Core & Main Inc. (NYSE: CNM), a leader in advancing reliable
infrastructure with local service, nationwide, today announced
financial results for the second quarter ended July 28, 2024.
Fiscal 2024 Second Quarter Results (Compared with Fiscal 2023
Second Quarter)
- Net sales increased 5.5% to $1,964 million
- Gross profit increased 3.4% to $518 million; gross profit
margin decreased 50 basis points to 26.4%
- Net income decreased 23.2% to $126 million
- Diluted earnings per share decreased 7.6% to $0.61
- Adjusted EBITDA (Non-GAAP) decreased 4.8% to $257 million;
Adjusted EBITDA margin (Non-GAAP) decreased 140 basis points to
13.1%
- Acquired five new businesses during and after the quarter: EGW
Utilities, Geothermal Supply Company, HM Pipe Products, GroGreen
Solutions and Green Equipment Company
"We grew net sales by approximately 6% to a new quarterly record
of $1.96 billion, reflecting strong growth from acquisitions that
was partially offset by project delays from wet weather conditions
and comparably lower end-market volumes," said Steve LeClair, chair
and CEO of Core & Main.
"Despite the challenging weather and market conditions, our
meter initiative continues to outpace the growth of our end
markets, highlighted by the 48% growth we achieved this quarter.
Pricing and gross margins were in line with our expectations, with
our gross margin initiatives delivering outstanding results to
partially offset the impact of higher inventory costs.
We acquired five new businesses during and shortly after the
quarter, each of which offers expansion into new geographies,
access to new product lines or the addition of key talent. We are
particularly excited by the acquisition of HM Pipe Products, which
will allow us to tap into to a new multi-billion-dollar addressable
market opportunity in Canada.
We continue to maintain a disciplined capital allocation
strategy, balancing investments in our business with returning
capital to shareholders, and in June, our board of directors
approved a $500 million share repurchase program. This marked our
first standing share repurchase authorization since becoming a
public company and reflects our commitment to returning capital to
shareholders. With our strong balance sheet and cash generation,
Core & Main is well positioned to capitalize on strategic
growth opportunities while delivering value for our
shareholders.
Supported by our strong management team, which was further
enhanced by the organizational realignment we completed in July,
our associates continue to demonstrate unwavering dedication to our
customers and their critical projects. I'm proud of their ability
to remain agile, even in challenging market conditions. We are
confident in our ability to deliver outstanding service to our
customers, drive value creation, and execute our growth and capital
allocation priorities now and in the future," LeClair
concluded.
Three Months Ended July 28, 2024
Net sales for the three months ended July 28, 2024 increased
$103 million, or 5.5%, to $1,964 million compared with $1,861
million for the three months ended July 30, 2023. Net sales
increased primarily due to acquisitions partially offset by project
delays from wet weather conditions, comparably lower end-market
volumes and slightly lower selling prices. Net sales increased for
pipes, valves & fittings and storm drainage products primarily
due to acquisitions partially offset by project delays from wet
weather conditions and comparably lower end-market volumes. Net
sales for fire protection products declined due to lower selling
prices and comparably lower end-market volumes partially offset by
acquisitions. Net sales of meter products benefited from our
ability to drive the adoption of smart meter technology through
municipalities, increased product availability and
acquisitions.
Gross profit for the three months ended July 28, 2024 increased
$17 million, or 3.4%, to $518 million compared with $501 million
for the three months ended July 30, 2023. Gross profit as a
percentage of net sales for the three months ended July 28, 2024
was 26.4% compared with 26.9% for the three months ended July 30,
2023. The overall decline in gross profit as a percentage of net
sales was primarily attributable to larger prior year benefits from
strategic inventory investments during an inflationary environment
partially offset by favorable impacts from the execution of our
gross margin initiatives and accretive acquisitions.
