Ferguson plc

Good morning, ladies and gentlemen. My name is Elliot. I'll be your conference operator today. At this time, I would like to welcome you to Ferguson's second quarter results for the period ended June 30th, 2026 conference call. All lines be placed on mute to prevent any interference with the presentation. At the end of the prepared remarks, there will be a question and answer session. To ask a question at that time, please press star and then the number one on your keypad. To withdraw your question, please press star and then the number two. Thank you. I would now like to turn the call over to Pete Kennedy, Ferguson's Vice President of Investor Relations and Sustainability. You may begin your conference call.

Good morning everyone and welcome to Ferguson's quarterly earnings conference call and webcast. Hopefully you've had a chance to review the earnings announcement we issued this morning. The announcement is available in the investor section of our corporate websites and on our SEC filings webpage. A recording of this call will be made available later today. I want to remind everyone that some of our statements today may be forward-looking and are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected, including the various risks and uncertainties discussed in our Form 10-KT available on the SEC's website. also any forward-looking statements represent the company's expectations only as of today and we disclaim any obligation to update these statements in addition on today's call we will also discuss certain non-gap financial measures therefore all references to operating profit operating margin diluted earnings per share effective tax rates and earnings before interest taxes depreciation and amortization reflect certain non-gap adjustments Please refer to our earnings presentation and announcements on our website for additional information regarding those non-GAAP measures, including reconciliations to their most directly comparable GAAP financial measures. With me on the call today are Kevin Murphy, our CEO, and Bill Brundage, our CFO. I will now turn the call over to Kevin.

Thank you, Pete, and welcome everyone to Ferguson's second quarter results conference call. Today I'll cover our quarterly performance highlights our results by end market and by customer group, and discuss our recent announcement to acquire FlowWorks. Bill will then review our financials and our updated guidance before I wrap up with a few final comments. We'll then have time to take your questions at the end. Our associates continued to execute for our customers in the second quarter, delivering market outperformance with both revenue and profit growth. Sales of $8.8 billion increased 4.6% over prior year. principally driven by organic growth of 3.8% and acquisition growth of 1%. We're pleased with our volume growth amid what continues to be a mixed market. Gross margin was strong at 31% down just 20 basis points against a tough comparison. We continue to drive productivity by balancing discipline cost management with investments for future growth. Operating profit increased 2.9% to $932 million. driving a 5.3% increase in diluted earnings per share to $3.39. We remain focused on executing our capital priorities. We've now announced eight acquisitions year to date. This includes five acquisitions that closed in the second quarter, investing nearly $600 million. And post quarter end, we signed a definitive agreement to acquire FlowWorks, a leading distributor of highly technical valves and flow control solutions. We also returned $375 million to shareholders through dividends and share repurchases. And our balance sheet remains strong with net debt to EBITDA of 1.3 times. While the economic environment remains uncertain, our performance year to date enables the upward revision of our full year guidance, which Bill will cover in more detail later on. Turning to our performance by end market in the United States, we delivered another strong quarter of non-residential performance, with 8% growth on top of a 13% prior year comparable. Our associates drove meaningful share gains by leveraging our scale, multi-customer group approach, and value-added capabilities. Continued strong activity in large capital projects offset softer activity in traditional non-residential work. We also returned to growth in the residential market, up 2% in the quarter, despite persistent headwinds across both new construction and repair maintenance and improvement work. Our intentional balanced business mix continues to provide durable growth opportunities and resilience through market cycles. Moving next to the second quarter revenue performance across our customer groups in the United States. Waterworks revenue grew 3% against a 15% prior year comparable. Our diversified exposure across large capital projects, public works municipal activity and metering technology helped offset weaker residential activity. We continue to execute our waterworks diversification strategy with the acquisition of Hamlet environmental technologies, further expanding our capabilities in water and wastewater treatment. Commercial mechanical grew 15% on a 20% prior year comparable. This momentum was driven by the strong execution of our teams on large capital projects such as data centers, pharmaceutical production, biotechnology, and general manufacturing. Our scale, breadth of products, diversified supply chain, value added capabilities, and our relationship with project stakeholders, including owners, engineers, general contractors, and our specialized customers continue to drive market outperformance. Similarly, our industrial customer group performed very well with 18% growth on top of a 6% prior year comparable. We continue to see steady demand across key sectors that balance our industrial business, including life sciences, pharma, chemical, and power generation infrastructure that's critical for supporting large capital projects. Moving to our facility supply group, revenue increased 5% while fire and fabrication declined 13%. In our residential customer groups, Ferguson Home declined 1% and residential trade plumbing was relatively flat. growth accelerated in our HVAC customer group with revenue up 11% in the quarter. This was driven principally by healthy organic performance alongside contributions from M&A. Our ability to outperform the market is driven by our HVAC growth strategy that includes investment in dual trade, greenfield expansion, and acquisitions. The scale and breadth of our business across these customer groups positions us well to capitalize on the long-term tailwinds in our end markets. Now let me share more about our recent announcement to acquire FlowWorks, a leading industrial distributor and service provider of highly technical valves and flow control solutions. Founded in 1961 in Houston, Texas, FlowWorks has more than 65 years of history as a leading flow control distributor with approximately $1 billion in revenue in 2025. and more than 60 locations including 25 service and repair centers across the United States and Canada. The acquisition will expand our specialty industrial flow control platform adding technical depth including valves, automation, pumps, fluid handling systems and specialty pipe fittings and flanges. We also expect the acquisition to enhance our growth strategy with expanded end market and product exposure. while adding significant recurring MRO-driven revenue. We're excited to welcome the more than 1,000 talented FlowWorks associates to Ferguson. Their capabilities, geographic footprint, and portfolio of 15 brands will complement our offering, providing customers even more choice in their product and service selections. In addition, their culture embodies our philosophy with a focus on associate development, exceptional customer service, and operational excellence. as one of our largest acquisition announcements to date, we expect to increase our total addressable market from $340 billion to $400 billion. FlowWorks will strengthen our business as we add additional exposure to key growth areas with secular tailwinds, including large capital projects and water infrastructure. FlowWorks will also support the balanced business mix in our industrial customer group and allow us to further engage with high growth end markets like data centers, semiconductors, Biotechnology and Pharma, Power Generation, Food and Beverage, and General Manufacturing, while creating powerful cross-sell opportunities across our non-residential customer groups. We believe FlowWorks will enhance our ability to drive market outperformance by playing an even larger part in the build-out happening across North America. Now let me turn over to Bill, who'll cover some of the financial aspects of the FlowWorks acquisition, as well as provide more detail regarding our financial performance, and updated guidance.