Core & Main Announces Fiscal 2023 Fourth Quarter and Full-Year Results
Fiscal 2023 Fourth Quarter Results (Compared with Fiscal 2022 Fourth Quarter)
-
Net sales increased 4.8% to
$1,440 million
- Gross profit margin decreased 40 basis points to 26.7%
-
Net income of
$76 million
-
Diluted earnings per share increased 9.7% to
$0.34
-
Adjusted EBITDA (Non-GAAP) decreased 2.4% to
$160 million
-
Net cash provided by operating activities of
$294 million
Fiscal 2023 Results (Compared with Fiscal 2022)
-
Net sales increased 0.8% to a record of
$6,702 million
- Gross profit margin increased 10 basis points to 27.1%
-
Net income of
$531 million
-
Diluted earnings per share increased 0.9% to
$2.15
-
Adjusted EBITDA (Non-GAAP) decreased 2.7% to
$910 million
- Adjusted EBITDA margin (Non-GAAP) decreased 50 basis points to 13.6%
-
Net cash provided by operating activities increased
$668 million to a record of$1,069 million
- Opened 4 new locations in underserved markets
- Closed 10 acquisitions during and after the year
-
Deployed
$1.3 billion of capital to repurchase and retire 45 million shares at an average per share price of approximately$30
- Net Debt Leverage (Non-GAAP) ended the year at 2.1x following significant investments in organic growth, acquisitions and share repurchases
"Fiscal 2023 was an exceptional year for
"Our teams navigated the dynamic environment to deliver strong financial performance, including net sales of over
"I would like to thank our associates, suppliers and customers for their dedication to serving our communities and building reliable infrastructure for generations to come. I would also like to thank the board of directors for appointing me chairman of the board and trusting me to lead this great organization. We have generated a significant amount of momentum for the business in recent months between the acquisitions we completed, the internal investments we made and the value we returned to shareholders, and we look forward to capitalizing on that momentum in fiscal 2024. We have never been better positioned to compete in this highly fragmented industry and execute our strategy to capture market share while driving long-term profitable growth."
Three Months Ended
Net sales for the three months ended
Gross profit for the three months ended
Selling, general and administrative (“SG&A”) expenses for the three months ended
Net income for the three months ended
The Class A common stock basic earnings per share for the three months ended
Adjusted EBITDA for the three months ended
Fiscal Year Ended
Net sales for fiscal 2023 increased
Gross profit for fiscal 2023 increased
Selling, general and administrative expenses for fiscal 2023 increased
Net income for fiscal 2023 decreased
The Class A common stock basic earnings per share for fiscal 2023 decreased 0.5% to
Adjusted EBITDA for fiscal 2023 decreased
Liquidity and Capital Resources
Net cash provided by operating activities for fiscal 2023 was
Net debt, calculated as gross consolidated debt net of cash and cash equivalents, as
As of
On
On
Fiscal 2024 Outlook
-
Net sales of
$7,400 to$7,600 million
-
Adjusted EBITDA (Non-GAAP) of
$925 to$975 million
- Adjusted EBITDA margin (Non-GAAP) of 12.5% to 12.8%
- Operating Cash Flow Conversion (Non-GAAP) of 60% to 70% of Adjusted EBITDA
"We expect end market volumes to improve in fiscal 2024, providing a foundation for us to gain market share through the execution of our product, customer and geographic expansion initiatives," LeClair continued. "We expect the M&A we completed during and after the year to contribute 6% to 7% of our sales growth in fiscal 2024. We anticipate price contribution will be roughly flat for the year and we expect another 30 to 50 basis points of gross margin normalization from our fiscal 2023 fourth quarter results. Taken altogether, we expect net sales to range from
Conference Call & Webcast Information
An archived version of the webcast will be available immediately following the call. A slide presentation highlighting Core & Main’s results will also be made available on the Investor Relations section of Core & Main’s website prior to the call.
About
Based in
Cautionary Note Regarding Forward-Looking Statements
Certain statements contained in this press release include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include information concerning Core & Main’s financial and operating outlook, as well as any other statement that does not directly relate to any historical or current fact. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “could,” “should,” “forecasts,” “expects,” “intends,” “plans,” “anticipates,” “projects,” “outlook,” “believes,” “estimates,” “predicts,” “potential,” “continue,” “preliminary,” or the negative of these terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we can give you no assurance these expectations will prove to have been correct. These forward-looking statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to differ materially from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements.
