Ferguson Enterprises (FERG) Transition period summary

Executive summary

• Achieved $31.3 billion in revenue for calendar year 2025, up 5% year-over-year, driven by organic and acquisition growth, with continued market share gains.

• Adjusted operating profit rose 11.3% to $3.0 billion, with adjusted operating margin expanding 50 basis points to 9.6%.

• Adjusted EPS-diluted increased 13.4% to $10.58, with strong cash generation and $1.6 billion returned to shareholders via dividends and buybacks.

• Eight acquisitions completed, contributing over $300 million in annualized revenue and supporting market consolidation.

• Strategic focus on large capital projects, water infrastructure, climate/comfort, and housing as long-term growth drivers.

Financial highlights

• Gross margin improved 70 basis points to 31% for the year; Q4 gross margin was 30.6%, up 90 basis points.

• Adjusted EBITDA increased to $3.24 billion, up 11.6% year-over-year.

• Q4 net sales were $7.5 billion, up 3.6% year-over-year; Q4 adjusted operating profit up 13.8%.

• Free cash flow reached $1.9 billion, with $354 million in CapEx and $276 million in M&A investments.

• Net debt to adjusted EBITDA stood at 1.1x, reflecting a strong balance sheet.

Outlook and guidance

• 2026 guidance anticipates low to mid-single digit net sales growth; adjusted operating margin expected between 9.4% and 9.8%.

• Residential markets expected down low to mid-single digits; non-residential up low to mid-single digits.

• CapEx projected at $350-$400 million; interest expense around $200 million; effective tax rate ~26%.

• Long-term growth algorithm targets 6%-11% annual revenue growth, with 10-30 basis points of annual operating margin expansion.