Core & Main Announces Fiscal 2021 Fourth Quarter and Full-Year Results
Core & Main, Inc. (NYSE: CNM) reported strong financial results for Q4 and fiscal year 2021, marked by a 50% increase in net sales to $1,246 million and a net income rise to $79 million. For the full year, net sales reached $5,004 million, a 37% increase, with net income rising to $225 million. The company improved gross profit margins and completed strategic acquisitions, including Catalone Pipe & Supply Co. and Dodson Engineered Products. Looking ahead, CNM expects net sales growth in the high single to low double-digit range for fiscal 2022.
- Net sales for Q4 increased 50% to $1,246 million.
- Fiscal 2021 net sales rose 37% to $5,004 million.
- Net income for fiscal 2021 increased to $225 million from $37 million.
- Gross profit margin improved by 170 basis points to 26.2% in Q4.
- Adjusted EBITDA for Q4 rose 113% to $151 million.
- SG&A expenses increased by $161 million, or 29%, to $717 million for fiscal 2021.
- Increased income taxes impacted net income despite higher operating income.
Fiscal 2021 Fourth Quarter Highlights (Compared with Fiscal 2020 Fourth Quarter)
-
Net sales increased
50% to$1,246 million
-
Gross profit margin increased 170 basis points to
26.2%
-
Net income increased to
from zero in the prior year$79 million
-
Adjusted EBITDA (Non-GAAP) increased
113% to$151 million
-
Adjusted EBITDA margin (Non-GAAP) increased 360 basis points to
12.1%
-
Closed the
Catalone Pipe & Supply Co. acquisition in the fourth quarter and acquiredDodson Engineered Products, Inc. subsequent to year-end
Fiscal Year 2021 Highlights (Compared with Fiscal 2020)
-
Net sales increased
37% to$5,004 million
-
Gross profit margin increased 150 basis points to
25.6%
-
Net income increased
to$188 million $225 million
-
Adjusted EBITDA (Non-GAAP) increased
77% to$604 million
-
Adjusted EBITDA margin (Non-GAAP) increased 270 basis points to
12.1%
-
Net Debt Leverage (Non-GAAP) (using Adjusted EBITDA on a trailing 12-month basis) decreased to 2.5x as of
January 30, 2022 compared with 5.6x as ofJanuary 31, 2021
“Core & Main continued to deliver exceptional results in the fourth quarter, allowing us to achieve record financial and operational performance in fiscal 2021,” said
“Net sales grew
We finished the year strong from an M&A standpoint, adding five extraordinary businesses to our team throughout the year and acquiring
LeClair concluded, "I’m proud of all we achieved in fiscal 2021 and want to thank our associates for their unwavering dedication and commitment to superior customer service. When confronted with a challenging operating environment, our associates adapted and continued delivering on our promise of providing our customers with local knowledge, local experience and local service, nationwide. I also want to thank our customers and suppliers for their great partnership through these challenging times. As I look ahead, I am confident that
Three Months Ended
Net sales for the three months ended
Gross profit for the three months ended
Selling, general and administrative (“SG&A”) expenses for the three months ended
Net income for the three months ended
Adjusted EBITDA (Non-GAAP) for the three months ended
Fiscal Year Ended
Net sales for fiscal 2021 increased
Gross profit for fiscal 2021 increased
SG&A expenses for fiscal 2021 increased
Net income for fiscal 2021 increased
Adjusted EBITDA (Non-GAAP) for fiscal 2021 increased
Capital Structure and Liquidity
Net debt, calculated as gross consolidated debt net of cash and cash equivalents, as of
As of
Fiscal 2022 Outlook
"We are very pleased with the momentum in our business and the positive underlying market tailwinds,” LeClair continued. “As we look across fiscal 2022, we expect net sales to grow in the high single to low double-digit range, with strong growth in the first half of the year but moderating in the second half with more difficult comparisons. We expect Adjusted EBITDA to be in the range of
Conference Call & Webcast Information
An archived version of the webcast will be available immediately following the call. A slide presentation highlighting Core & Main’s results and key performance indicators will also be made available on the Investor Relations section of Core & Main’s website prior to the call.
