Ferguson Enterprises Inc. /de
Management Discussion synthesis.

For further discussion on the Company's net sales, see the "Segment results" section below. Gross profit Gross profit in the second quarter of fiscal 2025 increased $13 million, or 0.6%, compared with the same period in fiscal 2024, primarily reflecting increased net sales. Gross profit as a percentage of sales was 29.7% and 30.4% in the second quarters of fiscal 2025 and fiscal 2024, respectively. The decrease of 0.7% reflected the impact on margins from subdued end market demand, as well as the impact of price deflation and sales mix. Gross profit in the year-to-date period of fiscal 2025 increased $22 million, or 0.5%, compared with the same period in fiscal 2024. Gross profit as a percentage of sales was 29.9% and 30.3% in the year-to-date periods of fiscal 2025 and fiscal 2024, respectively. The factors impacting the year-to-date comparisons were largely the same as those noted above for the quarter.

Selling, general and administrative ("SG&A") expenses SG&A expenses in the second quarter of fiscal 2025 increased $71 million, or 4.8%, compared with the same period in fiscal 2024. SG&A as a percentage of sales was 22.4% and 22.0% in the second quarters of fiscal 2025 and fiscal 2024, respectively. The increase in SG&A as a percent of sales primarily reflects the impact of cost inflation, mainly on infrastructure and fleet. SG&A expenses in the year-to-date period of fiscal 2025 increased $144 million, or 4.8%, compared with the same period in fiscal 2024. SG&A as a percentage of sales was 21.3% and 20.7% in the year-to-date period of fiscal 2025 and fiscal 2024, respectively. The factors impacting the year-to-date comparisons were largely the same as those noted above for the quarter, as well as the impact of increased labor costs, primarily related to wage inflation, on the year-to-date comparison. 20

Income tax Income tax expense was $94 million for the second quarter of fiscal 2025, a decrease of $17 million, or 15.3%, compared to the same period in fiscal 2024. In the year-to-date period of fiscal 2025, income tax expense was $248 million, a decrease of $35 million, or 12.4%, compared to the same period in fiscal 2024. In each case the decrease was due to lower income before income taxes. The Company's effective tax rates were 25.4% and 25.6% for the second quarters of fiscal 2025 and 2024, respectively. The Company's effective tax rates were 24.9% and 25.2% for the year-to-date periods of fiscal 2025 and 2024, respectively. For each of the year-over-year comparisons, the decrease in the effective tax rate was primarily due to discrete tax benefits recorded in fiscal 2025.

Net income Net income for the second quarter and year-to-date periods of fiscal 2025 was $276 million and $746 million, respectively. These represented decreases in net income of $46 million, or 14.3%, and $95 million, or 11.3%, compared with the respective periods in fiscal 2024 due to the various elements described in the sections above.

11 9 34 32 Net sales for the Canada segment were $319 million in the second quarter of fiscal 2025, an increase of $10 million, or 3.2%, compared to the same period in fiscal 2024. This increase in net sales was primarily driven by incremental sales from an acquisition of 5.4%, price inflation of approximately 2% and higher sales volume, partially offset by the impact of foreign currency exchange rates of 5.3%. Net sales were $722 million in the year-to-date period of fiscal 2025, an increase of $34 million, or 4.9%, compared with the same period in fiscal 2024. The factors impacting the year-to-date comparison were largely the same as those noted above for the quarter. Adjusted operating profit for the Canada segment in the second quarter and year-to-date periods of fiscal 2025 increased by $2 million compared with the respective periods in fiscal 2024 in connection with higher sales. 22

Diluted weighted average shares outstanding200.5 204.2 (1)Per share on a dilutive basis. (2)For the six months ended January 31, 2025, corporate restructurings primarily related to incremental costs in connection with transition activities following the establishment of our parent company's domicile in the United States. For the three and six months ended January 31, 2024, corporate restructuring costs related to incremental costs in connection with establishing a new corporate structure to domicile our ultimate parent company in the United States. (3)For the three and six months ended January 31, 2025 and 2024, discrete tax adjustments mainly related to the tax treatment of certain compensation items that are not material. (4)For the three and six months ended January 31, 2025 and 2024, the tax impact on non-GAAP adjustments primarily related to the amortization of acquired intangibles. 24

Cash flows from financing activities Six months ended January 31, (In millions)20252024 Net cash used in financing activities($289)($597) Net cash used in financing activities was $289 million and $597 million for the year-to-date periods of fiscal 2025 and 2024, respectively. Dividends paid to shareholders were $158 million and $305 million for the year-to-date periods of fiscal 2025 and 2024, respectively. The Company generally pays dividends in the fiscal quarter following the fiscal quarter in which the dividend was declared. However, the dividends declared in the fourth quarter of fiscal 2024 were also paid in the fourth quarter of fiscal 2024 due to the Merger. As such, no dividends were paid in the first quarter of fiscal 2025. Share repurchases under the Company's announced share repurchase program were $508 million and $250 million for the year-to-date periods of fiscal 2025 and fiscal 2024, respectively. Net proceeds from debt transactions were $421 million compared with net payments of $30 million for the year-to-date periods of fiscal 2025 and 2024, respectively. In the year-to-date period of fiscal 2025, the Company received net proceeds of $746 million and $325 million from the issuance of the 2034 Senior Notes and net borrowings under the Receivables Facility, respectively. These proceeds were partially offset by debt repayments of $500 million and $150 million in connection with the Company's Term Loans and the maturity of certain Private Placement Notes, respectively. In the year-to-date period of fiscal 2024, the Company repaid $55 million in connection with the maturity of certain Private Placement Notes, which was partially offset by net proceeds of $25 million borrowed under the Receivables Facility.

