Core & Main Announces Fiscal 2024 First Quarter Results
Core & Main (NYSE: CNM), a leading infrastructure company, announced its fiscal 2024 first quarter results. Net sales rose 10.6% to $1,741 million, while gross profit increased by 6.6% to $468 million, although the gross profit margin decreased by 100 basis points to 26.9%.
Net income fell 24.1% to $101 million, and diluted earnings per share dropped 2.0% to $0.49. Adjusted EBITDA decreased slightly by 1.4% to $217 million, with an Adjusted EBITDA margin of 12.5%.
The company closed five acquisitions during and after the quarter, including Dana Kepner and Geothermal Supply Company. Net debt leverage increased to 2.7x, influenced by higher borrowings for growth investments.
Looking ahead, Core & Main raised its fiscal 2024 net sales and Adjusted EBITDA guidance, expecting net sales between $7.5 to $7.6 billion and Adjusted EBITDA between $935 to $975 million.
- Net sales increased by 10.6% to $1,741 million.
- Gross profit rose by 6.6% to $468 million.
- Organic net sales showed low single-digit growth, with double-digit total net sales growth.
- Closed five acquisitions, expanding into new geographies and product lines.
- Raised fiscal 2024 net sales guidance to $7.5-$7.6 billion.
- Raised fiscal 2024 Adjusted EBITDA guidance to $935-$975 million.
- Gross profit margin decreased by 100 basis points to 26.9%.
- Net income decreased by 24.1% to $101 million.
- Diluted earnings per share decreased by 2.0% to $0.49.
- Adjusted EBITDA fell by 1.4% to $217 million.
- Net cash provided by operating activities decreased by $42 million to $78 million.
- Net debt leverage increased to 2.7x due to higher borrowings for growth investments.
- SG&A expenses rose by 15.2% to $257 million.
The fiscal 2024 first quarter results for Core & Main present a mixed bag for investors. Net sales increased by
On the positive side, Core & Main has made strategic moves by closing five acquisitions, enhancing their market reach and product lines. They seem committed to their M&A strategy, which could drive future growth. The adjusted EBITDA showed a slight decrease, but the long-term outlook provided by the management looks optimistic.
Overall, the investors should weigh the strong sales figures and strategic acquisitions against the increased costs and decreased net income. The company must demonstrate its ability to translate sales growth into improved profitability to gain investor confidence in the long term.
The results highlight Core & Main's ability to sustain growth through acquisitions, a important strategy in a highly fragmented market. The company's addressable market of
However, the decline in net income and the pressure on gross profit margins suggest challenges in integrating these acquisitions effectively and managing costs. Investors should watch how the company handles these integrations and whether it can achieve the anticipated synergies and cost reductions. The CEO's confidence in the long-term strategy is encouraging, but execution will be key.
The forecast for fiscal 2024, with expected net sales in the range of
Fiscal 2024 First Quarter Results (Compared with Fiscal 2023 First Quarter)
-
Net sales increased
10.6% to$1,741 million
-
Gross profit increased
6.6% to ; gross profit margin decreased 100 basis points to$468 million 26.9%
-
Net income decreased
24.1% to$101 million
-
Diluted earnings per share decreased
2.0% to$0.49
-
Adjusted EBITDA (Non-GAAP) decreased
1.4% to ; Adjusted EBITDA margin (Non-GAAP) was$217 million 12.5%
-
Net cash provided by operating activities was
$78 million
- Net Debt Leverage (Non-GAAP) was 2.7x as of April 28, 2024
- Closed five acquisitions during and after the quarter: Eastern Supply, Dana Kepner, ACF West, EGW Utilities and Geothermal Supply Company
"Our first quarter results demonstrate the effectiveness of our strategy and resilient business model," said Steve LeClair, chair and CEO of Core & Main.
