Softness in the manufacturing sector, slowdown in new orders and lingering effects of supply-chain issues have impacted the outlook of the Zacks Manufacturing-Tools & Related Products industry. The shortage of skilled labor in the United States is another concern for the industry.Investments in product development and cost-control measures are expected to foster the industry participants’ growth. Lincoln Electric Holdings, Inc. (LECO) , Core & Main, Inc. (CNM) , Stanley Black & Decker, Inc. (SWK) and Enerpa ...

Group 1 - The analyst maintains a positive outlook on Core & Main (CNM) for FY25, reiterating a buy rating based on demand expectations [1] - The analysis incorporates various investment strategies, including fundamental, technical, and momentum investing, to enhance the investment process [1] Group 2 - The article serves as a platform for tracking investment ideas and connecting with like-minded investors [1]

Financial Data and Key Metrics Changes - The company achieved record net sales of over $7.4 billion for fiscal 2024, reflecting an 11% increase year-over-year [26][47] - Adjusted EBITDA for fiscal 2024 increased by 2% to $930 million, with an adjusted EBITDA margin of 12.5%, down 110 basis points from the previous year [51][62] - Gross margin for fiscal 2024 was 26.6%, a decrease from 27.1% in fiscal 2023, attributed to higher average inventory costs [48][62] - Selling, general and administrative (SG&A) expenses rose approximately 16% to nearly $1.1 billion, primarily due to acquisitions and inflation [49][62] Business Line Data and Key Metrics Changes - The company reported strong double-digit average daily sales growth in metering and storm drainage products, and high single-digit growth in treatment plant projects [27] - Acquisitions contributed about 9% to sales growth, while organic average daily volumes were up low single digits [42][47] - Private label products represented approximately 4% of sales, with a target to grow to 10% or more over time [29][62] Market Data and Key Metrics Changes - The company estimates it holds a 19% share of a $39 billion addressable market, indicating significant growth potential [15] - Municipal spending on water infrastructure is expected to remain resilient, with low single-digit growth projected for 2025 [58][62] - The company anticipates flat nonresidential construction starts in 2025, with a stable outlook for municipal projects [56][62] Company Strategy and Development Direction - The company plans to continue driving profitable growth through both organic means and acquisitions, while maintaining strong cash flow [40][62] - The focus remains on expanding presence in underpenetrated geographies and driving the adoption of new products [60][62] - The company aims to enhance gross margins through private label initiatives, sourcing optimization, and pricing strategies [61][62] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating uncertainties related to interest rates, federal funding, and tariffs, while remaining optimistic about municipal water infrastructure projects [54][56] - The company expects to achieve net sales growth of 2% to 5% in fiscal 2025, with adjusted EBITDA projected to range from $950 million to $1 billion [62] - Management highlighted the importance of maintaining a strong culture and leadership team during the transition of executive roles [11][104] Other Important Information - The company completed 10 acquisitions in fiscal 2024, adding over $600 million in annual sales [27][32] - The company returned $176 million to shareholders through share repurchases, with a remaining authorization of $324 million [53][62] - Management noted that tariffs are not expected to significantly impact the business, as most products are produced domestically [33][116] Q&A Session Summary Question: What percentage of COGS is PVC today and what are the price expectations? - PVC pipe accounts for less than 15% of COGS, with an overall neutral pricing environment expected moving forward [68][69] Question: Can you provide insight into first quarter trends? - The start of 2025 is in line with expectations, with strong bidding activity and a good backlog [72][73] Question: What is the outlook for end markets? - Residential and non-residential markets are expected to remain steady, with municipal spending projected to be resilient [76][79] Question: What are the key levers for gross margin expansion? - Private label initiatives are the primary driver for gross margin expansion, followed by sourcing optimization [81][82] Question: How do you view the competitive dynamics in your markets? - The competitive environment remains stable, with continued market share gains expected [119]

