Ferguson Dominates North American Distribution, Eyes Acquisitions

TL;DR

**FERG is a distribution powerhouse with a diversified revenue stream and clear acquisition strategy, making it a solid long-term play in North American construction.**

AI Summary

Ferguson Enterprises Inc. (FERG) reported a strong fiscal year ended July 31, 2025, with its United States segment contributing 95% of net sales, operating 1,519 branches and employing approximately 32,000 associates. The Canada segment accounted for 5% of net sales, with 227 branches and around 3,000 associates. The company's business model is balanced, with residential and non-residential markets each contributing approximately half of net sales, and repair, maintenance, and improvement (RMI) representing two-thirds of net sales. Ferguson serves a highly fragmented North American construction market valued at $340 billion, leveraging a network of 1,746 branches, 11 regional distribution centers, and 6 market distribution centers. The company manages a global supply chain with approximately 37,000 suppliers, none exceeding 5% of total inventory purchases, and sells over 1 million unique products annually. Strategic outlook includes continued focus on bolt-on acquisitions to expand its branch network and enhance customer service capabilities within its fragmented markets.

Why It Matters

Ferguson's strong market position in the $340 billion North American construction market, with 95% of sales from the U.S. segment, signals robust demand for its plumbing, HVAC, and PVF products. This dominance, coupled with a balanced RMI and new construction sales mix, provides stability for investors amidst economic fluctuations. For employees, the extensive network of 1,746 branches and 35,000 associates suggests job security and growth opportunities. Customers benefit from Ferguson's vast product range and efficient supply chain, ensuring project success and timely delivery in a highly fragmented competitive landscape.

Risk Assessment

Risk Level: medium — Ferguson faces medium risk due to its exposure to commodity-priced materials like plastic, copper, and steel, which can represent up to 15% of annual net sales and are subject to volatile price changes. Additionally, the company operates in highly competitive industries, and a decrease in demand in residential and non-residential markets could negatively impact its ability to manage inventory effectively, as stated in the 'Risk Factors' section.

Analyst Insight

Investors should consider Ferguson's strong market leadership and balanced revenue streams as a defensive play in the construction sector. Monitor commodity price trends and the company's acquisition pipeline, as these factors will be key drivers of future profitability and market share expansion.

Revenue Breakdown

Key Numbers

• $340 billion — North American construction market size (Ferguson is the largest value-added distributor in this market.)
• 95% — United States segment net sales contribution (Consistent contribution for fiscal years 2025, 2024, and 2023.)
• 5% — Canada segment net sales contribution (Consistent contribution for fiscal years 2025, 2024, and 2023.)
• 1,746 — total branches (Network size as of July 31, 2025, across North America.)
• 35,000 — total associates (Workforce size as of July 31, 2025.)
• 37,000 — number of suppliers (No single supplier accounts for more than 5% of total inventory purchases.)
• 1 million — unique products sold annually (Demonstrates the breadth of Ferguson's product offering.)
• Two-thirds — net sales from RMI (Repair, maintenance, and improvement sales provide stability.)
• One-third — net sales from new construction (New construction sales complement RMI for balanced market exposure.)
• 15% — annual net sales from commodity-priced materials (These products are subject to volatile price changes.)

Key Players & Entities

• Ferguson Enterprises Inc. (company) — ultimate parent company since August 2024
• FERG (company) — ticker symbol on NYSE and LSE
• United States segment (company) — contributed 95% of net sales in fiscal 2025
• Canada segment (company) — contributed 5% of net sales in fiscal 2025
• New York Stock Exchange (regulator) — exchange where FERG is listed
• London Stock Exchange (regulator) — exchange where FERG is listed
• July 31, 2025 (date) — fiscal year end
• August 1, 2024 (date) — Ferguson Enterprises Inc. became ultimate parent company
• Newport News, Virginia (location) — corporate headquarters location
• Wolseley (company) — primary brand for Canada segment

FAQ

Risk Factors

• Economic and Market Weakness [high — market]: Weakness in the economy, market trends, uncertainty, and macroeconomic impacts such as inflation, recession, labor pressures, trade restrictions, interest rates, and geopolitical conditions could materially affect results. These factors are beyond the company's control.
• IT Systems and Omni-channel Capabilities [medium — operational]: Failure to rapidly identify or effectively respond to customer wants and trends, including costs and problems with new or upgraded IT systems or the timely deployment of new omni-channel capabilities, poses a risk.
• Decreased Demand in Competitive Industries [medium — market]: Operating in highly competitive industries and declines in residential and non-residential markets can lead to decreased demand for Ferguson's products.
• Product Price Volatility [medium — financial]: Approximately 15% of annual net sales are derived from commodity-priced materials, which are subject to volatile price changes. This can impact financial performance.
• Supply Chain Management [medium — operational]: The company must manage supply chain challenges effectively. While it has a global supply chain with approximately 37,000 suppliers, none exceeding 5% of total inventory purchases, disruptions can still occur.

