Core & Main Announces Fiscal 2021 Third Quarter Results
Core & Main (NYSE: CNM) reported robust financial results for Q3 and the first nine months of FY2021. Net sales surged 38.7% to $1.4 billion, driven by strong demand and pricing strategies. Net income soared 406% to $109.3 million, while Adjusted EBITDA rose 83.4% to $189.1 million, indicating effective margin management. The company successfully closed four acquisitions, enhancing its market position. Full-year Adjusted EBITDA guidance was raised to $560-$580 million, reflecting confidence in ongoing demand despite supply chain challenges.
- Net sales increased 38.7% to $1,404.8 million.
- Net income increased 406.0% to $109.3 million.
- Adjusted EBITDA rose 83.4% to $189.1 million.
- Four acquisitions closed, expanding market presence.
- Raised full-year Adjusted EBITDA guidance to $560-$580 million.
- None.
Fiscal 2021 Third Quarter Highlights (Compared with Fiscal 2020 Third Quarter)
-
Net sales increased
38.7% to$1,404.8 million
-
Gross profit margin increased 230 basis points to
26.4%
-
Net income increased
406.0% to$109.3 million
-
Adjusted EBITDA (Non-GAAP) increased
83.4% to$189.1 million
-
Adjusted EBITDA margin (Non-GAAP) increased 330 basis points to
13.5%
-
Net Debt Leverage (Non-GAAP) (using Adjusted EBITDA on a trailing twelve-month basis) decreased to 2.8x as of
October 31, 2021 compared with 3.3x as ofAugust 1, 2021
-
Closed four acquisitions during and subsequent to the quarter:
Pacific Pipe Company, Inc. , L &M Bag & Supply Co., Inc. ,CES Industrial Piping Supply, LLC andCatalone Pipe & Supply Co.
-
Fiscal year 2021 Adjusted EBITDA guidance increased to
-$560 , representing year-over-year growth of$580 million 64% to70%
“Core & Main delivered exceptional performance in the third quarter by capitalizing on strong end-market trends, proactively managing inflation and executing on our margin initiatives,” said
“We benefited from strong demand across each of our end markets, attributable to continued growth in municipal water infrastructure spending, growth in land and lot development due to continued housing demand, and recovery in the non-residential construction market. Despite ongoing inflationary trends across many of our product lines due to supply chain constraints and product availability challenges, our field and functional teams have done a fantastic job navigating the environment to provide consistent, reliable products and services to our customers. Our teams continue to execute at a very high level, leveraging our market leadership position and operational capabilities to gain market share and deliver EBITDA margin expansion during the quarter.”
“We remained active in M&A during and subsequent to the third quarter, closing on the Pacific Pipe, L & M Bag & Supply, CES Industrial Piping Supply and Catalone Pipe & Supply acquisitions. Each of these acquisitions fits well within our core M&A strategy, offering expansion into new geographies, access to new product lines, consolidation of existing market positions and the addition of key talent. We will continue to pursue and expand our acquisition pipeline, positioning ourselves for continued growth.”
LeClair concluded, “Overall, I am very proud of the entire
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
Nine Months Ended
Net sales for the nine months ended
Gross profit for the nine months ended
SG&A expenses for the nine months ended
Net income for the nine months ended
Adjusted EBITDA (Non-GAAP) for the nine months ended
Capital Structure and Liquidity
Net debt, calculated as gross consolidated debt net of cash and cash equivalents, as of
As of
Fiscal 2021 Outlook