About
Based in
Cautionary Note Regarding Forward-Looking Statements
Certain statements contained in this press release include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include information concerning Core & Main’s financial and operating outlook, as well as any other statement that does not directly relate to any historical or current fact. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “could,” “should,” “forecasts,” “expects,” “intends,” “plans,” “anticipates,” “projects,” “outlook,” “believes,” “estimates,” “predicts,” “potential,” “continue,” “preliminary,” or the negative of these terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we can give you no assurance these expectations will prove to have been correct. These forward-looking statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to differ materially from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements.
Factors that could cause actual results and outcomes to differ from those reflected in forward-looking statements include, without limitation, declines, volatility and cyclicality in the
Additional information concerning these and other factors can be found in our filings with the
CONSOLIDATED STATEMENTS OF OPERATIONS Amounts in millions (except share and per share data) |
||||||||||||
|
Three Months Ended |
|
Fiscal Year Ended |
|||||||||
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|||||
Net sales |
$ |
1,246 |
|
$ |
831 |
|
|
$ |
5,004 |
|
$ |
3,642 |
Cost of sales |
|
919 |
|
|
627 |
|
|
|
3,724 |
|
|
2,764 |
Gross profit |
|
327 |
|
|
204 |
|
|
|
1,280 |
|
|
878 |
Operating expenses: |
|
|
|
|
|
|
|
|||||
Selling, general and administrative |
|
183 |
|
|
138 |
|
|
|
717 |
|
|
556 |
Depreciation and amortization |
|
35 |
|
|
34 |
|
|
|
138 |
|
|
137 |
Total operating expenses |
|
218 |
|
|
172 |
|
|
|
855 |
|
|
693 |
Operating income |
|
109 |
|
|
32 |
|
|
|
425 |
|
|
185 |
Interest expense |
|
13 |
|
|
35 |
|
|
|
98 |
|
|
139 |
Loss on debt modification and extinguishment |
|
— |
|
|
— |
|
|
|
51 |
|
|
— |
Income (loss) before provision for income taxes |
|
96 |
|
|
(3 |
) |
|
|
276 |
|
|
46 |
Provision for (benefit from) income taxes |
|
17 |
|
|
(3 |
) |
|
|
51 |
|
|
9 |
Net income |
|
79 |
|
$ |
— |
|
|
|
225 |
|
$ |
37 |
Less: net income attributable to non-controlling interests (1) |
|
31 |
|
|
|
|
59 |
|
|
|||
Net income attributable to |
$ |
48 |
|
|
|
$ |
166 |
|
|
|||
|
|
|
|
|
|
|
|
|||||
Earnings per share (2) |
|
|
|
|
|
|
|
|||||
Basic |
$ |
0.29 |
|
|
|
$ |
0.57 |
|
|
|||
Diluted |
$ |
0.28 |
|
|
|
$ |
0.55 |
|
|
|||
Number of shares used in computing EPS (2) |
|
|
|
|
|
|
|
|||||
Basic |
|
161,768,901 |
|
|
|
|
159,188,391 |
|
|
|||
Diluted |
|
245,775,819 |
|
|
|
|
244,451,678 |
|
|
(1) |
|
For the fiscal year ended |
||
|
|
|
||
(2) |
|
Represents basic and diluted earnings per share of Class A common stock and weighted average shares of Class A common stock outstanding for the period from |
CONSOLIDATED BALANCE SHEETS Amounts in millions (except share and per share data) |
|||||
|
|
|
|
||
ASSETS |
|
|
|
||
Current assets: |
|
|
|
||
Cash and cash equivalents |
$ |
1 |
|
$ |
381 |
