Financial Data and Key Metrics Changes - Net sales increased by 1% to $2.1 billion, with organic volumes and prices remaining roughly flat year-over-year, while acquisitions contributed about one point of growth [19][21] - Gross margin improved by 60 basis points year-over-year to 27.2%, driven by private label initiatives and disciplined purchasing and pricing execution [21][15] - Adjusted diluted EPS increased approximately 3% to $0.89 compared to $0.86 last year, supported by higher adjusted net income and a lower share count from share repurchases [24] Business Line Data and Key Metrics Changes - Municipal projects represent over 40% of sales, providing steady demand supported by reliable funding sources, while non-residential markets also show healthy growth in infrastructure projects [5][10] - Residential activity, which accounts for less than 20% of sales, remains challenged in the near term, particularly in Sunbelt markets, but the long-term outlook is viewed as attractive [6][12] - The company achieved double-digit growth in product initiatives like fusible HDPE and treatment plant solutions, while meter products returned to high single-digit growth [12][19] Market Data and Key Metrics Changes - The overall end markets were down low single digits, primarily due to declines in residential lot development, with municipal demand remaining strong [19][20] - Significant funding for municipal projects is being driven by state and local sources, with recent legislative actions in states like Texas and New York reinforcing a robust project pipeline [9][10] - Data centers, while currently a low single-digit portion of total sales, are becoming a more meaningful growth driver due to increased water infrastructure needs [10][11] Company Strategy and Development Direction - The company is focused on expanding into high-growth geographies, broadening product offerings, and pursuing strategic M&A opportunities, including a recent expansion into the Canadian market [7][14] - A disciplined approach to pricing and gross margin expansion is emphasized, alongside investments in technology to enhance operational efficiency and customer service [15][16] - The company aims to convert momentum into stronger growth and improved SG&A leverage while maintaining a robust pipeline of acquisition opportunities [29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term fundamentals of the end markets, particularly in municipal and non-residential sectors, despite short-term challenges in residential markets [17][46] - The company anticipates flat to slightly down end market volumes for the year, with pricing expected to have a neutral impact on sales growth [27][28] - Management highlighted the importance of operational excellence and local relationships in capturing growth opportunities, particularly in complex projects like data centers [33][80] Other Important Information - The company has implemented $30 million of annualized cost savings, with a focus on improving operating leverage and maximizing efficiency [15][23] - A $500 million increase to the share repurchase authorization was announced, reflecting confidence in growth outlook and free cash flow generation [16][26] - The company generated free cash flow equal to 5.6% of its market capitalization, significantly above the average for S&P 500 companies [25] Q&A Session Summary Question: Can you talk about the large, complex projects? - Management highlighted the importance of local relationships and distribution capabilities in supporting complex projects, particularly in data centers, which are driving growth [31][33] Question: What caused the slight raise in municipal outlook? - Management cited significant funding at federal and state levels, with local water funds supporting projects, leading to increased confidence in the municipal end market [37][40] Question: Any early thoughts on 2026? - Management expects steady growth in the municipal end market and mixed results in non-residential, with potential for pent-up demand in residential to release [43][46] Question: Can you elaborate on gross margin strength? - Management indicated that gross margin performance was driven by private label growth and effective purchasing strategies, with expectations for continued annual expansion [49][50] Question: What is the current state of the M&A pipeline? - Management remains optimistic about the M&A pipeline, with active deals in progress and a commitment to deploying capital for both organic growth and acquisitions [97][98]

