David Manthey

David Manthey asked for specific commentary on the HVAC segment, including the benefit from pricing and acquisitions, the status of the refrigerant transition (R410 systems), and any insights into the multifamily market.

Answer

Kevin Murphy, President, CEO & Director, Ferguson, explained that HVAC equipment is seeing inflation due to the transition from R410A to A2L systems, but this is muted by a mix shift towards repair over replacement, resulting in low single-digit overall inflation. He noted strong performance on the East Coast and Midwest, offset by challenges in the Western U.S. Murphy confirmed that the majority of R410A systems were sold through in the fourth quarter. He reiterated the strategy of counter conversions (600+ completed), geographic expansion, and M&A to serve dual-trade contractors, acknowledging near-term market challenges but expressing optimism for the medium term.

David Manthey inquired about the expected organic sales seasonality for 2025, given the reduced M&A activity, asking how to think about quarter-to-quarter progression.

Answer

CFO Robyn Bradbury outlined typical seasonality, stating that Q2 and Q3 are usually similar in size, with a 15% to 20% decline in top-line sales from Q3 to Q4, and Q1 sales being relatively in line with Q4 or slightly uplifted.