ferg-20221031

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-40066

Ferguson plc
(Exact name of registrant as specified in its charter)


Jersey, Channel Islands						98-1499339
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

1020 Eskdale Road, Winnersh Triangle, Wokingham,

Berkshire, RG41 5TS, United Kingdom

(Address of principal executive offices and zip code)

+44 (0) 118 927 3800

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)


Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary Shares of 10 pence	FERG	New York Stock Exchange
		London Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of November 30, 2022, the number of outstanding ordinary shares was 207,654,899.

EXPLANATORY NOTE

Ferguson plc (the “Company”), a corporation organized under the laws of Jersey, Channel Islands, qualifies as a foreign private issuer in the United States for purposes of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company voluntarily has chosen to file annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K with the United States Securities and Exchange Commission instead of filing on the reporting forms available to foreign private issuers.

TABLE OF CONTENTS


			PAGE


CERTAIN TERMS			1
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS			1
PART – F INANCIAL INFORMATION			3
Item 1. Financial Statement s and Supplementary Data			3
Condensed Consolidated Statements of Earnings			3
C ondensed C onsolidated Statements of Comprehensive Income			4
C ondensed C onsolidated Balance Sheets			5
C ondensed C onsolidated Statements of Shareholders’ Equity			6
C ondensed C onsolidated Statements of Cash Flows			7
Notes to the Condensed Consolidated Financial Statements			8
Note 1 : Summary of significant accounting policies			8
Note 2 : Revenue and s egment information			9
Note 3 : Earnings per share			11
Note 4 : Income tax			11
Note 5 : Debt			12
Note 6 : Assets and liabilities at f air value			14
Note 7 : Commitments and contingencies			14
Note 8 : Accumulated other comprehensive loss			14
Note 9 : Retirement benefit obligation s			15
Note 10 : Shareholders’ equity			16
Note 11 : Share-based compensation			16
Note 12 : Related part y transaction s			18
Note 13 : Subsequent events			18
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			19
Item 3. Quantitative and Qualitative Disclosures About Market Risk			26
Item 4. Controls and Procedures			26
PART II - OTHER INFORMATION			27
Item 1. Legal Proceedings			27
Item 1A. Risk Factors			27
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			27
Item 5. Other Information			28
Item 6. Exhibits			29
SIGNATURES			30

CERTAIN TERMS

Unless otherwise specified or the context otherwise requires, the terms “Company,” “Ferguson,” “we,” “us” and “our” and other similar terms refer to Ferguson plc and its consolidated subsidiaries. Except as otherwise specified or the context otherwise requires, references to years indicate our fiscal year ended July 31 of the respective year. For example, references to “fiscal 2023” or similar references refer to the fiscal year ended July 31, 2023.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain information included in this quarterly report on Form 10-Q (this “Quarterly Report”) is forward-looking, including within the meaning of the 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 include, without limitation, statements or guidance regarding or relating to our future financial position, results of operations and growth, projected interest in and ownership of our ordinary shares by domestic U.S. investors, plans and objectives for future capabilities, risks associated with changes in global and regional economic, market and political conditions, ability to manage supply chain challenges, ability to manage the impact of product price fluctuations, our financial condition and liquidity, legal or regulatory changes, and other statements concerning the success of our business and strategies.

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, in each case, their negative or other variations or comparable terminology and other similar references to future periods. Forward-looking statements speak only as of the date on which they are made. They are not assurances of future performance and are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Therefore, you should not place undue reliance on any of these forward-looking statements. Although we believe that the forward-looking statements contained in this Quarterly Report are based on reasonable assumptions, you should be aware that many factors 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, including any macroeconomic or other consequences of the current conflict in Ukraine;

•failure to rapidly identify or effectively respond to direct and/or end customers’ wants, expectations or trends, including costs and potential problems associated with new or upgraded information technology systems;

•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 markets, as well as the repair, maintenance and improvement (“RMI”) and new construction markets;

•changes in competition, including as a result of market consolidation;

•failure of a key information technology system or process as well as exposure to fraud or theft resulting from payment‐related risks;

•privacy and protection of sensitive data failures, including failures due to data corruption, cybersecurity incidents or network security breaches;

•ineffectiveness of or disruption in our domestic or international supply chain or our fulfillment network, including delays in inventory, increased delivery costs or lack of availability;

