Core Points - Core & Main, Inc. announced changes to its board of directors and executive chair, effective April 1, 2026, as part of its long-term succession planning [1][9] Board Changes - M. Susan Hardwick was appointed as a director and member of the talent and compensation committee, bringing extensive leadership experience from her previous role as CEO of American Water Works Company [2][4] - Stephen LeClair retired as executive chair and chair of the board, with James Castellano appointed as the new chair of the board [3][4] - James Hope was named chair of the audit committee, and Robert Buck was appointed as a member of the audit committee [3] Leadership Insights - The CEO of Core & Main, Mark Witkowski, emphasized that Hardwick's experience in the water industry will be instrumental in executing the company's growth strategy [4] - Hardwick expressed her honor in joining the board and her commitment to contributing her experience to support the company's success [4] - Castellano acknowledged LeClair's significant contributions to the company since its independence in 2017 and wished him well in retirement [4] Board Composition - With Hardwick's appointment, there are now nine independent directors on Core & Main's ten-member board [4]

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Core Insights - Core & Main, Inc. reported mixed results for Q4, with adjusted EPS of 52 cents, exceeding market estimates of 42 cents, while quarterly sales were $1.581 billion, falling short of expectations of $1.599 billion [1] - The company projects FY2026 sales between $7.800 billion and $7.900 billion, compared to estimates of $7.994 billion [1] Company Performance - Fiscal 2025 marked the 16th consecutive year of sales growth for Core & Main, reflecting business resilience and strong end markets [2] - Following the earnings announcement, Core & Main shares experienced a slight decline of 0.1%, closing at $50.57 [2] Analyst Ratings - Barclays analyst Matthew Bouley maintained an Overweight rating on Core & Main, lowering the price target from $63 to $62 [3] - Deutsche Bank analyst Collin Verron also maintained a Buy rating, reducing the price target from $65 to $62 [3]

Market Sentiment - The CNN Money Fear and Greed index showed a slight increase in fear, moving from a previous reading of 14.9 to 16.9, remaining in the "Extreme Fear" zone [4][5] - U.S. stocks experienced a decline, with the S&P 500 falling by 0.37% to 6,556.37, while the Dow Jones decreased by approximately 84 points to 46,124.06, and the Nasdaq Composite dropped by 0.84% to 21,761.89 [3] Sector Performance - Most sectors within the S&P 500 closed positively, with energy, materials, and utilities stocks showing the largest gains [3] - In contrast, communication services and real estate stocks did not follow the upward trend, closing lower [3] Geopolitical Context - Ongoing conflicts between Iran and Israel have escalated, with reports indicating that Saudi Arabia and the UAE are moving closer to joining the conflict against Tehran, adding complexity to the geopolitical landscape [2]

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Core Insights - The company reported a fourth-quarter gross margin of 27.1%, an increase of 50 basis points year over year, driven by higher private label penetration and disciplined purchasing and pricing execution [1] - Fourth-quarter net sales decreased by 7% to $1.58 billion, attributed to one fewer selling week compared to the previous year, although average daily net sales increased by about 1% [2] - Fiscal 2025 marked the company's 16th consecutive year of sales growth, with net sales totaling $7.65 billion and adjusted EBITDA of $931 million [5] Financial Performance - Adjusted EBITDA for the fourth quarter was $167 million, down 7%, while the adjusted EBITDA margin improved by 10 basis points to 10.6% [1] - The company ended fiscal 2025 with net debt of nearly $1.95 billion and leverage of 2.1x, within its target range of 1.5x to 3x [14] - For fiscal 2026, the company guided net sales of $7.8 billion to $7.9 billion and adjusted EBITDA of $950 million to $980 million [15] Market Dynamics - The company experienced organic above-market growth of 3 points in fiscal 2025, driven by sales initiatives and geographic expansion [3] - Municipal volumes increased low- to mid-single digits, while residential lot development declined low double digits [4] - The company expects overall end markets to be roughly flat for fiscal 2026, with confidence in municipal demand but caution around private construction [16] Strategic Initiatives - Key growth initiatives include meters, treatment plant solutions, and geographic expansion, with meters growing at a low double-digit rate year after year [7][8] - The company opened 10 new branches during and after fiscal 2025, with plans to open 7 to 10 additional locations in fiscal 2026 [10] - Private label sales represented about 5% of total sales in fiscal 2025, with a target to reach at least 10% over time [11] M&A and Capital Allocation - Fiscal 2025 included 2% growth from acquisitions, with the company evaluating over 50 opportunities annually [12][13] - The company returned $155 million to shareholders through share repurchases during fiscal 2025, reducing share count by about 3.2 million [14] Pricing and Cost Dynamics - Pricing was generally positive across product categories in the fourth quarter, except for PVC, which saw a decline of about 15% in fiscal 2025 [17] - Rising fuel and resin costs could lead to increases in certain categories, with management indicating potential neutral to positive impacts depending on market developments [17]

