Waterworks, HVAC and industrial supplies distributor Ferguson posted 2026 second-quarter net sales of $8.75 billion, up 4.6% year over year, as growth across its U.S. business offset continued softness in Canada. Meanwhile, the company pursues the closing of its $1.6 billion acquisition of FloWorks announced July 13.

The company’s 2Q organic revenue increased 3.8% YoY, acquisitions added 1.0% and a Canadian divestiture reduced growth by 0.2%. Price inflation was in the low single digits.

For the quarter ended June 30, gross margin was 31.0%, down 20 basis points from a year earlier. Reported operating profit increased 6.1% to $893 million, with operating margin up 10 basis points to 10.2%. Adjusted operating profit increased 2.9% to $932 million, while adjusted operating margin decreased 10 basis points to 10.7%. Adjusted EBITDA increased 3.2% to $994 million. Net income was $666 million, compared with $634 million a year earlier.

ADI’s NYSE Debut, Ferguson’s S&P 500 Entry Give Distribution a Week to Celebrate – Aug. 4

U.S. sales increased 5.0%, including 4.0% organic growth and a 1.0% contribution from acquisitions. Residential revenue — about half of U.S. sales — increased 2%, while nonresidential revenue increased 8%. By customer group, Industrial sales jumped 18%, Commercial/Mechanical increased 15% and HVAC grew 11%. Fire & Fabrication declined 13%, while Ferguson Home decreased 1%.

“We delivered another strong quarter of non-residential growth and we returned to growth in residential despite the challenging market backdrop,” Ferguson CEO Kevin Murphy said.

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The company raised its calendar 2026 guidance, now expecting mid-single-digit sales growth compared with its previous low- to mid-single-digit forecast. Ferguson also narrowed its adjusted operating margin outlook to 9.5%-9.8% from 9.4%-9.8%. The guidance excludes its pending FloWorks acquisition.

M&A Continues

Ferguson completed five acquisitions during 2Q, deploying $573 million. The deals included Carrier Great Lakes, Dealers Supply Company, New England Applied Products and PRD Technologies Group — all previously covered by MDM — along with newly disclosed Hamlett Environmental Technologies Company, which adds water and wastewater process solutions in Michigan.

Through June, Ferguson had completed seven acquisitions for $583 million and announced eight deals year to date, including its pending $1.6 billion acquisition of FloWorks. The flow control distributor has approximately $1 billion in revenue, more than 60 locations and 1,000-plus employees. Ferguson expects the transaction to close during 3Q26.

Separately, Ferguson on Aug. 3 announced its selection for the S&P 500, effective with the opening of trading Aug. 5. The company described the addition as the final step in its transition from a London-listed FTSE 100 company to a solely NYSE-listed, North America-headquartered business.