AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 3/6 · 18/10/2026
Moat44
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 2/4 · The existing footprint and contractual volume rebates support purchasing and fulfillment benefits. Their size relative to competitors is unmeasured, and direct suppliers can often sell more cheaply.
durability · 2/4 · Replicating the established footprint requires investment, and reported share gains support continuing relevance. No exclusive supply rights or quantified long-term cost lead establish stronger durability.
customer dependency · 1/4 · Growth and reported share gains indirectly support customer usefulness, but demonstrate little dependency. The disclosed relationship remains service-sensitive, with no evidenced contractual lock-in.
erosion resilience · 2/4 · Growth and continuing operating profits show resilience despite experienced supplier competition. Lower first-quarter volume and potential rebate loss constrain confidence; potential risks are not treated as realized losses.
Pricing power—
Insufficient evidence for every rubric criterion; no category score is inferred.
realized pricing · 2/4 · First-quarter 2026 sales benefited from price inflation, providing evidence of realized pricing. Lower volume and supplier pricing advantages limit the conclusion; the passages do not isolate discretionary price increases from cost inflation.
retention · 2/4 · Sales growth and reported share gains indirectly indicate sustained customer demand. Lower first-quarter volume tempers that evidence, and aggregate growth cannot establish customer-level retention through price changes.
margin resilience · 2/4 · Year-to-date 2026 gross margin was flat, while second-quarter gross margin declined from 31.2% to 31.0%, attributed to supplier-price timing. This supports mixed resilience rather than unrestricted pass-through or a moat inferred from margins.
contractual freedom · — · The passages do not disclose customer price-setting rights, repricing clauses, fixed-price commitments or other contractual limits. Observed inflation does not establish those rights.
Predictability—
Five consecutive annual periods are required for predictability; the accepted history is incomplete.
Financial strength77
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 77.28
- netDebtEbitGrade
- 73.31
- interestCoverageGrade
- 82.68
- currentRatioGrade
- 74.65
- Debt / FCF (x)
- 2.59
- Net debt / operating income (x)
- 1.33
- Current ratio (x)
- 1.68
- cashInterestPaid
- 189.00
- cashInterestCoverage
- 10.10
Capital allocation—
Missing annual observations required by this category.
Management69
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · First-half 2026 operating cash flow of $716 million declined from $1,123 million while acquisition spending, capital expenditure, dividends and repurchases continued alongside $775 million of net borrowing. The approximately $1.6 billion acquisition commitment adds deployment risk. Cash generation remains positive, but acquisition returns and repurchase value creation are unproven.
incentive alignment · 3/4 · Actual management performance awards use three-year cycles and EPS growth, ROCE and relative shareholder-return conditions; disclosed activity includes vesting and performance adjustments. Clawback and anti-hedging safeguards reinforce alignment. A reduced transition bonus threshold, profit-only transition metric and conditional change-in-control acceleration limit the assessment; individual ownership is unavailable.
execution · 3/4 · Transition-period sales and operating profit increased, followed by higher first-half 2026 sales and segment adjusted operating profit. These are demonstrated operating achievements, with share gains remaining issuer-reported. Fiscal 2025 operating profit declined, recent acquisitions incurred early losses including integration costs, and cash conversion weakened; sustained exceptional execution is not established.
governance · 3/4 · Current disclosures establish an independent chair, independent committees, annual director elections, majority voting in uncontested elections, a single voting class and a 10% special-meeting right. These support strong governance structures, while their effectiveness over a long adverse period is unproven.
Evidence
Overview $31.3B Revenue (CY 2025) ~1m Customers 1,700+ Locations ~35,000 Associates ~37,000 Suppliers $1.6B Returned to shareholders over the past calendar year Balanced Market Exposure* Our balanced approach to end markets allows us to leverage scale in attractive markets with a resilient business model.