Income before income taxes370 433 994 1,124 Provision for income taxes(94)(111)(248)(283) Net income$276 $322 $746 $841 Net sales Net sales were $6.9 billion in the second quarter of fiscal 2025, an increase of $0.2 billion, or 3.0%, compared with the same period in fiscal 2024. The increase in net sales was driven by higher sales volume and incremental sales from acquisitions of 1.2%. These increases were partially offset by price deflation of approximately 2%, mainly within certain commodity categories in the United States. The Company's increase in net sales was driven by growth in both of the residential and non-residential markets in its United States segment. Net sales were $14.6 billion in the year-to-date period of fiscal 2025, an increase of $0.3 billion, or 1.8%, compared with the same period in fiscal 2024. The factors impacting the year-to-date comparison were largely the same as those noted above for the quarter.

Non-GAAP Reconciliations and Supplementary Information The Company reports its financial results in accordance with U.S. GAAP. However, the Company believes certain non-GAAP financial measures provide users of the Company's financial information with additional meaningful information to assist in understanding financial results and assessing the Company's performance from period to period. These non-GAAP financial measures include adjusted operating profit, adjusted net income and adjusted earnings per share ("adjusted EPS") - diluted. Management believes these measures are important indicators of operations because they exclude items that may not be indicative of our core operating results and provide a better baseline for analyzing trends in our underlying businesses, and they are consistent with how business performance is planned, reported and assessed internally by management and the Company's Board of Directors. Such non-GAAP adjustments include amortization of acquired intangible assets, discrete tax items, and any other items that are non-recurring. Non-recurring items may include various restructuring charges, gains or losses on the disposals of businesses which by their nature do not reflect primary operations, as well as certain other items deemed non-recurring in nature and/or that are not a result of the Company's primary operations. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. These non-GAAP financial measures should not be considered in isolation or as a substitute for results reported under U.S. GAAP. These non-GAAP financial measures reflect an additional way of viewing aspects of operations that, when viewed with U.S. GAAP results, provide a more complete understanding of the business. The Company strongly encourages investors and shareholders to review the Company's financial statements and publicly filed reports in their entirety and not to rely on any single financial measure.

The following table presents highlights of the Company's performance for the periods below: Three months endedSix months ended January 31,January 31,

Three months ended January 31, (In millions, except per share amounts)20252024 per share(1) per share(1) Net income$276 $1.38 $322 $1.58 Corporate restructurings(2)

Cash flows As of January 31, 2025 and July 31, 2024, the Company had cash and cash equivalents of $764 million and $571 million, respectively. In addition to cash, the Company had $1.9 billion of available liquidity from undrawn debt facilities as of January 31, 2025. As of January 31, 2025, the Company's total debt was $4.3 billion. The Company anticipates that it will be able to meet its debt obligations as they become due.

Cash flows from investing activities Six months ended January 31, (In millions)20252024 Net cash used in investing activities($192)($231) Net cash used in investing activities was $192 million and $231 million for the year-to-date periods of fiscal 2025 and 2024, respectively. Capital expenditures totaled $158 million and $192 million for the year-to-date periods of fiscal 2025 and 2024, respectively. These investments were primarily for strategic projects to support future growth, such as new market distribution centers, our branch network and new technology. In addition, the Company invested $46 million and $67 million in new acquisitions in the year-to-date period of fiscal 2025 and fiscal 2024, respectively. 25

As of (In millions)January 31, 2025July 31, 2024 Short-term debt$400 $150 Long-term debt3,949 3,774 Total debt$4,349 $3,924 Private Placement Notes In June 2015 and November 2017, Wolseley Capital, Inc., a wholly-owned subsidiary of the Company, privately placed fixed rate notes (the "Private Placement Notes"). As of January 31, 2025, $700 million in Private Placement Notes remain outstanding. In the second quarter of fiscal year 2025, the Company repaid $150 million of Private Placement Notes that matured. In September 2025, an additional $400 million of such notes will mature.

Revolving Credit Facility The Company maintains a Revolving Facility with aggregate total available credit commitments of $1.35 billion. As of January 31, 2025, no borrowings were outstanding under the Revolving Facility.

As of January 31, 2025, $575 million in borrowings were outstanding under the Receivables Facility. Other The Company was in compliance with all debt covenants that were in effect as of January 31, 2025. See Note 5, Debt to the Condensed Consolidated Financial Statements and the notes to the consolidated financial statements in "Item 8. Financial Statements and Supplementary Data" of the Annual Report for further details regarding the Company's debt. There have been no significant changes to the Company's policies on accounting for, valuing or managing the risk of financial instruments during the second quarter of fiscal 2025.

Due from non-guarantor subsidiaries9,884 5,474 Three months ended January 31, (In millions)2025 Net sales$- Gross profit- Operating loss(5) Net loss(67)

Other interest income, net to non-guarantor subsidiaries344 Other income, net from non-guarantor subsidiaries(1) $4,383 (1)Includes income from intercompany transactions with non-guarantor subsidiaries, primarily from non-cash dividend transactions.