"End market demand was solid in the first quarter and our teams continue to make progress executing our product, customer and geographic expansion initiatives to drive above market growth. We were pleased to achieve low single-digit organic net sales growth, double-digit total net sales growth and strong operating cash flow for the quarter."
"With an addressable market totaling
LeClair concluded, "I am grateful for our associates' dedication to delivering outstanding service to our customers and I am excited about what we have accomplished so far this year. We are confident our strategy will drive ongoing value creation as we continue to execute our growth and capital allocation priorities. We have many levers for driving profitable growth, the cash flow to capitalize on it and the team to execute it."
Three Months Ended April 28, 2024
Net sales for the three months ended April 28, 2024 increased
Gross profit for the three months ended April 28, 2024 increased
Selling, general and administrative ("SG&A") expenses for the three months ended April 28, 2024 increased
Net income for the three months ended April 28, 2024 decreased
The Class A common stock basic and diluted earnings per share for the three months ended April 28, 2024 both decreased
Adjusted EBITDA for the three months ended April 28, 2024 decreased
Liquidity and Capital Resources
Net cash provided by operating activities for the three months ended April 28, 2024 was
Net debt, calculated as gross consolidated debt net of cash and cash equivalents, as of April 28, 2024 was
As of April 28, 2024, we had
On February 9, 2024, we entered into an additional
On February 12, 2024, we entered into an instrument pursuant to which we will make payments to a third-party based upon a fixed interest rate of
Fiscal 2024 Outlook
"We are narrowing and raising our expectation for fiscal 2024 net sales and Adjusted EBITDA to reflect recent acquisitions and our first quarter performance," LeClair continued. "End market demand has been solid and we expect this to continue through the end of the year. We expect sales volume to more than offset slight price deflation in fiscal 2024, yielding low single-digit average daily sales growth excluding acquisitions. We expect the M&A we completed through today will contribute
Conference Call & Webcast Information
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. The conference call may also be accessed by dialing 833-470-1428 or +1-404-975-4839 (international). The passcode for the call is 988688. To ensure participants are connected for the full call, please dial in at least 10 minutes prior to the start of the call.
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 Core & Main
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 Securities and Exchange Commission. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. All such statements speak only as of the date made and, except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.
CORE & MAIN, INC. |
||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||
Amounts in millions (except share and per share data), unaudited |
||||||
|
|
Three Months Ended |
||||
|
|
April 28, 2024 |
|
April 30, 2023 |
||
|
|
|
|
|
||
Net sales |
|
$ |
1,741 |
|
$ |
1,574 |
Cost of sales |
|
|
1,273 |
|
|
1,135 |
Gross profit |
|
|
468 |
|
|
439 |
Operating expenses: |
|
|
|
|
||
Selling, general and administrative |
|
|
257 |
|
|
223 |
Depreciation and amortization |
|
|
43 |
|
|
35 |
Total operating expenses |
|
|
300 |
|
|
258 |
Operating income |
|
|
168 |
|
|
181 |
Interest expense |
|
|
34 |
|
|
17 |
Income before provision for income taxes |
|
|
134 |
|
|
164 |
Provision for income taxes |
|
|
33 |
|
|
31 |
Net income |
|
|
101 |
|
|
133 |
