On September 4, 2024, Core & Main Inc (CNM, Financial) released its 8-K filing for the second quarter of fiscal 2024, ending July 28, 2024. Core & Main Inc is a specialty distributor focusing on water, wastewater, storm drainage, and fire protection products and services. Catering to municipalities, private water companies, and contractors, it serves municipal, non-residential, and residential markets nationwide.
Performance Overview
Core & Main Inc (CNM, Financial) reported a 5.5% increase in net sales to $1,964 million for Q2 2024, compared to $1,861 million in Q2 2023. Despite this growth, the company faced challenges, including project delays due to wet weather conditions and lower end-market volumes, which impacted overall performance.
Financial Achievements and Challenges
Gross profit increased by 3.4% to $518 million, although the gross profit margin decreased by 50 basis points to 26.4%. Net income saw a significant decline of 23.2% to $126 million, and diluted earnings per share (EPS) decreased by 7.6% to $0.61, missing the analyst estimate of $0.73. Adjusted EBITDA also fell by 4.8% to $257 million, with an adjusted EBITDA margin of 13.1%, down 140 basis points.
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.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Net Sales | $1,964 million | $1,861 million |
| Gross Profit | $518 million | $501 million |
| Net Income | $126 million | $164 million |
| Diluted EPS | $0.61 | $0.66 |
| Adjusted EBITDA | $257 million | $270 million |
Balance Sheet and Cash Flow
Core & Main Inc (CNM, Financial) reported total assets of $6,098 million as of July 28, 2024, up from $5,069 million as of January 28, 2024. The company’s net debt stood at $2,439 million, with a net debt leverage ratio of 2.7x, up from 1.7x in the previous year. Net cash provided by operating activities for Q2 2024 was $48 million, a significant decrease from $282 million in Q2 2023, primarily due to higher working capital investments and increased interest and tax payments.
Strategic Acquisitions and Share Repurchase Program
During and after the quarter, Core & Main Inc (CNM, Financial) acquired five new businesses, including EGW Utilities, Geothermal Supply Company, HM Pipe Products, GroGreen Solutions, and Green Equipment Company. These acquisitions are expected to expand the company’s geographical reach and product lines. Additionally, the company announced a $500 million share repurchase program, reflecting its commitment to returning capital to shareholders.
We continue to maintain a disciplined capital allocation strategy, balancing investments in our business with returning capital to shareholders," LeClair added.
Analysis and Outlook
While Core & Main Inc (CNM, Financial) achieved record sales, the decline in net income and EPS, along with increased SG&A expenses, presents challenges. The company’s strategic acquisitions and share repurchase program indicate a focus on long-term growth and shareholder value. However, the impact of weather disruptions and lower end-market volumes may continue to pose challenges in the near term.
For more detailed insights and analysis, visit the full 8-K filing.
Explore the complete 8-K earnings release (here) from Core & Main Inc for further details.
