Ferguson Raises Guidance After Third-Quarter Sales Rise 9.5% on Non-Residential Strength

Ferguson Enterprises reported net sales of $9.03 billion for the third quarter ended September 30, up 9.5% from a year earlier.

Adjusted diluted earnings per share rose to $3.43 in the quarter. That compares with $3.18 a year earlier, a gain of 7.9%.

Ferguson said the increase principally reflected higher adjusted operating profit. Adjusted figures strip out acquisition and restructuring items.

The Zacks Consensus Estimate was $3.28 a share for the quarter. Adjusted EPS therefore beat that estimate by 4.6%, a calculation.

Shares rose about 12% in intraday trading on Monday. The snapshot is as of 11:12 a.m. ET, from Friday's $233.70 close.

That move is intraday only, not a settled reaction. Monday's closing price is the first settled verdict.

Non-residential work carried the quarter

Sales in the United States rose 10.2% to $8.62 billion. Organic growth supplied 7.4 points and acquisitions added 2.8 points.

Non-residential sales grew 15% in the quarter. Ferguson credited scale, expertise and value-added solutions for share gains.

Residential sales grew 6% despite pressured end markets. New construction stayed weak and repair work stayed soft.

Ferguson framed both gains as share wins in a mixed market. Residential work is about half of United States sales.

"Our expert associates delivered strong third quarter results," Chief Executive Kevin Murphy said. He pointed to the non-residential and residential growth.

Total organic growth was 7.0% in the quarter. Acquisitions added 2.7%, partly offset by 0.2% from divestments in Canada.

Canada sales fell 4.5% to $405 million. Organic growth of 0.6% faced a 3.2% divestment cut and a 1.9% currency drag.

Markets stayed challenging in Canada, particularly in residential. The segment shrank even as the group grew.

Large capital project activity remained healthy in the quarter. Open order volumes grew and bidding activity stayed strong.

Ferguson is North America's largest distributor of water and air solutions. It has about 36,000 associates in over 1,800 locations.

Margins held on the adjusted line

Adjusted operating profit rose 8.9% to $962 million. Its margin held at 10.7%, flat with a year earlier.

Reported operating profit was $885 million, up 4.9%. The reported margin was 9.8% of sales, down 40 basis points.

Gross margin eased 40 basis points to 30.9%. A basis point is one hundredth of a percentage point.

Ferguson said last year's gross margin was temporarily elevated. Supplier price increases had lifted that earlier comparison.

United States adjusted operating profit rose 8.8% to $952 million. Canada adjusted operating profit was $23 million, $1 million ahead.

Adjusted EBITDA rose 9.0% to $1.03 billion. Adjusted net income reached $664 million, up from $626 million.

Price inflation was low to mid single digits in the quarter. Cost leverage came from disciplined spending alongside growth investment.

Reported diluted earnings per share fell 4.9% to $3.08. Ferguson attributed that decline to tax-benefit timing last year.

The reported figure stands on its own basis. It reflects last year's tax benefits, not this quarter's trading.

Net income fell to $598 million from $638 million. Discrete tax benefits were $0.02 a share, against $0.21 last year.

The adjusted figures add back $50 million of intangible amortization. They also add back $25 million of FloWorks acquisition costs.

Guidance rises, with FloWorks inside it

Ferguson raised its calendar 2026 sales forecast to about 7% growth. The prior forecast was mid-single-digit growth.

Adjusted operating margin guidance rose to 9.6% to 9.8%. The low end moved up from 9.5%.

The updated guidance reflects recent performance and FloWorks. That acquisition closed on August 31, 2026.

Interest expense guidance rose to about $235 million. Capital spending guidance is now about $425 million.

The adjusted tax-rate forecast stayed near 26%. Ferguson does not reconcile its forward-looking adjusted measures.

Ferguson said its markets remain mixed overall. It still expects market outperformance from scale and long-term drivers.

Those drivers include water infrastructure and large capital projects. Climate, comfort and aging housing also underpin demand.

Deals, debt and a paused buyback

Ferguson completed eleven acquisitions this year. Their aggregate annualized revenue is about $1.5 billion.

Three deals closed in the quarter and one after it. FloWorks brought 60-plus locations and 25 service centers.

FloWorks works in technical valve and flow control solutions. Brax added pump capabilities on the West Coast.

Rogers Supply added twelve HVAC locations in Illinois and Indiana. Canyon Systems followed after quarter-end in water treatment.

Ferguson invested $1.7 billion in acquisitions during the quarter. It also deployed $108 million in capital spending.

It priced $1.2 billion of senior unsecured notes in the quarter. It also entered a $900 million term loan due 2029.

Net debt reached $5.7 billion at September 30. That compares with $3.3 billion a year earlier.

Net debt was 1.7 times adjusted EBITDA, up from 1.0 times. The target range for that leverage measure is 1 to 2 times.

Ferguson temporarily paused share repurchases for the FloWorks deal. Buybacks resume as leverage trends back toward that range's lower end.

Nine-month operating cash flow fell to $1.47 billion. That compares with $1.88 billion a year earlier.

The cash decline works out to 21.9%, a TickerGrove calculation. Receivables and other assets absorbed cash across the nine months.

The company declared a quarterly dividend of $0.89 a share. It is payable January 8, 2027, to holders of record November 20, 2026.

What remains unknown

What remains unknown starts with the settled verdict. The intraday rise is known; Monday's closing price is not.

How FloWorks performs inside Ferguson is also unknown. The deal closed August 31 and guidance now includes it.

Whether residential demand recovers is also unknown. Housing and repair work stayed soft through the quarter.

When buybacks resume is unknown as well. Ferguson tied resumption to leverage trending lower, without a date.

The February results are the next test

What to watch: results for the period ending December 31, 2026. Ferguson reports them on February 16, 2027.

Leverage is the second test for investors. A move toward the range's lower end restarts buybacks.

Non-residential momentum against soft housing is the third. That balance decided this quarter's growth mix.