Ferguson's Q1 Earnings Surge 21% on Robust Sales Growth

TL;DR

**FERG is crushing it with double-digit profit growth, buy the dip if you get one.**

AI Summary

Ferguson Enterprises Inc. (FERG) reported a strong financial performance for the three months ended October 31, 2025, with net sales increasing by 5.1% to $8.169 billion from $7.772 billion in the prior-year period. Net income saw a significant jump of 21.3% to $570 million, up from $470 million in the same quarter of 2024. Diluted earnings per share rose to $2.90 from $2.34, reflecting a 23.9% increase. Operating profit improved to $771 million from $665 million, despite a rise in selling, general and administrative expenses to $1.641 billion from $1.585 billion. The company's balance sheet shows a decrease in cash and cash equivalents to $526 million from $674 million at July 31, 2025, and an increase in long-term debt to $4.124 billion from $3.752 billion. Net cash provided by operating activities increased to $430 million from $345 million, while net cash used in financing activities significantly increased to $448 million from $214 million, primarily due to debt repayments of $1.475 billion and share repurchases of $208 million. The company is also transitioning its fiscal year end from July 31st to December 31st, with the current quarter being part of this transition period.

Why It Matters

Ferguson's strong performance, particularly the 21.3% net income growth and 5.1% sales increase, signals resilience in the North American construction market, a key indicator for the broader economy. For investors, this demonstrates effective cost management and strong demand for plumbing, HVAC, and water solutions, potentially leading to continued share price appreciation. Employees benefit from a healthy company, while customers can expect continued product availability and service quality from a dominant distributor. In a competitive landscape, Ferguson's ability to grow sales and profit margins reinforces its market leadership against rivals by leveraging its extensive distribution network and value-added services.

Risk Assessment

Risk Level: medium — While FERG shows strong financial performance, the increase in long-term debt to $4.124 billion from $3.752 billion at July 31, 2025, and significant cash outflow from financing activities ($448 million used) indicate a reliance on debt financing. Additionally, the 'Cautionary Note Regarding Forward-Looking Statements' highlights risks such as 'weakness in the economy,' 'decreased demand for our products,' and 'fluctuations in product prices/costs,' which could impact future profitability despite current strength.

Analyst Insight

Investors should consider holding FERG given its robust net income growth of 21.3% and strong diluted EPS of $2.90. Monitor the company's debt levels and interest expense in future filings, as increased leverage could become a concern if economic conditions deteriorate. The ongoing share repurchase program ($208 million this quarter) also signals management's confidence and can be accretive to shareholder value.

Financial Highlights

debt To Equity

1.92

revenue

$8.169B

operating Margin

9.44%

total Assets

$17.694B

total Debt

$4.124B

net Income

$570M

eps

$2.90

gross Margin

30.68%

cash Position

$526M

revenue Growth

+5.1%

Revenue Breakdown

Key Numbers

• $8.169B — Net Sales (Increased from $7.772 billion in Q1 2024, a 5.1% rise.)
• $570M — Net Income (Increased from $470 million in Q1 2024, a 21.3% rise.)
• $2.90 — Diluted Earnings Per Share (Increased from $2.34 in Q1 2024, a 23.9% rise.)
• $771M — Operating Profit (Increased from $665 million in Q1 2024.)
• $4.124B — Long-term Debt (Increased from $3.752 billion at July 31, 2025.)
• $430M — Net Cash Provided by Operating Activities (Increased from $345 million in Q1 2024.)
• $448M — Net Cash Used in Financing Activities (Increased from $214 million in Q1 2024.)
• $208M — Purchase of Treasury Shares (Executed during the three months ended October 31, 2025.)

Key Players & Entities

• Ferguson Enterprises Inc. (company) — Registrant and value-added distributor
• Newport News, Virginia (location) — Company headquarters
• October 31, 2025 (date) — End of the reported quarterly period
• New York Stock Exchange (regulator) — Exchange where FERG common stock is listed
• London Stock Exchange (regulator) — Exchange where FERG common stock is listed
• FASB (regulator) — Financial Accounting Standards Board
• SEC (regulator) — Securities and Exchange Commission
• Delaware (location) — State of incorporation for Ferguson Enterprises Inc.

