• Net Sales: Record net sales of over $7.4 billion for fiscal 2024, with a fourth-quarter increase of 18% to nearly $1.7 billion.
• Adjusted EBITDA: Fiscal 2024 adjusted EBITDA increased 2% to $930 million, with a fourth-quarter increase of approximately 12% to $179 million.
• Gross Margin: Fiscal 2024 gross margin at 26.6%, consistent with the fourth quarter.
• Operating Cash Flow: Generated more than $620 million in fiscal 2024.
• SG&A Expenses: Increased 21% in the fourth quarter to $279 million; fiscal 2024 SG&A increased approximately 16% to nearly $1.1 billion.
• Net Debt: Ended fiscal 2024 with net debt of roughly $2.3 billion and net debt leverage of 2.4 times.
• Share Repurchases: Deployed $176 million in fiscal 2024 to repurchase 4 million shares.
• Store Locations: Expanded footprint with more than 370 branches across 49 states.
• Acquisitions: Added 10 complementary businesses, contributing over $600 million in annual sales.
• Fiscal 2025 Outlook: Net sales expected to range from $7.6 billion to $7.8 billion, with adjusted EBITDA ranging from $950 million to $1 billion.

• Warning! GuruFocus has detected 3 Warning Signs with CRMD.

Release Date: March 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Core & Main Inc (NYSE:CNM) achieved 18% sales growth in the fourth quarter, demonstrating strong momentum.
• The company marked its 15th consecutive year of positive sales growth, with record net sales of over $7.4 billion for fiscal 2024.
• Core & Main Inc (NYSE:CNM) successfully integrated 10 complementary businesses, adding over $600 million in annual sales.
• The company has a significant opportunity to grow its market share, currently holding only 19% of a $39 billion addressable market.
• Core & Main Inc (NYSE:CNM) has a strong cash flow generation, allowing for reinvestment in growth and returning capital to shareholders through share repurchases.

Negative Points

• Gross margin for fiscal 2024 decreased by 50 basis points compared to the previous year, due to higher average cost of inventory.
• Interest expense increased significantly from $81 million to $142 million due to higher average borrowings.
• The company faces uncertainties surrounding interest rates, federal funding, and tariffs, which could impact construction activity.
• There is a potential headwind from pricing, as the company anticipates a neutral pricing environment for 2025.
• SG&A expenses increased by 21% in the fourth quarter, reflecting the impact of acquisitions and inflation.

Q & A Highlights

Q: Could you tell us what percentage of COGS is PVC today and what expectations are baked into the guidance you provided? A: Municipal PVC pipe accounts for less than 15% of our COGS. We've seen some price reductions from the high levels of '22 and '23, which contributed to a slight headwind in 2024. We expect the price environment to be neutral overall in 2025, with some price increases from suppliers likely to stick in the market. (Mark Witkowski, CFO)

Q: Can you provide some insight into first-quarter trends so far, considering weather and other factors? A: We are pleased with the start of 2025, which is in line with expectations. There was some weather impact in January, but it was expected. Our bidding activity is strong, and backlogs are looking good. (Mark Witkowski, CFO)

Q: Between residential and non-residential markets, where do you see more upside given current trends? A: We see potential upside in residential if mortgage rates decrease, releasing pent-up demand. Non-residential remains stable, supported by road and bridge projects and mega projects. Municipal spending is strong and expected to remain resilient. (Mark Witkowski, CFO)

Q: What are the key levers driving gross margin expansion in fiscal '25? A: Private label products are a significant driver, with penetration increasing from 2% to 4% of revenue. Sourcing optimization and price optimization also contribute to margin expansion. (Mark Witkowski, CFO)

Q: How does the large project pipeline look, especially with IIJA funding, and does the margin profile change for larger projects? A: We see good traction in large municipal projects with IIJA funding, particularly in water and wastewater treatment. These projects offer positive margins and long-term opportunities. Mega projects like data centers also present significant opportunities. (Steve LeClair, CEO)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.