Core & Main Announces Record Fiscal 2022 Second Quarter Results
Core & Main (NYSE: CNM) reported exceptional second quarter results for fiscal 2022, with net sales soaring 43.4% to $1.861 billion. Key highlights include a gross profit margin rise of 190 basis points to 26.9% and a remarkable net income increase of $172 million to $182 million. Adjusted EBITDA jumped 78.7% to $277 million, reflecting strong operational performance. The company is actively pursuing M&A to bolster growth and has raised its fiscal 2022 Adjusted EBITDA outlook to $840-$890 million, anticipating 39%-47% growth year-over-year.
- Net sales increased 43.4% to $1.861 billion.
- Gross profit margin improved by 190 basis points to 26.9%.
- Net income rose by $172 million to $182 million.
- Adjusted EBITDA surged 78.7% to $277 million.
- Raising fiscal 2022 Adjusted EBITDA guidance to $840-$890 million, a 39%-47% increase year-over-year.
- SG&A expenses increased by $38 million, or 19.8%, primarily due to higher personnel and facility costs.
Fiscal 2022 Second Quarter Highlights (Compared with Fiscal 2021 Second Quarter)
-
Net sales increased
43.4% to$1,861 million
-
Gross profit margin increased 190 basis points to
26.9%
-
Net income increased
to$172 million $182 million
-
Adjusted EBITDA (Non-GAAP) increased
78.7% to$277 million
-
Adjusted EBITDA margin (Non-GAAP) increased 300 basis points to
14.9%
-
Net Debt Leverage (Non-GAAP) of 1.9x as of
July 31, 2022
-
Remained active in M&A during and subsequent to the quarter, closing the
Earthsavers Erosion Control and Inland Water Works Supply Co. acquisitions, and signing a definitive agreement to acquire the municipal waterworks division ofTrumbull Industries, Inc. and an affiliated entity
-
Raising expectation for fiscal 2022 Adjusted EBITDA to be in the range of
to$840 , representing year-over-year growth of$890 million 39% to47%
"I am pleased to report another record quarter as we continue to build on our momentum, achieving solid growth in both net sales and Adjusted EBITDA," said
"This is a remarkable accomplishment considering our strong performance in the same period last year. Our teams are utilizing our best-in-class capabilities and executing at a high level to support our customers, suppliers and communities. Our customers remain busy, and we continue to experience healthy demand across each of our end markets and product lines. During the quarter, we improved our margins by executing our gross margin enhancement initiatives, achieving strong operating leverage and passing through rising material costs."
LeClair concluded, "We remain active in M&A, driving sustainable growth through acquisitions. During and subsequent to the quarter, we closed the
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
Six Months Ended
Net sales for the six months ended
Gross profit for the six months ended
SG&A expenses for the six months ended
Net income for the six months ended
Adjusted EBITDA for the six months ended
Capital Structure and Liquidity
Net Debt, calculated as gross consolidated debt net of cash and cash equivalents, as of
On
As of
Fiscal 2022 Outlook
