Ferguson Enterprises Inc. /DE/

Ferguson Enterprises Inc. is the largest value-added distributor serving the water and air specialized professional in the $340 billion residential and non-residential North American construction market ¹. The Company operates in highly fragmented markets, with no one market dominated by any single distributor, and is positioned as one of the top distributors in most end markets it serves, including residential, commercial, civil/infrastructure and industrial .

The filing names no specific competitors but states that the markets are highly fragmented with very few large competitors and a high number of small, local distributors, as well as mid-size regional distributors . Ferguson believes its network of suppliers, associates, and the number of branches and distribution centers provide it with the scale and expertise to serve customers better than competitors that operate only locally . The Company also benefits from significant synergies to help lower operating costs and improve margins .

Ferguson generates revenue as a value-added distributor, sourcing, distributing, and selling products from domestic and international suppliers . The business model bridges the gap between a large and fragmented supplier base with an even larger and more fragmented customer base . As of July 31, 2025, the Company had approximately 37,000 suppliers, with no supplier accounting for more than 5% of total inventory purchases, and no single customer accounted for more than 1% of net sales in fiscal 2025 . Revenue is recognized when control of the product is transferred to the customer, which is the point they are delivered to, or collected by, the customer . Residential and non-residential markets each account for approximately half of net sales, with net sales within these combined markets balanced between repair, maintenance and improvement (approximately two-thirds of net sales) and new construction (approximately one-third of net sales), based on management's estimates .

The United States segment contributed 95% of net sales in each of fiscal years 2025, 2024 and 2023 . As of July 31, 2025, the United States business operated 1,519 branches, 10 regional distribution centers, as well as five market distribution centers for branch replenishment and final mile distribution to customers . The network serves customers in all 50 states with approximately 32,000 associates, providing same-day and next-day product availability . The United States segment operates primarily under the Ferguson brand, providing products and services from plumbing, HVAC, appliances, and lighting to pipes, valves and fittings, water and wastewater solutions, and more to residential and non-residential customers . Net sales in the United States segment were $29,269 million in fiscal 2025, an increase of $1,074 million, or 3.8%, compared with the prior year . Net sales growth in the non-residential markets was 6.8% due to growth in each of Commercial, Civil/Infrastructure and Industrial . Net sales in the residential markets increased by 0.9%, with growth across both new construction and RMI . Adjusted operating profit in the United States was $2,840 million, an increase of 0.7% compared with the prior year .

The Canada segment contributed 5% of net sales in each of fiscal years 2025, 2024 and 2023 . As of July 31, 2025, the Canada business operated 227 branches, one regional distribution center and one market distribution center with approximately 3,000 associates . The Canada segment operates primarily under the Wolseley brand and supplies plumbing, HVAC and refrigeration products to residential and commercial contractors, as well as specialized water and wastewater treatment products and PVF solutions to industrial customers . Net sales for the Canada segment were $1,493 million in fiscal 2025, an increase of $53 million, or 3.7%, compared with the prior year . Adjusted operating profit for the Canada segment was $66 million in fiscal 2025, compared with $60 million in the prior year .

During fiscal 2025, the Company completed 9 acquisitions . The Company invested $301 million in acquisitions and $305 million in capital expenditures during fiscal 2025 . In October 2024, Ferguson Enterprises Inc. issued an aggregate principal amount of $750 million of Unsecured Senior Notes . In April 2025, the Company entered into a revolving credit agreement providing an unsecured revolving credit facility in an aggregate committed amount of $1.5 billion . During fiscal 2025, the Company repurchased $948 million of shares under its share repurchase program . In March 2025, the Company extended the share repurchase program by an additional $1.0 billion, bringing the total authorized share repurchase program to $5.0 billion . As of July 31, 2025, the Company had completed approximately $4.0 billion of the total authorized repurchase program . During the second half of fiscal 2025, the Company implemented targeted actions to streamline operations, recording non-recurring business restructuring expenses of $73 million . The Company also recorded corporate restructuring expenses of $7 million in fiscal 2025 primarily related to transition activities following the establishment of the ultimate parent company's domicile in the United States .