Receivables, net of allowance for credit losses of |
|
884 |
|
|
557 |
Inventories |
|
856 |
|
|
384 |
Prepaid expenses and other current assets |
|
26 |
|
|
15 |
Total current assets |
|
1,767 |
|
|
1,337 |
Property, plant and equipment, net |
|
94 |
|
|
86 |
Operating lease right-of-use assets |
|
152 |
|
|
129 |
Intangible assets, net |
|
871 |
|
|
919 |
|
|
1,515 |
|
|
1,453 |
Other assets |
|
35 |
|
|
— |
Total assets |
$ |
4,434 |
|
$ |
3,924 |
|
|
|
|
||
LIABILITIES AND STOCKHOLDERS’ EQUITY/PARTNERS’ CAPITAL |
|
|
|
||
Current liabilities: |
|
|
|
||
Current maturities of long-term debt |
$ |
15 |
|
$ |
13 |
Accounts payable |
|
608 |
|
|
326 |
Accrued compensation and benefits |
|
109 |
|
|
71 |
Current operating lease liabilities |
|
49 |
|
|
43 |
Other current liabilities |
|
58 |
|
|
69 |
Total current liabilities |
|
839 |
|
|
522 |
Long-term debt |
|
1,456 |
|
|
2,252 |
Non-current operating lease liabilities |
|
103 |
|
|
86 |
Deferred income taxes |
|
35 |
|
|
232 |
Payable to related parties pursuant to Tax Receivable Agreements |
|
153 |
|
|
— |
Other liabilities |
|
17 |
|
|
31 |
Total liabilities |
|
2,603 |
|
|
3,123 |
Commitments and contingencies |
|
|
|
||
Partners’ capital |
|
— |
|
|
801 |
Class A common stock, par value |
|
2 |
|
|
— |
Class B common stock, par value |
|
1 |
|
|
— |
Additional paid-in capital |
|
1,214 |
|
|
— |
Retained earnings |
|
92 |
|
|
— |
Accumulated other comprehensive income |
|
16 |
|
|
— |
Total stockholders’ equity/partners’ capital attributable to |
|
1,325 |
|
|
801 |
Non-controlling interests |
|
506 |
|
|
— |
Total stockholders’ equity/partners’ capital |
|
1,831 |
|
|
801 |
Total liabilities and stockholders’ equity/partners’ capital |
$ |
4,434 |
|
$ |
3,924 |
CONSOLIDATED STATEMENTS OF CASH FLOWS Amounts in millions |
|||||||
|
Fiscal Year Ended |
||||||
|
|
|
|
||||
Cash Flows From Operating Activities: |
|
|
|
||||
Net income |
$ |
225 |
|
|
$ |
37 |
|
Adjustments to reconcile net cash from operating activities: |
|
|
|
||||
Depreciation and amortization |
|
150 |
|
|
|
153 |
|
Provision for bad debt |
|
2 |
|
|
|
2 |
|
Non-cash inventory charge |
|
1 |
|
|
|
1 |
|
Equity-based compensation expense |
|
25 |
|
|
|
4 |
|
Loss on debt modification and extinguishment |
|
49 |
|
|
|
— |
|
Other |
|
(17 |
) |
|
|
(2 |
) |
Changes in assets and liabilities: |
|
|
|
||||
(Increase) decrease in receivables |
|
(312 |
) |
|
|
(28 |
) |
(Increase) decrease in inventories |
|
(440 |
) |
|
|
(27 |
) |
(Increase) decrease in other assets |
|
(7 |
) |
|
|
8 |
|
Increase (decrease) in accounts payable |
|
274 |
|
|
|
40 |
|
Increase (decrease) in accrued liabilities |
|
24 |
|
|
|
15 |
|
Increase (decrease) in other liabilities |
|
(5 |
) |
|
|
11 |
|
Net cash (used in) provided by operating activities |
|
(31 |
) |
|
|
214 |
|
Cash Flows From Investing Activities: |
|
|
|
||||
Capital expenditures |
|
(20 |
) |
|
|
(12 |
) |
Acquisitions of businesses, net of cash acquired |
|
(179 |
) |
|
|
(217 |
) |
Settlement of interest rate swap |
|
(5 |
) |
|
|
— |
|
Proceeds from the sale of property and equipment |
|
1 |
|
|
|
— |
|
Net cash used in investing activities |