"We expect continued growth in the second half of the year despite the strong growth we achieved in the same period last year," LeClair continued. "We remain confident in the long-term stability of our business and end markets, as roughly
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
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Amounts in millions (except share and per share data), unaudited |
|||||||||||||||
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Three Months Ended |
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Six Months Ended |
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|
|
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|
|
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|
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||||||||
Net sales |
$ |
1,861 |
|
$ |
1,298 |
|
|
$ |
3,459 |
|
$ |
2,353 |
|
||
Cost of sales |
|
1,360 |
|
|
|
973 |
|
|
|
2,537 |
|
|
|
1,771 |
|
Gross profit |
|
501 |
|
|
|
325 |
|
|
|
922 |
|
|
|
582 |
|
Operating expenses: |
|
|
|
|
|
|
|
||||||||
Selling, general and administrative |
|
230 |
|
|
|
192 |
|
|
|
436 |
|
|
|
346 |
|
Depreciation and amortization |
|
34 |
|
|
|
33 |
|
|
|
69 |
|
|
|
67 |
|
Total operating expenses |
|
264 |
|
|
|
225 |
|
|
|
505 |
|
|
|
413 |
|
Operating income |
|
237 |
|
|
|
100 |
|
|
|
417 |
|
|
|
169 |
|
Interest expense |
|
17 |
|
|
|
37 |
|
|
|
30 |
|
|
|
73 |
|
Loss on debt modification and extinguishment |
|
— |
|
|
|
50 |
|
|
|
— |
|
|
|
50 |
|
Income before provision for income taxes |
|
220 |
|
|
|
13 |
|
|
|
387 |
|
|
|
46 |
|
Provision for income taxes |
|
38 |
|
|
|
3 |
|
|
|
68 |
|
|
|
9 |
|
Net income |
|
182 |
|
|
|
10 |
|
|
|
319 |
|
|
|
37 |
|
Less: net income (loss) attributable to non-controlling interests |
|
67 |
|
|
|
(17 |
) |
|
|
118 |
|
|
|
(17 |
) |
Net income attributable to |
$ |
115 |
|
|
$ |
27 |
|
|
$ |
201 |
|
|
$ |
54 |
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share (2) |
|
|
|
|
|
|
|
||||||||
Basic |
$ |
0.69 |
|
|
$ |
(0.14 |
) |
|
$ |
1.20 |
|
|
$ |
(0.14 |
) |
Diluted |
$ |
0.67 |
|
|
$ |
(0.14 |
) |
|
$ |
1.17 |
|
|
$ |
(0.14 |
) |
Number of shares used in computing EPS (2) |
|
|
|
|
|
|
|
||||||||
Basic |
|
167,876,179 |
|
|
|
138,978,366 |
|
|
|
167,708,034 |
|
|
|
138,978,366 |
|
Diluted |
|
246,175,878 |
|
|
|
138,978,366 |
|
|
|
246,160,811 |
|
|
|
138,978,366 |
|
(1) |
For the three and six months ended |
|
|
||
(2) |
For the three and six months ended |
CONDENSED CONSOLIDATED BALANCE SHEETS Amounts in millions (except share and per share data), unaudited |
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|
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ASSETS |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
— |
|
|
$ |
1 |
|
Receivables, net of allowance for credit losses of |
|
1,264 |
|
|
884 |
||
Inventories |
|
1,166 |
|
|
|
856 |
|
Prepaid expenses and other current assets |
|
31 |
|
|
|
26 |
|
Total current assets |
|
2,461 |
|
|
|
1,767 |
|
Property, plant and equipment, net |
|
101 |
|
|
|
94 |
|
Operating lease right-of-use assets |
|
166 |
|
|
|
152 |
|
Intangible assets, net |
|
824 |
|
|
|
871 |
|
|
|
1,527 |
|
|
|
1,515 |
|
Other assets |
|
69 |
|
|
|
35 |
|
Total assets |
$ |
5,148 |
|
|
$ |
4,434 |
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Current maturities of long-term debt |