•failure to effectively manage and protect our facilities and inventory;

•unsuccessful execution of our operational strategies;

•failure to attract, retain and motivate key associates;

•exposure of associates, contractors, customers, suppliers and other individuals to health and safety risks;

•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 and service quality;

•inability to renew leases on favorable terms or at all, as well as any remaining obligations under a lease if we close a facility;

•changes in, interpretations of, or compliance with tax laws in the United States, the United Kingdom, Switzerland or Canada;

•our indebtedness and changes in our credit ratings and outlook;

•fluctuations in foreign currency and product prices (e.g., commodity-priced materials, inflation/deflation);

•funding risks related to our defined benefit pension plans;

•legal proceedings as well as failure to comply with domestic and foreign laws and regulations or the occurrence of unforeseen developments such as litigation;

•risks associated with the relocation of our primary listing to the United States and any volatility in our share price and shareholder base in connection therewith;

•the costs and risk exposure relating to environmental, social and governance (“ESG”) matters;

•adverse impacts caused by the COVID‐19 pandemic (or related variants); and

•other risks and uncertainties set forth under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended July 31, 2022 as filed with the Securities and Exchange Commission (“SEC”) on September 27, 2022 (the “Annual Report”) and in other filings we make with the SEC in the future.

Additionally, 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.

Part I - FINANCIAL INFORMATION

Item 1.Financial Statements and Supplementary Data

Ferguson plc

Condensed Consolidated Statements of Earnings

(unaudited)


	Three months ended
	October 31,
(In millions, except per share amounts)	2022	2021
Net sales	$7,931	$6,803
Cost of sales	(5,510)	(4,676)
Gross profit	2,421	2,127
Selling, general and administrative expenses	(1,509)	(1,314)
Depreciation and amortization	(81)	(74)
Operating profit	831	739
Interest expense, net	(41)	(27)
Other income (expense), net	2	(1)
Income before income taxes	792	711
Provision for income taxes	(197)	(176)
Income from continuing operations	595	535
Income from discontinued operations (net of tax)	—	25
Net income	$595	$560

Earnings per share - Basic:
Continuing operations	$2.85	$2.42
Discontinued operations	—	0.11
Total	$2.85	$2.53

Earnings per share - Diluted:
Continuing operations	$2.84	$2.40
Discontinued operations	—	0.11
Total	$2.84	$2.51

Weighted average number of shares outstanding:
Basic	208.7	221.4
Diluted	209.8	222.7

See accompanying Notes to the Condensed Consolidated Financial Statements.

Ferguson plc

Condensed Consolidated Statements of Comprehensive Income

(unaudited)


	Three months ended
	October 31,
(In millions)	2022	2021
Net income	$595	$560
Other comprehensive (loss) income:
Foreign currency translation adjustments	(36)	—
Pension (loss) income, net of tax benefit of $2 and $—, respectively.	(1)	3
Total other comprehensive (loss) income, net of tax	(37)	3
Comprehensive income	$558	$563

See accompanying Notes to the Condensed Consolidated Financial Statements.

Ferguson plc

Condensed Consolidated Balance Sheets

(unaudited)


	As of
(In millions, except share amounts)	October 31, 2022	July 31, 2022
Assets
Cash and cash equivalents	$638	$771
Accounts receivable, less allowances of $42 and $27, respectively	3,609	3,610
Inventories	4,233	4,333
Prepaid and other current assets	899	834
Assets held for sale	3	3
Total current assets	9,382	9,551
Property, plant and equipment, net	1,410	1,376
Operating lease right-of-use assets	1,225	1,200
Deferred income taxes, net	196	177
Goodwill	2,042	2,048
Other intangible assets, net	760	782
Other non-current assets	510	527
Total assets	$15,525	$15,661

Liabilities and shareholders' equity
Accounts payable	$3,335	$3,607
Short-term debt	—	250
Current portion of operating lease liabilities	327	321
Share repurchase liability	77	324
Other current liabilities	1,356	1,297
Total current liabilities	5,095	5,799
Long-term debt	3,759	3,679
Long-term portion of operating lease liabilities	900	878
Other long-term liabilities	650	640
Total liabilities	10,404	10,996