|
(203 |
) |
|
|
(229 |
) |
Cash Flows From Financing Activities: |
|
|
|
||||
IPO proceeds, net of underwriting discounts and commissions |
|
664 |
|
|
|
— |
|
Offering proceeds from underwriters’ option, net of underwriting discounts and commissions |
|
100 |
|
|
|
— |
|
Payments for offering costs |
|
(8 |
) |
|
|
— |
|
Investments from non-controlling interest holders |
|
— |
|
|
|
1 |
|
Distributions to non-controlling interest holders |
|
(52 |
) |
|
|
(15 |
) |
Borrowings on asset-based revolving credit facility |
|
18 |
|
|
|
460 |
|
Repayments on asset-based revolving credit facility |
|
(18 |
) |
|
|
(460 |
) |
Issuance of long-term debt |
|
1,500 |
|
|
|
250 |
|
Repayments of long-term debt |
|
(2,319 |
) |
|
|
(13 |
) |
Payment of debt redemption premiums |
|
(18 |
) |
|
|
— |
|
Debt issuance costs |
|
(13 |
) |
|
|
(8 |
) |
Net cash (used in) provided by financing activities |
|
(146 |
) |
|
|
215 |
|
(Decrease) increase in cash and cash equivalents |
|
(380 |
) |
|
|
200 |
|
Cash and cash equivalents at the beginning of the period |
|
381 |
|
|
|
181 |
|
Cash and cash equivalents at the end of the period |
$ |
1 |
|
|
$ |
381 |
|
|
|
|
|
||||
Cash paid for interest |
$ |
126 |
|
|
$ |
123 |
|
Cash paid for taxes |
$ |
55 |
|
|
$ |
8 |
|
Non-GAAP Financial Measures
In addition to providing results that are determined in accordance with GAAP, we present EBITDA, Adjusted EBITDA, Adjusted EBITDA margin and Net Debt Leverage, which are non-GAAP financial measures. These measures are not considered measures of financial performance or liquidity under GAAP and the items excluded therefrom are significant components in understanding and assessing our financial performance or liquidity. These measures should not be considered in isolation or as alternatives to GAAP measures such as net income or net income attributable to
We define EBITDA as net income or net income attributable to
We use EBITDA, Adjusted EBITDA, Adjusted EBITDA margin and Net Debt Leverage to assess the operating results and effectiveness and efficiency of our business, Adjusted EBITDA includes amounts otherwise attributable to non-controlling interests as we manage the consolidated company and evaluate operating performance in a similar manner. We present these non-GAAP financial measures because we believe that investors consider them to be important supplemental measures of performance, and we believe that these measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. Non-GAAP financial measures as reported by us may not be comparable to similarly titled metrics reported by other companies and may not be calculated in the same manner. These measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. For example, EBITDA and Adjusted EBITDA:
• do not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on debt;
• do not reflect income tax expenses, the cash requirements to pay taxes or related distributions;
• do not reflect cash requirements to replace in the future any assets being depreciated and amortized; and
• exclude certain transactions or expenses as allowed by the various agreements governing our indebtedness.
