Ferguson Enterprises Inc.
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Item 1.Business
Overview
Ferguson is the largest value-added distributor serving the water and air specialized professional in our $340 billion residential and non-residential North American construction market. We help make our customers’ complex projects simple, successful and sustainable by providing expertise and a wide range of products and services from plumbing, heating, ventilation and air conditioning (“HVAC”), appliances, and lighting to pipes, valves and fittings (“PVF”), water and wastewater solutions and more. We sell through a common network of distribution centers, branches, counter service and expert sales associates, showroom consultants and e-commerce channels.
The Company has a long history and maintained businesses throughout Europe, Canada and the United States in the 1900s. In the early 2000s, the Company’s focus shifted to attractive North American markets. As a result, the operating businesses across Europe were disposed of through various transactions. As part of this transition and following a corporate restructuring, Ferguson Enterprises Inc. became the ultimate parent company for the business in August 2024.
Ferguson is listed on the New York Stock Exchange (NYSE: FERG) and the London Stock Exchange (LSE: FERG).
The Company’s corporate headquarters and management office are located at 751 Lakefront Commons, Newport News, Virginia 23606 and its telephone number is +1 757-874-7795.
Business segments
The Company’s reportable segments are established based on how the Company manages its business and allocates resources, which is on a geographical basis. The Company’s reportable segments are the United States and Canada. For further segment information, see Part II, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 2, Segment and net sales information of the Notes to the Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data of this Annual Report (the “Consolidated Financial Statements”). Below is a description of the Company’s reportable segments.
United States segment
The United States segment contributed 95% of net sales in each of fiscal years 2025, 2024 and 2023.
The United States segment operates primarily under the Ferguson brand, providing expertise and a wide range of products and services from plumbing, HVAC, appliances, and lighting to PVF, water and wastewater solutions, and more to residential and non-residential customers. Our products are delivered through a common network of distribution centers, branches, counter service and expert sales associates, showroom consultants and e-commerce channels. As of July 31, 2025, the United States business operated 1,519 branches, 10 regional distribution centers, as well as five market distribution centers (“MDCs”) for branch replenishment and final mile distribution to customers. Our network serves our customers in all 50 states with approximately 32,000 associates, providing same-day and next-day product availability, which we believe to be a competitive advantage and an important requirement for customers.
Canada segment
The Canada segment contributed 5% of net sales in each of fiscal years 2025, 2024 and 2023.
The Canada segment operates primarily under the Wolseley brand and supplies plumbing, HVAC and refrigeration products to residential and commercial contractors. The Canada segment also supplies specialized water and wastewater treatment products to residential, commercial and infrastructure contractors, and supplies PVF solutions to industrial customers. As of July 31, 2025, the Canada business operated 227 branches, one regional distribution center and one MDC with approximately 3,000 associates.
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Business model
We have a balanced approach to attractive end markets and serve customers principally in North America. Residential and non-residential markets each account for approximately half of our net sales, with net sales within these combined markets balanced between repair, maintenance and improvement (“RMI”) (approximately two-thirds of our net sales) and new construction (approximately one-third of our net sales), based on management’s estimates.
Ferguson operates in highly fragmented markets, with no one market dominated by any single distributor. We are positioned as one of the top distributors in most end markets we serve, including residential, commercial, civil/infrastructure and industrial.
Our business bridges the gap between a large and fragmented supplier base with an even larger and more fragmented customer base. As of July 31, 2025, we had approximately 37,000 suppliers, with no supplier accounting for more than 5% of total inventory purchases, which provides us access to a diverse and broad range of quality products. As of July 31, 2025, we serve our customers through a network of 11 regional distribution centers, six MDCs, approximately 5,900 fleet vehicles, 1,746 branches and approximately 35,000 associates.
Customers
We help make our customers’ complex projects simple, successful and sustainable. We offer expertise and a broad range of products delivered where and when our customers need them. Customers rely on us to help them deliver critical infrastructure spanning almost every stage of a project’s life cycle within the residential and non-residential markets. We partner with our customers to keep millions of homes and businesses operating while helping them to run their business more efficiently. No single customer accounted for more than 1% of our net sales in fiscal 2025.
