Ferguson Achieves Strong Growth Amid Market Uncertainty
Ferguson, a leading North American specialty distributor of building materials and services, has reported impressive results for its third quarter of fiscal year 2025. Despite the dynamic and uncertain environment, the company has managed to deliver strong growth across various end markets and customer groups.
According to the Q3 earnings conference call transcript, Ferguson's sales reached $7.6 billion, marking a 4.3% increase over the prior year. This growth was driven by organic expansion of 5%, acquisition growth of 1%, and moderating deflationary pressures. The company's gross margin strengthened sequentially by 130 basis points to 31%, underscoring its ability to capture value while maintaining market share gains.
"We continue to take care of our customers, outperform the market, and drive strong growth in the third quarter," said Kevin Murphy, CEO of Ferguson. "Our associates have been instrumental in delivering this performance, which is a testament to their hard work and dedication."
Ferguson's operating profit increased by 6.1%, with operating margin expanding 20 basis points to 9.4%. Diluted earnings per share rose 7.8% year-over-year to $2.50, demonstrating the company's ability to generate profitable growth.
With a strong balance sheet, Ferguson deployed approximately $690 million during the quarter, including completing three acquisitions and returning $417 million to shareholders through share repurchases and dividends. The company's net debt-to-EBITDA ratio stands at 1.2x, indicating its robust financial position.
Looking ahead, Ferguson remains confident in its markets over the medium term. "We continue to balance investment in key strategic opportunities, leveraging multiyear tailwinds in both residential and nonresidential end markets," said Murphy. This strategic approach is expected to support complex project needs of specialized professional customers and drive future growth.
Within the United States, Ferguson's net sales grew 4.5%, with volume expansion moderated by deflationary pressures. The residential end market, which accounts for approximately half of U.S. revenue, remains subdued. However, the company's HVAC customer group delivered a 10% increase in revenue during the quarter, driven by growth initiatives.
Ferguson's diversified exposure to end markets and its focus on key growth initiatives have positioned it well in both the current environment and into the future. As the company continues to navigate market uncertainty, its strong performance and strategic approach are expected to drive long-term success.