Financial Data and Key Metrics Changes - Net sales increased by 1% to $2.1 billion, with organic volumes and prices roughly flat compared to the prior year, while acquisitions contributed about one point of growth [17] - Gross margin improved by 60 basis points year-over-year to 27.2%, driven by private label initiatives and disciplined sourcing and pricing execution [18][22] - Adjusted diluted EPS increased approximately 3% to $0.89 compared to $0.86 last year, reflecting higher adjusted net income and a lower share count from share repurchases [22] Business Line Data and Key Metrics Changes - Municipal projects represent over 40% of sales, providing steady demand supported by reliable funding sources [4] - Residential activity represents less than 20% of sales, with near-term dynamics remaining challenged, but long-term outlook viewed as attractive [5] - Meter products returned to high single-digit growth in the third quarter, supported by recent contract awards [11][62] Market Data and Key Metrics Changes - Municipal demand continues to be strong, with significant funding from state and local sources, including Texas authorizing up to $20 billion for new water supply projects [8] - Non-residential markets are seeing healthy growth in infrastructure projects, particularly in data centers, which are becoming a more meaningful driver of growth [9][10] - Residential lot development softened during the quarter, particularly in Sunbelt markets, but activity appears to have stabilized [11][18] Company Strategy and Development Direction - The company is focused on expanding into high-growth geographies and broadening its product offerings, including treatment plants and smart meters [5][12] - Strategic investments are aimed at expanding the addressable market and strengthening customer relationships, with a recent acquisition in the Canadian market [12] - The company maintains a disciplined capital allocation strategy, including a $500 million increase to its share repurchase authorization [15][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the municipal end market, citing significant funding at federal and state levels [32] - The company anticipates flat to slightly down end market volumes for the year, with a low double-digit decline in residential lot development [25] - Management remains optimistic about long-term fundamentals, expecting to convert momentum into stronger growth and improved SG&A leverage [26] Other Important Information - The company generated free cash flow equal to 5.6% of its market capitalization, significantly above the average for S&P 500 companies [23] - SG&A expenses increased 8% to $295 million, driven by acquisitions and elevated inflation, but the company implemented $30 million of annualized cost savings [19][20] Q&A Session Summary Question: Can you talk about the large, complex projects? - Management highlighted excitement about complex projects, particularly in data centers, emphasizing the importance of local relationships and timely supply [28][29] Question: Any early thoughts on 2026? - Management expects strong, steady growth in the municipal end market and mixed results in non-residential, with potential headwinds in residential [34] Question: Is the gross margin level a new normal? - Management indicated that while gross margins are expected to remain strong, they anticipate continued annual expansion [38] Question: What is the outlook for pricing? - Management expects pricing to remain stable, with most product categories anticipated to be up year-over-year [56] Question: What is the status of the M&A pipeline? - Management remains optimistic about the M&A pipeline, with active deals in progress and a focus on capital deployment for organic growth and share repurchases [58]

Fiscal 2025 Third Quarter Results December 9, 2025 CAUTIONARY STATEMENTS Cautionary Note Regarding Forward-Looking Statements This presentation and accompanying discussion may include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, all statements other than statements of historical or current facts relating to our intentions, beliefs, assumptions or current expectations concerning, among other th ...

Financial Performance - Net sales for the three months ended November 2, 2025, were $2,062 million, a slight increase from $2,038 million for the same period in 2024, reflecting a growth of 1.2%[18] - Gross profit for the nine months ended November 2, 2025, reached $1,631 million, compared to $1,529 million for the same period in 2024, indicating a year-over-year increase of 6.7%[18] - Operating income for the three months ended November 2, 2025, was $220 million, slightly down from $223 million in the prior year, a decrease of 1.4%[18] - Net income attributable to Core & Main, Inc. for the three months ended November 2, 2025, was $137 million, compared to $133 million for the same period in 2024, an increase of 3.0%[18] - Basic earnings per share (EPS) for the three months ended November 2, 2025, was $0.72, up