Value-added products and solutions
Our value-added solutions include a variety of sales channels available to our customers ranging from inside and outside sales teams, sales centers, digital commerce capabilities, system-to-system capabilities, counter sales and showrooms. We also offer customized solutions such as virtual design, fabrication, valve actuation, pre-assembly, kitting, installation and project management services. With our value-added solutions, we aim to increase productivity for our customers and for the industry.
We source, distribute and sell products from domestic and international suppliers. Our products include branded products and own brand products that the Company sells exclusively in the market. Approximately 95% of the products sold in the United States are sourced from U.S.-based suppliers, while approximately 90% of the products sold in Canada are sourced from Canada-based suppliers.
Our branded and private label (“Own Brand”) products are generally available from several sources and are not typically subject to supply constraints in normal market conditions. In the United States, net sales include basic products that contain significant amounts of commodity-priced materials, predominantly plastic, copper and steel, and other components which can be subject to volatile price changes based upon fluctuations in the commodities market. These commodity based products can represent up to approximately 15% of annual net sales. To a lesser extent, fluctuations in the price of fuel could affect transportation costs. In general, increases in such prices increase our operating costs and negatively impact our operating profit to the extent that such increases cannot be passed on to customers. Conversely, if competitive pressures allow us to hold prices despite relevant raw material prices falling, profitability can increase.
Fulfillment options for our customers include delivery, customer pick-up from our branches, counters and locker locations, and direct shipments.
We also offer after-sales support that comprises warranty, credit, project-based billing, returns and maintenance, repair and operations (“MRO”) support.
Global supply chain
We have a global supply chain which provides access to approximately 37,000 suppliers and we sell more than 1 million unique products each year. We operate an extensive network across North America, including three import centers, 11 regional distribution centers and 1,746 branch locations as of July 31, 2025. Our network also includes six MDCs which provide greater access to key strategic markets and allows us to bring our products closer to our customers. These MDCs include automated picking and replenishment systems for the majority of items. This automation improves efficiency and reduces manual handling of certain products which supports associate health and safety.
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Competitive conditions
We believe we are well-equipped to win new market share and generate attractive returns. We have leading positions in the residential and non-residential markets based on net sales as a percentage of overall market size. For fiscal 2025, residential and non-residential markets each account for approximately half of our net sales, with net sales within these combined markets balanced between RMI (approximately two-thirds of our net sales) and new construction (approximately one-third of our net sales), based on management’s estimates. We have chosen to operate in each of these markets because we believe we can generate strong growth, solid gross and operating margins and good returns on capital.
The markets we serve are highly fragmented with very few large competitors and a high number of small, local distributors, as well as mid-size regional distributors. While our market positions can be expanded through growth of our existing business, acquisitions also remain a core part of our growth strategy and we expect to focus on acquisitions that bolt-on to our existing branch network as well as acquisitions that provide further capabilities to serve our customers. We believe there is a significant opportunity for strong growth and continued consolidation within our markets.
Many customer projects require a range of products and solutions and we leverage our scale and expertise across the organization for the benefit of our customers. Specifically, we believe our network of suppliers, associates and the number of branches and distribution centers provide us with the scale and expertise to serve our customers better than our competitors do, as many of these competitors operate only locally. In addition, we also benefit from significant synergies to help lower operating costs and improve margins. We believe these factors will enable continued growth in net sales as well as growth in cash flow and, therefore, may better enable us to provide investment returns to shareholders.
Our scale and expertise position us to be involved in all stages of our customers’ projects, including design, staging, and project management. Across all our customers, we take a consultative approach. We partner with our customers in an effort to guide complex projects to a successful conclusion, and to make the entire project better because Ferguson was involved.
Contractual relationships and seasonality
We are not dependent on any material licenses, industrial, commercial or financial contracts (including contracts with customers and suppliers) or new manufacturing processes. Our business is not highly seasonal although we generally experience the highest volume of sales in our fourth fiscal quarter which begins during the spring season in North America.
Intellectual property
We rely on a combination of intellectual property laws, confidentiality procedures and contractual provisions to protect our proprietary assets and our brands. We have registered or applied for registration of trademarks, service marks, and internet domain names, both domestically and internationally.