Company Performance - Core & Main Inc. reported fourth-quarter earnings of 33 cents per share, missing the consensus estimate of 36 cents per share [2] - Net sales for Core & Main increased by 17.9% year-over-year to $1.69 billion, nearly aligning with the consensus estimate of $1.67 billion [2] - The CFO of Core & Main will succeed the current CEO, and the current senior vice president of finance and investor relations will take over as CFO [2] Stock Movements - Tenon Medical, Inc. shares surged 307% to $3.98 following FDA 510(k) clearance for its Catamaran St Joint Fusion System [9] - DatChat, Inc. shares increased by 137% to $5.11 after the launch of its Myseum social media platform on Apple iOS and Android [9] - Mullen Automotive, Inc. shares rose by 88% to $0.4804 [9] - Mural Oncology plc shares dropped 60% to $1.5470 after announcing the discontinuation of its final analysis of Nemvaleukin in combination with KEYTRUDA [9] - CNS Pharmaceuticals, Inc. shares fell 62% to $1.2907 following the primary analysis of Berubicin in glioblastoma multiforme treatment [9] - IMAC Holdings, Inc. shares decreased by 58% to $0.1794 [9]

Core Earnings Performance - Core & Main reported quarterly earnings of $0.33 per share, missing the Zacks Consensus Estimate of $0.36 per share, and showing a slight decrease from $0.34 per share a year ago, resulting in an earnings surprise of -8.33% [1] - The company posted revenues of $1.7 billion for the quarter ended January 2025, surpassing the Zacks Consensus Estimate by 1.07%, compared to year-ago revenues of $1.44 billion [2] Stock Performance and Outlook - Core & Main shares have declined approximately 2.5% since the beginning of the year, while the S&P 500 has seen a decline of -1.9% [3] - The company's earnings outlook is mixed, with current consensus EPS estimates at $0.51 for the coming quarter and $2.40 for the current fiscal year, with revenues expected to be $1.82 billion and $7.67 billion respectively [7] Industry Context - The Manufacturing - Tools & Related Products industry, to which Core & Main belongs, is currently ranked in the top 32% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - The correlation between near-term stock movements and trends in earnings estimate revisions is noted, suggesting that investors should monitor these revisions closely [5]

Market Overview - Core & Main estimates its addressable market in the U.S. for water, wastewater, storm drainage, and fire protection products to be approximately $39 billion in fiscal 2024[28]. - The company estimates that its net sales accounted for approximately 19% of its $39 billion addressable market in fiscal 2024[63]. - Approximately 42% of net sales were derived from the municipal construction sector, 38% from non-residential construction, and 20% from residential construction[22]. Product Sales Breakdown - Pipes, valves, and fittings accounted for approximately 67% of net sales in fiscal 2024[50]. - Storm drainage products represented about 16% of net sales in fiscal 2024[52]. - Fire protection products accounted for approximately 8% of net sales in fiscal 2024[54]. - Meter products accounted for approximately 9% of net sales in fiscal 2024[56]. - Sales through the strategic accounts program contributed approximately 5% to fiscal 2024 net sales, indicating potential for growth in large-scale projects[36]. Company Operations and Expansion - Core & Main has over 370 branch locations across 49 U.S. states, connecting more than 5,000 suppliers to over 60,000 customers[20]. - The company plans to continue expanding into underpenetrated geographies and product categories to enhance market share[35][38]. - Each branch sells approximately 4,500 products on average, with many in inventory and others available for delivery[70]. Financial Performance and Margins - Core & Main's gross margin has improved due to initiatives like private label product expansion and data-driven pricing strategies[41]. - The company experienced price stability in fiscal 2023, but certain suppliers and product lines still faced supply chain constraints[110]. - The company may face increased product costs due to supply chain disruptions and natural disasters, which could negatively impact net sales[110]. Customer and Supplier Relationships - The top 50 customers represented approximately 10% of net sales in fiscal 2024, with the largest customer accounting for less than 1%[58]. - The largest single supplier represented approximately 7% of product expenditures in fiscal 2024, while the top ten suppliers accounted for approximately 43%[61]. - Customer relationships are generally governed by purchase orders and job-specific agreements, with no long-term commitments, affecting sales stability[159]. Risks and Challenges - The company may lose business to competitors through competitive bidding processes, impacting its ability to secure contracts[108]. - The company faces risks associated with managing inventory effectively, which can result in lost sales opportunities or excess inventory[113]. - The company is exposed to risks related to environmental, health, and safety laws, which could impose costs and potential liabilities[99]. - A public health crisis could materially adversely affect the company's business, operations, and financial condition due to decreased product demand and supply chain disruptions[132]. - The company may incur significant costs to comply with environmental, health, and safety laws, which could exceed current estimates and reserves[134]. Debt and Financial Obligations - As of February 2, 2025, total consolidated indebtedness was $2,283 million, with $275 million in outstanding lease commitments[166]. - The company may incur additional indebtedness, which could increase risks to financial condition and results of operations[167]. - The company relies on distributions from Holdings and its subsidiaries to cover taxes and expenses, with no independent revenue generation[183]. Shareholder and Stock Information - The company has authorized a share repurchase program allowing for the purchase of up to $500 million of Class A common stock, with repurchases to be determined at the company's discretion[213]. - The market price of the company's Class A common stock may be volatile, influenced by various factors including industry conditions and quarterly operating results[198]. - The company currently does not have an approved plan to pay dividends on its Class A common stock, focusing instead on debt repayment and growth funding[212]. Cybersecurity and Compliance - The company has a comprehensive cybersecurity program based on the National Institute of Standards and Technology's Cybersecurity Framework, integrated within its enterprise risk management program[217]. - The legal and regulatory environment surrounding information security and privacy is constantly evolving, posing potential liabilities[155].

