Acquisitions

12 Months Ended

Jul. 31, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

Acquisitions

Note 16. Acquisitions

The Company acquired ten and eight businesses during fiscal 2024 and 2023, respectively. Each of the acquired businesses are primarily engaged in the distribution of plumbing, HVAC and infrastructure related products and was acquired to support growth. In each of the Company’s acquisitions, the Company has substantially purchased the acquiree's business and therefore all transactions have been accounted for as a business combination pursuant to FASB Accounting Standards Codification (ASC) 805.

The following table summarizes the preliminary purchase price allocation for the assets acquired and liabilities assumed in regards to the Company's respective acquisitions occurring in fiscal 2024 and 2023:

	Acquisitions occurring in fiscal
(In millions)	2024	2023
Cash and cash equivalents	$1	$3
Receivables and other assets	53	134
Inventories	50	180
Property, plant and equipment	6	11
Operating lease right-of-use assets	11	66
Trade name intangible assets	5	9
Customer relationships intangible assets	108	207
Other intangible assets	10	4
Trade and other payables	(41)	(80)
Lease liabilities	(11)	(66)
Deferred tax	(7)	—
Provisions	—	(4)
Other	(2)	—
Total	183	464
Goodwill	124	198
Consideration	$307	$662
Satisfied by:
Cash	$261	$619
Deferred consideration	46	43
Total consideration	$307	$662

The fair values of the assets acquired in fiscal 2024 are considered preliminary and are based on management’s best estimates. Further adjustments may be necessary in connection with acquisitions completed in fiscal 2024 when additional information becomes available during the measurement period about events that existed at the date of acquisition. There were no material adjustments in the current fiscal year that related to the closing of the measurement period of acquisitions made in the prior fiscal year. As of the date of this Annual Report, the Company has made all known material adjustments related to acquisitions in fiscal 2024.

The fair value estimates of intangible assets are considered non-recurring, Level 3 measurements within the fair value hierarchy and are estimated as of each respective acquisition date.

The goodwill on these acquisitions is attributable to the anticipated profitability of the new markets and product ranges to which the Company has gained access and additional profitability, operating efficiencies and other synergies available in connection with existing markets. Goodwill acquired during fiscal 2024 that was attributed to the United States and Canada segments were $91 million (2023: $198 million) and $33 million (2023: $0 million), respectively. Goodwill acquired in fiscal 2024 that is expected to be deductible for tax purposes is $90 million (2023: $198 million).

Deferred consideration represents the expected payout due to the sellers of certain acquired businesses that is subject to either 1) a contractual settle-up period or 2) a contingency related to contractually defined performance metrics. If the deferred consideration is contingent on achieving performance metrics, the liability is estimated using assumptions regarding the expectations of an acquiree’s ability to achieve the contractually defined performance metrics over a period of time that typically spans one to three years. When ultimately paid, deferred consideration is reported as a cash outflow from financing activities.

The businesses acquired in fiscal 2024 contributed $126 million to net sales and $4 million in losses to the Company’s income before income tax, including acquired intangible asset amortization, transaction and integration costs for the period between the applicable date of acquisition and July 31, 2024. Acquisition costs in fiscal 2024 was $5 million (2023: $5 million). Acquisition costs are expensed as incurred and included in SG&A in the Company’s consolidated statements of earnings.

The net outflow of cash in respect of the purchase of businesses is as follows:  

	For the years ended July 31,
(In millions)	2024	2023
Purchase consideration	$261	$619
Cash, cash equivalents and bank overdrafts acquired	(1)	(3)
Cash consideration paid, net of cash acquired	260	616
Deferred and contingent consideration paid for prior years’ acquisitions(1)	44	34
Net cash outflow in respect of the purchase of businesses	$304	$650

(1) Included in other financing activities in the consolidated statements of cash flows

Pro forma disclosures

If each acquisition had been completed on the first day of the prior fiscal year, the Company’s unaudited pro forma net sales would have been:

	Year ended July 31,
(In millions)	2024	2023
Pro forma net sales for current year acquisitions	$29,902	$30,140

	Year ended July 31,
(In millions)	2023	2022
Pro forma net sales for prior year acquisitions	$30,299	$29,354

The impact on income before income tax in fiscal 2024, 2023 and 2022, including additional intangible asset amortization, transaction and integration costs, would not be material.

The unaudited pro forma results presented herein do not necessarily represent financial results that would have been achieved had the acquisition actually occurred at the beginning of the prior fiscal year.