Regulatory landscape
Our operations are affected by various statutes, regulations and standards in the countries and markets in which we operate, including the United States and Canada. The amount of such regulation and the penalties for any breaches can vary. While we are not engaged in a highly regulated industry, we are subject to the laws governing businesses generally, including laws relating to competition, product safety, data protection, labor and employment practices, accounting and tax standards, international trade, fraud, bribery and corruption, land usage, the environment, health and safety, transportation, payment terms and other matters. We do not currently expect compliance with these laws and regulations to have a material effect on our capital expenditures, results of operations, or competitive position as compared to prior periods.
Human capital management
Our associates are fundamental to the long-term success of the Company. We continue to invest in the development of our associates and are committed to attracting, developing, engaging and retaining the best talent. Our associate base includes a mix of tenured associates and external hires, blended with new talent through acquisitions.
As of July 31, 2025, Ferguson employed approximately 35,000 associates worldwide, including those employed on a full-time, part-time, seasonal or temporary basis, which includes approximately 32,000 associates in the United States, 3,000 associates in Canada and small number of associates who reside outside of the United States and Canada.
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Key areas of our human capital management program include the following:
Attracting top talent
We seek the best associates in our industry. Our hiring process is intended to reach a diverse talent pool to assist us in fostering a culture of strong relationships where differences in thought, experience and perspective contribute to our ability to help make our customers’ projects simple, successful and sustainable.
Promoting growth
Ferguson is committed to creating meaningful, long-term career opportunities for associates to grow and succeed. The career paths of our senior leadership team demonstrate our commitment to identifying and developing the next generation of talent. Through internal mobility, many of our leaders shifted from frontline roles to managerial roles. Our learning and development initiatives are designed to foster both immediate skill-building and sustained professional advancement, helping associates thrive throughout their careers. We offer a variety of leadership and development programs that develop skills and capabilities for our associates and leaders. These programs are tailored to associates’ roles, leadership level and potential. The Company also offers associates professional development courses, many of which are on-demand and targeted at improving technical skills, sales, communication, wellbeing, critical thinking and relationship management skills.
Fostering engagement and retention
We strive to create an environment where our associates can bring their true, authentic selves to work every day.
Our Business Resource Groups (“BRGs”) play a role in our effort to enhance the overall wellbeing of our associates, support professional development and create a positive workplace environment. Membership for each BRG is open to all our associates and participation is voluntary.
Our associates’ voices matter. To support engagement and retention of our associates, we conduct an annual survey where associates can provide us with their feedback. From the resulting data, we develop an action plan designed to make improvements in the areas our associates indicated that they value most. In addition, we are committed to supporting our associates as well as customers and people within our communities. Through a variety of outreach efforts, we provide our associates with the opportunity to engage directly in community service.
We offer these development and engagement programs to aid in the growth, engagement and retention of our associates. We believe that these programs support our objective to retain the best talent.
Culture and values
We strive to maintain a culture of integrity and are committed to acting ethically in all our business activities. This commitment is outlined in our Code of Business Conduct and Ethics (“Code of Conduct”), which sets forth the standards that we expect of our associates and those who may work on our behalf. The Code of Conduct is a resource dedicated to helping our associates live by our values and understand Ferguson’s commitment to compliance with all applicable laws and regulations and Company policies. We require new associates to complete our Code of Conduct training upon hire and all current associates to complete our Code of Conduct training on an annual basis.
Equal employment opportunity policy
Ferguson recruits, hires, transfers, promotes, compensates, trains, terminates and is committed to making employment decisions about applicants and associates without regard to their race, color, religion, creed, national origin, ancestry, citizenship status, physical disability, mental disability, medical condition, genetic information, marital status, pregnancy, sex, gender, gender identity, gender expression, age, sexual orientation, military and/or veteran status or any other basis protected by law.
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Compensation and rewards
We are committed to offering competitive, comprehensive compensation and benefits that support the wellbeing of our associates. We regularly assess our total rewards programs, including compensation and recognition programs, in an effort to provide equitable and competitive programs that align with our overall compensation philosophy. We are committed to rewarding our associates based on achievement of organizational goals and individual performance. We offer a variety of health, welfare, and financial benefits to our full-time and part-time associates, including health care and insurance benefits, mental health and wellbeing resources, retirement plans, and an employee share purchase plan, among others.
