Item 1. Financial Statements

Ferguson Enterprises Inc.

Condensed Consolidated Statements of Earnings

(unaudited)

			Three months ended												Six months ended
			June 30,												June 30,
(In millions, except per share amounts)			2026						2025						2026						2025
Net sales			$8,751						$8,363						$16,223						$15,576
Cost of sales			(6,039)						(5,750)						(11,193)						(10,747)
Gross profit			2,712						2,613						5,030						4,829
Selling, general and administrative expenses			(1,718)						(1,650)						(3,325)						(3,215)
Restructuring expenses			(2)						(25)						(4)						(76)
Depreciation and amortization			(99)						(96)						(196)						(189)
Operating profit			893						842						1,505						1,349
Interest expense, net			(52)						(49)						(97)						(95)
Other income (expense)			5						(3)						(2)						5
Income before income taxes			846						790						1,406						1,259
Provision for income taxes			(180)						(156)						(326)						(280)
Net income			$666						$634						$1,080						$979
Earnings per share - Basic			$3.44						$3.21						$5.56						$4.94
Earnings per share - Diluted			$3.43						$3.21						$5.56						$4.94
Weighted average number of shares outstanding:
Basic			193.7						197.4						194.1						198.1
Diluted			194.0						197.5						194.4						198.2

See accompanying Notes to the Condensed Consolidated Financial Statements.

Ferguson Enterprises Inc.

Condensed Consolidated Statements of Comprehensive Income

(unaudited)

			Three months ended												Six months ended
			June 30,												June 30,
(In millions)			2026						2025						2026						2025
Net income			$666						$634						$1,080						$979
Other comprehensive (loss) income:
Foreign currency translation adjustments			(15)						44						(26)						44
Pension adjustments, net of tax impacts of ($2), ($2), ($3) and ($5), respectively			4						6						8						11
Total other comprehensive (loss) income, net of tax			(11)						50						(18)						55
Comprehensive income			$655						$684						$1,062						$1,034

See accompanying Notes to the Condensed Consolidated Financial Statements.

Ferguson Enterprises Inc.

Condensed Consolidated Balance Sheets

(unaudited)

			As of
(In millions, except share amounts)			June 30, 2026						December 31, 2025
Assets
Cash and cash equivalents			$437						$557
Accounts receivable, less allowances of $31 and $25, respectively			4,255						3,312
Inventories			5,101						4,588
Prepaid and other current assets			1,195						1,031
Assets held for sale			39						48
Total current assets			11,027						9,536
Property, plant and equipment, net			2,016						1,911
Operating lease right-of-use assets			1,922						1,832
Deferred income taxes, net			76						165
Goodwill			2,713						2,470
Other intangible assets, net			950						685
Other non-current assets			599						553
Total assets			$19,303						$17,152
Liabilities and stockholders’ equity
Accounts payable			$4,060						$3,117
Short-term debt			448						148
Current portion of operating lease liabilities			477						455
Other current liabilities			1,380						1,392
Liabilities held for sale			12						13
Total current liabilities			6,377						5,125
Long-term debt			4,456						3,978
Long-term portion of operating lease liabilities			1,506						1,436
Other long-term liabilities			763						756
Total liabilities			13,102						11,295
Stockholders’ equity:
Common stock, par value $0.0001; 500,000,000 shares authorized; 201,343,253 issued			—						—
Paid-in capital			1,031						996
Retained earnings			7,889						7,167
Treasury shares, 7,891,376 and 6,291,666 shares, respectively at cost			(1,669)						(1,274)
Accumulated other comprehensive loss			(1,050)						(1,032)
Total stockholders' equity			6,201						5,857
Total liabilities and stockholders' equity			$19,303						$17,152

See accompanying Notes to the Condensed Consolidated Financial Statements.