EBITDA, Adjusted EBITDA, Adjusted EBITDA margin and Net Debt Leverage are not alternative measures of financial performance or liquidity under GAAP and therefore should be considered in conjunction with net income, net income attributable to
No reconciliation of the estimated range for Adjusted EBITDA for fiscal 2022 is included herein because we are unable to quantify certain amounts that would be required to be included in net income attributable to
The following tables set forth a reconciliation of net income or net income attributable to
(Amounts in millions) |
|
Three Months Ended |
|
Fiscal Year Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net income attributable to |
|
$ |
48 |
|
|
|
|
$ |
166 |
|
|
|
||||
Plus: net income attributable to non-controlling interests |
|
|
31 |
|
|
|
|
|
59 |
|
|
|
||||
Net income |
|
|
79 |
|
|
$ |
— |
|
|
|
225 |
|
|
$ |
37 |
|
Depreciation and amortization (1) |
|
|
36 |
|
|
|
36 |
|
|
|
142 |
|
|
|
141 |
|
Provision for (benefit from) income taxes |
|
|
17 |
|
|
|
(3 |
) |
|
|
51 |
|
|
|
9 |
|
Interest expense |
|
|
13 |
|
|
|
35 |
|
|
|
98 |
|
|
|
139 |
|
EBITDA |
|
$ |
145 |
|
|
$ |
68 |
|
|
$ |
516 |
|
|
$ |
326 |
|
Loss on debt modification and extinguishment |
|
|
— |
|
|
|
— |
|
|
|
51 |
|
|
|
— |
|
Equity-based compensation |
|
|
3 |
|
|
|
1 |
|
|
|
25 |
|
|
|
4 |
|
Acquisition expenses (2) |
|
|
1 |
|
|
|
2 |
|
|
|
7 |
|
|
|
12 |
|
Offering expenses (3) |
|
|
2 |
|
|
|
— |
|
|
|
5 |
|
|
|
— |
|
Adjusted EBITDA |
|
$ |
151 |
|
|
$ |
71 |
|
|
$ |
604 |
|
|
$ |
342 |
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA Margin: |
|
|
|
|
|
|
|
|
||||||||
|
|
$ |
1,246 |
|
|
$ |
831 |
|
|
$ |
5,004 |
|
|
$ |
3,642 |
|
Adjusted EBITDA / |
|
|
12.1 |
% |
|
|
8.5 |
% |
|
|
12.1 |
% |
|
|
9.4 |
% |
(1) |
|
Includes depreciation of certain assets which are reflected in “cost of sales” in our Statement of Operations in the consolidated financial statements included in our Annual Report on Form 10-K. |
||
|
|
|
||
(2) |
|
Represents expenses associated with acquisition activities, including transaction costs, post-acquisition employee retention bonuses, severance payments, expense recognition of purchase accounting fair value adjustments (excluding amortization) and contingent consideration adjustments. |
||
|
|
|
||
(3) |
|
Represents costs related to the IPO and Secondary Offering reflected in SG&A expenses in our Statement of Operations in the consolidated financial statements included in our Annual Report on Form 10-K. |
The following table sets forth a calculation of Net Debt Leverage for the periods presented:
(Amounts in millions) |
|
As Of |
||||||
|
|
|
|
|
||||
Senior ABL Credit Facility due |
|
$ |
— |
|
|
$ |
— |
|
Senior Term Loan due |
|
|
— |
|
|
|
1,261 |
|
Senior Notes due |
|
|
— |
|
|
|
300 |
|
Senior Notes due |
|
|
— |
|
|
|
750 |
|
Senior Term Loan due 2028 |
|
|
1,493 |
|
|
|
— |
|
Total Debt |
|
|
1,493 |
|
|
|
2,311 |
|
Less: Cash & Cash Equivalents |
|
|
(1 |
) |
|
|
(381 |
) |
Net Debt |
|
$ |
1,492 |
|
|
$ |
1,930 |
|
Twelve Months Ended Adjusted EBITDA |
|
$ |
604 |
|
|
$ |
342 |
|
Net Debt Leverage |
|
2.5x |
|
5.6x |
View source version on businesswire.com: https://www.businesswire.com/news/home/20220330005178/en/
VP, Investor Relations and FP&A
(314) 995-9116
InvestorRelations@CoreandMain.com
Source:
FAQ
What were the fourth quarter results for CNM?
How did CNM perform in fiscal year 2021?
What is the adjusted EBITDA for CNM in Q4 2021?
What is CNM's outlook for fiscal 2022?