Ferguson Enterprises (FERG) Earnings Date & Reports

Key Takeaways

• Revenue beat: Net sales reached $8.75 billion, up 4.6% year-over-year, exceeding the consensus estimate of approximately $8.67 billion.
• Earnings outperformance: Adjusted diluted earnings per share (EPS) came in at $3.39, topping analyst expectations of roughly $3.29 to $3.30.
• Non-residential strength: US non-residential revenue jumped 8%, driven by large capital projects including data centers, power generation, and water infrastructure.
• Full-year guidance raised: Management lifted its calendar 2026 net sales growth outlook to mid-single-digit growth, up from the prior low- to mid-single-digit range.
• M&A momentum continues: Ferguson completed five acquisitions during the quarter and signed a definitive agreement to acquire FloWorks, a specialty flow-control distributor, for approximately $1.6 billion.
• Capital returns: The company declared a quarterly dividend of $0.89 per share and repurchased $202 million of its own stock during the quarter.

Earnings Context and Why It Matters

Ferguson Enterprises (NYSE: FERG), one of North America's largest distributors of plumbing, heating, ventilation, and air conditioning (HVAC) products, reported second-quarter results on August 10, 2026, for the period ended June 30. This earnings report arrived at a pivotal moment. The company had recently been added to the S&P 500 index on August 5, marking the final step in its transition from a London-listed entity to a purely US-headquartered business. Additionally, Ferguson had just announced its intention to cancel its secondary listing on the London Stock Exchange, which took effect on July 20. Against this backdrop of corporate transformation, investors were closely watching whether Ferguson could sustain its growth trajectory amid mixed macroeconomic signals, including subdued residential construction activity and evolving interest rate expectations.

Reported Results

Ferguson delivered net sales of $8.751 billion for the second quarter, representing a 4.6% increase from $8.363 billion in the prior-year period. Organic revenue growth contributed 3.8 percentage points, while acquisitions added 1.0 percentage point, partially offset by a 0.2 percentage point headwind from a Canadian divestiture. The result exceeded the Wall Street consensus estimate of roughly $8.67 billion by approximately $150 million.

On the bottom line, reported (GAAP) diluted EPS came in at $3.43, up 6.9% from $3.21 a year earlier. Adjusted diluted EPS, which excludes certain one-time items, rose 5.3% to $3.39, surpassing the consensus estimate of $3.29 to $3.30. Net income climbed to $666 million from $634 million in the same quarter last year.

Gross margin edged down 20 basis points (bps; one basis point equals 0.01%) to 31.0%, primarily reflecting business mix shifts toward faster-growing but lower-margin segments. Reported operating margin expanded 10 bps to 10.2%, while adjusted operating margin declined 10 bps to 10.7%. Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) increased 3.2% to $994 million. The company's balance sheet remained strong, with a net debt-to-adjusted EBITDA ratio of 1.3x.

By geography, US net sales grew 5.0% to $8.343 billion, led by an 8% surge in non-residential revenue and a 2% increase in residential revenue. Canada remained a soft spot, with net sales declining 1.9% to $408 million amid challenging residential market conditions and foreign exchange pressures.

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Market Reaction and Investor Sentiment

Ferguson shares traded approximately 2.5% higher in the pre-market and early regular session on August 10 following the earnings release, reflecting investor approval of the beat-and-raise quarter. The stock's positive reaction was likely supported by several factors: the revenue and earnings beats, the upward revision to full-year sales guidance, continued progress on the acquisition strategy, and the broader vote of confidence signaled by the company's recent addition to the S&P 500.

Investor sentiment heading into the report had been cautiously optimistic. While concerns about residential housing market softness and potential tariff-related cost pressures lingered, Ferguson's track record of consistent execution and its diversified exposure to both residential and non-residential end markets provided a degree of reassurance. The results validated that optimism, with the non-residential segment — particularly data center construction and large capital projects — serving as a powerful offset to residential headwinds.

Forward Outlook and Key Factors to Monitor

Ferguson raised its calendar 2026 guidance across several key metrics. Net sales growth is now expected to reach mid-single-digit levels, upgraded from the prior low- to mid-single-digit range. The adjusted operating margin target was narrowed to 9.5% to 9.8%, up from the lower end of 9.4% previously. Capital expenditure guidance was also raised to a range of $375 million to $425 million, reflecting increased investment in growth initiatives. Notably, the updated outlook does not yet incorporate any contribution from the pending FloWorks acquisition, which management expects to close during the third quarter.

The FloWorks transaction stands out as a critical catalyst. Valued at approximately $1.6 billion and targeting a technical industrial distributor with roughly $1 billion in annual revenue, the deal would significantly expand Ferguson's presence in water infrastructure, power generation, semiconductors, pharmaceuticals, and data center markets. Management projects approximately $45 million in annual cost and revenue synergies, and the transaction is expected to be immediately accretive to adjusted EPS upon closing.

Investors should also monitor the trajectory of non-residential project backlogs and open order volumes, which management described as healthy and growing. Continued strength in data center and infrastructure spending could provide a durable growth tailwind. On the other side of the ledger, residential repair, maintenance, and improvement (RMI) activity remains subdued, and any further weakening in consumer spending or housing turnover could weigh on that portion of the business. Canada's performance also warrants attention, as softer market conditions and currency effects have created persistent drag.

Ferguson's acquisition integration pace, margin discipline, and ability to sustain market share gains across its customer groups — including HVAC, Waterworks, Industrial, and Commercial/Mechanical — will be key variables shaping the remainder of fiscal 2026 and beyond.

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