Ferguson raises 2026 margin outlook as Q3 sales rise 9.5%
Sales rose 9.5% to $9.0 billion in the third quarter, and adjusted diluted EPS of $3.43 rose 7.9%. The company raised the floor of its 2026 adjusted operating margin forecast to 9.6%, from 9.5%.
Key takeaways
- Ferguson Enterprises (FERG) reported third-quarter sales of $9.0 billion, up 9.5% from a year earlier, and raised its 2026 adjusted operating margin forecast to 9.6% to 9.8%. Adjusted diluted earnings per share were $3.43, up 7.9%. The company also raised its interest expense outlook to about $235 million, citing the FloWorks acquisition.
Ferguson Enterprises (FERG) raised the low end of its 2026 adjusted operating margin forecast as third-quarter sales rose 9.5% to $9.0 billion.
Adjusted diluted EPS rose 7.9%; reported diluted EPS was $3.08, down 4.9%.
Here's how the company did:
- Net sales: $9.03 billion vs. $8.25 billion a year earlier
- Adjusted diluted EPS: $3.43 vs. $3.18 a year earlier
- Adjusted operating profit: $962 million vs. $883 million a year earlier
Organic growth was 7.0% in the quarter, and acquisitions added 2.7%.
2026 guidance
Ferguson now expects an adjusted operating margin of 9.6% to 9.8%, from 9.5% to 9.8% on Aug. 10.
Interest expense is now expected at about $235 million, up from about $200 million. Capital expenditures are now expected at about $425 million, from $375 million to $425 million. The adjusted effective tax rate stays at about 26%.
CEO Kevin Murphy said: “While our markets remain mixed, our year-to-date performance and the addition of FloWorks enable us to raise our full year guidance.”
Segment results
US net sales rose 10.2% to $8.62 billion, with organic growth of 7.4%. Non-residential sales rose 15%, and residential sales rose 6%. US adjusted operating profit was $952 million, up 8.8%.
Canada net sales fell 4.5% to $405 million: organic growth of 0.6% was offset by a 3.2% impact from divestments and a 1.9% foreign exchange headwind. Canada adjusted operating profit was $23 million.
Acquisitions
Ferguson completed three acquisitions in the quarter, including FloWorks, which closed Aug. 31. Canyon Systems, Inc. was completed after quarter end.
The company has completed eleven acquisitions this year, with aggregate annualized sales of about $1.5 billion.
Cash and capital returns
Net debt to adjusted EBITDA was 1.7x at Sept. 30, up from 1.0x a year earlier. The company invested $1.7 billion in acquisitions in the quarter, including FloWorks, and spent $108 million on capital expenditures.
Ferguson priced $1.2 billion of senior unsecured notes and entered into a $900 million term loan that matures in 2029. The proceeds were used to finance FloWorks, with the remainder for general corporate purposes.
Share repurchases were paused in connection with FloWorks. The company expects to resume buybacks as leverage trends back toward the lower end of its 1-2x net debt to adjusted EBITDA target range.
The board declared a quarterly dividend of $0.89, payable Jan. 8, 2027, to holders of record as of Nov. 20, 2026.
Ferguson plans to report results for the year ending Dec. 31, 2026, on Feb. 16, 2027.