Industry Context

Ferguson operates as the largest value-added distributor in the $340 billion North American construction market, which is highly fragmented. The company serves both residential and non-residential sectors, with a significant portion of its sales (two-thirds) coming from the stable Repair, Maintenance, and Improvement (RMI) segment. Key product areas include plumbing, HVAC, appliances, lighting, and pipes, valves, and fittings (PVF).

Regulatory Implications

While specific regulatory risks are not detailed in the provided text, companies in the construction supply chain are subject to various regulations concerning product safety, environmental standards, and labor practices. Changes in trade policies, tariffs, or sanctions could also impact operations and costs.

What Investors Should Do

1. Monitor RMI segment performance
2. Assess impact of commodity price volatility
3. Evaluate competitive landscape and market share
4. Track acquisition strategy effectiveness

Glossary

PVF

Pipes, Valves, and Fittings (A key product category for Ferguson, contributing to its offerings in the construction market.)

HVAC

Heating, Ventilation, and Air Conditioning (Another core product category for Ferguson, serving both residential and non-residential markets.)

RMI

Repair, Maintenance, and Improvement (Represents two-thirds of Ferguson's net sales, indicating a stable revenue stream from ongoing needs rather than solely new construction.)

MDC

Market Distribution Center (Part of Ferguson's distribution network, used for branch replenishment and final mile distribution to customers.)

Year-Over-Year Comparison

The provided text focuses on the fiscal year ended July 31, 2025, and does not contain comparative data from the previous fiscal year (July 31, 2024). Therefore, a direct comparison of key metrics like revenue growth, margin changes, or the emergence of new risks cannot be made based on this excerpt.

Key Financial Figures

• $0.0001 — ch Registered: Common Stock, par value $0.0001 per share FERG The New York Stock Excha
• $340 billion — and air specialized professional in our $340 billion residential and non-residential North A

Filing Documents

• ferg-20250731.htm (10-K) — 1937KB
• exhibit1045aremploymentagr.htm (EX-10.45) — 123KB
• exhibit1048formofneoemplag.htm (EX-10.48) — 11KB
• exhibit1056rsuawardagreeme.htm (EX-10.56) — 100KB
• exhibit1057performanceawar.htm (EX-10.57) — 104KB
• exhibit1058stockoptionagre.htm (EX-10.58) — 108KB
• exhibit211listofsignifican.htm (EX-21.1) — 66KB
• exhibit231consentofdeloitt.htm (EX-23.1) — 2KB
• exhibit311section302ceocer.htm (EX-31.1) — 10KB
• exhibit312section302cfocer.htm (EX-31.2) — 10KB
• exhibit321section906ceocer.htm (EX-32.1) — 5KB
• exhibit322section906cfocer.htm (EX-32.2) — 5KB
• ferg-20250731_g1.jpg (GRAPHIC) — 115KB
• ferg-20250731_g2.jpg (GRAPHIC) — 78KB
• image_0.jpg (GRAPHIC) — 0KB
• 0002011641-25-000027.txt ( ) — 12277KB
• ferg-20250731.xsd (EX-101.SCH) — 73KB
• ferg-20250731_cal.xml (EX-101.CAL) — 130KB
• ferg-20250731_def.xml (EX-101.DEF) — 354KB
• ferg-20250731_lab.xml (EX-101.LAB) — 900KB
• ferg-20250731_pre.xml (EX-101.PRE) — 682KB
• ferg-20250731_htm.xml (XML) — 1823KB

FORWARD-LOOKING STATEMENTS AND RISK FACTOR SUMMARY

FORWARD-LOOKING STATEMENTS AND RISK FACTOR SUMMARY 1 PART I

Risk Factors

Item 1A. Risk Factors 9

Unresolved Staff Comments

Item 1B. Unresolved Staff Comments 24

Cybersecurity

Item 1C. Cybersecurity 25

Properties

Item 2. Properties 26

Legal Proceedings

Item 3. Legal Proceedings 27

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 27 Information about our Executive Officers 27 PART II