"Our performance in the third quarter continued to be very strong despite ongoing supply chain constraints and product availability challenges," LeClair continued. "Demand and pricing trends remain favorable across each of our end markets, and now look more positive than what we expected three months ago. Based on current visibility, backlog of existing orders and business trends, we now expect full year fiscal 2021 Adjusted EBITDA to be in the range of
Conference Call & Webcast Information
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
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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Amounts in millions (except share and per share data), unaudited |
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Three Months Ended |
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Nine Months Ended |
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Net sales |
$ |
1,404.8 |
|
|
$ |
1,012.5 |
|
|
$ |
3,757.5 |
|
|
$ |
2,810.5 |
|
Cost of sales |
1,034.2 |
|
|
768.1 |
|
|
2,804.9 |
|
|
2,136.3 |
|
||||
Gross profit |
370.6 |
|
|
244.4 |
|
|
952.6 |
|
|
674.2 |
|
||||
Operating expenses: |
|
|
|
|
|
|
|
||||||||
Selling, general and administrative |
187.9 |
|
|
144.8 |
|
|
533.6 |
|
|
418.6 |
|
||||
Depreciation and amortization |
35.2 |
|
|
34.9 |
|
|
102.6 |
|
|
102.7 |
|
||||
Total operating expenses |
223.1 |
|
|
179.7 |
|
|
636.2 |
|
|
521.3 |
|
||||
Operating income |
147.5 |
|
|
64.7 |
|
|
316.4 |
|
|
152.9 |
|
||||
Interest expense |
13.0 |
|
|
35.6 |
|
|
85.3 |
|
|
103.8 |
|
||||
Loss on debt modification and extinguishment |
0.3 |
|
|
— |
|
|
50.7 |
|
|
— |
|
||||
Income before provision for income taxes |
134.2 |
|
|
29.1 |
|
|
180.4 |
|
|
49.1 |
|
||||
Provision for income taxes |
24.9 |
|
|
7.5 |
|
|
34.2 |
|
|
12.6 |
|
||||
Net income |
109.3 |
|
|
$ |
21.6 |
|
|
146.2 |
|
|
$ |
36.5 |
|
||
Less: net income attributable to non-controlling interests (1) |
44.9 |
|
|
|
|
27.9 |
|
|
|
||||||
Net income attributable to |
$ |
64.4 |
|
|
|
|
$ |
118.3 |
|
|
|
||||
|
|
|
|
|
|
|
|
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Earnings per share (2) |
|
|
|
|
|
|
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||||||||
Basic |
$ |
0.41 |
|
|
|
|
$ |
0.27 |
|
|
|
||||
Diluted |
$ |
0.39 |
|
|
|
|
$ |
0.26 |
|
|
|
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Number of shares used in computing EPS (2) |
|
|
|
|
|
|
|
||||||||
Basic |
158,986,524 |
|
|
|
|
156,869,487 |
|
|
|
||||||
Diluted |
244,582,116 |
|
|
|
|
243,080,600 |
|
|
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(1) |
Prior to the Reorganization Transactions (as defined in our Quarterly Report on Form 10-Q for the quarterly period ended |
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(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 three months ended |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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Amounts in millions (except share and per share data), unaudited |
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ASSETS |
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Current assets: |
|
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|
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Cash and cash equivalents |
$ |
4.9 |
|
|
$ |
380.9 |
|
Receivables, net of allowance for credit losses of |
946.1 |
|
|
556.8 |
|
||
Inventories |
721.2 |
|
|
383.8 |
|
||
Prepaid expenses and other current assets |
24.7 |
|
|
15.6 |
|
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Total current assets |
1,696.9 |
|
|
1,337.1 |
|
||
Property, plant and equipment, net |
90.7 |
|
|
86.2 |
|
||
Operating lease right-of-use assets |
158.7 |
|
|
128.5 |
|
||
Intangible assets, net |
899.3 |
|
|
919.2 |
|
||
|
1,515.4 |
|
|
1,452.7 |
|
||
Other assets |
19.8 |
|
|
— |
|
||
Total assets |
$ |
4,380.8 |
|
|
$ |
3,923.7 |
|
|
|
|
|
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LIABILITIES AND PARTNERS’ CAPITAL/STOCKHOLDERS’ EQUITY |
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|
