Item 1. Financial Statements

Ferguson Enterprises Inc.

Condensed Consolidated Statements of Earnings

(unaudited)

			Three months ended												Nine months ended
			April 30,												April 30,
(In millions, except per share amounts)			2025						2024						2025						2024
Net sales			$7,621						$7,308						$22,265						$21,689
Cost of sales			(5,262)						(5,076)						(15,524)						(15,097)
Gross profit			2,359						2,232						6,741						6,592
Selling, general and administrative expenses			(1,589)						(1,510)						(4,711)						(4,483)
Restructuring expenses			(70)						(12)						(73)						(20)
Depreciation and amortization			(94)						(85)						(276)						(248)
Operating profit			606						625						1,681						1,841
Interest expense, net			(46)						(43)						(140)						(132)
Other (expense) income, net			(3)						(1)						10						(4)
Income before income taxes			557						581						1,551						1,705
Provision for income taxes			(147)						(138)						(395)						(421)
Net income			$410						$443						$1,156						$1,284
Earnings per share - Basic			$2.07						$2.19						$5.79						$6.32
Earnings per share - Diluted			$2.07						$2.18						$5.78						$6.30
Weighted average number of shares outstanding:
Basic			198.3						202.6						199.6						203.3
Diluted			198.5						203.2						199.8						203.9

See accompanying Notes to the Condensed Consolidated Financial Statements.

Ferguson Enterprises Inc.

Condensed Consolidated Statements of Comprehensive Income

(unaudited)

			Three months ended												Nine months ended
			April 30,												April 30,
(In millions)			2025						2024						2025						2024
Net income			$410						$443						$1,156						$1,284
Other comprehensive income (loss):
Foreign currency translation adjustments			40						(19)						1						(33)
Pension adjustments, net of tax impacts of ($3), ($1), ($5) and ($3), respectively			8						2						14						7
Total other comprehensive income (loss), net of tax			48						(17)						15						(26)
Comprehensive income			$458						$426						$1,171						$1,258

See accompanying Notes to the Condensed Consolidated Financial Statements.

Ferguson Enterprises Inc.

Condensed Consolidated Balance Sheets

(unaudited)

			As of
(In millions, except share amounts)			April 30, 2025						July 31, 2024
Assets
Cash and cash equivalents			$519						$571
Accounts receivable, less allowances of $38 and $21, respectively			3,748						3,602
Inventories			4,548						4,188
Prepaid and other current assets			917						1,020
Assets held for sale			44						29
Total current assets			9,776						9,410
Property, plant and equipment, net			1,832						1,752
Operating lease right-of-use assets			1,678						1,565
Deferred income taxes, net			197						181
Goodwill			2,427						2,357
Other intangible assets, net			750						753
Other non-current assets			605						554
Total assets			$17,265						$16,572
Liabilities and stockholders’ equity
Accounts payable			$3,775						$3,410
Short-term debt			400						150
Current portion of operating lease liabilities			428						395
Other current liabilities			1,368						1,261
Total current liabilities			5,971						5,216
Long-term debt			3,701						3,774
Long-term portion of operating lease liabilities			1,300						1,198
Other long-term liabilities			762						768
Total liabilities			11,734						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			920						864
Retained earnings			6,241						9,589
Treasury shares, 3,854,675 and 30,827,929 shares, respectively at cost			(714)						(3,936)
Accumulated other comprehensive loss			(916)						(931)
Total stockholders' equity			5,531						5,616
Total liabilities and stockholders' equity			$17,265						$16,572

See accompanying Notes to the Condensed Consolidated Financial Statements.

Ferguson Enterprises Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited)

