Ferguson U.S. Nonresidential Sales Rose 15 Percent in Third Quarter
Total sales rose 9.5 percent to $9.0 billion, with 2.7 percentage points of that from acquisitions. Gross margin slipped 40 basis points to 30.9 percent and net income fell to $598 million from $638 million. Ferguson has closed eleven deals this year, among them a twelve-branch HVAC distributor in Illinois and Indiana.
Nonresidential sales in Ferguson's U.S. business rose 15 percent in the quarter ended Sept. 30, the distributor reported Monday, while residential sales, about half of the U.S. total, rose 6 percent against what the company called weak new construction and continued softness in repair, maintenance and improvement work.
Total net sales were $9,026 million, up 9.5 percent from $8,245 million a year earlier. Organic growth accounted for 7.0 percentage points and acquisitions 2.7, offset by 0.2 points from divested businesses in Canada. Price inflation ran low to mid single digits, Ferguson said. U.S. sales reached $8,621 million, up 10.2 percent. Canada fell 4.5 percent to $405 million, where 0.6 percent organic growth was wiped out by divestments and currency.
"Our expert associates delivered strong third quarter results, with non-residential sales up 15% and residential growth of 6%," Chief Executive Kevin Murphy said. "We continue to invest organically and through acquisitions to expand our value-added solutions and geographic footprint."
Margin Gave Back 40 Basis Points
Gross margin came in at 30.9 percent, 40 basis points below a year earlier, which Ferguson attributed to a prior-year figure "temporarily elevated by the timing and extent of supplier price increases." Reported operating profit rose 4.9 percent to $885 million and adjusted operating profit rose 8.9 percent to $962 million, holding adjusted operating margin flat at 10.7 percent. Net income fell to $598 million from $638 million and diluted earnings per share to $3.08 from $3.24, which the company tied mainly to the timing of tax benefits a year earlier. Adjusted earnings were $3.43 a share, up 7.9 percent, and adjusted EBITDA rose 9.0 percent to $1,028 million.
- Nine-month net sales $25,249 million, up 6.0 percent
- Nine-month diluted earnings per share $8.63, up 5.6 percent
- Net debt to adjusted EBITDA 1.7 times, against 1.0 times a year earlier
- Capital expenditures $108 million in the quarter
- Quarterly dividend $0.89, payable Jan. 8, 2027 to holders of record Nov. 20, 2026
Eleven Deals This Year and One of Them in HVAC
Ferguson closed three acquisitions during the quarter and a fourth after it ended, bringing this year's total to eleven with aggregate annualized sales of about $1.5 billion. The largest was FloWorks, a valve and flow control distributor with more than 60 locations and 25 service centers across the United States and Canada, which closed Aug. 31. Brax Company Inc. added pump and pump repair work from three locations in Southern California, and Canyon Systems Inc., bought after the quarter closed, brings water and wastewater treatment process capability across six Western states.
The HVAC addition was Rogers Supply Company Inc., with twelve locations across Illinois and Indiana, which Ferguson said supports its dual-trade offering to contractors who sell both plumbing and heating and cooling. Ferguson does not report HVAC sales as a separate line, so those twelve branches are the clearest available measure of what it added in the trade during the quarter. Murphy named "climate and comfort" among the long-term drivers he expects to carry the company, alongside water infrastructure, large capital projects and aging and underbuilt housing.
Guidance Lifted for the Year Ending Dec. 31
Ferguson now expects calendar 2026 net sales growth of about 7 percent, up from prior guidance of mid single digit growth, and adjusted operating margin of 9.6 to 9.8 percent, narrowed from 9.5 to 9.8 percent. It raised expected interest expense to about $235 million from about $200 million and capital expenditures to about $425 million from a range of $375 million to $425 million. The adjusted effective tax rate stays at about 26 percent. Ferguson said the revision reflects year-to-date performance and the inclusion of FloWorks.
The first trade reports of these results did not agree with each other on two points. Ferguson's fiscal year is now the calendar year, so this is the third quarter of 2026 and the guidance covers Jan. 1 through Dec. 31. The 15 percent is U.S. nonresidential growth, not company-wide commercial sales, which some coverage merged with the 9.5 percent total. Ferguson sold $31.3 billion in calendar 2025 from more than 1,800 locations with about 36,000 associates.
Why This Matters to Contractors
Paying for FloWorks took $1.7 billion of acquisition spending in a single quarter, funded with $1.2 billion of newly priced senior unsecured notes and a $900 million unsecured term loan maturing in 2029, and Ferguson paused its share repurchases to do it. Net debt reached 1.7 times adjusted EBITDA from 1.0 times a year earlier, still inside the company's stated 1 to 2 times target but with less headroom than the eleven-deal pace of 2026 assumed. Ferguson said buybacks resume as that ratio trends back toward the low end of the range, which puts the next round of branch and counter-stock additions on the balance sheet's timetable rather than the market's.
Sources
- Ferguson Enterprises Inc., "Ferguson Reports Third Quarter Ended September 30, 2026," Nov. 9, 2026 (SEC Exhibit 99.1). sec.gov
- Ferguson Enterprises Inc., Form 8-K, Items 2.02 and 9.01, filed Nov. 9, 2026. sec.gov
- Mark Brohan, "Ferguson's Commercial Sales Surge 15% as Acquisitions Fuel Distribution Expansion," Distribution Strategy Group, Nov. 9, 2026. distributionstrategy.com