Q3 FY2026
Filed Nov 9, 2026Ferguson Q3 2026 net sales up 9.5% with 7.0% organic growth; reported diluted EPS down 4.9% to $3.08; full-year net sales guidance raised to ~7% growth
Net sales grew 9.5% (7.0% organic) and adjusted operating profit grew 8.9%, with adjusted diluted EPS up 7.9%. Full-year net sales guidance was raised to about 7% growth. Offsetting this, reported diluted EPS fell 4.9%, gross margin fell 40 bps to 30.9%, Canada sales declined 4.5%, and net debt to adjusted EBITDA rose to 1.7x from 1.0x after the FloWorks acquisition.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net sales (three months ended Sept 30, 2026)GAAP | $9.03B | – | +9.5% |
| Organic sales growth (three months ended Sept 30, 2026)other | 7.0% | – | – |
| Acquisition growth contribution to net sales (three months ended Sept 30, 2026)other | 2.7% | – | – |
| Cost of sales (three months ended Sept 30, 2026)GAAP | −$6.24B | – | – |
| Gross profit (three months ended Sept 30, 2026)GAAP | $2.79B | – | – |
| Gross margin (three months ended Sept 30, 2026)GAAP | 30.9% | – | (40) bps |
| Selling, general and administrative expenses (three months ended Sept 30, 2026)GAAP | −$1.78B | – | – |
| Restructuring expenses (three months ended Sept 30, 2026)GAAP | −$2M | – | – |
| Depreciation and amortization (three months ended Sept 30, 2026)GAAP | −$116M | – | – |
| Operating profit (three months ended Sept 30, 2026)GAAP | $885M | – | +4.9% |
| Operating margin (three months ended Sept 30, 2026)GAAP | 9.8% | – | (40) bps |
| Adjusted operating profit (three months ended Sept 30, 2026)non-GAAP | $962M | – | +8.9% |
| Adjusted operating margin (three months ended Sept 30, 2026)non-GAAP | 10.7% | – | Flat |
| Interest expense, net (three months ended Sept 30, 2026)GAAP | −$64M | – | – |
| Other expense, net (three months ended Sept 30, 2026)GAAP | −$16M | – | – |
| Income before income taxes (three months ended Sept 30, 2026)GAAP | $805M | – | – |
| Provision for income taxes (three months ended Sept 30, 2026)GAAP | −$207M | – | – |
| Net income (three months ended Sept 30, 2026)GAAP | $598M | – | – |
| Adjusted net income (three months ended Sept 30, 2026)non-GAAP | $664M | – | – |
| Earnings per share - basic (three months ended Sept 30, 2026)GAAP | $3.09 | – | – |
| Earnings per share - diluted (three months ended Sept 30, 2026)GAAP | $3.08 | – | (4.9)% |
| Adjusted earnings per share - diluted (three months ended Sept 30, 2026)non-GAAP | $3.43 | – | +7.9% |
| Adjusted EBITDA (three months ended Sept 30, 2026)non-GAAP | $1.03B | – | +9.0% |
| Net debt to adjusted EBITDA (at Sept 30, 2026)non-GAAP | 1.7x | – | – |
| Capital expenditures (three months ended Sept 30, 2026)other | $108M | – | – |
| Investment in acquisitions (three months ended Sept 30, 2026)other | $1.7B | – | – |
| Net sales (nine months ended Sept 30, 2026)GAAP | $25.25B | – | +6.0% |
| Cost of sales (nine months ended Sept 30, 2026)GAAP | −$17.43B | – | – |
| Gross profit (nine months ended Sept 30, 2026)GAAP | $7.82B | – | – |
| Gross margin (nine months ended Sept 30, 2026)GAAP | 31.0% | – | (10) bps |
| Selling, general and administrative expenses (nine months ended Sept 30, 2026)GAAP | −$5.11B | – | – |
| Restructuring expenses (nine months ended Sept 30, 2026)GAAP | −$6M | – | – |
| Operating profit (nine months ended Sept 30, 2026)GAAP | $2.39B | – | +9.0% |
| Operating margin (nine months ended Sept 30, 2026)GAAP | 9.5% | – | +30 bps |
| Adjusted operating profit (nine months ended Sept 30, 2026)non-GAAP | $2.54B | – | +6.5% |
| Adjusted operating margin (nine months ended Sept 30, 2026)non-GAAP | 10.1% | – | +10 bps |
| Interest expense, net (nine months ended Sept 30, 2026)GAAP | −$161M | – | – |
| Net income (nine months ended Sept 30, 2026)GAAP | $1.68B | – | – |
| Earnings per share - diluted (nine months ended Sept 30, 2026)GAAP | $8.63 | – | +5.6% |
| Adjusted earnings per share - diluted (nine months ended Sept 30, 2026)non-GAAP | $9.09 | – | +7.2% |
| Adjusted EBITDA (nine months ended Sept 30, 2026)non-GAAP | $2.73B | – | +6.9% |
| Net cash provided by operating activities (nine months ended Sept 30, 2026)GAAP | $1.47B | – | – |
| Capital expenditures (nine months ended Sept 30, 2026)GAAP | −$342M | – | – |
| Purchase of businesses acquired, net of cash acquired (nine months ended Sept 30, 2026)GAAP | −$2.26B | – | – |
| Cash dividends paid (nine months ended Sept 30, 2026)GAAP | −$519M | – | – |
| Purchase of treasury shares (nine months ended Sept 30, 2026)GAAP | −$438M | – | – |
| Net change in debt and bank overdrafts (nine months ended Sept 30, 2026)GAAP | $2.04B | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| US (three months ended Sept 30, 2026)Organic growth of 7.4% and a further 2.8% contribution from acquisitions. Residential sales grew 6% and non-residential sales grew 15%, per the company. Residential end markets, about half of sales, remained pressured by weak new construction and softness in repair, maintenance and improvement work. | $8.62B | – | +10.2% |
