On June 4, 2024, Core & Main Inc (CNM, Financial) released its 8-K filing for the fiscal 2024 first quarter ended April 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 net sales of $1,741 million for the first quarter of fiscal 2024, a 10.6% increase compared to $1,574 million in the same period last year. However, net income decreased by 24.1% to $101 million from $133 million in the previous year. The diluted earnings per share (EPS) fell to $0.49, missing the analyst estimate of $0.51. Despite the decline in net income, the company managed to beat the revenue estimate of $1,720.07 million.
Financial Achievements and Challenges
Gross profit for the quarter increased by 6.6% to $468 million, although the gross profit margin decreased by 100 basis points to 26.9%. The decline in net income was primarily due to higher selling, general, and administrative (SG&A) expenses, which rose by 15.2% to $257 million. The increase in SG&A expenses was driven by higher personnel costs and facility expenses related to acquisitions and inflation.
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."
Income Statement Highlights
| Metric | Q1 FY2024 | Q1 FY2023 |
|---|---|---|
| Net Sales | $1,741 million | $1,574 million |
| Gross Profit | $468 million | $439 million |
| Net Income | $101 million | $133 million |
| Diluted EPS | $0.49 | $0.50 |
Balance Sheet and Cash Flow
Core & Main Inc (CNM, Financial) reported net cash provided by operating activities of $78 million, a decrease from $120 million in the same period last year. The company closed five acquisitions during and after the quarter, including Eastern Supply, Dana Kepner, ACF West, EGW Utilities, and Geothermal Supply Company. These acquisitions contributed to the increase in net sales but also led to higher SG&A expenses.
Liquidity and Capital Resources
As of April 28, 2024, Core & Main Inc (CNM, Financial) had $241 million in outstanding borrowings on its senior asset-based revolving credit facility, which provides for borrowings of up to $1,250 million. The company's net debt leverage was 2.7x, up from 1.7x in the previous year, primarily due to higher borrowings to fund acquisitions and share repurchases.
Outlook
Looking ahead, Core & Main Inc (CNM, Financial) has narrowed and raised its fiscal 2024 net sales and Adjusted EBITDA expectations to reflect recent acquisitions and first-quarter performance. The company now expects net sales to range from $7.5 to $7.6 billion and Adjusted EBITDA to range from $935 to $975 million.
We are confident our strategy will drive ongoing value creation as we continue to execute our growth and capital allocation priorities," LeClair concluded.
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.
