08:55 AM EDT, 03/11/2025 (MT Newswires) -- Ferguson Enterprises ( FERG ) lowered its full-year adjusted operating margin outlook on Tuesday amid continuous commodity price deflation, as the company's fiscal second-quarter earnings declined year over year while sales increased and topped market estimates.

The plumbing and heating products company reported adjusted earnings of $1.52 a share for the quarter ended Jan. 31, down from $1.74 the year before. Sales inclined 3% year over year to $6.87 billion and surpassed the Street's view for $6.76 billion.

Persistent weakness in certain commodity categories resulted in overall price deflation of about 2%, according to the company. On an organic basis, revenue moved 2.1% higher while volume gained roughly 4%. Shares of the firm fell 7.4% in the most recent premarket activity.

Ferguson now anticipates its adjusted operating margin to be in a range of 8.3% to 8.8% for fiscal 2025, compared with its previous projections of 9% to 9.5%. In the second quarter, the metric deteriorated 130 basis points year over year to 6.5%.

"Our associates continued to execute well for our customers in the second quarter, generating continued market outperformance with a sequential step up in volume growth rates," Chief Executive Kevin Murphy said in a statement. "We are navigating a unique time with continued subdued markets and persistent commodity price deflation that drove lower than expected adjusted operating margin in our seasonally lightest quarter."

Sales in the US rose to $6.55 billion in the second quarter from $6.36 billion in the prior-year period, as residential revenue inclined 2%. Non-residential revenue "remained slightly more resilient" and advanced around 4%. Sales in Canada improved 3.2% to $319 million, partially offset by a 5.3% foreign-exchange headwind.

The company continues to expect low single-digit net sales growth in fiscal 2025, while the Street is looking for $30.37 billion. Capital expenditures are pegged at $325 million to $375 million, down from the prior guidance of $400 million to $450 million.

"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," according to Murphy.