Executive Summary
Ferguson plc reported Q2 2025 (calendar quarter ended January 31, 2025) with revenue of USD 6.872 billion, up 2.98% year over year but down 11.58% quarter over quarter. Gross profit was USD 2.042 billion, yielding a gross margin of 29.7%, while operating income totaled USD 410 million and EBITDA was USD 510 million, corresponding to operating and EBITDA margins of 5.97% and 7.42%, respectively. Net income came in at USD 276 million and diluted earnings per share (EPS) USD 1.38, translating to net and earnings margins of 4.02% and 2.01% on a per-share basis. The quarter reflected seasonal and mix-related headwinds, with notable working capital changes driving cash flow dynamics. Cash flow from operations was USD 340 million and free cash flow was USD 259 million, supporting a constructive but elevated balance sheet leverage profile. Ferguson ended the period with USD 764 million in cash and cash equivalents, total debt approximately USD 6.02 billion, and net debt around USD 5.26 billion, yielding a net debt to EBITDA roughly 10.3x. Despite robust annual revenue, profitability and cash generation were pressured by higher working capital and a transition in mix, contributing to a softer quarter compared with the prior year. The business remains a leading US/Canada plumbing and heating distributor with a broad footprint and significant digital and service-enabled capabilities, but the valuation remains reflective of a high-quality, cyclical franchise with leverage-driven sensitivities to housing and construction cycles.
Key Performance Indicators
QoQ: -38.35% | YoY:-14.05%
QoQ: -41.28% | YoY:-14.29%
QoQ: -41.03% | YoY:-12.66%
Key Insights
Revenue: USD 6,872.0 million; YoY +2.98%; QoQ -11.58%
Gross Profit: USD 2,042.0 million; Gross Margin 29.71%; YoY +0.64%; QoQ -12.74%
Operating Income: USD 410.0 million; Operating Margin 5.97%; YoY -14.05%; QoQ -38.35%
Net Income: USD 276.0 million; Net Margin 4.02%; YoY -14.29%; QoQ -41.28%
EPS (Diluted): USD 1.38; YoY -12.66%; QoQ -41.03%
Cash Flow: Net cash from operating activities USD 340.0 million; Free cash flow USD 259.0 million; Net change in cash USD 161.0 million; Cash at end of peri...
Financial Highlights
Revenue: USD 6,872.0 million; YoY +2.98%; QoQ -11.58%
Gross Profit: USD 2,042.0 million; Gross Margin 29.71%; YoY +0.64%; QoQ -12.74%
Operating Income: USD 410.0 million; Operating Margin 5.97%; YoY -14.05%; QoQ -38.35%
Net Income: USD 276.0 million; Net Margin 4.02%; YoY -14.29%; QoQ -41.28%
EPS (Diluted): USD 1.38; YoY -12.66%; QoQ -41.03%
Cash Flow: Net cash from operating activities USD 340.0 million; Free cash flow USD 259.0 million; Net change in cash USD 161.0 million; Cash at end of period USD 815.0 million
Balance Sheet: Total assets USD 16.53 billion; Total liabilities USD 11.04 billion; Total stockholders’ equity USD 5.49 billion; Cash and equivalents USD 764.0 million; Net debt USD 5.26 billion; Debt to capitalization 0.523; Interest coverage 8.54x; DSO 41.91 days; DIO 79.62 days; DPO 56.40 days; Current ratio 1.824; Quick ratio 0.979; Cash ratio 0.151
Valuation & Efficiency: P/E 32.62x; P/BV 6.56x; P/S 5.24x; EV/EBITDA 80.91x; Dividend yield 0.37%; Asset turnover 0.416x; Fixed asset turnover 1.995x; Receivables turnover 2.15x; Inventory turnover 1.13x
Cash Deployment: Dividends paid USD 158.0 million; Net debt reduction via repayments USD 345.0 million; Share repurchases USD -252.0 million; Capex USD 81.0 million; Free cash flow yield modest but positive given leverage and seasonality
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
6.87B |
2.98% |
-11.58% |
| Gross Profit |
2.04B |
0.64% |
-12.74% |
| Operating Income |
410.00M |
-14.05% |
-38.35% |
| Net Income |
276.00M |
-14.29% |
-41.28% |
| EPS |
1.38 |
-12.66% |
-41.03% |
Key Financial Ratios
operatingProfitMargin
5.97%
operatingCashFlowPerShare
$1.7
freeCashFlowPerShare
$1.3
dividendPayoutRatio
48.4%
Management Commentary
No earnings call transcript data provided in the supplied materials. As a result, no management quotes or theme-based highlights can be drawn from the transcript. If a transcript becomes available, we will extract themes by the usual categories (strategy, operations, market conditions, and guidance) and annotate with context and implications for investors.
Transcript data not provided.
— Management
Transcript data not provided.
— Management
Forward Guidance
There is no formal official guidance provided in the data set for Ferguson’s QQ3/Q4 2025 outlook. Based on the QQ2 results and the broader US/Canada industrial distribution environment, a qualitative framework is as follows: - Revenue trajectory is likely to hinge on the pace of US housing activity, commercial construction, and replacement demand for plumbing, HVAC, and PVF products. A mid-single-digit revenue trajectory is plausible if housing and commercial activity stabilizes or modestly improves. - Gross margins appear sensitive to product mix and cost absorption; management will likely emphasize price discipline, category mix optimization, and inventory efficiency to protect margins in a volatile input environment. - Working capital will remain a key swing factor; continued focus on receivables collection, inventory turnover, and payables timing will influence cash flow generation. - Deleveraging risk remains a near-term overhang given net debt to EBITDA around 10x; management may prioritize cash generation to support debt reduction, while balancing capex and shareholder returns. Key metrics investors should monitor include: working capital days (DSO/DIO/DPO), free cash flow generation, debt reduction progress, and any signs of margin stabilization or improvement in return on capital employed.