Factors that could cause actual results and outcomes to differ from those reflected in forward-looking statements include, without limitation, declines, volatility and cyclicality in the
Additional information concerning these and other factors can be found in our filings with the
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CONSOLIDATED STATEMENTS OF OPERATIONS |
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Amounts in millions (except share and per share data) |
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|
|
|
||||||||
|
Three Months Ended |
|
Fiscal Years Ended |
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|
|
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|
|
|
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||||
|
|
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|
|
|
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||||
Net sales |
$ |
1,440 |
|
$ |
1,374 |
|
$ |
6,702 |
|
$ |
6,651 |
Cost of sales |
|
1,056 |
|
|
1,001 |
|
|
4,884 |
|
|
4,856 |
Gross profit |
|
384 |
|
|
373 |
|
|
1,818 |
|
|
1,795 |
Operating expenses: |
|
|
|
|
|
|
|
||||
Selling, general and administrative |
|
230 |
|
|
213 |
|
|
931 |
|
|
880 |
Depreciation and amortization |
|
38 |
|
|
36 |
|
|
147 |
|
|
140 |
Total operating expenses |
|
268 |
|
|
249 |
|
|
1,078 |
|
|
1,020 |
Operating income |
|
116 |
|
|
124 |
|
|
740 |
|
|
775 |
Interest expense |
|
22 |
|
|
20 |
|
|
81 |
|
|
66 |
Income before provision for income taxes |
|
94 |
|
|
104 |
|
|
659 |
|
|
709 |
Provision for income taxes |
|
18 |
|
|
20 |
|
|
128 |
|
|
128 |
Net income |
|
76 |
|
|
84 |
|
|
531 |
|
|
581 |
Less: net income attributable to non-controlling interests |
|
13 |
|
|
30 |
|
|
160 |
|
|
215 |
Net income attributable to |
$ |
63 |
|
$ |
54 |
|
$ |
371 |
|
$ |
366 |
|
|
|
|
|
|
|
|
||||
Earnings per share |
|
|
|
|
|
|
|
||||
Basic |
$ |
0.35 |
|
$ |
0.31 |
|
$ |
2.15 |
|
$ |
2.16 |
Diluted |
$ |
0.34 |
|
$ |
0.31 |
|
$ |
2.15 |
|
$ |
2.13 |
Number of shares used in computing EPS |
|
|
|
|
|
|
|
||||
Basic |
|
181,333,247 |
|
|
172,483,768 |
|
|
172,839,836 |
|
|
169,482,199 |
Diluted |
|
213,854,692 |
|
|
246,275,118 |
|
|
227,818,077 |
|
|
246,217,004 |
|
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CONSOLIDATED BALANCE SHEETS |
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Amounts in millions (except share and per share data) |
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|
|
|
|
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|
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ASSETS |
|
|
|
||
Current assets: |
|
|
|
||
Cash and cash equivalents |
$ |
1 |
|
$ |
177 |
Receivables, net of allowance for credit losses of |
|
973 |
|
|
955 |
Inventories |
|
766 |
|
|
1,047 |
Prepaid expenses and other current assets |
|
33 |
|
|
32 |
Total current assets |
|
1,773 |
|
|
2,211 |
Property, plant and equipment, net |
|
151 |
|
|
105 |
Operating lease right-of-use assets |
|
192 |
|
|
175 |
Intangible assets, net |
|
784 |
|
|
795 |
|
|
1,561 |
|
|
1,535 |
Deferred income taxes |
|
542 |
|
|
— |
Other assets |
|
66 |
|
|
88 |
Total assets |
$ |
5,069 |
|
$ |
4,909 |
|
|
|
|
||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
||
Current liabilities: |
|
|
|
||
Current maturities of long-term debt |
$ |
15 |
|
$ |
15 |
Accounts payable |
|
504 |
|
|
479 |
Accrued compensation and benefits |
|
106 |
|
|
123 |
Current operating lease liabilities |
|
55 |
|
|
54 |
Other current liabilities |
|
94 |
|
|
55 |
Total current liabilities |
|
774 |
|
|
726 |
Long-term debt |
|
1,863 |
|
|
1,444 |
Non-current operating lease liabilities |
|
138 |
|
|
121 |
Deferred income taxes |
|
48 |
|
|
9 |
Tax receivable agreement liabilities |
|
706 |
|
|
180 |
Other liabilities |
|
16 |
|
|
19 |
Total liabilities |
|
3,545 |
|
|
2,499 |
Commitments and contingencies |
|
|
|
||
Class A common stock, par value |
|
2 |
|
|
2 |
Class B common stock, par value
9,630,186 and 73,229,675 shares issued and outstanding as of
and |
|
— |
|
|
1 |
Additional paid-in capital |
|
1,214 |
|
|
1,241 |
Retained earnings |
|
189 |
|
|
458 |
Accumulated other comprehensive income |