FAQ

Risk Factors

• Supply Chain Disruptions [medium — operational]: The company relies on a complex global supply chain. Disruptions due to geopolitical events, natural disasters, or supplier issues could impact inventory availability and increase costs, as seen in the general inflationary environment affecting cost of sales.
• Economic Downturns [medium — market]: A significant portion of Ferguson's revenue is tied to new construction and renovation projects. Economic slowdowns or recessions could reduce demand for its products and services, impacting net sales and profitability.
• Environmental Regulations [low — regulatory]: Changes in environmental laws and regulations could require significant investments in compliance, potentially increasing operating expenses and affecting the company's ability to source certain materials or operate facilities.
• Interest Rate Fluctuations [medium — financial]: The company's long-term debt increased to $4.124 billion. Rising interest rates could increase the cost of servicing this debt, impacting net income.
• Integration of Acquisitions [low — operational]: Ferguson has a history of acquisitions. The failure to successfully integrate acquired businesses could lead to operational inefficiencies and hinder the realization of expected synergies.
• Competition [medium — market]: The building materials and plumbing supply industry is competitive. Intense competition could lead to pricing pressures and reduced market share.
• Liquidity Management [medium — financial]: Cash and cash equivalents decreased to $526 million from $674 million. While operating cash flow increased, significant debt repayments and share repurchases in financing activities require careful liquidity management.

Industry Context

Ferguson Enterprises operates in the highly fragmented wholesale distribution of plumbing supplies, heating and cooling equipment, and pipe, valves, and fittings. The industry is characterized by strong relationships with both suppliers and customers, and is sensitive to the health of the construction and renovation markets. Trends include increasing demand for sustainable and energy-efficient products, and the ongoing consolidation of smaller players.

Regulatory Implications

Ferguson operates under various regulations related to product safety, environmental standards, and trade practices. Changes in these regulations, particularly those concerning environmental impact or material sourcing, could necessitate operational adjustments and compliance investments. The company's international operations also expose it to diverse regulatory landscapes.

What Investors Should Do

1. Monitor debt levels and interest coverage ratios.
2. Analyze the impact of the fiscal year-end transition.
3. Evaluate the drivers of SG&A expense growth.
4. Assess the sustainability of current growth rates.

Key Dates

• 2025-10-31: End of Three Months Reporting Period — Represents the period for which the financial results are reported, showing a 5.1% increase in net sales and a 21.3% increase in net income compared to the prior year.
• 2025-07-31: Previous Fiscal Year End / Prior Balance Sheet Date — Provides a comparison point for the balance sheet, showing a decrease in cash and an increase in long-term debt.
• 2025-10-31: Transition Period End — This quarter is part of the company's transition to a December 31st fiscal year end, which may affect comparability of future periods.

Glossary

Operating profit

Profit generated from a company's normal business operations before interest and taxes. (Increased to $771 million from $665 million, indicating improved core business performance.)

Diluted Earnings Per Share (EPS)

A measure of profitability that accounts for all potential dilutive common shares, such as stock options and convertible securities. (Rose to $2.90 from $2.34, showing a significant increase in profitability on a per-share basis.)

Net cash provided by operating activities

The amount of cash generated from the normal day-to-day business operations of a company. (Increased to $430 million from $345 million, demonstrating stronger cash generation from core operations.)

Net cash used in financing activities

Cash flows related to debt, equity, and dividends, including repayments, issuances, repurchases, and dividend payments. (Significantly increased to $448 million from $214 million, driven by substantial debt repayments and share repurchases.)

Treasury shares

Shares of a company's own stock that it has repurchased from the open market. (The company repurchased $208 million of treasury shares, impacting cash flow and reducing the number of outstanding shares.)

Accumulated other comprehensive loss

A component of equity that includes unrealized gains and losses on certain investments and foreign currency translation adjustments. (Stood at a loss of $978 million as of October 31, 2025, a slight increase from $971 million at July 31, 2025.)

Goodwill

An intangible asset that arises when one company acquires another for a price that is higher than the fair market value of its net assets. (Remained stable at $2.464 billion, indicating no significant acquisitions or impairments during the period.)

Operating lease right-of-use assets

Assets recognized under accounting standards for leases, representing the right to use an asset for the lease term. (Increased to $1.841 billion from $1.763 billion, reflecting ongoing lease commitments.)

Year-Over-Year Comparison

Compared to the prior year's comparable period, Ferguson Enterprises Inc. demonstrated robust growth, with net sales up 5.1% to $8.169 billion and net income surging 21.3% to $570 million. Diluted EPS also saw a significant increase of 23.9% to $2.90. While operating profit improved, driven by higher gross profit, selling, general, and administrative expenses also rose. The balance sheet reflects a strategic shift with a decrease in cash and an increase in long-term debt, alongside higher operating cash flow but significantly increased cash used in financing activities, primarily for debt repayment and share buybacks.