Company Performance - Core & Main, Inc. (NYSE:CNM) reported mixed results for Q4, with adjusted EPS of 52 cents, surpassing market expectations of 42 cents [2] - The company's quarterly sales were $1.581 billion, which fell short of the anticipated $1.599 billion [2] - For FY2026, Core & Main projects sales between $7.800 billion and $7.900 billion, compared to estimates of $7.994 billion [2] Market Trends - U.S. stocks experienced a decline, with the Dow Jones index dropping over 350 points, down 0.86% to 45,812.92 [1] - The NASDAQ fell 0.87% to 21,756.87, and the S&P 500 decreased by 0.72% to 6,533.64 [1] - In sector performance, energy shares increased by 1.7%, while information technology stocks decreased by 1.1% [1] Commodity Prices - Oil prices rose by 4.8% to $92.36, while gold prices fell by 1.1% to $4,357.70 [3] - Silver decreased by 2% to $67.945, and copper fell by 1.2% to $5.4065 [3]

Core Insights - Core & Main reported quarterly earnings of $0.52 per share, exceeding the Zacks Consensus Estimate of $0.48 per share, and showing an increase from $0.33 per share a year ago, resulting in an earnings surprise of +8.33% [1] - The company posted revenues of $1.58 billion for the quarter ended January 2026, which was 0.42% below the Zacks Consensus Estimate and a decrease from $1.7 billion in the same quarter last year [2] - Core & Main has surpassed consensus EPS estimates only once in the last four quarters, indicating a mixed performance trend [2] Future Outlook - The sustainability of the stock's price movement will largely depend on management's commentary during the earnings call and the earnings outlook for the upcoming quarters [3][4] - The current consensus EPS estimate for the next quarter is $0.68 on revenues of $1.9 billion, while the estimate for the current fiscal year is $3.15 on revenues of $7.94 billion [7] - The estimate revisions trend for Core & Main was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold), suggesting the stock is expected to perform in line with the market [6] 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 industry outlook [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Data and Key Metrics Changes - For fiscal 2025, the company generated net sales of $7.65 billion, adjusted EBITDA of $931 million, and adjusted diluted EPS of $2.97, reflecting a 3% increase in net sales compared to the previous year [9][35] - Adjusted EBITDA margin declined by 30 basis points to 12.2%, while gross margin increased by 30 basis points to 26.9% due to higher private label penetration and disciplined purchasing [36][37] - Operating cash flow for the year was $650 million, representing a conversion rate of approximately 70% from adjusted EBITDA [38] Business Line Data and Key Metrics Changes - Municipal projects accounted for 44% of sales, with low- to mid-single-digit growth, while non-residential sales were relatively flat, and residential lot development declined low double digits [5][10] - The company achieved 3 points of organic above-market growth, driven by sales initiatives and geographic expansion, including the opening of 10 new branches [13][14] - The smart metering business grew at an average annual rate of approximately 14% over the past five years, with significant contributions from large contracts [24][82] Market Data and Key Metrics Changes - The addressable market across the U.S. and Canada is estimated at $44 billion, up approximately $5 billion from the previous year, with the company holding about 20% market share in the U.S. [6][7] - The residential market is expected to remain challenged in the near term due to housing affordability and higher mortgage rates, but long-term demand drivers remain strong [11][18] Company Strategy and Development Direction - The company aims to extend its competitive advantages, compound market share gains, and expand structural earnings power [16][42] - Investments are being made in product offerings, capabilities, and geographic expansion to drive market share gains and support margin expansion [21][31] - The company is focused on disciplined M&A to complement organic growth, with a pipeline of over 50 opportunities evaluated annually [27][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the municipal market due to stable funding sources, while remaining cautious about the private construction market amid geopolitical volatility and interest rate uncertainties [40][41] - The company expects net sales for fiscal 2026 to be between $7.8 billion and $7.9 billion, with adjusted EBITDA of $950 million to $980 million [39] Other Important Information - The company returned $155 million to shareholders through share repurchases during the year, reducing the share count by approximately 3.2 million [38] - The company has a strong liquidity position with $1.45 billion available, including $220 million in cash [38] Q&A Session Summary Question: Growth disconnect of Core & Main versus competitors - Management acknowledged differences in market presence and product mix, noting strong share growth in smart meters and treatment plants, while recognizing competitors' advantages in certain markets [46][49] Question: Cost out program and its impact - Management confirmed that the $30 million cost out program was completed in FY 2025, with benefits expected to continue into FY 2026 [52] Question: Current market conditions and commodity inflation - Management is monitoring the impact of geopolitical events on fuel and resin prices, indicating potential price increases in certain product categories [56][58] Question: Growth investments in data centers and treatment plants - The company plans to invest in additional resources for treatment plant initiatives, enhancing capabilities for larger projects [64] Question: EBITDA guidance and its components - Management provided insights on the guidance range, emphasizing the importance of pricing stability and potential inflation impacts on margins [70][73] Question: M&A strategy and expectations - Management expressed confidence in the M&A pipeline, anticipating a return to a more normalized cadence of acquisitions in the coming years [76] Question: Growth expectations for the meters business - The meters business is expected to continue delivering low double-digit growth, supported by a strong pipeline of large projects [82]

