e-commerce? How much market share does Ferguson stand to lose to competitors such as Amazon?
Could you estimate the market share that Ferguson may have lost to competitors such as Amazon in the e-commerce set?
If Ferguson’s e-commerce strategy isn’t panning out and the company is perhaps losing market share to Amazon, is it taking the necessary steps to reinvest in the e-commerce platform? What would you do in this situation?
You highlighted Ferguson’s strong fundamentals. What would you highlight as the company’s greatest strengths and core business?
Ferguson has completed five acquisitions since 1 August 2022. Does the company primarily acquire to expand its geographic footprint or equipment base? How should we think about its acquisition strategy?
Are there any other historically underserved regions or is Ferguson pretty much everywhere now in the US?
What makes Ferguson lose to local or regional competition? If you were a customer, why would you choose the local or regional competitor?
What pricing environment do you expect for 2023? You mentioned a couple of price increases. What increases have we seen historically?
What are typical distributor margins in the HVAC and plumbing industry, especially for Ferguson, and what margins should we expect in 2023?
Do you expect any margin growth or compression for Ferguson in 2023, and what’s driving that?
What margin pressure could we see – 5-10%, as you highlighted earlier? What do you think in terms of compression?
Are price increases typically successfully passed on to the customer? Could further price increases eventually cause demand destruction and customer flight?
Ferguson saw strong growth from its industrial non-residential segment in Q1 2023. Is this driven by infrastructure projects and mega-projects ramping up due to the US Infrastructure Bill? Is the company competitive in getting into mega-project development work? Could this be a tail for it?
Who would you highlight as Ferguson’s primary competitors across plumbing and HVAC?
You referred to the plumbing distributor industry as the wild west. Has that wild west been tamed at all? Are you seeing any signs of heating-up competition, conglomerates or consolidations?
If you were a VC or PE consolidator coming in, what is your primary goal? What would you see in the consolidating contractor networks that would make it so attractive to you?
Is there anything a typical analyst might not know or understand about Ferguson or the plumbing distributor industry that they should know or monitor in 2023?
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