Core & Main(CNM)

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Core & Main(CNM) - 2025 Q4 - Earnings Call Transcript
2025-03-25 12:30
Financial Data and Key Metrics Changes - The company achieved 18% sales growth in Q4 fiscal 2024, with record net sales exceeding $7.4 billion and adjusted EBITDA of $930 million [7][16][25] - Gross margin for Q4 was 26.6%, consistent with the previous quarter, while adjusted EBITDA margin decreased by 110 basis points to 12.5% for the full year [26][30] - Selling, general, and administrative expenses increased by 21% in Q4 to $279 million, primarily due to acquisitions and inflation [26][29] 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 [16][17] - Acquisitions contributed approximately 9% to sales growth in Q4, with organic average daily volumes up low single digits [25][27] Market Data and Key Metrics Changes - The company estimates a 19% market share in a $39 billion addressable market, with significant opportunities for growth in municipal repair and replacement projects [8][9] - End market volumes were roughly flat for the year, with mid-single-digit growth in residential lot development and low-single-digit growth in municipal repair and replacement activity [28] Company Strategy and Development Direction - The company focuses on driving profitable growth through organic means and acquisitions, while maintaining strong cash flow and delivering value to shareholders [24][32] - The strategy includes expanding private label products, optimizing sourcing, and enhancing pricing initiatives to drive gross margin expansion [35][56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating uncertainties related to interest rates, federal funding, and tariffs, particularly due to strong exposure to nondiscretionary municipal water infrastructure projects [32][34] - The outlook for fiscal 2025 anticipates net sales growth of 2% to 5%, with adjusted EBITDA growth of 2% to 8% [37][38] Other Important Information - The company completed 10 acquisitions in fiscal 2024, adding over $600 million in annual sales and expanding its presence in key geographies [17][19] - The company returned $176 million to shareholders through share repurchases, with a remaining authorization of $324 million [31] Q&A Session Summary Question: What percentage of COGS is PVC today and what are the expectations for pricing? - PVC pipe accounts for less than 15% of COGS, with an overall neutral pricing environment expected moving forward [41][42] 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 [44][46] Question: Where do you see more upside between residential and non-residential markets? - Both markets show potential, with residential demand expected to release as mortgage rates decrease, while non-residential remains stable [50][52] Question: What are the key levers driving gross margin expansion? - Private label products are the primary driver, followed by sourcing optimization and pricing initiatives [53][55] Question: How does the M&A process change with new leadership? - The strong pipeline of deals remains, with continued support from outgoing leadership during the transition [68][69] Question: Are there any changes in competitive dynamics? - The competitive environment remains stable, with continued market share gains expected [89]
Core & Main(CNM) - 2025 Q4 - Annual Report
2025-03-25 11:32
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].
Core & Main(CNM) - 2025 Q4 - Annual Results
2025-03-25 11:31
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]
Top Wall Street Forecasters Revamp Core & Main Price Expectations Ahead Of Q4 Earnings
Benzinga· 2025-03-24 16:05
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]
Core & Main (CNM) Stock Falls Amid Market Uptick: What Investors Need to Know
ZACKS· 2025-03-21 23:06
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]
Core & Main (CNM) Rises But Trails Market: What Investors Should Know
ZACKS· 2025-03-17 23:20
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]
Core & Main (CNM) Ascends But Remains Behind Market: Some Facts to Note
ZACKS· 2025-03-06 00:00
