Core & Main, Inc. Q4 FY2026 earnings call

Mark Witkowski discussed Core & Main's market position as a leading specialty distributor with over 225,000 products, 370+ branches, and a balanced end market. Fiscal 2025 had 16th consecutive sales growth. Organic above-market growth was within target range driven by sales initiatives and geographic expansion. Acquisitions added 2% sales growth. Brad Cowles talked about sales initiatives like meters, treatment plant, fusible HDPE, geosynthetics driving above-market growth, M&A with over 40 acquisitions since 2017, and margin expansion levers including private label, sourcing/pricing optimization, and technology.

Core & Main is a leading specialty distributor of water infrastructure products and services in North America. Municipal projects represent 44% of sales, nonresidential end market 38%, and residential lot development 18%. In fiscal 2025, net sales were $7.65 billion, adjusted EBITDA $931 million, adjusted diluted EPS $2.97, and operating cash flow $650 million. For Q4, net sales decreased 7% to $1.58 billion, gross margin 27.1% (up 50 basis points year-over-year), adjusted EBITDA $167 million (down 7% vs last year).

For fiscal 2026, expect net sales $7.8 billion to $7.9 billion, adjusted EBITDA $950 million to $980 million, and operating cash flow conversion 60% to 70% of adjusted EBITDA. Confident in municipal market stability, cautious on private construction market due to geopolitical volatility, interest rates, etc. Expect to drive above-market volume growth from sales and geographic expansion initiatives, and grow adjusted EBITDA margins while executing gross margin initiatives and cost actions.

Various risks include geopolitical volatility like the Middle East conflict impacting fuel and resin prices, which could affect operating expenses and product prices. Uncertainty in the interest rate environment and overall builder confidence impacting the private construction market. Also, potential inflation higher than expected affecting SG&A and margins.

Q: Growth disconnect vs competitors, A: Mark discussed end market presence, share gains in smart meter and treatment plant areas.

Q: Cost-out program, A: Robyn explained $30 million run rate with $5 million benefit in Q4 and remaining to hit in 2026.

Q: Energy and commodity inflation, A: Mark discussed watching fuel and resin price impacts, watching oil and gas market effects.

Q: Growth investments, A: Brad talked about investing in data center, treatment plant with resources.

Q: M&A, A: Mark said confident in pipeline with choppy M&A activity.

Q: Meters business growth, A: Brad discussed consistent low double-digit growth.

Q: Resi end market, A: Mark and Robyn discussed sequential stability and soft start to 2026.

Q: Inventory management, A: Mark said teams do well managing inventory ahead of price increases.

Q: First quarter trends and pricing, A: Robyn discussed first quarter in line with guide and PVC headwinds.

Q: Buybacks, A: Robyn said continued buybacks with ample cash flow