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s discussion and analysis of financial condition and results of operations (“MD&A”) is intended to convey management’s perspective regarding the Company’s operational and financial performance for the three months ended March 31, 2026 and 2025, respectively. This MD&A should be read in conjunction with the unaudited condensed consolidated financial statements and related notes appearing in “Item 1. Financial Statements” of this Quarterly Report (the “Condensed Consolidated Financial Statements”) and the consolidated financial statements and related notes in “Item 8. Financial Statements and Supplementary Data” of the Transition Report.
The following discussion contains trend information and other forward-looking statements. Actual results could differ materially from those discussed in these forward-looking statements, as well as from our historical performance, due to various factors, including, but not limited to, those referred to in “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” and elsewhere in this Quarterly Report.
Overview
Ferguson is a value-added distributor of essential water and air solutions, serving the specialized professional in the residential and non-residential North American construction markets. We help make our customers’ complex projects simple, successful and sustainable by providing expertise and a wide range of products and services from plumbing, HVAC, appliances, and lighting to PVF, water and wastewater solutions, and more. Ferguson is headquartered in Newport News, Virginia.
The following table presents highlights of the Company’s performance for the periods below:
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| (In millions, except per share amounts) | 2026 | 2025 | |||||||||||||||||
| Net sales | $7,472 | $7,213 | |||||||||||||||||
| Operating profit | 612 | 507 | |||||||||||||||||
| Net income | 414 | 345 | |||||||||||||||||
| Earnings per share - diluted | 2.13 | 1.73 | |||||||||||||||||
| Net cash provided by operating activities | 772 | 874 | |||||||||||||||||
Supplemental non-GAAP financial measures:(1) | |||||||||||||||||||
| Adjusted operating profit | 647 | 597 | |||||||||||||||||
| Adjusted earnings per share - diluted | 2.28 | 2.09 | |||||||||||||||||
(1) 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.”
For the first quarter of 2026, net sales increased by 3.6% compared with the first quarter of 2025, primarily due to price inflation and incremental sales from acquisitions, partially offset by lower volume.
For the first quarter of 2026, operating profit increased by 20.7% (adjusted operating profit increased 8.4%), compared with the first quarter of 2025. The year-over-year change was driven by higher sales and the associated gross profit, partially offset by higher variable operating costs.
For the first quarter of 2026, diluted earnings per share was $2.13 (adjusted diluted earnings per share: $2.28), increasing 23.1% (9.1% on an adjusted basis) compared with the first quarter of 2025 due to higher net income and the impact of share repurchases.
Net cash provided by operating activities decreased to $772 million in the first quarter of 2026 compared with $874 million in the first quarter of 2025, primarily reflecting an increased investment in working capital, partially offset by higher net income after adjusting for non-cash items.
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Results of Operations
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| (In millions) | 2026 | 2025 | |||||||||||||||||
| Net sales | $7,472 | $7,213 | |||||||||||||||||
| Cost of sales | (5,154) | (4,997) | |||||||||||||||||
| Gross profit | 2,318 | 2,216 | |||||||||||||||||
| Selling, general and administrative expenses | (1,607) | (1,565) | |||||||||||||||||
| Restructuring expenses | (2) | (51) | |||||||||||||||||
| Depreciation and amortization | (97) | (93) | |||||||||||||||||
| Operating profit | 612 | 507 | |||||||||||||||||
| Interest expense, net | (45) | (46) | |||||||||||||||||
| Other (expense) income, net | (7) | 8 | |||||||||||||||||
| Income before income taxes | 560 | 469 | |||||||||||||||||
| Provision for income taxes | (146) | (124) | |||||||||||||||||
| Net income | $414 | $345 | |||||||||||||||||
Net sales
For the first quarter of 2026, net sales were $7.5 billion, an increase of $0.3 billion, or 3.6%, compared with the first quarter of 2025. The increase in net sales was primarily driven by mid-single digit price inflation and incremental sales from acquisitions of 0.8%, partially offset by lower sales volume. The Company’s increase in net sales was driven by growth in non-residential markets in its United States segment.
