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Ferguson Enterprises Inc. /DE/ (FERG)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 2025 delivered a clean beat: revenue $8.50B (+6.9% YoY) and adjusted EPS $3.48, with gross margin up 70 bps to 31.7% and adjusted operating margin up 60 bps to 11.4% .
  • Versus S&P Global consensus, Ferguson posted an EPS beat of about $0.47 and a revenue beat of ~$0.10B, driven by stronger non-residential activity and disciplined pricing; adjusted EBITDA outperformed consensus as well. Values retrieved from S&P Global .
  • Non-residential strength (commercial +21%, waterworks +15%) offset muted residential, while management cited modest inflation and supplier price timing as tailwinds; HVAC was slightly down given efficiency standard transition and affordability pressure .
  • Guidance raised for calendar 2025 to mid-single-digit revenue growth and 9.2%–9.6% adjusted operating margin; fiscal year-end shifts to Dec 31, improving operational seasonality and focus during peak demand .
  • Capital allocation remains supportive with $189M repurchases and $0.83 dividend declared in Q4; leverage sits at 1.1x net debt/adjusted EBITDA, preserving optionality for bolt-ons and buybacks .

What Went Well and What Went Wrong

What Went Well

  • Non-residential outperformance: commercial mechanical revenue +21%, waterworks +15%, reflecting strong data center, life sciences, healthcare, and infrastructure demand; backlogs described as “healthy” across key groups .
  • Margin execution: gross margin expanded to 31.7% (+70 bps YoY) and adjusted operating margin to 11.4% (+60 bps), helped by pricing discipline and timing of supplier increases; normalized long-run gross margin seen in the 30–31% range .
  • Strategic progress: 4 acquisitions in Q4 (HVAC, water & wastewater solutions, metering) and continued HVAC dual-trade counter conversions (600 completed, near 650 goal), strengthening capability-led growth .

What Went Wrong

  • Residential remained muted with new construction weakness and ongoing PVC deflation; residential trade plumbing down ~2%, HVAC slightly down, with more repair vs. replace behavior given affordability constraints .
  • Commodity basket deflation persisted (PVC softness), moderating price gains; management expects only modest overall inflation near-term and cautions tariff-related “noise” can swing category pricing .
  • Seasonality likely to temper margins in calendar 2H (implied ~9.2% vs. 9.6% 1H), even as sales may be slightly higher; Q&A framed expectations around historical holiday-light periods and mix normalization .

Financial Results

MetricQ4 2024Q3 2025Q4 2025
Net Sales ($USD Billions)$7.95 $7.62 $8.50
Gross Margin %31.0% 31.0% 31.7%
Operating Margin % (Reported)10.2% 8.0% 10.9%
Operating Margin % (Adjusted)10.8% 9.4% 11.4%
Diluted EPS (Reported, $)$2.23 $2.07 $3.55
Diluted EPS (Adjusted, $)$2.98 $2.50 $3.48
Operating Profit ($USD Millions, Reported)811 606 925
Operating Profit ($USD Millions, Adjusted)857 715 972

Segment breakdown (Q4 2025 vs Q4 2024):

SegmentQ4 2024Q4 2025
USA Net Sales ($USD Billions)$7.53 $8.06
Canada Net Sales ($USD Billions)$0.42 $0.44
Total Net Sales ($USD Billions)$7.95 $8.50
USA Adjusted Operating Profit ($USD Millions)844 962
Canada Adjusted Operating Profit ($USD Millions)22 24
Central & Other Costs ($USD Millions)(9) (14)
Total Adjusted Operating Profit ($USD Millions)857 972

KPIs & capital allocation (chronological):

MetricQ2 2025Q3 2025Q4 2025
Adjusted EBITDA ($USD Millions)502 770 1,029
Net Debt / Adjusted EBITDA (x)1.2x 1.2x 1.1x
Share Repurchases ($USD Millions)$252 $251 $189
Dividend per Share ($)$0.83 $0.83 $0.83

Guidance Changes

MetricQ2 2025 (FY2025 Guide)Q3 2025 (Updated FY2025 Guide)Q4 2025 (Calendar 2025 Guide)
Net Sales GrowthLow single digit Low to mid-single digit Mid-single digit
Adjusted Operating Margin8.3%–8.8% 8.5%–9.0% 9.2%–9.6%
Interest Expense$180–$200M $180–$200M $180–$200M
CapEx$325–$375M $300–$350M $300–$350M
Adjusted Effective Tax Rate~26% ~26% ~26%
Fiscal Year-EndJuly 31 July 31 Changed to Dec 31; transition report (Aug 1–Dec 31, 2025) planned

Dividend and timing (Q4): $0.83 per share; payable Nov 7, 2025; record date Sep 26, 2025 .

