Ferguson Enterprises Inc. 10-K Summary: Fiscal Year Ended July 31, 2025
Business Context and Reporting Period
This filing covers the fiscal year ended July 31, 2025. Ferguson Enterprises Inc. is the largest value-added distributor serving the water and air specialized professional in the North American residential and non-residential construction market. The company operates two reportable segments: United States (95% of net sales) and Canada (5% of net sales). In August 2024, the company completed a corporate restructuring to domicile its ultimate parent company in the United States, transitioning from Ferguson plc. The company is changing its fiscal year-end from July 31 to December 31, commencing January 1, 2026.
Key Financial Metrics
| Metric (in millions, except per share) | Fiscal 2025 | Fiscal 2024 |
|---|---|---|
| Net Sales | $30,762 | $29,635 |
| Gross Profit | $9,435 | $9,053 |
| Gross Margin | 30.7% | 30.5% |
| Operating Profit | $2,606 | $2,652 |
| Adjusted Operating Profit | $2,842 | $2,824 |
| Net Income | $1,856 | $1,735 |
| Diluted EPS | $9.32 | $8.53 |
| Adjusted Diluted EPS | $9.94 | $9.69 |
| Operating Cash Flow | $1,908 | $1,873 |
| Total Debt | $4,152 | $3,924 |
| Cash and Cash Equivalents | $674 | $571 |
| Available Liquidity (Undrawn Facilities) | $2,000 | N/A |
Material Changes vs. Prior Period
- Revenue Growth: Net sales increased 3.8% to $30.8 billion, driven by higher sales volume and acquisitions (1.0% contribution), partially offset by one fewer sales day and slight price deflation in commodity categories.
- Profitability: GAAP operating profit decreased 1.7% due to $80 million in non-recurring restructuring expenses ($73 million business restructuring, $7 million corporate restructuring) and the impact of one fewer sales day. However, Adjusted Operating Profit increased 0.6% due to higher gross profit.
- Earnings Per Share: Diluted EPS increased 9.3% to $9.32, primarily driven by higher net income and the impact of share repurchases. The prior year included a $137 million non-recurring, non-cash deferred tax charge related to the corporate restructuring.
- Segment Performance:
- United States: Net sales up 3.8%; Adjusted operating profit up 0.7%. Non-residential markets grew 6.8%, while residential markets grew 0.9%.
- Canada: Net sales up 3.7%; Adjusted operating profit increased due to higher sales and gross profit, offset by foreign currency impacts (-2.3%) and higher operating costs.
- Capital Allocation: The company invested $301 million in acquisitions and $305 million in capital expenditures. Share repurchases totaled $948 million, with approximately $1 billion remaining under the $5.0 billion authorized program.
Guidance, Outlook, and Risks
Outlook and Strategy: Management anticipates sufficient liquidity to meet operating requirements and fund strategic initiatives for the next 12 months. The company continues to focus on acquisitions that bolt-on to its existing network and investments in technology to enhance omni-channel capabilities. The company is transitioning to a December 31 fiscal year-end, creating a five-month transition period from August 1, 2025, to December 31, 2025.
Key Risks and Contingencies:
- Economic Conditions: Exposure to macroeconomic factors including inflation, interest rates, and potential recession impacting residential and non-residential construction markets.
- Supply Chain and Commodities: Fluctuations in commodity prices (plastic, copper, steel) and potential supply chain disruptions could impact margins and inventory costs.
- Corporate Restructuring: Ongoing transition costs and tax implications related to the domicile change to the U.S. (completed August 2024).
- Debt and Interest Rates: Total debt of $4.2 billion exposes the company to interest rate risk, though a portion is hedged. The company maintains a $1.5 billion revolving credit facility and a $915 million receivables facility.
- Cybersecurity: Ongoing risks related to data protection and IT system failures, though no material incidents were reported in fiscal 2025.
Investor Verification Checklist
- Restructuring Costs: Verify the run-rate impact of the $80 million in restructuring expenses and the timeline for realizing efficiency gains.
- Commodity Pricing: Monitor the ability to pass on commodity price increases to customers, given the deflationary pressure noted in the first half of fiscal 2025.
- Share Repurchase Program: Confirm the remaining $1 billion authorization and the company's commitment to capital returns amidst debt obligations.
- Fiscal Year Transition: Review the impact of the fiscal year-end change (July 31 to December 31) on future reporting periods and comparability.
- Inventory Levels: Assess inventory reserves and turnover given the $4.5 billion inventory balance and risks associated with slow-moving goods.