Gross profit
Gross profit in the first quarter of 2026 increased $102 million, or 4.6%, compared with the first quarter of 2025, primarily reflecting increased net sales. Gross profit as a percentage of sales was 31.0% in the first quarter of 2026 compared with 30.7% in the first quarter of 2025. The increase of 0.3% primarily reflected solid execution across the business.
Selling, general and administrative (“SG&A”) expenses
SG&A expenses in the first quarter of 2026 increased $42 million, or 2.7%, compared with the first quarter of 2025. SG&A as a percentage of sales was 21.5% in the first quarter of 2026 compared with 21.7% in the first quarter of 2025. The decrease in SG&A as a percentage of sales primarily reflects improved productivity and operating leverage of the Company’s cost base.
Income tax
Income tax expense was $146 million in the first quarter of 2026, an increase of $22 million, or 17.7%, compared with the first quarter of 2025 due to higher income before income taxes. The Company’s effective tax rate of 26.1% in the first quarter of 2026 was generally in-line with 26.4% for the first quarter of 2025.
Net income
Net income was $414 million in the first quarter of 2026, an increase of $69 million, or 20.0%, compared with the first quarter of 2025, primarily due to the various elements described in the sections above.
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Segment results
United States
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| (In millions) | 2026 | 2025 | |||||||||||||||||
| Net sales | $7,146 | $6,904 | |||||||||||||||||
Adjusted operating profit | 656 | 611 | |||||||||||||||||
Net sales for the United States segment were $7.1 billion in the first quarter of 2026, an increase of $242 million, or 3.5%, compared with the first quarter of 2025. The increase in net sales was primarily driven by mid-single digit price inflation and incremental sales from acquisitions of 0.6%, partially offset by lower sales volume. Net sales in non-residential markets, representing approximately half of revenue in the United States, increased approximately 8% compared with the first quarter of 2025. This increase was driven by commercial/mechanical, industrial and waterworks, including large capital project activity. Net sales in residential markets decreased approximately 1% compared with the first quarter of 2025 in light of weak new construction activity, along with soft repair, maintenance and improvement (“RMI”) work.
Adjusted operating profit for the United States segment was $656 million in the first quarter of 2026, an increase of $45 million, or 7.4%, compared with the first quarter of 2025, primarily reflecting higher sales and the associated gross profit, partially offset by higher variable operating costs.
Canada
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| (In millions) | 2026 | 2025 | |||||||||||||||||
| Net sales | $326 | $309 | |||||||||||||||||
Adjusted operating profit | 5 | 6 | |||||||||||||||||
Net sales for the Canada segment were $326 million in the first quarter of 2026, an increase of $17 million, or 5.5%, compared with the first quarter of 2025. This increase in net sales was primarily driven by incremental sales from acquisitions of 5.8%, the impact of foreign currency exchange rates of 4.6% and low to mid-single digit price inflation. These increases were partially offset by lower volume and the impact of a non-core business divestments of 4.6%.
Adjusted operating profit for the Canada segment decreased by $1 million in the first quarter of 2026, compared with the first quarter of 2025 due to higher operating costs, partially offset by higher gross profit.
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Non-GAAP Reconciliations and Supplementary Information
The Company reports its financial results in accordance with U.S. GAAP. However, the Company believes certain non-GAAP financial measures provide users of the Company’s financial information with additional meaningful information to assist in understanding financial results and assessing the Company’s performance from period to period. These non-GAAP financial measures include adjusted operating profit, adjusted net income and adjusted earnings per share (“adjusted EPS”) - diluted. Management believes these measures are important indicators of operations because they exclude items that may not be indicative of our core operating results and provide a better baseline for analyzing trends in our underlying businesses, and they are consistent with how business performance is planned, reported and assessed internally by management and the Company’s Board of Directors. Such non-GAAP adjustments include amortization of acquired intangible assets, discrete tax items, and any other items that are non-recurring. Non-recurring items may include various restructuring charges, gains or losses on the disposals of businesses which by their nature do not reflect primary operations, as well as certain other items deemed non-recurring in nature and/or that are not a result of the Company’s primary operations. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names. These non-GAAP financial measures should not be considered in isolation or as a substitute for results reported under U.S. GAAP. These non-GAAP financial measures reflect an additional way of viewing aspects of operations that, when viewed with U.S. GAAP results, provide a more complete understanding of the business. The Company strongly encourages investors and shareholders to review the Company’s financial statements and publicly filed reports in their entirety and not to rely on any single financial measure.
