Core & Main(US:CNM)2023-12-04 16:00Financial Performance - Net income for the three months ended October 29, 2023, was $158 million, a decrease of 11.2% from $178 million for the same period in 2022[54]. - Total comprehensive income attributable to Core & Main, Inc. for the three months ended October 29, 2023, was $109 million, down from $131 million in the prior year, representing a decline of 16.8%[54]. - Total net sales for the three months ended October 29, 2023, were $1.827 billion, slightly up from $1.818 billion in the same period last year, reflecting a growth of 0.5%[72]. - The company’s total comprehensive income for the nine months ended October 29, 2023, was $451 million, down from $557 million in the same period of 2022, indicating a decline of 18.9%[54]. - The Company reported net income of $158 million for the three months ended October 29, 2023, compared to $178 million for the same period in the previous year[90]. - Basic earnings per share for the three months ended October 29, 2023, was $0.65, consistent with the same period in the previous year[90]. Assets and Liabilities - Total assets increased to $5,067 million as of October 29, 2023, compared to $4,909 million on January 29, 2023, reflecting a growth of approximately 3.2%[39]. - Current assets decreased slightly to $2,171 million from $2,211 million, with cash and cash equivalents dropping from $177 million to $101 million[39]. - Total liabilities increased to $2,852 million from $2,499 million, marking a rise of approximately 14.1%[39]. - Long-term debt remained relatively stable at $1,436 million compared to $1,444 million, showing a minor decrease[39]. - As of October 29, 2023, total debt obligations amounted to $1,478 million, with a Senior Term Loan due July 2028 of $1,463 million and no amounts outstanding under the Senior ABL Credit Facility[96][97]. Cash Flow and Investments - Cash provided by operating activities for the nine months ended October 29, 2023, was $775 million, significantly higher than $94 million for the same period in 2022[59]. - The company reported a net cash used in investing activities of $(182) million for the nine months ended October 29, 2023, compared to $(133) million in the same period last year[59]. - The company made acquisitions with an aggregate transaction value of $161 million during the nine months ended October 29, 2023, compared to $110 million in the same period of the previous year[73]. - In Fiscal 2023, the Company acquired J.W. D'Angelo Company, Inc., Foster Supply Inc., Midwest Pipe Supply Inc., UPSCO Manufacturing & Distribution Company, and Landscape & Construction Supplies, totaling a net cash outflow of $151 million[74]. Acquisitions and Goodwill - The net assets acquired in Fiscal 2023 amounted to $159 million, while the net assets acquired in Fiscal 2022 were $114 million[76]. - Goodwill associated with Fiscal 2023 acquisitions was recorded at $3 million, while Fiscal 2022 acquisitions had goodwill of $20 million[76]. - The carrying amount of the Company's goodwill as of October 29, 2023, was $1,552 million, an increase from $1,535 million at the beginning of the period[79]. - Goodwill acquired during the nine months ended October 29, 2023, was related to Fiscal 2023 Acquisitions, reflecting the excess of purchase price over the fair value of net assets acquired[93]. Market and Operational Insights - The company operates approximately 320 branches across 48 states, enhancing its market reach and service capabilities[46]. - The company is focused on expanding its product offerings, including smart meter systems and fusible HDPE piping solutions, to meet evolving market demands[46]. - The company expects increased federal infrastructure investment, particularly from the IIJA's $55 billion allocation for water infrastructure, to positively impact its business[119]. - The company experienced a decline in the residential end market due to interest rate increases, which slowed home buying and new lot development[119]. - The company is exposed to price fluctuations in product procurement, which can impact margins and overall financial performance[228]. Shareholder Activities - The company repurchased 9,377,183 shares of Class A common stock for a total consideration of $332 million during the April 2023 repurchase transaction[47]. - A secondary public offering of 14,000,000 shares of Class A common stock was completed at a price of $28.215 per share, raising significant capital for the company[47]. - The Company completed several secondary offerings in 2023, with the latest on November 9, 2023, involving 8,190,569 Partnership Interests exchanged at a price per share of $30.440[117]. - The November 2023 Secondary Offering involved the sale of 19,000,000 shares of Class A common stock at a price of $30.440 per share, raising significant capital[138]. Debt and Interest Rates - The weighted average interest rate on the Senior Term Loan Facility was 7.97% as of October 29, 2023, with a fair value of $1,461 million[96]. - Each one percentage point change in interest rates would result in an approximately $15 million change in annual interest expense on the Senior Term Loan Facility[227]. - The Company estimates $41 million of cash flow interest rate swap gains will be reclassified from accumulated other comprehensive income into earnings over the next 12 months[100]. Compliance and Governance - The Company was in compliance with all debt covenants as of October 29, 2023[97]. - The company is no longer classified as a "controlled company" under NYSE rules as of September 19, 2023, and is transitioning to meet corporate governance requirements[233]. - CD&R Investors beneficially own approximately 33.3% of the combined voting power of the company's common stock, influencing significant corporate decisions[232]. Risks and Legal Proceedings - The company is not currently involved in any material legal proceedings, although it faces inherent risks related to product liability claims[231]. - The company’s cash flows from operating activities are typically lower during the first and second fiscal quarters due to working capital investments and incentive compensation payments[120].