|
46 |
|
|
45 |
Total stockholders’ equity attributable to |
|
1,451 |
|
|
1,747 |
Non-controlling interests |
|
73 |
|
|
663 |
Total stockholders’ equity |
|
1,524 |
|
|
2,410 |
Total liabilities and stockholders’ equity |
$ |
5,069 |
|
$ |
4,909 |
|
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CONSOLIDATED STATEMENTS OF CASH FLOWS |
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Amounts in millions |
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|
|
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Fiscal Years Ended |
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|
|
|
|
||||
Cash Flows From Operating Activities: |
|
|
|
||||
Net income |
$ |
531 |
|
|
$ |
581 |
|
Adjustments to reconcile net cash from operating activities: |
|
|
|
||||
Depreciation and amortization |
|
154 |
|
|
|
148 |
|
Equity-based compensation expense |
|
10 |
|
|
|
11 |
|
Other |
|
7 |
|
|
|
— |
|
Changes in assets and liabilities: |
|
|
|
||||
(Increase) decrease in receivables |
|
21 |
|
|
|
(51 |
) |
(Increase) decrease in inventories |
|
328 |
|
|
|
(149 |
) |
(Increase) decrease in other assets |
|
2 |
|
|
|
(4 |
) |
Increase (decrease) in accounts payable |
|
11 |
|
|
|
(140 |
) |
Increase (decrease) in accrued liabilities |
|
4 |
|
|
|
5 |
|
Increase (decrease) in other liabilities |
|
1 |
|
|
|
— |
|
Net cash provided by operating activities |
|
1,069 |
|
|
|
401 |
|
Cash Flows From Investing Activities: |
|
|
|
||||
Capital expenditures |
|
(39 |
) |
|
|
(25 |
) |
Acquisitions of businesses, net of cash acquired |
|
(231 |
) |
|
|
(128 |
) |
Other |
|
— |
|
|
|
1 |
|
Net cash used in investing activities |
|
(270 |
) |
|
|
(152 |
) |
Cash Flows From Financing Activities: |
|
|
|
||||
Repurchase and retirement of partnership interests |
|
(1,344 |
) |
|
|
— |
|
Distributions to non-controlling interest holders |
|
(41 |
) |
|
|
(57 |
) |
Payments pursuant to Tax Receivable Agreements |
|
(5 |
) |
|
|
— |
|
Borrowings on asset-based revolving credit facility |
|
665 |
|
|
|
244 |
|
Repayments on asset-based revolving credit facility |
|
(235 |
) |
|
|
(244 |
) |
Repayments of long-term debt |
|
(15 |
) |
|
|
(15 |
) |
Debt issuance costs |
|
— |
|
|
|
(2 |
) |
Other |
|
— |
|
|
|
1 |
|
Net cash used in financing activities |
|
(975 |
) |
|
|
(73 |
) |
(Decrease) increase in cash and cash equivalents |
|
(176 |
) |
|
|
176 |
|
Cash and cash equivalents at the beginning of the period |
|
177 |
|
|
|
1 |
|
Cash and cash equivalents at the end of the period |
$ |
1 |
|
|
$ |
177 |
|
|
|
|
|
||||
Cash paid for interest (excluding effects of interest rate swap) |
$ |
105 |
|
|
$ |
74 |
|
Cash paid for income taxes |
|
116 |
|
|
|
147 |
|
Non-GAAP Financial Measures
In addition to providing results that are determined in accordance with
We define EBITDA as net income or net income attributable to
We use EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Operating Cash Flow Conversion and Net Debt Leverage to assess the operating results and effectiveness and efficiency of our business. Adjusted EBITDA includes amounts otherwise attributable to non-controlling interests as we manage the consolidated company and evaluate operating performance in a similar manner. We present these non-GAAP financial measures because we believe that investors consider them to be important supplemental measures of performance, and we believe that these measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. Non-GAAP financial measures as reported by us may not be comparable to similarly titled metrics reported by other companies and may not be calculated in the same manner. These measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. For example, EBITDA and Adjusted EBITDA:
- do not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on debt;
- do not reflect income tax expenses, the cash requirements to pay taxes or related distributions;
- do not reflect cash requirements to replace in the future any assets being depreciated and amortized; and
- exclude certain transactions or expenses as allowed by the various agreements governing our indebtedness.
EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Operating Cash Flow Conversion and Net Debt Leverage are not alternative measures of financial performance or liquidity under GAAP and therefore should be considered in conjunction with net income, net income attributable to
No reconciliation of the estimated range for Adjusted EBITDA, Adjusted EBITDA margin or Operating Cash Flow Conversion for fiscal 2024 is included herein because we are unable to quantify certain amounts that would be required to be included in net income attributable to
The following table sets forth a reconciliation of net income or net income attributable to
(Dollar amounts in millions) |
Three Months Ended |
|
Fiscal Years Ended |
||||||||||||
|
|
|
|
|
|
|
|
||||||||
Net income attributable to |
$ |
63 |
|
|
$ |
54 |
|
|
$ |
371 |
|
|
$ |
366 |
|
Plus: net income attributable to non-controlling interests |
|
13 |
|
|
|
30 |
|
|
|
160 |
|
|
|
215 |
|
Net income |
|
76 |
|
|
|
84 |
|
|
|
531 |
|
|
|
581 |
|
Depreciation and amortization (1) |
|
38 |
|
|
|
36 |
|
|
|
149 |
|
|
|
143 |
|
Provision for income taxes |
|
18 |
|
|
|
20 |
|
|
|
128 |
|
|
|
128 |
|
Interest expense |
|
22 |
|
|
|
20 |
|
|
|
81 |
|
|
|
66 |
|
EBITDA |
$ |
154 |
|
|
$ |
160 |
|
|
$ |
889 |
|
|
$ |
918 |
|
Equity-based compensation |
|
2 |
|
|
|
2 |
|
|
|
10 |
|
|
|
11 |
|
Acquisition expenses (2) |
|
2 |
|
|
|
2 |
|
|
|
6 |
|
|
|
5 |
|
Offering expenses (3) |
|
2 |
|
|
|
— |
|
|
|
5 |
|
|
|
1 |
|
Adjusted EBITDA |
$ |
160 |
|
|
$ |
164 |
|
|
$ |
910 |
|
|
$ |
935 |
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA Margin: |
|
|
|
|
|
|
|
||||||||
|
$ |
1,440 |
|
|
$ |
1,374 |
|
|
$ |
6,702 |
|
|
$ |
6,651 |
|
Adjusted EBITDA / |
|
11.1 |
% |
|
|
11.9 |
% |
|
|
13.6 |
% |
|
|
14.1 |
% |
(1) |
|
Includes depreciation of certain assets which is reflected in “cost of sales” in our Statement of Operations. |
(2) |
|
Represents expenses associated with acquisition activities, including transaction costs, post-acquisition employee retention bonuses, severance payments, expense recognition of purchase accounting fair value adjustments (excluding amortization) and contingent consideration adjustments. |
(3) |
|
Represents costs related to secondary offerings reflected in SG&A expenses in our Statement of Operations. |
The following table sets forth a calculation of Net Debt Leverage for the periods presented:
(Dollar amounts in millions) |
|
Fiscal Years Ended |
||||||
|
|
|
|
|
||||
Senior ABL Credit Facility due |
|
$ |
430 |
|
|
$ |
— |
|
Senior Term Loan due |
|
|
1,463 |
|
|
|
1,478 |
|
Total Debt |
|
$ |
1,893 |
|
|
$ |
1,478 |
|
Less: Cash & Cash Equivalents |
|
|
(1 |
) |
|
|
(177 |
) |
Net Debt |
|
$ |
1,892 |
|
|
$ |
1,301 |
|
Twelve Months Ended Adjusted EBITDA |
|
|
910 |
|
|
|
935 |
|
Net Debt Leverage |
2.1x |
1.4x |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240318671737/en/
Investor Relations:
InvestorRelations@CoreandMain.com
Source: