Ferguson Q3 sales rise 9.5%, net income falls 6.3%
Higher sales and adjusted diluted EPS were recorded alongside declines in GAAP net income and year-to-date operating cash flow.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Form Type
10-Q
Rhea-AI Filing Summary
Ferguson Enterprises Inc. (FERG) reported third-quarter 2026 net sales of $9.026 billion, up 9.5% year over year, while net income fell 6.3% to $598 million. Diluted EPS was $3.08, down 4.9%, while adjusted diluted EPS rose 7.9% to $3.43. Adjusted operating profit increased 8.9% to $962 million, with sales growth reflecting price inflation, higher volume and acquisition sales.
For the nine months ended September 30, 2026, operating cash flow was $1.472 billion versus $1.884 billion in the same 2025 period; working-capital investment, higher cash tax payments and incentive-compensation timing contributed to the decline. The company acquired ten businesses, including FloWorks on August 31, 2026; 2026 acquisition consideration totaled $2.361 billion. Acquired businesses contributed $271 million in net sales and $37 million in losses to income before income tax, including $49 million of transaction and integration costs and related acquired-intangible amortization.
Total debt was $6.170 billion as of September 30, 2026. Ferguson temporarily paused share repurchases in connection with FloWorks and expects to resume them once certain leverage targets are achieved, subject to market conditions, capital allocation priorities and other relevant factors.
2 points · 0 major0 major · 3 points
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointThird-quarter net sales rose 9.5% to $9.026 billion year over year.
- Moderate pointAdjusted diluted EPS increased 7.9% to $3.43 year over year.
Negative
- Moderate pointThird-quarter net income declined 6.3% to $598 million year over year.
- Moderate pointYear-to-date operating cash flow fell $412 million to $1.472 billion.
- Minor pointAcquired businesses contributed $37 million in losses before income tax during the nine-month period.
Filing Explained
The receivables facility’s term now runs to November 2029; as of September 30, 2026, it represented capacity, not outstanding borrowing.
Ferguson reports that it entered amended receivables-facility agreements on
The facility provides up to
Key Figures
Third-quarter net sales: $9.026 billion
Third-quarter net income: $598 million
Diluted EPS: $3.08
+5 more
8 metrics
Third-quarter net sales
$9.026 billion
Three months ended September 30, 2026; $8.245 billion in 2025, up 9.5%.
Third-quarter net income
$598 million
Three months ended September 30, 2026; $638 million in 2025, down 6.3%.
Diluted EPS
$3.08
Three months ended September 30, 2026; $3.24 in 2025, down 4.9%.
Adjusted diluted EPS
$3.43
Three months ended September 30, 2026; $3.18 in 2025, up 7.9%.
Operating cash flow
$1.472 billion
Nine months ended September 30, 2026; $1.884 billion in 2025, a decrease of $412 million.
Acquisition consideration
$2.361 billion
Total consideration for acquisitions completed during the nine months ended September 30, 2026.
Total debt
$6.170 billion
As of September 30, 2026; $4.126 billion as of December 31, 2025.
Acquired-business losses before income tax
$37 million
Contribution from businesses acquired during the nine months ended September 30, 2026.
Key Terms
Adjusted earnings per share, Receivables Securitization Facility, Term SOFR Rate, Deferred consideration, +1 more
5 terms
Receivables Securitization Facility financial
"The Company maintains a Receivables Securitization Facility"
Term SOFR Rate financial
"at either the Base Rate or the Term SOFR Rate, plus a margin"
Term SOFR rate is a forward-looking interest rate for a set period (for example one or three months) based on the overnight cost of borrowing cash using Treasury securities as collateral. Think of it as a quoted, agreed-upon lending rate for a future interval, like locking in the expected short-term borrowing cost ahead of time. Investors care because it is used to price loans, bonds and derivatives as a transparent replacement for older benchmarks, affecting interest payments and valuation.
Deferred consideration financial
"Deferred consideration represents the expected payout due to certain sellers"
Deferred consideration is part of a purchase price in a business deal that is paid after the initial transaction, often only if agreed future targets or conditions are met. It matters to investors because it changes when cash actually leaves or enters a company, shifts risk between buyer and seller, and can affect future reported profits and liabilities — like part of a sale price kept as an IOU tied to future performance.
purchase price allocation financial
"summarizes the preliminary purchase price allocation"
Purchase price allocation is the accounting process that breaks down the total amount paid for an acquired business into specific pieces—like tangible assets, identifiable intangible assets (brands, patents, customer lists) and goodwill—based on their estimated fair values. Investors care because this breakdown affects future earnings, tax costs and reported asset values: higher allocations to amortizable intangibles or goodwill can change profit volatility, depreciation and potential impairment charges, similar to splitting a restaurant bill to see what you actually bought versus what you paid extra for goodwill.
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How did Ferguson finance the FloWorks acquisition?
Ferguson funded the FloWorks acquisition with net proceeds from the August 2026 Senior Notes, a borrowing under its Term Loan Facility and available cash on hand. The bridge facility of up to $700 million was never drawn, and its commitments were terminated in full on August 14, 2026.
When does FERG's receivables facility now terminate?
The scheduled termination date was extended to November 6, 2029, from October 29, 2027, under agreements entered into on November 6, 2026. The amendment also modified certain termination-event provisions, including increasing cross-default and judgment thresholds for the company and its subsidiaries other than Ferguson Receivables, LLC.
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM10-Q
For the quarterly period endedSeptember 30, 2026
For the transition period from to
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to
Commission File Number: 001-42200
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
+1 -757 -874-7795
| (Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices) | ||||||||
Securities registered pursuant to Section 12(b) of the Act: | ||||||||
| Title of Each Class: | Trading Symbol: | Name of Each Exchange on Which Registered: | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☒ | Accelerated filer | ☐ | |||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
As of November 2, 2026, the number of outstanding shares of common stock was 193,648,602 .
TABLE OF CONTENTS
| PAGE | |||||
CERTAIN TERMS | 1 | ||||
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS | 1 | ||||
PART I – FINANCIAL INFORMATION | 3 | ||||
Item 1. Financial Statements | 3 | ||||
Condensed Consolidated Statements of Earnings | 3 | ||||
Condensed Consolidated Statements of Comprehensive Income | 4 | ||||
Condensed Consolidated Balance Sheets | 5 | ||||
Condensed Consolidated Statements of Stockholders’ Equity | 6 | ||||
Condensed Consolidated Statements of Cash Flows | 7 | ||||
Notes to the Condensed Consolidated Financial Statements | 8 | ||||
Note 1: Summary of significant accounting policies | 8 | ||||
Note 2: Segment and net sales information | 10 | ||||
Note 3: Weighted average shares | 12 | ||||
Note 4: Income tax | 13 | ||||
Note 5: Debt | 13 | ||||
Note 6: Assets and liabilities at fair value | 15 | ||||
Note 7: Commitments and contingencies | 15 | ||||
Note 8: Accumulated other comprehensive loss | 16 | ||||
Note 9: Retirement benefit obligations | 17 | ||||
Note 10: Stockholders’ equity | 17 | ||||
Note 11: Share-based compensation | 18 | ||||
Note 12: Acquisitions | 20 | ||||
Note 13: Restructuring expenses | 21 | ||||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 22 | ||||
Item 3. Quantitative and Qualitative Disclosures About Market Risk | 32 | ||||
Item 4. Controls and Procedures | 32 | ||||
PART II - OTHER INFORMATION | 33 | ||||
Item 1. Legal Proceedings | 33 | ||||
Item 1A. Risk Factors | 33 | ||||
Item 5. Other Information | 33 | ||||
Item 6. Exhibits | 35 | ||||
SIGNATURES | 36 | ||||
CERTAIN TERMS
Unless otherwise specified or the context otherwise requires, the terms “Company,” “Ferguson,” “we,” “us,” and “our” and other similar terms used in this Quarterly Report on Form 10-Q (this “Quarterly Report”) refer to Ferguson Enterprises Inc. and its consolidated subsidiaries. The term “FloWorks Acquisition” refers to the Company’s acquisition of FWI Holdings, Inc. (“FloWorks”) on August 31, 2026.
In connection with its fiscal year-end change from July 31st to December 31st, the Company filed audited financial statements for the five-month transition period from August 1, 2025 to December 31, 2025, on a Transition Report on Form 10-KT (the “Transition Report”). The condensed consolidated financial statements on this Quarterly Report should be read in conjunction with the financial statements and related notes thereto included in the Transition Report filed with the SEC on February 27, 2026. Except as otherwise specified or the context otherwise requires, references to years indicate the calendar year ended December 31st of the respective year. For example, references to the “third quarter of 2025” refer to the three months ended September 30, 2025.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain information included in this Quarterly Report is forward-looking, including within the meaning of the Private Securities Litigation Reform Act of 1995, and involves risks, assumptions and uncertainties that could cause actual results to differ materially from those expressed or implied by forward-looking statements. Forward-looking statements cover all matters which are not historical facts and include, without limitation, statements or guidance regarding or relating to our future financial position, results of operations and growth, plans and objectives for the future including our capabilities and priorities, expectations regarding global and regional economic, market and political conditions, ability to manage supply chain challenges, the expected synergies and financial impact of recent acquisitions, ability to manage the impact of product price fluctuations, our financial condition and liquidity, legal or regulatory changes, capital deployment strategy, including the amount and timing of our dividends and share repurchases, investments and capital expenditures, and other statements concerning the success of our business and strategies.