Shareholders’ equity:
Ordinary shares, par value 10 pence: 500,000,000 shares authorized, 232,171,182 shares issued	$30	$30
Paid-in capital	773	760
Retained earnings	8,129	7,594
Treasury shares, 24,069,674 and 21,078,577 shares, respectively at cost	(2,897)	(2,782)
Employee Benefit Trusts, 284,562 and 846,491 shares, respectively at cost	(47)	(107)
Accumulated other comprehensive loss	(867)	(830)
Total shareholders' equity	5,121	4,665
Total liabilities and shareholders' equity	$15,525	$15,661

See accompanying Notes to the Condensed Consolidated Financial Statements.

Ferguson plc

Condensed Consolidated Statements of Shareholders’ Equity

(unaudited)


	Three Months Ended October 31, 2021
(In millions, except per share data)	Ordinary Shares	Paid-in Capital	Retained Earnings	Treasury Shares	Employee Benefit Trusts	Accumulated Other Comprehensive Loss	Total Equity
Balance at July 31, 2021	$30	$704	$6,054	($931)	($58)	($796)	$5,003
Share-based compensation	—	24	—	—	—	—	24
Net income	—	—	560	—	—	—	560
Other comprehensive income	—	—	—	—	—	3	3
Share repurchases	—	—	—	(390)	(43)	—	(433)
Shares issued under employee share plans	—	—	(50)	7	43	—	—
Balance at October 31, 2021	30	$728	$6,564	($1,314)	($58)	($793)	$5,157


	Three Months Ended October 31, 2022
(In millions, except per share data)	Ordinary Shares	Paid-in Capital	Retained Earnings	Treasury Shares	Employee Benefit Trusts	Accumulated Other Comprehensive Loss	Total Equity
Balance at July 31, 2022	$30	$760	$7,594	($2,782)	($107)	($830)	$4,665
Share-based compensation	—	13	—	—	—	—	13
Net income	—	—	595	—	—	—	595
Other comprehensive loss	—	—	—	—	—	(37)	(37)
Share repurchases	—	—	—	(115)	—	—	(115)
Shares issued under employee share plans	—	—	(60)	—	60	—	—
Balance at October 31, 2022	$30	$773	$8,129	($2,897)	($47)	($867)	$5,121

See accompanying Notes to the Condensed Consolidated Financial Statements.

Ferguson plc

Condensed Consolidated Statements of Cash Flows

(unaudited)


(In millions)	Three months ended
	October 31,
	2022	2021
Cash flows from operating activities:
Net income	$595	$560
(Income) from discontinued operations	—	(25)
Income from continuing operations	595	535
Depreciation and amortization	81	74
Share-based compensation	13	19
Decrease (increase) in inventories	94	(386)
Increase in receivables and other assets	(56)	(337)
Decrease in accounts payable and other liabilities	(395)	(44)
Change in deferred taxes and income tax payable	167	128
Other operating activities	2	2
Net cash provided by (used in) operating activities of continuing operations	501	(9)
Net cash used in operating activities of discontinued operations	(3)	—
Net cash provided by (used in) operating activities	498	(9)

Cash flows from investing activities:
Purchase of businesses acquired, net of cash acquired	(5)	(48)
Capital expenditures	(95)	(54)
Other investing activities	(4)	(3)
Net cash used in investing activities of continuing operations	(104)	(105)
Net cash provided by investing activities of discontinued operations	—	25
Net cash used in investing activities	(104)	(80)

Cash flows from financing activities:
Purchase of own shares by Employee Benefit Trusts	—	(43)
Purchase of treasury shares	(366)	(97)
Repayments of debt	(1,505)	—
Proceeds from debt	1,350	—
Change in bank overdrafts	7	1,070
Other financing activities	(5)	(4)
Net cash (used in) provided by financing activities	(519)	926
Change in cash, cash equivalents and restricted cash	(125)	837
Effects of exchange rate changes	(8)	(6)
Cash, cash equivalents and restricted cash, beginning of period	785	1,342
Cash, cash equivalents and restricted cash, end of period	$652	$2,173

Supplemental Disclosures:
Cash paid for income taxes	$29	$48
Cash paid for interest	57	20
Accrued capital expenditures	11	7

See accompanying Notes to the Condensed Consolidated Financial Statements.

Ferguson plc

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Note 1: Summary of significant accounting policies

Background

Ferguson plc (the “Company”) (NYSE: FERG; LSE: FERG) is a public company limited by shares incorporated in Jersey under the Companies (Jersey) Law 1991 (as amended). The Company is a value-added distributor in North America providing expertise, solutions and products from infrastructure, plumbing and appliances to HVAC, fire, fabrication and more. We exist to make our customers’ complex projects simple, successful and sustainable. Ferguson is headquartered in the United Kingdom (“U.K.”), with its operations and associates solely focused on North America and managed from Newport News, Virginia. The Company’s registered office is 13 Castle Street, St Helier, Jersey, JE1 1ES, Channel Islands.

Basis of presentation

The accompanying unaudited condensed consolidated financial statements and notes to the condensed consolidated financial statements are presented in accordance with the rules and regulations of the Securities and Exchange Commission and accounting principles generally accepted in the United States of America (“U.S. GAAP”), but do not include all the disclosures normally required in annual consolidated financial statements. The unaudited condensed consolidated financial statements, in the opinion of management, contain all normal recurring adjustments necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented. The July 31, 2022 condensed consolidated balance sheet was derived from the audited financial statements.

These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2022 (the “Annual Report”). The financial results for the interim periods may not be indicative of the financial results for the entire fiscal year.

Use of estimates

The preparation of the Company's interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions affecting certain reported amounts. Actual results may differ from those estimates.

Cash, cash equivalents and restricted cash

Cash and cash equivalents include cash on hand, deposits with banks with original maturities of three months or less and overdrafts to the extent there is a legal right of offset and practice of net settlement with cash balances.

Restricted cash primarily consists of deferred consideration for business combinations, subject to various settlement agreements, and is recorded in prepaid and other current assets in the Company’s condensed consolidated balance sheets.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows.


	As of
(In millions)	October 31, 2022	July 31, 2022
Cash and cash equivalents	$638	$771
Restricted cash	14	14
Total cash, cash equivalents and restricted cash	$652	$785

Recently issued accounting pronouncements

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of Effects of Reference Rate Reform on Financial Reporting. This ASU, and subsequent clarifications, provide practical expedients for contract modification accounting related to the transition away from the London Interbank Offered Rate (“LIBOR”) and other interbank offering rates to alternative reference rates. The expedients are applicable to contract modifications made and hedging relationships entered into on or before December 31, 2022. The amendments should be applied on a prospective basis. The Company has evaluated the impact of reference rate reform and does not expect a material impact to the Company’s consolidated financial statements.

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The amendments address how to determine whether a contract liability is recognized by the acquirer in a business combination and provides specific guidance on how to recognize and measure acquired contract assets and contract liabilities from revenue contracts in a business combination. For public business entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption of the amendments is permitted, including adoption in an interim period. The Company is evaluating this standard update and does not expect a material impact to the Company’s consolidated financial statements.

Recent accounting pronouncements pending adoption that are not discussed above are either not applicable, or will not have, or are not expected to have, a material impact on our consolidated financial condition, results of operations, cash flows or related disclosures.

Note 2: Revenue and segment information

The Company reports its financial results of operations on a geographical basis in the following two reportable segments: United States and Canada. Each segment generally derives its revenues in the same manner. The Company uses adjusted operating profit as its measure of segment profit. Adjusted operating profit is defined as profit before tax, excluding central and other costs, restructuring costs, amortization of acquired intangible assets, net interest expense, as well as other items typically recorded in net other (expense) income such as (loss)/gain on disposal of businesses, pension plan changes/closure costs and amounts recorded in connection with the Company’s interests in investees. Certain income and expenses are not allocated to the Company’s segments and, thus, the information that management uses to make operating decisions and assess performance does not reflect such amounts.

Segment details were as follows:


	Three months ended
	October 31,
(In millions)	2022	2021
Net sales:
United States	$7,532	$6,418
Canada	399	385
Total net sales	$7,931	$6,803
Adjusted operating profit:
United States	$845	$752
Canada	33	34

Central and other costs	(14)	(19)

Corporate restructurings(1)	—	(1)
Amortization of acquired intangible assets	(33)	(27)
Interest expense, net	(41)	(27)
Other (expense) income, net	2	(1)
Income before income taxes	$792	$711

(1)For the three months ended October 31, 2021, corporate restructuring costs related to the incremental costs of the Company’s listing in the United States.

