Ferguson Enterprises Inc. (NYSE:FERG) stock fell Tuesday after the company reported fiscal results for the quarter ended October 31, 2025. Sales rose 5.1% year over year to $8.169 billion, beating the $8.031 billion estimate.
The company stated that the increase reflected 4.2% organic growth and 1.0% acquisition growth, partially offset by 0.1% due to foreign exchange and a divestment in Canada, with price inflation of approximately 3%.
Gross margin rose 60 basis points to 30.7%. Operating margin improved 80 basis points to 9.4%, or 9.9% on an adjusted basis. GAAP diluted EPS increased 23.9% to $2.90, and adjusted EPS rose 15.9% to $2.84, topping the $2.57 estimate.
Also Read: A Preview Of Ferguson’s Earnings
Reported operating profit was $771 million and adjusted operating profit was $808 million, with adjusted EBITDA of $867 million.
Ferguson said margin improvement was driven by “our associates’ disciplined execution,” and said it “continued to diligently manage the cost base to generate operating leverage.”
Segment Performance
In the U.S., sales rose 5.3%, as “residential revenue down 1% in the quarter” was offset by “non-residential revenue up 12% during the quarter,” supported by waterworks and commercial/mechanical activity, including large capital projects. U.S. adjusted operating profit increased 15.6% to $806 million.
In Canada, sales increased by 2.2% due to acquisition growth, partially offset by foreign exchange and a non-core divestment. Ferguson said markets “have remained subdued in Canada, particularly in residential,” and Canada’s adjusted operating profit was $16 million.
Ferguson completed the acquisition of Moore Supply Company and repurchased $208 million of shares. The company declared a quarterly dividend of 89 cents, up 7% from the prior year, payable February 27, 2026, to stockholders of record as of January 2, 2026.
Management Commentary
Kevin Murphy, Ferguson CEO, said, “We are poised to deliver a strong calendar year 2025 performance, and we remain confident in our markets over the medium term. While we continue to operate in an uncertain environment, we will stay focused on leveraging multiyear tailwinds in both residential and non-residential markets as we support the complex project needs of the water and air specialized professional.”
Outlook
For calendar 2025, Ferguson updated its guidance to reflect net sales growth of approximately 5% and an adjusted operating margin of 9.4% to 9.6%, up from prior guidance of mid-single-digit sales growth and an adjusted operating margin of 9.2% to 9.6%.
The company projects interest expense of approximately $190 million, capital expenditures of around $350 million, and an adjusted effective tax rate of approximately 26% for 2025.
As announced on September 16, 2025, Ferguson is changing its fiscal year-end from July 31 to December 31. The company will undergo a five-month transition period from August 1 to December 31, 2025, and will begin reporting on a calendar-year basis effective January 1, 2026.
FERG Price Action: Ferguson Enterprises shares were down 3.82% at $236.42 at the time of publication on Tuesday, according to Benzinga Pro data.
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