Group 1 - Core & Main (CNM) closed at $47.53, reflecting a +0.23% change from the previous day, underperforming compared to the S&P 500's gain of 1.12% [1] - Over the past month, CNM shares experienced a loss of 13.21%, which is worse than the Industrial Products sector's loss of 7.88% and the S&P 500's loss of 4.13% [1] Group 2 - The upcoming earnings release for Core & Main is anticipated, with projected EPS of $0.36, indicating a 5.88% increase year-over-year, and expected quarterly revenue of $1.68 billion, up 16.67% from the previous year [2] - Recent analyst estimate revisions for Core & Main suggest positive short-term business trends, reflecting analysts' confidence in the company's performance [3] Group 3 - The Zacks Rank system, which evaluates estimate changes, currently ranks Core & Main at 3 (Hold), with the Zacks Consensus EPS estimate remaining unchanged over the past month [5] - Core & Main has a Forward P/E ratio of 19.73, which is higher than the industry average of 19.23 [6] Group 4 - The company has a PEG ratio of 2.36, compared to the Manufacturing - Tools & Related Products industry's average PEG ratio of 1.29 [7] - The Manufacturing - Tools & Related Products industry is ranked 88 in the Zacks Industry Rank, placing it in the top 36% of over 250 industries, indicating strong performance potential [8]
Core & Main: Good Growth Prospects And Attractively Valued
Seeking Alpha· 2025-02-25 20:51
Group 1 - Core & Main, Inc. (NYSE: CNM) has strong growth prospects driven by aging infrastructure in municipal markets and solid demand in heavy non-residential sectors due to reshoring trends [1] - The residential and light non-residential markets are also expected to experience growth [1] - The focus is on GARP (Growth at Reasonable Price) opportunities within the industrial, consumer, and technology sectors [1]
4 Manufacturing Tools Stocks to Watch on Prospering Industry Trends
ZACKS· 2025-01-20 16:15
Industry Overview - The Zacks Manufacturing-Tools & Related Products industry is expected to grow due to strong demand for machinery tools in industrial and automotive sectors, driven by urbanization and investments in product development [1][4] - The industry includes companies that develop and distribute various tools and technologies used across multiple sectors, including industrial, commercial, oil & gas, and automotive [3] Growth Drivers - Strength in end markets, particularly in industrial, automotive, and packaging, is anticipated to boost the industry's growth, with increased reliance on electrical devices further driving demand for manufacturing tools [4] - Continuous investments in product development and innovation are crucial for maintaining competitiveness, although they may lead to highly leveraged balance sheets [5] - An acquisition-based growth strategy is being employed by industry participants to expand customer reach and product offerings, allowing them to enter new markets and mitigate risks associated with reliance on a single market [6] Market Performance - The Zacks Manufacturing-Tools & Related Products industry currently holds a Zacks Industry Rank of 84, placing it in the top 34% of over 250 Zacks industries, indicating solid prospects [7][8] - Over the past year, the industry has underperformed compared to the sector and the S&P 500, with a growth of 3.1% against the sector's 16.6% and the S&P 500's 26.4% [9] Valuation Metrics - The industry is trading at a forward 12-month Price-to-Earnings (P/E) ratio of 18.95X, which is lower than the S&P 500's 22.33X and the sector's 19.65X [11] Key Companies - Core & Main, Inc. (CNM) is benefiting from increased demand for its products and recent acquisitions, with a revised earnings estimate of $2.16 per share for fiscal 2024 [13][14] - Stanley Black & Decker, Inc. (SWK) is expected to gain from a global cost-reduction program and has seen a 0.5% upward revision in its earnings estimate for 2024 [16][17] - Lincoln Electric Holdings (LECO) is focusing on strategic acquisitions and new product launches to drive growth, with a history of exceeding earnings estimates [23][19] - Kennametal Inc. (KMT) is experiencing momentum in its Infrastructure segment and has made significant investments in product development [21][22]
Core & Main (CNM) Upgraded to Buy: Here's Why
ZACKS· 2025-01-10 18:01
Core Viewpoint - Core & Main (CNM) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][3] Earnings Estimates and Stock Price Movement - The Zacks rating system reflects changes in earnings estimates, which are strongly correlated with near-term stock price movements, particularly due to institutional investors adjusting their valuations based on these estimates [4][6] - For Core & Main, the rising earnings estimates and the rating upgrade suggest an improvement in the company's underlying business, likely leading to increased stock prices [5][10] Earnings Estimate Revisions - For the fiscal year ending January 2025, Core & Main is expected to earn $2.16 per share, reflecting a 0.5% change from the previous year, with a 3.2% increase in the Zacks Consensus Estimate over the past three months [8][10] Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks which have averaged a +25% annual return since 1988 [7][9] - The upgrade of Core & Main to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10]