Key Financial Figures

• $0.0001 — ch Registered: Common Stock, par value $0.0001 per share FERG The New York Stock Excha

Filing Documents

• ferg-20251031.htm (10-Q) — 756KB
• exhibit101-threemonthsende.htm (EX-10.1) — 84KB
• exhibit311-threemonthsende.htm (EX-31.1) — 10KB
• exhibit312-threemonthsende.htm (EX-31.2) — 10KB
• exhibit321-threemonthsende.htm (EX-32.1) — 5KB
• exhibit322-threemonthsende.htm (EX-32.2) — 5KB
• ferg-20251031_g1.jpg (GRAPHIC) — 115KB
• 0002011641-25-000059.txt ( ) — 5235KB
• ferg-20251031.xsd (EX-101.SCH) — 34KB
• ferg-20251031_cal.xml (EX-101.CAL) — 57KB
• ferg-20251031_def.xml (EX-101.DEF) — 153KB
• ferg-20251031_lab.xml (EX-101.LAB) — 468KB
• ferg-20251031_pre.xml (EX-101.PRE) — 338KB
• ferg-20251031_htm.xml (XML) — 607KB

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION 3

Financial Statements

Item 1. Financial Statements 3 Condensed Consolidated Statements of Earnings 3 C ondensed C onsolidated Statements of Comprehensive Income 4 C ondensed C onsolidated Balance Sheets 5 C ondensed C onsolidated Statements of Stockholders' Equity 6 C ondensed C onsolidated Statements of Cash Flows 7 Notes to the Condensed Consolidated Financial Statements 8 Note 1: Summary of significant accounting policies 8 Note 2: Revenue and segment information 10 Note 3: Weighted average shares 12 Note 4: Income tax 12 Note 5: Debt 13 Note 6: Assets and liabilities at fair value 14 Note 7: Commitments and contingencies 14 Note 8: Accumulated other comprehensive loss 14 Note 9: Retirement benefit obligations 15 Note 10: Stockholders' equity 16 Note 11: Share-based compensation 16

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

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 18

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 26

Controls and Procedures

Item 4. Controls and Procedures 26

- OTHER INFORMATION

PART II - OTHER INFORMATION 27

Legal Proceedings

Item 1. Legal Proceedings 27

Risk Factors

Item 1A. Risk Factors 27

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 27

Exhibits

Item 6. Exhibits 28

SIGNATURES

SIGNATURES 29 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. As previously announced, our board of directors approved a change in our fiscal year end from July 31st to December 31st. 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 31st fiscal year end to a December 31st fiscal year end. References to the "current quarter" refer to the three months in the transition period ended October 31, 2025. Prior to the transition period, our fiscal year was the year ending on July 31 of the corresponding calendar year. For example, references to "fiscal 2025" or similar references refer to the fiscal year ended July 31, 2025, and references to "the first quarter of fiscal 2025" refer to the quarter ended October 31, 2024. Our fiscal year 2026 will commence on January 1, 2026. 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, 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

- FINANCIAL INFORMATION

Part I - FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements Ferguson Enterprises Inc. Condensed Consolidated Statements of Earnings (unaudited) Three months ended October 31, (In millions, except per share amounts) 2025 2024 Net sales $ 8,169 $ 7,772 Cost of sales ( 5,663 ) ( 5,432 ) Gross profit 2,506 2,340 Selling, general and administrative expenses ( 1,641 ) ( 1,585 ) Depreciation and amortization ( 94 ) ( 90 ) Operating profit 771 665 Interest expense, net ( 46 ) ( 46 ) Other (expense) income, net ( 13 ) 5 Income before income taxes 712 624 Provision for income taxes ( 142 ) ( 154 ) Net income $ 570 $ 470 Earnings per share - Basic $ 2.91 $ 2.34 Earnings per share - Diluted $ 2.90 $ 2.34 Weighted average number of shares outstanding: Basic 196.2 200.8 Diluted 196.6 201.3 See accompanying Notes to the Condensed Consolidated Financial Statements. 3 Ferguson Enterprises Inc. Condensed Consolidated Statements of Comprehensive Income (unaudited) Three months ended October 31, (In millions) 2025 2024 Net income $ 570 $ 470 Other comprehensive (loss) income: Foreign currency translation adjustments ( 9 ) ( 7 ) Pension adjustments, net of tax impacts of ($ 1 ) and ($ 2 ), respectively 2 5 Total other comprehensive income (loss), net of tax ( 7 ) ( 2 ) Comprehensive income $ 563 $ 468 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) October 31, 2025 July 31, 2025 Assets Cash and cash equivalents $ 526 $ 674 Accounts receivable, less allowances of $ 24 and $ 24 , respectively 3,807 3,964 Inventories 4,613 4,492 Prepaid and other current assets 1,025 945 Assets held for sale 56 71 Total current assets 10,027 10,146 Property, plant and equipment, net 1,886 1,846 Operating lease right-of-use assets 1,841 1,763 Deferred income taxes, net 136 225 Goodwill 2,464 2,464 Other intangible assets, n

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