Forward-looking statements can be identified by the use of forward-looking terminology, including terms such as “believes,” “estimates,” “anticipates,” “expects,” “forecasts,” “intends,” “continues,” “plans,” “projects,” “goal,” “target,” “aim,” “may,” “will,” “would,” “could” or “should” or, in each case, their negative or other variations or comparable terminology and other similar references to future periods. Forward-looking statements speak only as of the date on which they are made. They are not assurances of future performance and are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Therefore, you should not place undue reliance on any of these forward-looking statements. Although we believe that the forward-looking statements contained in this Quarterly Report are based on reasonable assumptions, you should be aware that many factors could cause actual results to differ materially from those contained in such forward-looking statements, including but not limited to:
•weakness in the economy, market trends, uncertainty and other conditions in the markets in which we operate and the macroeconomic impact of factors beyond our control (including, among others, inflation/deflation, recession, labor and wage pressures, trade restrictions such as tariffs, sanctions and retaliatory countermeasures, interest rates, and geopolitical conditions);
•failure to rapidly identify or effectively respond to direct and/or end customers’ wants, expectations or trends, including costs and potential problems associated with new or upgraded information technology systems or our ability to timely deploy new omni-channel capabilities;
•decreased demand for our products as a result of operating in highly competitive industries and the impact of declines in the residential and non-residential markets and our ability to effectively manage inventory as a result;
•changes in competition, including as a result of market consolidation, new entrants, vertical integration or competitors responding more quickly to emerging technologies (such as generative or agentic artificial intelligence (“AI”));
•failure of a key information technology system or process as well as payment-related risks, including exposure to fraud or theft;
•privacy and protection of sensitive data failures, including failures due to data corruption, cybersecurity incidents, network security breaches or the use of AI;
1
•ineffectiveness of or disruption in our domestic or international supply chain or our fulfillment network, including delays in inventory availability at our distribution facilities and branches, increased delivery costs or lack of availability due to loss of key suppliers;
•failure to effectively manage and protect our facilities and inventory or to prevent personal injury to customers, suppliers or associates, including as a result of workplace violence;
•unsuccessful execution of our operational strategies, including the failure to quickly adapt our strategy to emerging technologies;
•failure to attract, retain and motivate key associates;
•exposure of associates, contractors, customers, suppliers and other individuals to health and safety risks and fleet incidents;
•risks associated with acquisitions, partnerships, joint ventures and other business combinations, dispositions or strategic transactions;
•risks associated with sales of private label products, including regulatory, product liability and reputational risks and the adverse impact such sales may have on supplier relationships and rebates;
•the failure to achieve and maintain a high level of product and service quality or comply with responsible sourcing standards;
•inability to renew leases on favorable terms or at all, as well as any remaining obligations under a lease when we close a facility;
•changes in, interpretations of, or compliance with tax laws and accounting standards;
•our access to capital, indebtedness and changes in our credit ratings and outlook;
•fluctuations in product prices/costs (e.g., including as a result of the use of commodity-priced materials, inflation/deflation, trade restrictions and/or failure to qualify for or maintain supplier rebates) and foreign currency;
•funding risks related to our defined benefit pension plans;
•legal proceedings in the ordinary course of our business as well as any failure to comply with domestic and foreign laws, regulations and standards, as those laws, regulations and standards or interpretations and enforcement thereof may change;
•the occurrence of unforeseen developments such as litigation, investigations, governmental proceedings or enforcement actions;
•our failure to comply with the obligations associated with being a public company listed on the New York Stock Exchange (“NYSE”) and the costs associated therewith;
•the costs and risk exposure relating to sustainability matters and disclosures, including regulatory or legal requirements and disparate stakeholder expectations; and
•other risks and uncertainties as set forth under the heading “Risk Factors” in our Transition Report and in other filings we make with the SEC in the future.
Additionally, forward-looking statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Other than in accordance with our legal or regulatory obligations, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
2
Part I - FINANCIAL INFORMATION
Item 1.Financial Statements
Ferguson Enterprises Inc.
Condensed Consolidated Statements of Earnings
(unaudited)
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (In millions, except per share amounts) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net sales | $ | $ | $ | $ | |||||||||||||||||||
| Cost of sales | ( | ( | ( | ( | |||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Selling, general and administrative expenses | ( | ( | ( | ( | |||||||||||||||||||
| Restructuring expenses | ( | ( | ( | ( | |||||||||||||||||||
| Depreciation and amortization | ( | ( | ( | ( | |||||||||||||||||||
| Operating profit | |||||||||||||||||||||||
| Interest expense, net | ( | ( | ( | ( | |||||||||||||||||||
| Other expense, net | ( | ( | ( | ( | |||||||||||||||||||
| Income before income taxes | |||||||||||||||||||||||
| Provision for income taxes | ( | ( | ( | ( | |||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Earnings per share - Basic | $ | $ | $ | $ | |||||||||||||||||||
| Earnings per share - Diluted | $ | $ | $ | $ | |||||||||||||||||||
| Weighted average number of shares outstanding: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
3
Ferguson Enterprises Inc.
Condensed Consolidated Statements of Comprehensive Income
(unaudited)
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Other comprehensive (loss) income: | |||||||||||||||||||||||
| Foreign currency translation adjustments | ( | ( | ( | ||||||||||||||||||||
Pension adjustments, net of tax impacts of ($ | ( | ( | |||||||||||||||||||||
| Total other comprehensive income (loss), net of tax | ( | ( | ( | ||||||||||||||||||||
| Comprehensive income | $ | $ | $ | $ | |||||||||||||||||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
4
Ferguson Enterprises Inc.
Condensed Consolidated Balance Sheets
(unaudited)
| As of | |||||||||||
| (In millions, except share amounts) | September 30, 2026 | December 31, 2025 | |||||||||
| Assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, less allowances of $ | |||||||||||
| Inventories | |||||||||||
| Prepaid and other current assets | |||||||||||
| Assets held for sale | |||||||||||
| Total current assets | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Deferred income taxes, net | |||||||||||
| Goodwill | |||||||||||
| Other intangible assets, net | |||||||||||
| Other non-current assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and stockholders’ equity | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Short-term debt | |||||||||||
| Current portion of operating lease liabilities | |||||||||||
| Other current liabilities | |||||||||||
| Liabilities held for sale | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Long-term portion of operating lease liabilities | |||||||||||
| Deferred income taxes, net | |||||||||||
| Other long-term liabilities | |||||||||||
| Total liabilities | |||||||||||
| Stockholders’ equity: | |||||||||||
Common stock, par value $ | |||||||||||
| Paid-in capital | |||||||||||
| Retained earnings | |||||||||||
Treasury shares, | ( | ( | |||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total stockholders' equity | |||||||||||
| Total liabilities and stockholders' equity | $ | $ | |||||||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
5
Ferguson Enterprises Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(unaudited)
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (In millions, except per share data) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Common stock: | |||||||||||||||||||||||
| Balance at beginning of period | $ | $ | $ | $ | |||||||||||||||||||
| Common stock issued | |||||||||||||||||||||||
| Balance at end of period | |||||||||||||||||||||||
| Paid-in capital: | |||||||||||||||||||||||
| Balance at beginning of period | $ | $ | |||||||||||||||||||||
| Share-based compensation expense | |||||||||||||||||||||||
| Balance at end of period | |||||||||||||||||||||||
| Retained earnings: | |||||||||||||||||||||||
| Balance at beginning of period | $ | $ | |||||||||||||||||||||
| Net earnings | |||||||||||||||||||||||
Cash dividends declared of $ | ( | ( | ( | ( | |||||||||||||||||||
| Shares issued under employee stock plans | ( | ( | ( | ||||||||||||||||||||
| Balance at end of period | |||||||||||||||||||||||
| Treasury shares: | |||||||||||||||||||||||
| Balance at beginning of period | ( | ( | ($ | ($ | |||||||||||||||||||
| Share repurchases | ( | ( | ( | ||||||||||||||||||||
| Shares issued under employee share plans, net | |||||||||||||||||||||||
| Balance at end of period | ( | ( | ( | ( | |||||||||||||||||||
| Accumulated other comprehensive loss: | |||||||||||||||||||||||
| Balance at beginning of period | ( | ( | ($ | ($ | |||||||||||||||||||
| Total other comprehensive income (loss) | ( | ( | ( | ||||||||||||||||||||
| Balance at end of period | ( | ( | ( | ( | |||||||||||||||||||
| Total stockholders’ equity | $ | $ | $ | $ | |||||||||||||||||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
6
Ferguson Enterprises Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
| (In millions) | Nine months ended | ||||||||||
| September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | $ | |||||||||
| Depreciation and amortization | |||||||||||
| Share-based compensation | |||||||||||
| Changes in deferred income taxes | |||||||||||
| Changes in inventories | ( | ( | |||||||||
| Changes in receivables and other assets | ( | ( | |||||||||
| Changes in accounts payable and other liabilities | |||||||||||
| Changes in income taxes payable | ( | ( | |||||||||
| Other operating activities | |||||||||||
| Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities: | |||||||||||
| Purchase of businesses acquired, net of cash acquired | ( | ( | |||||||||
| Capital expenditures | ( | ( | |||||||||
| Other investing activities | |||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
| Purchase of treasury shares | ( | ( | |||||||||
| Repayments of debt | ( | ( | |||||||||
| Proceeds from debt | |||||||||||
| Change in bank overdrafts | ( | ||||||||||
| Cash dividends | ( | ( | |||||||||
| Other financing activities | ( | ( | |||||||||
| Net cash provided by (used in) financing activities | ( | ||||||||||
| Change in cash, cash equivalents and restricted cash | ( | ||||||||||
| Effects of exchange rate changes | ( | ||||||||||
| Cash, cash equivalents and restricted cash, beginning of period | |||||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | $ | |||||||||
| Supplemental Disclosures: | |||||||||||
| Cash paid for income taxes, net | $ | $ | |||||||||
| Cash paid for interest | |||||||||||
| Accrued capital expenditures | |||||||||||
| Accrued dividends | |||||||||||
| Lease assets obtained in exchange for new operating lease liabilities (non-cash) | |||||||||||
See accompanying Notes to the Condensed Consolidated Financial Statements.
