Ferguson Lifts 2026 Guidance as Q3 Sales Hit $9.0B

Ferguson Enterprises Inc. (NYSE: FERG) reported third-quarter fiscal 2026 net sales of $9.0 billion on 9 November 2026, a 9.5% increase year over year that included 7.0% organic growth. Adjusted diluted earnings per share rose 7.9% to $3.43, while reported diluted EPS fell 4.9% to $3.08. The distributor also raised its calendar 2026 net sales guidance to roughly 7% growth from mid-single-digit growth previously. Adjusted operating margin guidance tightened to 9.6%-9.8% from 9.5%-9.8%.

Context — why the guidance raise matters now

Ferguson's updated outlook reflects both its latest trading performance and the inclusion of the FloWorks acquisition, which closed on 31 August 2026. That deal, plus ten other acquisitions completed this year, added roughly $1.5 billion in aggregate annualized revenue, the company said.

The prior guidance, issued before FloWorks closed, called for mid-single-digit net sales growth and an adjusted operating margin of 9.5%-9.8%. The company also lifted its interest expense expectation to about $235 million from roughly $200 million, and capital expenditures to about $425 million from a $375-$425 million range. Both revisions trace to the acquisition and the debt taken on to fund it.

Ferguson's markets remain mixed, according to CEO Kevin Murphy, who described residential conditions as pressured by weak new construction and soft repair, maintenance and improvement work. Non-residential demand, by contrast, stayed healthy, with the company citing growth in open order volumes and strong bidding activity on large capital projects.

The catalyst chain is straightforward: Ferguson closed FloWorks on the final day of its fiscal third quarter, funded it with $1.2 billion of senior unsecured notes and a $900 million unsecured term loan maturing in 2029, then updated guidance to capture the combined business. use rose to 1.7x net debt to adjusted EBITDA from 1.0x a year earlier — still inside the company's stated 1-2x target range.

Data — what the numbers show

Third-quarter reported operating profit was $885 million, up 4.9%, for a 9.8% operating margin — 40 basis points below the prior year. On an adjusted basis, operating profit was $962 million, up 8.9%, with a 10.7% margin that was flat year over year.

Metric	Q3 2026	Q3 2025	Change
Net sales	$9,026M	$8,245M	+9.5%
Gross margin	30.9%	31.3%	-40 bps
Adjusted operating profit	$962M	$883M	+8.9%
Adjusted diluted EPS	$3.43	$3.18	+7.9%
Adjusted EBITDA	$1,028M	$943M	+9.0%
Net debt/adj. EBITDA	1.7x	1.0x	+0.7x

The US segment drove the quarter, with net sales up 10.2% to $8,621 million on 7.4% organic growth and a 2.8% acquisition contribution. Residential sales, roughly half the US total, rose 6% despite weak new construction. Non-residential sales climbed 15%. Canada net sales fell 4.5% to $405 million as a 3.2% divestment drag and 1.9% foreign-exchange headwind offset 0.6% organic growth.

For the nine months, net sales rose 6.0% to $25,249 million and adjusted diluted EPS gained 7.2% to $9.09. Gross margin slipped 10 basis points to 31.0%.

The company attributed the 40-basis-point gross margin decline to a prior-year quarter that was temporarily elevated by the timing and extent of supplier price increases. Price inflation in the quarter was low to mid single digits.

Analysis — what it means for markets and sectors

Ferguson's read-through extends to building-products manufacturers and distributors exposed to North American repair and remodel demand. The company's ability to grow residential sales 6% while describing that market as pressured suggests share gains rather than end-market recovery — a distinction that matters for peers reliant on volume growth from a healthier housing cycle.

The 15% non-residential growth is the more durable signal. Large capital project activity, water infrastructure, and wastewater treatment all feed Ferguson's value-added strategy, and the FloWorks deal added over 60 locations and 25 service centers across the US and Canada in highly technical valve and flow-control work. Canyon Systems, acquired after quarter-end, established a process solutions platform for water and wastewater treatment across six Western states.

The clearest counter-argument sits in the balance sheet. Net debt to adjusted EBITDA doubled year over year to 1.7x after $1.7 billion of acquisition spending in the quarter. Ferguson temporarily paused its share repurchase program for the FloWorks deal and said it expects to resume buybacks as use trends toward the lower end of its 1-2x target. If use stays elevated or end markets weaken further, the capital-return story that supports the multiple weakens with it.

Positioning reflects that tension. Income-oriented holders get a declared quarterly dividend of $0.89, payable 8 January 2027 to stockholders of record as of 20 November 2026. Investors focused on the buyback pause will watch the use trajectory rather than the payout.

Outlook — what to watch next

Ferguson's provisional financial calendar sets results for the period ending 31 December 2026 on 16 February 2027, with a call from 8:30 a.m. ET. That print will be the first to include a full quarter of FloWorks and will show whether the acquisition's margin profile matches the company's adjusted operating margin guidance of 9.6%-9.8%.

The use path is the second catalyst. Management tied the resumption of buybacks to use trending toward the lower end of the 1-2x range, so any reduction in the 1.7x ratio — whether from EBITDA growth or debt paydown — signals when repurchases restart.

Interest expense is the third variable. The company raised its 2026 expectation to about $235 million from roughly $200 million, reflecting the $1.2 billion notes offering and the $900 million term loan. Any further financing for acquisitions would push that line higher again.

Frequently Asked Questions

Why did Ferguson's reported EPS fall while adjusted EPS rose?

Reported diluted EPS fell 4.9% to $3.08, mainly because the prior-year quarter carried tax benefits that did not repeat. Adjusted diluted EPS, which strips out acquisition and integration costs, amortization of acquired intangibles, a loss on disposal of a non-operating entity, and discrete tax items, rose 7.9% to $3.43 on higher adjusted operating profit.

What does the FloWorks acquisition add to Ferguson's business?

FloWorks strengthened Ferguson's valve and flow-control offering, adding more than 60 locations and 25 service centers across the United States and Canada. It closed on 31 August 2026 and is the largest of eleven acquisitions Ferguson completed this year, which together carry roughly $1.5 billion in aggregate annualized revenue. The company did not disclose individual deal terms.

How does Ferguson's 1.7x use compare with its target?

Ferguson aims to keep net debt to adjusted EBITDA within one to two times, a range the company says supports investment-grade credit metrics. At 1.7x, following $1.7 billion of quarterly acquisition spending, the ratio sits in the upper half of that band and well above the 1.0x recorded a year earlier. Management said it expects to resume buybacks as use moves lower.

Bottom Line

Ferguson beat on adjusted profit, raised full-year sales guidance, and absorbed FloWorks at 1.7x use — still inside its stated target range.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.