from $0.69 in the same period last year, reflecting a growth of 4.3%[18] - Net income for the quarter ending November 2, 2025, was reported at $143 million, compared to $105 million for the previous period, representing a 36.2% increase[24] - Net income for the nine months ended November 2, 2025, increased to $389 million from $367 million for the same period last year, representing a growth of 6%[29] - Adjusted Diluted Earnings Per Share for the nine months ended November 2, 2025, increased by 7.5% to $2.45 compared to $2.28 for the same period in 2024, driven by an increase in net income[138] Assets and Liabilities - Total assets increased to $6,300 million as of November 2, 2025, up from $5,870 million on February 2, 2025, representing an increase of 7.3%[16] - Total stockholders' equity attributable to Core & Main, Inc. increased to $1,977 million as of November 2, 2025, from $1,698 million on February 2, 2025, a rise of 16.4%[16] - Long-term debt decreased to $2,129 million as of November 2, 2025, down from $2,237 million on February 2, 2025, a reduction of 4.8%[16] - Total liabilities increased to $4,245 million as of November 2, 2025, compared to $4,096 million on February 2, 2025, an increase of 3.6%[16] - The total debt as of November 2, 2025, was $2,172 million, with a significant portion attributed to the Senior Term Loan Credit Facility[60] Cash Flow and Investments - Cash flows from operating activities for the nine months ended November 2, 2025, were $382 million, slightly down from $386 million in the previous year[29] - Net cash used in investing activities decreased by $686 million to $71 million for the nine months ended November 2, 2025, primarily due to a $690 million decrease in cash outflows for acquisitions[150] - Net cash used in financing activities was $230 million for the nine months ended November 2, 2025, compared to net cash provided of $380 million for the same period in 2024, reflecting a $610 million change attributed to net debt activity[151] Shareholder Activities - The company repurchased and retired equity interests amounting to $50 million during the quarter ending November 2, 2025[24] - The company repurchased 1,949,239 shares of Class A common stock for a total of $97 million during the nine months ended November 2, 2025, compared to 2,890,483 shares for $121 million in the prior year[33] - The company completed $97 million of Class A common stock repurchases under the Repurchase Program during the nine months ended November 2, 2025[146] - The company has $227 million remaining available for use under its share repurchase program as of November 2, 2025[33] - On December 1, 2025, the board of directors authorized an increase of $500 million to the existing share repurchase program[86] Acquisitions and Market Position - The company completed acquisitions with an aggregate transaction value of $49 million during the nine months ended November 2, 2025, compared to $748 million in the prior year[44] - The total assets acquired in the Fiscal 2025 Acquisition amounted to $51 million, compared to $878 million in Fiscal 2024[48] - The net assets acquired in the Fiscal 2025 Acquisition were valued at $33 million, while the Fiscal 2024 Acquisitions were valued at $753 million[50] - The contingent consideration for the Canada Waterworks acquisition could reach up to $18 million based on future Adjusted EBITDA targets[49] - Goodwill from the Fiscal 2025 Acquisition was recorded at $20 million, while goodwill from Fiscal 2024 Acquisitions was $239 million[50] Operational Insights - The company operates approximately 370 branch locations across 49 U.S. states, focusing on water, wastewater, storm drainage, and fire protection products[31] - Core & Main's operating results are typically lower in the first and fourth fiscal quarters due to seasonality, particularly in northern regions[93] - The company categorizes its net sales into various product lines, including pipes, valves & fittings, storm drainage products, fire protection products, and meter products[102] - The company experienced significant supply chain disruptions in fiscal 2022, leading to price inflation and product surcharges, but saw improvements in supply chain stability in fiscal 2023[95] Financial Ratios and Metrics - The effective tax rate for the three months ended November 2, 2025, was 24.7%, a slight decrease from 25.1% for the same period in 2024[71] - EBITDA for the nine months ended November 2, 2025, was $744 million, compared to $732 million for the same period in 2024[158] - Adjusted EBITDA for the nine months ended November 2, 2025, was $764 million, an increase from $751 million for the same period in 2024[158] - The weighted average interest rate on the company's debt was 5.99% as of