Reconciliation of net income to adjusted operating profit
The following table reconciles net income (U.S. GAAP) to adjusted operating profit (non-GAAP):
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| (In millions) | 2026 | 2025 | |||||||||||||||||
| Net income | $414 | $345 | |||||||||||||||||
| Provision for income taxes | 146 | 124 | |||||||||||||||||
| Interest expense, net | 45 | 46 | |||||||||||||||||
| Other expense (income), net | 7 | (8) | |||||||||||||||||
| Operating profit | 612 | 507 | |||||||||||||||||
Corporate restructuring expenses(1) | 2 | — | |||||||||||||||||
Business restructuring expenses(2) | — | 51 | |||||||||||||||||
| Amortization of acquired intangibles | 33 | 39 | |||||||||||||||||
| Adjusted operating profit | $647 | $597 | |||||||||||||||||
(1)For the three months ended March 31, 2026, corporate restructuring expenses primarily related to incremental costs in connection with transition activities following the establishment of our parent company’s domicile in the United States.
(2)For the three months ended March 31, 2025, business restructuring expenses primarily related to the Company’s implementation of targeted actions to streamline operations, enhancing speed and efficiency to better serve customers and drive further profitable growth.
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Reconciliation of net income to adjusted net income and adjusted EPS - diluted
The following table reconciles net income (U.S. GAAP) to adjusted net income and adjusted EPS - diluted (non-GAAP):
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| (In millions, except per share amounts) | 2026 | 2025 | |||||||||||||||||||||
per share(1) | per share(1) | ||||||||||||||||||||||
| Net income | $414 | $2.13 | $345 | $1.73 | |||||||||||||||||||
Corporate restructuring expenses(2) | 2 | 0.01 | — | — | |||||||||||||||||||
Business restructuring expenses(3) | — | — | 51 | 0.26 | |||||||||||||||||||
| Amortization of acquired intangibles | 33 | 0.17 | 39 | 0.20 | |||||||||||||||||||
Discrete tax adjustments(4) | 4 | 0.02 | 3 | 0.02 | |||||||||||||||||||
Tax impact on non-GAAP adjustments(5) | (9) | (0.05) | (23) | (0.12) | |||||||||||||||||||
| Adjusted net income | $444 | $2.28 | $415 | $2.09 | |||||||||||||||||||
| Diluted weighted average shares outstanding | 194.8 | 199.0 | |||||||||||||||||||||
(1)Per share on a dilutive basis.
(2)For the three months ended March 31, 2026, corporate restructuring expenses primarily related to incremental costs in connection with transition activities following the establishment of our parent company’s domicile in the United States.
(3)For the three months ended March 31, 2025, business restructuring expenses primarily related to the Company’s implementation of targeted actions to streamline operations, enhancing speed and efficiency to better serve customers and drive further profitable growth.
(4)For the three months ended March 31, 2026 and 2025, discrete tax adjustments were mainly related to interest on uncertain tax positions.
(5)For the three months ended March 31, 2026, the tax impact on non-GAAP adjustments primarily related to the amortization of acquired intangibles. For the three months ended March 31, 2025, the tax impact on non-GAAP adjustments related to the restructuring expenses and the amortization of acquired intangibles.
Liquidity and Capital Resources
The Company believes its current cash position coupled with cash flow anticipated to be generated from operations and access to capital should be sufficient to meet its operating cash requirements for the next 12 months and will also enable the Company to invest and fund capital expenditures, acquisitions, dividend payments, share repurchases, required debt payments and other contractual obligations through the next several years. The Company also anticipates that it has the ability to obtain alternative sources of financing, if necessary.