Selling, general and administrative ("SG&A") expenses for
the three months ended July 28, 2024 increased $30 million, or
12.6%, to $268 million compared with $238 million during the three
months ended July 30, 2023. The increase was generally attributable
to acquisitions. Non-acquisition SG&A costs were essentially
flat as investments in growth were offset by lower variable
compensation costs. SG&A expenses as a percentage of net sales
were 13.6% for the three months ended July 28, 2024 compared with
12.8% for the three months ended July 30, 2023. The increase was
primarily attributable to acquisitions and investments in
growth.
Net income for the three months ended July 28, 2024 decreased
$38 million, or 23.2%, to $126 million compared with $164 million
for the three months ended July 30, 2023. The decrease in net
income was primarily attributable to a decrease in operating income
and an increase in interest expense.
The Class A common stock basic earnings per share for the three
months ended July 28, 2024 decreased 6.1% to $0.62 compared with
$0.66 for the three months ended July 30, 2023. The Class A common
stock diluted earnings per share for the three months ended July
28, 2024 decreased 7.6% to $0.61 compared with $0.66 for the three
months ended July 30, 2023. The decrease in basic earnings per
share was attributable to higher Class A share counts from
exchanges of Partnership Interests partially offset by an increase
in net income attributable to Core & Main, Inc. Diluted
earnings per share decreased due to a decline in net income
partially offset by lower share counts following the share
repurchase transactions executed throughout fiscal 2023.
Adjusted EBITDA for the three months ended July 28, 2024
decreased $13 million, or 4.8%, to $257 million compared with $270
million for the three months ended July 30, 2023. The decrease in
Adjusted EBITDA was primarily attributable to higher SG&A
expenses partially offset by higher gross profit. For a
reconciliation of Adjusted EBITDA to net income or net income
attributable to Core & Main, Inc., the most comparable GAAP
financial metric, as applicable, see “Non-GAAP Financial Measures”
below.
Six Months Ended July 28, 2024
Net sales for the six months ended July 28, 2024 increased $270
million, or 7.9%, to $3,705 million compared with $3,435 million
for the six months ended July 30, 2023. Net sales increased
primarily due to acquisitions partially offset by comparably lower
selling prices. Net sales increased for pipes, valves &
fittings due to acquisitions. Net sales increased for storm
drainage due to acquisitions and our ability to drive the adoption
of advanced storm water management systems. Net sales for fire
protection products declined due to comparably lower selling prices
and end-market volumes partially offset by acquisitions. Net sales
of meter products benefited from our ability to drive the adoption
of smart meter technology through municipalities, increased product
availability and acquisitions.
Gross profit for the six months ended July 28, 2024 increased
$46 million, or 4.9%, to $986 million compared with $940 million
for the six months ended July 30, 2023. Gross profit as a
percentage of net sales for the six months ended July 28, 2024 was
26.6% compared with 27.4% for the six months ended July 30, 2023.
The overall decrease in gross profit as a percentage of net sales
was primarily attributable to larger prior year benefits from
strategic inventory investments during an inflationary environment
partially offset by favorable impacts from the execution of our
gross margin initiatives and accretive acquisitions.
SG&A expenses for the six months ended July 28, 2024
increased $64 million, or 13.9%, to $525 million compared with $461
million during the six months ended July 30, 2023. The increase
includes $41 million in personnel expenses primarily related to
acquisitions. The remaining increase is driven by acquisitions,
inflation and other growth investments. SG&A expenses as a
percentage of net sales were 14.2% for the six months ended July
28, 2024 compared with 13.4% for the six months ended July 30,
2023. The increase was primarily attributable to investments in
growth, inflationary cost impacts and acquisitions.
Net income for the six months ended July 28, 2024 decreased $70
million, or 23.6% to $227 million compared with $297 million for
the six months ended July 30, 2023. The decrease in net income was
primarily attributable to a decrease in operating income and an
increase in interest expenses.
