Trian Partners Activist Presentation Deck
Trian's Investment Thesis
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2. Scale = Virtuous Cycle
Ferguson is #1 player in highly fragmented North American market
We expect Ferguson to be the prudent consolidator (completed 15 acquisitions last year)
Scale advantages driven by vendor rebates; private label; DC network; product availability; local
market route density
- Provides ability to reinvest in growth initiatives such as e-commerce (25% of business)
Ferguson has grown US organic revenue at a ~7.5% CAGR since 2014 - outgrowing the market
300-400 bps organically (1) while increasing margins and return on capital
▪ We believe Ferguson can significantly enhance market share over time
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1. Attractive North American Business
Commercial and residential trade customers value convenience and availability over price...labor
costs more than product to end user
Branch-driven business: ~80% of sales originated or distributed from a Ferguson branch or
showroom (Amazon-resilient business)
~75% of blended branch business is repair, maintenance, and improvement oriented (less cyclical)
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3. We Believe Ferguson is Mispriced as a UK-Listed Equity as 100% of its EBITDA
Will Be from North America Following the UK Business De-Merger(²)
Leading specialty distributors in the US trade at 17.2x EBITDA versus Ferguson at 10.4x EBITDA
Source: Company filings, investor presentations, FactSet.
(1) According to Ferguson management. Data sourced from investor presentation dated October 2, 2018. (2) Subject to shareholder approval.
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