FERG Q1 2026 Earnings Call Summary | Stock Taper
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FERG

FERG — Ferguson plc

NYSE

Q1 2026 Earnings Call Summary

December 9, 2025

Ferguson Earnings Call Summary (Q1 2026)

1. Key Financial Results and Metrics

  • Sales: $8.2 billion, up 5% year-over-year (4% organic growth, 1% from acquisitions).
  • Gross Margin: 30.7%, an increase of 60 basis points from the prior year.
  • Operating Profit: $808 million, a 14% increase year-over-year, with an operating margin of 9.9%.
  • Diluted Earnings Per Share (EPS): $2.84, up nearly 16% from the previous year.
  • Capital Expenditures: $511 million deployed, with a focus on organic growth and acquisitions.
  • Dividends: Quarterly dividend increased by 7% to $0.89 per share.
  • Shareholder Returns: $372 million returned through share repurchases and dividends.

2. Strategic Updates and Business Highlights

  • Acquisition: Completed the acquisition of Moore Supply Company, enhancing HVAC capabilities in the Chicago area.
  • Market Performance:
    • U.S. net sales grew by 5.3%, with nonresidential revenue up 12% and waterworks revenue up 14%.
    • Residential markets remain challenging, with a 1% decline in residential revenue.
  • Investment in Talent: Continued investment in trainee programs, adding approximately 250-300 trainees.
  • Operational Focus: Emphasis on multi-customer group approach and value-added services to drive growth.

3. Forward Guidance and Outlook

  • Revenue Growth: Expecting approximately 5% revenue growth for calendar year 2025.
  • Operating Margin Guidance: Revised to a range of 9.4% to 9.6%, up from previous expectations.
  • Interest Expense: Anticipated at approximately $190 million for the year.
  • CapEx: Estimated at around $350 million, at the upper end of previous guidance.
  • Market Confidence: Management remains optimistic about medium-term market conditions despite near-term uncertainties.

4. Challenges and Points of Concern

  • Residential Market Weakness: Continued pressure from declining new residential housing starts and soft repair, maintenance, and improvement (RMI) work.
  • HVAC Sector Challenges: Decline of 6% in HVAC revenue due to market pressures and consumer behavior shifting towards repairs rather than replacements.
  • Potential Lumpiness in Large Projects: While large capital projects are growing, the gestation period is longer, which may lead to revenue variability.
  • Foreign Exchange and Divestment Impact: Adverse effects from foreign exchange rates and a divestment in Canada affecting overall performance.

5. Notable Q&A Insights

  • Large Capital Projects: Represent mid to high single digits of total revenue, with data centers making up over half of that segment. The pipeline for these projects continues to grow.
  • Q4 Performance: Growth rate expected to be around 3% for the calendar Q4, attributed to ongoing pressures in new residential and HVAC markets.
  • Pricing Trends: Inflation for the quarter was about 3%, with expectations for modest price increases entering 2026.
  • Inventory Management: Current inventory levels are deemed appropriate, with no significant changes anticipated as they enter the new year.

Overall, Ferguson reported solid financial results and strategic initiatives despite facing challenges in the residential and HVAC markets. The company remains focused on growth opportunities and maintaining a strong balance sheet while navigating a complex market environment.