Less: net income attributable to non-controlling interests |
|
|
6 |
|
|
47 |
Net income attributable to Core & Main, Inc. |
|
$ |
95 |
|
$ |
86 |
|
|
|
|
|
||
Earnings per share |
|
|
|
|
||
Basic |
|
$ |
0.49 |
|
$ |
0.50 |
Diluted |
|
$ |
0.49 |
|
$ |
0.50 |
Number of shares used in computing EPS |
|
|
|
|
||
Basic |
|
|
192,194,061 |
|
|
171,597,317 |
Diluted |
|
|
202,615,824 |
|
|
243,716,764 |
CORE & MAIN, INC. |
|||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||
Amounts in millions (except share and per share data), unaudited |
|||||
|
April 28, 2024 |
|
January 28, 2024 |
||
ASSETS |
|
|
|
||
Current assets: |
|
|
|
||
Cash and cash equivalents |
$ |
30 |
|
$ |
1 |
Receivables, net of allowance for credit losses of |
|
1,200 |
|
|
973 |
Inventories |
|
945 |
|
|
766 |
Prepaid expenses and other current assets |
|
48 |
|
|
33 |
Total current assets |
|
2,223 |
|
|
1,773 |
Property, plant and equipment, net |
|
160 |
|
|
151 |
Operating lease right-of-use assets |
|
206 |
|
|
192 |
Intangible assets, net |
|
971 |
|
|
784 |
Goodwill |
|
1,845 |
|
|
1,561 |
Deferred income taxes |
|
546 |
|
|
542 |
Other assets |
|
90 |
|
|
66 |
Total assets |
$ |
6,041 |
|
$ |
5,069 |
|
|
|
|
||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
||
Current liabilities: |
|
|
|
||
Current maturities of long-term debt |
$ |
23 |
|
$ |
15 |
Accounts payable |
|
777 |
|
|
504 |
Accrued compensation and benefits |
|
68 |
|
|
106 |
Current operating lease liabilities |
|
61 |
|
|
55 |
Other current liabilities |
|
109 |
|
|
94 |
Total current liabilities |
|
1,038 |
|
|
774 |
Long-term debt |
|
2,401 |
|
|
1,863 |
Non-current operating lease liabilities |
|
145 |
|
|
138 |
Deferred income taxes |
|
92 |
|
|
48 |
Tax receivable agreement liabilities |
|
697 |
|
|
706 |
Other liabilities |
|
24 |
|
|
16 |
Total liabilities |
|
4,397 |
|
|
3,545 |
Commitments and contingencies |
|
|
|
||
Class A common stock, par value |
|
2 |
|
|
2 |
Class B common stock, par value |
|
— |
|
|
— |
Additional paid-in capital |
|
1,221 |
|
|
1,214 |
Retained earnings |
|
284 |
|
|
189 |
Accumulated other comprehensive income |
|
63 |
|
|
46 |
Total stockholders’ equity attributable to Core & Main, Inc. |
|
1,570 |
|
|
1,451 |
Non-controlling interests |
|
74 |
|
|
73 |
Total stockholders’ equity |
|
1,644 |
|
|
1,524 |
Total liabilities and stockholders’ equity |
$ |
6,041 |
|
$ |
5,069 |
CORE & MAIN, INC. |
|||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
Amounts in millions, unaudited |
|||||||
|
Three Months Ended |
||||||
|
April 28, 2024 |
|
April 30, 2023 |
||||
Cash Flows From Operating Activities: |
|
|
|
||||
Net income |
$ |
101 |
|
|
$ |
133 |
|
Adjustments to reconcile net cash from operating activities: |
|
|
|
||||
Depreciation and amortization |
|
46 |
|
|
|
37 |
|
Equity-based compensation expense |
|
3 |
|
|
|
2 |
|
Deferred income tax expense |
|
2 |
|
|
|
— |
|
Other |
|
2 |
|
|
|
— |
|
Changes in assets and liabilities: |
|
|
|
||||
(Increase) decrease in receivables |
|
(170 |
) |
|
|
(135 |
) |
(Increase) decrease in inventories |
|
(104 |
) |
|
|
35 |
|
(Increase) decrease in other assets |
|
(17 |
) |
|
|
(4 |
) |
Increase (decrease) in accounts payable |
|
244 |
|
|
|
98 |
|
Increase (decrease) in accrued liabilities |
|
(29 |
) |
|
|
(46 |
) |
Net cash provided by operating activities |
|
78 |
|
|
|
120 |
|
Cash Flows From Investing Activities: |
|
|
|
||||
Capital expenditures |
|
(7 |
) |
|
|
(10 |
) |
Acquisitions of businesses, net of cash acquired |
|
(564 |
) |
|
|
(64 |
) |
Other |
|
(3 |
) |
|
|
— |
|
Net cash used in investing activities |
|
(574 |
) |
|
|
(74 |
) |
Cash Flows From Financing Activities: |
|
|
|
||||
Repurchase and retirement of partnership interests |
|
— |
|
|
|
(332 |