The Class A common stock basic earnings per share for the six
months ended July 28, 2024 decreased 4.3% to $1.11 compared with
$1.16 for the six months ended July 30, 2023. The Class A common
stock diluted earnings per share for the six months ended July 28,
2024 decreased 3.5% to $1.11 compared with $1.15 for the six months
ended July 30, 2023. The decrease in basic earnings per share was
attributable to higher Class A share counts from exchanges of
Partnership Interests partially offset by an increase in net income
attributable to Core & Main, Inc. Diluted earnings per share
decreased due to a decline in net income partially offset by lower
share counts following the share repurchase transactions executed
throughout fiscal 2023.
Adjusted EBITDA for the six months ended July 28, 2024 decreased
$16 million, or 3.3%, to $474 million compared with $490 million
for the six months ended July 30, 2023. The decrease in Adjusted
EBITDA was primarily attributable to higher SG&A expenses
partially offset by higher gross profit. For a reconciliation of
Adjusted EBITDA to net income or net income attributable to Core
& Main, Inc., the most comparable GAAP financial metric, as
applicable, see “Non-GAAP Financial Measures” below.
Liquidity and Capital Resources
Net cash provided by operating activities for the three months
ended July 28, 2024 was $48 million compared with $282 million for
the three months ended July 30, 2023. The $234 million decrease in
cash provided by operating activities was primarily driven by more
typical investment in working capital in the three months ended
July 28, 2024 compared with a reduction in inventory during fiscal
2023 due to inventory optimization subsequent to supply chain
improvements. Increased interest payments and higher income tax
payments due to higher taxable income of Core & Main, Inc.
following exchanges of Partnership Interests throughout fiscal 2023
also reduced cash flows.
Net debt, calculated as gross consolidated debt net of cash and
cash equivalents, as of July 28, 2024 was $2,439 million. Net Debt
Leverage (defined as the ratio of net debt to Adjusted EBITDA for
the last 12 months) was 2.7x, an increase of 1.0x from July 30,
2023. The increase in Net Debt Leverage was primarily attributable
to higher borrowings to fund investments in organic growth,
acquisitions and share repurchases.
As of July 28, 2024, we had $250 million outstanding borrowings
on our senior asset-based revolving credit facility ("Senior ABL
Credit Facility"), which provides for borrowings of up to $1,250
million, subject to borrowing base availability. As of July 28,
2024, after giving effect to approximately $14 million of letters
of credit issued under the Senior ABL Credit Facility, Core &
Main LP would have been able to borrow approximately $986 million
under the Senior ABL Credit Facility, subject to borrowing base
availability.
On May 21, 2024, we amended the terms of the $1,500 million
senior term loan (the "2028 Senior Term Loan") in order to reduce
the effective applicable margin from 2.60% to 2.00%, resulting in
annual interest savings of approximately $9 million. The 2028
Senior Term Loan principal balance did not change, still matures on
July 27, 2028 and requires quarterly principal payments on the last
business day of each fiscal quarter in an amount equal to
approximately 0.25% of the original principal amount. The 2028
Senior Term Loan is subject to a Term SOFR "floor" of 0.00%.
Fiscal 2024 Outlook
"We are revising our outlook for fiscal 2024 to reflect
significant weather disruptions in the second quarter and our
expectation that some of the growth we anticipated in the second
half of the year will likely be pushed into 2025," LeClair said.
"Pricing and gross margins have sustained well and are in line with
our expectations through the first half of the year. As a result of
lower-than-expected end market volumes, we are lowering our full
year net sales range to $7.3 to $7.4 billion and are lowering our
full year Adjusted EBITDA range to $900 to $930 million. We are
raising our operating cash flow conversion range to 65% to 75% of
Adjusted EBITDA as a result of our disciplined working capital
management. While weather and market softness are impacting this
year's results, we remain optimistic about the long-term demand
characteristics of our end markets and are focused on executing
against our long-term strategy as we manage through near-term macro
dynamics."
Conference Call & Webcast Information
Core & Main will host a live conference call and webcast on
September 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 live call is 823702. 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 St. Louis, Core & Main is a leader in advancing
reliable infrastructure™ with local service, nationwide®. As a
leading specialized distributor with a focus on water, wastewater,
storm drainage and fire protection products and related services,
Core & Main provides solutions to municipalities, private water
companies and professional contractors across municipal,
non-residential and residential end markets, nationwide. With more
than 350 locations across the U.S., the company provides its
customers local expertise backed by a national supply chain. Core
& Main’s nearly 5,500 associates are committed to helping their
communities thrive with safe and reliable infrastructure. Visit
coreandmain.com to learn more.