			Three months ended												Nine months ended
			April 30,												April 30,
(In millions, except per share data)			2025						2024						2025						2024
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			$912						$842						$864						$809
Share-based compensation expense			8						13						30						44
Ordinary shares canceled			—						—						26						—
Other			—						—						—						2
Balance at end of period			920						855						920						855
Retained earnings:
Balance at beginning of period			$5,998						$9,018						$9,589						$8,557
Treasury shares canceled			—						—						(3,932)						—
Net earnings			410						443						1,156						1,284
Cash dividends declared of $0.83, $0.79, $2.45, and $2.33, respectively			(164)						(160)						(488)						(472)
Shares issued under employee stock plans			(3)						—						(84)						(68)
Balance at end of period			6,241						9,301						6,241						9,301
Treasury shares:
Balance at beginning of period			($457)						($3,575)						($3,936)						($3,425)
Treasury shares canceled			—						—						3,936						—
Share repurchases			(259)						(175)						(767)						(351)
Shares issued under employee share plans, net			2						—						53						26
Balance at end of period			(714)						(3,750)						(714)						(3,750)
Employee Benefit Trust:
Balance at beginning of period			$—						$—						$—						($46)
Shares issued			—						—						—						45
Other			—						—						—						1
Balance at end of period			—						—						—						—
Accumulated other comprehensive loss:
Balance at beginning of period			($964)						($897)						($931)						($888)
Total other comprehensive income (loss)			48						(17)						15						(26)
Balance at end of period			(916)						(914)						(916)						(914)
Total stockholder's equity			$5,531						$5,522						$5,531						$5,522

See accompanying Notes to the Condensed Consolidated Financial Statements.

Ferguson Enterprises Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(In millions)			Nine months ended
April 30,
2025						2024
Cash flows from operating activities:
Net income			$1,156						$1,284
Depreciation and amortization			276						248
Share-based compensation			22						39
Changes in deferred income taxes			(14)						(14)
Changes in inventories			(324)						(194)
Changes in receivables and other assets			(24)						107
Changes in accounts payable and other liabilities			244						107
Changes in income taxes payable			26						(69)
Other operating activities			5						(1)
Net cash provided by operating activities			1,367						1,507
Cash flows from investing activities:
Purchase of businesses acquired, net of cash acquired			(242)						(185)
Capital expenditures			(235)						(263)
Other investing activities			13						30
Net cash used in investing activities			(464)						(418)
Cash flows from financing activities:
Purchase of treasury shares			(759)						(421)
Repayments of debt			(3,175)						(1,480)
Proceeds from debt			3,346						1,375
Change in bank overdrafts			3						19
Cash dividends			(324)						(465)
Other financing activities			(66)						(23)
Net cash used in financing activities			(975)						(995)
Change in cash, cash equivalents and restricted cash			(72)						94
Effects of exchange rate changes			3						(8)
Cash, cash equivalents and restricted cash, beginning of period			625						669
Cash, cash equivalents and restricted cash, end of period			$556						$755
Supplemental Disclosures:
Cash paid for income taxes, net			$384						$505
Cash paid for interest			171						162
Accrued capital expenditures			7						9
Accrued dividends			165						160

See accompanying Notes to the Condensed Consolidated Financial Statements.

Ferguson Enterprises Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

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 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 specialist 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.

Basis of presentation

The accompanying unaudited condensed consolidated financial statements and notes to the condensed consolidated financial statements are presented in accordance with the rules and regulations of the SEC and accounting principles generally accepted in the United States of America (“U.S. GAAP”), but do not include all disclosures normally required in annual consolidated financial statements. In the opinion of management, the unaudited condensed consolidated financial statements contain all normal recurring adjustments necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented.

In light of the Merger, the July 31, 2024 condensed consolidated balance sheet was derived from the audited financial statements of the predecessor. For the nine months ended April 30, 2024, the unaudited condensed consolidated statements of earnings, comprehensive income, stockholders’ equity, and cash flows represent the activities of the predecessor. The successor issuer had no operating activities prior to the Effective Date.

Prior year amounts in connection with restructuring expenses have been reclassified from selling, general and administrative costs into restructuring expenses in order to conform with the current period presentation.

These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Annual Report. The financial results for the interim periods may not be indicative of the financial results for the entire fiscal year.

Use of estimates

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

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 is primarily related to cash held in connection with certain letters of credit, as well as 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 condensed consolidated balance sheets.

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

			As of
(In millions)			April 30, 2025						July 31, 2024
Cash and cash equivalents			$519						$571
Restricted cash			37						54
Total cash, cash equivalents and restricted cash			$556						$625

Supplier finance program

In October 2023, the Company began a supplier financing program with a third party wherein certain shipping and logistics providers in the United States can opt to receive early payment at a nominal discount. 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 condensed consolidated balance sheets and were $46 million as of April 30, 2025 and July 31, 2024.

Recently issued accounting standard updates (“ASU”)

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.

In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” This ASU expands public entities’ required segment disclosures, including disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items and interim disclosures of a reportable segment’s profit or loss and assets that are currently not required. This ASU is effective for fiscal years beginning after December 15, 2023, and interim reporting periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The impact to the Company’s consolidated financial statements and related disclosures is not expected to be material.

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: Revenue and segment information

The Company reports its financial results of operations on a geographical basis in the following two reportable segments: United States and Canada. Each segment generally derives its revenues in the same manner. The Company uses adjusted operating profit as its measure of segment profit. A reporting segment’s adjusted operating profit is defined as profit before tax, excluding central and other costs, restructuring expenses, amortization of acquired intangible assets, net interest expenses, as well as other items typically recorded in net other (expense) income such as (loss)/gain on disposal of businesses, pension plan changes/closure costs and amounts recorded in connection with the Company’s interests in investees. 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.

Segment results were as follows:

			Three months ended												Nine months ended
			April 30,												April 30,
(In millions)			2025						2024						2025						2024
Net sales:
United States			$7,288						$6,974						$21,210						$20,667
Canada			333						334						1,055						1,022
Total net sales			$7,621						$7,308						$22,265						$21,689
Adjusted operating profit:
United States			$726						$685						$1,878						$1,976
Canada			8						6						42						38
Central and other costs			(19)						(17)						(50)						(47)
Restructuring expenses(1)			(70)						(12)						(73)						(20)
Amortization of acquired intangible assets			(39)						(37)						(116)						(106)
Interest expense, net			(46)						(43)						(140)						(132)
Other (expense) income, net			(3)						(1)						10						(4)
Income before income taxes			$557						$581						$1,551						$1,705

(1)See Note 13 for details regarding restructuring expenses.

Our products are delivered through a common network of distribution centers, branches, counter service and specialist sales associates, showroom consultants and e-commerce channels. 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 the performance obligations are satisfied when control of the product is transferred to the customer which is the point the product is delivered to, or collected by, the customer.

The Company determined that disaggregating net sales by end market at the segment level achieves the disclosure objective to depict how the nature, amount, timing, and uncertainty of revenue and cash flows may be impacted by economic factors. The disaggregated net sales by end market are as follows:

			Three months ended												Nine months ended
			April 30,												April 30,
(In millions)			2025						2024						2025						2024
United States:
Residential			$3,610						$3,552						$10,728						$10,591
Non-residential:
Commercial			2,508						2,337						7,161						6,929
Civil/Infrastructure			661						599						1,866						1,740
Industrial			509						486						1,455						1,407
Total Non-residential			3,678						3,422						10,482						10,076
Total United States			7,288						6,974						21,210						20,667
Canada			333						334						1,055						1,022
Total net sales			$7,621						$7,308						$22,265						$21,689

No sales to an individual customer accounted for more than 10% of net sales during any of the periods presented.

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:

			Three months ended												Nine months ended
			April 30,												April 30,
(In millions)			2025						2024						2025						2024
Weighted average number of shares outstanding:
Basic weighted average shares			198.3						202.6						199.6						203.3
Effect of dilutive shares(1)			0.2						0.6						0.2						0.6
Diluted weighted average shares			198.5						203.2						199.8						203.9
Excluded anti-dilutive shares			0.1						—						0.2						—

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

Note 4: Income tax

As of August 1, 2024, Ferguson is a U.S. corporation. The provision for income taxes for fiscal 2025 consists of provisions for the U.S. plus non-U.S. tax rate differentials with respect to other locations in which Ferguson’s operations are based. For fiscal years prior to 2025, Ferguson’s provision for income taxes consists of provisions for the U.K. plus non-U.K. tax rate differentials with respect to other locations in which the predecessor operated. Accordingly, the consolidated income tax rate is a composite rate reflecting earnings in various locations and the applicable tax rates.