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Current liabilities: |
|
|
|
||||
Current maturities of long-term debt |
$ |
15.0 |
|
|
$ |
13.0 |
|
Accounts payable |
613.3 |
|
|
325.7 |
|
||
Accrued compensation and benefits |
97.6 |
|
|
70.7 |
|
||
Current operating lease liabilities |
48.7 |
|
|
42.8 |
|
||
Other current liabilities |
68.0 |
|
|
70.1 |
|
||
Total current liabilities |
842.6 |
|
|
522.3 |
|
||
Long-term debt |
1,459.0 |
|
|
2,251.7 |
|
||
Non-current operating lease liabilities |
110.1 |
|
|
85.9 |
|
||
Deferred income taxes |
97.7 |
|
|
232.1 |
|
||
Payable to related parties pursuant to Tax Receivable Agreements |
91.8 |
|
|
— |
|
||
Other liabilities |
20.9 |
|
|
31.0 |
|
||
Total liabilities |
2,622.1 |
|
|
3,123.0 |
|
||
Commitments and contingencies |
|
|
|
||||
Partners’ capital |
— |
|
|
800.7 |
|
||
Class A common stock, par value |
1.6 |
|
|
— |
|
||
Class B common stock, par value |
0.9 |
|
|
— |
|
||
Additional paid-in capital |
1,168.7 |
|
|
— |
|
||
Retained earnings |
44.4 |
|
|
— |
|
||
Accumulated other comprehensive income |
7.7 |
|
|
— |
|
||
Total partners’ capital/stockholders’ equity attributable to |
1,223.3 |
|
|
800.7 |
|
||
Non-controlling interests |
535.4 |
|
|
— |
|
||
Total partners’ capital/stockholders’ equity |
1,758.7 |
|
|
800.7 |
|
||
Total liabilities and partners’ capital/stockholders’ equity |
$ |
4,380.8 |
|
|
$ |
3,923.7 |
|
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
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Amounts in millions, unaudited |
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Nine Months Ended |
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|
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Cash Flows From Operating Activities: |
|
|
|
||||
Net income |
$ |
146.2 |
|
|
$ |
36.5 |
|
Adjustments to reconcile net cash from operating activities: |
|
|
|
||||
Depreciation and amortization |
112.3 |
|
|
114.3 |
|
||
Provision for bad debt |
1.4 |
|
|
2.1 |
|
||
Non-cash inventory charge |
0.8 |
|
|
0.6 |
|
||
Equity-based compensation expense |
22.2 |
|
|
3.1 |
|
||
Loss on debt modification and extinguishment |
48.7 |
|
|
— |
|
||
Other |
(8.2 |
) |
|
(0.5 |
) |
||
Changes in assets and liabilities: |
|
|
|
||||
(Increase) decrease in receivables |
(373.8 |
) |
|
(107.0 |
) |
||
(Increase) decrease in inventories |
(304.7 |
) |
|
(34.0 |
) |
||
(Increase) decrease in other assets |
(8.2 |
) |
|
3.4 |
|
||
Increase (decrease) in accounts payable |
278.9 |
|
|
121.1 |
|
||
Increase (decrease) in accrued liabilities |
18.9 |
|
|
0.7 |
|
||
Increase (decrease) in other liabilities |
(0.7 |
) |
|
13.9 |
|
||
Net cash (used in) provided by operating activities |
(66.2 |
) |
|
154.2 |
|
||
Cash Flows From Investing Activities: |
|
|
|
||||
Capital expenditures |
(12.0 |
) |
|
(8.3 |
) |
||
Acquisitions of businesses, net of cash acquired |
(172.2 |
) |
|
(217.2 |
) |
||
Settlement of interest rate swap |
(5.2 |
) |
|
— |
|
||
Proceeds from the sale of property and equipment |
0.5 |
|
|
0.2 |
|
||
Net cash used in investing activities |
(188.9 |
) |
|
(225.3 |
) |
||
Cash Flows From Financing Activities: |
|
|
|
||||
IPO proceeds, net of underwriting discounts and commissions |
663.7 |
|
|
— |
|
||
Offering proceeds from underwriters’ option, net of underwriting discounts and commissions |
99.5 |
|
|
— |
|
||
Payments for offering costs |
(7.8 |
) |
|
— |
|
||
Investments from non-controlling interest holders |
0.3 |
|
|
0.8 |
|
||
Distributions to non-controlling interest holders |
(30.9 |
) |
|
(9.8 |
) |
||
Borrowings on asset-based revolving credit facility |
— |
|
|
460.0 |
|
||
Repayments on asset-based revolving credit facility |
— |
|
|
(460.0 |
) |
||
Issuance of long-term debt |
1,500.0 |
|
|
250.0 |
|
||
Repayments of long-term debt |
(2,314.8 |
) |
|
(9.8 |
) |
||
Payment of contingent consideration |
