Item 8. Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)			43
Consolidated Statements of Earnings			45
Consolidated Statements of Comprehensive Income			46
Consolidated Balance Sheets			47
Consolidated Statements of Stockholders’ Equity			48
Consolidated Statements of Cash Flows			48
Notes to Consolidated Financial Statements			50
Note 1. Summary of significant accounting policies			50
Note 2. Segment and net sales information			57
Note 3. Weighted average shares			59
Note 4. Income tax			60
Note 5. Property, plant and equipment			63
Note 6. Leases			64
Note 7. Goodwill			65
Note 8. Other intangible assets			66
Note 9. Debt			67
Note 10. Fair value measurements			70
Note 11. Commitments and contingencies			70
Note 12. Accumulated other comprehensive loss			71
Note 13. Retirement benefit obligations			72
Note 14. Stockholders’ equity			76
Note 15. Share-based compensation			77
Note 16. Acquisitions			79
Note 17. Related party transactions			80
Note 18. Restructuring and impairments expenses			81

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Ferguson Enterprises Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Ferguson Enterprises Inc. and subsidiaries (the "Company") as of July 31, 2025 and 2024, the related consolidated statements of earnings, comprehensive income, stockholders' equity, and cash flows, for each of the three years in the period ended July 31, 2025, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of July 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended July 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of July 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated September 26, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Inventory Reserves - Refer to Note 1 to the Financial Statements

Critical Audit Matter Description

The Company had inventories of $4.5 billion as of July 31, 2025.

Inventory reserves are recorded against slow-moving, obsolete, and damaged inventories for which the net realizable value is estimated to be less than the cost. The reserve is estimated based on the Company’s current knowledge and judgment with respect to inventory levels, sales trends, and historical experience.

We identified certain components of the inventory reserve as a critical audit matter due to the inherent uncertainty and higher degree of auditor judgment and effort needed to evaluate sales trends and experience that were used in determining the inventory reserve.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to certain components of the inventory reserve included the following:

• Obtained an understanding of the Company’s accounting policies related to the reserve calculation. Based on that understanding, we evaluated the appropriateness of the policy and independently recalculated the inventory reserve amount based on the Company’s policy;

• Recalculated the inventory reserve in accordance with the Company’s policy for a sample of certain inventory items;

• Developed an independent expectation of the inventory reserve at year end based on historical ratios and compared the inventory reserve against our expectation.

/s/ Deloitte & Touche LLP

Richmond, VA

September 26, 2025

We have served as the Company's auditor since 2022.

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.

Ferguson Enterprises Inc.

Consolidated Statements of Comprehensive Income

			For the years ended July 31,
(In millions)			2025						2024						2023
Net income			$1,856						$1,735						$1,889
Other comprehensive (loss) income:
Foreign currency translation adjustments			(2)						(32)						(9)
Pension adjustments, net of tax impacts of $12, $4 and $16, respectively.			(38)						(11)						(49)
Total other comprehensive loss, net of tax			(40)						(43)						(58)
Comprehensive income			$1,816						$1,692						$1,831

See accompanying Notes to the Consolidated Financial Statements.

Ferguson Enterprises Inc.

Consolidated Balance Sheets

			As of July 31,
(In millions, except share amounts)			2025						2024
Assets
Cash and cash equivalents			$674						$571
Accounts receivable, less allowances of $24 and $21, respectively			3,964						3,602
Inventories			4,492						4,188
Prepaid and other current assets			945						1,020
Assets held for sale			71						29
Total current assets			10,146						9,410
Property, plant and equipment, net			1,846						1,752
Operating lease right-of-use assets			1,763						1,565
Deferred income taxes, net			225						181
Goodwill			2,464						2,357
Other intangible assets, net			726						753
Other non-current assets			559						554
Total assets			$17,729						$16,572
Liabilities and stockholders' equity
Accounts payable			$3,577						$3,410
Short-term debt			400						150
Current portion of operating lease liabilities			447						395
Other current liabilities			1,578						1,261
Liabilities held for sale			26						—
Total current liabilities			6,028						5,216
Long-term debt			3,752						3,774
Long-term portion of operating lease liabilities			1,367						1,198
Other long-term liabilities			750						768
Total liabilities			11,897						10,956
Stockholders’ equity:
Ordinary shares, par value 10 pence: 500,000,000 shares authorized, 0 and 232,171,182 shares issued, respectively			$—						$30
Common stock, par value $0.0001; 500,000,000 shares authorized; 201,343,253 and 0 shares issued, respectively			—						—
Paid-in capital			926						864
Retained earnings			6,776						9,589
Treasury shares, 4,759,053 and 30,827,929 shares, respectively at cost			(899)						(3,936)
Accumulated other comprehensive loss			(971)						(931)
Total stockholders' equity			5,832						5,616
Total liabilities and stockholders' equity			$17,729						$16,572

See accompanying Notes to the Consolidated Financial Statements.

Ferguson Enterprises Inc.

Consolidated Statements of Stockholders’ Equity

			For the years ended July 31,
(In millions, except per share data)			2025						2024						2023
Ordinary shares:
Balance at beginning of period			$30						$30						$30
Treasury shares canceled			(4)						—						—
Ordinary shares canceled			(26)						—						—
Balance at end of period			—						30						30
Common stock:
Balance at beginning of period			—						—						—
Common stock issued			—						—						—
Balance at end of period			—						—						—
Paid-in capital:
Balance at beginning of period			864						809						760
Share-based compensation expense			36						53						49
Ordinary shares canceled			26						—						—
Other			—						2						—
Balance at end of period			926						864						809
Retained earnings:
Balance at beginning of period			9,589						8,557						7,594
Treasury shares canceled			(3,932)						—						—
Net income			1,856						1,735						1,889
Cash dividends declared of $3.28, $3.12, and $4.16, respectively			(652)						(631)						(858)
Shares issued under employee stock plans			(85)						(72)						(68)
Balance at end of period			6,776						9,589						8,557
Treasury shares:
Balance at beginning of period			(3,936)						(3,425)						(2,782)
Treasury shares canceled			3,936						—						—
Share repurchases			(953)						(558)						(667)
Shares issued under employee share plans, net			54						47						24
Balance at end of period			(899)						(3,936)						(3,425)
Employee Benefit Trust:
Balance at beginning of period			—						(46)						(107)
Shares issued			—						45						61
Other			—						1						—
Balance at end of period			—						—						(46)
Accumulated other comprehensive loss:
Balance at beginning of period			(931)						(888)						(830)
Total other comprehensive loss			(40)						(43)						(58)
Balance at end of period			(971)						(931)						(888)
Total stockholder's equity			$5,832						$5,616						$5,037

See accompanying Notes to the Consolidated Financial Statements.

Ferguson Enterprises Inc.

Consolidated Statements of Cash Flows

(In millions)			For the years ended July 31,
2025						2024						2023
Cash flows from operating activities:
Net income			$1,856						$1,735						$1,889
Depreciation and amortization			373						335						321
Share-based compensation			28						49						51
Non-cash impact of impairments			—						—						125
Changes in deferred income taxes			(39)						125						(104)
Changes in inventories			(273)						(252)						607
Changes in receivables and other assets			(321)						(98)						(1)
Changes in accounts payable and other liabilities			278						11						(196)
Changes in income taxes payable			7						(45)						24
Other operating activities			(1)						13						11
Net cash provided by operating activities of continuing operations			1,908						1,873						2,727
Net cash used in operating activities of discontinued operations			—						—						(4)
Net cash provided by operating activities			1,908						1,873						2,723
Cash flows from investing activities:
Purchase of businesses acquired, net of cash acquired			(301)						(260)						(616)
Capital expenditures			(305)						(372)						(441)
Other investing activities			63						31						3
Net cash used in investing activities			(543)						(601)						(1,054)
Cash flows from financing activities:
Purchase of treasury shares			(948)						(634)						(908)
Proceeds from sale of treasury shares			—						17						17
Repayments of debt			(4,400)						(2,110)						(2,930)
Proceeds from debt			4,621						2,255						2,775
Change in bank overdrafts			4						(16)						(15)
Cash dividends			(489)						(784)						(711)
Other financing activities			(74)						(41)						(35)
Net cash used in financing activities			(1,286)						(1,313)						(1,807)
Change in cash, cash equivalents and restricted cash			79						(41)						(138)
Effects of exchange rate changes			3						(3)						22
Cash, cash equivalents and restricted cash, beginning of period			625						669						785
Cash, cash equivalents and restricted cash, end of period			$707						$625						$669
Supplemental Disclosures:
Cash paid for income taxes			$601						$651						$656
Cash paid for interest			189						188						182
Accrued capital expenditures			14						6						17
Accrued dividends			163						—						152

See accompanying Notes to the Consolidated Financial Statements.

Ferguson Enterprises Inc.

Notes to the Consolidated Financial Statements

Note 1. Summary of significant accounting policies

Background

Ferguson Enterprises Inc. (including subsidiaries, the “Company”) (NYSE: FERG; LSE: FERG) is a Delaware corporation. Ferguson is a value-added distributor serving the water and air specialized professional in the residential and non-residential North American construction market. We help make our customers’ complex projects simple, successful and sustainable by providing expertise and a wide range of products and services from plumbing, HVAC, appliances, and lighting to PVF, water and wastewater solutions, and more. We sell through a common network of distribution centers, branches, counter service and expert sales associates, showroom consultants and e-commerce channels. The corporate headquarters of the Company is located at 751 Lakefront Commons, Newport News, Virginia 23606.

