Core & Main Announces Fiscal 2022 Fourth Quarter and Record Full-Year Results
Core & Main (NYSE: CNM) reported robust financial results for the fourth quarter and fiscal year ended January 29, 2023. Fourth-quarter net sales rose by 10.3% to $1.374 billion, with net income increasing 6.3% to $84 million. For fiscal 2022, net sales totaled $6.651 billion, a 32.9% increase year-over-year. Adjusted EBITDA for the year grew by 54.8% to $935 million, reflecting improved margins. The company closed eight acquisitions, adding $175 million in annualized net sales. Looking forward, Core & Main anticipates fiscal 2023 net sales between $6.455 billion and $6.875 billion.
- Net sales increased 32.9% year-over-year to $6.651 billion.
- Net income surged 158.2% to $581 million for fiscal 2022.
- Adjusted EBITDA rose 54.8% to $935 million, with margin improving to 14.1%.
- Successfully closed 8 acquisitions adding $175 million in annualized sales.
- Mid single-digit volume decline offset some revenue growth.
- SG&A expenses increased 22.7% to $880 million.
Fiscal 2022 Fourth Quarter Highlights (Compared with Fiscal 2021 Fourth Quarter)
-
Net sales increased
10.3% to$1,374 million
-
Gross profit margin increased 90 basis points to
27.1%
-
Net income increased
6.3% to$84 million
-
Adjusted EBITDA (Non-GAAP) increased
8.6% to$164 million
-
Net cash provided by operating activities increased
to$272 million $307 million
Fiscal Year 2022 Highlights (Compared with Fiscal 2021)
-
Net sales increased
32.9% to$6,651 million
-
Gross profit margin increased 140 basis points to
27.0%
-
Net income increased
158.2% to$581 million
-
Adjusted EBITDA (Non-GAAP) increased
54.8% to$935 million
-
Adjusted EBITDA margin (Non-GAAP) increased 200 basis points to
14.1%
-
Net cash provided by operating activities increased
to$432 million $401 million
-
Closed 8 acquisitions during and subsequent to the year with approximately
of historical annualized net sales$175 million
- Opened 3 new locations, building on our commitment to make our products and expertise more accessible nationwide
"Fiscal 2022 was an impressive year for
"We achieved a record
"I would like to thank all of our associates, as well as our supplier partners, for their hard work and dedication to serving our customers and communities. Our fiscal 2022 performance builds on the journey we've taken to transform our business and create a stronger platform for long-term growth. Looking forward, we expect to continue generating strong cash flow and our capital allocation strategy remains focused on investing in both organic and inorganic growth opportunities, while returning capital to shareholders. We have significant financial flexibility and liquidity, a proven growth strategy and the platform to capitalize on secular growth trends to deliver value to our stakeholders over the long term."