7
Ferguson Enterprises Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
Note 1: Summary of significant accounting policies
Background
Ferguson Enterprises Inc. (including subsidiaries, the “Company”) (NYSE: FERG) is a Delaware corporation. 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. We sell through a common network of distribution centers, branches, counter service and expert sales associates, showroom consultants and e-commerce channels. The corporate headquarters of the Company is located at 751 Lakefront Commons, Newport News, Virginia 23606.
Basis of presentation
The accompanying unaudited condensed consolidated financial statements and notes to the condensed consolidated financial statements are presented in accordance with the rules and regulations of the SEC and accounting principles generally accepted in the United States of America (“U.S. GAAP”), but do not include all disclosures normally required in annual consolidated financial statements. In the opinion of management, the unaudited condensed consolidated financial statements contain all normal recurring adjustments necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented.
These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Transition Report. The financial results for the interim period may not be indicative of the financial results for the entire annual period.
Use of estimates
The preparation of the Company's interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions affecting certain reported amounts in the interim condensed consolidated financial statements and accompanying notes. Actual results may differ from those estimates.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits with banks with original maturities of three months or less and overdrafts to the extent there is a legal right of offset and practice of net settlement with cash balances. Cash equivalents also include amounts due from third-party credit card processors as they are both short-term and highly liquid in nature and are typically converted to cash within a few days of the sales transaction.
Restricted cash primarily consists of deferred consideration for business combinations, subject to various settlement agreements. These amounts are recorded in prepaid and other current assets and other non-current assets in the Company’s condensed consolidated balance sheets.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows.
| As of | |||||||||||
| (In millions) | September 30, 2026 | December 31, 2025 | |||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
| Total cash, cash equivalents and restricted cash | $ | $ | |||||||||
8
Supplier finance program
Recently issued accounting standard updates (“ASU”)
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” This ASU requires new financial statement disclosures disaggregating prescribed expense categories within relevant income statement expense captions, including information about purchases of inventory, employee compensation, depreciation, and intangible asset amortization for each relevant expense caption on the face of the income statement. Per ASU No. 2025-01, the amendments under ASU No. 2024-03 are effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The ASU No. 2024-03 can be adopted either prospectively or retrospectively. The Company is currently evaluating the ASU to determine the impact on its disclosures.
In September 2025, the FASB issued ASU No. 2025-06, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40).” The amendments in this update remove all references to the previously existing software development project stages and require entities to start capitalizing software costs when management has authorized and committed funding to a software project and it is probable that the project will be completed with its intended functionality. The new standard is effective for fiscal years beginning after December 15, 2027. Early adoption is permitted and can be applied prospectively, retrospectively, or utilizing a modified transition approach. The Company is currently evaluating the ASU to determine the impact on its consolidated financial statements.
In May 2026, the FASB issued ASU 2026-02, “Environmental Credits and Environmental Credit Obligations (Topic 818).” The standard provides accounting and disclosure guidance for environmental credits and related obligations. The guidance is effective for annual reporting periods beginning after December 15, 2027, including interim periods within those annual periods. Early adoption is permitted. The standard is required to be applied using a modified retrospective approach through a cumulative-effect adjustment to beginning retained earnings in the period of adoption. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.
Recent accounting pronouncements pending adoption that are not discussed above are either not applicable, or will not have, or are not expected to have, a material impact on our consolidated financial condition, results of operations or cash flows.
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Note 2: Segment and net sales information
The Company reports its financial results of operations on a geographical basis in the following two reportable segments: United States and Canada. Each segment generally derives its revenues in the same manner as described in Note 1, Summary of significant accounting policies included in the Transition Report. The Company uses adjusted operating profit as its measure of segment profit. Certain income and expenses are not allocated to the Company’s segments and, thus, the information that management uses to make operating decisions and assess performance does not reflect such amounts.
This segment structure reflects the financial information and reports used by the Company’s management, specifically its chief operating decision makers (“CODM”), to make decisions regarding the Company’s business, including resource allocations and performance assessments, as well as the current operating focus in compliance with ASC 280, Segment Reporting. The Company’s CODM are the Chief Executive Officer and the Chief Financial Officer.
The significant expenses reviewed by the CODM include operating costs and costs of sales. The operating costs evaluated by the CODM are primarily SG&A, including depreciation expense on long lived assets and software amortization expense. The CODM use segment adjusted operating profit to evaluate performance and allocate resources (including employees, property, and financial or capital resources) in conjunction with the annual budget process, as well as during periodic business reviews.
Segment results were as follows:
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net sales: | |||||||||||||||||||||||
| United States | $ | $ | $ | $ | |||||||||||||||||||
| Canada | |||||||||||||||||||||||
| Total net sales | |||||||||||||||||||||||
| Cost of sales: | |||||||||||||||||||||||
| United States | ( | ( | ( | ( | |||||||||||||||||||
| Canada | ( | ( | ( | ( | |||||||||||||||||||
| Operating costs: | |||||||||||||||||||||||
| United States | ( | ( | ( | ( | |||||||||||||||||||
| Canada | ( | ( | ( | ( | |||||||||||||||||||
| Adjusted operating profit: | |||||||||||||||||||||||
| United States | $ | $ | |||||||||||||||||||||
| Canada | |||||||||||||||||||||||
| Total segment adjusted operating profit | |||||||||||||||||||||||
Central and other costs(1) | ( | ( | ( | ( | |||||||||||||||||||
Restructuring expenses(2) | ( | ( | ( | ( | |||||||||||||||||||
Acquisition and integration costs(3) | ( | ( | |||||||||||||||||||||
| Amortization of acquired intangible assets | ( | ( | ( | ( | |||||||||||||||||||
| Interest expense, net | ( | ( | ( | ( | |||||||||||||||||||
| Other expense, net | ( | ( | ( | ( | |||||||||||||||||||
| Income before income taxes | $ | $ | $ | $ | |||||||||||||||||||
(1)Primarily includes SG&A that is not related to a segment.
(2)See Note 13, Restructuring expenses for further information.
(3)Incremental costs related to the FloWorks Acquisition are not included in segment adjusted operating profit.
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Capital expenditures and depreciation and amortization by segment were as follows:
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Capital expenditures: | |||||||||||||||||||||||
| United States | $ | $ | $ | $ | |||||||||||||||||||
| Canada | |||||||||||||||||||||||
| Total capital expenditures | $ | $ | $ | $ | |||||||||||||||||||
| Depreciation and amortization: | |||||||||||||||||||||||
| United States | $ | $ | $ | $ | |||||||||||||||||||
| Canada | |||||||||||||||||||||||
Total depreciation and amortization(1) | $ | $ | $ | $ | |||||||||||||||||||
(1) Includes amortization of acquired intangible assets of $ | |||||||||||||||||||||||
Assets by segment included:
| As of | |||||||||||
| (In millions) | September 30, 2026 | December 31, 2025 | |||||||||
| Assets: | |||||||||||
| United States | $ | $ | |||||||||
| Canada | |||||||||||
| Total segment assets | |||||||||||
| Corporate | |||||||||||
| Total assets | $ | $ | |||||||||
Long-lived assets are as follows:
| As of | |||||||||||
| (In millions) | September 30, 2026 | December 31, 2025 | |||||||||
| Long-lived assets: | |||||||||||
| United States | $ | $ | |||||||||
| Canada | |||||||||||
| Total long-lived assets | $ | $ | |||||||||
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Net sales disaggregation
A disaggregation of net sales by customer group in the United States is as follows:
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Customer Group | |||||||||||||||||||||||
| Waterworks | % | % | % | % | |||||||||||||||||||
| Ferguson Home | % | % | % | % | |||||||||||||||||||
| Commercial/Mechanical | % | % | % | % | |||||||||||||||||||
| Residential Trade Plumbing | % | % | % | % | |||||||||||||||||||
| HVAC | % | % | % | % | |||||||||||||||||||
| Industrial | % | % | % | % | |||||||||||||||||||
| Facilities Supply | % | % | % | % | |||||||||||||||||||
| Fire & Fabrication | % | % | % | % | |||||||||||||||||||
| Total United States | % | % | % | % | |||||||||||||||||||
The Company does not disaggregate sales for Canada based on materiality. No sales to an individual customer accounted for more than 10% of net sales during any of the periods presented.
Note 3: Weighted average shares
The following table shows the calculation of diluted shares:
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Weighted average number of shares outstanding: | |||||||||||||||||||||||
| Basic weighted average shares | |||||||||||||||||||||||
Effect of dilutive shares(1) | |||||||||||||||||||||||
| Diluted weighted average shares | |||||||||||||||||||||||
| Excluded anti-dilutive shares | |||||||||||||||||||||||
(1)Represents the potential dilutive impact of share-based awards.
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Note 4: Income tax
The Company’s tax provision for each period presented was calculated using an estimated annual tax rate, adjusted for discrete items occurring during the applicable period to arrive at an effective tax rate. The effective income tax rates for the relevant periods were as follows:
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Effective tax rate | % | % | % | % | |||||||||||||||||||
During the nine months ended September 30, 2026, the Company’s unrecognized tax benefits balance decreased by $19 million. The decrease was mainly due to the lapsing of statutes of limitations.
The Company’s net deferred tax position shifted from a net deferred tax asset as of December 31, 2025, to a net deferred tax liability as of September 30, 2026, primarily due to the FloWorks Acquisition. The acquired deferred tax liabilities primarily reflect differences between the financial reporting basis and tax basis of acquired intangible assets. The purchase price allocation, including the related deferred tax amounts, remains preliminary and may be adjusted during the measurement period as additional information becomes available.
Note 5: Debt
The Company’s debt obligations consisted of the following:
| As of | |||||||||||
| (In millions) | September 30, 2026 | December 31, 2025 | |||||||||
| Variable-rate debt: | |||||||||||
| Term Loan | $ | $ | |||||||||
| Fixed-rate debt: | |||||||||||
| Private placement notes | |||||||||||
| Unsecured senior notes, due April 2027 - October 2034 | |||||||||||
2029 Senior Notes, | |||||||||||
2036 Senior Notes, | |||||||||||
| Subtotal | $ | $ | |||||||||
| Less: current maturities of debt | ( | ( | |||||||||
| Unamortized discounts and debt issuance costs | ( | ( | |||||||||
| Interest rate swap - fair value adjustment | ( | ( | |||||||||
| Total long-term debt | $ | $ | |||||||||
Receivables Securitization Facility
The Company maintains a Receivables Securitization Facility (the “Receivables Facility”) which is primarily governed by the Receivables Purchase Agreement, dated July 31, 2013, as amended from time to time (the “Receivables Purchase Agreement”). The Receivables Facility consists of funding for up to $900 million, terminating on October 29, 2027. The Company has the ability to increase the aggregate total available amount under the Receivables Facility up to a total of $1.5 billion, subject to lender participation. As of September 30, 2026, no borrowings were outstanding under the Receivables Facility.
In November 2026, the Company and certain of its subsidiaries entered into an amendment and restatement of the agreements governing the Receivables Facility. Among other things, the amendments extended the scheduled termination date of the Receivables Facility until November 2029. For additional information, see Part II, Item 5, "Other Information.”
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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 the aggregate capacity of the facility by $500 million under certain conditions, including the receipt of additional or increased lender commitments. As of September 30, 2026, no borrowings were outstanding under the Revolving Facility.
On April 2, 2026, the Company extended the stated maturity date of the commitments under the Revolving Facility from April 2, 2030 to April 2, 2031 by utilizing one of the two extension options available in the Revolving Credit Agreement.
Term Loan Credit Agreement
On August 11, 2026, the Company, as borrower, entered into a term loan credit agreement (the “Term Loan Credit Agreement”) with Ferguson UK Holdings Limited (“FUKHL”), as guarantor, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent for the lenders. The Term Loan Credit Agreement provides for a term loan facility in an aggregate committed amount of up to $900 million (the “Term Loan Facility”), which is unsecured and matures August 31, 2029. Capitalized terms used in this summary have the meaning set forth in the Term Loan Credit Agreement. The Borrowing under the Term Loan Facility bears interest, at the Company’s option, at either the Base Rate or the Term SOFR Rate, plus a margin. The proceeds of the Term Loan Facility were used to fund a portion of the consideration, including related fees and expenses, payable in connection with the FloWorks Acquisition.
As of September 30, 2026, $850 million of the borrowing under the Term Loan Facility was outstanding. The interest rate under the Term Loan Facility was approximately 4.9 % as of September 30, 2026.
Private Placement Notes
In November 2026, $150 million of private placement notes will mature. The remaining $150 million of private placement notes will mature in September 2027.
Unsecured Senior Notes
In August 2026, the Company issued and sold an aggregate of $1.2 billion of unsecured senior notes in two series: $700 million of 4.80 % senior notes due August 2029 and $500 million of 5.60 % senior notes due August 2036 (together, the “August 2026 Senior Notes”). The obligations of the Company under the August 2026 Senior Notes are fully and unconditionally guaranteed by FUKHL.
Each series of August 2026 Senior Notes may be redeemed, in whole or in part, at any time at the applicable redemption prices and on the terms and conditions set forth in the supplemental indenture and indenture governing the August 2026 Senior Notes (the “Indenture”). The Indenture contains certain covenants and restrictions, including covenants that limit the Company’s and FUKHL’s ability to incur specified debt secured by liens and that require the Company and FUKHL to satisfy certain conditions in order to merge or consolidate with another entity. The Indenture also provides for customary events of default.
In April 2027, $300 million of unsecured senior notes will mature.
Other
Concurrently with the Term Loan Credit Agreement and in connection with the FloWorks Acquisition, the Company, as borrower, entered into a bridge term loan credit agreement (the “Bridge Credit Agreement”). The Bridge Credit Agreement provided for an unsecured bridge credit facility of up to $700 million (the “Bridge Facility”). Following the issuance of the August 2026 Senior Notes, the commitments under the Bridge Credit Agreement were terminated in full on August 14, 2026. The Bridge Facility was never drawn.
The Company was in compliance with all debt covenants that were in effect as of September 30, 2026.
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Note 6: Assets and liabilities at fair value
The Company has not changed its valuation techniques for measuring the fair value of any financial assets or liabilities during the periods presented. The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and other debt instruments, such as the Term Loan Facility due to the variable interest rate, approximated their fair values as of September 30, 2026 and December 31, 2025.
The Company’s derivatives (interest rate swaps which are considered fair value hedges) and investments in equity instruments are carried at fair value on the condensed consolidated balance sheets (Level 2 and Level 3 fair value inputs, respectively) and are not material. The notional amount of the Company’s outstanding fair value hedges was $150
Carrying amounts and the related estimated fair value of the Company’s long-term debt were as follows:
| September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||
| (In millions) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||||||||
| Unsecured senior notes | $ | $ | $ | $ | |||||||||||||||||||
| Private placement notes | |||||||||||||||||||||||
Note 7: Commitments and contingencies
The Company is, from time to time, involved in various legal proceedings considered to be normal course of business in relation to, among other things, the products that we supply, contractual and commercial disputes, fleet incidents and disputes with employees. Provision is made if, on the basis of current information and professional advice, liabilities are considered probable. In the case of unfavorable outcomes, the Company may benefit from applicable insurance protection. The Company does not expect any of its pending legal proceedings to have a material adverse effect on its results of operations, financial position or cash flows.
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Note 8: Accumulated other comprehensive loss
The change in accumulated other comprehensive loss was as follows:
| (In millions, net of tax) | Foreign currency translation | Pensions | Total | ||||||||||||||
Balance at December 31, 2025 | ($ | ($ | ($ | ||||||||||||||
| Other comprehensive (loss) income before reclassifications | ( | ( | |||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | |||||||||||||||||
| Other comprehensive (loss) income | ( | ( | |||||||||||||||
| Balance at March 31, 2026 | ( | ( | ( | ||||||||||||||
| Other comprehensive (loss) income before reclassifications | ( | ( | |||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | |||||||||||||||||
| Other comprehensive (loss) income | ( | ( | |||||||||||||||
| Balance at June 30, 2026 | ( | ( | ( | ||||||||||||||
| Other comprehensive (loss) income before reclassifications | ( | ( | |||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | |||||||||||||||||
| Other comprehensive (loss) income | ( | ||||||||||||||||
Balance at September 30, 2026 | ( | ( | ( | ||||||||||||||
| (In millions, net of tax) | Foreign currency translation | Pensions | Total | ||||||||||||||
Balance at December 31, 2024 | ( | ( | ( | ||||||||||||||
| Other comprehensive income before reclassifications | |||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | |||||||||||||||||
| Other comprehensive (loss) income | |||||||||||||||||
| Balance at March 31, 2025 | ( | ( | ( | ||||||||||||||
| Other comprehensive (loss) income before reclassifications | |||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | |||||||||||||||||
| Other comprehensive (loss) income | |||||||||||||||||
| Balance at June 30, 2025 | ( | ( | ( | ||||||||||||||
| Other comprehensive (loss) income before reclassifications | ( | ( | ( | ||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | |||||||||||||||||
| Other comprehensive (loss) income | ( | ( | ( | ||||||||||||||
Balance at September 30, 2025 | ( | ( | ( | ||||||||||||||
Amounts reclassified from accumulated other comprehensive loss related to pension and other post-retirement items include the related income tax impacts. Such amounts consisted of the following:
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Amortization of actuarial losses | $ | $ | $ | $ | |||||||||||||||||||
| Tax benefit | ( | ( | ( | ||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | $ | $ | $ | $ | |||||||||||||||||||
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Note 9: Retirement benefit obligations
The Company maintains pension plans in the U.K. and Canada. The components of net periodic pension cost, which are included in Other expense, net in the condensed consolidated statements of earnings, were as follows:
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Interest cost | ($ | ($ | ($ | ($ | |||||||||||||||||||
| Expected return on plan assets | |||||||||||||||||||||||
| Amortization of net actuarial losses | ( | ( | ( | ( | |||||||||||||||||||
| Net periodic cost | ($ | ($ | ($ | ($ | |||||||||||||||||||
The impact of exchange rate fluctuations is included in the amortization of net actuarial losses line above.