Effective on August 1, 2024 (the “Effective Date”), the Company established a new corporate structure to domicile our ultimate parent company in the United States by completing a merger between entities under common control (the “Merger”). The Merger resulted in (i) Ferguson plc (the “predecessor”) becoming a direct, wholly owned subsidiary of Ferguson Enterprises Inc. (the “successor issuer”) and (ii) the shareholders of Ferguson plc at the designated record time for the Merger no longer holding ordinary shares of Ferguson plc but instead holding shares of common stock of Ferguson Enterprises Inc.

Financial statements and basis of consolidation

The accompanying consolidated financial statements have been prepared in accordance with U.S. GAAP as set forth in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification and in conjunction with the rules and regulations of the SEC. These consolidated financial statements include the results of the Company and its wholly-owned subsidiaries as of July 31, 2025. All intercompany transactions have been eliminated from the consolidated financial statements.

Fiscal year

Except as otherwise specified, references to years indicate our fiscal year ended July 31 of the respective year. For example, references to “fiscal 2025” or similar references refer to the fiscal year ended July 31, 2025.

Use of estimates

The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions affecting reported amounts in the consolidated financial statements and accompanying notes. Actual results may differ from those estimates.

Accounts receivables

Accounts receivables are stated at their estimated net realizable value. An allowance for credit losses is estimated based on historical write-offs, the age of past due receivables, as well as consideration for forward-looking expectations where appropriate. Accounts receivables are written off when recoverability is assessed as being remote. The charges associated with the allowance for credit losses are recognized in selling, general and administrative expenses (“SG&A”). Subsequent recoveries of amounts previously written off are credited to SG&A.

Advertising and marketing costs

Advertising costs, including digital, television, radio and print, are expensed when the advertisement first appears. Certain marketing, or co-op, contributions are received to fund marketing activities of specific, incremental, and identifiable costs incurred to promote suppliers’ products or activities, which are recorded in SG&A as reductions of the related marketing costs.

The following table presents net advertising expenses included in SG&A:

			For the years ended July 31,
(In millions)			2025						2024						2023
Net advertising and marketing costs			$376						$380						$403

Business combinations

The assets and liabilities of acquired businesses are recorded at their fair values at the date of acquisition. The excess of the purchase price over the fair value of the identifiable assets acquired and liabilities assumed is recorded as goodwill. During the measurement period, which is up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits with banks with original maturities of three months or less and overdrafts to the extent there is a legal right of offset and practice of net settlement with cash balances. Cash equivalents also include amounts due from third-party credit card processors as they are both short-term and highly liquid in nature and are typically converted to cash within a few days of the sales transaction.

Restricted cash primarily consists of deferred consideration for business combinations, subject to various settlement agreements. These amounts are recorded in prepaid and other current assets and other non-current assets in the Company’s consolidated balance sheets.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows.

			As of July 31,
(In millions)			2025						2024						2023
Cash and cash equivalents			$674						$571						$601
Restricted cash			33						54						68
Total cash, cash equivalents and restricted cash			$707						$625						$669

Concentrations of credit risk

The Company monitors credit risk associated with those financial institutions with which it conducts significant business. Credit risk, including but not limited to counterparty non-performance under derivative instruments and our credit facilities, is not considered significant, as we primarily conduct business with large, well-established financial institutions. This risk is managed by setting credit and settlement limits for approved counterparties. In addition, the Company has established guidelines that it follows regarding counterparty credit ratings which are monitored regularly, seeking to limit its exposure to any individual counterparty. The concentration of credit risk was deemed not significant as of July 31, 2025 and 2024.

Cost of sales

Cost of sales includes the cost of goods purchased for resale, net of earned rebates, and the cost of bringing inventory to a sellable location and condition. As the Company does not produce or manufacture products, its inventories are finished goods and therefore depreciation related to warehouse facilities and equipment is presented separately within operating expenses.

Derivative instruments and hedging activity

Derivative financial instruments, in particular interest rate swaps and foreign exchange swaps, are used to manage the financial risks arising from the Company’s business activities and the financing of those activities. Derivatives are not used for speculative purposes or trading activities and have generally not been significant. Derivatives are measured at their fair values and included in other assets and other liabilities in the consolidated balance sheets. The Company’s derivatives are not material.

Fair value measurements

The applicable accounting guidance for fair value measurements established a fair value hierarchy. The fair value hierarchy established under this guidance prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows:

Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 - Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted prices, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace.

Level 3 - Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management's best estimate of fair value from the perspective of a market participant.

Foreign currency

The consolidated financial statements are presented in U.S. dollars.

Results of operations of foreign subsidiaries are translated into U.S. dollars using average exchange rates during the year. The assets and liabilities of those subsidiaries are translated into U.S. dollars using exchange rates at the current rate of exchange on the last day of the reporting period. These foreign currency translation adjustments are included in accumulated other comprehensive loss. Foreign currency transaction gains and losses are not material.

In the event that the Company disposes of a subsidiary that uses a non-U.S. dollar functional currency, the gain or loss on disposal recognized in the consolidated statements of earnings includes the cumulative currency translation adjustments attributable to the subsidiary.

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Company’s share of the net identifiable assets of the acquired business at the date of acquisition. Goodwill is not amortized but is carried at cost less accumulated impairment losses. The Company performs an annual impairment assessment in the fourth quarter of each fiscal year, or more frequently if changes in circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

The annual impairment assessment begins with an option to assess qualitative factors to determine whether a quantitative evaluation is appropriate for determining potential goodwill impairment. The quantitative impairment assessment compares the fair value of the reporting unit to its carrying value. The reporting units represent the lowest level within the Company at which the associated goodwill is monitored for management purposes and are based on the markets where the business operates.

The fair value of a reporting unit is determined using the income approach, which requires significant assumptions regarding future operations and the ability to generate cash flows. These assumptions include a forecast of future operating cash flows, capital requirements and a discount rate. Where the carrying value of a reporting unit exceeds the fair value, an impairment loss is recorded in the consolidated statements of earnings.

Gains and losses on the disposal of an entity include the carrying amount of goodwill related to the entity sold.

Other intangible assets

Definite-lived intangible assets are primarily comprised of customer relationships, trade names and other intangible assets, acquired as part of business combinations and are capitalized separately from goodwill and carried at cost less accumulated amortization and accumulated impairment losses.

Computer software that is not integral to an item of property, plant and equipment is recognized separately as an intangible asset and is carried at cost less accumulated amortization and accumulated impairment losses. Costs may include software licenses and external and internal costs directly attributable to the development, design and implementation of the computer software. Training and data conversion costs are expensed as incurred.

Customer relationship amortization is calculated using a systematic, accelerated approach based on the timing of future expected cash flows. The straight-line method is used for all other intangible assets.

The estimated useful life of the respective intangible assets are as follows:

Customer relationships			4 – 15 years
Trade names and brands			1 – 15 years
Software			3 – 5 years
Other			1 – 5 years

Impairment of long-lived assets

The recoverability of long-lived assets, including property, plant and equipment, right of use assets and definite-lived intangible assets, is evaluated when events or changes in circumstances indicate that the carrying amounts of an asset group may not be recoverable. Long-lived depreciable and amortizable assets are tested for impairment in asset groups, which are defined as the lowest level of assets that generate identifiable cash flows that are largely independent of the cash flows of other asset groups. A potential impairment has occurred for an asset group if projected future undiscounted cash flows expected to result from the use and eventual disposition of the assets are less than the carrying amounts of the assets.

Inventories

Inventories, which comprise goods purchased for resale, are stated at the lower of cost or net realizable value. Cost is primarily determined using the average cost method. The cost of goods purchased for resale includes import and custom duties, transport and handling costs, freight and packing costs and other attributable costs less trade discounts and rebates. Net realizable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

Inventory reserves are recorded against slow‐moving, obsolete and damaged inventories for which the net realizable value is estimated to be less than the cost. The reserve is estimated based on the Company’s current knowledge and judgment with respect to inventory levels, sales trends and historical experience.

Leases

The Company enters into contractual arrangements for the utilization of certain non-owned assets. These principally relate to property for the Company’s branches, distribution centers and offices which have varying terms including extension and termination options and periodic rent reviews.

The Company determines if an arrangement is a lease at inception. Leases are evaluated at commencement to determine proper classification as an operating lease or a finance lease. The Company’s leases primarily consist of operating leases. The Company recognizes a right-of-use (“ROU”) asset and lease liability at lease commencement based on the present value of lease payments over the lease term.

The Company generally uses its incremental borrowing rate as the discount rate as most of the Company’s lease arrangements do not provide an implicit borrowing rate. The incremental borrowing rate is estimated using a combination of U.S. Treasury note rates corresponding to lease terms, as well as a blended credit risk spread.

For operating leases, fixed lease payments are recognized on a straight-line basis over the lease term. The Company has elected to not separate lease and non-lease components. Certain lease agreements include variable lease payments that depend on an index, as well as payments for non-lease components, such as common area maintenance, and certain pass-through operating expenses such as real estate taxes and insurance. In instances where these payments are fixed, they are included in the measurement of our lease liabilities, and when variable, are excluded and recognized in the period in which the obligations for those payments are incurred. The Company’s leases do not contain any material residual value guarantees or payments under purchase and termination options which are reasonably certain to be exercised.