Adjusted earnings per share - diluted1.521.743.984.40 (1) The Company uses certain non-GAAP measures, which are not defined or specified under U.S. GAAP. See the section titled "Non-GAAP Reconciliations and Supplementary Information." For the second quarter of fiscal 2025, net sales increased by 3.0% compared to the second quarter of fiscal 2024, primarily due to higher sales volume and incremental revenue from acquisitions, partially offset by price deflation (approximately 2%), mainly within certain commodity categories in the United States. For the second quarter of fiscal 2025, operating profit decreased by 14.0% (adjusted operating profit decreased 13.7%), compared with the second quarter of fiscal 2024. This decrease was primarily due to higher operating costs driven by sales volume growth and cost inflation. For the second quarter of fiscal 2025, diluted earnings per share was $1.38 (adjusted diluted earnings per share: $1.52), decreasing 12.7% compared with the second quarter of fiscal 2024 (12.6% on an adjusted basis) due to lower net income, partially offset by the impact of share repurchases. Net cash provided by operating activities decreased to $0.7 billion in the year-to-date period of fiscal 2025 compared with $0.9 billion in the same period of fiscal 2024, reflecting an increase in working capital to support volume growth period-over-period, along with lower net income after adjusting for non-cash items. 19

Income tax Income tax expense was $147 million for the third quarter of fiscal 2025, an increase of $9 million, or 6.5%, compared to the same period in fiscal 2024. This increase was mainly related to the impact of the discrete tax benefit recorded in fiscal 2024. In the year-to-date period of fiscal 2025, income tax expense was $395 million, a decrease of $26 million, or 6.2%, compared to the same period in fiscal 2024. This decrease was due to lower income before income taxes in fiscal 2025, partially offset by the impact of the discrete tax benefit recorded in fiscal 2024. The Company's effective tax rates were 26.4% and 23.8% for the third quarters of fiscal 2025 and 2024, respectively. The Company's effective tax rates were 25.5% and 24.7% for the year-to-date periods of fiscal 2025 and 2024, respectively. For each of the year-over-year comparisons, the increases were primarily driven by the release of uncertain tax positions in fiscal 2024 due to the lapsing of statute limitations, as well as the impact of other discrete tax items.

The following table presents highlights of the Company's performance for the periods below: Three months endedNine months ended April 30,April 30, (In millions, except per share amounts)2025202420252024

Supplemental non-GAAP financial measures:(1) Adjusted operating profit7156741,8701,967 Adjusted earnings per share - diluted2.502.326.486.72 (1) The Company uses certain non-GAAP measures, which are not defined or specified under U.S. GAAP. See the section titled "Non-GAAP Reconciliations and Supplementary Information." For the third quarter of fiscal 2025, net sales increased by 4.3% compared to the third quarter of fiscal 2024, primarily due to higher sales volume and incremental revenue from acquisitions, partially offset by the impact of one less sales day. Pricing was broadly flat in the quarter. While we have seen instances of pull-forward buying activity from customers, such behavior is difficult to quantify and we do not believe it had a material impact on our performance in the third quarter. For the third quarter of fiscal 2025, operating profit decreased by 3.0% (adjusted operating profit increased 6.1%), compared with the third quarter of fiscal 2024. This decrease was primarily due to the $70 million in non-recurring restructuring expenses, which was partially offset by higher gross profit compared with the third quarter of fiscal 2024. Adjusted operating profit increased due to higher gross profit compared with the third quarter of 2024. For the third quarter of fiscal 2025, diluted earnings per share was $2.07 (adjusted diluted earnings per share: $2.50), decreasing 5.0% compared with the third quarter of fiscal 2024 due to lower net income, partially offset by the impact of share repurchases. Adjusted diluted earnings per share increased 7.8%, driven by higher adjusted operating profit and the impact of share repurchases. 20 Net cash provided by operating activities decreased to $1.4 billion in the year-to-date period of fiscal 2025 compared with $1.5 billion in the same period of fiscal 2024, reflecting an increase in working capital to support volume growth period-over-period, along with lower net income after adjusting for non-cash items.

For further discussion on the Company's net sales, see the "Segment results" section below. Gross profit Gross profit in the third quarter of fiscal 2025 increased $127 million, or 5.7%, compared with the same period in fiscal 2024, primarily reflecting increased net sales. Gross profit as a percentage of sales was 31.0% and 30.5% in the third quarters of fiscal 2025 and fiscal 2024, respectively. The increase of 0.5% reflected improved pricing driven by specific management actions to better capture the value provided to customers, as well as moderating deflation in the year-over-year comparison. Gross profit in the year-to-date period of fiscal 2025 increased $149 million, or 2.3%, compared with the same period in fiscal 2024. Gross profit as a percentage of sales was 30.3% and 30.4% in the year-to-date periods of fiscal 2025 and fiscal 2024, respectively. The decrease of 0.1% reflected the impact of price deflation, primarily during the first half of the year, and sales mix, partially offset by management actions to improve pricing during the third quarter of fiscal 2025. 21

Receivables Securitization Facility The Company maintains a Receivables Facility with an aggregate total available amount of $1.1 billion. 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. In October 2024, the Company extended the termination date of the Receivables Facility and made other changes to the terms and conditions of the Receivables Facility. See Note 5, Debt to the Condensed Consolidated Financial Statements for further details of such changes.