Ferguson Enterprises Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited)

			Three months ended												Six months ended
			June 30,												June 30,
(In millions, except per share data)			2026						2025						2026						2025
Common stock:
Balance at beginning of period			$—						$—						$—						$—
Common stock issued			—						—						—						—
Balance at end of period			—						—						—						—
Paid-in capital:
Balance at beginning of period			1,011						918						$996						$908
Share-based compensation expense			20						5						35						15
Balance at end of period			1,031						923						1,031						923
Retained earnings:
Balance at beginning of period			7,403						6,065						$7,167						$5,887
Net earnings			666						634						1,080						979
Cash dividends declared of $0.89, $0.83, $1.78 and $1.66, respectively			(172)						(163)						(345)						(328)
Shares issued under employee stock plans			(13)						(1)						(13)						(3)
Other			5						—						—						—
Balance at end of period			7,889						6,535						7,889						6,535
Treasury shares:
Balance at beginning of period			(1,501)						(610)						($1,274)						($407)
Share repurchases			(198)						(224)						(425)						(428)
Shares issued under employee share plans, net			30						2						30						3
Balance at end of period			(1,669)						(832)						(1,669)						(832)
Accumulated other comprehensive loss:
Balance at beginning of period			(1,039)						(950)						($1,032)						($955)
Total other comprehensive (loss) income			(11)						50						(18)						55
Balance at end of period			(1,050)						(900)						(1,050)						(900)
Total stockholder's equity			$6,201						$5,726						$6,201						$5,726

See accompanying Notes to the Condensed Consolidated Financial Statements.

Ferguson Enterprises Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(In millions)			Six months ended
June 30,
2026						2025
Cash flows from operating activities:
Net income			$1,080						$979
Depreciation and amortization			196						189
Share-based compensation			35						15
Changes in deferred income taxes			43						(10)
Changes in inventories			(468)						(169)
Changes in receivables and other assets			(1,070)						(844)
Changes in accounts payable and other liabilities			1,045						906
Changes in income taxes payable			(137)						50
Other operating activities			(8)						7
Net cash provided by operating activities			716						1,123
Cash flows from investing activities:
Purchase of businesses acquired, net of cash acquired			(583)						(226)
Capital expenditures			(234)						(141)
Other investing activities			17						15
Net cash used in investing activities			(800)						(352)
Cash flows from financing activities:
Purchase of treasury shares			(438)						(428)
Repayments of debt			(700)						(2,225)
Proceeds from debt			1,475						2,000
Change in bank overdrafts			—						(115)
Cash dividends			(347)						(330)
Other financing activities			(7)						(27)
Net cash used in financing activities			(17)						(1,125)
Change in cash, cash equivalents and restricted cash			(101)						(354)
Effects of exchange rate changes			(5)						25
Cash, cash equivalents and restricted cash, beginning of period			581						773
Cash, cash equivalents and restricted cash, end of period			$475						$444
Supplemental Disclosures:
Cash paid for income taxes, net			$421						$240
Cash paid for interest			94						95
Accrued capital expenditures			19						12
Accrued dividends			172						164
Lease assets obtained in exchange for new operating lease liabilities (non-cash)			316						349

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) is a Delaware corporation. Ferguson is a value-added distributor of essential water and air solutions, serving the specialized professional in the residential and non-residential North American construction markets. 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.

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.

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

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 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 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)			June 30, 2026						December 31, 2025
Cash and cash equivalents			$437						$557
Restricted cash			38						24
Total cash, cash equivalents and restricted cash			$475						$581

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 condensed consolidated balance sheets and were $76 million and $49 million as of June 30, 2026 and December 31, 2025, respectively.

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 September 2025, the FASB issued ASU No. 2025-06, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40).” The amendments in this update remove all references to the previously existing software development project stages and require entities to start capitalizing software costs when management has authorized and committed funding to a software project and it is probable that the project will be completed with its intended functionality. The new standard is effective for fiscal years beginning after December 15, 2027. Early adoption is permitted and can be applied prospectively, retrospectively, or utilizing a modified transition approach. The Company is currently evaluating the ASU to determine the impact on its consolidated financial statements.