Lease terms are initially determined as the non-cancelable period of a lease adjusted for options to extend or terminate a lease that are reasonably certain to be exercised. Generally, the Company’s real estate leases have initial terms of three to 10 years and up to four extension periods that range from two to five years each. Renewal options are typically not included in the lease term as it is not reasonably certain at commencement date that the Company would exercise the extension options. Lease liabilities are subsequently measured at amortized cost using the effective interest method.

Right of use assets are carried at cost less accumulated amortization, impairment losses, and any subsequent remeasurement of the lease liability. Initial cost comprises the lease liability adjusted for lease payments at or before the commencement date, lease incentives received, initial direct costs and an estimate of restoration costs. The Company recognizes minimum rent expense on a straight-line basis over the lease term.

Leases that have an original term of 12 months or less are not recognized on the Company’s consolidated balance sheet, and the lease expense related to those short-term leases is recognized over the lease term.

Property, plant and equipment (“PPE”)

PPE is recorded at cost less accumulated depreciation. Cost includes expenditures necessary to acquire and prepare PPE for its intended use. In addition, subsequent costs that increase the productive capacity or extend the useful life of PPE are capitalized. The cost of repairs and maintenance are expensed as incurred.

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”).

The majority of volume-based supplier rebates are determined by reference to guaranteed rates of rebate. These calculations require minimal judgment. A small proportion of volume-based supplier rebates are subject to tiered targets where the rebate percentage increases as volumes purchased reach agreed targets within a set period of time. The Company estimates supplier rebates based on forecasts which are informed by historical trading patterns, current performance and trends.

Rebates relating to the purchase of goods for resale are accrued as earned and are recorded initially as a deduction to the cost of inventory with a subsequent reduction in cost of sales when the related goods are sold. When the Company has the legal right of offset and net settles with the supplier, the supplier rebate receivables are offset with amounts owed to the supplier at the balance sheet date and are included within accounts payable. When the Company does not have the legal right of offset, the supplier rebate receivables are recorded in prepaid and other current assets in the consolidated balance sheets. As of July 31, 2025 and 2024, rebates owed to the Company were $471 million and $491 million, respectively.

Revenue recognition

The Company recognizes revenue when a sales arrangement with a customer exists (e.g., contract, purchase orders, others), the transaction price is fixed or determinable, collection of consideration is probable and the Company has satisfied its performance obligation per the sales arrangement. The majority of the Company’s revenue originates from sales arrangements with a single performance obligation to deliver products, whereby performance obligations are satisfied when control of the product is transferred to the customer which is the point they are delivered to, or collected by, the customer. Therefore, shipping and handling activities are not deemed to be a separate performance obligation. Payment terms between the Company and its customers vary by the type of customer, country of sale and the products sold. The Company does not have significant financing components in its contracts and the payment due date is typically shortly after sale.

In some limited cases, the Company’s contracts contain services and products that are deemed one performance obligation as the services are highly interdependent and interrelated with the products or are significantly integrated with the products. Contracts in which services provided are a separately identifiable performance obligation are not material.

In some instances, goods are delivered directly to the customer by the supplier. The Company has concluded that it is the principal in these transactions as it is primarily responsible to the customer for fulfilling the obligation and has the responsibility for identifying and directing the supplier to deliver the goods to the customer.

The Company offers a right of return to its customers for most goods sold. Revenue is reduced by the amount of expected returns in the period in which the related revenue is recorded with a corresponding liability recorded in other current liabilities. The Company also recognizes a returned asset in prepaid and other current assets with a corresponding adjustment to cost of sales, for the right to recover the returned goods, measured at the former carrying value, less any expected recovery costs.

Share-based compensation

Share-based incentives are provided to associates under the Company’s long-term incentive and all-employee share purchase plans. The Company recognizes a compensation cost in respect of these plans based on the fair value of the awards as determined at the date of grant and is not subsequently remeasured unless the conditions on which the award was granted are modified. Compensation cost is generally recognized on a straight-line basis over the vesting period, utilizing cumulative catch-up for changes in estimates of non-market performance conditions. Estimates of expected forfeitures are made at the date of grant based on historical experience to appropriately reduce expense for those grants expected not to satisfy service conditions, or based on expected performance for non-market performance conditions. The estimated forfeitures are adjusted when facts and circumstances indicate the prior estimate is no longer appropriate.

Tax

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets (“DTAs”) and deferred tax liabilities (“DTLs”) for the expected future tax consequences of events that have been included in the financial statements. Under this method, the Company determines DTAs and DTLs based on the differences between the financial reporting and tax basis of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on DTAs and DTLs is recognized in income in the period that includes the enactment date. For a tax-paying component of an entity and within a particular tax jurisdiction, all deferred tax liabilities and assets, as well as any related valuation allowance, shall be offset and presented as a single non-current amount.

The Company recognizes DTAs to the extent that it believes these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations. If the Company determines that it would be able to realize our DTAs in the future in excess of their net recorded amount, the DTA valuation allowance would be appropriately adjusted, which would reduce the provision for income taxes.

The Company records uncertain tax positions in accordance with Accounting Standard Codification (“ASC”) 740 on the basis of a two-step process in which (1) it determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority.

Supplier finance program

The Company maintains a supplier financing program with a third party financial institution wherein certain of the Company’s shipping and logistics providers in the United States can opt to receive early payment from the third party financial institution at a nominal discount. Such payment terms are independently negotiated between the third party financial institution and the shipping and logistics providers. The Company’s obligations to suppliers are unchanged and payment terms are consistent with the Company’s normal payment terms. All outstanding payables related to the supplier finance program are classified within accounts payable within our consolidated balance sheets.

The rollforward of outstanding obligations confirmed as valid under the supplier finance program is as follows:

			For the year ended July 31,
(In millions)			2025
Beginning balance			$46
Invoices confirmed during the year			390
Confirmed invoices paid during the year			(374)
Ending balance			$62

Recently issued accounting pronouncements

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” This ASU requires new financial statement disclosures disaggregating prescribed expense categories within relevant income statement expense captions, including information about purchases of inventory, employee compensation, depreciation and intangible asset amortization for each relevant expense caption on the face of the income statement. Per ASU No. 2025-01, the amendments under ASU No. 2024-03 are effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The ASU No. 2024-03 can be adopted either prospectively or retrospectively. The Company is currently evaluating the ASU to determine the impact on its disclosures.

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This ASU provides qualitative and quantitative updates to the rate reconciliation and income taxes paid disclosures, among others, in order to enhance the transparency of income tax disclosures, including consistent categories and greater disaggregation of information in the rate reconciliation and disaggregation by jurisdiction of income taxes paid. The amendments in this ASU are effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied prospectively; however, retrospective application is also permitted. The Company is currently evaluating the ASU to determine the impact on its disclosures.

Recent accounting pronouncements pending adoption that are not discussed above are either not applicable, or will not have, or are not expected to have, a material impact on our consolidated financial condition, results of operations or cash flows.

Note 2. Segment and net sales information

The Company reports its financial results of operations on a geographical basis in the following two reportable segments which are also operating segments: United States and Canada. Each segment generally derives its revenues in the same manner as described in Note 1, Summary of significant accounting policies. The Company uses adjusted operating profit as its measure of segment profit. Certain income and expenses are not allocated to the Company’s segments and, thus, the information that management uses to make operating decisions and assess performance does not reflect such amounts.

This segment structure reflects the financial information and reports used by the Company’s management, specifically its chief operating decision makers (“CODM”), to make decisions regarding the Company’s business, including resource allocations and performance assessments, as well as the current operating focus in compliance with ASC 280, Segment Reporting. The Company’s CODM are the Chief Executive Officer and the Chief Financial Officer.

The significant expenses reviewed by the CODM include operating costs and costs of sales. The operating costs evaluated by the CODM are primarily SG&A, including depreciation expense on long lived assets and software amortization expense.

The CODM use segment adjusted operating profit to evaluate performance and allocate resources (including employees, property, and financial or capital resources) in conjunction with the annual budget process, as well as during periodic business reviews.

Segment results were as follows:

			For the years ended July 31,
(In millions)			2025						2024						2023
Net sales:
United States			$29,269						$28,195						$28,291
Canada			1,493						1,440						1,443
Total net sales			$30,762						$29,635						$29,734
Cost of sales:
United States			(20,238)						(19,528)						(19,650)
Canada			(1,089)						(1,054)						(1,059)
Operating costs:
United States			(6,191)						(5,847)						(5,749)
Canada			(338)						(326)						(308)
Adjusted operating profit:
United States			2,840						2,820						2,892
Canada			66						60						76
Total segment adjusted operating profit			2,906						2,880						2,968
Central and other costs(1)			(64)						(56)						(51)
Restructuring and impairment expenses(2)			(80)						(28)						(125)
Amortization of acquired intangible assets			(156)						(144)						(133)
Interest expense, net			(190)						(179)						(184)
Other expense, net			7						(9)						(11)
Income before income taxes			$2,423						$2,464						$2,464

(1)Primarily includes SG&A, including depreciation expense on long lived assets and software amortization expense that is not related to a segment.

(2)See Note 18, Restructuring and impairment expenses for further information.