Selling, general and administrative ("SG&A") expenses SG&A expenses in the third quarter of fiscal 2025 increased $79 million, or 5.2%, compared with the same period in fiscal 2024. SG&A as a percentage of sales was 20.9% and 20.7% in the third quarters of fiscal 2025 and fiscal 2024, respectively. The increase in SG&A as a percent of sales primarily reflects the impact of cost inflation, mainly on labor, infrastructure and fleet. SG&A expenses in the year-to-date period of fiscal 2025 increased $228 million, or 5.1%, compared with the same period in fiscal 2024. SG&A as a percentage of sales was 21.2% and 20.7% in the year-to-date period of fiscal 2025 and fiscal 2024, respectively. The factors impacting the year-to-date comparisons were largely the same as those noted above for the quarter.

Net interest expense Net interest expense was $46 million in the third quarter of fiscal 2025 compared with $43 million in the same period in fiscal 2024. In the year-to-date periods, net interest expense was $140 million in fiscal 2025 compared with $132 million in fiscal 2024. The increase in interest expense was due to higher average borrowings over the respective periods compared with the prior year.

Net income Net income for the third quarter and year-to-date periods of fiscal 2025 was $410 million and $1,156 million, respectively. These represented decreases in net income of $33 million, or 7.4%, and $128 million, or 10.0%, compared with the respective periods in fiscal 2024 due to the various elements described in the sections above. 22

Segment results United States Three months endedNine months ended April 30,April 30, (In millions)2025202420252024 Net sales$7,288 $6,974 $21,210 $20,667

Adjusted operating profit 726 685 1,878 1,976 Net sales for the United States segment were $7.3 billion in the third quarter of fiscal 2025, an increase of $314 million, or 4.5%, compared to the same period in fiscal 2024. The increase in net sales was primarily driven by higher sales volume and incremental sales from acquisitions of 1.0%, partially offset by the 1.5% impact of one less sales day. Pricing was broadly flat in the quarter due to improvements in finished goods pricing offset by deflation in certain commodity categories. Net sales in non-residential markets increased approximately 7% due to growth in each of Commercial, Civil/Infrastructure and Industrial sales compared with the same period in fiscal 2024. Net sales in residential markets increased approximately 2% compared with the same period in fiscal 2024 with growth across both new construction and repairs, maintenance and improvement. Net sales were $21.2 billion in the year-to-date period of fiscal 2025, an increase of $0.5 billion, or 2.6%, compared with the same period in fiscal 2024. The factors impacting the year-to-date comparison were largely the same as those noted above for the quarter, except price deflation was approximately 2%. Adjusted operating profit for the United States segment was $726 million in the third quarter of fiscal 2025, an increase of $41 million, or 6.0%, compared to the same period in fiscal 2024, primarily reflecting higher gross profit. Adjusted operating profit for the United States segment was $1.9 billion in the year-to-date period of fiscal 2025, a decrease of $0.1 billion, or 5.0%, compared to the same period in fiscal 2024, primarily reflecting the impact of higher operating costs driven by sales volume growth and cost inflation.

Canada Three months endedNine months ended April 30,April 30, (In millions)2025202420252024 Net sales$333 $334 $1,055 $1,022 Adjusted operating profit

Nine months ended April 30, (In millions, except per share amounts)20252024 per share(1) per share(1) Net income$1,156 $5.78 $1,284 $6.30 Corporate restructuring expenses(2)

Cash flows As of April 30, 2025 and July 31, 2024, the Company had cash and cash equivalents of $519 million and $571 million, respectively. In addition to cash, the Company had $2.1 billion of available liquidity from undrawn debt facilities as of April 30, 2025. As of April 30, 2025, the Company's total debt was $4.1 billion. The Company anticipates that it will be able to meet its debt obligations as they become due.

Cash flows from operating activities Nine months ended April 30, (In millions)20252024 Net cash provided by operating activities$1,367 $1,507 Net cash provided by operating activities was $1,367 million and $1,507 million for the year-to-date periods of fiscal 2025 and 2024, respectively. The $140 million decrease was mainly due to lower net income (adjusted for non-cash items), as well as changes in working capital compared with the prior year. The increase in working capital was primarily driven by receivables in light of sales growth and an increase in inventory in connection with sales volume growth and consideration of customer demand, partially offset by the timing of vendor payments compared with the prior year.

Cash flows from investing activities Nine months ended April 30, (In millions)20252024 Net cash used in investing activities($464)($418) Net cash used in investing activities was $464 million and $418 million for the year-to-date periods of fiscal 2025 and 2024, respectively. Capital expenditures totaled $235 million and $263 million for the year-to-date periods of fiscal 2025 and 2024, respectively. These investments were primarily for strategic projects to support future growth, such as new market distribution centers, our branch network and new technology. In addition, the Company invested $242 million and $185 million in new acquisitions in the year-to-date period of fiscal 2025 and fiscal 2024, respectively. 26

Cash flows from financing activities Nine months ended April 30, (In millions)20252024 Net cash used in financing activities($975)($995) Net cash used in financing activities was $975 million and $995 million for the year-to-date periods of fiscal 2025 and 2024, respectively. Dividends paid to shareholders were $324 million and $465 million for the year-to-date periods of fiscal 2025 and 2024, respectively. The Company generally pays dividends in the fiscal quarter following the fiscal quarter in which the dividend was declared. However, the dividends declared in the fourth quarter of fiscal 2024 were also paid in the fourth quarter of fiscal 2024 due to the Merger. As such, no dividends were paid in the first quarter of fiscal 2025. Share repurchases under the Company's announced share repurchase program were $759 million and $421 million for the year-to-date periods of fiscal 2025 and fiscal 2024, respectively. Net proceeds from debt transactions were $171 million compared with net payments of $105 million for the year-to-date periods of fiscal 2025 and 2024, respectively. In the year-to-date period of fiscal 2025, the Company received net proceeds of $746 million and $75 million from the issuance of the 2034 Senior Notes and net borrowings under the Receivables Facility (each, as defined below), respectively. These proceeds were partially offset by debt repayments of $500 million and $150 million in connection with the Company's Term Loans and the maturity of certain Private Placement Notes (each, as defined below), respectively. In the year-to-date period of fiscal 2024, the Company repaid $55 million in connection with the maturity of certain Private Placement Notes and $50 million under the Receivables Facility.

