Ferguson plc (FERG) Business Profile

What it does

Ferguson is a North American distributor of products used to build, maintain and repair homes, commercial buildings and infrastructure. Its customers include specialized professionals who need materials and help with projects involving water, air and related systems. The company is headquartered in Newport News, Virginia, and Kevin Murphy is its president and chief executive officer.

Its range includes plumbing, heating, ventilation and air conditioning (HVAC) products, appliances and lighting. It also sells pipes, valves and fittings, as well as water and wastewater products. In Canada, its range includes refrigeration products. Ferguson sources products from suppliers and distributes them to customers; its range includes both supplier brands and products sold exclusively under its own brands.

Customers can buy through branches, counters, sales associates, showrooms and online channels. Ferguson offers delivery, pickup and direct shipment options. It also provides services such as virtual design, fabrication, pre-assembly and project management, alongside after-sales support including warranty, returns and project-based billing.

The business operates through United States and Canada segments. It primarily uses the Ferguson brand in the United States and the Wolseley brand in Canada. As of December 31, 2025, its network included 1,729 branches and approximately 6,200 fleet vehicles.

How it makes money

Ferguson earns revenue primarily by sourcing and selling products that customers use in construction, infrastructure and ongoing maintenance. Its United States segment sells plumbing, HVAC, appliances, lighting, pipes, valves and fittings, and water and wastewater products. Its Canada segment supplies plumbing, HVAC and refrigeration products, specialized water and wastewater treatment products, and industrial pipe, valve and fitting solutions.

The company sells through a shared network of distribution centers, branches, counters, sales teams, showrooms and e-commerce channels. Services such as fabrication, valve actuation, kitting and project management are part of its offering. Customers can also receive credit, project-based billing, returns and maintenance, repair and operations support.

Sales come from both new construction and work on existing properties. Ferguson estimates that repair, maintenance and improvement accounts for approximately two-thirds of net sales, while new construction accounts for approximately one-third. Residential and non-residential markets each account for approximately half of net sales. The company does not describe those maintenance sales as contracted or guaranteed recurring revenue.

In FY2025, United States segment revenue was $29.3 billion and Canada segment revenue was $1.5 billion; for the five months ended December 31, 2025, consolidated net sales were $12.8 billion.

Pricing affects profitability as well as revenue. Some products contain commodity-priced materials, and Ferguson may not be able to pass all cost increases to customers. For the five-month transition period, gross profit as a percent of sales was 30.6%, compared with 29.8% in the same period a year earlier.

Customers and how it sells

Ferguson serves professionals working in residential, commercial, infrastructure and industrial markets. Its Canada business supplies contractors as well as industrial customers, while its United States business serves customers across all 50 states. No single customer accounted for more than 1% of net sales during the transition period or fiscal 2025.

The company’s FY2025 customer-group breakdown includes Waterworks at 23.0% of revenue, Ferguson Home at 21.0%, Residential Trade Plumbing at 15.0% and Commercial/Mechanical at 14.0%. HVAC accounted for 12.0%. These groups buy products for different kinds of projects, from water infrastructure to work on homes and commercial buildings.

The United States segment accounted for 95.1% of FY2025 revenue, and Canada accounted for 4.85%. As of December 31, 2025, the United States business operated 1,517 branches, while the Canada business operated 212 branches. Ferguson’s United States network offers same-day and next-day product availability.

Customers can use sales teams, branches, counters, showrooms and digital commerce. Fulfillment choices include delivery, pickup from branches, counters and lockers, and direct shipments. Ferguson also provides system-to-system capabilities and support after a sale, including warranty and returns.

Suppliers and costs

Ferguson sources products from domestic and international suppliers rather than describing manufacturing as its principal activity. As of December 31, 2025, it had approximately 37,000 suppliers, and no supplier accounted for more than 5% of total inventory purchases. Its supplier and own-brand products are generally available from several sources and are not typically subject to supply constraints in normal market conditions.

Approximately 95% of products sold in the United States are sourced from U.S.-based suppliers, and approximately 90% of products sold in Canada are sourced from Canada-based suppliers. Supplier agreements are generally terminable by either party on limited notice. Losing key arrangements or failing to find alternatives could affect product availability and margins.

