Core & Main(CNM)2025-03-25 12:30Financial Data and Key Metrics Changes - The company achieved 18% sales growth in Q4 fiscal 2024, with record net sales exceeding 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 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 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]