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 for the three months ended
Fiscal Year Ended
Net sales for fiscal 2022 increased
Gross profit for fiscal 2022 increased
SG&A expenses for fiscal 2022 increased
Net income for fiscal 2022 increased
Adjusted EBITDA for fiscal 2022 increased
Liquidity and Capital Resources
Net cash provided by operating activities for fiscal 2022 was
Net debt, calculated as gross consolidated debt net of cash and cash equivalents, as of
As of
Fiscal 2023 Outlook
-
Net sales of
to$6,455 $6,875 million
-
Adjusted EBITDA of
to$785 $865 million
-
Adjusted EBITDA margin of
12.2% to12.6%
-
Effective income tax rate of
18% to20%
"We are confident that we are well positioned to capitalize on municipal infrastructure tailwinds, particularly as water utilities begin to accelerate repair and replacement work supported by the federal infrastructure bill," LeClair said. "We expect to continue driving above market growth and gaining market share through our product, customer and geographic expansion initiatives. We expect net sales to range from
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 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 Years Ended |
|||||||||||||
|
|
|
|
|
|||||||||||
|
|
|
|
|
|||||||||||
Net sales |
$ |
1,374 |
$ |
1,246 |
$ |
6,651 |
$ |
5,004 |
|||||||
Cost of sales |
|
1,001 |
|
|
919 |
|
|
4,856 |
|
|
3,724 |
|
|||
Gross profit |
|
373 |
|
|
327 |
|
|
1,795 |
|
|
1,280 |
|
|||
Operating expenses: |
|
|
|
|
|||||||||||
Selling, general and administrative |
|
213 |
|
|
183 |
|
|
880 |
|
|
717 |
|
|||
Depreciation and amortization |
|
36 |
|
|
35 |
|
|
140 |
|
|
138 |
|
|||
Total operating expenses |
|
249 |
|
|
218 |
|
|
1,020 |
|
|
855 |
|
|||
Operating income |
|
124 |
|
|
109 |
|
|
775 |
|
|
425 |
|
|||
Interest expense |
|
20 |
|
|
13 |
|
|
66 |
|
|
98 |
|
|||
Loss on debt modification and extinguishment |
|
— |
|
|
— |
|
|
— |
|
|
51 |
|
|||
Income before provision for income taxes |
|
104 |
|
|
96 |
|
|
709 |
|
|
276 |
|
|||
Provision for income taxes |
|
20 |
|
|
17 |
|
|
128 |
|
|
51 |
|
|||
Net income |
|
84 |
|
|
79 |
|
|
581 |
|
|
225 |
|
|||
Less: net income attributable to non-controlling interests (1) |
|
30 |
|
|
31 |
|
|
215 |
|
|
59 |
|
|||
Net income attributable to |
$ |
54 |
|
$ |
48 |
|
$ |
366 |
|
$ |
166 |
|
|||
|
|
|
|
|
|||||||||||
Earnings per share (2) |
|
|
|
|
|||||||||||
Basic |
$ |
0.31 |
|
$ |
0.29 |
|
$ |
2.16 |
|
$ |
0.57 |
|
|||
Diluted |
$ |
0.31 |
|
$ |
0.28 |
|
$ |
2.13 |
|
$ |
0.55 |
|
|||
Number of shares used in computing EPS (2) |
|
|
|
|
|||||||||||
Basic |
|
172,483,768 |
|
|
161,768,901 |
|
|
169,482,199 |
|
|
159,188,391 |
|
|||
Diluted |
|
246,275,118 |
|
|
245,775,819 |
|
|
246,217,004 |
|
|
244,451,678 |
|
(1) |
For the fiscal year ended |
|
|
||
(2) |
For the fiscal year ended |
CONSOLIDATED BALANCE SHEETS Amounts in millions (except share and per share data) |
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|
|
|
|||||
|
|
|
|||||
ASSETS |
|
|
|||||
Current assets: |
|
|
|||||
Cash and cash equivalents |
$ |
177 |
$ |
1 |
|||
Receivables, net of allowance for credit losses of |
|
955 |
|
|
884 |
|
|
Inventories |
|
1,047 |
|
|
856 |
|
|
Prepaid expenses and other current assets |
|
32 |
|
|
26 |
|
|