In May 2026, the FASB issued ASU 2026-02, “Environmental Credits and Environmental Credit Obligations (Topic 818).” The standard provides accounting and disclosure guidance for environmental credits and related obligations. The guidance is effective for annual reporting periods beginning after December 15, 2027, including interim periods within those annual periods. Early adoption is permitted. The standard is required to be applied using a modified retrospective approach through a cumulative-effect adjustment to beginning retained earnings in the period of adoption. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

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: United States and Canada. Each segment generally derives its revenues in the same manner as described in Note 1, Summary of significant accounting policies included in the Transition Report. 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:

			Three months ended												Six months ended
			June 30,												June 30,
(In millions)			2026						2025						2026						2025
Net sales:
United States			$8,343						$7,947						$15,489						$14,851
Canada			408						416						734						725
Total net sales			8,751						8,363						16,223						15,576
Cost of sales:
United States			(5,736)						(5,448)						(10,651)						(10,220)
Canada			(303)						(302)						(542)						(527)
Operating costs:
United States			(1,682)						(1,600)						(3,257)						(3,121)
Canada			(83)						(91)						(165)						(169)
Adjusted operating profit:
United States			925						899						$1,581						$1,510
Canada			22						23						27						29
Total segment adjusted operating profit			947						922						1,608						1,539
Central and other costs(1)			(15)						(16)						(29)						(36)
Restructuring activities(2)			(2)						(25)						(4)						(76)
Amortization of acquired intangible assets			(37)						(39)						(70)						(78)
Interest expense, net			(52)						(49)						(97)						(95)
Other income (expense)			5						(3)						(2)						5
Income before income taxes			$846						$790						$1,406						$1,259

(1)Primarily includes SG&A that is not related to a segment.

(2)See Note 13, Restructuring expenses for further information.

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

			Three months ended												Six months ended
			June 30,												June 30,
(In millions)			2026						2025						2026						2025
Capital expenditures:
United States			$140						$66						$230						$138
Canada			2						2						$4						$3
Total capital expenditures			$142						$68						$234						$141
Depreciation and amortization:
United States			$94						$91						$186						$180
Canada			5						5						10						9
Total depreciation and amortization**(1)**			$99						$96						$196						$189
(1) Includes amortization of acquired intangible assets of $37 million, $39 million, $70 million and $78 million in the three and six months ended June 30, 2026 and 2025, respectively. These amounts are not included in segment adjusted operating profit.

Assets by segment included:

			As of
(In millions)			June 30, 2026						December 31, 2025
Assets:
United States			$17,746						$15,444
Canada			977						946
Total segment assets			18,723						16,390
Corporate			580						762
Total assets			$19,303						$17,152

Long-lived assets are as follows:

			As of
(In millions)			June 30, 2026						December 31, 2025
Long-lived assets:
United States			$1,973						$1,865
Canada			43						46
Total long-lived assets			$2,016						$1,911

Net sales disaggregation

A disaggregation of net sales by customer group in the United States is as follows:

			Three months ended												Six months ended
			June 30,												June 30,
			2026						2025						2026						2025
Customer Group
Waterworks			24		%				24		%				23		%				23		%
Ferguson Home			20		%				21		%				20		%				21		%
Commercial/Mechanical			16		%				15		%				16		%				15		%
Residential Trade Plumbing			14		%				15		%				15		%				15		%
HVAC			13		%				12		%				12		%				12		%
Industrial			7		%				6		%				7		%				7		%
Facilities Supply			4		%				4		%				4		%				4		%
Fire & Fabrication			2		%				3		%				3		%				3		%
Total United States			100		%				100		%				100		%				100		%

The Company does not disaggregate sales for Canada based on materiality. 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												Six months ended
			June 30,												June 30,
(In millions)			2026						2025						2026						2025
Weighted average number of shares outstanding:
Basic weighted average shares			193.7						197.4						194.1						198.1
Effect of dilutive shares(1)			0.3						0.1						0.3						0.1
Diluted weighted average shares			194.0						197.5						194.4						198.2
Excluded anti-dilutive shares			0.1						0.1						0.1						0.1

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

Note 4: Income tax

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												Six months ended
			June 30,												June 30,
			2026						2025						2026						2025
Effective tax rate			21.3		%				19.7		%				23.2		%				22.2		%

During the three and six months ended June 30, 2026, the Company’s unrecognized tax benefits balances decreased $28 million and $24 million, respectively. These decreases were mainly due to the lapsing of statutes of limitations.

