Ferguson Enterprises Raises Guidance After Q2 Beat, Announces $1.6B FloWorks Acquisition
The plumbing and HVAC distributor reported 4.6% revenue growth and outlined plans for its largest acquisition to date as it expands into industrial flow control.
Revenue and Profit Growth Amid Mixed Markets
Ferguson Enterprises reported second quarter revenue of $8.8 billion, up 4.6% year-over-year, driven by organic growth of 3.8% and acquisition contributions of 1% (earnings call, 2026-08-10). The $50 billion market cap distributor delivered operating profit of $932 million, up 2.9%, while diluted earnings per share increased 5.3% to $3.39.
"We're pleased with our volume growth amid what continues to be a mixed market," said CEO Kevin Murphy on the call. Gross margin of 31% was down just 20 basis points against what the company described as a tough comparison (earnings call, 2026-08-10).
The company's performance was underpinned by strong nonresidential growth of 8% in the United States, offsetting a 2% increase in the still-challenged residential market. For the first half of fiscal 2026, net sales reached $16.2 billion, up 4.2%, with operating profit growing 5.1% to $1.6 billion (earnings call, 2026-08-10).
Customer Group Performance Shows Diversification
Ferguson's multi-customer group strategy continued to demonstrate resilience across end markets. Commercial mechanical revenue grew 15% on top of a 20% prior-year comparable, driven by execution on large capital projects including data centers, pharmaceutical production, and biotechnology facilities (earnings call, 2026-08-10).
The industrial customer group delivered 18% growth, while HVAC revenue increased 11%, accelerated by both organic performance and acquisitions. Waterworks revenue grew 3% despite a challenging 15% prior-year comparison, supported by diversified exposure across large capital projects, public works, and municipal activity (earnings call, 2026-08-10).
$1.6B FloWorks Acquisition Expands Industrial Footprint
Post-quarter, Ferguson announced a definitive agreement to acquire FloWorks, a leading distributor of highly technical valves and flow control solutions, for approximately $1.6 billion in cash. The Houston-based company generated approximately $1 billion in revenue in 2025 and operates more than 60 locations, including 25 service and repair centers across the United States and Canada (earnings call, 2026-08-10).
CFO Bill Brundage said the transaction represents "an acquisition multiple of approximately 10x EBITDA and including expected synergies of approximately $45 million" (earnings call, 2026-08-10). The company expects the deal to be immediately accretive to adjusted earnings per share and close in the third quarter.
The acquisition will expand Ferguson's total addressable market from $340 billion to $400 billion and add significant recurring MRO-driven revenue. "FloWorks will enhance our ability to drive market outperformance by playing an even larger part in the build-out happening across North America," Murphy said (earnings call, 2026-08-10).
Capital Allocation and Updated Guidance
Ferguson announced eight acquisitions year-to-date, investing nearly $600 million, while returning $375 million to shareholders through dividends and share repurchases. The company's net debt to EBITDA stood at 1.3x at quarter-end, expected to increase to approximately 1.8x upon closing the FloWorks acquisition, remaining within the stated target range of 1 to 2x (earnings call, 2026-08-10).
According to MarginX data, Ferguson's next cash dividend of $0.89 per share is scheduled for August 21, 2026.
The company raised its full-year guidance based on year-to-date performance, though specific figures were not detailed in the prepared remarks. Management noted that "the economic environment remains uncertain" while expressing confidence in continued execution (earnings call, 2026-08-10).
This article was generated by MarginX from the earnings call on 2026-08-10. It is not investment advice.