The Company’s material cash requirements include contractual and other obligations arising in the normal course of business. These obligations primarily include debt service and related interest payments, operating lease obligations and other purchase obligations. The nature and composition of such existing cash requirements have not materially changed from those disclosed in the Transition Report other than items updated in this Quarterly Report.
Cash flows
As of March 31, 2026 and December 31, 2025, the Company had cash and cash equivalents of $820 million and $557 million, respectively. In addition to cash, the Company had $2.4 billion of available liquidity from undrawn debt facilities as of March 31, 2026.
As of March 31, 2026, the Company’s total debt was $4.1 billion. The Company anticipates that it will be able to meet its debt obligations as they become due.
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Cash flows from operating activities
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| (In millions) | 2026 | 2025 | |||||||||
| Net cash provided by operating activities | $772 | $874 | |||||||||
Net cash provided by operating activities was $772 million and $874 million for the three months ended March 31, 2026 and 2025, respectively. The $102 million decrease was mainly due to an increased investment in working capital compared with the prior year, partially offset by higher net income (adjusted for non-cash items) and lower cash tax payments due to timing. The increase in working capital was primarily driven by an increase in receivables due to the timing of collections year-over-year, higher inventory purchases in consideration of customer demand, the timing of vendor payments compared with the prior year and the change in timing of cash incentive payouts in light of the Company’s change to a calendar year-end.
Cash flows from investing activities
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| (In millions) | 2026 | 2025 | |||||||||
| Net cash used in investing activities | ($94) | ($211) | |||||||||
Capital expenditures totaled $92 million and $73 million for the three months ended March 31, 2026 and 2025, respectively. These investments were primarily for strategic projects to support future growth, such as new market distribution centers, our branch network and new technology. In addition, the Company invested $10 million and $150 million in new acquisitions for the three months ended March 31, 2026 and 2025, respectively.
Cash flows from financing activities
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| (In millions) | 2026 | 2025 | |||||||||
| Net cash used in financing activities | ($413) | ($814) | |||||||||
Dividends paid to shareholders were $174 million and $166 million for the three months ended March 31, 2026 and 2025, respectively.
Share repurchases under the Company’s September 2021 share repurchase program were $236 million and $207 million for the three months ended March 31, 2026 and 2025, respectively.
Net payments from debt transactions were $300 million for the three months ended March 31, 2025 due to net repayments under the Receivables Facility. The Company did not have any debt transactions in the first quarter of 2026.
Debt facilities
The following section summarizes certain material provisions of our long-term debt facilities and current obligations. The following description is only a summary, does not purport to be complete and is qualified in its entirety by reference to the documents governing such indebtedness.
| As of | |||||||||||
| (In millions) | March 31, 2026 | December 31, 2025 | |||||||||
| Short-term debt | $148 | $148 | |||||||||
| Long-term debt | 3,979 | 3,978 | |||||||||
| Total debt | $4,127 | $4,126 | |||||||||
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Private Placement Notes
In June 2015 and November 2017, Wolseley Capital, Inc., a wholly-owned subsidiary of the Company, privately placed fixed rate notes (the “Private Placement Notes”). As of March 31, 2026, $300 million in Private Placement Notes remain outstanding.
In November 2026, $150 million of private placement notes will mature.
Unsecured Senior Notes
The Company has issued $3.85 billion in various issuances of unsecured senior notes.
Receivables Securitization Facility
The Company maintains a Receivables Securitization Facility with an aggregate total available amount of $900 million (the “Receivables Facility”). The Company has the ability to increase the aggregate total available amount under the Receivables Facility up to a total of $1.5 billion from time to time, subject to lender participation. As of March 31, 2026, no borrowings were outstanding under the Receivables Facility.
Revolving Credit Facility
The Company, pursuant to a revolving credit agreement (the “Revolving Credit Agreement”), maintains a revolving credit facility that has aggregate total available credit commitments of $1.5 billion (the “Revolving Facility”). The Revolving Credit Agreement provides the Company with the ability to increase from time to time the aggregate capacity of the facility by $500 million under certain conditions, including the receipt of additional or increased lender commitments. As of March 31, 2026, no borrowings were outstanding under the Revolving Facility.
