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Ferguson Enterprises$FERG · filed: grew revenue 3.8% in FY2025 to $30.8BNew shipTrillion Score 516Fall Risk MediumCheck ▾Close ▴
What Ferguson Enterprises filed
Grew revenue 3.8% in FY2025 to $30.8 billion, operating margin 8.5% against a 5.0% median for hardware & plumbing & heating equipment & supplies, equity 32.9% of assets, and dividend per share up 1 year running. Every figure links to the filing it came from on Ferguson Enterprises’s card. New ship: no warning signs. Trillion Score 516, #7 of 20 in its field; Fall Risk Medium (how it is measured).
Figures as filed with the SEC. Ranges, scores and boats are statistical descriptions of past filings, not ratings or recommendations. Reporting, not advice.
In plain words
Ferguson locks repair-focused density ahead of a multi-year HVAC replacement wave; Wynnchurch exits cleanly but not spectacularly.
$1.6 billion
in cash
380 branch locations
across the United States
$800 million
rebuilt management
1,700 U.S. locations
will absorb FloWorks into its Residential HVAC division and…
Ferguson Enterprises announced Monday it will acquire FloWorks from Wynnchurch Capital for $1.6 billion in cash, the largest single acquisition in Ferguson's recent history and Wynnchurch's cleanest exit since rotating out of Worldwide Equipment in 2024. The deal was signed without an auction process.
FloWorks operates 380 branch locations across the United States, focused on repair and replacement plumbing and HVAC supplies rather than new construction. Wynnchurch acquired the business in 2020 for an undisclosed amount below $800 million, rebuilt management, and doubled the branch count through fourteen tuck-in acquisitions. Ferguson, already the largest distributor in the sector with 1,700 U.S. locations, will absorb FloWorks into its Residential HVAC division and expects $60 million in annual cost synergies by the second year post-close. The transaction is expected to close in Q4 2026, subject to HSR clearance.
The timing reflects two converging forces. First, residential HVAC replacement cycles are entering a structural upturn as units installed during the 2008-2012 construction trough reach end-of-life, with the median system age now at 14.2 years versus a 12-year replacement standard. Second, repair-focused distribution carries higher gross margins than new construction supply—FloWorks runs at approximately 28% gross margins compared to Ferguson's blended 26%—and proves more resilient during housing slowdowns. Ferguson's management has stated it will finance the deal entirely through cash on hand and existing credit facilities, with no equity raise planned. The company held $1.1 billion in cash and equivalents as of its most recent quarterly filing.
The deal also signals private equity's continued appetite for distribution roll-ups with operational complexity. Wynnchurch, a Chicago-based firm with $6 billion under management, specializes in operationally intensive businesses where multiple expansion comes from margin improvement rather than revenue growth alone. FloWorks fits that profile precisely: the firm reduced days sales outstanding by 11 days and consolidated six regional billing systems into one since 2020. Wynnchurch will likely return 2.4x to 2.7x cash-on-cash to its Fund V investors, a respectable but not exceptional outcome that reflects the difficulty of exiting mid-market distribution businesses at premium multiples in the current rate environment.
Allocators should watch three follow-on events. First, whether Ferguson attempts further branch expansion in the Southwest and Mountain West regions where FloWorks holds density advantages, likely through additional tuck-ins in Q1 2027. Second, whether Wynnchurch deploys exit proceeds into a similar operational roll-up thesis within 90 days, as the firm typically recycles capital quickly. Third, whether competing distributors—particularly Watsco and private-equity-backed Johnstone Supply—respond with their own M&A before year-end to defend regional market share.
Ferguson's Chief Executive Kevin Murphy stated the acquisition "positions us ahead of the replacement cycle" in prepared remarks, a phrase that doubles as guidance. The company expects U.S. residential HVAC unit shipments to grow 6-8% annually through 2029, with repair and replacement comprising 72% of that volume. FloWorks adds exactly that exposure.
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For the principal
If holding distribution or building-materials exposure, Ferguson just became less cyclical; consider reweighting toward repair-driven revenue mix.
For the operator
Watch for Ferguson's post-close branch consolidation moves in Q1 2027; margin accretion timelines will clarify by March earnings call.
For the house
We rotate named accounts toward Ferguson equity on replacement-cycle thesis; exit Watsco positions if no responsive M&A by October.
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