| Canada (three months ended Sept 30, 2026)Organic growth of 0.6% was fully offset by a 3.2% impact from non-core business divestments and a 1.9% headwind from foreign exchange rates, per the company. The company describes Canadian markets as challenging, particularly in residential. | $405M | – | (4.5)% |
| US (nine months ended Sept 30, 2026)Segment net sales as printed in the segment overview. No driver breakdown for the nine-month period is given in the filing. | $24.11B | – | +6.3% |
| Canada (nine months ended Sept 30, 2026)Segment net sales as printed in the segment overview. No driver breakdown for the nine-month period is given in the filing. | $1.14B | – | (0.9)% |
Calendar 2026 (January 1 - December 31, 2026), updated guidance outlook
- Revenue~7% growth
- Tax rate~26% (adjusted effective tax rate)
- NoteAdjusted operating margin: 9.6% - 9.8% (prior guidance 9.5% - 9.8%)
- NoteInterest expense: ~$235 million (prior guidance ~$200 million)
- NoteCapital expenditures: ~$425 million (prior guidance $375 - $425 million)
- NoteNet sales prior guidance: mid-single digit growth. Updated guidance reflects latest performance and inclusion of the FloWorks acquisition that closed on August 31, 2026, per the filing.
- NoteCompany does not reconcile forward-looking non-GAAP measures.
Capital returns
- Quarterly dividend of $0.89 declared, payable January 8, 2027 to stockholders of record as of November 20, 2026.
- Share repurchase program temporarily paused in connection with the FloWorks acquisition. The company expects to resume buybacks as leverage trends back toward the lower end of its 1-2x net debt to adjusted EBITDA target range.
- Nine-month purchase of treasury shares was $(438) million versus $(611) million in the prior-year period.
- Nine-month cash dividends paid were $(519) million versus $(493) million.
What drove it
- Company states net sales growth of 9.5% was driven by organic growth of 7.0% and acquisition growth of 2.7%, partially offset by 0.2% from divestments in Canada.
- Company states price inflation was low to mid single digits in the quarter.
- Company states the prior-year gross margin was temporarily elevated by the timing and extent of supplier price increases.
- Company states the reported diluted EPS decline of 4.9% was primarily due to the timing and extent of tax benefits in the comparable period.
- Company states adjusted diluted EPS growth of 7.9% was principally due to higher adjusted operating profit.
- US non-residential sales grew 15% in the quarter, which the company attributes to scale, expertise, multi-customer group approach and value-added solutions. Large capital project activity had growth in open order volumes and strong bidding activity.
- Acquisitions in the quarter included FloWorks (closed August 31, 2026), Brax Company, Inc. and Rogers Supply Company, Inc. Canyon Systems, Inc. was acquired after quarter end. The company reports eleven acquisitions year to date with aggregate annualized sales of approximately $1.5 billion.
Concerns
- Reported diluted EPS was $3.08, down 4.9% from $3.24, and reported net income fell to $598 million from $638 million.
- Gross margin fell 40 bps to 30.9% in the quarter.
- Residential end markets, about half of US sales, remained pressured, per the company.
- Canada net sales fell 4.5% to $405 million, and the company describes Canadian markets as challenging, particularly in residential.
- Net debt to adjusted EBITDA rose to 1.7x from 1.0x, and share repurchases are paused until leverage trends back toward the lower end of the target range.
- Interest expense guidance was raised to about $235 million from about $200 million.
- Nine-month net cash from operating activities was $1,472 million versus $1,884 million in the prior-year period.
What to watch
- Timing of resumption of share repurchases as net debt to adjusted EBITDA trends toward the lower end of the 1-2x range.
- Integration of FloWorks and the other acquisitions, and their contribution to acquisition growth.
- Residential demand trends in the US, given the company's cited weakness in new construction and RMI activity.
- Gross margin trajectory following the prior-year supplier price increase timing the company cites.
- Canada sales trends, including the effect of divestments and foreign exchange.
- Full-year 2026 results, provisionally scheduled for February 16, 2027, with a call from 8:30 a.m. ET.
Balance sheet and cash flow
- Net debt to adjusted EBITDA was 1.7x at September 30, 2026, versus 1.0x at September 30, 2025. Company target range is one to two times.