The Company’s tax provision for each period presented was calculated using an estimated annual tax rate, adjusted for discrete items occurring during the applicable period to arrive at an effective tax rate. The effective income tax rates for the relevant periods were as follows:

			Three months ended												Nine months ended
			April 30,												April 30,
			2025						2024						2025						2024
Effective tax rate			26.4		%				23.8		%				25.5		%				24.7		%

During the three and nine months ended April 30, 2025, there were no material changes to the Company’s unrecognized tax benefits when compared to those items disclosed in the Annual Report.

Note 5: Debt

The Company’s debt obligations consisted of the following:

			As of
(In millions)			April 30, 2025						July 31, 2024
Variable-rate debt:
Receivables Facility			$325						$250
Term Loan			—						500
Fixed-rate debt:
Private placement notes			700						850
Unsecured senior notes, due April 2027 - April 2032			2,350						2,350
2034 Senior Notes, 5.00% due October 2034			750						—
Subtotal			$4,125						$3,950
Less: current maturities of debt			(400)						(150)
Unamortized discounts and debt issuance costs			(21)						(18)
Interest rate swap - fair value adjustment			(3)						(8)
Total long-term debt			$3,701						$3,774

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”). Capitalized terms used in this summary have the meaning set forth in the Receivables Purchase Agreement, as amended by the Omnibus Amendment and Consent (Ferguson Receivables, LLC), dated April 21, 2025, among the Parties (the “Omnibus Amendment”).

Pursuant to the Omnibus Amendment, the Maximum Net Investment was reduced by $185 million in connection with the termination of the TD Purchase Group’s commitment under the Receivables Facility. As a result, the Receivables Facility now 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. As of April 30, 2025, $325 million in borrowings were outstanding under the Receivables Facility. The interest rate under the Receivable Facility was approximately 5.26% as of April 30, 2025.

Term Loan Agreement

The Company and Ferguson UK Holdings Limited (“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 using a portion of the proceeds from the issuance of the 2034 Senior Notes (as defined below) and the Term Loan Agreement was terminated in accordance with its terms.

Revolving Credit 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 for 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.

U.S. Dollar-denominated loans bear interest at either Term SOFR Rate plus a rating-based margin or, alternatively, at Base Rate plus 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. The margin as well as the commitment fee is based on the Company’s senior unsecured debt rating.

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.

As of April 30, 2025, no borrowings were outstanding under the Revolving Facility.

Private Placement Notes

In the second quarter of fiscal 2025, the Company repaid $150 million related to the 3.44% private placement notes that matured in November 2024.

In September 2025, $400 million of private placement notes will mature.

2034 Senior Notes

On October 3, 2024, the Company issued and sold $750 million aggregate principal amount of unsecured senior notes, maturing in October 2034 (the “2034 Senior Notes”). The 2034 Senior Notes bear interest at a rate of 5.00%, payable semi-annually. The obligations of the Company under the 2034 Senior Notes are fully and unconditionally guaranteed by FUKHL, an indirect subsidiary of the Company.

The 2034 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 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 2034 Senior Notes include covenants, subject to certain exceptions, which include limitations on the granting of liens and on mergers and acquisitions.

Other

The Company was in compliance with all debt covenants that were in effect as of April 30, 2025.

Note 6: Assets and liabilities at fair value

The Company has not changed its valuation techniques for measuring the fair value of any financial assets or liabilities during the periods presented. The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and other debt instruments, such as the Receivables Facility due to its variable interest rate, approximated their fair values as of April 30, 2025 and July 31, 2024.

The Company’s derivatives (interest rate swaps which are considered fair value hedges) and investments in equity instruments are carried at fair value on the condensed consolidated balance sheets (Level 2 and Level 3 fair value inputs, respectively) and are not material. The notional amount of the Company’s outstanding fair value hedges was $150 million and $300 million as of April 30, 2025 and July 31, 2024, respectively. The notional value of fair value hedges decreased in connection with the repayment of $150 million related to the 3.44% private placement notes that matured in November 2024.