Capital expenditures and depreciation and amortization by segment were as follows:

			For the years ended July 31,
(In millions)			2025						2024						2023
Capital expenditures:
United States			$300						$353						$423
Canada			5						19						18
Total capital expenditures			$305						$372						$441
Depreciation and amortization:
United States			$356						$323						$313
Canada			17						12						8
Total depreciation and amortization**(1)**			$373						$335						$321
(1) Includes amortization of acquired intangible assets of $156 million, $144 million and $133 million in 2025, 2024 and 2023, respectively. These amounts are not included in segment adjusted operating profit.

Assets by segment included:

			As of July 31,
(In millions)			2025						2024
Assets:
United States			$15,757						$14,795
Canada			1,008						898
Total segment assets			16,765						15,693
Corporate			964						879
Total assets			$17,729						$16,572

Long-lived assets are as follows:

			As of July 31,
(In millions)			2025						2024
Long-lived assets:
United States			$1,795						$1,699
Canada			51						53
Total long-lived assets			$1,846						$1,752

Net sales disaggregation

A disaggregation of net sales by end market is as follows:

			For the years ended July 31,
(In millions)			2025						2024						2023
United States:
Residential			$14,598						$14,464						$14,820
Non-residential:
Commercial			10,088						9,431						9,213
Civil/Infrastructure			2,609						2,396						2,344
Industrial			1,974						1,904						1,914
Total Non-residential			14,671						13,731						13,471
Total United States			29,269						28,195						28,291
Canada			1,493						1,440						1,443
Total net sales			$30,762						$29,635						$29,734

No sales to an individual customer accounted for more than 10% of net sales during any of the last three fiscal years.

The Company is a value-added distributor in North America, providing a wide range of products from plumbing, HVAC, appliances, and lighting to PVF, water and wastewater solutions, and more. We offer a broad line of products, and items are regularly added to and removed from the Company's inventory. Accordingly, it would be impractical to provide sales information by product category due to the way the business is managed, and the dynamic nature of the inventory offered.

Note 3. Weighted average shares

The following table shows the calculation of diluted shares:

			For the years ended July 31,
(In millions)			2025						2024						2023
Weighted average number of shares outstanding:
Basic weighted average shares			198.9						202.9						206.4
Effect of dilutive shares (1)			0.3						0.6						0.8
Diluted weighted average shares			199.2						203.5						207.2
Excluded anti-dilutive shares			0.1						—						0.1

(1) Represents the potential dilutive impact of share-based awards.

Note 4. Income tax

Income before income tax by geographical area consisted of the following:

			For the years ended July 31,
(In millions)			2025						2024						2023
United States			$2,263						$2,022						$2,011
International			160						442						453
Total			$2,423						$2,464						$2,464

In fiscal 2025, the Company became a tax resident in the United States. As such, the categories in connection with certain disclosure requirements have changed and are therefore reflected separately from prior years.

Provisions for income taxes for the U.S. federal, state and local and international consisted of the following:

			For the year ended July 31,
(In millions)			2025
Current:
U.S. Federal			$458
U.S. State and Local			125
International			23
Total current			$606
Deferred:
U.S. Federal			($36)
U.S. State and Local			(7)
International			4
Total deferred			($39)
Provision for income taxes			$567

Provision for income taxes in prior years consisted of the following:

									For the years ended July 31,
(In millions)									2024						2023
Current:
Federal and state (U.S.)									$552						$624
United Kingdom									3						—
International									49						55
Total current									$604						$679
Deferred:
Federal and state (U.S.)									($32)						($120)
United Kingdom									155						17
International									2						(1)
Total deferred									$125						($104)
Provision for income taxes									$729						$575

The following is a reconciliation of income tax expense with income taxes at the U.S. statutory rate:

			For the years ended July 31,
(In millions)			2025
Provision for income taxes at U.S. statutory rate(1)			$509			21.0		%
State and local income tax net of federal income tax benefit			92			3.8
Foreign operations			8			0.3
Impact of change in reserves			(21)			(0.9)
U.S. business credits			(11)			(0.4)
Non-taxable income			(10)			(0.4)
Income tax expense			$567			23.4		%

(1)For fiscal years 2025, the Company was a tax resident in the U.S. Therefore, the Company utilized the U.S. statutory rate.

The following is a reconciliation of income tax expense with income taxes at the U.K. statutory rate:

			For the years ended July 31,
(In millions)			2024									2023
Provision for income taxes at U.K. statutory rate(1)			$616			25.0		%				$518			21.0		%
Non-U.K. tax rate differentials			(30)			(1.2)						68			2.8
Impact of change in reserves			12			0.5						8			0.3
Tax credits			(8)			(0.3)						(15)			(0.6)
Impact of Merger transaction (2)			144			5.8						—			—
Non-taxable income			(13)			(0.5)						(6)			(0.2)
Other			8			0.3						2			—
Income tax expense			$729			29.6		%				$575			23.3		%

(1)For fiscal years 2024 and 2023, the Company was a tax resident in the U.K. Therefore, the Company utilized the U.K. statutory rate. Since the change in statutory rate transitioned between fiscal years, the Company utilized a prorated statutory rate during fiscal 2023.

(2)As a result of the steps taken in the fourth quarter of fiscal 2024 to complete the Merger, the Company recognized one-time, non-cash deferred tax charges of $137 million composed of a reduction in deferred tax assets of $90 million related to tax losses that were no longer expected to be realizable and an increase in valuation allowance of $47 million related to U.K. deferred tax assets no longer expected to be realizable, as well the tax impact of non-deductible expenses related to the Merger.

Deferred Taxes

Significant components of the Company’s deferred tax assets and liabilities are as follows:

			As of July 31,
(In millions)			2025						2024
Assets:
Deferred compensation			$97						$82
Tax loss carryforwards			92						90
Lease liabilities			460						404
Sales returns and other liabilities			146						106
Inventory			36						45
Capitalized research and development			114						82
Other			32						49
Total deferred tax assets			977						858
Valuation allowance			(129)						(128)
Total deferred tax assets, net of valuation allowance			$848						$730
Liabilities:
Right of use assets			($447)						($397)
Goodwill and intangible assets			(139)						(129)
Property, plant and equipment			(44)						(34)
Total deferred tax liabilities			(630)						(560)
Net deferred tax assets			$218						$170

We recognize a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion, or all, of a deferred tax asset will not be realized. Our valuation allowance at July 31, 2025 related to foreign net capital loss carryforwards in the U.K. and Canada as well as deferred tax assets in the U.K. which are not expected to be realizable. Our valuation allowance at July 31, 2024 relates to foreign net capital loss carryforwards in the U.K. and Canada which are not expected to be realizable. For the year ended July 31, 2025, there was a $1 million change in the valuation allowance (2024: $47 million and 2023: $4 million).

As of July 31, 2025, the Company had U.S. federal and state operating loss carryforwards for income tax purposes of $8 million and $24 million, respectively. Some of the loss carryforwards may expire at various dates through 2039. At July 31, 2025, the Company had $369 million of loss carryforwards related to international operations. The Company’s foreign losses and foreign capital losses were offset with valuation allowances.

Unrecognized Tax Benefits

The following table reconciles the beginning and ending amount of our gross unrecognized tax benefits:

			For the years ended July 31,
(In millions)			2025						2024						2023
Unrecognized tax benefits at beginning of fiscal year			$151						$144						$140
Additions based on tax positions related to current year			5						25						27
Additions for tax positions of prior years			2						2						2
Reductions for tax positions of prior years			—						(10)						—
Reductions due to lapse of statute of limitations			(32)						(10)						(25)
Unrecognized tax benefits			$126						$151						$144

As of July 31, 2025, the unrecognized tax benefits that, if recognized, would impact the effective tax rate were $126 million (2024: $151 million and 2023: $144 million). The Company recognizes interest and penalties in the income tax provision in its consolidated statements of earnings. As of July 31, 2025, the Company had accrued interest of $32 million (2024: $28 million and 2023: $23 million). For the year ended July 31, 2025, the interest expense included in income tax expense was $4 million (2024: $5 million and 2023: $6 million). Penalties related to these positions were not material for all periods presented.

The total amount of unrecognized tax benefits relating to the Company’s tax positions is subject to change based on future events including, but not limited to, the settlement of ongoing tax audits and assessments and the expiration of applicable statutes of limitations. The Company anticipates that the balance of gross unrecognized tax benefits, excluding interest and penalties, will be reduced by $61 million during the next 12 months, primarily due to statute of limitation expirations. However, the outcomes and timing of such events are highly uncertain and changes in the occurrence, expected outcomes and timing of such events could cause the Company’s current estimate to change materially in the future.

Reinvestment of Unremitted Earnings

We consider foreign earnings of specific subsidiaries to be indefinitely reinvested. These permanently reinvested earnings of foreign subsidiaries at July 31, 2025 amounted to $800 million (2024: $795 million). The Company is not recording a deferred tax liability, if any, on such amounts. If at some future date, the Company ceases to be permanently reinvested in these specific foreign subsidiaries, the Company may be subject to foreign withholding and other taxes on these undistributed earnings and may need to record a deferred tax liability for any outside basis difference on these specific foreign subsidiaries. In addition, interest payments made between the U.S. and U.K. are anticipated to be exempt from withholding taxes, however, if Ferguson should fail to meet treaty requirements, withholding taxes may apply to these payments.