- Net debt was $5,695 million at September 30, 2026 versus $3,297 million at September 30, 2025.
- Long-term debt was $5,571 million and short-term debt was $599 million at September 30, 2026. Long-term debt was $4,124 million at September 30, 2025 and short-term debt was nil.
- Cash and cash equivalents were $476 million at September 30, 2026 versus $557 million at December 31, 2025.
- Total assets were $21,211 million at September 30, 2026 versus $17,152 million at December 31, 2025. Goodwill rose to $3,375 million from $2,470 million.
- Total stockholders' equity was $6,659 million at September 30, 2026 versus $5,857 million at December 31, 2025.
- During the quarter the company priced public offerings totaling $1.2 billion of senior unsecured notes and entered into an unsecured $900 million term loan maturing in 2029. The company states these proceeds were used to finance the FloWorks acquisition, with the remainder for general corporate purposes.
- Nine-month net cash from operating activities was $1,472 million versus $1,884 million. Nine-month changes in receivables and other assets were $(1,142) million versus $(718) million.
Analysis
Ferguson reported third quarter 2026 net sales of $9,026 million, up 9.5% from $8,245 million, with organic growth of 7.0% and acquisition growth of 2.7%. The US business grew 10.2% to $8,621 million, with residential sales up 6% and non-residential sales up 15%, per the company. Canada net sales declined 4.5% to $405 million. The company describes residential end markets as pressured and Canadian markets as challenging, so growth in the quarter leaned on non-residential activity and acquisitions.
Profitability presents a mixed picture. Reported gross margin was 30.9%, down 40 bps from 31.3%, and reported operating profit rose 4.9% to $885 million with reported operating margin of 9.8%, down 40 bps. On an adjusted basis, operating profit rose 8.9% to $962 million and adjusted operating margin was flat at 10.7%. The company attributes the gross margin decline to a prior-year period temporarily elevated by the timing and extent of supplier price increases. Reported diluted EPS fell 4.9% to $3.08, which the company primarily attributes to the timing and extent of tax benefits in the comparable period. Adjusted diluted EPS rose 7.9% to $3.43. The gap between reported and adjusted figures is largely acquisition-related amortization of $50 million and $25 million of acquisition and integration costs, as printed in the reconciliation.
For the nine months, net sales were $25,249 million, up 6.0%, reported operating profit rose 9.0% to $2,390 million, and adjusted operating profit rose 6.5% to $2,541 million. Nine-month reported diluted EPS was $8.63, up 5.6%, and adjusted diluted EPS was $9.09, up 7.2%.
Capital allocation shifted toward acquisitions and debt. Nine-month purchases of businesses were $(2,257) million versus $(276) million a year earlier, and the company issued $1.2 billion of senior unsecured notes and a $900 million term loan to finance FloWorks, per the filing. Net debt rose to $5,695 million and net debt to adjusted EBITDA moved to 1.7x from 1.0x. Share repurchases are paused and the company expects to resume them as leverage approaches the lower end of its target range. Nine-month operating cash flow of $1,472 million was below the $1,884 million of the prior year period, and changes in receivables and other assets absorbed $(1,142) million.
Full-year 2026 guidance was updated. Net sales growth is now guided to about 7%, up from mid-single digits, and adjusted operating margin to 9.6% to 9.8% from 9.5% to 9.8%. The company also raised interest expense guidance to about $235 million from about $200 million and capital expenditures to about $425 million, the top of the prior range. The guidance update reflects the FloWorks acquisition. Figures for full-year results are not yet reported, so the guidance cannot be compared with actual full-year outcomes.
Management, verbatim
Our expert associates delivered strong third quarter results, with non-residential sales up 15% and residential growth of 6%.
Kevin Murphy, Chief Executive Officer
While our markets remain mixed, our year-to-date performance and the addition of FloWorks enable us to raise our full year guidance.
Kevin Murphy, Chief Executive Officer
Not in the filing
stated, not guessed- Prior-year and prior-quarter figures for the three-month cost of sales, gross profit, SG&A, restructuring, depreciation and amortization, interest, other expense and tax lines are printed, but year-over-year percentage changes for these lines are not printed.
- Year-over-year percentage change for three-month net income and adjusted net income is not printed.
- Three-month operating cash flow and free cash flow are not reported separately. Free cash flow is not reported.
- Sequential (quarter-over-quarter) figures versus Q2 2026 are not printed.
- Acquisition growth contribution and organic growth prior-year figures are not printed, since they are growth rates.
- Revenue for the Industrial, HVAC and Waterworks customer groups is not disclosed.
- Driver breakdown for the nine-month segment changes is not provided.
- Prior-year guidance comparison (vs_prior_guidance) is empty because full-year 2026 actuals are not yet reported; the year-to-date figures cannot be matched to full-year guidance.
- Cash at December 31, 2025 and total debt at December 31, 2025 are balance-sheet comparisons, not prior-year figures, and are not placed in key_metrics.
- Gross margin and operating expense guidance are not provided.
- Share price reaction and analyst consensus are not in the documents.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.