Ferguson Enterprises (FERG) investor relations material

Executive summary

• Net sales rose 3.6% year-over-year to $7.5 billion, driven by 2.8% organic growth and 0.8% from acquisitions, with strong execution despite challenging residential markets.

• Adjusted operating profit increased 8.4% to $647 million, with adjusted operating margin up 40 bps to 8.7%.

• Adjusted diluted EPS rose 9.1% to $2.28, aided by share repurchases; reported EPS grew 23.1% to $2.13.

• Completed two acquisitions in the quarter, with three more signed and one closed post-quarter, expanding capabilities across key segments.

• Balance sheet remains strong, with net debt to adjusted EBITDA at 1.0x.

Financial highlights

• Gross margin improved by 30 bps to 31.0% year-over-year.

• Adjusted EBITDA grew 9.2% to $711 million.

• Free cash flow for the quarter was $688 million after $92 million CapEx.

• Capital deployment totaled $512 million, including $236 million in share repurchases and $174 million in dividends.

• Operating cash flow was $772 million, down due to higher working capital investments.

Outlook and guidance

• Full-year 2026 guidance reaffirmed: net sales expected to grow low to mid-single digits, with adjusted operating margin of 9.4%-9.8%.

• Capital expenditures projected at $350–$400 million; interest expense around $200 million; effective tax rate ~26%.

• Inflation expected to be slightly higher than initially anticipated, with continued volume pressure in residential.

• Management expects sufficient liquidity for all operating and capital needs over the next 12 months.