Financial Data and Key Metrics Changes - Core & Main reported net sales of $7.65 billion for fiscal 2025, reflecting a 3% increase year-over-year, with a 5% growth when adjusted for one less selling week [33][34] - Adjusted EBITDA for the year was $931 million, slightly ahead of the prior year, while adjusted EBITDA margin declined 30 basis points to 12.2% [35] - Adjusted diluted EPS increased by 7% to $2.97, driven by lower interest expenses and a reduced share count from share repurchases [35] Business Line Data and Key Metrics Changes - Municipal projects accounted for 44% of sales, with low to mid-single-digit growth, while non-residential sales were relatively flat, and residential lot development declined low double digits [5][10][34] - Average daily net sales for meter products grew by 12% in the fourth quarter and mid-single digits for the year, following a strong prior year growth comparison of 32% [12][33] - The company achieved 3 points of organic above-market growth in fiscal 2025, driven by sales initiatives and geographic expansion [12][34] Market Data and Key Metrics Changes - The addressable market for Core & Main is estimated at $44 billion, up approximately $5 billion from the previous year, with the U.S. market share at around 20% [6][7] - The company expects overall end markets to remain roughly flat for the year, with municipal demand providing stability amid uncertainties in the private construction market [38][40] Company Strategy and Development Direction - Core & Main aims to extend its competitive advantages, compound market share gains, and expand structural earnings power [15][40] - The company is focusing on investments in smart metering, treatment plants, and geographic expansion to drive above-market growth [19][22] - Acquisitions and greenfield openings are key strategies for expanding the company's footprint and unlocking new growth opportunities [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the municipal market due to stable funding sources, while remaining cautious about the private construction market amid geopolitical volatility and interest rate uncertainties [38][40] - The company anticipates a return to growth in residential markets to address the significant undersupply of housing in the U.S. [11][17] Other Important Information - The company generated $650 million of operating cash flow during the year, reflecting a conversion rate of approximately 70% from adjusted EBITDA [36] - Core & Main returned $155 million to shareholders through share repurchases during the year, reducing the share count by roughly 3.2 million [36] Q&A Session Summary Question: Growth disconnect of Core & Main versus competitors - Management acknowledged differences in market presence and product mix, noting strong share growth in smart metering and treatment plants, while recognizing competitors' advantages in certain markets [43][44][45] Question: Cost out program and its impact - Management confirmed that the $30 million cost out program was completed in FY 2025, with benefits expected to materialize in the first half of FY 2026 [48][49] Question: Current market conditions and commodity inflation - Management is monitoring the impact of geopolitical events on fuel and resin prices, indicating potential price increases in certain product categories [53][54][55] Question: Growth investments in data centers and treatment plants - The company plans to invest in additional resources for treatment plant projects, enhancing capabilities to win larger contracts [58][61] Question: EBITDA guidance and its components - Management provided insights on the guidance range, emphasizing the importance of pricing stability and potential inflation impacts on SG&A [66][70] Question: M&A strategy and future expectations - Management expressed confidence in the M&A pipeline, anticipating a return to a more normalized cadence of acquisitions in the coming years [72][74] Question: Growth expectations for the meters business - The meters business is expected to continue delivering low double-digit growth, supported by a strong pipeline of large projects [77][80]