Ferguson Enterprises Inc. ( FERG ) shares are trading lower after the company reported first-quarter results.

The company reported net sales of $7.77 billion, which was 0.8% higher year over year, missing the consensus of $7.83 billion.

Organic revenue fell by 0.3%, with a 1.1% negative impact from acquisition growth. Net sales in the U.S. business increased by 0.5%, while that in Canada grew by 6.3%.

Gross margin contracted by 10 basis points to 30.1% in the first quarter. Adjusted operating margin contracted to 9.1% from 10% a year ago quarter.

Adjusted EBITDA declined to $758 million from $819 million a year ago quarter. Adjusted EPS of $2.45, missing the consensus of $2.62.

The company declared a quarterly dividend per share of $0.83, representing a growth of 5% over prior year. The dividend will be paid on February 6 to stockholders of record as of December 20, 2024.

Ferguson repurchased shares worth $256 million in the quarter, with around $600 million remaining under the current share repurchase program.

Outlook Reiterated: Ferguson expects FY25 net sales growth to be in low-single-digits, adjusted operating margin of 9.0% – 9.5%, and capital expenditures of $400 million – $450 million.

Kevin Murphy, Ferguson CEO, said, “While we anticipate an ongoing challenging near term market environment, we will continue to invest in scale and capabilities to take advantage of multi-year structural tailwinds such as underbuilt and aging U.S. housing, non-residential large capital projects and our opportunity with the plumbing and HVAC specialized professional.”

Investors can gain exposure to the stock via Invesco Water Resources ETF ( PHO ) and Global X Clean Water ETF ( AQWA ) .

Price Action: FERG shares are down 9.82% at $196.36 at the last check Tuesday.

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