The quarter was a modest EPS beat, not a broad operating beat. Adjusted diluted EPS of $3.39 exceeded the published consensus of roughly $3.29-$3.35, while $8.75 billion of revenue fell slightly short of the roughly $8.84 billion expectation. Revenue still grew 4.6% year over year, led by 8% non-residential growth, but residential remained soft. (Financial Highlights; End-market commentary)
| Metric | Q2 2026 | Q2 2025 | Change / expectation |
|---|---|---|---|
| Net sales | $8.751B | $8.363B | +4.6%; slightly below published consensus of ~$8.84B |
| Adjusted diluted EPS | $3.39 | $3.22 | +5.3%; above published consensus of ~$3.29-$3.35 |
| Adjusted operating profit | $932M | $906M | +2.9% |
| Adjusted operating margin | 10.7% | 10.8% | Down 10 bps |
| Gross margin | 31.0% | 31.2% | Down 20 bps |
| Operating cash flow, six months | $716M | $1.123B | Down $407M |
| Net debt / adjusted EBITDA | 1.3x | 1.2x | Higher leverage |
The meaningful upside is the raised full-year outlook. Ferguson upgraded 2026 net-sales growth from low-to-mid-single digit to mid-single digit and lifted the low end of adjusted operating-margin guidance from 9.4% to 9.5%; it also raised planned capital expenditures by $25 million at both ends of the range. (Updated 2026 Guidance)
Underlying margins were less impressive than the headline EPS growth. Adjusted operating profit rose only 2.9%, below the 4.6% revenue increase, as gross margin fell 20 basis points and adjusted operating margin slipped to 10.7% from 10.8%. Share repurchases helped adjusted EPS, with diluted shares down to 194.0 million from 197.5 million. (Financial Highlights; Adjusted net income reconciliation)
Growth is increasingly acquisition-supported and more debt-funded. Ferguson completed five acquisitions, agreed to acquire FloWorks, and said announced year-to-date acquisitions represent approximately $1.4 billion of annualized revenue. Six-month acquisition spending reached $583 million versus $226 million a year earlier, while net debt increased to $4.468 billion from $3.582 billion at the prior year-end and leverage rose to 1.3x from 1.2x. (Acquisition commentary; Cash Flow statement; Net debt reconciliation)
Net read: narrowly better than expected because the guidance raise outweighs the small revenue and margin shortfalls. The filing confirms strong non-residential share gains and improved full-year confidence, but it does not show broad-based demand strength: residential remains subdued, margins are slightly weaker, cash conversion has deteriorated, and acquisitions are adding leverage. (End-market commentary; Cash Flow statement; Net debt reconciliation)
Read the original 8-K on SEC EDGAR ↗