Note 5: Debt

The Company’s debt obligations consisted of the following:

			As of
(In millions)			June 30, 2026						December 31, 2025
Variable-rate debt:
Receivables Facility			$525						$—
Revolving Facility			250						—
Fixed-rate debt:
Private placement notes			300						300
Unsecured senior notes, due April 2027 - October 2034			3,850						3,850
Subtotal			$4,925						$4,150
Less: current maturities of debt			(448)						(148)
Unamortized discounts and debt issuance costs			(20)						(22)
Interest rate swap - fair value adjustment			(1)						(2)
Total long-term debt			$4,456						$3,978

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 (the “Receivables Purchase Agreement”). The Receivables Facility consists of funding for up to $900 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, subject to lender participation. As of June 30, 2026, $525 million in borrowings were outstanding under the Receivables Facility. The interest rate under the Receivables Facility was approximately 4.6% as of June 30, 2026.

Revolving Credit Facility

The Company, pursuant to a revolving credit agreement (the “Revolving Credit Agreement”), maintains a revolving credit facility that has aggregate total available credit commitments of $1.5 billion (the “Revolving Facility”). The Revolving Credit Agreement provides the Company with the ability to increase the aggregate capacity of the facility by $500 million under certain conditions, including the receipt of additional or increased lender commitments. As of June 30, 2026, $250 million in borrowings were outstanding under the Revolving Facility. The interest rate under the Revolving Facility was approximately 4.8% as of June 30, 2026.

On April 2, 2026, the Company extended the stated maturity date of the commitments under the Revolving Facility from April 2, 2030 to April 2, 2031 by utilizing one of the two extension options available in the Revolving Credit Agreement.

Private Placement Notes

In November 2026, $150 million of private placement notes will mature.

Unsecured Senior Notes

In April 2027, $300 million of unsecured senior notes will mature.

Other

The Company was in compliance with all debt covenants that were in effect as of June 30, 2026.

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 and the Revolving Facility due to the variable interest rates, approximated their fair values as of June 30, 2026 and December 31, 2025.

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 as of June 30, 2026 and December 31, 2025.

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

			June 30, 2026												December 31, 2025
(In millions)			Carrying Amount						Fair Value						Carrying Amount						Fair Value
Unsecured senior notes			$3,830						$3,773						$3,828						$3,833
Private placement notes			300						299						300						300

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, fleet incidents 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 December 31, 2025			($456)						($576)						($1,032)
Other comprehensive (loss) income before reclassifications			(11)						—						(11)
Amounts reclassified from accumulated other comprehensive loss			—						4						4
Other comprehensive (loss) income			(11)						4						(7)
Balance at March 31, 2026			(467)						(572)						(1,039)
Other comprehensive (loss) income before reclassifications			(15)						—						(15)
Amounts reclassified from accumulated other comprehensive loss			—						4						4
Other comprehensive (loss) income			(15)						4						(11)
Balance at June 30, 2026			(482)						(568)						(1,050)

(In millions, net of tax)			Foreign currency translation						Pensions						Total
Balance at December 31, 2024			(491)						(464)						(955)
Other comprehensive income before reclassifications			—						2						2
Amounts reclassified from accumulated other comprehensive loss			—						3						3
Other comprehensive (loss) income			—						5						5
Balance at March 31, 2025			(491)						(459)						(950)
Other comprehensive (loss) income before reclassifications			44						4						48
Amounts reclassified from accumulated other comprehensive loss			—						2						2
Other comprehensive (loss) income			44						6						50
Balance at June 30, 2025			(447)						(453)						(900)

