Core & Main(CNM)2025-03-25 16:28Financial Data and Key Metrics Changes - The company achieved record net sales of over 930 million, with an adjusted EBITDA margin of 12.5%, down 110 basis points from the previous year [51][62] - Gross margin for fiscal 2024 was 26.6%, a decrease from 27.1% in fiscal 2023, attributed to higher average inventory costs [48][62] - Selling, general and administrative (SG&A) expenses rose approximately 16% to nearly 39 billion addressable market, indicating significant growth potential [15] - Municipal spending on water infrastructure is expected to remain resilient, with low single-digit growth projected for 2025 [58][62] - The company anticipates flat nonresidential construction starts in 2025, with a stable outlook for municipal projects [56][62] Company Strategy and Development Direction - The company plans to continue driving profitable growth through both organic means and acquisitions, while maintaining strong cash flow [40][62] - The focus remains on expanding presence in underpenetrated geographies and driving the adoption of new products [60][62] - The company aims to enhance gross margins through private label initiatives, sourcing optimization, and pricing strategies [61][62] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating uncertainties related to interest rates, federal funding, and tariffs, while remaining optimistic about municipal water infrastructure projects [54][56] - The company expects to achieve net sales growth of 2% to 5% in fiscal 2025, with adjusted EBITDA projected to range from 1 billion [62] - Management highlighted the importance of maintaining a strong culture and leadership team during the transition of executive roles [11][104] Other Important Information - The company completed 10 acquisitions in fiscal 2024, adding over 176 million to shareholders through share repurchases, with a remaining authorization of $324 million [53][62] - Management noted that tariffs are not expected to significantly impact the business, as most products are produced domestically [33][116] Q&A Session Summary Question: What percentage of COGS is PVC today and what are the price expectations? - PVC pipe accounts for less than 15% of COGS, with an overall neutral pricing environment expected moving forward [68][69] 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 [72][73] Question: What is the outlook for end markets? - Residential and non-residential markets are expected to remain steady, with municipal spending projected to be resilient [76][79] Question: What are the key levers for gross margin expansion? - Private label initiatives are the primary driver for gross margin expansion, followed by sourcing optimization [81][82] Question: How do you view the competitive dynamics in your markets? - The competitive environment remains stable, with continued market share gains expected [119]