Cautionary Note Regarding Forward-Looking Statements
This press release contains “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Forward-looking statements include, without limitation,
all statements other than statements of historical facts contained
in this press release, including statements relating to our
intentions, beliefs, assumptions or current expectations
concerning, among other things, our future results of operations
and financial position, business strategy and plans and objectives
of management for future operations, including, among others,
statements regarding expected growth, future capital expenditures,
capital allocation and debt service obligations, and the
anticipated impact on our business.
Some of the forward-looking statements can be identified by the
use of forward-looking terms such as “believes,” “expects,” “may,”
“will,” “shall,” “should,” “would,” “could,” “seeks,” “aims,”
“projects,” “is optimistic,” “intends,” “plans,” “estimates,”
“anticipates” or the negative versions of these words or other
comparable terms.
Forward-looking statements are subject to known and unknown
risks and uncertainties, many of which may be outside our control.
We caution you that forward-looking statements are not guarantees
of future performance or outcomes and that actual performance and
outcomes, including, without limitation, our actual results of
operations, financial condition and liquidity, and the development
of the market in which we operate, may differ materially from those
made in or suggested by the forward-looking statements contained in
this press release. In addition, even if our results of operations,
financial condition, cash flows and the development of the market
in which we operate are consistent with the forward-looking
statements contained in this press release, those results or
developments may not be indicative of results or developments in
subsequent periods. A number of important factors, including,
without limitation, the risks and uncertainties discussed under the
captions “Risk Factors” in our Annual Report on Form 10-K for the
fiscal year ended January 28, 2024 and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” in our
Quarterly Report on Form 10-Q for the fiscal period ended July 28,
2024, could cause actual results and outcomes to differ materially
from those reflected in the forward-looking statements.
Furthermore, new risks and uncertainties emerge from time to time,
and it is not possible for us to predict all risks and
uncertainties that could have an impact on the forward-looking
statements contained in this press release.
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 U.S.
residential and non-residential construction markets; slowdowns in
municipal infrastructure spending and delays in appropriations of
federal funds; our ability to competitively bid for municipal
contracts; price fluctuations in our product costs; our ability to
manage our inventory effectively, including during periods of
supply chain disruptions; risks involved with acquisitions and
other strategic transactions, including our ability to identify,
acquire, close or integrate acquisition targets successfully; the
fragmented and highly competitive markets in which we compete and
consolidation within our industry; the development of alternatives
to distributors of our products in the supply chain; our ability to
hire, engage and retain key personnel, including sales
representatives, qualified branch, district and regional managers
and senior management; our ability to identify, develop and
maintain relationships with a sufficient number of qualified
suppliers and the potential that our exclusive or restrictive
supplier distribution rights are terminated; the availability of
freight; the ability of our customers to make payments on credit
sales; changes in supplier rebates or other terms of our supplier
agreements; our ability to identify and introduce new products and
product lines effectively; the spread of, and response to, public
health crises, and the inability to predict the ultimate impact on
us; costs and potential liabilities or obligations imposed by
environmental, health and safety laws and requirements; regulatory
change and the costs of compliance with regulation; changes in
stakeholder expectations in respect of environmental, social and
governance and sustainability practices; exposure to product
liability, construction defect and warranty claims and other
litigation and legal proceedings; potential harm to our reputation;
difficulties with or interruptions of our fabrication services;
safety and labor risks associated with the distribution of our
products; interruptions in the proper functioning of our and our
third-party service providers' information systems, including from
cybersecurity threats; impairment in the carrying value of
goodwill, intangible assets or other long-lived assets; our ability
to continue our customer relationships with short-term contracts;
risks associated with exporting our products internationally; our
ability to maintain effective internal controls over financial
reporting and remediate any material weaknesses; our indebtedness
and the potential that we may incur additional indebtedness that
might restrict our operating flexibility; the limitations and
restrictions in the agreements governing our indebtedness, the
Amended and Restated Limited Partnership Agreement of Core &
Main Holdings, LP, as amended, and the Tax Receivable Agreements
(each as defined in our Annual Report on Form 10-K for the fiscal
year ended January 28, 2024); increases in interest rates; changes
in our credit ratings and outlook; our ability to generate the
significant amount of cash needed to service our indebtedness; our
organizational structure, including our payment obligations under
the Tax Receivable Agreements, which may be significant; our
ability to sustain an active, liquid trading market for our Class A
common stock; and risks related to other factors discussed under
“Risk Factors” in our Annual Report on Form 10-K for the fiscal
year ended January 28, 2024.