November 2, 2025[152] Management and Governance - Core & Main LP announced an executive transition agreement with John R. Schaller effective September 5, 2025[188] - Mark R. Witkowski serves as the Principal Executive Officer, while Robyn L. Bradbury is the Principal Financial Officer[191] - The report includes certifications pursuant to the Sarbanes-Oxley Act of 2002 by both the Principal Executive Officer and Principal Financial Officer[188] - There were no changes in internal control over financial reporting that materially affected the company's financial reporting during the fiscal quarter[173] Risk Factors - The company is exposed to price fluctuations in product procurement, which may affect gross profit margins[169] - Foreign currency operations were not material, with a hypothetical 10% change in the U.S. dollar's value not significantly impacting net earnings[170] - The company has not been involved in any material legal proceedings as of the reporting date, minimizing potential liabilities[176]

Financial Performance - Net sales increased 1.2% to $2,062 million compared to $2,038 million in the same quarter last year, driven primarily by acquisitions[7] - Gross profit rose 3.3% to $561 million, with a gross profit margin of 27.2%, up from 26.6% in the prior year[9] - Net income increased 2.1% to $143 million, attributed to a decrease in interest expense[12] - Adjusted EBITDA decreased 1.1% to $274 million, impacted by higher SG&A expenses[14] - Operating income decreased 1.3% to $220 million, primarily due to higher SG&A expenses[11] - Net income attributable to Core & Main, Inc. for the third quarter was $137 million, compared to $133 million in the same quarter last year, resulting in diluted earnings per share of $0.72[40] - Adjusted EBITDA for the nine months ended November 2, 2025, was $764 million, up from $751 million for the same period in 2024, reflecting a 1.7% growth[50] - Adjusted Diluted Earnings Per Share for the three months ended November 2, 2025, was $0.89, compared to $0.86 for the same period in 2024, indicating a 3.5% increase[53] - EBITDA for the three months ended November 2, 2025, was $267 million, slightly down from $269 million for the same period in 2024, a decrease of 0.7%[50] Expenses and Costs - SG&A expenses increased 7.7% to $295 million, representing 14.3% of net sales, up from 13.4% in the previous year[10] - The company reported capital expenditures of $31 million for the nine months ended November 2, 2025, compared to $24 million in the prior year[44] - Equity-based compensation for the nine months ended November 2, 2025, was $14 million, compared to $11 million for the same period in 2024, reflecting a 27.3% increase[50] Debt and Cash Management - Net debt decreased to $2,083 million from $2,420 million as of the same date last year, due to lower borrowings[25] - Long-term debt decreased to $2,129 million from $2,237 million since the beginning of the fiscal year[42] - Total Debt as of November 2, 2025, was $2,172 million, down from $2,430 million as of October 27, 2024[55] - Net Debt decreased to $2,083 million as of November 2, 2025, from $2,420 million as of October 27, 2024, showing a reduction of 14%[55] - Cash and cash equivalents at the end of the period were $89 million, significantly higher than $8 million at the beginning of the period[44] - Net cash provided by operating activities for the nine months ended November 2, 2025, was $382 million, compared to $386 million for the same period last year[44] Strategic Acquisitions - Core & Main completed the acquisition of Canada Waterworks on September 30, 2025[7] - The company continues to focus on strategic acquisitions, with $32 million spent on acquisitions net of cash acquired during the nine months ended November 2, 2025[44] - The company expects variability in acquisition expenses to significantly impact future GAAP financial results, indicating potential unpredictability in earnings[49] Future Outlook - For fiscal 2025, the company expects net sales of $7,600 to $7,700 million, with adjusted EBITDA of $920 to $940 million[30] - Total assets increased to $6,300 million as of November 2, 2025, up from $5,870 million at the end of the previous fiscal year[42] Non-GAAP Measures - The company emphasizes the importance of non-GAAP financial measures like Adjusted EBITDA and Adjusted Diluted Earnings Per Share for evaluating performance, despite their limitations[48] - The amortization of intangible assets for the three months ended November 2, 2025, was $0.19 per share, consistent with the same period in 2024[53]