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												Six months ended
			June 30,												June 30,
(In millions)			2026						2025						2026						2025
Amortization of actuarial losses			$6						$4						$11						$8
Tax benefit			(2)						(2)						(3)						(3)
Amounts reclassified from accumulated other comprehensive loss			$4						$2						$8						$5

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 income (expense) in the condensed consolidated statements of earnings, were as follows:

			Three months ended												Six months ended
			June 30,												June 30,
(In millions)			2026						2025						2026						2025
Interest cost			($17)						($16)						($35)						($31)
Expected return on plan assets			17						17						34						33
Amortization of net actuarial losses			(6)						(4)						(11)						(8)
Net periodic cost			($6)						($3)						($12)						($6)

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												Six months ended
			June 30,												June 30,
			2026						2025						2026						2025
Common stock:
Balance at beginning of period			201,343,253						201,343,253						201,343,253						201,343,253
Common stock issued			—						—						—						—
Balance at end of period			201,343,253						201,343,253						201,343,253						201,343,253
Treasury shares:
Balance at beginning of period			(7,214,742)						(3,208,336)						(6,291,666)						(2,035,323)
Share repurchases			(817,995)						(1,258,855)						(1,744,010)						(2,439,320)
Treasury shares used to settle share-based compensation awards			141,361						5,237						144,300						12,689
Balance at end of period			(7,891,376)						(4,461,954)						(7,891,376)						(4,461,954)
Total shares outstanding at end of period			193,451,877						196,881,299						193,451,877						196,881,299

Share Repurchases

As of April 30, 2026, the Company had completed $4.7 billion in share repurchases under a September 2021 program that authorized up to $5.0 billion. On April 30, 2026, the Board authorized a new share repurchase program of up to $2 billion in aggregate purchases of common stock, replacing the prior program. As of June 30, 2026, the Company has completed $136 million in share repurchases under the April 2026 program.

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 October 2024 cliff vest, typically at the end of three years. RSU awards granted in October 2024 and beyond 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.

• 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 assumptions used in the Monte Carlo simulations for the rTSR granted in 2026 were as follows:

rTSR Fair value assumptions:
Expected annualized volatility			29.48		%
Risk free interest rate			3.75		%
Simulation period			2.8 years
Grant date fair value of rTSR awards			$237.16

The following table summarizes the share-based incentive awards activity for the six months ended June 30, 2026:

			Number of shares						Weighted average grant date fair value
Outstanding as of December 31, 2025			712,184						$191.67
RSU awards granted			240,598						220.11
PSU-EX granted			90,421						225.58
Share adjustments based on performance			(14,769)						289.68
Vested			(4,050)						172.40
Forfeited			(18,615)						199.14
Outstanding as of June 30, 2026			1,005,769						$199.87

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

			Three months ended												Six months ended
			June 30,												June 30,
(In millions)			2026						2025						2026						2025
Share-based compensation expense (within SG&A)			$20						$6						$35						$15
Income tax benefit			5						2						9						4

Total unrecognized share-based compensation expense for all share-based payment plans was $141 million at June 30, 2026, which is expected to be recognized over a weighted average period of 2.1 years.

Stock Options

The Company grants stock option awards to certain members of management 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. When determining expected volatility, the Company considers the historical volatility of the Company’s stock price. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant, based on the options’ expected term. The expected term of the options was estimated using the “simplified method” as permitted under Staff Accounting Bulletin 110. We consider the use of the simplified method appropriate due to the lack of sufficient historical data.

The assumptions used in the Black-Scholes option-pricing model in 2026 were as follows:

Stock option fair value assumptions used:
Expected annualized volatility			32.14		%
Dividend yield			1.54		%
Risk free interest rate			3.89		%
Expected term			6 years
Grant date fair value of stock option awards			$75.22

Stock option activity in 2026 is summarized in the following table:

			Number of shares						Weighted average exercise price per share						Aggregate intrinsic value (in millions)						Weighted average remaining contractual life (years)
Outstanding as of December 31, 2025			83,316						$211.52
Granted			61,416						231.63
Outstanding as of June 30, 2026			144,732						$220.06						$3						9.1
Exercisable as of June 30, 2026			19,793						$201.38						$1						8.3

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 offered for purchase under the plan subject to certain guidelines set forth in the ESPP.