Total current assets |
|
2,211 |
|
|
1,767 |
|
|
Property, plant and equipment, net |
|
105 |
|
|
94 |
|
|
Operating lease right-of-use assets |
|
175 |
|
|
152 |
|
|
Intangible assets, net |
|
795 |
|
|
871 |
|
|
|
|
1,535 |
|
|
1,515 |
|
|
Other assets |
|
88 |
|
|
35 |
|
|
Total assets |
$ |
4,909 |
|
$ |
4,434 |
|
|
|
|
|
|||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|||||
Current liabilities: |
|
|
|||||
Current maturities of long-term debt |
$ |
15 |
|
$ |
15 |
|
|
Accounts payable |
|
479 |
|
|
608 |
|
|
Accrued compensation and benefits |
|
123 |
|
|
109 |
|
|
Current operating lease liabilities |
|
54 |
|
|
49 |
|
|
Other current liabilities |
|
55 |
|
|
58 |
|
|
Total current liabilities |
|
726 |
|
|
839 |
|
|
Long-term debt |
|
1,444 |
|
|
1,456 |
|
|
Non-current operating lease liabilities |
|
121 |
|
|
103 |
|
|
Deferred income taxes |
|
9 |
|
|
35 |
|
|
Payable to related parties pursuant to Tax Receivable Agreements |
|
180 |
|
|
153 |
|
|
Other liabilities |
|
19 |
|
|
17 |
|
|
Total liabilities |
|
2,499 |
|
|
2,603 |
|
|
|
|
|
|||||
Commitments and contingencies |
|
|
|||||
Class A common stock, par value |
|
2 |
|
|
2 |
|
|
Class B common stock, par value |
|
1 |
|
|
1 |
|
|
Additional paid-in capital |
|
1,241 |
|
|
1,214 |
|
|
Retained earnings |
|
458 |
|
|
92 |
|
|
Accumulated other comprehensive income |
|
45 |
|
|
16 |
|
|
Total stockholders’ equity attributable to |
|
1,747 |
|
|
1,325 |
|
|
Non-controlling interests |
|
663 |
|
|
506 |
|
|
Total stockholders’ equity |
|
2,410 |
|
|
1,831 |
|
|
Total liabilities and stockholders’ equity |
$ |
4,909 |
|
$ |
4,434 |
|
CONSOLIDATED STATEMENTS OF CASH FLOWS Amounts in millions |
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|
|
|
|
|
|
|
|
|
Fiscal Years Ended |
||||||
|
|
|
|||||
Cash Flows From Operating Activities: |
|
|
|||||
Net income |
$ |
581 |
|
$ |
225 |
|
|
Adjustments to reconcile net cash from operating activities: |
|
|
|||||
Depreciation and amortization |
|
148 |
|
|
150 |
|
|
Equity-based compensation expense |
|
11 |
|
|
25 |
|
|
Loss on debt modification and extinguishment |
|
— |
|
|
49 |
|
|
Other |
|
— |
|
|
(14 |
) |
|
Changes in assets and liabilities: |
|
|
|||||
(Increase) decrease in receivables |
|
(51 |
) |
|
(312 |
) |
|
(Increase) decrease in inventories |
|
(149 |
) |
|
(440 |
) |
|
(Increase) decrease in other assets |
|
(4 |
) |
|
(7 |
) |
|
Increase (decrease) in accounts payable |
|
(140 |
) |
|
274 |
|
|
Increase (decrease) in accrued liabilities |
|
5 |
|
|
24 |
|
|
Increase (decrease) in other liabilities |
|
— |
|
|
(5 |
) |
|
Net cash provided by (used in) operating activities |
|
401 |
|
|
(31 |
) |
|
Cash Flows From Investing Activities: |
|
|
|||||
Capital expenditures |
|
(25 |
) |
|
(20 |
) |
|
Acquisitions of businesses, net of cash acquired |
|
(128 |
) |
|
(179 |
) |
|
Settlement of interest rate swap |
|
— |
|
|
(5 |
) |
|
Proceeds from the sale of property and equipment |
|
1 |
|
|
1 |
|
|
Net cash used in investing activities |
|
(152 |
) |
|
(203 |
) |
|
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 |
) |
|
Proceeds from issuance of common stock from employee equity plans |
|
1 |
|
|
— |
|
|
Distributions to non-controlling interest holders |
|
(57 |
) |
|
(52 |
) |
|