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

			April 30, 2025												July 31, 2024
(In millions)			Carrying Amount						Fair Value						Carrying Amount						Fair Value
Unsecured senior notes			$3,079						$3,006						$2,333						$2,263
Private placement notes			700						698						849						837

Note 7: Commitments and contingencies

The Company is, from time to time, involved in various legal proceedings considered to be normal 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 8: 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, 2024			($461)						($470)						($931)
Other comprehensive (loss) income before reclassifications			(7)						2						(5)
Amounts reclassified from accumulated other comprehensive loss			—						3						3
Other comprehensive (loss) income			(7)						5						(2)
Balance at October 31, 2024			(468)						(465)						(933)
Other comprehensive loss before reclassifications			(32)						(1)						(33)
Amounts reclassified from accumulated other comprehensive loss			—						2						2
Other comprehensive (loss) income			(32)						1						(31)
Balance at January 31, 2025			(500)						(464)						(964)
Other comprehensive income before reclassifications			40						4						44
Amounts reclassified from accumulated other comprehensive loss			—						4						4
Other comprehensive income			40						8						48
Balance at April 30, 2025			($460)						($456)						($916)

(In millions, net of tax)			Foreign currency translation						Pensions						Total
Balance at July 31, 2023			($429)						($459)						($888)
Other comprehensive (loss) before reclassifications			(35)						(2)						(37)
Amounts reclassified from accumulated other comprehensive loss			—						3						3
Other comprehensive (loss) income			(35)						1						(34)
Balance at October 31, 2023			(464)						(458)						(922)
Other comprehensive income before reclassifications			21						2						23
Amounts reclassified from accumulated other comprehensive loss			—						2						2
Other comprehensive income			21						4						25
Balance at January 31, 2024			(443)						(454)						(897)
Other comprehensive loss before reclassifications			(19)						(1)						(20)
Amounts reclassified from accumulated other comprehensive loss			—						3						3
Other comprehensive (loss) income			(19)						2						(17)
Balance at April 30, 2024			($462)						($452)						($914)

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:

			Three months ended												Nine months ended
			April 30,												April 30,
(In millions)			2025						2024						2025						2024
Amortization of actuarial losses			$5						$4						$12						$11
Tax benefit			(1)						(1)						(3)						(3)
Amounts reclassified from accumulated other comprehensive loss			$4						$3						$9						$8

Note 9: Retirement benefit obligations

The Company maintains pension plans in the U.K. and Canada. The components of net periodic pension cost, which are included in Other (expense) income, net in the condensed consolidated statements of earnings, were as follows:

			Three months ended												Nine months ended
			April 30,												April 30,
(In millions)			2025						2024						2025						2024
Interest cost			($14)						($15)						($45)						($45)
Expected return on plan assets			16						16						48						46
Amortization of net actuarial losses			(5)						(4)						(12)						(11)
Net periodic cost			($3)						($3)						($9)						($10)

The impact of exchange rate fluctuations is included in the amortization of net actuarial losses line above.

Note 10: Stockholders’ equity

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

			Three months ended												Nine months ended
			April 30,												April 30,
			2025						2024						2025						2024
Ordinary shares:
Balance at beginning of period			—						232,171,182						232,171,182						232,171,182
Treasury shares canceled			—						—						(30,827,929)						—
Ordinary shares canceled			—						—						(201,343,253)						—
Balance at end of period			—						232,171,182						—						232,171,182
Common stock:
Balance at beginning of period			201,343,253						—						—						—
Common stock issued			—						—						201,343,253						—
Balance at end of period			201,343,253						—						201,343,253						—
Treasury shares:
Balance at beginning of period			(2,312,552)						(29,168,420)						(30,827,929)						(27,893,680)
Treasury shares canceled			—						—						30,827,929						—
Share repurchases			(1,550,783)						(827,205)						(4,118,174)						(2,319,358)
Treasury shares used to settle share-based compensation awards			8,660						1,851						263,499						219,264
Balance at end of period			(3,854,675)						(29,993,774)						(3,854,675)						(29,993,774)
Employee Benefit Trusts:
Balance at beginning of period			—						—						—						(274,031)
Employee Benefit Trust shares used to settle share-based compensation awards			—						—						—						253,212
Shares sold upon termination of Employee Benefit Trust			—						—						—						20,819
Balance at end of period			—						—						—						—
Total shares outstanding at end of period			197,488,578						202,177,408						197,488,578						202,177,408

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 April 30, 2025, the Company had completed $3.9 billion in share repurchases under the authorized program.