Financial Performance - Net sales for the fourth quarter increased 17.9% to $1,698 million compared to $1,440 million in the prior year[6] - Gross profit for the fourth quarter increased 17.4% to $451 million, with a gross profit margin of 26.6%[8] - Net income for the fourth quarter decreased 11.8% to $67 million, primarily due to increased interest and income tax expenses[11] - Fiscal 2024 net sales increased 11.0% to $7,441 million compared to $6,702 million in fiscal 2023[14] - Adjusted EBITDA for fiscal 2024 increased 2.2% to $930 million compared to $910 million in fiscal 2023[20] - Net income attributable to Core & Main, Inc. for the fiscal year ended February 2, 2025, was $411 million, a 10.8% increase from $371 million in the previous year[41] - Net income attributable to Core & Main, Inc. for the three months ended February 2, 2025, was $64 million, compared to $63 million for the same period in the previous year[52] - Adjusted EBITDA for the fiscal year ended February 2, 2025, was $930 million, an increase from $910 million in the prior fiscal year[52] Expenses and Costs - SG&A expenses for fiscal 2024 increased 15.8% to $1,078 million, driven by acquisitions and inflation[16] - The company paid $197 million in interest for the fiscal year ended February 2, 2025, compared to $105 million the previous year, indicating higher borrowing costs[45] - The company incurred interest expense of $36 million for the three months ended February 2, 2025, compared to $22 million for the same period in the previous year[52] - Depreciation and amortization for the fiscal year ended February 2, 2025, was $186 million, compared to $149 million in the prior fiscal year[52] - The company reported a provision for income taxes of $21 million for the three months ended February 2, 2025, compared to $18 million for the same period in the previous year[52] - Acquisition expenses for the fiscal year ended February 2, 2025, totaled $11 million, up from $6 million in the prior fiscal year[52] Acquisitions and Growth Strategy - The company completed ten acquisitions to expand its geographic presence and product lines[5] - Acquisitions of businesses net of cash acquired totaled $741 million for the fiscal year ended February 2, 2025, compared to $231 million in the previous year, reflecting aggressive growth strategy[45] Debt and Assets - Net debt increased to $2,275 million as of February 2, 2025, due to higher borrowings for acquisitions and share repurchases[22] - Long-term debt rose to $2,237 million as of February 2, 2025, up from $1,863 million the previous year, indicating increased leverage[43] - Total assets increased to $5,870 million as of February 2, 2025, compared to $5,069 million as of January 28, 2024[43] - Net Debt as of February 2, 2025, was $2,275 million, up from $1,892 million as of January 28, 2024[54] Future Guidance - Fiscal 2025 guidance includes net sales of $7,600 to $7,800 million, reflecting a growth of 2% to 5%[28] - Anticipated adjusted EBITDA for fiscal 2025 is projected to be between $950 million and $1,000 million[28] Operational Efficiency - Adjusted EBITDA margin is defined as Adjusted EBITDA divided by net sales, reflecting the company's operational efficiency[48] - EBITDA for the three months ended February 2, 2025, was $173 million, compared to $154 million for the same period in the previous year[52] Cash Flow - The company reported net cash provided by operating activities of $621 million for the fiscal year ended February 2, 2025, down from $1,069 million the previous year[45] - Cash and cash equivalents at the end of the period were $8 million, up from $1 million at the beginning of the period[45] Variability in Financial Results - The company expects variability in excluded items may have a significant impact on future GAAP financial results[50]