) |
Distributions to non-controlling interest holders |
|
(4 |
) |
|
|
(10 |
) |
Payments pursuant to Tax Receivable Agreements |
|
(11 |
) |
|
|
(5 |
) |
Borrowings on asset-based revolving credit facility |
|
585 |
|
|
|
130 |
|
Repayments on asset-based revolving credit facility |
|
(774 |
) |
|
|
— |
|
Issuance of long-term debt |
|
750 |
|
|
|
— |
|
Repayments of long-term debt |
|
(6 |
) |
|
|
(4 |
) |
Debt issuance costs |
|
(12 |
) |
|
|
— |
|
Other |
|
(3 |
) |
|
|
(1 |
) |
Net cash provided by (used in) financing activities |
|
525 |
|
|
|
(222 |
) |
Increase (decrease) in cash and cash equivalents |
|
29 |
|
|
|
(176 |
) |
Cash and cash equivalents at the beginning of the period |
|
1 |
|
|
|
177 |
|
Cash and cash equivalents at the end of the period |
$ |
30 |
|
|
$ |
1 |
|
|
|
|
|
||||
Cash paid for interest (excluding effects of interest rate swap) |
$ |
34 |
|
|
$ |
28 |
|
Cash paid for taxes |
|
47 |
|
|
|
27 |
|
Non-GAAP Financial Measures
In addition to providing results that are determined in accordance with accounting principles generally accepted in
We define EBITDA as net income or net income attributable to Core & Main, Inc., as applicable, adjusted for non-controlling interests, depreciation and amortization, provision for income taxes and interest expense. We define Adjusted EBITDA as EBITDA as further adjusted for certain items management believes are not reflective of the underlying operations of our business, including but not limited to (a) loss on debt modification and extinguishment, (b) equity-based compensation, (c) expenses associated with the public offerings and (d) expenses associated with acquisition activities. Net income attributable to Core & Main, Inc. is the most directly comparable GAAP measure to EBITDA and Adjusted EBITDA. We define Adjusted EBITDA margin as Adjusted EBITDA divided by net sales. We define Operating Cash Flow Conversion as net cash provided by (used in) operating activities divided by Adjusted EBITDA for the period presented. We define Net Debt Leverage as total consolidated debt (gross of unamortized discounts and debt issuance costs), net of cash and cash equivalents, divided by Adjusted EBITDA for the last twelve months.
We use EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Operating Cash Flow Conversion 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, Operating Cash Flow Conversion 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 Core & Main, Inc. and other performance measures such as gross profit or net cash provided by or used in operating, investing or financing activities and not as alternatives to such GAAP measures. In evaluating Adjusted EBITDA, you should be aware that, in the future, we may incur expenses similar to those eliminated in this presentation.
No reconciliation of the estimated range for Adjusted EBITDA, Adjusted EBITDA margin or Operating Cash Flow Conversion for fiscal 2024 is included herein because we are unable to quantify certain amounts that would be required to be included in net income attributable to Core & Main, Inc. or cash provided by or used in operating activities, the most directly comparable GAAP measures, without unreasonable efforts due to the high variability and difficulty to predict certain items excluded from Adjusted EBITDA. Consequently, we believe such reconciliation would imply a degree of precision that would be misleading to investors. In particular, the effects of acquisition expenses cannot be reasonably predicted in light of the inherent difficulty in quantifying such items on a forward-looking basis. We expect the variability of these excluded items may have an unpredictable, and potentially significant, impact on our future GAAP financial results.