Note 10: Stockholders’ equity
The following table presents a summary of the Company’s share activity:
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Common stock: | |||||||||||||||||||||||
| Balance at beginning of period | |||||||||||||||||||||||
| Common stock issued | |||||||||||||||||||||||
| Balance at end of period | |||||||||||||||||||||||
| Treasury shares: | |||||||||||||||||||||||
| Balance at beginning of period | ( | ( | ( | ( | |||||||||||||||||||
| Share repurchases | ( | ( | ( | ||||||||||||||||||||
| Treasury shares used to settle share-based compensation awards | |||||||||||||||||||||||
| Balance at end of period | ( | ( | ( | ( | |||||||||||||||||||
| Total shares outstanding at end of period | |||||||||||||||||||||||
Share Repurchases
As of April 30, 2026, the Company had completed $4.7 billion in share repurchases under a September 2021 program that authorized up to $5.0 billion. On April 30, 2026, the Board authorized a new share repurchase program of up to $2 billion in aggregate purchases of common stock, replacing the prior program. As of September 30, 2026, the Company has completed $136 million in share repurchases under the April 2026 program.
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Note 11: Share-based compensation
The Company grants share-based compensation awards that can be broadly characterized by the underlying vesting conditions as follows:
•Time vested, restricted stock units (“RSU”) vest over time. RSU awards granted prior to October 2024 cliff vest, typically at the end of three years . RSU awards granted in October 2024 and beyond will vest in equal, annual installments over three years . The fair value of these awards is based on the closing share price on the date of grant.
•Multiple metric performance stock units granted to certain members of management (“PSU-EX”) typically vest following three-year performance cycles. The number of shares issued will vary based upon the Company’s performance against pre-determined goals for adjusted EPS growth (diluted), return on capital employed (“ROCE”) and relative total shareholder return (“rTSR”). The fair value of awards vesting based upon EPS growth (diluted) and ROCE are equal to the closing share price on the date of grant and the fair value of rTSR awards are determined using a Monte Carlo simulation. The assumptions used in the Monte Carlo simulations for the rTSR granted in 2026 were as follows:
| rTSR Fair value assumptions: | |||||
| Expected annualized volatility | % | ||||
| Risk free interest rate | % | ||||
| Simulation period | |||||
| Grant date fair value of rTSR awards | $ | ||||
The following table summarizes the share-based incentive awards activity for the nine months ended September 30, 2026:
| Number of shares | Weighted average grant date fair value | ||||||||||
Outstanding as of December 31, 2025 | $ | ||||||||||
| RSU awards granted | |||||||||||
| PSU-EX granted | |||||||||||
| Share adjustments based on performance | |||||||||||
| Vested | ( | ||||||||||
| Forfeited | ( | ||||||||||
Outstanding as of September 30, 2026 | $ | ||||||||||
The following table relates to all share-based compensation awards:
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Share-based compensation expense (within SG&A) | $ | $ | $ | $ | |||||||||||||||||||
| Income tax benefit | |||||||||||||||||||||||
Total unrecognized share-based compensation expense for all share-based payment plans was $118 million as of September 30, 2026, which is expected to be recognized over a weighted average period of 1.9 years.
Stock Options
The Company grants stock option awards to certain members of management with an exercise price equal to the closing share price of the Company's common stock on the last trading day prior to the date of grant. These options vest and become exercisable over three years , in equal, annual installments beginning one year from the date of grant, and expire 10 years from the date of grant.
The fair value of the Company's stock options was estimated on the date of grant using the Black-Scholes option-pricing model. When determining expected volatility, the Company considers the historical volatility of the Company’s stock price. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant, based on the options’ expected term. The expected term of the options was estimated using the “simplified method” as permitted under Staff Accounting Bulletin 110. We consider the use of the simplified method appropriate due to the lack of sufficient historical data.
The assumptions used in the Black-Scholes option-pricing model in 2026 were as follows:
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| Stock option fair value assumptions used: | |||||
| Expected annualized volatility | % | ||||
| Dividend yield | % | ||||
| Risk free interest rate | % | ||||
| Expected term | |||||
| Grant date fair value of stock option awards | $ | ||||
Stock option activity in 2026 is summarized in the following table:
| Number of shares | Weighted average exercise price per share | Aggregate intrinsic value (in millions) | Weighted average remaining contractual life (years) | ||||||||||||||||||||
Outstanding as of December 31, 2025 | $ | ||||||||||||||||||||||
| Granted | |||||||||||||||||||||||
Outstanding as of September 30, 2026 | $ | $ | |||||||||||||||||||||
Exercisable as of September 30, 2026 | $ | $ | |||||||||||||||||||||
Employee share purchase plan
Ferguson Enterprises Inc. Employee Share Purchase Plan 2021 (the “ESPP”) provides for a limit of 20 million shares of common stock that can be offered for purchase under the plan subject to certain guidelines set forth in the ESPP.
As of September 30, 2026, 19.5 million shares of common stock remain available for purchase under the ESPP. The exercise price per share of common stock is prescribed by the Compensation Committee of the Board for each offering period and may not be less than 85 % of the lesser of the fair market value of common stock on the date of grant and the fair market value of common stock on the date of exercise. During the second quarter of 2026, approximately 136,659 shares were purchased under the ESPP at an average price of $132.23 . The expense associated with the ESPP is not material.
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Note 12: Acquisitions
The Company acquired ten businesses during the nine months ended September 30, 2026, the largest of which was the FloWorks Acquisition. Each of the acquired businesses is generally engaged in the distribution of plumbing, HVAC, waterworks, wastewater, industrial or infrastructure related products or solutions and was acquired to support growth. In each acquisition, the Company obtained control of an integrated set of activities and assets that met the definition of a business under FASB Accounting Standards Codification (ASC) 805, Business Combinations. Accordingly, the acquisitions were accounted for as business combinations in accordance with ASC 805.
The following table summarizes the preliminary purchase price allocation for the assets acquired and liabilities assumed in regard to the Company's acquisitions completed in the year-to-date period, with the FloWorks Acquisition presented separately and all other acquisitions presented in aggregate:
| (In millions) | FloWorks | Other | Total | ||||||||||||||
| Cash and cash equivalents | $ | $ | $ | ||||||||||||||
| Trade and other receivables | $ | ||||||||||||||||
| Inventories | $ | ||||||||||||||||
| Property, plant and equipment | $ | ||||||||||||||||
| Right of use assets | $ | ||||||||||||||||
| Trade names and brands | $ | ||||||||||||||||
| Customer relationships | $ | ||||||||||||||||
| Other intangible assets | $ | ||||||||||||||||
| Trade and other payables | ( | ( | ($ | ||||||||||||||
| Lease liabilities | ( | ( | ($ | ||||||||||||||
| Deferred tax | ( | ( | ($ | ||||||||||||||
| Other | ( | ($ | |||||||||||||||
| Total | |||||||||||||||||
| Goodwill | |||||||||||||||||
| Consideration | $ | $ | $ | ||||||||||||||
| Satisfied by: | |||||||||||||||||
| Cash | $ | $ | $ | ||||||||||||||
| Deferred & other consideration | |||||||||||||||||
| Total consideration | $ | $ | $ | ||||||||||||||
The fair values of the net assets acquired are considered preliminary and are based on management’s best estimates. Further adjustments may be necessary in connection with acquisitions completed in a prior period when additional information becomes available about events that existed at the date of acquisition. Amendments to fair value estimates may be made to these figures during the measurement period following the date of acquisition. There were no material adjustments in the current year that related to the closing of the measurement period of acquisitions made in the prior year. As of the date of this Quarterly Report, the Company has made all known material adjustments related to acquisitions in 2026.
The fair value estimates of intangible assets are considered non-recurring, Level 3 measurements within the fair value hierarchy and are estimated as of each respective acquisition date.
The goodwill on these acquisitions is attributable to the anticipated profitability of the new markets and product ranges to which the Company has gained access and additional profitability, operating efficiencies and other synergies available in connection with existing markets. The goodwill acquired during the nine months ended September 30, 2026 was attributed to the United States, with $131 million expected to be deductible for tax purposes.
Deferred consideration represents the expected payout due to certain sellers of acquired businesses that is subject to either 1) a contractual settle-up period or 2) a contingency related to contractually defined performance metrics. If the deferred consideration is contingent on achieving performance metrics, the liability is estimated using assumptions regarding the expectations of an acquiree’s ability to achieve such performance metrics over a period of time that typically spans to three years . When ultimately paid, deferred consideration is reported as a cash outflow from financing activities.
20
The businesses acquired during the year-to-date period of 2026 contributed $271 million to net sales and $37 million in losses to the Company’s income before income tax, including transaction and integration costs of $49 million, as well as related acquired intangible asset amortization for the period between the applicable date of acquisition and September 30, 2026. Acquisition costs are expensed as incurred and included in selling, general and administrative expenses in the Company’s consolidated statements of earnings.
The net outflow of cash related to business acquisitions is as follows:
| Nine months ended | |||||
| (In millions) | September 30, 2026 | ||||
| Purchase consideration | $ | ||||
| Cash, cash equivalents and bank overdrafts acquired | ( | ||||
| Cash consideration paid, net of cash acquired | |||||
Deferred and contingent consideration(1) | |||||
| Net cash outflow in respect of the purchase of businesses | $ | ||||
(1) Included in other financing activities in the Condensed Consolidated Statements of Cash Flows.
Pro forma disclosures
If each acquisition had been completed on the first day of the prior year, the Company’s unaudited pro forma net sales and income before tax would have been:
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Pro forma net sales | $ | $ | $ | $ | |||||||||||||||||||
| Pro forma income before income tax | $ | $ | $ | $ | |||||||||||||||||||
These unaudited pro forma results do not necessarily represent financial results that would have been achieved had the acquisition actually occurred at the beginning of the prior year.
Note 13: Restructuring expenses
The Company’s restructuring expenses are summarized below:
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Corporate restructuring expenses | $ | $ | $ | $ | |||||||||||||||||||
| Business restructuring expenses | |||||||||||||||||||||||
| Restructuring expenses | $ | $ | $ | $ | |||||||||||||||||||
Corporate restructuring expenses
In the three and nine months ended September 30, 2026 and 2025, corporate restructuring expenses primarily related to transition activities following the establishment of our parent company’s domicile in the United States. The Company does not expect further charges to be material.
Business restructuring expenses
In the three and nine months ended September 30, 2025, the Company implemented targeted actions to streamline operations, enhancing speed and efficiency to better serve customers and drive further profitable growth. As a result of these actions, non-recurring business restructuring expenses of $73 million were incurred in the year-to-date period, primarily in the United States. The charges primarily related to severance costs of $46 27
21
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 and nine months ended September 30, 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 “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:
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (In millions, except per share amounts) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net sales | $9,026 | $8,245 | $25,249 | $23,821 | |||||||||||||||||||
| Operating profit | 885 | 844 | 2,390 | 2,193 | |||||||||||||||||||
| Net income | 598 | 638 | 1,678 | 1,617 | |||||||||||||||||||
| Earnings per share - diluted | 3.08 | 3.24 | 8.63 | 8.17 | |||||||||||||||||||
| Net cash provided by operating activities | 1,472 | 1,884 | |||||||||||||||||||||
Supplemental non-GAAP financial measures:(1) | |||||||||||||||||||||||
| Adjusted operating profit | 962 | 883 | 2,541 | 2,386 | |||||||||||||||||||
| Adjusted earnings per share - diluted | 3.43 | 3.18 | 9.09 | 8.48 | |||||||||||||||||||
(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 third quarter of 2026, net sales increased by 9.5% compared with the third quarter of 2025, primarily due to price inflation, higher volume and incremental sales from acquisitions.
For the third quarter of 2026, operating profit increased by 4.9% (adjusted operating profit increased 8.9%), compared with the third 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 and incremental costs in connection with the FloWorks Acquisition.
For the third quarter of 2026, diluted earnings per share was $3.08, a decrease of 4.9% compared with the third quarter of 2025, primarily due to the timing and extent of tax benefits in 2025, higher acquisition costs in connection with the FloWorks Acquisition and higher interest expense, partially offset by higher operating profit and the impact of share repurchases. Adjusted diluted earnings per share was $3.43, an increase of 7.9% compared with the third quarter of 2025, primarily driven by higher adjusted operating profit and the impact of share repurchases, partially offset by higher interest expense.
Net cash provided by operating activities decreased to $1,472 million in the year-to-date period of 2026 compared with $1,884 million in the same period of 2025, primarily reflecting an increased investment in working capital and higher cash tax payments, partially offset by higher net income after adjusting for non-cash items.
22
Results of Operations
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net sales | $9,026 | $8,245 | $25,249 | $23,821 | |||||||||||||||||||
| Cost of sales | (6,240) | (5,662) | (17,433) | (16,409) | |||||||||||||||||||
| Gross profit | 2,786 | 2,583 | 7,816 | 7,412 | |||||||||||||||||||
| Selling, general and administrative expenses | (1,783) | (1,640) | (5,108) | (4,855) | |||||||||||||||||||
| Restructuring expenses | (2) | (3) | (6) | (79) | |||||||||||||||||||
| Depreciation and amortization | (116) | (96) | (312) | (285) | |||||||||||||||||||
| Operating profit | 885 | 844 | 2,390 | 2,193 | |||||||||||||||||||
| Interest expense, net | (64) | (47) | (161) | (142) | |||||||||||||||||||
| Other expense, net | (16) | (6) | (18) | (1) | |||||||||||||||||||
| Income before income taxes | 805 | 791 | 2,211 | 2,050 | |||||||||||||||||||
| Provision for income taxes | (207) | (153) | (533) | (433) | |||||||||||||||||||
| Net income | $598 | $638 | $1,678 | $1,617 | |||||||||||||||||||
Net sales
For the third quarter of 2026, net sales were $9.0 billion, an increase of $0.8 billion, or 9.5%, compared with the third quarter of 2025. The increase in net sales was primarily driven by low- to mid-single-digit price inflation, higher volume and incremental sales from acquisitions of 2.7%. The Company’s increase in net sales was driven by non-residential growth and, to a lesser extent, residential growth within its United States segment.
Net sales were $25.2 billion in the year-to-date period of 2026, an increase of $1.4 billion, or 6.0%, compared with the same period in 2025. The increase in net sales was primarily driven by low- to mid-single-digit price inflation and incremental sales from acquisitions of 1.5% and, to a lesser extent, higher sales volume.
Gross profit
Gross profit in the third quarter of 2026 increased $203 million, or 7.9%, compared with the third quarter of 2025, primarily reflecting increased net sales. Gross profit as a percentage of sales was 30.9% in the third quarter of 2026 compared with 31.3% in the third quarter of 2025. The decrease of 0.4% primarily reflects the timing and extent of supplier price increases in the prior year.
Gross profit in the year-to-date period of 2026 increased $404 million, or 5.5%, compared with the same period in 2025. Gross profit as a percentage of sales was 31.0% in the year-to-date period of 2026 compared with 31.1% in the same period in 2025. The factors impacting the year-to-date comparisons were largely the same as those noted above for the quarter.
Selling, general and administrative (“SG&A”) expenses
SG&A expenses in the third quarter of 2026 increased $143 million, or 8.7%, compared with the third quarter of 2025. SG&A as a percentage of sales was 19.8% in the third quarter of 2026 compared with 19.9% in the third quarter of 2025. The decrease in SG&A as a percentage of sales primarily reflects operating leverage of the Company’s cost base, partially offset by acquisition and integration costs related to the FloWorks Acquisition.
SG&A expenses in the year-to-date period of 2026 increased $253 million, or 5.2%, compared with the same period in 2025. SG&A as a percentage of sales was 20.2% in the year-to-date period of 2026 compared with 20.4% in the same period in 2025. The factors impacting the year-to-date comparisons were largely the same as those noted above for the quarter.
23
Interest expense
Net interest expense was $64 million and $47 million for the third quarters of 2026 and 2025, respectively, and $161 million and $142 million for the year-to-date periods of 2026 and 2025, respectively. The year-over-year increases in net interest expense were primarily due to higher average debt resulting from the Company’s $1.2 billion of unsecured senior notes and $900 million of term loans entered into during the third quarter of 2026, mainly to provide funding for the FloWorks Acquisition.
Income tax
Income tax expense was $207 million in the third quarter of 2026, an increase of $54 million, or 35.3%, compared with the third quarter of 2025, primarily reflecting a release of unrecognized tax benefits in the prior-year period.
In the year-to-date period of 2026, income tax expense was $533 million, an increase of $100 million, or 23.1%, compared to the same period in 2025, primarily reflecting higher income before income taxes and discrete tax benefits recorded in the prior-year period.
The Company’s effective tax rates were 25.7% and 19.3% for the third quarters of 2026 and 2025, respectively. The Company’s effective tax rates were 24.1% and 21.1% for the year-to-date periods of 2026 and 2025, respectively. In both year-over-year comparisons, the higher effective tax rates primarily reflected discrete tax adjustments recorded in the respective prior-year periods.
Net income
Net income was $598 million in the third quarter of 2026, a decrease of $40 million, or 6.3%, compared with the third quarter of 2025. Net income for the year-to-date period of 2026 was $1,678 million, an increase of $61 million, or 3.8%, compared with the same period in 2025. These changes were due to the various elements described in the sections above.
Segment results
United States
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net sales | $8,621 | $7,821 | $24,110 | $22,672 | |||||||||||||||||||
Adjusted operating profit | 952 | 875 | 2,533 | 2,385 | |||||||||||||||||||
Net sales for the United States segment were $8.6 billion in the third quarter of 2026, an increase of $0.8 billion, or 10.2%, compared with the third quarter of 2025. The increase in net sales was primarily driven by low- to mid-single-digit price inflation, higher volume and incremental sales from acquisitions of 2.8%. Net sales in non-residential markets, representing approximately half of revenue in the United States, increased approximately 15% compared with the third quarter of 2025. This increase was driven by commercial/mechanical, industrial and waterworks, including large capital project activity. Net sales in residential markets increased approximately 6% compared with the third quarter of 2025, primarily due to growth in HVAC and, to a lesser extent, residential trade plumbing and Ferguson Home.
Net sales were $24.1 billion in the year-to-date period of 2026, an increase of $1.4 billion, or 6.3%, compared with the same period in 2025. The increase in net sales was primarily driven by low- to mid-single-digit price inflation and incremental sales from acquisitions of 1.5%. Net sales in non-residential markets increased approximately 11% compared with the year-to-date period of 2025. This increase was driven by commercial/mechanical, industrial and waterworks, including large capital project activity. Net sales in residential markets increased 2% compared with the year-to-date period of 2025 due to growth in HVAC.
Adjusted operating profit for the United States segment was $952 million in the third quarter of 2026, an increase of $77 million, or 8.8%, compared with the third quarter of 2025, primarily reflecting higher sales and the associated gross profit, partially offset by higher variable operating costs.