Proxy Statement Summary / operating footprint and scale · Filed 16/03/2026
Assets are depreciated to their estimated residual value using the straight-line method over their estimated useful lives as follows: Owned buildings 20 - 50 years Leasehold improvements Up to period of lease Plant and machinery 10 years Computer hardware 3 - 5 years Furniture, fixtures, equipment 5 - 7 years Vehicles 4 years Rebates The Company has agreements with a number of its suppliers whereby volume-based rebates and other discounts are received in connection with the purchase of goods for resale from those suppliers (“supplier rebates”).
Accounting policies / supplier rebate agreements · Filed 26/09/2025
Net sales of $12.8 billion were 4.5% higher than the same five-month period in 2024 with above market share gains.
Transition-period performance / sales growth and issuer-reported share gains · Filed 16/03/2026
Segment results were as follows: Three months ended Six months ended June 30, June 30, (In millions) 2026 2025 2026 2025 Net sales: United States $8,343 $7,947 $15,489 $14,851 Canada 408 416 734 725 Total net sales 8,751 8,363 16,223 15,576 Cost of sales: United States (5,736) (5,448) (10,651) (10,220) Canada (303) (302) (542) (527) Operating costs: United States (1,682) (1,600) (3,257) (3,121) Canada (83) (91) (165) (169) Adjusted operating profit: United States 925 899 $1,581 $1,510 Canada 22 23 27 29 Total segment adjusted operating profit 947 922 1,608 1,539 Central and other costs(1) (15) (16) (29) (36) Restructuring activities(2) (2) (25) (4) (76) Amortization of acquired intangible assets (37) (39) (70) (78) Interest expense, net (52) (49) (97) (95) Other income (expense) 5 (3) (2) 5 Income before income taxes $846 $790 $1,406 $1,259 (1)Primarily includes SG&A that is not related to a segment.
Note 2 / segment sales and operating results · Filed 10/08/2026
Core Strengths World-class supply chain Value-added solutions Digital tools Expert associates Through scale deployed locally utilizing our world-class supply chain, value-added solutions and digital tools, along with our expert associates, we help meet our customers’ unique needs.
Proxy Statement Summary / management description of locally deployed capabilities · Filed 16/03/2026
Additionally, we have experienced and may continue to experience competitive pressure from certain of our suppliers vertically integrating and selling their products directly to customers.
Risk factors / experienced supplier direct-selling competition · Filed 26/09/2025
Our suppliers can often sell their products at lower prices and maintain higher gross margins on their product sales than we can.
Risk factors / suppliers' pricing advantage · Filed 26/09/2025
Furthermore, this competitor consolidation could cause the industries in which we operate to become more competitive as greater economies of scale are achieved.
Risk factors / potential competitor consolidation and economies of scale · Filed 25/09/2024
•fluctuations in product prices/costs (e.g., including as a result of the use of commodity-priced materials, inflation/deflation, trade restrictions and/or failure to qualify for or maintain supplier rebates) and foreign currency;
Risk summary / potential loss of supplier rebates · Filed 05/05/2026
If service levels were to significantly decrease, customers might purchase from our competitors instead, resulting in reduced net sales, lower operating margins, reduced profitability, loss of market share and/or diminished brand recognition.
Risk factors / customer substitution if service deteriorates · Filed 26/09/2025
For the first quarter of 2026, net sales increased by 3.6% compared with the first quarter of 2025, primarily due to price inflation and incremental sales from acquisitions, partially offset by lower volume.
MD&A / first-quarter 2026 price inflation, acquisitions and lower volume · Filed 05/05/2026
Gross profit as a percentage of sales was 31.0% in the second quarter of 2026.
MD&A / second-quarter 2026 gross margin · Filed 10/08/2026
Gross profit as a percent of sales was 31.2% in the second quarter of 2025.
MD&A / comparative second-quarter 2025 gross margin · Filed 10/08/2026
The decrease of 0.2% primarily reflects the timing and extent of supplier price increases in the prior year.
MD&A / supplier price timing explanation · Filed 10/08/2026
Gross profit as a percentage of sales was flat in the year-over-year comparison.