Core Points - Core & Main, Inc. reported a net sales increase of $24 million, or 1.2%, to $2,062 million for the third quarter ended November 2, 2025, compared to $2,038 million for the same period in the previous year, primarily driven by acquisitions [7][9] - The company achieved a gross profit increase of $18 million, or 3.3%, to $561 million, with a gross profit margin of 27.2% compared to 26.6% in the prior year [8][9] - Net income rose by $3 million, or 2.1%, to $143 million, while diluted earnings per share increased by 4.3% to $0.72 [12][13] Financial Performance - Net sales for the nine months ended November 2, 2025, increased by $323 million, or 5.6%, to $6,066 million, attributed to higher volumes and acquisitions [16] - Gross profit for the nine months increased by $102 million, or 6.7%, to $1,631 million, with a gross profit margin of 26.9% [17] - Selling, general and administrative (SG&A) expenses for the nine months rose by $91 million, or 11.4%, to $890 million, with SG&A as a percentage of net sales at 14.7% [18] Operational Highlights - The company opened new locations in Houston, Texas, and Denver, Colorado, which are priority markets with attractive growth profiles [4][9] - Core & Main completed the acquisition of Canada Waterworks on September 30, 2025, enhancing its market position [9] - The company implemented $30 million of annualized cost savings while continuing to invest in growth initiatives [5] Cash Flow and Debt Management - Net cash provided by operating activities was $382 million for the nine months ended November 2, 2025, compared to $386 million for the same period in the previous year [24] - As of November 2, 2025, net debt decreased to $2,083 million from $2,420 million as of October 27, 2024, primarily due to lower borrowings on the senior asset-based revolving credit facility [25][49] - The company had no outstanding borrowings on its Senior ABL Credit Facility as of November 2, 2025, allowing for significant borrowing capacity [26] Future Outlook - Core & Main reaffirms its full-year fiscal 2025 outlook, projecting net sales of $7,600 to $7,700 million and adjusted EBITDA of $920 to $940 million [28]

Core Points - Core & Main has announced a $500 million increase to its share repurchase authorization, reflecting the company's commitment to returning value to shareholders [1] Company Summary - The increase in share repurchase authorization indicates a strong financial position and confidence in the company's future performance [1] - This move is part of the company's broader strategy to enhance shareholder value through capital allocation [1]

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Group 1 - Core & Main's stock closed at $50.00, reflecting a +2.08% change from the previous day's closing price, outperforming the S&P 500's daily gain of 0.3% [1] - The stock has decreased by 4.45% over the past month, underperforming compared to the Industrial Products sector's loss of 0.68% and the S&P 500's loss of 0.06% [1] Group 2 - Core & Main is set to announce its earnings on December 9, 2025, with analysts expecting earnings of $0.72 per share, indicating a year-over-year growth of 4.35% [2] - The consensus estimate projects revenue of $2.08 billion, reflecting a 2.03% increase from the same quarter last year [2] Group 3 - Full-year Zacks Consensus Estimates predict earnings of $2.24 per share and revenue of $7.67 billion, representing year-over-year changes of +5.16% and +3.02%, respectively [3] Group 4 - Recent modifications to analyst estimates for Core & Main indicate changing near-term business trends, with upward revisions suggesting analysts' positive outlook on the company's operations and profit generation [4] Group 5 - Empirical research shows a direct correlation between estimate revisions and stock price performance, allowing investors to leverage the Zacks Rank for actionable insights [5] Group 6 - The Zacks Rank system, ranging from 1 (Strong Buy) to 5 (Strong Sell), has a strong track record, with 1 ranked stocks yielding an average annual return of +25% since 1988; Core & Main currently holds a Zacks Rank of 3 (Hold) [6] Group 7 - Core & Main is trading at a Forward P/E ratio of 21.83, which is a premium compared to the industry average Forward P/E of 19.98; the company also has a PEG ratio of 1.92, aligning with the industry average [7] Group 8 - The Manufacturing - Tools & Related Products industry, part of the Industrial Products sector, holds a Zacks Industry Rank of 30, placing it in the top 13% of over 250 industries, indicating strong performance potential [8]

Core Business Overview - Core & Main (CNM) is experiencing gradual improvement in its underlying business fundamentals, although it is still perceived as a short-cycle distributor [1] Market Perception - The market continues to view Core & Main through a lens that emphasizes its short-cycle distribution model, which may affect investor sentiment [1]