Borrowings on asset-based revolving credit facility |
|
244 |
|
|
18 |
|
|
Repayments on asset-based revolving credit facility |
|
(244 |
) |
|
(18 |
) |
|
Issuance of long-term debt |
|
— |
|
|
1,500 |
|
|
Repayments of long-term debt |
|
(15 |
) |
|
(2,319 |
) |
|
Payment of debt redemption premiums |
|
— |
|
|
(18 |
) |
|
Debt issuance costs |
|
(2 |
) |
|
(13 |
) |
|
Net cash (used in) provided by financing activities |
|
(73 |
) |
|
(146 |
) |
|
Increase (decrease) in cash and cash equivalents |
|
176 |
|
|
(380 |
) |
|
Cash and cash equivalents at the beginning of the period |
|
1 |
|
|
381 |
|
|
Cash and cash equivalents at the end of the period |
$ |
177 |
|
$ |
1 |
|
|
|
|
|
|||||
Cash paid for interest (excluding effects of interest rate swap) |
$ |
74 |
|
$ |
126 |
|
|
Cash paid for income taxes |
|
147 |
|
|
55 |
|
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 2023 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 table sets forth a reconciliation of net income or net income attributable to |
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(Amounts in millions) |
Three Months Ended |
Fiscal Years Ended |
|||||||||||||
|
|
|
|
|
|||||||||||
Net income attributable to |
$ |
54 |
|
$ |
48 |
|
$ |
366 |
|
$ |
166 |
|
|||
Plus: net income attributable to non-controlling interest |
|
30 |
|
|
31 |
|
|
215 |
|
|
59 |
|
|||
Net income |
|
84 |
|
|
79 |
|
|
581 |
|
|
225 |
|
|||
Depreciation and amortization (1) |
|
36 |
|
|
36 |
|
|
143 |
|
|
142 |
|
|||
Provision for income taxes |
|
20 |
|
|
17 |
|
|
128 |
|
|
51 |
|
|||
Interest expense |
|
20 |
|
|
13 |
|
|
66 |
|
|
98 |
|
|||
EBITDA |
$ |
160 |
|
$ |
145 |
|
$ |
918 |
|
$ |
516 |
|
|||
Loss on debt modification and extinguishment |
|
— |
|
|
— |
|
|
— |
|
|
51 |
|
|||
Equity-based compensation |
|
2 |
|
|
3 |
|
|
11 |
|
|
25 |
|
|||
Acquisition expenses (2) |
|
2 |
|
|
1 |
|
|
5 |
|
|
7 |
|
|||
Offering expenses (3) |
|
— |
|
|
2 |
|
|
1 |
|
|
5 |
|
|||
Adjusted EBITDA |
$ |
164 |
|
$ |
151 |
|
$ |
935 |
|
$ |
604 |
|
|||
|
|
|
|
|
|||||||||||
Adjusted EBITDA Margin: |
|
|
|
|
|||||||||||
|
$ |
1,374 |
|
$ |
1,246 |
|
$ |
6,651 |
|
$ |
5,004 |
|
|||
Adjusted EBITDA / |
|
11.9 |
% |
|
12.1 |
% |
|
14.1 |
% |
|
12.1 |
% |
(1) |
Includes depreciation of certain assets which are reflected in “cost of sales” in our 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 and subsequent secondary offerings reflected in SG&A expenses in our Statement of Operations. |
The following table sets forth a calculation of Net Debt Leverage for the periods presented: |
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(Amounts in millions) |
Fiscal Years Ended |
||||||
|
|
|
|||||
Senior ABL Credit Facility due |
$ |
— |
|
$ |
— |
|
|
Senior Term Loan due |
|
1,478 |
|
|
1,493 |
|
|
Total Debt |
|
1,478 |
|
|
1,493 |
|
|
Less: Cash & Cash Equivalents |
|
(177 |
) |
|
(1 |
) |
|
Net Debt |
$ |
1,301 |
|
$ |
1,492 |
|
|
Twelve Months Ended Adjusted EBITDA |
|
935 |
|
|
604 |
|
|
Net Debt Leverage |
|
1.4x |
|
|
2.5x |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20230327005623/en/
Investor Relations:
InvestorRelations@CoreandMain.com
Source:
FAQ
What were Core & Main's fourth quarter results for fiscal 2022?
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