Our products are delivered through a common network of distribution centers, branches, specialist sales associates, counter service, showroom consultants and e-commerce. The Company recognizes revenue when a sales arrangement with a customer exists, the transaction price is fixed or determinable and the Company has satisfied its performance obligation per the sales arrangement. The majority of the Company’s revenue originates from sales arrangements with a single performance obligation to deliver products, whereby the performance obligations are satisfied when control of the product is transferred to the customer which is the point the product is delivered to, or collected by, the customer.

The Company determined that disaggregating net sales by end market at the segment level achieves the disclosure objective to depict how the nature, amount, timing, and uncertainty of revenue and cash flows may be impacted by economic factors. The disaggregated net sales by end market are as follows:


	Three months ended
	October 31,
(In millions)	2022	2021
United States:
Residential	$4,002	$3,477
Non-residential:
Commercial	2,419	2,053
Civil/Infrastructure	638	501
Industrial	473	387
Total Non-residential	3,530	2,941
Total United States	7,532	6,418
Canada	399	385
Total net sales	$7,931	$6,803

No sales to an individual customer accounted for more than 10% of net sales during any of the periods presented.

The Company is a value-added distributor of products from infrastructure, plumbing and appliances to HVAC, fire, fabrication and more. We offer a broad line of products, and items are regularly added to and removed from the Company's inventory. Accordingly, it would be impractical to provide sales information by product category due to the way our business is managed and the dynamic nature of the inventory offered.

Note 3: Earnings per share

Basic earnings per share is calculated using our weighted-average outstanding common shares. Diluted earnings per share is calculated using our weighted-average outstanding common shares including the dilutive effect of share awards as determined under the treasury stock method.

The following table shows the calculation of diluted shares:


	Three months ended
	October 31,
(In millions, except per share amounts)	2022	2021
Income from continuing operations	$595	$535
Income from discontinued operations (net of tax)	—	25
Net income	$595	$560

Weighted average number of shares outstanding:
Basic weighted-average shares	208.7	221.4
Effect of dilutive shares	1.1	1.3
Diluted weighted-average shares	209.8	222.7

Earnings per share - Basic:
Continuing operations	$2.85	$2.42
Discontinued operations	—	0.11
Total	$2.85	$2.53

Earnings per share - Diluted:
Continuing operations	$2.84	$2.40
Discontinued operations	—	0.11
Total	$2.84	$2.51

Excluded anti-dilutive shares	—	0.1

Note 4: Income tax

Ferguson manages its affairs so that it is centrally managed and controlled in the U.K. and therefore has its tax residency in the U.K. The provision for income taxes consists of provisions for the U.K. plus non-U.K. tax rate differentials with respect to other locations in which Ferguson’s operations are based. Accordingly, the consolidated income tax rate is a composite rate reflecting earnings in various locations and the applicable rates.

The Company’s tax provision for each period presented was calculated using an estimated annual tax rate, adjusted for discrete items occurring during the applicable period to arrive at an effective tax rate. The effective income tax rates were 24.9% and 24.8% for the three months ended October 31, 2022 and 2021, respectively.

During the first quarter of fiscal 2023, there have been no material changes to the Company’s unrecognized tax benefits when compared to those items disclosed in the Company’s Annual Report.

As disclosed in our Annual Report, we consider foreign earnings of specific subsidiaries to be indefinitely reinvested. If at some future date, the Company ceases to be permanently reinvested in these foreign subsidiaries, the Company may be subject to foreign withholding and other taxes on these undistributed earnings and may need to record a deferred tax liability for any outside basis difference on these specific foreign subsidiaries. The potential impact in connection with these items has not materially changed since the end of fiscal 2022.

Note 5: Debt

The Company’s debt obligations consisted of the following:


	As of
(In millions)	October 31, 2022	July 31, 2022
Variable-rate debt:
Receivables Securitization Facility	$50	$455
Term Loan	500	—
Private Placement Notes:
3.43% due September 2022	—	250
3.30% due November 2023	55	55
3.44% due November 2024	150