(1) The results are presented in accordance with U.S. GAAP on a continuing operations basis.
(2) The Company uses certain non-GAAP measures, which are not defined or specified under U.S. GAAP. See the section titled “Non-GAAP Reconciliations and Supplementary Information.”
Summary of financial results
First quarter
Net sales of $7,931 million were 16.6% ahead of last year, with growth rates slowing through the period as expected. Organic revenue growth was 12.7% with a further 2.7% contribution from acquisitions and 1.5% from an additional sales day, partially offset by a 0.3% adverse impact from foreign exchange rates. Inflation in the first quarter was approximately 15%.
Gross margins of 30.5% were 80 basis points lower than last year driven primarily by strong prior year comparables, during a period of rapid commodity price inflation and acute supply chain disruption. Operating expenses continued to be well controlled, improving 40 basis points as a percentage of sales which partially offset the gross margin decline, limiting operating margin compression to 40 basis points on a reported and adjusted basis. We remain focused on productivity and efficiencies while investing in our talented associates, supply chain capabilities and digital tools.
Reported operating profit was $831 million, 12.4% ahead of last year. Adjusted operating profit of $864 million, increased 12.6% compared to last year.
Reported diluted earnings per share was $2.84 (Q1 FY2022: $2.40), an increase of 18.3%, and adjusted diluted earnings per share of $2.95 increased 18.0% with the increase due to the strength of the operating profit performance in the quarter and the lower share count from share repurchases.
USA - first quarter
The US business grew net sales by 17.4%, driven by 13.0% organic growth with a further 2.9% from acquisitions and 1.5% from an additional sales day.
Residential end markets, which comprise just over half of US revenue, held up well during the quarter. New residential housing start and permit activity has eased but RMI work has remained more resilient. Overall, residential revenue grew by approximately 15% in the first quarter.
Non-residential end markets, representing just under half of US revenue, experienced continued robust growth. Non-residential revenue grew by approximately 20% in the first quarter.
Adjusted operating profit of $845 million was 12.4% or $93 million ahead of last year.
We completed one acquisition during the quarter that comprised several locations of Monark Premium Appliance, a distributor of high end appliances serving builders, designers, developers and homeowners. Subsequent to the quarter end we acquired Airefco, a leading regional HVAC distributor serving customers in the Pacific Northwest across 11 locations and Guarino Distributing Company, an HVAC distributor operating in Louisiana and Mississippi. In aggregate these three businesses generate annualized revenues of approximately $270 million.
Canada - first quarter
Net sales grew by 3.6%, with organic revenue growth of 8.2% and a further 1.5% from an additional sales day, offset by 6.1% due to the adverse impact of foreign exchange rates. Similar to the US segment, non-residential markets have been more resilient than residential markets. Adjusted operating profit of $33 million compressed by $1 million, including a $2 million adverse impact from foreign exchange rates.
Segmental overview