(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 orspecified under U.S. GAAP. See the section titled “Non-GAAP Reconciliations and Supplementary Information.”
Summary of financial results
Fourth quarter
Net sales of $7,971 million were 21.4% ahead of last year, 19.5% higher on an organic basis with a further 2.1% contribution from acquisitions, partially offset by a 0.2% adverse impact from foreign exchange rates. Inflation in the fourth quarter was approximately 20%.
Gross margins of 30.5% were 90 basis points lower than last year driven primarily by strong prior year comparables, during a period of rapid commodity price inflation. Operating expenses continued to be well controlled, resulting in a net operating margin increase of 10 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 technology.
Reported operating profit was $814 million, 23.1% ahead of last year. Adjusted operating profit of $849 million, increased 21.5% compared to last year.
Reported diluted earnings per share was $2.73 (Q4 FY2021: $2.98), a decrease of 8.4% due to a non- recurring prior year tax benefit. Adjusted diluted earnings per share of $2.85 increased 20.3% with the increase due to the strength of the operating profit performance in the quarter and the lower share count from share repurchases, partially offset by higher interest and tax.
Full year
Net sales of $28,566 million were 25.3% ahead of last year, 23.5% higher on an organic basis with an additional 1.8% from acquisitions. Inflation during the year was approximately high teens.
Gross margins of 30.7% were 10 basis points ahead of last year and operating expenses continued to be well controlled, resulting in an operating margin increase of 130 basis points(adjusted operating margin +110 basis points).
Reported operating profit was $2,820 million, 44.6% ahead of last year. Adjusted operating profit was $2,951 million, an increase of 41.1%.
Reported diluted earnings per share was $9.59 (FY2021: $7.25). Adjusted diluted earnings per share of $9.76 increased 44.6% due to the strength of the profit performance through the year and the lower share count from share repurchases.
USA - fourth quarter
The US business grew net sales by 22.1%, driven by 19.8% organic growth and an additional 2.3% from acquisitions.
Residential end markets, which comprise just over half of US revenue, remained robust during the quarter. New residential housing start and permit activity has eased but RMI work has remained resilient. Overall, residential revenue grew by approximately 17% in the fourth quarter.
Non-residential end markets, representing just under half of US revenue, experienced continued strong growth. Non-residential revenue grew by approximately 28% in the fourth quarter.
Adjusted operating profit of $829 million was 20.5% or $141 million ahead of last year.
We completed seven acquisitions during the quarter with annualized revenues of approximately $470 million. Among others, these included Aaron & Company, a leading plumbing and HVAC distributor in New Jersey and Minka Lighting, an own brand lighting and fan company. Geographic bolt-on and capability acquisitions, such as these, remain core to our growth strategy as we continue to consolidate our fragmented markets.
Within the Waterworks customer group we expanded our capabilities in geosynthetic and erosion controlsolutions by acquiring D2 Land & Water Resource and Triton Environmental, geotextile and erosion control specialists operating across the Midwest, Colorado, Pennsylvania and Texas. Additionally, we acquired STE, giving broader distribution rights for certain geotextile products that remove contaminants from polluted water.
Canada - fourth quarter
Net sales grew by 10.5%, with organic revenue growth of 14.2% offset by 3.7% due to the adverse impact of foreign exchange rates. Both residential and non-residential end markets grew in the quarter against strong comparables. Adjusted operating profit of $35 million grew by 25.0%, significantly outpacing revenue growth as a result of good operating leverage.
Segmental overview