MD&A / year-to-date gross margin comparison · Filed 10/08/2026
6 Ferguson Enterprises Inc. Condensed Consolidated Statements of Cash Flows (unaudited) (In millions) Six months ended June 30, 2026 2025 Cash flows from operating activities: Net income $1,080 $979 Depreciation and amortization 196 189 Share-based compensation 35 15 Changes in deferred income taxes 43 (10) Changes in inventories (468) (169) Changes in receivables and other assets (1,070) (844) Changes in accounts payable and other liabilities 1,045 906 Changes in income taxes payable (137) 50 Other operating activities (8) 7 Net cash provided by operating activities 716 1,123 Cash flows from investing activities: Purchase of businesses acquired, net of cash acquired (583) (226) Capital expenditures (234) (141) Other investing activities 17 15 Net cash used in investing activities (800) (352) Cash flows from financing activities: Purchase of treasury shares (438) (428) Repayments of debt (700) (2,225) Proceeds from debt 1,475 2,000 Change in bank overdrafts — (115) Cash dividends (347) (330) Other financing activities (7) (27) Net cash used in financing activities (17) (1,125) Change in cash, cash equivalents and restricted cash (101) (354) Effects of exchange rate changes (5) 25 Cash, cash equivalents and restricted cash, beginning of period 581 773 Cash, cash equivalents and restricted cash, end of period $475 $444 Supplemental Disclosures: Cash paid for income taxes, net $421 $240 Cash paid for interest 94 95 Accrued capital expenditures 19 12 Accrued dividends 172 164 Lease assets obtained in exchange for new operating lease liabilities (non-cash) 316 349 See accompanying Notes to the Condensed Consolidated Financial Statements.
Condensed consolidated cash flows / operating cash, investment, financing and shareholder distributions · Filed 10/08/2026
The businesses acquired during the year-to-date period of 2026 contributed $58 million to net sales and $15 million in losses to the Company’s income before income tax, including transaction and integration costs of $19 million, as well as related acquired intangible asset amortization for the period between the applicable date of acquisition and June 30, 2026.
Note 12 / realized acquisition contributions and integration costs · Filed 10/08/2026
On July 13, 2026, the Company announced that it has entered into a definitive agreement to acquire FWI Holdings, Inc.
Liquidity and Capital Resources / announced acquisition agreement · Filed 10/08/2026
for approximately $1.6 billion. The Company has committed financing for the acquisition and expects to fund the acquisition through a combination of available cash and borrowings under such financing arrangements.
Liquidity and Capital Resources / acquisition consideration and committed financing · Filed 10/08/2026
•Multiple metric performance stock units granted to certain members of management (“PSU-EX”) typically vest following three-year performance cycles.
Share-based compensation / management performance awards and vesting cycle · Filed 05/05/2026
The number of shares issued will vary based upon the Company’s performance against pre-determined goals for adjusted EPS growth (diluted), return on capital employed (“ROCE”) and relative total shareholder return (“rTSR”).
Share-based compensation / EPS, ROCE and relative shareholder-return conditions · Filed 05/05/2026
The following table summarizes the share-based incentive awards activity for fiscal 2025: Number of shares Weighted average grant date fair value Outstanding as of July 31, 2024 963,130 $135.82 RSU awards granted 124,240 190.39 PSU awards granted 164,349 188.69 PSU-EX awards granted 51,366 167.95 Share adjustments based on performance (166,201) 138.96 Vested (417,442) 134.47 Forfeited (83,203) 160.46 Outstanding as of July 31, 2025 636,239 $159.58 77 The following table relates to RSU, PSU and PSU-EX awards activity: For the years ended July 31, (In millions, except per share amounts) 2025 2024 2023 Fair value of awards vested $84 $79 $67 Weighted average grant date fair value per share granted $186.18 $158.32 $99.95 The following table relates to all share-based compensation awards: For the years ended July 31, (In millions) 2025 2024 2023 Share-based compensation expense (within SG&A) $28 $49 $51 Income tax benefit 12 14 11 Total unrecognized share-based payment expense for all share-based payment plans was $67 million at July 31, 2025, which is expected to be recognized over a weighted average period of 1.9 years.