Group 1 - Core & Main, Inc. is set to release its first-quarter financial results on March 25, with expected earnings of 36 cents per share, an increase from 32 cents per share in the previous year [1] - The company projects quarterly revenue of $1.67 billion, up from $1.44 billion a year earlier [1] - Core & Main reported better-than-expected third-quarter EPS and sales on December 3 [1] Group 2 - Core & Main shares fell 0.5% to close at $48.27 [2] - Analysts have provided various ratings and price targets for Core & Main, with Citigroup maintaining a Neutral rating and raising the price target from $43 to $56 [4] - Goldman Sachs also maintained a Neutral rating, increasing the price target from $50 to $57 [4] - RBC Capital reiterated an Outperform rating and lifted the price target from $53 to $62 [4] - Truist Securities maintained a Hold rating and increased the price target from $38 to $56 [4] - Baird maintained an Outperform rating and boosted the price target from $60 to $66 [4]

Company Performance - Core & Main (CNM) closed at $48.27, reflecting a -0.49% change from the previous day, underperforming the S&P 500 which gained 0.08% [1] - Over the past month, CNM shares declined by 7.46%, worse than the Industrial Products sector's loss of 5.98% and the S&P 500's loss of 7.33% [2] Upcoming Earnings Report - Core & Main is set to release its earnings on March 25, 2025, with an expected EPS of $0.36, indicating a 5.88% growth year-over-year [3] - Revenue is projected to be $1.68 billion, representing a 16.67% increase compared to the same quarter last year [3] Analyst Projections - Recent shifts in analyst projections for Core & Main are important, as positive revisions indicate optimism regarding the company's business and profitability [4] - The Zacks Rank system, which reflects these estimate changes, currently rates Core & Main at 3 (Hold) [6] Valuation Metrics - Core & Main has a Forward P/E ratio of 20.18, which is higher than the industry's Forward P/E of 18.63 [7] - The company's PEG ratio stands at 2.41, compared to the Manufacturing - Tools & Related Products industry's average PEG ratio of 1.3 [7] Industry Context - The Manufacturing - Tools & Related Products industry is part of the Industrial Products sector, holding a Zacks Industry Rank of 82, placing it in the top 33% of over 250 industries [8] - Strong individual industry groups, as measured by the Zacks Industry Rank, tend to outperform weaker groups by a factor of 2 to 1 [8]

Company Overview - Core & Main (CNM) ended the recent trading session at $47.85, showing a +0.36% change from the previous day's closing price, which is less than the S&P 500's daily gain of 0.64% [1] - Over the past month, shares of Core & Main have depreciated by 12.21%, underperforming the Industrial Products sector's loss of 6.06% and the S&P 500's loss of 7.69% [2] Upcoming Earnings - The upcoming earnings release for Core & Main is scheduled for March 25, 2025, with an expected EPS of $0.36, indicating a 5.88% growth compared to the same quarter last year [3] - The consensus estimate forecasts revenue to be $1.68 billion, reflecting a 16.67% growth compared to the corresponding quarter of the prior year [3] Analyst Forecasts - Recent revisions to analyst forecasts for Core & Main are important as they reflect short-term business trends, with positive changes indicating a favorable outlook on the company's health and profitability [4] - Empirical research shows that these estimate revisions correlate with impending stock price performance, allowing investors to capitalize on this through the Zacks Rank system [5] Zacks Rank and Valuation - Core & Main currently holds a Zacks Rank of 3 (Hold), with the Zacks Consensus EPS estimate remaining steady over the past month [6] - The company's Forward P/E ratio is 19.84, which is a premium compared to the industry average Forward P/E of 18.4 [7] - Core & Main has a PEG ratio of 2.37, compared to the Manufacturing - Tools & Related Products industry's average PEG ratio of 1.28 [8] Industry Context - The Manufacturing - Tools & Related Products industry is part of the Industrial Products sector and holds a Zacks Industry Rank of 81, placing it in the top 33% of over 250 industries [9]