FERG · Ferguson plc

Ferguson Enterprises delivered a solid start to fiscal 2026, with Q1 net sales rising 3.6% to $7.5 billion, supported by 2.8% organic growth and a 0.8% contribution from acquisitions. The company demonstrated effective cost management and productivity improvements, driving a 30 basis point expansion in gross margin to 31.0%. Adjusted operating margin improved 40 basis points to 8.7%, reflecting operational leverage and disciplined execution. Reported diluted EPS of $2.13 increased 23.1% year-over-year, while adjusted diluted EPS of $2.28 rose 9.1%, benefiting from higher adjusted operating profit and share repurchase activity.

Segment performance highlighted a divergence between residential and non-residential markets. While residential end markets remained challenged with weak new construction and soft repair, maintenance, and improvement activity, the company outperformed with residential revenue down only 1%. Non-residential revenue grew 8%, driven by scale advantages and strong activity in large capital projects. The US segment posted a 3.5% sales increase, while Canada grew 5.5% primarily through acquisitions.

The company maintained a strong financial position with a net debt to adjusted EBITDA ratio of 1.0x. During the quarter, Ferguson completed $236 million in share repurchases and announced a new $2 billion repurchase authorization with no expiration date, replacing the prior program. The Board declared a quarterly dividend of $0.89, payable in July 2026. Management reaffirmed full-year 2026 guidance, targeting low to mid-single digit net sales growth and an adjusted operating margin of 9.4% to 9.8%. Additionally, the company announced a review of its London Stock Exchange secondary listing, with an update expected in the second quarter.