For fiscal 2025, net sales were $30,762 million, an increase of 3.8% compared with $29,635 million in fiscal 2024 . Gross profit was $9,435 million in fiscal 2025, an increase of $382 million, or 4.2%, compared with fiscal 2024 . Gross profit as a percent of sales was 30.7% in fiscal 2025 compared with 30.5% in the prior year . Operating profit was $2,606 million in fiscal 2025, a decrease of 1.7% compared with $2,652 million in fiscal 2024 . Net income was $1,856 million in fiscal 2025, an increase of $121 million, or 7.0%, compared with $1,735 million in fiscal 2024 . Diluted earnings per share was $9.32 in fiscal 2025, increasing 9.3% compared with $8.53 in the prior year . Net cash provided by operating activities was $1,908 million in fiscal 2025, an increase of 1.9% compared with $1,873 million in fiscal 2024 .

Acquisitions remain a core part of Ferguson's growth strategy, and the Company expects to focus on acquisitions that bolt-on to its existing branch network as well as acquisitions that provide further capabilities to serve customers . The Company believes there is a significant opportunity for strong growth and continued consolidation within its markets . The Company's scale and expertise position it to be involved in all stages of customers' projects, including design, staging, and project management .

The Company is continuing to invest in its e-commerce and omni-channel capabilities and other technology solutions, including investments in incremental upgrades to its enterprise-wide resource planning systems, to simplify customer propositions and to optimize the supply chain and branch network to be more efficient . The Company is also leveraging technology to enhance customer service, streamline product delivery and develop tools to save customers time and money .

The filing does not provide specific margin or cost outlook targets for the upcoming period.

The Company invested $305 million in capital expenditures in fiscal 2025, primarily for strategic projects to support future growth, such as new market distribution centers, the branch network and new technology . The Company expects to continue to invest in the development of its associates and is committed to attracting, developing, engaging and retaining the best talent .

As of July 31, 2025, the Company had approximately $1 billion remaining under its share repurchase program . The Company currently anticipates that cash dividends will continue to be paid on a quarterly basis in amounts comparable to dividends paid in prior periods . The Company invested $301 million in acquisitions in fiscal 2025 .

The Company faces headwinds from weakness in the economy, market trends, uncertainty and other conditions in the markets in which it operates, including inflation/deflation, recession, labor and wage pressures, trade restrictions such as tariffs, sanctions and retaliatory countermeasures, interest rates, and geopolitical conditions . The Company's end markets are dependent upon certain macroeconomic trends, and a slowdown in end markets caused by softer demand, inflation, higher interest or mortgage rates, and other issues in the market has been seen in the past . The Company also faces risks from fluctuating product prices, as some products contain significant amounts of commodity-priced materials, predominantly plastic, copper and steel, which can represent up to approximately 15% of annual net sales .

The Company faces risks from potential regional or global barriers to trade or a global trade war that could increase the cost of products . Recently, the U.S. has announced tariffs and reciprocal tariffs on a wide range of products, and several countries have similarly announced reciprocal or other tariffs . If these tariffs are fully implemented and the Company is unable to pass on the costs to customers, gross profits will be reduced . The Company also faces risks from the shortage of skilled trade professionals in the U.S., which could lead to customers delaying or failing to place orders .

Ferguson's financial performance depends significantly on industry trends and general economic conditions in the U.S., where it generated 95% of net sales in fiscal 2025 . A slowdown in residential and non-residential markets, which each account for approximately half of net sales, due to factors like higher interest rates or inflation could materially adversely affect results . The Company faces risks from fluctuating product prices, as commodity-based products containing plastic, copper, and steel can represent up to approximately 15% of annual net sales . Inability to pass on price inflation or deflation to customers could reduce profit margins . The Company also faces risks from potential trade barriers and tariffs; if tariffs are fully implemented and the Company cannot pass on costs, gross profits will be reduced . Additionally, the Company had total debt of $4.2 billion as of July 31, 2025, and its overall level of indebtedness may have an adverse effect on its strategy, including requiring it to dedicate portions of cash flow to debt payments and limiting flexibility .

Management's message emphasizes that Ferguson is the largest value-added distributor serving the water and air specialized professional in the $340 billion residential and non-residential North American construction market . The tone is focused on driving profitable growth across operational businesses by fulfilling customer needs, capitalizing on attractive markets and growth opportunities, and achieving planned execution . Key strategic priorities emphasized include: driving profitable growth through comprehensive and differentiated products and solutions; developing the operating model to be sufficiently agile in adapting to changing customer wants and flexing the cost base when required; and continuing to invest in e-commerce, omni-channel capabilities, and other technology solutions to simplify customer propositions and optimize the supply chain and branch network . Management also highlights that acquisitions remain a core part of the growth strategy .