$ |
15 |
|
|
$ |
15 |
|
Accounts payable |
|
826 |
|
|
|
608 |
|
Accrued compensation and benefits |
|
90 |
|
|
|
109 |
|
Current operating lease liabilities |
|
52 |
|
|
|
49 |
|
Other current liabilities |
|
96 |
|
|
|
58 |
|
Total current liabilities |
|
1,079 |
|
|
|
839 |
|
Long-term debt |
|
1,592 |
|
|
|
1,456 |
|
Non-current operating lease liabilities |
|
114 |
|
|
|
103 |
|
Deferred income taxes |
|
31 |
|
|
|
35 |
|
Payable to related parties pursuant to Tax Receivable Agreements |
|
148 |
|
|
|
153 |
|
Other liabilities |
|
19 |
|
|
|
17 |
|
Total liabilities |
|
2,983 |
|
|
|
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 |
|
1,216 |
|
|
|
1,214 |
|
Retained earnings |
|
298 |
|
|
|
92 |
|
Accumulated other comprehensive income |
|
33 |
|
|
|
16 |
|
Total stockholders’ equity attributable to |
|
1,550 |
|
|
|
1,325 |
|
Non-controlling interests |
|
615 |
|
|
|
506 |
|
Total stockholders’ equity |
|
2,165 |
|
|
|
1,831 |
|
Total liabilities and stockholders’ equity |
$ |
5,148 |
|
|
$ |
4,434 |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Amounts in millions, unaudited |
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|
|
||||||
|
Six Months Ended |
||||||
|
|
|
|
||||
Cash Flows From Operating Activities: |
|
|
|
||||
Net income |
$ |
319 |
|
|
$ |
37 |
|
Adjustments to reconcile net cash from operating activities: |
|
|
|
||||
Depreciation and amortization |
|
73 |
|
|
|
75 |
|
Provision for bad debt |
|
3 |
|
|
|
1 |
|
Equity-based compensation expense |
|
7 |
|
|
|
20 |
|
Loss on debt modification and extinguishment |
|
— |
|
|
|
48 |
|
Other |
|
(8 |
) |
|
|
(4 |
) |
Changes in assets and liabilities: |
|
|
|
||||
(Increase) decrease in receivables |
|
(376 |
) |
|
|
(277 |
) |
(Increase) decrease in inventories |
|
(298 |
) |
|
|
(209 |
) |
(Increase) decrease in other assets |
|
(7 |
) |
|
|
— |
|
Increase (decrease) in accounts payable |
|
217 |
|
|
|
239 |
|
Increase (decrease) in accrued liabilities |
|
9 |
|
|
|
(24 |
) |
Increase (decrease) in other liabilities |
|
1 |
|
|
|
(5 |
) |
Net cash used in operating activities |
|
(60 |
) |
|
|
(99 |
) |
Cash Flows From Investing Activities: |
|
|
|
||||
Capital expenditures |
|
(15 |
) |
|
|
(8 |
) |
Acquisitions of businesses, net of cash acquired |
|
(42 |
) |
|
|
— |
|
Settlement of interest rate swap |
|
— |
|
|
|
(5 |
) |
Proceeds from the sale of property and equipment |
|
1 |
|
|
|
— |
|
Net cash used in investing activities |
|
(56 |
) |
|
|
(13 |
) |
Cash Flows From Financing Activities: |
|
|
|
||||
IPO proceeds, net of underwriting discounts and commissions |
|
— |
|
|
|
664 |
|
Payments for offering costs |
|
— |
|
|
|
(4 |
) |
Distributions to non-controlling interest holders |
|
(17 |
) |
|
|
(20 |
) |
Borrowings on asset-based revolving credit facility |
|
214 |
|
|
|
— |
|
Repayments on asset-based revolving credit facility |
|
(72 |
) |
|
|
— |
|
Issuance of long-term debt |
|
— |
|
|
|
1,500 |
|
Repayments of long-term debt |
|
(8 |
) |
|
|
(2,311 |
) |
Payment of debt redemption premiums |
|
— |
|
|
|
(18 |
) |
Debt issuance costs |
|
(2 |
) |
|
|
(13 |
) |
Net cash provided by (used in) financing activities |
|
115 |
|
|
|
(202 |
) |
Decrease in cash and cash equivalents |
|