Share-based compensation / actual grants, performance adjustments and vesting · Filed 26/09/2025
2 2026 PROXY STATEMENT 2026 Proxy Statement Summary Governance and Compensation Highlights Sound and Effective Board Practices •Active Board oversight of the Company’s strategy, enterprise risk management and sustainability framework and related public disclosures •Annual Board and Committee performance evaluations •Annual review of Board leadership structure •Formal policy limiting service on other public company boards of directors •Active board engagement in succession planning for CEO, CFO and other Executive Officers Commitment to Refreshment and Independence •Proactive Board and Committee refreshment with focus on optimal mix of backgrounds, skills, knowledge and experience •Four new independent Directors within the past five years •All Committees are composed solely of independent Directors •Independent Board Chair appointed by independent Directors Commitment to Shareholder Rights •Directors elected annually to serve one-year terms •Majority voting for Directors with Director resignation policy in an uncontested election and plurality voting for Directors in a contested election •Single class of outstanding voting stock •No supermajority voting provisions •Shareholders that own at least 10% of the total voting power of the outstanding shares of common stock of the Company have the right to request a special meeting Strong Compensation Practices •Robust annual risk assessment of executive compensation programs, policies and practices •Recommended annual say-on-pay vote •Comprehensive clawback policy that ensures incentive-based compensation is subject to clawback if there is a financial restatement or certain misconduct •Stock ownership guidelines for Non-Employee Directors and Executive Officers •Prohibition on hedging and pledging of Company shares For more information about our compensation governance practices, see the section below titled “Compensation Discussion and Analysis—Executive Summary—Pay Decisions and Compensation Governance Policies and Practices” on page 38.
Governance and Compensation Highlights / independence, shareholder rights and compensation safeguards · Filed 16/03/2026
Transition Period Bonus Program Performance Metrics and Weightings In recognition of a shorter performance period for the transition period, the Compensation Committee approved adjusted operating profit as the sole performance metric for the transition period Bonus Program and the range of achievement levels of threshold at 85%, target at 100% and maximum at 110%, reflecting a decrease for threshold from 90% to 85% from the fiscal 2025 Bonus Program achievement levels for all Executive Officers.
Executive Compensation / transition bonus metric and reduced threshold · Filed 16/03/2026
(6)Pursuant to the Company’s Change in Control Policy, in the event of a change in control, if the acquiring entity does not assume (or fully replace with an equivalent or better LTI award) a NEO’s outstanding equity awards following the change in control, then the remaining unvested portion of any stock options, stock awards, restricted shares or performance shares held by each of the NEOs will accelerate and vest (without any proration for time) immediately prior to the effective date of the change in control.
Executive Compensation / acceleration when change-in-control awards are not assumed · Filed 16/03/2026
Operating profit of $1,099 million was $183 million higher than the comparative period in 2024 with diluted earnings per share of $4.01, an increase of 26.5%.
Transition-period performance / operating profit growth · Filed 16/03/2026
44 Ferguson Enterprises Inc. Consolidated Statements of Earnings For the years ended July 31, (In millions, except per share amounts) 2025 2024 2023 Net sales $30,762 $29,635 $29,734 Cost of sales (21,327) (20,582) (20,709) Gross profit 9,435 9,053 9,025 Selling, general and administrative expenses (6,376) (6,038) (5,920) Restructuring and impairment expenses (80) (28) (125) Depreciation and amortization (373) (335) (321) Operating profit 2,606 2,652 2,659 Interest expense, net (190) (179) (184) Other income (expense), net 7 (9) (11) Income before income taxes 2,423 2,464 2,464 Provision for income taxes (567) (729) (575) Net income $1,856 $1,735 $1,889 Earnings per share - Basic $9.33 $8.55 $9.15 Earnings per share - Diluted $9.32 $8.53 $9.12 Weighted average number of shares outstanding: Basic 198.9 202.9 206.4 Diluted 199.2 203.5 207.2 See accompanying Notes to the Consolidated Financial Statements.
Consolidated statements of earnings / fiscal 2023–2025 operating results · Filed 26/09/2025
The Board is led by Geoff Drabble, our independent Non-Employee Board Chair.
Corporate Governance / current independent Board Chair · Filed 16/03/2026
