Ferguson Enterprises Inc. (NYSE:FERG) shares are trading lower after the company reported second-quarter results.

The company reported net sales of $6.87 billion, which was 3.0% higher year over year, beating the consensus of $6.76 billion.

Net sales growth was driven by organic revenue growth of 2.1% and acquisition growth of 1.2%.

Total volume increased by approximately 5%, with organic volume up 4%. Meanwhile, weakness in certain commodity-related categories led to a modest overall price deflation of about 2%.

Net sales in the U.S. business increased by 3.0%, while that in Canada grew by 3.2% in the quarter.

Gross margin contracted by 70 basis points Y/Y to 29.7% in the second quarter. Adjusted operating margin contracted 130 basis points to 6.5% in the quarter.

Adjusted EBITDA declined 11.6% Y/Y to $502 million in the quarter. Adjusted EPS of $1.52 (-12.6% Y/Y) missed the consensus of $1.60.

The company declared a quarterly dividend per share of $0.83, representing a growth of 5% over the prior year. The dividend is payable on May 6 to stockholders of record as of March 21, 2025.

Ferguson repurchased $252 million in shares during the quarter and disclosed an additional $1.0 billion, leaving around $1.4 billion remaining under its current share repurchase program. As of January 31, net debt stood at $3.59 billion.

FY25 Outlook: Ferguson continues to expect net sales growth to be in low-single-digits and revised the outlook for adjusted operating margin to 8.3% – 8.8% (from 9.0% – 9.5%) and capital expenditures to $325 million – $375 million (from $400 million – $450 million).

Kevin Murphy, Ferguson CEO, said, ”While we have been disciplined in managing costs in relation to volume growth, we are taking additional steps to streamline the business to increase speed and efficiency to better serve our customers, positioning the organization for future profitable growth.”

“We remain confident in our markets over the medium-term and continue to balance investment in key strategic opportunities, leveraging multiyear tailwinds in both residential and non-residential markets as we support the complex project requirements of our specialist professional customers.”

Investors can gain exposure to the stock via Invesco Water Resources ETF (NASDAQ:PHO) and Global X Clean Water ETF (NASDAQ:AQWA).

Price Action: FERG shares are down 3.63% at $159.55 at the last check Tuesday.

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