Colored by continued market headwinds and commodity price deflation, PVF, plumbing, HVAC, infrastructure and industrial supplies distributor Ferguson reported 1Q sales of $7.8 billion, up 0.8% year-over-year driven by a 0.3% decline in organic revenue and offset by 1.1% of acquisition growth.

On a volumetric basis, total volume increased by approximately 3% with organic volume up approximately 2%. While continued weakness in certain commodity related categories drove modest overall price deflation of around 2%.

Gross margin of 30.1% was 10 basis points lower than last year.

Operating expense growth was driven by volumetric growth, cost inflation and continued investment in core capabilities for future growth.

Reported operating profit was $665 million (8.6% operating margin), 10.0% lower than last year. Adjusted operating profit of $706 million (9.1% adjusted operating margin) was 8.7% below last year.

Ferguson CEO Kevin Murphy said the numbers confirm the company is outperforming the market.

“The year has started largely as expected and our balanced business mix and ability to deploy scale locally give us confidence in our continued market outperformance,” he said in an earnings report.

He said the company will “continue to invest for organic growth” and consolidate fragmented markets through acquisition.

U.S.

In the U.S.— where Ferguson is now officially headquartered — sales were up 0.5%. Organic revenue was down 0.4%, offset by 0.9% from acquisitions.

Residential end markets, which comprise just over half of U.S. revenue, remained down year-over-year with market activity similar to the fourth quarter. Overall, its residential revenue was flat in the first quarter. Non-residential end markets were slightly more resilient, up 1% in 1Q, but also remain down year-over-year. Sales in civil/infrastructure and industrial end markets were stronger with commercial broadly flat.

Ferguson completed one acquisition during the quarter, Fresno Pipe and Supply, a distributor of industrial pipes, valves and fitting products in California. Additionally, subsequent to quarter end, the company acquired Templeton and its affiliate, TEMSCO, which serve the water and wastewater industries in the southeast.

Full-Year Guidance

Its fiscal 2025 financial guidance remains unchanged, reflecting modest full year revenue growth with continued outperformance.

“While we anticipate an ongoing challenging near term market environment, we will continue to invest in scale and capabilities to take advantage of multi-year structural tailwinds such as underbuilt and aging U.S. housing, non-residential large capital projects and our opportunity with the plumbing and HVAC specialized professional,” Murphy said.