IFRS to US GAAP conversion
September 28, 2021
US GAAP update
Forward-Looking Statements
Certain information included in this presentation is forward-looking, including within the meaning of the United States 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, including terms such as "believes", "estimates", "anticipates", "expects", "forecasts", "intends", "continues," "plans", "projects", "goal", "target", "aim", "may", "will", "would", "could" or "should" or comparable terminology. Examples of forward-looking statements include, among others: statements or guidance regarding or relating to our transition from IFRS to US GAAP and plans and objectives for future capabilities. Many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those in such forward-looking statements, including, but not limited to: weakness in the economy, market trends, uncertainty and other conditions in the markets in which we operate, and other factors beyond our control; adverse impacts caused by the COVID-19 pandemic or related variants; decreased demand for our products as a result of operating in highly competitive industries and the impact of declines in the residential and non-residential repair, maintenance and improvement ("RMI") markets as well as the new construction market; failure to rapidly identify or effectively respond to consumer wants, expectations or trends; failure of a key information technology system or process as well as exposure to fraud or theft resulting from payment-related risks; unsuccessful execution of our operational strategies; failure to attract, retain and motivate key associates; ineffectiveness of or disruption in our international supply chain or our fulfillment network, including delays in inventory, increased delivery costs or lack of availability; fluctuations in foreign currency and fluctuating product prices (inflation / deflation); inherent risks associated with acquisitions, partnerships, joint ventures and other business combinations, dispositions or strategic transactions; regulatory, product liability and reputational risks and the failure to achieve and maintain a high level of product quality as a result of our suppliers' or manufacturers' mistakes or inefficiencies; legal proceedings as well as failure to comply with domestic and foreign laws and regulations or the occurrence of unforeseen developments such as litigation; changes in, interpretations of, or compliance with tax laws in the United States, the United Kingdom, Switzerland or Canada; privacy and protection of sensitive data failures, including failures due to data corruption, cybersecurity incidents or network security breaches; exposure of associates, contractors, customers, suppliers and other individuals to health and safety risks; funding risks related to our defined benefit pension plans; inability to renew leases on favorable terms or at all as well as any obligation under the applicable lease; failure to effectively manage and protect our facilities and inventory; our indebtedness and changes in our credit ratings and outlook; risks associated with our intention to relocate our primary listing to the United States and any volatility in our share price and shareholder base in connection therewith; and other risks and uncertainties set forth under the heading "Principal Risks and Uncertainties" in our half year earnings announcement dated March 16, 2021 and under the heading "Risk Factors" in our registration statement on Form 20-F filed with the Securities and Exchange Commission ("SEC") on February 12, 2021 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
Non-GAAP Financial Information
This presentation contains financial measures that are not measures presented in conformity with US GAAP. These non-GAAP measures include Adjusted Operating Profit, Adjusted Operating Profit Margin, Operating profit less exceptionals, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted EPS (basic), Adjusted EPS (diluted), ROCE, Average Capital Employed and Net Debt. This presentation includes reconciliations of historical non-GAAP measures to the most comparable US GAAP measure. Management believes the non-GAAP measures in this presentation are commonly used financial measures for investors to evaluate our operating performance and financial position and present a useful tool to evaluate ongoing operations and our performance from period to period. In addition, these are some of the financial metrics management uses in internal evaluations of the overall performance of our business. Management acknowledges that there are many items that impact a company's reported results and the adjustments reflected in these non-GAAP measures are not intended to present all items that may have impacted these results. In addition, these non-GAAP measures are not necessarily comparable to similarly titled measures used by other companies.
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Disclaimer:
- All US GAAP and US non-GAAP financial measures contained in this presentation are unaudited, preliminary and subject to change. Accordingly, such information may be presented differently in future filings by us with the SEC.