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 29

[Reserved]

Item 6. [Reserved] 30

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 31

Quantitative and Qualitative Disclosures About Market Risk

Item 7A. Quantitative and Qualitative Disclosures About Market Risk 41

Financial Statements and Supplementary Data

Item 8. Financial Statements and Supplementary Data 42

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 82

Controls and Procedures

Item 9A. Controls and Procedures 82

Other Information

Item 9B. Other Information 84

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 84 PART III

Directors, Executive Officers and Corporate Governance

Item 10. Directors, Executive Officers and Corporate Governance 84

Executive Compensation

Item 11. Executive Compensation 84

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 85

Certain Relationships and Related Transactions

Item 13. Certain Relationships and Related Transactions 85

Principal Accountant Fees and Services

Item 14. Principal Accountant Fees and Services 85 PART IV

Exhibits, Financial Statement Schedules

Item 15. Exhibits, Financial Statement Schedules 86

Form 10-K Summary

Item 16. Form 10-K Summary 92 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 Annual Report (i) for periods prior to August 1, 2024, refer to Ferguson plc and its consolidated subsidiaries and (ii) for periods on and following August 1, 2024, refer to Ferguson Enterprises Inc. and its consolidated subsidiaries. Except as otherwise specified or the context otherwise requires, references to years indicate our fiscal year ended July 31 st of the respective year. For example, references to "fiscal 2025" or similar references refer to the fiscal year ended July 31, 2025. As previously announced, Ferguson is changing its fiscal year end from July 31 st to December 31 st , with its new fiscal year commencing on January 1, 2026. The term "transition period" refers to the five-month period from August 1, 2025 to December 31, 2025 as the Company transitions from a July 31 st fiscal year end to a December 31 st fiscal year end. MARKET AND INDUSTRY DATA The information in this Annual Report that has been sourced from third parties has been accurately reproduced and, as far as we are aware and able to ascertain from the information published by that third party, no facts have been omitted that would render the reproduced information inaccurate or misleading. Industry publications generally state that their information is obtained from sources they believe reliable but that the accuracy and completeness of such information is not guaranteed and that the projections they contain are based on a number of significant assumptions. We are not aware of any exhaustive industry or market reports that cover or address our specific markets. TRADEMARKS All trademarks, trade names and service marks appearing in this Annual Report are the property of their respective owners. Solely for convenience, the trademarks and trade names in this Annual Report are referred to

FORWARD-LOOKING STATEMENTS AND RISK FACTOR SUMMARY

FORWARD-LOOKING STATEMENTS AND RISK FACTOR SUMMARY Certain information included in this Annual 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, risks associated with changes in global and regional economic, market and political conditions, ability to manage supply chain challenges, ability to manage the impact of product price fluctuations, our financial condition and liquidity, legal or regulatory changes, 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 Annual Report are based on reasonable assumptions,

Business

Item 1. Business Overview Ferguson is the largest value-added distributor serving the water and air specialized professional in our $340 billion residential and non-residential North American construction market. We help make our customers' complex projects simple, successful and sustainable by providing expertise and a wide range of products and services from plumbing, heating, ventilation and air conditioning ("HVAC"), appliances, and lighting to pipes, valves and fittings ("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 Company has a long history and maintained businesses throughout Europe, Canada and the United States in the 1900s. In the early 2000s, the Company's focus shifted to attractive North American markets. As a result, the operating businesses across Europe were disposed of through various transactions. As part of this transition and following a corporate restructuring, Ferguson Enterprises Inc. became the ultimate parent company for the business in August 2024. Ferguson is listed on the New York Stock Exchange (NYSE: FERG) and the London Stock Exchange (LSE: FERG). The Company's corporate headquarters and management office are located at 751 Lakefront Commons, Newport News, Virginia 23606 and its telephone number is +1 757-874-7795. Business segments The Company's reportable segments are established based on how the Company manages its business and allocates resources, which is on a geographical basis. The Company's reportable segments are the United States and Canada. For further segment information, see Part II, Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 2, Segment and net sales information of the Notes to the Consolidated Financial Statements in Part II, Item 8: Financial Statements and Supplementary Data of this Annual R

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