Ordinary Shares and Treasury shares

As of August 1, 2024, the Company canceled all ordinary shares 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 11: Share-based compensation

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 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 the nine months ended April 30, 2025:

			Number of shares						Weighted average grant date fair value
Outstanding as of July 31, 2024			963,130						$135.82
RSU awards granted			123,789						190.30
PSU awards granted			164,349						188.69
PSU-EX granted			51,366						167.95
Share adjustments based on performance			(205,335)						131.00
Vested			(413,453)						134.49
Forfeited			(69,049)						159.34
Outstanding as of April 30, 2025			614,797						$163.48

The following table relates to RSU, PSU and PSU-EX awards activity:

			Nine months ended
			April 30,
(In millions, except per share amounts)			2025
Fair value of awards vested			$83
Weighted average grant date fair value per share granted			$186.14

The following table relates to all share-based compensation awards:

			Three months ended												Nine months ended
			April 30,												April 30,
(In millions)			2025						2024						2025						2024
Share-based compensation expense (within SG&A)			$9						$15						$22						$39
Income tax benefit			2						4						6						10

Total unrecognized share-based compensation expense for all share-based payment plans was $80 million at April 30, 2025, which is expected to be recognized over a weighted average period of 2.1 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, 2,043 options have been forfeited. The share-based compensation expense of these stock options is not material.

Note 12: Acquisitions

The Company acquired five businesses during the nine months ended April 30, 2025. 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 regard to the Company's acquisitions:

(In millions)
Cash and cash equivalents			$2
Trade and other receivables			35
Inventories			45
Property, plant and equipment			3
Right of use assets			12
Trade names and brands			7
Customer relationships			111
Other intangible assets			6
Trade and other payables			(20)
Lease liabilities			(12)
Total			189
Goodwill			74
Consideration			$263
Satisfied by:
Cash			$244
Deferred & other consideration			19
Total consideration			$263

The fair values of the net assets acquired are considered preliminary and are based on management’s best estimates. Further adjustments may be necessary in connection with acquisitions completed in a prior period when additional information becomes available about events that existed at the date of acquisition. Amendments to fair value estimates may be made to these figures during the measurement period following 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 Quarterly Report, the Company has made all known 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. The additions to goodwill during the nine months ended April 30, 2025 that was attributed to the United States and Canada segments were $66 million and $8 million, respectively. All goodwill acquired in fiscal 2025 is expected to be deductible for tax purposes.

Deferred consideration represents the expected payout due to certain sellers of 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 such 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 during the year-to-date period of fiscal 2025 contributed $41 million to net sales. The impact to the Company’s income before income tax, including acquired intangible asset amortization, transaction costs and integration costs was not material for the nine months ended April 30, 2025. Acquisition costs are expensed as incurred and included in selling, general and administrative expenses in the Company’s consolidated statements of earnings.

The net outflow of cash related to business acquisitions is as follows:

			Nine months ended
(In millions)			April 30, 2025
Purchase consideration			$244
Cash, cash equivalents and bank overdrafts acquired			(2)
Cash consideration paid, net of cash acquired			242
Deferred and contingent consideration(1)			33
Net cash outflow in respect of the purchase of businesses			$275

(1) Included in other financing activities in the Condensed 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 would have been:

			Three months ended												Nine months ended
			April 30,												April 30,
(In millions)			2025						2024						2025						2024
Pro forma net sales			$7,656						$7,373						$22,413						$21,884

The impact on income before income tax, including additional amortization, transaction costs and integration costs would not be material in the three and nine months ended April 30, 2025 and 2024.

These unaudited pro forma results 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 13: Restructuring expenses

The Company’s restructuring expenses are summarized below:

			Three months ended												Nine months ended
			April 30,												April 30,
(In millions)			2025						2024						2025						2024
Corporate restructuring expenses			$2						$12						$5						$20
Business restructuring expenses			68						—						68						—
Restructuring expenses			$70						$12						$73						$20

Corporate restructuring expenses

During fiscal 2024, corporate restructuring expenses primarily related to establishing a new corporate structure to domicile our ultimate parent company in the United States. 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. The Company does not expect charges in connection with these actions, including any future charges, to be material.

Business restructuring expenses

During the third quarter of 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 $68 million were incurred in the quarter, primarily in the United States. The charges primarily related to severance costs of $41 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.