Earnings Call Themes & Trends

TopicQ2 2025 (Prev.)Q3 2025 (Prev.)Q4 2025 (Current)Trend
Non-residential large projects (data centers, healthcare, life sciences)Resilient non-res; civil/infrastructure strength Bidding solid; broad-based momentum Healthy backlogs; accelerating data center activity; multi-group approach wins Strengthening
Pricing/Inflation/TariffsModest deflation (PVC) pressured margins Moderating deflation; margin actions helped Mild inflation (~2%); commodity basket mixed; tariff “noise” persists Normalizing
Residential marketsSubdued; ~2% growth in US residential Residential muted; trade plumbing headwinds Flat residential overall; Home +3%; affordability drives repair over replace Weak to stabilizing high-end
HVACTransition to A2L; soft unitary; repair emphasis Expansion initiatives; counter conversions ongoing Slightly down; low single-digit inflation; regional bifurcation; more repair vs replace Near-term soft; medium-term constructive
Supply chain & executionStreamlining actions announced; expected $100M annual savings Execution benefits starting; working capital investments Strong supply chain; margin uptick aided by supplier pricing timing; normalized GM 30–31% Improving execution
Capital allocationBuybacks, dividend increase, leverage ~1.2x Continued buybacks; pipeline healthy $948M FY buybacks; $1B remaining authorization; leverage 1.1x; focus on bolt-ons Consistent

Management Commentary

  • “We delivered strong growth as our associates continued to serve customers in a challenging market; sales of $8.5B increased 6.9% with gross margin of 31.7% up 70 bps” — Kevin Murphy, CEO .
  • “Operating profit of $972M (11.4% margin) grew 13.4% over last year; diluted EPS of $3.48 was 16.8% above last year, driven by operating profit and repurchases” — Bill Brundage, CFO .
  • “Large capital projects are accelerating, particularly data centers; our multi-customer group approach and early engagement with engineers/owners is a competitive advantage” — Kevin Murphy .
  • “Gross margin normalization to the 30–31% range is expected; Q4 benefited temporarily from supplier price timing” — Bill Brundage .
  • “We’re changing our fiscal year-end to Dec 31 to align reporting with seasonality and focus on customers during peak” — Bill Brundage .

Q&A Highlights

  • Non-res backlogs and pipeline: Healthy across commercial mechanical, fire protection, waterworks, industrial PVF; data center activity accelerating across geographies without cancellations .
  • Pricing/margins outlook: Mild inflation expected; commodity basket mixed (copper inflation; steel flattish-to-up; PVC deflation); GM to normalize as supplier price timing fades .
  • HVAC dynamics: Slight decline; low single-digit inflation mainly on equipment; repair-over-replace trend; regional strength in East/Mid-Atlantic/Midwest vs. weaker West; ongoing dual-trade expansion .
  • Seasonality and margin cadence: Calendar 2H margins softer vs 1H (historically lighter Nov–Dec); implied 2H operating margin upper-8% to mid-9% range .
  • Restructuring savings: ~$100M annualized; cadence roughly ~$25M YoY per quarter over next three quarters; decision speed improved in the field .

Estimates Context

MetricConsensus (Q4 2025)Actual (Q4 2025)Surprise
Revenue ($USD Billions)$8.39*$8.50 +$0.10B (~+1.2%)
Primary EPS ($)$3.01*$3.48 +$0.47 (~+15.7%)
EBITDA ($USD Billions)$0.90*$1.03 +$0.13B
  • Primary EPS – # of Estimates: 17*; Revenue – # of Estimates: 16* (Values retrieved from S&P Global).
  • Ferguson delivered broad beats on EPS and revenue driven by non-res project strength, gross margin expansion, and cost discipline; temporary supplier price timing boosted Q4 margins, which should normalize .

Key Takeaways for Investors

  • Ferguson’s Q4 print was quality-driven: non-residential demand and disciplined pricing produced margin expansion and a consensus beat; near-term normalization of gross margin is expected as supplier price timing fades .
  • The narrative has shifted toward large-capital-project solutions (data centers, healthcare, industrial), where Ferguson’s multi-group model and early engagement create durable share gains; this is a medium-term earnings compounder .
  • Residential remains mixed; high-end remodel (Ferguson Home +3%) is resilient, but trade plumbing and HVAC face affordability and transition pressures; expect softer calendar 2H vs 1H .
  • Calendar 2025 guidance implies continued margin improvement (9.2%–9.6%) and mid-single-digit growth despite macro uncertainty, supported by operational streamlining and healthy acquisition pipeline .
  • Capital deployment is balanced: $948M buybacks in FY and $0.83 dividend reinforce shareholder returns while maintaining investment-grade leverage (1.1x), leaving optionality for bolt-ons .
  • Trading lens: favor on strength tied to non-res project momentum and margin resilience; watch for updates on HVAC transition, PVC pricing, and tariff developments as potential volatility drivers .
  • FY-end change to Dec 31 should improve seasonal comparability and operational focus; transition report planned for Aug–Dec period reduces reporting friction during the busiest season .

Additional Q4 Materials

  • 8-K 2.02 press release with full financials and guidance .
  • Earnings call transcript (prepared remarks and Q&A) .
  • Other press releases: results timing announcement (Sep 2) ; dividend declaration included in 8-K .