(1 |
) |
|
|
(314 |
) |
Cash and cash equivalents at the beginning of the period |
|
1 |
|
|
|
381 |
|
Cash and cash equivalents at the end of the period |
$ |
— |
|
|
$ |
67 |
|
|
|
|
|
||||
Cash paid for interest |
$ |
27 |
|
|
$ |
102 |
|
Cash paid for taxes |
|
62 |
|
|
|
15 |
|
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, unaudited) |
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net income attributable to |
|
$ |
115 |
|
$ |
27 |
|
|
$ |
201 |
|
$ |
54 |
|
||
Less: net income (loss) attributable to non-controlling interest |
|
|
67 |
|
|
|
(17 |
) |
|
|
118 |
|
|
|
(17 |
) |
Net income |
|
|
182 |
|
|
|
10 |
|
|
|
319 |
|
|
|
37 |
|
Depreciation and amortization (1) |
|
|
34 |
|
|
|
34 |
|
|
|
70 |
|
|
|
69 |
|
Provision for income taxes |
|
|
38 |
|
|
|
3 |
|
|
|
68 |
|
|
|
9 |
|
Interest expense |
|
|
17 |
|
|
|
37 |
|
|
|
30 |
|
|
|
73 |
|
EBITDA |
|
$ |
271 |
|
|
$ |
84 |
|
|
$ |
487 |
|
|
$ |
188 |
|
Loss on debt modification and extinguishment |
|
|
— |
|
|
|
50 |
|
|
|
— |
|
|
|
50 |
|
Equity-based compensation |
|
|
4 |
|
|
|
19 |
|
|
|
7 |
|
|
|
20 |
|
Acquisition expenses (2) |
|
|
2 |
|
|
|
1 |
|
|
|
2 |
|
|
|
3 |
|
Offering expenses (3) |
|
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
3 |
|
Adjusted EBITDA |
|
$ |
277 |
|
|
$ |
155 |
|
|
$ |
496 |
|
|
$ |
264 |
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA Margin: |
|
|
|
|
|
|
|
|
||||||||
|
|
$ |
1,861 |
|
|
$ |
1,298 |
|
|
$ |
3,459 |
|
|
$ |
2,353 |
|
Adjusted EBITDA / |
|
|
14.9 |
% |
|
|
11.9 |
% |
|
|
14.3 |
% |
|
|
11.2 |
% |
(Amounts in millions, unaudited) |
|
Twelve Months Ended |
||||||
|
|
|
|
|
||||
Net income attributable to |
|
$ |
313 |
|
$ |
76 |
|
|
Less: net income (loss) attributable to non-controlling interest |
|
|
194 |
|
|
|
(17 |
) |
Net income |
|
|
507 |
|
|
|
59 |
|
Depreciation and amortization (1) |
|
|
143 |
|
|
|
140 |
|
Provision for income taxes |
|
|
110 |
|
|
|
13 |
|
Interest expense |
|
|
55 |
|
|
|
144 |
|
EBITDA |
|
$ |
815 |
|
|
$ |
356 |
|
Loss on debt modification and extinguishment |
|
|
1 |
|
|
|
50 |
|
Equity-based compensation |
|
|
12 |
|
|
|
22 |
|
Acquisition expenses (2) |
|
|
6 |
|
|
|
7 |
|
Offering expenses (3) |
|
|
2 |
|
|
|
3 |
|
Adjusted EBITDA |
|
$ |
836 |
|
|
$ |
438 |
|
(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 Secondary Offering 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, unaudited) |
|
As Of |
||||||
|
|
|
|
|
||||
Senior ABL Credit Facility due |
|
$ |
142 |
|
$ |
— |
|
|
Senior Term Loan due |
|
|
1,485 |
|
|
|
1,500 |
|
Total Debt |
|
|
1,627 |
|
|
|
1,500 |
|
Less: Cash & Cash Equivalents |
|
|
— |
|
|
|
(67 |
) |
Net Debt |
|
$ |
1,627 |
|
|
$ |
1,433 |
|
Twelve Months Ended Adjusted EBITDA |
|
|
836 |
|
|
|
438 |
|
Net Debt Leverage |
|
1.9x |
|
3.3x |
View source version on businesswire.com: https://www.businesswire.com/news/home/20220912005941/en/
VP, Finance & Investor Relations
(314) 995-9116
InvestorRelations@CoreandMain.com
Source:
FAQ
What were Core & Main's second quarter earnings results for fiscal 2022?
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What is the updated fiscal 2022 adjusted EBITDA guidance for Core & Main?
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