Good morning. The largest plumbing, HVAC, and waterworks distributor in the country just opened its books — and unlike the last big supplier report we covered, this one raised its outlook. The difference between the two is the most useful demand map a trades owner will get this quarter.
Top story — Ferguson grew 4.6% and raised its year, and the mix tells you why
Ferguson — the biggest US distributor of plumbing, HVAC, and waterworks products, the counter behind a huge share of the trades — reported second-quarter 2026 results on 10 August: net sales of $8.8 billion, up 4.6% with organic growth of 3.8% and 1.0% from acquisitions, gross margin of 31.0%, down 20 basis points, and diluted EPS of $3.43, up 6.9% with adjusted EPS of $3.39, up 5.3%. The split is the story. Non-residential revenue rose 8% in the US on healthy large capital projects and growing open-order volumes. Residential — roughly half of Ferguson’s revenue — stayed subdued on weak new construction and soft repair-and-remodel, but Ferguson still grew residential 2% by taking share in a down market. Why it matters to your shop: this is the plumbing/waterworks counter confirming what the HVAC makers and the Census data already showed — commercial, industrial, and public work are carrying 2026 while residential grinds. Where your demand comes from decides whether this year is a squeeze or a grind. Ferguson’s CEO named the growth lanes plainly: water infrastructure, large capital projects, climate and comfort, and aging, underbuilt housing.
Quick hits
Guidance went UP, not down. Ferguson raised calendar-2026 guidance to mid-single-digit sales growth, from low-to-mid, and nudged the adjusted operating-margin floor to 9.5%–9.8%. Compare Builders FirstSource, which cut its year two weeks earlier: the homebuilder-exposed supplier is bracing while the plumbing/waterworks-weighted one is raising. The lesson is mix, not the whole market.
The counter keeps consolidating. Ferguson completed five acquisitions in the quarter — including HVAC distributors Carrier Great Lakes with 7 locations in Michigan/Ohio and Dealers Supply with 17 locations in the Southeast — and signed a deal for valve specialist FloWorks; its eight announced 2026 acquisitions total roughly $1.4 billion in annualized revenue. The roll-up wave isn’t just buying shops like yours — it’s buying the counters you buy from.
Margin is tight even for the giant. Gross margin slipped 20 bps because last year’s quarter was temporarily inflated by the timing of supplier price increases, and price inflation ran only low-single-digit. If the biggest buyer in the channel is managing costs to hold a 31% gross line, protect your own GP% on every quote — the channel isn’t handing anyone easy margin this year.
The Tip — Re-weight your book toward the lanes Ferguson just confirmed
Pull your last 90 days of quotes and tag each one: new residential, repair-and-remodel, commercial/mechanical, industrial, public/municipal. Then compare your split to the signal — the biggest counter in the country just printed non-resi up 8% against subdued residential. If your book is 80% new-residential, that’s a strategy decision you’re making by default. One concrete move this week: pick the nearest commercial or municipal lane your licenses already cover — service contracts, tenant fit-outs, backflow testing, water-infrastructure subs — and put one bid or one relationship call into it. Owners who added a commercial lane in past residential slowdowns kept trucks busy while the housing-only shops discounted.
Tool watch — [Not sponsored]
Bookmark Ferguson’s quarterly results page — linked in the Sources line below — next to the Builders FirstSource one we flagged in a recent issue. Read them as a pair each quarter: BFS is the homebuilder side of the channel, Ferguson is the plumbing/HVAC/waterworks side. When one cuts and the other raises, the gap between them is the clearest read you’ll get on which end-markets have the money. Fifteen minutes, four times a year, free. No one paid for this mention.
That’s the callout. See you next time.
The Callout — the business brief for the trades. We label every commercial placement: [Sponsor], [Affiliate], or [Not sponsored]. Today’s Tool watch is our own honest read — no one paid for it. 231J Ramparts Road, Te Anau 9600, New Zealand · Unsubscribe anytime.
Sources: Ferguson — Q2 2026 results, 10 Aug 2026 · Ferguson — Q2 2026 press-release PDF · Business Wire via Morningstar — Ferguson Q2 2026, 10 Aug 2026 · Builders FirstSource — Q2 2026 results, 30 Jul 2026 · Ferguson — quarterly results page