FERGFerguson Enterprises

We are subject to income taxes in the U.S. and various other countries globally. Changes in tax laws, regulations and treaties, treaties and conflicts in related interpretations or the interpretation thereof can and do occur. Significant judgment is required for determining the Company’s tax liabilities, and the Company’s tax returns are periodically examined by various tax authorities. The ultimate resolution of any tax matters guidance may result in payments greater or less than amounts accrued, which could have a negative impact on our provision for income taxes. In addition, our future earnings and the value of our deferred tax assets and liabilities could be negatively impacted by further changes in tax legislation, including changes in tax rates, tax laws and changes in the rules for earnings repatriations in the U.S. or other countries. For example, the current U.S. presidential administration has proposed a higher U.S. federal corporate tax rate and increased taxation of offshore income. Further, in July and October 2021, the OECD/G20 Inclusive Framework agreed on the general rules for redefined jurisdictional taxation rights and a global minimum tax. In December 2022, the European Union member states voted unanimously to adopt a Directive implementing the Pillar Two (global minimum tax) rules giving member states until December 31, 2023 to implement the Directive into national legislation. Certain jurisdictions in which we operate, under the OECD/G20 Inclusive Framework, have enacted legislation that adopts a subset of such rules effective for tax years beginning after January 1, 2024, with the remaining rules becoming effective January 1, 2025. The application of tax law is subject to interpretation. Additionally, administrative guidance can be incomplete or vary from legislative intent, and therefore the application of the tax law is uncertain. While we believe the positions reported by the Company comply with relevant tax laws and regulations, we could be subject to tax audits and taxing authorities could interpret our application of certain laws and regulations differently. Future tax controversy matters may result in previously unrecorded tax expenses, higher future tax expenses or the assessment of interest and penalties which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

In November 2023, 2024, the FASB Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” This ASU expands public entities’ required segment disclosures, requires new financial statement disclosures disaggregating prescribed expense categories within relevant income statement expense captions, including disclosure information about purchases of significant segment expenses that inventory, employee compensation, depreciation and intangible asset amortization for each relevant expense caption on the face of the income statement. Per ASU No. 2025-01, the amendments under ASU No. 2024-03 are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items and interim disclosures of a reportable segment’s profit or loss and assets that are currently not required. This ASU is effective for fiscal years annual reporting periods beginning after December 15, 2023, 2026, and interim periods within fiscal years annual reporting periods beginning after December 15, 2024. 2027. Early adoption is permitted. The ASU No. 2024-03 can be adopted either prospectively or retrospectively. The Company is currently evaluating the ASU to determine the impact of adopting this ASU on its disclosures.

Net sales for the United States segment were $28.2 $29.3 billion in fiscal 2024, a decrease 2025, an increase of $0.1 $1.1 billion, or 0.3%, 3.8%, compared with the prior year. The decrease increase in net sales was primarily driven by price deflation of approximately 2%, mainly within certain commodity categories, and to a lesser extent, lower higher sales volume. These decreases were partially offset by volume, along with incremental sales from acquisitions of 1.7% and 1.0%. These increases were partially offset by price deflation of approximately 1%, mainly within certain commodity categories in the benefit first half of the fiscal year that was partially offset by improvements in finished goods pricing. In addition, net sales growth was partially offset by the impact of one additional fewer sales day of 0.4% in the year-over-year comparison. Net sales growth in the non-residential markets was 6.8% due to growth in each of Commercial, Civil/Infrastructure and Industrial. Net sales in the residential markets decreased increased by 2.4%, driven by lower sales in 0.9%, with growth across both new construction reflecting housing starts and permit activity that were below prior year levels, as well as lower sales in RMI. Net sales growth in the non-residential markets, was 1.9%, with growth in the civil/infrastructure and commercial markets.