As of (In millions)April 30, 2025July 31, 2024 Short-term debt$400 $150 Long-term debt3,701 3,774 Total debt$4,101 $3,924 Private Placement Notes In June 2015 and November 2017, Wolseley Capital, Inc., a wholly-owned subsidiary of the Company, privately placed fixed rate notes (the "Private Placement Notes"). As of April 30, 2025, $700 million in Private Placement Notes remain outstanding. In the second quarter of fiscal year 2025, the Company repaid $150 million of Private Placement Notes that matured. In September 2025, an additional $400 million of such notes will mature.

As of April 30, 2025, $325 million in borrowings were outstanding under the Receivables Facility. Other The Company was in compliance with all debt covenants that were in effect as of April 30, 2025. See Note 5, Debt to the Condensed Consolidated Financial Statements and the notes to the consolidated financial statements in "Item 8. Financial Statements and Supplementary Data" of the Annual Report for further details regarding the Company's debt. There have been no significant changes to the Company's policies on accounting for, valuing or managing the risk of financial instruments during the third quarter of fiscal 2025.

Due from non-guarantor subsidiaries9,741 5,474 Nine months ended April 30, (In millions)2025 Net sales$- Gross profit- Operating loss(10) Net loss(97)

Other interest income, net from non-guarantor subsidiaries484 Other income, net from non-guarantor subsidiaries(1) $4,383 (1)Includes income from intercompany transactions with non-guarantor subsidiaries, primarily from non-cash dividend transactions.

Provision for income taxes(147)(138)(395)(421) Net income$410 $443 $1,156 $1,284 Net sales Net sales were $7.6 billion in the third quarter of fiscal 2025, an increase of $0.3 billion, or 4.3%, compared with the same period in fiscal 2024. The increase in net sales was primarily driven by higher sales volume and incremental sales from acquisitions of 1.0%, partially offset by the 1.5% impact of one less sales day. Pricing was broadly flat in the quarter due to improvements in finished goods pricing offset by deflation in certain commodity categories in the United States. The Company's increase in net sales was driven by growth in non-residential markets, as well as residential markets, in its United States segment. Net sales were $22.3 billion in the year-to-date period of fiscal 2025, an increase of $0.6 billion, or 2.7%, compared with the same period in fiscal 2024. The factors impacting the year-to-date comparison were largely the same as those noted above for the quarter, except price deflation was approximately 1%.

(4)For the three months ended March 31, 2026 and 2025, discrete tax adjustments were mainly related to interest on uncertain tax positions. (5)For the three months ended March 31, 2026, the tax impact on non-GAAP adjustments primarily related to the amortization of acquired intangibles. For the three months ended March 31, 2025, the tax impact on non-GAAP adjustments related to the restructuring expenses and the amortization of acquired intangibles.

In September 2025, the Company repaid $400 million related to the 3.73% private placement notes that matured. Unsecured Senior Notes The Company has issued $3.9 billion in various issuances of unsecured senior notes (collectively, the "Unsecured Senior Notes"), including the September 2025 issuance of $750 million aggregate principal amount of unsecured senior notes due March 2031 (the "2031 Senior Notes").

Overview 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. Ferguson is headquartered in Newport News, Virginia.

Selling, general and administrative ("SG&A") expenses SG&A expenses in the first quarter of 2026 increased $42 million, or 2.7%, compared with the first quarter of 2025. SG&A as a percentage of sales was 21.5% in the first quarter of 2026 compared with 21.7% in the first quarter of 2025. The decrease in SG&A as a percentage of sales primarily reflects improved productivity and operating leverage of the Company's cost base.

Net income Net income was $414 million in the first quarter of 2026, an increase of $69 million, or 20.0%, compared with the first quarter of 2025, primarily due to the various elements described in the sections above. 20

Segment results United States Three months ended March 31, (In millions)20262025 Net sales$7,146 $6,904 Adjusted operating profit 656 611 Net sales for the United States segment were $7.1 billion in the first quarter of 2026, an increase of $242 million, or 3.5%, compared with the first quarter of 2025. The increase in net sales was primarily driven by mid-single digit price inflation and incremental sales from acquisitions of 0.6%, partially offset by lower sales volume. Net sales in non-residential markets, representing approximately half of revenue in the United States, increased approximately 8% compared with the first quarter of 2025. This increase was driven by commercial/mechanical, industrial and waterworks, including large capital project activity. Net sales in residential markets decreased approximately 1% compared with the first quarter of 2025 in light of weak new construction activity, along with soft repair, maintenance and improvement ("RMI") work. Adjusted operating profit for the United States segment was $656 million in the first quarter of 2026, an increase of $45 million, or 7.4%, compared with the first quarter of 2025, primarily reflecting higher sales and the associated gross profit, partially offset by higher variable operating costs.

