CNM

Core & Main Reports 10.6% Increase in Net Sales

Core & Main Inc. (NYSE: CNM) has announced its financial results for the first quarter ended April 28, 2024, compared with the first quarter of fiscal 2023. The company reported a 10.6% increase in net sales to $1,741 million. Gross profit increased by 6.6% to $468 million, although the gross profit margin decreased by 100 basis points to 26.9%. Net income decreased by 24.1% to $101 million, and diluted earnings per share decreased by 2.0% to $0.49.

Additionally, adjusted EBITDA (non-GAAP) decreased by 1.4% to $217 million, with an adjusted EBITDA margin (non-GAAP) of 12.5%. The company closed five acquisitions during and after the quarter, including Eastern Supply, Dana Kepner, ACF West, EGW Utilities, and Geothermal Supply Company.

Net sales increased by $167 million, or 10.6%, primarily driven by acquisitions and slight improvements in end-markets. Gross profit increased by $29 million, or 6.6%, due to increased net sales, partially offset by a decrease in gross profit as a percentage of net sales. Selling, general and administrative expenses increased by $34 million, or 15.2%, primarily due to personnel expenses, higher facility and distribution costs related to acquisitions and inflation.

Net income decreased by $32 million, or 24.1%, primarily due to a decrease in operating income resulting from higher SG&A and amortization expenses, and an increase in interest expense. The class A common stock basic and diluted earnings per share for the three months ended April 28, 2024, both decreased by 2.0% to $0.49 compared with $0.50 for the three months ended April 30, 2023.

Adjusted EBITDA for the three months ended April 28, 2024, decreased by $3 million, or 1.4%, to $217 million compared with $220 million for the three months ended April 30, 2023, primarily due to higher SG&A expenses partially offset by higher gross profit.

Net cash provided by operating activities for the three months ended April 28, 2024, was $78 million compared with $120 million for the three months ended April 30, 2023, a decrease of $42 million primarily driven by higher income tax payments, increased interest payments, and more typical investment in working capital.

As of April 28, 2024, the net debt leverage (defined as the ratio of net debt to adjusted EBITDA for the last 12 months) was 2.7x, an increase of 1.0x from April 30, 2023, primarily attributable to higher borrowings to fund investments in organic growth, acquisitions, and share repurchases since April 30, 2023.

Looking ahead, Core & Main is narrowing and raising its expectation for fiscal 2024 net sales and adjusted EBITDA to reflect recent acquisitions and its first-quarter performance. The company now expects net sales to range from $7.5 to $7.6 billion, and adjusted EBITDA to range from $935 to $975 million.

Core & Main will host a live conference call and webcast on June 4, 2024, at 8:30 a.m. ET to discuss the company's financial results. The webcast will be accessible via the events calendar at ir.coreandmain.com, and the conference call may also be accessed by dialing 833-470-1428 or +1-404-975-4839. An archived version of the webcast will be available immediately following the call.

Based in St. Louis, Core & Main is a leading specialized distributor with a focus on water, wastewater, storm drainage, and fire protection products and related services, providing solutions to municipalities, private water companies, and professional contractors across municipal, non-residential, and residential end markets nationwide. The market has reacted to these announcements by moving the company's shares -14.4% to a price of $48.01. For the full picture, make sure to review Core & Main's 8-K report.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.

IN FOCUS