Core & Main, Inc. Q4 FY2025 earnings call

Mark Witkowski discussed Core and Main's market position as a leading specialty distributor of water infrastructure products and services, with a portfolio of over 225,000 products, 370+ branches in US and Canada, and a balanced end market mix. Brad Coles talked about sales initiatives like meters, treatment plant, fusible HDPE, and geosynthetics growing at an average annual rate of ~14% over 5 years, geographic expansion with 6 Greenfield openings in fiscal 2025 and expected 7 - 10 in 2026, and disciplined M&A with over 40 acquisitions since 2017 adding nearly 150 branches and over $1.8B in annual sales. Robin Bradbury reviewed financial results for fiscal 2025 and 4th quarter, and discussed investments in cost actions and growth initiatives.

Core and Main is a leading specialty distributor of water infrastructure products and services in North America. Municipal projects represent 44% of sales, non-residential end market is roughly 38% of sales, and residential lot development is approximately 18% of sales. In fiscal 2025, net sales were $7.65 billion, adjusted EBITDA was $931 million, adjusted diluted EPS was $2.97, and operating cash flow was $650 million. For the fourth quarter, net sales decreased 7% to $1.58 billion, gross margin was 27.1% (up 50 basis points year-over-year), total SG&A decreased 5% to $264 million, and adjusted EBITDA was $167 million (down 7% versus last year).

For fiscal 2026, expect net sales of 7.8 - 7.9 billion dollars, adjusted EBITDA of 950 - 980 million dollars, and operating cash flow conversion of 60 - 70 percent of adjusted EBITDA. Expect to drive above market volume growth from sales and geographic expansion initiatives, including strong performance across meters and treatment plant and opening 7 - 10 greenfields. Expect to grow adjusted EBITDA margins by executing gross margin initiatives and realizing cost actions benefits.

Various risks and uncertainties that could cause actual results to differ materially from expectations, including those related to macroeconomic conditions, geopolitical volatility (like Middle East conflict and tariff uncertainties), interest rate environment, builder confidence, and potential impact of fuel and resin price increases on product costs.

Q: Growth disconnect vs largest competitors.

A: Discussed end market presence, share growth in smart meter and treatment plant areas, and exposure to data center construction.

Q: Cost out program.

A: 30 million run rate cost out, with 1M in Q3, 5M in Q4, remainder hitting in first, second, and third quarter of 2026.

Q: Energy and commodity inflation.

A: Watching fuel and resin price impacts, potential flow through to product pricing.

Q: Meters business growth.

A: Consistently low double-digit growth, large projects contributing to volume, additional resources invested.

Q: Resi market.

A: Expecting low double-digit to mid-teens decline in first half of 2026, sequentially improving.

Q: First quarter trends and pricing.

A: First quarter in line with guide, expecting first quarter to be tough comp, PVC having headwind, other product categories expected to have price increases.

Q: Buybacks.

A: Continued buybacks expected with ample cash flow and remaining authorization.