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
Six Months Ended
July 28, 2024
July 30, 2023
July 28, 2024
July 30, 2023
Net sales
$
1,964
$
1,861
$
3,705
$
3,435
Cost of sales
1,446
1,360
2,719
2,495
Gross profit
518
501
986
940
Operating expenses:
Selling, general and administrative
268
238
525
461
Depreciation and amortization
46
37
89
72
Total operating expenses
314
275
614
533
Operating income
204
226
372
407
Interest expense
36
22
70
39
Income before provision for income
taxes
168
204
302
368
Provision for income taxes
42
40
75
71
Net income
126
164
227
297
Less: net income attributable to
non-controlling interests
7
54
13
101
Net income attributable to Core &
Main, Inc.
$
119
$
110
$
214
$
196
Earnings per share
Basic
$
0.62
$
0.66
$
1.11
$
1.16
Diluted
$
0.61
$
0.66
$
1.11
$
1.15
Number of shares used in computing
EPS
Basic
192,797,961
167,312,292
192,495,255
169,474,741
Diluted
202,667,354
228,983,281
202,640,993
236,375,917
CORE & MAIN, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
Amounts in millions (except share
and per share data), unaudited
July 28, 2024
January 28, 2024
ASSETS
Current assets:
Cash and cash equivalents
$
13
$
1
Receivables, net of allowance for credit
losses of $18 and $12, respectively
1,294
973
Inventories
959
766
Prepaid expenses and other current
assets
52
33
Total current assets
2,318
1,773
Property, plant and equipment, net
163
151
Operating lease right-of-use assets
206
192
Intangible assets, net
954
784
Goodwill
1,843
1,561
Deferred income taxes
559
542
Other assets
55
66
Total assets
$
6,098
$
5,069
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Current maturities of long-term debt
$
23
$
15
Accounts payable
738
504
Accrued compensation and benefits
80
106
Current operating lease liabilities
61
55
Other current liabilities
110
94
Total current liabilities
1,012
774
Long-term debt
2,404
1,863
Non-current operating lease
liabilities
146
138
Deferred income taxes
84
48
Tax receivable agreement liabilities
701
706
Other liabilities
31
16
Total liabilities
4,378
3,545
Commitments and contingencies
Class A common stock, par value $0.01 per
share, 1,000,000,000 shares authorized, 192,642,689 and 191,663,608
shares issued and outstanding as of July 28, 2024 and January 28,
2024, respectively
2
2
Class B common stock, par value $0.01 per
share, 500,000,000 shares authorized, 8,483,709 and 9,630,186
shares issued and outstanding as of July 28, 2024 and January 28,
2024, respectively
—
—
Additional paid-in capital
1,225
1,214
Retained earnings
385
189
Accumulated other comprehensive income
32
46
Total stockholders’ equity attributable to
Core & Main, Inc.