(0.3 |
) |
|
— |
|
||
Payment of debt redemption premiums |
(17.5 |
) |
|
— |
|
||
Debt issuance costs |
(13.1 |
) |
|
(8.1 |
) |
||
Net cash (used in) provided by financing activities |
(120.9 |
) |
|
223.1 |
|
||
(Decrease) increase in cash and cash equivalents |
(376.0 |
) |
|
152.0 |
|
||
Cash and cash equivalents at the beginning of the period |
380.9 |
|
|
180.9 |
|
||
Cash and cash equivalents at the end of the period |
$ |
4.9 |
|
|
$ |
332.9 |
|
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, net income attributable to
We define EBITDA as 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 attributable to
No reconciliation of the estimated range for Adjusted EBITDA for fiscal 2021 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, unaudited) |
|
Three Months Ended |
|
Nine Months Ended |
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|
|
|
|
|
|
|
|
|||||||||
Net income attributable to |
|
$ |
64.4 |
|
|
|
|
$ |
118.3 |
|
|
|
||||
Plus: net income attributable to non-controlling interests |
|
44.9 |
|
|
|
|
27.9 |
|
|
|
||||||
Net income |
|
$ |
109.3 |
|
|
$ |
21.6 |
|
|
$ |
146.2 |
|
|
$ |
36.5 |
|
Depreciation and amortization (1) |
|
36.1 |
|
|
35.5 |
|
|
105.2 |
|
|
105.2 |
|
||||
Provision for income taxes |
|
24.9 |
|
|
7.5 |
|
|
34.2 |
|
|
12.6 |
|
||||
Interest expense |
|
13.0 |
|
|
35.6 |
|
|
85.3 |
|
|
103.8 |
|
||||
EBITDA |
|
$ |
183.3 |
|
|
$ |
100.2 |
|
|
$ |
370.9 |
|
|
$ |
258.1 |
|
Loss on debt modification and extinguishment |
|
0.3 |
|
|
— |
|
|
50.7 |
|
|
— |
|
||||
Equity-based compensation |
|
2.7 |
|
|
1.1 |
|
|
22.2 |
|
|
3.1 |
|
||||
Acquisition expenses (2) |
|
2.8 |
|
|
1.8 |
|
|
6.0 |
|
|
9.6 |
|
||||
IPO expenses (3) |
|
— |
|
|
— |
|
|
3.6 |
|
|
— |
|
||||
Adjusted EBITDA |
|
$ |
189.1 |
|
|
$ |
103.1 |
|
|
$ |
453.4 |
|
|
$ |
270.8 |
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA Margin: |
|
|
|
|
|
|
|
|
||||||||
|
|
$ |
1,404.8 |
|
|
$ |
1,012.5 |
|
|
$ |
3,757.5 |
|
|
$ |
2,810.5 |
|
Adjusted EBITDA / |
|
13.5 |
% |
|
10.2 |
% |
|
12.1 |
% |
|
9.6 |
% |
(Amounts in millions, unaudited) |
|
Twelve Months Ended |
||||||
|
|
|
|
|
||||
Net income attributable to |
|
$ |
119.1 |
|
|
$ |
76.3 |
|
Plus: net income (loss) attributable to non-controlling interests |
|
27.9 |
|
|
(17.0) |
|
||
Net income |
|
$ |
147.0 |
|
|
$ |
59.3 |
|
Depreciation and amortization (1) |
|
140.8 |
|
|
140.2 |
|
||
Provision for income taxes |
|
30.7 |
|
|
13.3 |
|
||
Interest expense |
|
120.6 |
|
|
143.2 |
|
||
EBITDA |
|
$ |
439.1 |
|
|
$ |
356.0 |
|
Loss on debt modification and extinguishment |
|
50.7 |
|
|
50.4 |
|
||
Equity-based compensation |
|
23.2 |
|
|
21.6 |
|
||
Acquisition expenses (2) |
|
8.3 |
|
|
7.3 |
|
||
IPO expenses (3) |
|
3.6 |
|
|
3.6 |
|
||
Adjusted EBITDA |
|
$ |
524.9 |
|
|
$ |
438.9 |
|
(1) | Includes depreciation of certain assets which are reflected in “cost of sales” in our historical statement of operations. |
|
|
||
(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. |
The following table sets forth a calculation of Net Debt Leverage for the periods presented:
(Amounts in millions, unaudited) |
As Of |
||||||
|
|
|
|||||
ABL Facility |
$ |
— |
|
|
$ |
— |
|
Senior Term Loan due 2028 |
1,496.3 |
|
|
1,500.0 |
|
||
Total Debt |
$ |
1,496.3 |
|
|
$ |
1,500.0 |
|
Less: Cash & Cash Equivalents |
(4.9 |
) |
|
(66.6 |
) |
||
Net Debt |
$ |
1,491.4 |
|
|
$ |
1,433.4 |
|
Twelve Months Ended Adjusted EBITDA |
524.9 |
|
|
438.9 |
|
||
Net Debt Leverage |
|
2.8x |
|
|
|
3.3x |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20211207005240/en/
VP, Investor Relations and FP&A
(314) 995-9116
InvestorRelations@CoreandMain.com
Source:
FAQ
What were the financial results for Core & Main (CNM) in Q3 2021?
How much did Core & Main's Adjusted EBITDA grow in Q3 2021?
What is the future outlook for Core & Main (CNM) Adjusted EBITDA?