As of June 30, 2026, 19.5 million shares of common stock remain available for purchase under the ESPP. The exercise price per share of common stock is prescribed by the Compensation Committee of 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 the six months ended June 30, 2026 there were approximately 136,659 shares purchased under the ESPP at an average price of $132.23. The expense associated with the ESPP is not material.

Note 12: Acquisitions

The Company acquired seven businesses during the six months ended June 30, 2026. Each of the acquired businesses is generally engaged in the distribution of plumbing, HVAC, wastewater or infrastructure related products or solutions and was acquired to support growth. In each acquisition, the Company obtained control of an integrated set of activities and assets that met the definition of a business under FASB Accounting Standards Codification (ASC) 805, Business Combinations. Accordingly, the acquisitions were accounted for as business combinations in accordance with 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			$38
Trade and other receivables			57
Inventories			55
Property, plant and equipment			7
Right of use assets			17
Trade names and brands			21
Customer relationships			288
Other intangible assets			20
Trade and other payables			(56)
Lease liabilities			(17)
Deferred tax			(43)
Total			387
Goodwill			251
Consideration			$638
Satisfied by:
Cash			$621
Deferred & other consideration			17
Total consideration			$638

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 year that related to the closing of the measurement period of acquisitions made in the prior year. As of the date of this Quarterly Report, the Company has made all known material adjustments related to acquisitions in 2026.

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. All of the goodwill acquired during the six months ended June 30, 2026 was attributed to the United States, with $99 million 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 2026 contributed $58 million to net sales and $15 million in losses to the Company’s income before income tax, including transaction and integration costs of $19 million, as well as related acquired intangible asset amortization for the period between the applicable date of acquisition and June 30, 2026. 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:

			Six months ended
(In millions)			June 30, 2026
Purchase consideration			$621
Cash, cash equivalents and bank overdrafts acquired			(38)
Cash consideration paid, net of cash acquired			583
Deferred and contingent consideration(1)			7
Net cash outflow in respect of the purchase of businesses			$590

(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 year, the Company’s unaudited pro forma net sales would have been:

			Three months ended												Six months ended
			June 30,												June 30,
(In millions)			2026						2025						2026						2025
Pro forma net sales			$8,788						$8,458						$16,354						$15,767

The impact on income before income tax, including additional amortization, transaction costs and integration costs would not be material in the three and six months ended June 30, 2026 and 2025.

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 year.

Note 13: Restructuring expenses

The Company’s restructuring expenses are summarized below:

			Three months ended												Six months ended
			June 30,												June 30,
(In millions)			2026						2025						2026						2025
Corporate restructuring expenses			$2						$4						$4						$4
Business restructuring expenses			—						21						—						72
Restructuring expenses			$2						$25						$4						$76

Corporate restructuring expenses

In the three and six months ended June 30, 2026 and 2025, corporate restructuring expenses primarily related to transition activities following the establishment of our parent company’s domicile in the United States. The Company does not expect further charges to be material.

Business restructuring expenses

In the three and six months ended June 30, 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 $72 million were incurred in the year-to-date period, primarily in the United States. The charges primarily related to severance costs of $45 million, as well as $27 million of non-cash branch and facility costs, mainly related to lease impairments.

Note 14: Subsequent event

On July 13, 2026, the Company announced that it has entered into a definitive agreement to acquire FWI Holdings, Inc. for approximately $1.6 billion. The Company has committed financing for the acquisition and expects to fund the acquisition through a combination of available cash and borrowings under such financing arrangements. The transaction is expected to close in the third quarter of 2026, subject to customary closing conditions.