Core & Main(CNM)2025-03-25 11:32Market 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 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 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].