Ferguson raises 2026 sales growth outlook to about 7% after adjusted profit growth
Key Facts
Ferguson raised its outlook for net sales growth in calendar 2026 to about 7%, after reporting sales of $9.0 billion in the quarter ended September 30, up 9.5% from a year earlier. The company said in its earnings statement that growth included a 7.0% organic contribution and a 2.7% addition from acquisitions, offset by a 0.2% negative impact from divestitures in Canada. Adjusted operating profit rose 8.9% to $962 million, while adjusted diluted earnings per share increased 7.9% to $3.43. The company also raised its expected adjusted operating margin range for the year to 9.6%-9.8% from 9.5%-9.8%. The revisions reflect improved sales and margin expectations after a quarter of broad-based growth, while reported profit and financing indicators remain part of the results’ financial picture.
The leading driver was the United States, where sales rose 10.2%, including 7.4% organic growth and a 2.8% contribution from acquisitions. Residential sales increased 6% despite weakness in new construction and continued softness in repair, maintenance and improvement activity. By contrast, non-residential sales surged 15% during the quarter, highlighting demand strength in that business compared with the residential market. Ferguson said overall sales growth benefited from organic expansion and acquisitions, with a limited impact from Canadian divestitures. The figures show that strength in non-residential activity helped offset headwinds in some parts of the housing business.
On a reported basis, adjusted operating margin held at 10.7% year over year, while reported diluted earnings per share fell 4.9% to $3.08. The company attributed the decline mainly to the timing and size of tax benefits in the comparison period, explaining the difference between the path of reported profit and adjusted earnings per share growth. Meanwhile, Ferguson raised its estimated interest expense for 2026 to about $235 million from about $200 million. It also revised expected capital expenditures to about $425 million, compared with a previous range of $375 to $425 million. These changes add higher financing and spending costs during the year to the revenue growth picture.
The FloWorks acquisition had been completed before the results were announced, with Ferguson closing the deal on August 31, 2026. The company announced it on July 13 at an enterprise value of about $1.6 billion; FloWorks generated about $1 billion in revenue in 2025 and had more than 60 locations in the United States and Canada. Ferguson said its ratio of net debt to adjusted earnings before interest, taxes, depreciation and amortization was 1.7 times in the quarter, compared with 1.0 times a year earlier. Chief Executive Kevin Murphy linked the expansion to a broader acquisition program, saying: "We completed 11 acquisitions this year with combined annual revenue of about $1.5 billion, while maintaining a strong balance sheet." He added that water infrastructure, large capital projects, climate and comfort, and older and underbuilt housing represent long-term growth drivers.
Ferguson shares rose 12% in trading on Monday, November 9, according to a report published by Investing.com citing Reuters, after the results and outlook upgrade. The move came after the company raised its annual sales growth estimate to about 7% and improved its adjusted operating margin range, alongside strong growth in non-residential sales. Ferguson also declared a quarterly dividend of $0.89 per share, payable on January 8, 2027, to shareholders of record on November 20, 2026. The company provisionally scheduled its results for the period ended December 31, 2026, for February 16, 2027, with the conference call set to begin at 8:30 a.m. U.S. Eastern Time. These dates make the next quarter the first checkpoint for assessing whether sales growth continues and how financing costs affect results after the FloWorks deal.