Adjusted operating profit for the United States segment was $2,533 million in the year-to-date period of 2026, an increase of $148 million, or 6.2%, compared to the same period in 2025. The factors impacting the year-to-date comparison were largely the same as those noted above for the quarter.
24
Canada
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net sales | $405 | $424 | $1,139 | $1,149 | |||||||||||||||||||
Adjusted operating profit | 23 | 22 | 50 | 51 | |||||||||||||||||||
Net sales for the Canada segment were $405 million in the third quarter of 2026, a decrease of $19 million, or 4.5%, compared with the third quarter of 2025. This decrease in net sales was primarily driven by the impact of non-core business divestments of 3.2%, the impact of foreign currency exchange rates of 1.9%, along with lower sales volume, partially offset by low-single-digit price inflation.
Net sales were $1,139 million in the year-to-date period of 2026, a decrease of $10 million, or 0.9%, compared with the same period in 2025. The decrease was primarily driven by the impact of non-core business divestments of 3.7%, along with lower sales volume. These decreases were partially offset by low- to mid-single-digit price inflation, incremental sales from acquisitions of 1.6% and the impact of foreign currency exchange rates of 0.6%.
Adjusted operating profit for the Canada segment increased by $1 million in the third quarter of 2026, compared with the third quarter of 2025 due to lower operating costs, partially offset by lower gross margins.
Adjusted operating profit for the Canada segment decreased by $1 million in the year-to-date period of 2026, compared with the same period of 2025 due to lower gross margins, partially offset by lower operating costs.
25
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 (the “Board”). Such non-GAAP adjustments include amortization of acquired intangible assets, discrete tax items, certain significant acquisition-related transaction and integration costs associated with acquisitions that are outside the Company’s typical acquisition profile 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):
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net income | $598 | $638 | $1,678 | $1,617 | |||||||||||||||||||
| Provision for income taxes | 207 | 153 | 533 | 433 | |||||||||||||||||||
| Interest expense, net | 64 | 47 | 161 | 142 | |||||||||||||||||||
| Other expense, net | 16 | 6 | 18 | 1 | |||||||||||||||||||
| Operating profit | 885 | 844 | 2,390 | 2,193 | |||||||||||||||||||
Corporate restructuring expenses(1) | 2 | 2 | 6 | 6 | |||||||||||||||||||
Business restructuring expenses(2) | — | 1 | — | 73 | |||||||||||||||||||
Acquisition and integration costs(3) | 25 | — | 25 | — | |||||||||||||||||||
| Amortization of acquired intangibles | 50 | 36 | 120 | 114 | |||||||||||||||||||
| Adjusted operating profit | $962 | $883 | $2,541 | $2,386 | |||||||||||||||||||
(1)For the three and nine months ended September 30, 2026 and 2025, 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 and nine months ended September 30, 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.
(3)For the three and nine months ended September 30, 2026, acquisition and integration costs related to the Company’s incremental costs in connection with the FloWorks Acquisition.
26
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):
| Three months ended | |||||||||||||||||||||||
| September 30, | |||||||||||||||||||||||
| (In millions, except per share amounts) | 2026 | 2025 | |||||||||||||||||||||
per share(1) | per share(1) | ||||||||||||||||||||||
| Net income | $598 | $3.08 | $638 | $3.24 | |||||||||||||||||||
Corporate restructuring expenses(2) | 2 | 0.01 | 2 | 0.01 | |||||||||||||||||||
Business restructuring expenses(3) | — | — | 1 | 0.01 | |||||||||||||||||||
Acquisition and integration costs(4) | 25 | 0.13 | — | — | |||||||||||||||||||
| Amortization of acquired intangibles | 50 | 0.26 | 36 | 0.18 | |||||||||||||||||||
Loss on disposal of non-operating entity(5) | 9 | 0.05 | — | — | |||||||||||||||||||
Discrete tax adjustments(6) | (4) | (0.02) | (42) | (0.21) | |||||||||||||||||||
Tax impact on non-GAAP adjustments(7) | (16) | (0.08) | (9) | (0.05) | |||||||||||||||||||
| Adjusted net income | $664 | $3.43 | $626 | $3.18 | |||||||||||||||||||
| Diluted weighted average shares outstanding | 193.9 | 196.9 | |||||||||||||||||||||
| Nine months ended | |||||||||||||||||||||||
| September 30, | |||||||||||||||||||||||
| (In millions, except per share amounts) | 2026 | 2025 | |||||||||||||||||||||
per share(1) | per share(1) | ||||||||||||||||||||||
| Net income | $1,678 | $8.63 | $1,617 | $8.17 | |||||||||||||||||||
Corporate restructuring expenses(2) | 6 | 0.03 | 6 | 0.03 | |||||||||||||||||||
Business restructuring expenses(3) | — | — | 73 | 0.37 | |||||||||||||||||||
Acquisition and integration costs(4) | 25 | 0.13 | — | — | |||||||||||||||||||
| Amortization of acquired intangibles | 120 | 0.62 | 114 | 0.58 | |||||||||||||||||||
Loss on disposal of non-operating entity(5) | 9 | 0.05 | — | — | |||||||||||||||||||
Discrete tax adjustments(6) | (38) | (0.20) | (85) | (0.43) | |||||||||||||||||||
Tax impact on non-GAAP adjustments(7) | (34) | (0.17) | (48) | (0.24) | |||||||||||||||||||
| Adjusted net income | $1,766 | $9.09 | $1,677 | $8.48 | |||||||||||||||||||
| Diluted weighted average shares outstanding | 194.4 | 197.9 | |||||||||||||||||||||
(1)Per share on a dilutive basis.
(2)For the three and nine months ended September 30, 2026 and 2025, 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 and nine months ended September 30, 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 and nine months ended September 30, 2026, acquisition and integration costs related to the Company’s incremental costs in connection with the FloWorks Acquisition.
(5)For the three and nine months ended September 30, 2026, the Company disposed of a non-operating entity at a loss. This loss is included in other expense, net in the Company’s consolidated statement of earnings.
(6)For the three and nine months ended September 30, 2026 and 2025, discrete tax adjustments primarily related to the release of uncertain tax positions due to lapses in statutes of limitations, the tax treatment of certain compensation items that were not individually significant, and, for the year-to-date periods, adjustments related to prior-year tax positions.
(7)For the three and nine months ended September 30, 2026, the tax impact on non-GAAP adjustments primarily related to the amortization of acquired intangibles, and, to a lesser extent, certain costs related to the FloWorks Acquisition. For the three and nine months ended September 30, 2025, the tax impact on non-GAAP adjustments primarily related to the amortization of acquired intangibles, along with the tax impact of certain restructuring expenses.
27
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 September 30, 2026 and December 31, 2025, the Company had cash and cash equivalents of $476 million and $557 million, respectively. In addition to cash, the Company had $2.45 billion of available liquidity from undrawn debt facilities as of September 30, 2026.
As of September 30, 2026, the Company’s total debt was $6.2 billion. The Company anticipates that it will be able to meet its debt obligations as they become due.
Cash flows from operating activities
| Nine months ended | |||||||||||
| September 30, | |||||||||||
| (In millions) | 2026 | 2025 | |||||||||
| Net cash provided by operating activities | $1,472 | $1,884 | |||||||||
Net cash provided by operating activities was $1,472 million and $1,884 million for the year-to-date periods of 2026 and 2025, respectively. The $412 million decrease was mainly due to an increased investment in working capital, higher cash tax payments and the timing of incentive compensation payouts due to the transition to a calendar year-end, partially offset by higher net income (adjusted for non-cash items). The increase in working capital was primarily driven by an increase in receivables due to the timing of collections year-over-year and the timing of vendor payments compared with the prior year.
Cash flows from investing activities
| Nine months ended | |||||||||||
| September 30, | |||||||||||
| (In millions) | 2026 | 2025 | |||||||||
| Net cash used in investing activities | ($2,597) | ($468) | |||||||||
Capital expenditures totaled $342 million and $247 million for the year-to-date periods of 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 $2,257 million and $276 million in new acquisitions for the nine months ended September 30, 2026 and 2025, respectively, including $1.6 billion in 2026 related to the FloWorks Acquisition.
Cash flows from financing activities
| Nine months ended | |||||||||||
| September 30, | |||||||||||
| (In millions) | 2026 | 2025 | |||||||||
| Net cash provided by (used in) financing activities | $1,068 | ($1,344) | |||||||||
Dividends paid to shareholders were $519 million and $493 million for the year-to-date periods of 2026 and 2025, respectively.
Share repurchases under the Company’s authorized share repurchase programs were $438 million and $611 million for the year-to-date periods of 2026 and 2025, respectively. The Company has temporarily paused its share repurchase program in connection with the FloWorks Acquisition. We expect to resume share repurchases once certain leverage targets are achieved, subject to market conditions, capital allocation priorities and other relevant factors.
28
Net proceeds from debt transactions were $2,044 million compared with net payments of $78 million for the year-to-date periods of 2026 and 2025, respectively. In the year-to-date period of 2026, the Company received $1,194 million in net proceeds from the issuance of the August 2026 Senior Notes (as defined below) and net borrowings of $850 million under the Term Loan Facility (as defined below). In the year-to-date period of 2025, the Company had net repayments of $78 million, including debt repayments of $400 million in connection with the maturity of certain Private Placement Notes and net repayments of $425 million under the Company’s Receivables Facility (each, as defined below), partially offset by $747 million in proceeds from the issuance of certain unsecured senior notes.