Canada Three months ended March 31, (In millions)20262025 Net sales$326 $309 Adjusted operating profit 5 6 Net sales for the Canada segment were $326 million in the first quarter of 2026, an increase of $17 million, or 5.5%, compared with the first quarter of 2025. This increase in net sales was primarily driven by incremental sales from acquisitions of 5.8%, the impact of foreign currency exchange rates of 4.6% and low to mid-single digit price inflation. These increases were partially offset by lower volume and the impact of a non-core business divestments of 4.6%. Adjusted operating profit for the Canada segment decreased by $1 million in the first quarter of 2026, compared with the first quarter of 2025 due to higher operating costs, partially offset by higher gross profit. 21

The following table presents highlights of the Company's performance for the periods below: Three months ended March 31, (In millions, except per share amounts)20262025

Three months ended March 31, (In millions, except per share amounts)20262025 per share(1) per share(1) Net income$414 $2.13 $345 $1.73 Corporate restructuring expenses(2)

Liquidity and Capital Resources The Company believes its current cash position coupled with cash flow anticipated to be generated from operations and access to capital should be sufficient to meet its operating cash requirements for the next 12 months and will also enable the Company to invest and fund capital expenditures, acquisitions, dividend payments, share repurchases, required debt payments and other contractual obligations through the next several years. The Company also anticipates that it has the ability to obtain alternative sources of financing, if necessary. The Company's material cash requirements include contractual and other obligations arising in the normal course of business. These obligations primarily include debt service and related interest payments, operating lease obligations and other purchase obligations. The nature and composition of such existing cash requirements have not materially changed from those disclosed in the Transition Report other than items updated in this Quarterly Report.

Cash flows As of March 31, 2026 and December 31, 2025, the Company had cash and cash equivalents of $820 million and $557 million, respectively. In addition to cash, the Company had $2.4 billion of available liquidity from undrawn debt facilities as of March 31, 2026. As of March 31, 2026, the Company's total debt was $4.1 billion. The Company anticipates that it will be able to meet its debt obligations as they become due. 23

Cash flows from investing activities Three months ended March 31, (In millions)20262025 Net cash used in investing activities($94)($211) Capital expenditures totaled $92 million and $73 million for the three months ended March 31, 2026 and 2025, respectively. These investments were primarily for strategic projects to support future growth, such as new market distribution centers, our branch network and new technology. In addition, the Company invested $10 million and $150 million in new acquisitions for the three months ended March 31, 2026 and 2025, respectively.

As of (In millions)March 31, 2026December 31, 2025 Short-term debt$148 $148 Long-term debt3,979 3,978 Total debt$4,127 $4,126 24 Private Placement Notes In June 2015 and November 2017, Wolseley Capital, Inc., a wholly-owned subsidiary of the Company, privately placed fixed rate notes (the "Private Placement Notes"). As of March 31, 2026, $300 million in Private Placement Notes remain outstanding.

Receivables Securitization Facility The Company maintains a Receivables Securitization Facility with an aggregate total available amount of $900 million (the "Receivables Facility"). 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. As of March 31, 2026, no borrowings were outstanding under the Receivables Facility.

Other The Company was in compliance with all debt covenants that were in effect as of March 31, 2026. See Note 5, Debt to the Condensed Consolidated Financial Statements and the notes to the consolidated financial statements in "Item 8. Financial Statements and Supplementary Data" of the Transition Report for further details regarding the Company's debt. There have been no significant changes to the Company's policies on accounting for, valuing or managing the risk of financial instruments during the three months ended March 31, 2026. 25

Supplemental non-GAAP financial measures:(1) Adjusted operating profit647597 Adjusted earnings per share - diluted2.282.09 (1) The Company uses certain non-GAAP measures, which are not defined or specified under U.S. GAAP. See the section titled "Non-GAAP Reconciliations and Supplementary Information." For the first quarter of 2026, net sales increased by 3.6% compared with the first quarter of 2025, primarily due to price inflation and incremental sales from acquisitions, partially offset by lower volume. For the first quarter of 2026, operating profit increased by 20.7% (adjusted operating profit increased 8.4%), compared with the first quarter of 2025. The year-over-year change was driven by higher sales and the associated gross profit, partially offset by higher variable operating costs. For the first quarter of 2026, diluted earnings per share was $2.13 (adjusted diluted earnings per share: $2.28), increasing 23.1% (9.1% on an adjusted basis) compared with the first quarter of 2025 due to higher net income and the impact of share repurchases. Net cash provided by operating activities decreased to $772 million in the first quarter of 2026 compared with $874 million in the first quarter of 2025, primarily reflecting an increased investment in working capital, partially offset by higher net income after adjusting for non-cash items. 19

Gross profit Gross profit in the first quarter of 2026 increased $102 million, or 4.6%, compared with the first quarter of 2025, primarily reflecting increased net sales. Gross profit as a percentage of sales was 31.0% in the first quarter of 2026 compared with 30.7% in the first quarter of 2025. The increase of 0.3% primarily reflected solid execution across the business.