1,644
1,451
Non-controlling interests
76
73
Total stockholders’ equity
1,720
1,524
Total liabilities and stockholders’
equity
$
6,098
$
5,069
CORE & MAIN, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
Amounts in millions,
unaudited
Six Months Ended
July 28, 2024
July 30, 2023
Cash Flows From Operating
Activities:
Net income
$
227
$
297
Adjustments to reconcile net cash from
operating activities:
Depreciation and amortization
95
75
Equity-based compensation expense
7
5
Deferred income tax expense
5
2
Other
7
3
Changes in assets and liabilities:
(Increase) decrease in receivables
(263
)
(253
)
(Increase) decrease in inventories
(105
)
185
(Increase) decrease in other assets
(14
)
—
Increase (decrease) in accounts
payable
203
113
Increase (decrease) in accrued
liabilities
(36
)
(25
)
Net cash provided by operating
activities
126
402
Cash Flows From Investing
Activities:
Capital expenditures
(16
)
(15
)
Acquisitions of businesses, net of cash
acquired
(596
)
(151
)
Other
(6
)
2
Net cash used in investing activities
(618
)
(164
)
Cash Flows From Financing
Activities:
Repurchase and retirement of equity
interests
(21
)
(473
)
Distributions to non-controlling interest
holders
(7
)
(25
)
Payments pursuant to Tax Receivable
Agreements
(11
)
(5
)
Borrowings on asset-based revolving credit
facility
605
235
Repayments on asset-based revolving credit
facility
(785
)
(120
)
Issuance of long-term debt
750
—
Repayments of long-term debt
(11
)
(8
)
Debt issuance costs
(14
)
—
Other
(2
)
1
Net cash provided by (used in) financing
activities
504
(395
)
Increase (decrease) in cash and cash
equivalents
12
(157
)
Cash and cash equivalents at the beginning
of the period
1
177
Cash and cash equivalents at the end of
the period
$
13
$
20
Cash paid for interest (excluding effects
of interest rate swap)
$
95
$
59
Cash paid for taxes
84
61
Non-GAAP Financial Measures
In addition to providing results that are determined in
accordance with accounting principles generally accepted in the
United States of America ("GAAP"), we present EBITDA, Adjusted
EBITDA, Adjusted EBITDA margin, Operating Cash Flow Conversion and
Net Debt Leverage, all of 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 Core & Main, Inc., as applicable,
cash provided by or used in operating, investing or financing
activities or other financial statement data presented in our
financial statements as an indicator of our financial performance
or liquidity.
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
Six Months Ended
July 28, 2024
July 30, 2023
July 28, 2024
July 30, 2023
Net income attributable to Core &
Main, Inc.
$
119
$
110
$
214
$
196
Plus: net income attributable to
non-controlling interest
7
54
13
101
Net income
126
164
227
297
Depreciation and amortization (1)
47
37
91
73
Provision for income taxes
42
40
75
71
Interest expense
36
22
70
39
EBITDA
$
251
$
263
$
463
$
480
Equity-based compensation
4
3
7
5
Acquisition expenses (2)
2
3
4
3
Offering expenses (3)
—
1
—
2
Adjusted EBITDA
$
257
$
270
$
474
$
490
(Amounts in millions)
Twelve Months Ended
July 28, 2024
July 30, 2023
Net income attributable to Core &
Main, Inc.
$
389
$
361
Plus: net income attributable to
non-controlling interest
72
198
Net income
461
559
Depreciation and amortization (1)
167
146
Provision for income taxes
132
131
Interest expense
112
75
EBITDA
$
872
$
911
Equity-based compensation
12
9
Acquisition expenses (2)
7
6
Offering expenses (3)
3
3
Adjusted EBITDA
$
894
$
929
(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
July 28, 2024
July 30, 2023
Senior ABL Credit Facility due February
2029
$
250
$
115
Senior Term Loan due July 2028
1,455
1,470
Senior Term Loan due February 2031
747
—
Total Debt
$
2,452
$
1,585
Less: Cash & Cash Equivalents
(13
)
(20
)
Net Debt
$
2,439
$
1,565
Twelve Months Ended Adjusted EBITDA
894
929
Net Debt Leverage
2.7 x
1.7 x
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240903029981/en/
Investor Relations: Robyn Bradbury, 314-995-9116
InvestorRelations@CoreandMain.com
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