Ferguson (LON:FERG) reported higher second-quarter sales and earnings as strength in large capital projects, industrial activity and HVAC offset continued pressure in portions of the residential and traditional non-residential markets. The company also raised its full-year sales outlook and announced plans to acquire industrial flow-control distributor FloWorks.
For the quarter ended June 30, 2026, Ferguson posted net sales of $8.8 billion, up 4.6% from a year earlier. The increase reflected 3.8% organic growth and a 1% contribution from acquisitions, partly offset by a Canadian divestment. Operating profit rose 2.9% to $932 million, while diluted earnings per share increased 5.3% to $3.39.
Large projects drive non-residential growth
CEO Kevin Murphy said Ferguson delivered 8% non-residential growth, following a 13% comparable in the prior-year quarter. Strong activity in large capital projects more than offset weaker conditions in traditional non-residential categories.
Commercial mechanical revenue climbed 15% on top of 20% growth a year earlier, supported by projects involving data centers, pharmaceutical production, biotechnology and general manufacturing. Industrial revenue increased 18%, following 6% growth in the prior-year period, as demand remained steady in life sciences, pharmaceuticals, chemicals and power-generation infrastructure.
During the question-and-answer session, Brundage said large capital projects account for a mid- to high-single-digit percentage of Ferguson’s total revenue and continue to increase as a share of the business. Open orders and backlogs were building across commercial mechanical, industrial and Waterworks, he said, with the company expecting the category to remain a growth tailwind over the next several years.
Murphy said the company was seeing activity beyond data centers, including power generation, water infrastructure, chemicals, food and beverage, general manufacturing, mining and minerals. He added that early engagement with customers has become increasingly important as project owners manage labor availability and supply-chain requirements.
Residential business returns to growth
Ferguson’s overall residential business grew 2% in the quarter despite persistent weakness in new construction and repair, maintenance and improvement activity. Revenue at Ferguson Home declined 1%, while residential trade plumbing was relatively flat.
HVAC was a key exception, with revenue increasing 11%, supported by organic growth and acquisitions. Murphy attributed the performance to Ferguson’s strategy of serving dual-trade plumbing and HVAC contractors, expanding locations and counters, adding equipment relationships and pursuing acquisitions.
The company completed five acquisitions during the quarter, including Carrier Great Lakes and Dealers Supply Company, which expand its HVAC distribution and fabrication capabilities. Ferguson also acquired Hamlett Environmental Technologies in Waterworks, New England Applied Products in commercial mechanical, and PRD Technologies Group in industrial flow control.
Ferguson has announced eight acquisitions year to date, representing approximately $1.4 billion in aggregate annualized revenue, according to Brundage.
FloWorks deal expands flow-control platform
After the quarter ended, Ferguson signed a definitive agreement to acquire FloWorks, a Houston-based distributor and service provider of valves and flow-control solutions. FloWorks generated approximately $1 billion of revenue in 2025 and operates more than 60 locations, including 25 service and repair centers in the U.S. and Canada.
The cash transaction values FloWorks at an enterprise value of approximately $1.6 billion. Ferguson expects to complete the acquisition during its third quarter and said the deal should be immediately accretive to adjusted earnings per share.
Brundage said the acquisition multiple is about 10 times EBITDA including anticipated synergies of roughly $45 million. The company expects revenue opportunities across its industrial, commercial mechanical and Waterworks customer groups, alongside cost savings from network optimization, logistics and technology.
Murphy said FloWorks would add technical capabilities in valves, automation, pumps, fluid-handling systems, specialty pipe fittings and flanges. The acquisition is also expected to increase Ferguson’s total addressable market to $400 billion from $340 billion and add more recurring maintenance, repair and operations revenue.
Ferguson expects net-debt-to-EBITDA leverage to rise to about 1.8 times upon closing from 1.3 times at the end of the second quarter. The company said this would remain within its target range of one to two times. Brundage said Ferguson expects to resume share repurchases once leverage returns toward the lower end of that range.
Guidance raised
For the full 2026 fiscal year, Ferguson raised its sales-growth outlook to the mid-single digits from its prior forecast for low- to mid-single-digit growth. The company also increased the lower end of its operating-margin outlook and now expects a range of 9.5% to 9.8%.
The guidance excludes the planned FloWorks acquisition. Ferguson expects interest expense of about $200 million, capital expenditures of $375 million to $425 million, and an effective tax rate of approximately 26%.
Brundage said the company’s overall market outlook has not materially changed: it continues to expect broadly flat markets, with residential conditions remaining pressured and non-residential markets posting low- to mid-single-digit growth. However, stronger-than-expected first-half performance and higher open orders support expectations for somewhat faster growth in the second half, with third-quarter growth expected to exceed the second-quarter rate.
About Ferguson (LON:FERG)
Ferguson plc distributes plumbing and heating products in the United States and Canada. It offers plumbing and heating solutions to customers in the residential, commercial, civil/infrastructure, and industrial end markets. The company also provides expertise, solutions, and products, including infrastructure, plumbing, appliances, fire, fabrication, and others, as well as heating, ventilation, and air conditioning products under the Ferguson brand name. In addition, it supplies pipes, valves, fittings, plumbing supplies, water and wastewater treatment products, and refrigeration products under Wolseley brand name.
