Ferguson Enterprises Inc.

What they do

Ferguson distributes plumbing, HVAC, appliances, lighting, PVF, and water and wastewater products through a common network of distribution centers, branches, counter service, showrooms, and e-commerce. As of July 31, 2025, it operated 1,746 branches, 11 regional distribution centers, and six market distribution centers across the United States and Canada. The United States segment operates under the Ferguson brand and contributed 95% of net sales in each of fiscal 2025, 2024, and 2023; the Canada segment operates under the Wolseley brand and contributed 5%.

Revenue drivers

• United States segment — Contributed 95% of net sales in fiscal 2025, 2024, and 2023, providing plumbing, HVAC, appliances, lighting, PVF, and water and wastewater solutions to residential and non-residential customers through 1,519 branches and 10 regional distribution centers as of July 31, 2025.
• Canada segment — Contributed 5% of net sales in fiscal 2025, 2024, and 2023, operating primarily under the Wolseley brand with 227 branches and one regional distribution center as of July 31, 2025, supplying plumbing, HVAC, refrigeration, water/wastewater, and PVF products.
• Repair, maintenance and improvement (RMI) — Approximately two-thirds of net sales, based on management's estimates, serving residential and non-residential RMI demand.
• New construction — Approximately one-third of net sales, based on management's estimates, with residential and non-residential markets each accounting for roughly half of total net sales.

Recent performance

For the quarter ended June 30, 2026, Ferguson reported net sales of $8.8 billion, an increase of 4.6% over the prior year, driven by organic revenue growth of 3.8% and acquisition growth of 1.0%, partially offset by 0.2% from a Canadian divestment. Gross margin was 31.0%, down 20 basis points from the prior year, which was temporarily elevated by the timing and extent of supplier price increases. Operating profit was $893 million and operating margin was 10.2%, up 10 basis points on a reported basis but down 10 basis points on an adjusted basis at 10.7%. Diluted earnings per share were $3.43, up 6.9% on a reported basis and up 5.3% on an adjusted basis. For the six months ended June 30, 2026, net sales were $16.2 billion, up 4.2%, with diluted EPS of $5.56, up 12.6% on a reported basis.

Strategy

Ferguson completed five acquisitions during the second quarter of 2026 and signed a definitive purchase agreement to acquire FWI Holdings, Inc. ("FloWorks"), a leading distributor of highly technical valves and flow control solutions, expected to close in the third quarter. The company repurchased $202 million of shares during the quarter and declared a quarterly dividend of $0.89. Management states that its scale-advantaged business model and consistent cash generation enable investment in organic growth, market consolidation through acquisitions, and capital returns, while maintaining a strong balance sheet with net debt to adjusted EBITDA of 1.3x. Stated long-term growth drivers are water infrastructure, large capital projects, climate and comfort, and aging and underbuilt housing.

Risks

• U.S. market concentration — The company generated 95% of net sales in the United States in fiscal 2025, exposing results to U.S. residential and non-residential construction conditions, interest rates, and mortgage rate fluctuations.
• Commodity deflation and pricing — Pricing was slightly down year-over-year in fiscal 2025, primarily during the first half, due to deflation in certain commodity categories, which pressured net sales growth.
• Restructuring and acquisition integration — Fiscal 2025 operating profit included $80 million in non-recurring restructuring expenses, and the company completed five acquisitions in the second quarter of 2026 while pursuing FloWorks, creating integration risk.
• Tariffs and supply chain — The company cites trade restrictions such as tariffs, sanctions, and retaliatory countermeasures as risks that could disrupt its domestic or international supply chain or increase delivery costs.

Outlook

For calendar 2026, Ferguson increased its guidance to mid-single digit net sales growth, adjusted operating margin of 9.5% to 9.8%, interest expense of $200 million, capital expenditures of $375 to $425 million, and an adjusted effective tax rate of 26%. The updated guidance does not include the expected impact of the FloWorks acquisition, which is expected to close during the third quarter. Management stated the economic environment remains uncertain but that year-to-date performance enabled the upward revision of full-year guidance.