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) | September 30, 2026 | December 31, 2025 | |||||||||
| Short-term debt | $599 | $148 | |||||||||
| Long-term debt | 5,571 | 3,978 | |||||||||
| Total debt | $6,170 | $4,126 | |||||||||
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 September 30, 2026, $300 million in Private Placement Notes remain outstanding.
In November 2026, $150 million of private placement notes will mature. The remaining $150 million of private placement notes will mature in September 2027.
Unsecured Senior Notes
The Company has issued $5.05 billion in various issuances of unsecured senior notes, including the August 2026 issuance of $700 million aggregate principal amount of unsecured senior notes due August 2029 and $500 million aggregate principal amount of unsecured senior notes due August 2036 (together, the “August 2026 Senior Notes”).
In April 2027, $300 million of unsecured senior notes will mature.
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 September 30, 2026, no borrowings were outstanding under the Receivables Facility.
In November 2026, the Company and certain of its subsidiaries entered into an amendment and restatement of the agreements governing the Receivables Facility. Among other things, the amendments extended the scheduled termination date of the Receivables Facility until November 2029. For additional information, see Part II, Item 5, "Other Information.”
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 September 30, 2026, no borrowings were outstanding under the Revolving Facility.
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Term Loan and Bridge Credit Facilities
In August 2026, the Company entered into an unsecured $900 million term loan facility (the “Term Loan Facility”) and an unsecured $700 million bridge facility (the “Bridge Facility”) to finance a portion of the purchase price, fees and expenses associated with the FloWorks Acquisition. The FloWorks Acquisition was funded through net proceeds from the August 2026 Senior Notes, a borrowing under the Term Loan Facility and available cash on hand, and the Bridge Facility was never drawn. The commitments under the Bridge Facility were terminated in full on August 14, 2026. The Term Loan Facility matures on August 31, 2029. As of September 30, 2026, $850 million of the borrowing was outstanding under the Term Loan Facility.
Other
The Company was in compliance with all debt covenants that were in effect as of September 30, 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.
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 September 30, 2026.
Guarantor Disclosures
Ferguson Enterprises Inc. (the “Issuer”) is the issuer of the 4.350% Senior Notes due 2031, 5.000% Senior Notes due 2034, 4.800% Senior Notes due 2029 and 5.600% Senior Notes due 2036. The obligations under these 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.
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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) | September 30, 2026 | December 31, 2025 | |||||||||
| Current assets | $71 | $46 | |||||||||
| Non-current assets | 2 | 2 | |||||||||
| Current liabilities | 207 | 214 | |||||||||
| Non-current liabilities | 3,543 | 1,500 | |||||||||
| Due (to)/from non-guarantor subsidiaries, net | 887 | 370 | |||||||||
| Nine months ended | |||||
| September 30, | |||||
| (In millions) | 2026 | ||||
| Net sales | $— | ||||
| Gross profit | — | ||||
| Operating loss | (36) | ||||
| Net loss | (119) | ||||
| Other interest income, net from non-guarantor subsidiaries | 41 | ||||
Other loss, net from non-guarantor subsidiaries(1) | (14) | ||||
(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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Item 3.Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes to the quantitative and qualitative disclosures about market risk disclosed in the Transition Report.
Item 4.Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has carried out an evaluation of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) or 15d-15(e) promulgated under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of September 30, 2026. The term “disclosure controls and procedures” means controls and other procedures that are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in our reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding our required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well conceived and operated, can only provide reasonable assurance that the objectives of the disclosure controls and procedures are met.
Based on their evaluation as of the end of the period covered by this Quarterly Report, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at a reasonable assurance level.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is from time to time a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. With respect to such lawsuits, claims and proceedings, the Company records reserves when it is probable a liability has been incurred and the amount of loss can be reasonably estimated. The Company does not expect any of its pending legal proceedings to have a material adverse effect on its results of operations, financial position or cash flows. The Company maintains liability insurance for certain risks that are subject to certain self-insurance limits.
Item 1A.Risk Factors
As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in our Transition Report. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
Item 5.Other Information
Insider Trading Arrangements
Amended and Restated Bylaws
On November 4, 2026, the Board approved and adopted the Company’s Amended and Restated Bylaws (the “Amended Bylaws”), effective immediately. Among other things, the Amended Bylaws:
•Revise the advance notice provisions for stockholder nominations and proposals to clarify that:
◦supporting a nomination or proposal means providing financial support;
◦“Public Disclosure,” means disclosure made by the Company; and
◦stockholders may authorize a representative to present a nomination or proposal by electronic transmission.
•Require any stockholder soliciting proxies from other stockholders to use a proxy card color other than white, which is reserved for the exclusive use of the Board.
•Clarify that an officer to whom the Board has delegated such authority may fill officer vacancies.
•Revise the indemnification and advancement provisions to clarify:
◦that mandatory advancement of expenses applies only in connection with the defense of a proceeding;
◦that an indemnitee may deliver the undertaking required to receive advancement either in a separate writing or by signing an indemnification agreement that includes the undertaking;
◦that officers appointed by another officer under authority delegated by the Board are officers for purposes of the indemnification bylaw; and
◦that indemnification and advancement are not available in a proceeding initiated by an indemnitee unless the commencement of the proceeding was authorized by the Board in advance.
The Amended Bylaws also include certain technical, clarifying and conforming changes, including, without limitation, updates to defined terms, deletion of unnecessary language and the removal of an obsolete transition provision.
The foregoing description is a summary and is qualified in its entirety by reference to the full text of the Amended Bylaws, filed as Exhibit 3.2 to this Quarterly Report.
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Amendment and Restatement of Agreements Governing Receivables Facility
On November 6, 2026, the Company and certain of its subsidiaries entered into (i) an Amended and Restated Receivables Purchase Agreement (the “A&R Receivables Purchase Agreement”), among the Company, Ferguson Receivables, LLC (“FRL”) and certain other subsidiaries, the conduit purchasers, committed purchasers, letter of credit banks and facility agents party thereto, and Royal Bank of Canada, as administrative agent, and (ii) an Amended and Restated Purchase and Contribution Agreement (the “A&R Purchase and Contribution Agreement” and, together with the A&R Receivables Purchase Agreement, the “Amended Agreements”), among Ferguson Enterprises, LLC, FRL and certain other subsidiaries of the Company.
Among other things, the Amended Agreements: (i) extend the scheduled termination date of the Receivables Facility from October 29, 2027 to November 6, 2029; (ii) modify certain termination event provisions, including by increasing the cross-default and judgment thresholds that apply to the Company and its subsidiaries (other than FRL); and (iii) make certain other technical updates.
The foregoing description is a summary and is qualified in its entirety by reference to the full text of the A&R Receivables Purchase Agreement and A&R Purchase and Contribution Agreement, filed as Exhibits 10.2 and 10.3, respectively, to this Quarterly Report.
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Item 6.Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report.
| (a) | Exhibits | ||||
| Exhibit | Description | ||||||||||
| 3.1 | Amended and Restated Certificate of Incorporation of Ferguson Enterprises Inc. (incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K (File No. 001-42200) filed by Ferguson Enterprises Inc. with the SEC on August 1, 2024). | ||||||||||
| 3.2* | Amended and Restated Bylaws of Ferguson Enterprises Inc., dated November 4, 2026. | ||||||||||
| 10.1 | Term Loan Credit Agreement, dated August 11, 2026, by and among Ferguson Enterprises Inc., as borrower, Ferguson UK Holdings Limited, as guarantor, the other guarantors from time to time party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K (File No. 001-42200) filed by Ferguson Enterprises Inc. with the SEC on August 11, 2026). | ||||||||||
10.2*† | Amended and Restated Receivables Purchase Agreement, dated as of November 6, 2026, among Ferguson Receivables, LLC as seller, Ferguson Enterprises, LLC as servicer, each of the originators, conduit purchasers, committed purchasers, letters of credit banks, and facility agents party thereto, Royal Bank of Canada as administrative agent, and Ferguson Enterprises Inc. as parent. | ||||||||||
| 10.3* | Amended and Restated Purchase and Contribution Agreement, dated as of November 6, 2026, among Ferguson Receivables, LLC as purchaser, Ferguson Enterprises, LLC as servicer, and its various subsidiaries party thereto as originators. | ||||||||||
| 22.1 | List of Subsidiary Guarantors (incorporated by reference to Exhibit 22.1 of the Registration Statement on Form S-3 (File No. 333-282398) filed by Ferguson Enterprises Inc. and Ferguson UK Holdings Ltd with the SEC on September 30, 2024). | ||||||||||
| 31.1* | Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002. | ||||||||||
| 31.2* | Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002. | ||||||||||
| 32.1** | Certification of Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002. | ||||||||||
| 32.2** | Certification of Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002. | ||||||||||
| 101.INS* | Inline XBRL Instance Document—this instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document | ||||||||||
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | ||||||||||
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | ||||||||||
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | ||||||||||
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | ||||||||||
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | ||||||||||
| 104* | Cover Page Interactive Data File (embedded within the Inline XBRL document) | ||||||||||
* Filed herewith
** Furnished herewith
† Certain portions of this exhibit (indicated by “[***]”) have been omitted pursuant to Item 601(b)(10) of Regulation S-K.
The Registrant agrees to furnish to the SEC, upon request, copies of any instruments that define the rights of holders of long-term debt of the Registrant that are not filed as exhibits to this Quarterly Report.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
November 9, 2026
Ferguson Enterprises Inc. | ||||||||
| /s/ William Brundage | ||||||||
| Name: | William Brundage | |||||||
| Title: | Chief Financial Officer | |||||||
| (Principal Financial Officer and Duly Authorized Officer) | ||||||||
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