Net income Net income for the first quarter of fiscal 2025 was $470 million, a decrease of $49 million, or 9.4%, compared with the same period in fiscal 2024 due to the various elements described in the sections above. 18

Liquidity and Capital Resources The Company believes its current cash position coupled with cash flow anticipated to be generated from operations and access to capital should be sufficient to meet its operating cash requirements for the next 12 months and will also enable the Company to invest and fund acquisitions, capital expenditures, dividend payments, share repurchases, required debt payments and other contractual obligations through the next several fiscal years. The Company also anticipates that it has the ability to obtain alternative sources of financing, if necessary. The Company's material cash requirements include contractual and other obligations arising in the normal course of business. These obligations primarily include debt service and related interest payments, operating lease obligations and other purchase obligations. The nature and composition of such existing cash requirements have not materially changed from those disclosed in the Annual Report other than items updated in this Quarterly Report.

Unsecured Senior Notes Ferguson Finance plc, a wholly-owned subsidiary of the Company, has issued $2.35 billion in various issuances of unsecured senior notes (collectively, the "Unsecured Senior Notes"). In October 2024, Ferguson Enterprises Inc. issued $750 million aggregate principal amount of unsecured senior notes due October 2034 (the "2034 Senior Notes"). See Note 5, Debt to the Condensed Consolidated Financial Statements for further discussion of the 2034 Senior Notes. The Unsecured Senior Notes and 2034 Senior Notes (together, the "Senior Notes") are fully and unconditionally guaranteed on a direct, unsubordinated and unsecured senior basis and generally carry the same terms and conditions with interest paid semi-annually. The 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 Senior Notes respective 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 Senior Notes include covenants, subject to certain exceptions, which include limitations on the granting of liens and on mergers and acquisitions.

As of October 31, 2024, $75 million in borrowings were outstanding under the Receivables Facility. 23 Other The Company was in compliance with all debt covenants that were in effect as of October 31, 2024. See Note 5, Debt to the Condensed Consolidated Financial Statements and the notes to the consolidated financial statements in "Item 8. Financial Statements and Supplementary Data" of the Annual Report for further details regarding the Company's debt. There have been no significant changes to the Company's policies on accounting for, valuing or managing the risk of financial instruments during the first quarter of fiscal 2025.

Selling, general and administrative ("SG&A") expenses SG&A expenses in the first quarter of fiscal 2025 increased $73 million, or 4.8%, compared with the same period in fiscal 2024. SG&A as a percentage of sales was 20.4% and 19.6% in the first quarters of fiscal 2025 and fiscal 2024, respectively. The increase in SG&A as a percent of sales primarily reflects the impact of labor and infrastructure cost inflation, as well as an increase in associates in connection with sales volume growth.

Overview 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. Ferguson is headquartered and managed in Newport News, Virginia with its operations and associates solely focused on North America.

Reconciliation of net income to adjusted operating profit The following table reconciles net income (U.S. GAAP) to adjusted operating profit (non-GAAP): For the years ended July 31,

Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations Management's discussion and analysis of financial condition and results of operations ("MD&A") is intended to convey management's perspective regarding the Company's operational and financial performance for the three months ended October 31, 2024 and 2023, respectively. This MD&A should be read in conjunction with the unaudited condensed consolidated financial statements and related notes appearing in "Item 1. Financial Statements" of this Quarterly Report (the "Condensed Consolidated Financial Statements") and the consolidated financial statements and related notes in "Item 8. Financial Statements and Supplementary Data" of the Annual Report. The following discussion contains trend information and other forward-looking statements. Actual results could differ materially from those discussed in these forward-looking statements, as well as from our historical performance, due to various factors, including, but not limited to, those referred to in "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" and elsewhere in this Quarterly Report.

Adjusted operating profit for the Canada segment in the first quarter of fiscal 2025 was even with the first quarter of fiscal 2024. 19 Non-GAAP Reconciliations and Supplementary Information The Company reports its financial results in accordance with U.S. GAAP. However, the Company believes certain non-GAAP financial measures provide users of the Company's financial information with additional meaningful information to assist in understanding financial results and assessing the Company's performance from period to period. These non-GAAP financial measures include adjusted operating profit, adjusted net income and adjusted earnings per share ("adjusted EPS") - diluted. Management believes these measures are important indicators of operations because they exclude items that may not be indicative of our core operating results and provide a better baseline for analyzing trends in our underlying businesses, and they are consistent with how business performance is planned, reported and assessed internally by management and the Company's Board of Directors. Such non-GAAP adjustments include amortization of acquired intangible assets, discrete tax items, and any other items that are non-recurring. Non-recurring items may include various restructuring charges, gains or losses on the disposals of businesses which by their nature do not reflect primary operations, as well as certain other items deemed non-recurring in nature and/or that are not a result of the Company's primary operations. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. These non-GAAP financial measures should not be considered in isolation or as a substitute for results reported under U.S. GAAP. These non-GAAP financial measures reflect an additional way of viewing aspects of operations that, when viewed with U.S. GAAP results, provide a more complete understanding of the business. The Company strongly encourages investors and shareholders to review the Company's financial statements and publicly filed reports in their entirety and not to rely on any single financial measure.

Reconciliation of net income to adjusted net income and adjusted EPS - diluted The following table reconciles net income (U.S. GAAP) to adjusted net income and adjusted EPS - diluted (non-GAAP):

Cash flows As of October 31, 2024 and July 31, 2024, the Company had cash and cash equivalents of $601 million and $571 million, respectively. In addition to cash, the Company had $2.4 billion of available liquidity from undrawn debt facilities as of October 31, 2024. As of October 31, 2024, the Company's total debt was $4.0 billion. The Company anticipates that it will be able to meet its debt obligations as they become due. 21

Cash flows from investing activities Three months ended October 31, (In millions)20242023 Net cash used in investing activities($99)($96) Net cash used in investing activities was $99 million for the first quarter of fiscal 2025 compared to $96 million in the same period in fiscal 2024. Capital expenditures totaled $77 million and $91 million for the first quarter of fiscal 2025 and fiscal 2024, respectively. These investments were primarily for strategic projects to support future growth, such as new market distribution centers, our branch network and new technology. In addition, the Company invested $22 million and $12 million in new acquisitions in the first quarter of fiscal 2025 and fiscal 2024, respectively.

