Good morning. North America's largest plumbing and HVAC distributor reported its quarter on 10 August, and buried in it is the clearest read you will get on where the work actually is right now — because Ferguson sells to almost everybody, and it has to tell the truth to the SEC.
Top story — Two markets, one counter
Ferguson's US business grew 5.0% in the quarter ended 30 June 2026. That single number hides the only thing that matters to you, because underneath it the business split clean in half.
Residential — which Ferguson says is "approximately half of revenue" — grew 2%. The company's own words: new residential construction activity "has been weak" and repair, maintenance and improvement work "remains soft." That is the replace-the-furnace, re-pipe-the-bathroom, fix-the-panel market. It is most of what most of you sell.
Non-residential grew 8%. Ferguson describes "large capital project activity" as healthy, with "growth in open order volumes and strong bidding activity."
Now the part that should make you sit up. Ferguson says it is beating its own markets — "We continue to outperform our markets with residential revenue up 2% in the quarter." Take the company at its word and the arithmetic is unkind: if the outperformer grew residential 2%, the residential market it is outperforming grew less than 2%.
There is a pricing signal in the same document, and it points the same way. "Price inflation was in the low single digits." Gross margin came in at 31.0%, down 20 basis points, and Ferguson explains why: last year's margin was "temporarily elevated by the timing and extent of supplier price increases." Translated — the years when you made money simply by holding stock bought before the next price letter are over. Materials are not the tailwind any more.
Quick hits
The counter kept consolidating. Ferguson completed five acquisitions in the quarter, including Carrier Great Lakes (seven locations across Michigan and Ohio) and Dealers Supply Company (seventeen locations in the Southeast) on the HVAC side. It then signed a deal for FloWorks after quarter end. Its own count: eight acquisitions announced year-to-date, about $1.4 billion of annualized revenue. If your supply house changed its sign this year, that is the arithmetic behind it.
Canada went backwards. Net sales fell 1.9%, with organic growth of 1.7% wiped out by a divestment, and Ferguson calls its markets there "challenging… particularly in residential."
They raised the year anyway. Full-year net sales guidance moved from "low to mid-single digit growth" to "mid-single digit growth," and planned capital expenditure went up, from $350–400 million to $375–425 million. A distributor does not raise its spending plan into a market it expects to fall over.
The Tip — Go and re-read the escalation clause you wrote in 2022
If price inflation is running low single digits at the largest distributor in the country, a lot of shops are still quoting like it is 2022. Pull three things this week: your quote validity window, your material escalation clause, and your standard markup on materials. A seven-day quote expiry and an aggressive escalation clause were survival tools when prices moved monthly; today they cost you jobs against a competitor whose quote holds for thirty days. Separately, if your book is 90% residential, this quarter is your prompt to find out what it would take to bid one commercial or light-industrial job — not to change your business, but to know the answer before you need it.
Tool watch — [Not sponsored]
Every figure above is free. Public companies file their results with the SEC, and a distributor's quarterly release is the cheapest market research a trades owner can get — it is written by people who are legally liable for getting it wrong, and it is published months before any industry survey. The useful part is not the earnings per share. It is the segment commentary, where a distributor says out loud which end markets are up and which are soft. Ferguson's is on its own investor pages and on sec.gov, and its next one is provisionally 9 November 2026. Put it in the diary and read two paragraphs of it. Do the same with whichever distributor sells you the most.
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 — nobody paid for it, and the only things named are a public company's own SEC filing and the SEC's free website. 231J Ramparts Road, Te Anau 9600, New Zealand · Unsubscribe anytime.