Tax Return Examination Status

The Company files income tax returns in the U.S., U.K. and in various other foreign, state and local jurisdictions. We are subject to tax audits in the various jurisdictions until the respective statutes of limitation expire. The Company is no longer subject to U.S. income tax examinations for fiscal years before 2022 with the exception of fiscal year 2020. With respect to the U.K., the company is no longer subject to examinations by tax authorities for fiscal years before 2020. There are ongoing U.S. state and local audits and other foreign audits covering fiscal 2013-2023. We do not expect the results from any ongoing income tax audit to have a material impact on our consolidated financial condition, results of operations or cash flows.

Note 5. Property, plant and equipment

Property, plant and equipment consisted of the following:

			As of July 31,
(In millions)			2025						2024
Land			$399						$388
Buildings			1,206						1,185
Leasehold improvements			719						618
Plant and machinery			1,012						927
Other equipment			173						166
Property, plant and equipment			3,509						3,284
Less: Accumulated depreciation			(1,663)						(1,532)
Property, plant and equipment, net			$1,846						$1,752

Depreciation related to property, plant and equipment included in operating costs for fiscal 2025 was $187 million (2024: $162 million and 2023: $148 million).

Note 6. Leases

Lease-related assets and liabilities consisted of the following:

			As of July 31,
(In millions)			2025						2024
Assets:
Operating lease right-of-use assets			$1,763						$1,565
Liabilities:
Current portion of operating lease liabilities			$447						$395
Long-term portion of operating lease liabilities			1,367						1,198
Total lease liabilities			$1,814						$1,593

The components of leasing costs, included in SG&A, consisted of the following:

			For the years ended July 31,
(In millions)			2025						2024						2023
Operating lease costs			$484						$440						$390
Variable lease costs			107						92						85
Short-term lease costs			33						28						23
Total lease costs			$624						$560						$498

Variable lease costs represent costs incurred in connection with non-lease components, such as common area maintenance, and certain pass-through operating expenses such as real estate taxes and insurance.

The weighted average remaining lease terms and discount rates for the Company’s operating leases were as follows:

			As of July 31,
			2025						2024
Weighted average remaining lease term (years)			5.4						5.4
Weighted average discount rate			4.6		%				4.5		%

The future minimum rental payments for the next five fiscal years under operating lease obligations, having initial or remaining non-cancelable lease terms in excess of one year are summarized as follows:

			As of July 31,
(In millions)			2025
2026			$457
2027			436
2028			367
2029			280
2030			199
Thereafter			350
Total undiscounted lease payments			2,089
Less: imputed interest			(275)
Present value of liabilities			$1,814

The future minimum lease payments in the table above exclude payments for leases that have not yet commenced.

Supplemental cash flow information related to leases consisted of the following:

			For the years ended July 31,
(In millions)			2025						2024						2023
Cash paid for operating leases (operating cash flows)			$469						$424						$379
Lease assets obtained in exchange for new operating lease liabilities (non-cash)			370						253						309

As of July 31, 2025, the Company had $63 million of non-cancelable operating leases with terms similar to the Company’s current operating leases that have not yet commenced. These leases are expected to commence in fiscal year 2026.

Note 7. Goodwill

The Company completed its annual impairment analysis for goodwill during the fourth quarter of fiscal 2025. Based on the results of the Company’s analysis, the Company concluded that the fair value of each reporting unit was substantially in excess of its respective carrying value. There were no impairment charges related to goodwill in fiscal 2025, 2024 or 2023.

The following table presents the changes in the net carrying amount of goodwill allocated by reportable segment for the years ended July 31, 2025 and 2024:

(In millions)			United States						Canada						Total
Balance as of July 31, 2023			$2,092						$149						$2,241
Acquisitions			91						33						124
Effect of currency translation adjustment			(1)						(7)						(8)
Balance as of July 31, 2024			2,182						175						2,357
Acquisitions			99						17						116
Included in disposal group as assets held for sale			(5)						(3)						(8)
Effect of currency translation adjustment			—						(1)						(1)
Balance as of July 31, 2025			$2,276						$188						$2,464
Cumulative goodwill impairment as of July 31, 2025			$108						$11						$119

Cumulative balance of historical goodwill impairments as of July 31, 2025, as shown above, was the same for all periods presented herein. See Note 16, Acquisitions, to the Consolidated Financial Statements for further information on the additions to goodwill in fiscal 2025 and 2024.

Note 8. Other intangible assets

The Company's major categories of definite-lived intangible assets and the respective weighted average remaining useful lives consisted of the following:

						As of July 31, 2025												As of July 31, 2024
(In millions, except remaining useful life)			Weighted average remaining useful life (years)			Gross Carrying Amount						Accumulated Amortization						Gross Carrying Amount						Accumulated Amortization
Software			2			$315						($252)						$300						($223)
Customer relationships*			7			1,568						(959)						1,452						(855)
Tradenames and brands*			4			279						(246)						273						(224)
Other*			3			223						(202)						219						(189)
Total intangible assets						$2,385						($1,659)						$2,244						($1,491)
* Acquired intangible assets

Amortization expense of intangible assets for the year ended July 31, 2025 was $186 million (2024: $173 million and 2023: $173 million).

As of July 31, 2025, expected amortization expense for the unamortized definite-lived intangible assets for the next five fiscal years and thereafter is as follows:

			As of July 31,
(In millions)			2025
2026			$155
2027			147
2028			128
2029			94
2030			79
Thereafter			123
Total			$726

Note 9. Debt

The Company’s debt obligations consisted of the following:

			As of July 31,
(In millions)			2025						2024
Variable-rate debt:
Receivables Facility			$375						$250
Term Loan			—						500
Private Placement Notes:
3.44% due November 2024			—						150
3.73% due September 2025			400						400
3.51% due November 2026			150						150
3.83% due September 2027			150						150
Unsecured Senior Notes:
4.25% due April 2027			300						300
4.50% due October 2028			750						750
3.25% due June 2030			600						600
4.65% due April 2032			700						700
5.00% due October 2034			750						—
Subtotal			$4,175						$3,950
Less: current maturities of debt			(400)						(150)
Unamortized discounts and debt issuance costs			(19)						(18)
Interest rate swap - fair value adjustment			(4)						(8)
Total long-term debt			$3,752						$3,774

Private Placement Notes

In June 2015 and November 2017, Wolseley Capital, Inc. (“Wolseley Capital”), a wholly owned subsidiary of the Company, privately placed fixed rate notes in an aggregate principal amount of $800 million and $355 million, respectively (collectively, the “Private Placement Notes”). Interest on the Private Placement Notes is payable semi-annually.

As of July 31, 2025 and 2024, the Company had interest rate swaps with a notional value of $150 million and $300 million, respectively, in connection with the Private Placement Notes entered into in November 2017. See Note 10, Fair value measurements for further information.

Wolseley Capital’s obligations under the note and guarantee agreements are unconditionally guaranteed by the Ferguson Enterprises Inc. (“FEI”) and Ferguson UK Holdings Limited, an indirect subsidiary of the Company (“FUKHL”). Wolseley Capital may repay the outstanding Private Placement Notes, in whole or in part, at any time at a price equal to 100% of the principal amount being prepaid plus a “make-whole” prepayment premium.

The note and guarantee agreements relating to the Private Placement Notes contain certain customary affirmative covenants, as well as certain customary negative covenants that, among other things, restrict, subject to certain exceptions, the Company’s non-guarantor subsidiaries’ ability to incur indebtedness and the Company’s ability to enter into affiliate transactions, grant liens on its assets, sell assets, or engage in acquisitions, mergers or consolidations. In addition, subject to certain exceptions, the note and guarantee agreements require us to maintain a leverage ratio.

The outstanding Private Placement Notes also contain customary events of default. Upon an event of default and an acceleration of the Private Placement Notes, the Company must repay the outstanding Private Placement Notes plus a make-whole premium and accrued and unpaid interest.

Subsequent to July 31, 2025, the Company repaid $400 million related to the 3.73% Private Placement Notes that matured in September 2025.

Unsecured Senior Notes

As of July 31, 2025, the Company has issued a total of $3.1 billion in unsecured notes, collectively referred to as the “Unsecured Senior Notes”.

• Ferguson Finance plc (“Ferguson Finance”) has issued $2.35 billion of Unsecured Senior Notes.

• In October 2024, FEI issued an aggregate principal amount of $750 million of Unsecured Senior Notes.

Subsequent to fiscal 2025, in September 2025, FEI issued an additional $750 million aggregate principal amount of Unsecured Senior Notes, maturing in March 2031 (the “2031 Senior Notes”). The 2031 Senior Notes bear interest at a rate of 4.35%, payable semi-annually.

The Unsecured Senior Notes issued by Ferguson Finance are fully and unconditionally guaranteed by FUKHL and FEI, and the Unsecured Senior Notes issued by FEI are fully and unconditionally guaranteed by FUKHL, each on a direct, unsubordinated and unsecured senior basis and generally carry the same terms and conditions with interest paid semi-annually. The Unsecured Senior Notes may be redeemed, in whole or in part (i) at 100% of the principal amount on the notes being redeemed plus a “make-whole” prepayment premium at any time prior to certain specified periods up to three months before the maturity date (the “Notes Par Call Date”) or (ii) after the Notes Par Call Date at 100% of the principal amount of the notes being redeemed plus accrued and unpaid interest on the principal being redeemed.

The Unsecured Senior Notes include covenants, subject to certain exceptions, which include limitations on the granting of liens and on mergers and acquisitions.

Revolving Facility

In April 2025, the Company entered into a revolving credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, FUKHL, as guarantor, and certain other lenders (the “Revolving Credit Agreement”), providing an unsecured revolving credit facility in an aggregate committed amount of $1.5 billion that matures April 2, 2030 (the “Revolving Facility”). The Revolving Credit Agreement provides the Company with the ability to increase from time to time the aggregate capacity of the facility by $500 million under certain conditions, including the receipt of additional or increased lender commitments. Capitalized terms used in this summary have the meaning set forth the Revolving Credit Agreement.

U.S. Dollar-denominated loans bear interest at either Term SOFR Rate plus a margin or, alternatively, at Base Rate plus a margin. Canadian Dollar-denominated loans bear interest at Adjusted Term CORRA Rate plus a margin. In addition, the Company will pay a commitment fee on any unused commitments.

Upon entering into the Revolving Credit Agreement, the Company terminated its existing committed $1.35 billion Multicurrency Revolving Facility Agreement originally dated March 10, 2020, as amended and restated by that certain Amendment and Restatement Agreement, dated October 7, 2022 (“Multicurrency Revolving Facility”).

As of July 31, 2025 and 2024, no borrowings were outstanding under the Revolving Facility or the Multicurrency Revolving Facility, respectively.

Receivables Securitization Facility

The Company maintains a Receivables Securitization Facility (the “Receivables Facility”) which is primarily governed by the Receivables Purchase Agreement, dated July 31, 2013, as amended from time to time, among the following parties (the “Parties”): the Company, Ferguson Receivables, LLC (“FRL”) and certain other subsidiaries of the Company; the conduit purchasers, committed purchasers, and letter of credit banks from time to time party thereto; and Royal Bank of Canada, as administrative agent (the “Receivables Purchase Agreement”).

The Receivables Facility consists of funding for up to $915 million, terminating on October 29, 2027. The Company has the ability to increase the aggregate total available amount under the Receivables Facility up to a total of $1.5 billion from time to time, subject to lender participation. Under the Receivables Facility, creditors of FRL have no recourse to the Company’s general credit and FRL’s assets can be used only to settle FRL’s obligations. Interest is payable under the Receivables Facility at a rate of Term SOFR (as defined in the Receivables Facility) plus a credit spread adjustment of 10 basis points plus a margin or, in the case of the lending banks that fund, through a conduit, by the issuance of commercial paper, at a rate equal to the per annum rate payable of the related commercial paper issued by such conduit plus a margin. The interest rate under the Receivables Facility was approximately 5.25% as of July 31, 2025. The Company does not factor its accounts receivable.

The Receivables Facility contains affirmative and negative covenants that, among other things, restrict, subject to certain exceptions, the ability of the Company and its subsidiaries party thereto from granting additional liens on the accounts receivable, selling certain assets or engaging in acquisitions, mergers or consolidations, or, in the case of the borrower, incurring other indebtedness.

The Receivables Facility also contains events of default and cross-default provisions, including requirements that our performance in relation to accounts receivable remains at set levels (specifically, among other things, relating to timely payments being received from debtors on the accounts receivable and to the amount of accounts receivable written off as bad debt) and that a required level of accounts receivable be generated and available to support the borrowings under the arrangements.

The Company pays customary fees regarding unused amounts to maintain the availability under the Receivables Facility.

Term Loan Agreement

The Company and FUKHL previously maintained a Credit Agreement, dated October 7, 2022 (as amended from time to time, the “Term Loan Agreement”), providing for term loans (the “Term Loan”) in an aggregate principal amount of $500 million. In October 2024, the Term Loan was voluntarily repaid in full and the Term Loan Agreement was terminated in accordance with its terms.

Other

The Company was in compliance with all debt covenants for all of these debt obligations and facilities that were in effect as of July 31, 2025.

Debt maturities, excluding of unamortized original issue discounts, unamortized debt issuance costs, fair-value hedge adjustments, and finance lease obligations, for the next five fiscal years and thereafter are as follows:

			As of July 31,
(In millions)			2025
2026			$400
2027			450
2028			525
2029			750
2030			600
Thereafter			1,450
Total			$4,175

Note 10. Fair value measurements

Derivative Instruments

The Company’s derivatives relate principally to interest rate swaps, designated as fair value hedges, to manage its exposure to interest rate movements on its debt. They are measured at fair value on a recurring basis through profit and loss using forward interest curves which are Level 2 inputs. The Company’s derivatives are not material. The notional amount of the Company’s outstanding fair value hedges as of July 31, 2025 was $150 million (2024: $300 million).

Equity investments

The fair value of the Company’s equity investments is measured on a recurring basis using market derived valuation methods upon occurrence of orderly transactions for identical or similar assets which is deemed a Level 3 input. The fair value of equity investments was $39 million as of July 31, 2025 (2024: $28 million) and the activity during fiscal 2025 was not material.

Other Fair Value Disclosures

Due to their short maturities, or their insignificance, the carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and short-term debt approximated their fair values at July 31, 2025 and 2024.

Non-recurring fair value measurements

Fair value estimates are made in connection with the Company’s acquisitions. See Note 16, Acquisitions of the Consolidated Financial Statements for further details.

Liabilities for which fair value is only disclosed

Carrying amounts and the related estimated fair value of the Company’s long-term debt were as follows:

			As of July 31,
			2025												2024
(In millions)			Carrying Amount						Fair Value						Carrying Amount						Fair Value
Unsecured Senior Notes			$3,081						$3,033						$2,333						$2,263
Private Placement Notes			700						698						849						837

The difference in fair values results from changes, since issuance, in the corporate debt markets and investor preferences. The fair value of the Unsecured Senior Notes and Private Placement Notes are classified as Level 2 fair value measurements, and were estimated using observable market prices as provided in secondary markets that consider the Company’s credit risk and market-related conditions.

Due to its variable rate nature, the carrying value of the Company’s variable rate debt approximates its fair value.

Note 11. Commitments and contingencies

The Company is, from time to time, involved in various legal proceedings considered to be ordinary course of business in relation to, among other things, the products that we supply, contractual and commercial disputes and disputes with employees. Provision is made if, on the basis of current information and professional advice, liabilities are considered probable. In the case of unfavorable outcomes, the Company may benefit from applicable insurance protection. The Company does not expect any of its pending legal proceedings to have a material adverse effect on its results of operations, financial position or cash flows.

Note 12. Accumulated other comprehensive loss

The change in accumulated other comprehensive loss was as follows:

(In millions, net of tax)			Foreign currency translation						Pensions						Total
Balance at July 31, 2022			($420)						($410)						($830)
Other comprehensive loss before reclassifications			(9)						(57)						(66)
Amounts reclassified from accumulated other comprehensive loss			—						8						8
Other comprehensive loss			(9)						(49)						(58)
Balance as of July 31, 2023			($429)						($459)						($888)
Other comprehensive loss before reclassifications			(32)						(22)						(54)
Amounts reclassified from accumulated other comprehensive loss			—						11						11
Other comprehensive loss			(32)						(11)						(43)
Balance as of July 31, 2024			($461)						($470)						($931)
Other comprehensive loss before reclassifications			(2)						(49)						(51)
Amounts reclassified from accumulated other comprehensive loss			—						11						11
Other comprehensive loss			(2)						(38)						(40)
Balance as of July 31, 2025			($463)						($508)						($971)

Amounts reclassified from accumulated other comprehensive loss related to pension and other post-retirement items include the related income tax impacts. Such amounts consisted of the following:

			For the years ended July 31,
(In millions)			2025						2024						2023
Amortization of actuarial losses			$15						$15						$11
Tax benefit			(4)						(4)						(3)
Amounts reclassified from accumulated other comprehensive loss			$11						$11						$8

Note 13. Retirement benefit obligations

The Company provides various retirement benefits to eligible employees, including pension benefits associated with defined benefit plans, contributions to defined contribution plans, post-retirement benefits and other benefits. Eligibility requirements and benefit levels vary depending on associate location.

The Company provides defined benefit plans to its employees in Canada. The majority of the Canadian defined benefit plans are funded. Post-retirement benefit obligations are not material and have been included in all amounts presented herein.

The legacy U.K. defined benefit plan (the “U.K. Plan”) is the Wolseley Group Retirement Benefits Plan which provides benefits based on final pensionable salaries. The assets are held in separate trustee administered funds. The plan was closed to new entrants in 2009, closed to future service accrual in December 2013 and closed to future non-inflationary salary accrual on the disposal of the U.K. business in 2021. In 2021, prior to the disposal of the U.K. business, Wolseley UK Limited, the U.K. Plan liabilities were transferred to FUKHL.

In 2017, the Company secured a buy-in insurance policy with Pension Insurance Corporation for the U.K. Plan. This policy covers all benefit payments to a certain portion of participants in the plan. The insured liabilities are exactly equal to the fair value of the related insurance assets.

On September 9, 2025, subsequent to the fiscal year-end, the trustee of the U.K. Plan purchased a bulk annuity policy (the “September Buy-In Policy”) to insure the remaining uninsured U.K. Plan liabilities. Under the September Buy-In Policy, the U.K. Plan’s assets, along with a Company contribution of £41 million have been transferred to an insurance provider in return for a qualifying insurance policy that will provide an income stream equivalent to the remaining obligations to the covered U.K. Plan’s members. As a result, the Company is no longer required to make deficit reduction contributions but expects to make ongoing contributions to cover the U.K. Plan’s expenses and other payments that may be required.

The funded status of the Company’s plans was as follows, valued with a measurement date of July 31 for each year:

			For the years ended July 31,
(In millions)			2025						2024
Change in net benefit obligations:
Beginning balance			$1,251						$1,218
Interest cost			62						62
Actuarial (gain) loss			(119)						36
Benefits paid			(68)						(63)
Exchange rate adjustment			30						(2)
Ending balance			$1,156						$1,251
Change in assets at fair value:
Beginning balance			$1,308						$1,270
Actual return on plan assets			(123)						68
Company contributions			31						34
Benefits paid			(68)						(63)
Exchange rate adjustment			34						(1)
Ending balance at fair value			$1,182						$1,308
Funded status of plans			$26						$57

As required by United Kingdom pensions regulation, the U.K. Plan completed its triennial actuarial valuation exercise, which is measured on a technical provisions basis, based on the U.K. Plan’s financial position as of April 30, 2022. The triennial valuation originally resulted in required contributions by the Company of £133 million to be spread over the period to January 31, 2026, of which the Company has paid £72 million as of July 31, 2025. In connection with the September Buy-In Policy, the Company has satisfied all obligations to date under the triennial valuation occurring in April 2022.

Total expected employer contributions to the defined benefit plans for the year ending July 31, 2026 are estimated to be $59 million, which includes amounts paid in the September Buy-In Policy.

Amounts recognized in the consolidated balance sheets consisted of:

			As of July 31,
(In millions)			2025						2024
Non-current asset			$26						$57

Amounts recognized in accumulated other comprehensive loss:

			As of July 31,
(In millions)			2025						2024
Net actuarial loss			$667						$617
Income tax impact			(159)						(147)
Accumulated other comprehensive loss			$508						$470

Components of other comprehensive loss (income) consisted of the following:

			For the years ended July 31,
(In millions)			2025						2024						2023
Net actuarial loss (gain)			$69						$31						$83
Amortization of net actuarial loss			(15)						(15)						(11)
Impact of exchange rates			(4)						(1)						(7)
Income tax impact			(12)						(4)						(16)
Other comprehensive loss, net of tax			$38						$11						$49

The components of net periodic pension costs associated with all of the Company’s plans were as follows:

			For the years ended July 31,
(In millions)			2025						2024						2023
Other expense (income), net
Amortization of net actuarial losses			$15						$15						$11
Interest cost			62						62						51
Expected return on plan assets			(65)						(63)						(49)
Net periodic cost			$12						$14						$13
Weighted average assumptions:
Discount rate, net periodic benefit cost			4.98		%				5.05		%				3.53		%
Discount rate, benefit obligations			5.71		%				4.98		%				5.05		%
Expected return on plan assets			5.02		%				5.11		%				3.41		%
Wage inflation growth rate			2.40		%				2.45		%				2.50		%

The Company determines the discount rate primarily by reference to rates on high-quality, long-term corporate and government bonds that mature in a pattern similar to the expected payments to be made under the various plans.

The Company has established strategic asset allocation percentage targets for significant asset classes with the aim of achieving an appropriate balance between risk and return. The Company periodically revises asset allocations, where appropriate, in an effort to improve return and/or manage risk. The expected return on plan assets is determined based on the expected long-term rate of return on plan assets and the market-related value of plan assets. The market-related value of plan assets is based on long-term expectations given current investment objectives and historical results.

Investment Strategy

The Company’s investment strategy for its funded post-employment plans is decided locally and, if relevant, by the trustees of the plan and takes account of the relevant statutory requirements. The Company’s objective for the investment strategy is to achieve a target rate of return in excess of the increase in the liabilities, while taking an acceptable amount of investment risk relative to the liabilities. This objective is implemented by using specific allocations to a variety of asset classes that are expected over the long term to deliver the target rate of return.

For the U.K. Plan, the guaranteed insurance policy represented approximately 35% of the plan assets as of July 31, 2025.

Subsequent to year-end, in connection with the September Buy-In Policy, the U.K. Plan assets entirely consist of guaranteed insurance contracts to reduce risk to the Company.

For the plans in Canada, the investment strategy is to invest predominantly in equities and bonds.

The Company’s weighted average asset allocations by asset category were as follows:

			As of July 31,
			2025						2024
Asset category:
Equity securities			3		%				2		%
Fixed income securities			63						63
Cash, cash equivalents and other short-term investments			1						2
Guaranteed insurance policies			33						33
Total			100		%				100		%

The following tables present the fair value of the Company’s plan assets using the fair value hierarchy:

			As of July 31, 2025
(In millions)			Total						Level 1						Level 2						Level 3
U.K. Plan assets:
Fixed income security: Government			$705						$705						$—						$—
Cash and cash equivalents			4						4						—						—
Insurance policies			378						—						—						378
Canada Plan assets:
Equity securities			34						34						—						—
Fixed income securities:
Corporate			7						—						7						—
Government			31						—						31						—
Cash and cash equivalents			2						2						—						—
Other			21						13						8						—
			$1,182						$758						$46						$378

			As of July 31, 2024
(In millions)			Total						Level 1						Level 2						Level 3
U.K. Plan assets:
Fixed income securities:
Corporate			$340						$1						$227						$112
Asset backed			1						—						1						—
Government			439						439						—						—
Cash, cash equivalents and other short-term investments			23						22						1						—
Insurance policies			409						—						—						409
Canada Plan assets:
Equity securities			34						34						—						—
Fixed income securities:
Corporate			7						—						7						—
Government			33						—						33						—
Cash and cash equivalents			2						2						—						—
Other			20						12						8						—
			$1,308						$510						$277						$521

The following table presents a reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs (Level 3):

			For the years ended July 31,
(In millions)			2025						2024
Beginning balance			$521						$510
Transfers into Level 3			—						11
Transfers out of Level 3			(95)						—
Actual returns			(26)						31
Purchases, sales and settlements, net			(34)						(32)
Impact of exchange rates			12						1
Ending balance			$378						$521

The Company expects the following benefit payments related to its defined benefit pension plans over the next 10 years:

			As of July 31,
(In millions)			2025
2026			$67
2027			68
2028			70
2029			71
2030			72
2031-2035			385
Total			$733

Defined Contribution Plans

The principal plans operated for employees in the United States are defined contribution plans, which are established in accordance with 401(k) rules in the United States. The Company’s Canadian employees are covered by defined contribution plans including a Post Retirement Benefit Plan and Supplemental Executive Retirement Plan. Under the Canadian plans, the Company’s employees are able to make personal contributions.

Total expense related to defined contribution plans in fiscal 2025 was $98 million (2024: $95 million and 2023: $93 million).

In addition, Ferguson Enterprises, LLC, a subsidiary of the Company, sponsors a non-qualified deferred compensation plan for the benefit of U.S.-based executives and certain other senior associates. For the year ended July 31, 2025, the Company’s obligations related to the plan total $408 million (2024: $378 million), including a current portion of the liability of $35 million (2024: $28 million). The Company has investments in Company-owned life insurance policies that are intended to fund these obligations, however, these assets are subject to the general claims of the Company’s creditors. The assets are recorded at cash surrender value with changes recognized in earnings. The non-current assets total $409 million (2024: $373 million).

Note 14. Stockholders’ equity

The following table presents a summary of the Company’s share activity:

			For the years ended July 31,
			2025						2024						2023
Ordinary shares:
Balance at beginning of period			232,171,182						232,171,182						232,171,182
Treasury shares canceled			(30,827,929)						—						—
Change in shares issued			(201,343,253)						—						—
Balance at end of period			—						232,171,182						232,171,182
Common stock:
Balance at beginning of period			—						—						—
Common stock issued			201,343,253						—						—
Balance at end of period			201,343,253						—						—
Treasury shares:
Balance at beginning of period			(30,827,929)						(27,893,680)						(21,078,577)
Treasury shares canceled			30,827,929						—						—
Shares repurchases			(5,026,408)						(3,317,654)						(7,022,242)
Treasury shares used to settle share-based compensation awards			267,355						383,405						207,139
Balance at end of period			(4,759,053)						(30,827,929)						(27,893,680)
Employee Benefit Trust:
Balance at beginning of period			—						(274,031)						(846,491)
Employee Benefit Trust shares used to settle share-based compensation awards			—						253,212						572,460
Shares sold upon termination of Employee Benefit Trust			—						20,819						—
Balance at end of period			—						—						(274,031)
Total shares outstanding at end of period			196,584,200						201,343,253						204,003,471

Employee Benefit Trusts

Two Employee Benefit Trusts had been previously established in connection with the Company’s discretionary share award plans and long-term incentive plans. During fiscal 2024, each of these trusts were terminated with all shares disbursed or sold.

Share Repurchases

In March 2025, the Company extended the share repurchase program by an additional $1.0 billion. As such, the Company is purchasing shares under an authorization that allows up to $5.0 billion in share repurchases. As of July 31, 2025, the Company has completed $4.0 billion in share repurchases under the authorized program.

Ordinary and Treasury shares

As of August 1, 2024, the Company canceled all ordinary shares held in treasury in connection with its completion of the Merger. As a result, in the first quarter of fiscal 2025, 30,827,929 ordinary shares held in treasury were canceled, 201,343,253 of outstanding ordinary shares not held in treasury were canceled and 201,343,253 shares of common stock were issued as consideration therefor.