US GAAP conversion: Group financial statements
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USSectionGAAPheadingupdate
Headline results summary - IFRS & US GAAP
$ millions | Restated1 | |||||
IFRS Captions | FY 2021 | FY 2020 | FY 2021 | FY 2020 | US GAAP Captions | |
Statutory Financial Results | ||||||
Revenue | 22,792 | 19,940 | 22,792 | 19,940 | Net Sales | |
Profit before tax | 1,891 | 1,292 | 1,862 | 1,272 | Income before income taxes | |
Diluted earnings per share | 670.5c | 423.5c | $6.55 | $4.24 | Diluted EPS | |
Dividend per share | 239.4c | 208.2c | $2.39 | $2.08 | Dividend per share | |
Alternative Performance Measures | ||||||
Gross Margin | 30.6% | 30.0% | 30.6% | 30.0% | Gross Margin | |
Adjusted Operating Profit2 | ||||||
Underlying trading profit | 2,099 | 1,592 | 2,092 | 1,587 | ||
Underlying trading margin | 9.2% | 8.0% | 9.2% | 8.0% | Adjusted Operating Profit Margin3 | |
Adjusted EBITDA | 2,266 | 1,760 | 2,259 | 1,755 | Adjusted EBITDA2 | |
Adjusted EBITDA margin | 9.9% | 8.8% | 9.9% | 8.8% | Adjusted EBITDA Margin3 | |
Headline earnings per share-basic | 688.1c | 508.0c | ||||
Adjusted EPS - diluted2 | ||||||
$6.75 | $5.04 | |||||
Net debt: Adjusted EBITDA2 | 0.6x | 0.6x | 0.5x | 0.6x | Net debt: Adjusted EBITDA2 |
1The Group disposed of its UK business on January 29, 2021. Pursuant to IFRS requirements, the UK results have been reclassified to discontinued operations and the results have been restated. Diluted earnings per share, dividend per share and the net debt : adjusted EBITDA metrics are for the Group and have consequently not been restated.
2See Appendix for reconciliations of the US non-GAAP metrics. Net debt to Adjusted EBITDA is a on a rolling 12-month basis.
3Adjusted Operating Profit Margin and Adjusted EBITDA Margin are calculated by dividing Adjusted Operating Profit or Adjusted EBITDA, as applicable, by net sales.
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USSectionGAAPheadingupdate
Bridge: IFRS trading profit to US GAAP & adjusted operating profit/EBITDA1
FY2021 $ millions | % of | US GAAP | US GAAP | % of | |
IFRS Total | Sales | adjustments | Total | Sales | |
Operating profit | 2,034 | 8.9% | (84) | 1,950 | 8.6% |
Add: Exceptional items2 | 11 | - | 11 | ||
Add: Amortization of acquired intangibles | 131 | - | 131 | ||
Trading Profit | 2,176 | 9.5% | (84) | 2,092 | 9.2% |
IFRS 16 (Leases) impact | (77) | 77 | - | ||
Underlying Trading Profit / Adjusted Operating Profit (respectively) | 2,099 | 9.2% | (7) | 2,092 | 9.2% |
Add: Depreciation | 130 | 130 | |||
Add: Amortization/impairment non-acquired intangibles | 37 | 37 | |||
Adjusted EBITDA | 2,266 | 9.9% | 2,259 | 9.9% | |
Leases (IFRS 16) - New leasing standards became effective in FY2020 for both US GAAP and IFRS. Under US GAAP, operating costs in FY2021 would have increased by $77 million as US GAAP requires recognition of a single charge within operating costs.
Stock based compensation - Operating costs increase by $7 million as certain share based award programs are treated as liability settled under US GAAP and are revalued (i.e., marked-to-market) each reporting period.
- See Appendix for further reconciliations of US non-GAAP metrics.
- Exceptional items are defined in the Company's audited IFRS financial statements. The nature of such items have not changed in the transition.
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Ferguson plc published this content on 28 September 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 September 2021 12:01:10 UTC.