Debt facilities The following section summarizes certain material provisions of our long-term debt facilities and current obligations. The following description is only a summary, does not purport to be complete and is qualified in its entirety by reference to the documents governing such indebtedness.

Net income Net income was $570 million in the current quarter, an increase of $100 million, or 21.3%, compared with the first quarter of fiscal 2025 due to the various elements described in the sections above. 19

Liquidity and Capital Resources The Company believes its current cash position coupled with cash flow anticipated to be generated from operations and access to capital should be sufficient to meet its operating cash requirements for the next 12 months and will also enable the Company to invest and fund acquisitions, capital expenditures, dividend payments, share repurchases, required debt payments and other contractual obligations through the next several fiscal years. The Company also anticipates that it has the ability to obtain alternative sources of financing, if necessary. The Company's material cash requirements include contractual and other obligations arising in the normal course of business. These obligations primarily include debt service and related interest payments, operating lease obligations, required pension obligations and other purchase obligations. The nature and composition of such existing cash requirements have not materially changed from those disclosed in the Annual Report other than items updated in this Quarterly Report.

Reconciliation of net income to adjusted operating profit The following table reconciles net income (U.S. GAAP) to adjusted operating profit (non-GAAP): For the years ended July 31,

(In millions)20252024 Short-term debt$400$150 Long-term debt3,7523,774 Total debt$4,152$3,924 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"). As of July 31, 2025, $700 million in Private Placement Notes were outstanding.

Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations Management's discussion and analysis of financial condition and results of operations ("MD&A") is intended to convey management's perspective regarding the Company's operational and financial performance for the three months ended October 31, 2025 and 2024, respectively. This MD&A should be read in conjunction with the unaudited condensed consolidated financial statements and related notes appearing in "Item 1. Financial Statements" of this Quarterly Report (the "Condensed Consolidated Financial Statements") and the consolidated financial statements and related notes in "Item 8. Financial Statements and Supplementary Data" of the Annual Report. The following discussion contains trend information and other forward-looking statements. Actual results could differ materially from those discussed in these forward-looking statements, as well as from our historical performance, due to various factors, including, but not limited to, those referred to in "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" and elsewhere in this Quarterly Report.

Canada Three months ended October 31, (In millions)20252024 Net sales$412 $403 Adjusted operating profit 16 23 Net sales for the Canada segment were $412 million in the current quarter, an increase of $9 million, or 2.2%, compared with the first quarter of fiscal 2025. This increase in net sales was primarily driven by incremental sales from acquisitions of 4.6% and price inflation of approximately 4%. These increases were partially offset by lower volume, the impact of foreign currency exchange rates of 1.6% and the impact of a non-core business divestment of 1.5%. Adjusted operating profit for the Canada segment decreased by $7 million compared with the first quarter of fiscal 2025 due to higher operating costs, partially offset by higher gross profit. 20

Reconciliation of net income to adjusted net income and adjusted EPS - diluted The following table reconciles net income (U.S. GAAP) to adjusted net income and adjusted EPS - diluted (non-GAAP):

Cash flows As of October 31, 2025 and July 31, 2025, the Company had cash and cash equivalents of $526 million and $674 million, respectively. In addition to cash, the Company had $2.4 billion of available liquidity from undrawn debt facilities as of October 31, 2025. As of October 31, 2025, the Company's total debt was $4.1 billion. The Company anticipates that it will be able to meet its debt obligations as they become due. 22

Cash flows from investing activities Three months ended October 31, (In millions)20252024 Net cash used in investing activities($132)($99) Capital expenditures totaled $118 million and $77 million for the three months ended October 31, 2025 and 2024, respectively. These investments were primarily for strategic projects to support future growth, such as new market distribution centers, our branch network and new technology. In addition, the Company invested $21 million and $22 million in new acquisitions for the three months ended October 31, 2025 and 2024, respectively.

Debt facilities The following section summarizes certain material provisions of our long-term debt facilities and current obligations. The following description is only a summary, does not purport to be complete and is qualified in its entirety by reference to the documents governing such indebtedness.

Receivables Securitization Facility The Company maintains a Receivables Securitization Facility with an aggregate total available amount of $915 million (the "Receivables Facility"). 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. As of October 31, 2025, no borrowings were outstanding under the Receivables Facility.

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 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. As of October 31, 2025, no borrowings were outstanding under the Revolving Facility.

Summarized Financial Information of Obligor Group The following tables present the summarized financial information specified in Rule 1-02(bb)(1) of Regulation S-X for the Obligor Group on a combined basis, after elimination of intercompany transactions and balances between the Obligor Group, and excluding the investments in and equity in the earnings of any non-guarantor subsidiaries. The summarized financial information has been prepared in accordance with Rule 13-01 of Regulation S-X. The summarized financial information should be read in conjunction with the Condensed Consolidated Financial Statements and notes thereto included herein and the audited consolidated financial statements and notes thereto included in the Annual Report.