Note 15. Share-based compensation

The Ferguson Enterprises Inc. 2023 Omnibus Equity Incentive Plan (the “Omnibus Plan”) provides authorization for the granting of share-based compensation awards to the Company’s key employees and non-employee directors. The Omnibus Plan provides for the issuance of up to 6,750,000 shares of the Company’s common stock, subject to share recycling and adjustment provisions. All share-based compensation awards granted subsequent to shareholder approval of the Omnibus Plan at the annual general meeting on November 28, 2023 have been granted under the Omnibus Plan.

Since November 2023, no new awards have been granted under the Ferguson Enterprises Inc. Ordinary Share Plan 2019, the Ferguson Enterprises Inc. Performance Ordinary Share Plan 2019 and the Ferguson Enterprises Inc. Long Term Incentive Plan 2019.

The Company grants share-based compensation awards that can be broadly characterized by the underlying vesting conditions as follows:

• Time vested, restricted stock units (“RSU”) vest over time. RSU awards granted prior to fiscal 2025 cliff vest, typically at the end of three years. RSU awards granted in fiscal 2025 will vest in equal, annual installments over three years. The fair value of these awards is based on the closing share price on the date of grant.

• Single metric performance stock units (“PSU”) typically vest following three-year performance cycles. The number of shares issued will vary based upon the Company’s performance against an adjusted operating profit measure. The fair value of the award is based on the closing share price on the date of grant.

• Multiple metric performance stock units granted to certain members of management (“PSU-EX”) typically vest following three-year performance cycles. 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”). The fair value of awards vesting based upon EPS growth (diluted) and ROCE are equal to the closing share price on the date of grant and the fair value of rTSR awards are determined using a Monte-Carlo simulation.

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

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.

Stock options

In October 2024, the Company granted 65,760 stock options with an exercise price equal to the closing share price of the Company's common stock on the last trading day prior to the date of grant. These options vest and become exercisable over three years, in equal, annual installments beginning one year from the date of grant, and expire 10 years from the date of grant. The fair value of the Company's stock options was estimated on the date of grant using the Black-Scholes option-pricing model. Since the grant date, 6,803 options have been forfeited. The share-based compensation expense of these stock options is not material.

Employee share purchase plan

Ferguson Enterprises Inc. Employee Share Purchase Plan 2021 (the “ESPP”) provides for a limit of 20 million shares of common stock that can be awarded under the plan subject to certain guidelines set forth in the plan.

As of July 31, 2025, 19.5 million shares of common stock remain available for allotment under the ESPP. The exercise price per share of common stock is prescribed by the Board for each offering period and may not be less than 85% of the lesser of the fair market value of common stock on the date of grant and the fair market value of common stock on the date of exercise. During fiscal 2025, there were no shares purchased under the ESPP. The expense associated with the ESPP is not material.

Note 16. Acquisitions

The Company acquired nine and ten businesses during fiscal 2025 and 2024, respectively. Each of the acquired businesses is generally engaged in the distribution of plumbing, HVAC or infrastructure related products and was acquired to support growth. In each of the Company’s acquisitions, the Company has purchased substantially all of the acquiree’s business and therefore all transactions have been accounted for as a business combination pursuant to FASB Accounting Standards Codification (ASC) 805.

The following table summarizes the preliminary purchase price allocation for the assets acquired and liabilities assumed in regards to the Company’s respective acquisitions having occurred as of July 31 in fiscal 2025 and 2024:

			Acquisitions occurring in fiscal
(In millions)			2025						2024
Cash and cash equivalents			$2						$1
Receivables and other assets			44						53
Inventories			48						50
Property, plant and equipment			3						6
Operating lease right-of-use assets			14						11
Customer relationships intangible assets			136						108
Other intangible assets			16						15
Trade and other payables			(24)						(41)
Lease liabilities			(14)						(11)
Deferred tax			(4)						(7)
Other			—						(2)
Total			221						183
Goodwill			116						124
Consideration			$337						$307
Satisfied by:
Cash			$303						$261
Deferred consideration			34						46
Total consideration			$337						$307

The fair values of the assets acquired in fiscal 2025 are considered preliminary and are based on management’s best estimates. Further adjustments may be necessary in connection with acquisitions completed in fiscal 2025 when additional information becomes available during the measurement period about events that existed at the date of acquisition. There were no material adjustments in the current fiscal year that related to the closing of the measurement period of acquisitions made in the prior fiscal year. As of the date of this Annual Report, the Company has made all material adjustments related to acquisitions in fiscal 2025.

The fair value estimates of intangible assets are considered non-recurring, Level 3 measurements within the fair value hierarchy and are estimated as of each respective acquisition date.

The goodwill on these acquisitions is attributable to the anticipated profitability of the new markets and product ranges to which the Company has gained access and additional profitability, operating efficiencies and other synergies available in connection with existing markets. Goodwill acquired during fiscal 2025 that was attributed to the United States and Canada segments were $99 million (2024: $91 million) and $17 million (2024: $33 million), respectively. Goodwill acquired in fiscal 2025 that is expected to be deductible for tax purposes is $102 million (2024: $90 million).

Deferred consideration represents the expected payout due to the sellers of certain acquired businesses that is subject to either 1) a contractual settle-up period or 2) a contingency related to contractually defined performance metrics. If the deferred consideration is contingent on achieving performance metrics, the liability is estimated using assumptions regarding the expectations of an acquiree’s ability to achieve the contractually defined performance metrics over a period of time that typically spans one to three years. When ultimately paid, deferred consideration is reported as a cash outflow from financing activities.

The businesses acquired in fiscal 2025 contributed $112 million to net sales and $5 million in profit to the Company’s income before income tax, including acquired intangible asset amortization, transaction and integration costs for the period between the applicable date of acquisition and July 31, 2025. Acquisition costs in fiscal 2025 was $3 million (2024: $5 million). Acquisition costs are expensed as incurred and included in SG&A in the Company’s consolidated statements of earnings.

The net outflow of cash in respect of the purchase of businesses is as follows:

			For the years ended July 31,
(In millions)			2025						2024
Purchase consideration			$303						$261
Cash, cash equivalents and bank overdrafts acquired			(2)						(1)
Cash consideration paid, net of cash acquired			301						260
Deferred and contingent consideration paid for prior years’ acquisitions(1)			41						44
Net cash outflow in respect of the purchase of businesses			$342						$304

(1) Included in other financing activities in the consolidated statements of cash flows

Pro forma disclosures

If each acquisition had been completed on the first day of the prior fiscal year, the Company’s unaudited pro forma net sales and income before income tax would have been:

			Year ended July 31,
(In millions)			2025						2024
Pro forma net sales for current year acquisitions			$30,966						$29,954
Pro forma income before income tax for current year acquisitions			2,427						2,476

			Year ended July 31,
(In millions)			2024						2023
Pro forma net sales for prior year acquisitions			$29,902						$30,140

The impact on income before income tax for prior year acquisitions in 2024 and 2023, including additional intangible asset amortization, transaction and integration costs, would not be material.

The unaudited pro forma results presented herein do not necessarily represent financial results that would have been achieved had the acquisition actually occurred at the beginning of the prior fiscal year.

Note 17. Related party transactions

In fiscal 2024 and 2023, the Company purchased $8 million and $27 million, respectively, of delivery, installation and related administrative services from companies that were significantly influenced by a Ferguson Non-Employee Director at the time such services were acquired. The services were purchased on an arm’s-length basis. In December 2023, this related party relationship ended. As such, subsequent services provided by these companies did not constitute related party transactions. No material amounts are due to such companies. No such related parties transactions occurred in fiscal 2025 that require disclosure under ASC 850.

Note 18: Restructuring and impairment expenses

The Company’s restructuring expenses are summarized below:

			For the years ended July 31,
(In millions)			2025						2024						2023
Corporate restructuring expenses			$7						$28						$—
Business restructuring expenses			73						—						18
Impairment expenses			—						—						107
Restructuring expenses			$80						$28						$125

Corporate restructuring expenses

During fiscal 2025, the Company recorded corporate restructuring expenses that were primarily related to transition activities following the establishment of our parent company’s domicile in the United States.

During fiscal 2024, corporate restructuring expenses primarily related to establishing a new corporate structure to domicile our ultimate parent company in the United States.

Business restructuring expenses

During fiscal 2025, the Company implemented targeted actions to streamline operations, enhancing speed and efficiency to better serve customers and drive further profitable growth. As a result of these actions, non-recurring business restructuring expenses of $73 million were incurred, primarily in the United States. The charges primarily related to severance costs of $45 million, as well as $15 million of non-cash branch and facility costs, mainly related to lease impairments. The Company does not expect charges in connection with these actions, including any future charges, to be material.

During fiscal 2023, the Company recorded charges of $18 million related to the closure of certain smaller, underperforming branches in the United States, primarily related to impairment of lease assets and related fixed assets. This item was included in the restructuring and impairments expenses line of the Company’s consolidated statements of earnings.

No such business restructurings were recorded in fiscal 2024.

Impairments

In fiscal 2023, the Company recorded a non-cash charge of $107 million in connection with previously capitalized software costs in the United States. This item was included in the restructuring and impairments expenses line of the Company’s consolidated statements of earnings. No such impairments were recorded in fiscal years 2025 and 2024.