Products containing commodity-priced materials, predominantly plastic, copper and steel, can represent up to approximately 15% of annual net sales. Fuel prices can also affect transportation costs. Ferguson’s costs include running its branches, distribution centers and fleet, as well as paying associates and investing in technology. As of December 31, 2025, it employed approximately 35,000 associates worldwide. If product or transportation costs rise and Ferguson cannot pass them on, operating profit can be affected.

Competitive position

Ferguson operates in fragmented markets alongside small local distributors and mid-size regional distributors. It also faces wholesale distributors, supply houses, retailers, online businesses and manufacturers that sell directly to customers. Ferguson does not name individual competitors. Some suppliers can sell directly to customers at lower prices while maintaining higher gross margins on their product sales.

Ferguson considers itself one of the top distributors in most of the residential, commercial, civil and infrastructure, and industrial end markets it serves. It says its United States network provides same-day and next-day availability. Its network also combines branches and distribution centers with sales expertise, digital channels and services that support projects from design through delivery.

Our reading: The branch and distribution network is a meaningful competitive advantage because it puts products close to customers who need timely availability, although local distributors also compete in these markets. Our reading: Ferguson’s range of suppliers and project services adds another layer of differentiation, but that advantage is not exclusive when manufacturers, online businesses and other distributors can compete for the same customers. Our reading: Customer relationships may benefit from Ferguson’s expertise and support, but the evidence does not establish that customers face substantial costs to switch suppliers.

Growth opportunities

Ferguson sizes its residential and non-residential construction markets at $340 billion. It seeks to expand through growth in its existing business and acquisitions. The company expects to focus on acquisitions that add to its branch network as well as those that provide further capabilities for serving customers. It also sees an opportunity for continued consolidation in its fragmented markets.

The company continues to invest in e-commerce, other technology, its supply chain and branch network. Its market distribution centers bring products closer to customers and use automated picking and replenishment systems for most items. Ferguson also offers services such as virtual design, fabrication and project management as part of its customer offering.

For the five months ended December 31, 2025, net sales increased 4.5% from the same period a year earlier, primarily due to price inflation and incremental sales from acquisitions. Growth in United States non-residential markets contributed to the increase. United States non-residential sales increased approximately 11%, driven by waterworks and commercial/mechanical activity, including large capital projects. United States residential sales decreased approximately 1%, reflecting weak housing starts and permit activity and soft repair, maintenance and improvement work.

Capital expenditure was $185 million during the five-month transition period, primarily for projects including market distribution centers, the branch network and technology. Ferguson invested $21 million in new acquisitions during that period.

Structural risks

• Construction demand: Residential and non-residential activity depends partly on economic and industry conditions. Higher interest or mortgage rates, weak housing activity, or delays and cancellations of large capital projects can reduce demand for Ferguson’s products.
• Competition: Distributors, retailers, online businesses and manufacturers compete across Ferguson’s markets. Suppliers that sell directly to customers can put pressure on the company’s sales and margins, while new technology or lower-cost business models could shift demand away from it.
• Product costs and trade: Plastic, copper, steel, fuel and shipping costs can fluctuate. Tariffs and other trade restrictions can raise product costs; Ferguson may not be able to pass those increases on to customers or fully offset the effect of falling product prices.
• Supply and fulfillment: Supplier disruptions, shipping constraints or problems in Ferguson’s distribution network can delay products or increase costs. Key supplier agreements can generally be terminated on limited notice, and alternative sources may not always be available.
• Inventory and execution: Excess inventory can lead to write-downs or discounted sales, while shortages can delay shipments. Technology investments and acquisitions may cost more, take longer or fail to deliver their anticipated benefits.
• Debt: Ferguson had total debt of $4.1 billion as of December 31, 2025. Debt payments can reduce funds available for reinvestment, and a portion of borrowings carries variable interest rates.

Bottom line

Our reading

Ferguson is a distribution business built around product availability, professional relationships and a network that connects many suppliers with many customers. Its maintenance and repair work provides exposure beyond new construction, but demand still depends on property and infrastructure activity. The network and service offering help differentiate it, while commodity costs, direct supplier competition and execution of acquisitions remain important pressures on profitability.