Ferguson’s commercial sales rise 15% as acquisitions accelerate

By Olivia Hart

Ferguson reported $9.03 billion in third-quarter sales, up 9.5% from $8.25 billion, as nonresidential sales rose 15% and 11 acquisitions added businesses with about $1.5 billion in combined annual sales.

The Newport News, Virginia-based distributor raised its full-year sales forecast to about 7% from mid-single-digit guidance. The top line outpaced profit: net income fell 6.3% to $598 million from $638 million, while the share of sales remaining after product costs dropped to 30.9% from 31.3%.

Where did the growth come from?

Existing operations produced 7% sales growth during the quarter; acquisitions added 2.7 percentage points, while Canadian business divestitures shaved 0.2 points. Those components reconcile to the reported 9.5% increase.

The U.S. business supplied $8.62 billion, up 10.2% from $7.82 billion. Existing U.S. operations grew 7.4%, and acquisitions contributed 2.8 percentage points, extending Ferguson’s industrial and infrastructure reach.

Orders awaiting fulfillment increased, and bidding activity stayed strong for large projects, although conditions varied across construction markets. Ferguson did not quantify the increase in unfulfilled orders.

CEO Kevin Murphy said: “Our expert associates delivered strong third quarter results, with non-residential sales up 15% and residential growth of 6%. We continue to invest organically and through acquisitions to expand our value-added solutions and geographic footprint.”

Residential demand supplied 6% growth but represented half of Ferguson’s U.S. sales. Weak new-home construction and soft repair, maintenance and improvement spending kept that business below the nonresidential pace.

Canadian sales fell 4.5% to $405 million. Ferguson attributed the decline to divestitures, currency changes and continued residential weakness, showing how geographic mix can dilute gains elsewhere.

In its earnings announcement, Ferguson said: “We grew non-residential sales by 15% this quarter as our scale, expertise, multi-customer group approach and value-added solutions drove strong share gains in a mixed market.”

That statement attributes share gains to scale and service, but the disclosed data provide growth rates rather than absolute market share. In short, Ferguson’s measured growth is faster where commercial and industrial work outweigh housing.

How are acquisitions changing Ferguson’s reach?

Ferguson completed three acquisitions during the third quarter and a fourth after Sept. 30, bringing its 2026 total to 11. Together, those businesses represent approximately $1.5 billion of annual sales.

That $1.5 billion measures acquired revenue, not purchase consideration. Ferguson separately spent approximately $1.7 billion on acquisitions during the quarter, including FloWorks.

FloWorks, acquired Aug. 31, specializes in valves, flow-control equipment and related services. The industrial distributor operates more than 60 locations and 25 service centers across the United States and Canada.

The other additions broaden Ferguson’s technical and geographic scope:

• Brax Co. operates three locations in Southern California and specializes in pumps and pump repair.
• Rogers Supply Co. adds 12 HVAC (heating, ventilation and air conditioning) locations across Illinois and Indiana and lets Ferguson serve contractors buying plumbing and HVAC products.
• Canyon Systems Inc., acquired after the quarter, establishes a water and wastewater treatment business serving six Western states.

These deals move Ferguson beyond new construction into replacement, maintenance and repair work. Such activity can continue when new projects slow, although customers still control spending decisions. Technical help with equipment selection, installation and maintenance gives distributors more to sell than product availability alone.

In short, the acquisitions buy technical reach and service depth, not just another revenue stream.

Did sales growth translate into stronger economics?

Operating profit rose 4.9% to $885 million from $844 million, even as quarterly net income fell, partly because tax benefits differed between periods. For the first nine months of 2026, sales rose 6% to $25.25 billion from $23.82 billion, while net income increased 3.8% to $1.68 billion from $1.62 billion.

Ferguson attributed its higher sales forecast to stronger year-to-date results and the Aug. 31 FloWorks closing. The product-cost margin—a gross-margin measure—fell to 30.9% from 31.3%. The results therefore show pressure from supplier pricing, operating expenses and acquisition-related costs even as sales expand, without quantifying each factor’s contribution.

The company now expects operating profit, excluding certain expenses, to equal 9.6% to 9.8% of sales, versus 9.5% to 9.8% previously. It plans about $425 million of 2026 spending on buildings, equipment and technology, up from a $375 million-to-$425 million range, and spent $108 million on those investments during the quarter.

The reported figures provide no inventory-turn measure—how quickly distributors sell and replace stock—so they cannot establish whether acquired networks improved inventory productivity. Orders awaiting fulfillment increased, but that measure shows demand for execution, not stock efficiency.

In short, higher sales did not automatically produce stronger quarterly margin or proven inventory efficiency.

What does this mean for competing distributors?

Regional and independent distributors in flow control, pumps, HVAC and water treatment now face a national rival with more locations, a wider assortment and acquired technical capabilities. Ferguson can serve contractors and industrial facilities through one broader network, giving it more channel reach than a single-market competitor.

The scale can shift channel power, meaning a distributor’s bargaining leverage. A supplier may face one larger buyer across multiple sites, while Ferguson can bundle products, technical assistance and coordinated deliveries. For contractors and facility operators, specialized inventory, equipment selection help, installation support, maintenance and repair can carry more economic value than unit price alone.

The model’s limits are equally concrete. Canada posted a 4.5% sales decline, residential remains half of U.S. sales, and the product-cost margin contracted. Murphy identified water infrastructure, large construction projects, heating and cooling needs, and aging housing as long-term demand sources.

Going forward, if those markets sustain demand, Ferguson’s expanded network could gain share; its test is whether service depth can improve the 30.9% product-cost margin and inventory turns that the company has not yet disclosed.