The following table sets forth a reconciliation of net income or net income attributable to Core & Main, Inc. to EBITDA and Adjusted EBITDA for the periods presented, as well as a calculation of Adjusted EBITDA margin for the periods presented:
(Amounts in millions) |
Three Months Ended |
|
Twelve Months Ended |
||||||||||||
|
April 28, 2024 |
|
April 30, 2023 |
|
April 28, 2024 |
|
April 30, 2023 |
||||||||
Net income attributable to Core & Main, Inc. |
$ |
95 |
|
|
$ |
86 |
|
|
$ |
380 |
|
|
$ |
366 |
|
Plus: net income attributable to non-controlling interest |
|
6 |
|
|
|
47 |
|
|
|
119 |
|
|
|
211 |
|
Net income |
|
101 |
|
|
|
133 |
|
|
|
499 |
|
|
|
577 |
|
Depreciation and amortization (1) |
|
44 |
|
|
|
36 |
|
|
|
157 |
|
|
|
143 |
|
Provision for income taxes |
|
33 |
|
|
|
31 |
|
|
|
130 |
|
|
|
129 |
|
Interest expense |
|
34 |
|
|
|
17 |
|
|
|
98 |
|
|
|
70 |
|
EBITDA |
$ |
212 |
|
|
$ |
217 |
|
|
$ |
884 |
|
|
$ |
919 |
|
Equity-based compensation |
|
3 |
|
|
|
2 |
|
|
|
11 |
|
|
|
10 |
|
Acquisition expenses (2) |
|
2 |
|
|
|
— |
|
|
|
8 |
|
|
|
5 |
|
Offering expenses (3) |
|
— |
|
|
|
1 |
|
|
|
4 |
|
|
|
2 |
|
Adjusted EBITDA |
$ |
217 |
|
|
$ |
220 |
|
|
$ |
907 |
|
|
$ |
936 |
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA Margin: |
|
|
|
|
|
|
|
||||||||
Net Sales |
$ |
1,741 |
|
|
$ |
1,574 |
|
|
$ |
6,869 |
|
|
$ |
6,627 |
|
Adjusted EBITDA / Net Sales |
|
12.5 |
% |
|
|
14.0 |
% |
|
|
13.2 |
% |
|
|
14.1 |
% |
(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 and expense recognition of purchase accounting fair value adjustments (excluding amortization). |
|
|
(3) |
Represents costs related to 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:
(Amounts in millions) |
|
As of |
||||||
|
|
April 28, 2024 |
|
April 30, 2023 |
||||
Senior ABL Credit Facility due February 2029 |
|
$ |
241 |
|
|
$ |
130 |
|
Senior Term Loan due July 2028 |
|
|
1,459 |
|
|
|
1,474 |
|
Senior Term Loan due February 2031 |
|
|
749 |
|
|
|
— |
|
Total Debt |
|
|
2,449 |
|
|
|
1,604 |
|
Less: Cash & Cash Equivalents |
|
|
(30 |
) |
|
|
(1 |
) |
Net Debt |
|
$ |
2,419 |
|
|
$ |
1,603 |
|
Twelve Months Ended Adjusted EBITDA |
|
|
907 |
|
|
|
936 |
|
Net Debt Leverage |
|
2.7 |
x |
|
1.7 |
x |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240603394382/en/
Investor Relations:
Robyn Bradbury, 314-995-9116
InvestorRelations@CoreandMain.com
Source: Core & Main, Inc.
FAQ
What were Core & Main's net sales for Q1 2024?
How did Core & Main's net income perform in Q1 2024?
What was Core & Main's diluted earnings per share in Q1 2024?
What was Core & Main's Adjusted EBITDA for Q1 2024?
How much did Core & Main's gross profit margin change in Q1 2024?
What is Core & Main's fiscal 2024 guidance for net sales?
What is Core & Main's fiscal 2024 Adjusted EBITDA guidance?