Other
The Company was in compliance with all debt covenants that were in effect as of March 31, 2026.
See Note 5, Debt to the Condensed Consolidated Financial Statements and the notes to the consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” of the Transition Report for further details regarding the Company’s debt.
There have been no significant changes to the Company’s policies on accounting for, valuing or managing the risk of financial instruments during the three months ended March 31, 2026.
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Guarantor Disclosures
Ferguson Enterprises Inc. (the “Issuer”) is the issuer of the 4.350% Senior Notes due 2031 and 5.000% Senior Notes due 2034. The obligations under both series of senior notes are unsecured and are fully and unconditionally guaranteed on an unsecured basis by Ferguson UK Holdings Limited (the “Guarantor” and together with the Issuer, the “Obligor Group”).
The Issuer is a holding company that primarily repurchases shares and pays dividends, issues and services third-party debt obligations, and engages in certain corporate and headquarters activities, as well as holds an investment in its direct subsidiary, that primarily holds investments in and borrows from the Guarantor. The Guarantor is a holding company that primarily issues and services third-party debt obligations and holds investments in, borrows from and lends to non-guarantor subsidiary operating companies. These activities are generally funded by non-guarantor subsidiaries. The Guarantor is a private limited company incorporated under the laws of England and Wales and an indirect subsidiary of the Issuer.
Summarized Financial Information of Obligor Group
The following tables present the summarized financial information specified in Rule 1-02(bb)(1) of Regulation S-X for the Obligor Group on a combined basis, after elimination of intercompany transactions and balances between the Obligor Group, and excluding the investments in and equity in the earnings of any non-guarantor subsidiaries. The summarized financial information has been prepared in accordance with Rule 13-01 of Regulation S-X. The summarized financial information should be read in conjunction with the Condensed Consolidated Financial Statements and notes thereto included herein and the audited consolidated financial statements and notes thereto included in the Transition Report.
| As of | |||||||||||||||||||
| (In millions) | March 31, 2026 | December 31, 2025 | |||||||||||||||||
| Current assets | $44 | $46 | |||||||||||||||||
| Non-current assets | 2 | 2 | |||||||||||||||||
| Current liabilities | 203 | 214 | |||||||||||||||||
| Non-current liabilities | 1,503 | 1,500 | |||||||||||||||||
| Due (to)/from non-guarantor subsidiaries, net | (51) | 370 | |||||||||||||||||
| Three months ended | |||||||||||||
| March 31, | |||||||||||||
| (In millions) | 2026 | ||||||||||||
| Net sales | $— | ||||||||||||
| Gross profit | — | ||||||||||||
| Operating loss | (12) | ||||||||||||
| Net loss | (37) | ||||||||||||
| Other interest income, net from non-guarantor subsidiaries | 16 | ||||||||||||
Other loss, net from non-guarantor subsidiaries(1) | (32) | ||||||||||||
(1)Includes income from intercompany transaction with non-guarantor subsidiaries, primarily from non-cash dividend transactions.
Critical accounting policies and estimates
There have been no material changes to our critical accounting policies as disclosed in the Transition Report.
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Recent SEC filings
- 2026-05-05 8-K Earnings Release; Financial Statements and Exhibits
- 2026-05-05 10-Q Quarterly Report
- 2026-02-27 10-KT 10-KT
- 2026-02-24 8-K Earnings Release; Financial Statements and Exhibits
- 2025-12-09 10-Q Quarterly Report
- 2025-12-09 8-K Earnings Release; Financial Statements and Exhibits
- 2025-09-26 10-K Annual Report
- 2025-09-22 8-K Other Events; Financial Statements and Exhibits
- 2025-09-16 8-K Earnings Release; Bylaws/Articles Amended; Other Events
- 2025-06-03 10-Q Quarterly Report
- 2025-06-03 8-K Earnings Release; Financial Statements and Exhibits
- 2025-04-03 8-K Material Agreement Entered; Material Agreement Terminated; Material Financial Obligation; Financial Statements and Exhibits
- 2025-03-11 10-Q Quarterly Report
- 2025-03-11 8-K Earnings Release; Financial Statements and Exhibits
- 2025-01-10 8-K Officer/Director Change