Core & Main (CNM) Q1 2025 earnings summary

Executive summary

• Net sales reached $1.74 billion for Q1 2024, up 11% year-over-year, driven by acquisitions and healthy end market demand.

• Adjusted EBITDA declined 1% to $217 million, with margin compressing 150 basis points to 12.5% due to gross margin normalization and higher inventory costs.

• Net income for the quarter was $101 million, down 24.1% year-over-year, primarily due to higher SG&A, amortization, and interest expenses.

• Five acquisitions closed during and after the quarter, including Dana Kepner, expanding geographic reach and product offerings.

• Operating cash flow was $78 million, reflecting positive cash generation in a seasonally lower quarter.

Financial highlights

• Gross profit increased 6.6% to $468 million, but gross margin declined to 26.9% from 27.9% year-over-year due to higher inventory costs and competitive pressures.

• Net debt leverage increased to 2.7x from 1.7x a year ago, reflecting higher borrowings for acquisitions.

• Total debt at quarter-end was $2,449 million, with $241 million outstanding on the $1,250 million ABL facility and $993 million available.

• SG&A expenses rose 15.2% to $257 million, representing 14.8% of net sales.

• Diluted EPS decreased 2% to $0.49.

Outlook and guidance

• Fiscal 2024 net sales guidance raised to $7.5–$7.6 billion, representing 12–13% year-over-year growth.

• Adjusted EBITDA guidance increased to $935–$975 million, up 3–7% year-over-year.

• M&A expected to contribute 7–8% of total sales growth in 2024; organic sales growth projected in low single digits.

• Adjusted EBITDA margin projected at 12.5–12.8% for FY24.

• End-market demand anticipated to remain solid through year-end, with continued market share gains.