Core & Main Announces Fiscal 2024 First Quarter Results
Fiscal 2024 First Quarter Results (Compared with Fiscal 2023 First Quarter)
-
Net sales increased 10.6% to
$1,741 million
-
Gross profit increased 6.6% to
$468 million ; gross profit margin decreased 100 basis points to 26.9%
-
Net income decreased 24.1% to
$101 million
-
Diluted earnings per share decreased 2.0% to
$0.49
-
Adjusted EBITDA (Non-GAAP) decreased 1.4% to
$217 million ; Adjusted EBITDA margin (Non-GAAP) was 12.5%
-
Net cash provided by operating activities was
$78 million
-
Net Debt Leverage (Non-GAAP) was 2.7x as of
April 28, 2024
-
Closed five acquisitions during and after the quarter: Eastern Supply,
Dana Kepner , ACF West,EGW Utilities andGeothermal Supply Company
"Our first quarter results demonstrate the effectiveness of our strategy and resilient business model," said
"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. We were pleased to achieve low single-digit organic net sales growth, double-digit total net sales growth and strong operating cash flow for the quarter."
"With an addressable market totaling
LeClair concluded, "I am grateful for our associates' dedication to delivering outstanding service to our customers and I am excited about what we have accomplished so far this year. We are confident our strategy will drive ongoing value creation as we continue to execute our growth and capital allocation priorities. We have many levers for driving profitable growth, the cash flow to capitalize on it and the team to execute it."
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 and diluted earnings per share for the three months ended
Adjusted EBITDA for the three months ended
Liquidity and Capital Resources
Net cash provided by operating activities for the three months ended
Net debt, calculated as gross consolidated debt net of cash and cash equivalents, as of
As of
On
On
Fiscal 2024 Outlook
"We are narrowing and raising our expectation for fiscal 2024 net sales and Adjusted EBITDA to reflect recent acquisitions and our first quarter performance," LeClair continued. "End market demand has been solid and we expect this to continue through the end of the year. We expect sales volume to more than offset slight price deflation in fiscal 2024, yielding low single-digit average daily sales growth excluding acquisitions. We expect the M&A we completed through today will contribute 7% to 8% of our net sales growth in fiscal 2024. Taken altogether, we now 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
|
||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||
Amounts in millions (except share and per share data), unaudited |
||||||
|
|
Three Months Ended |
||||
|
|
|
|
|
||
|
|
|
|
|
||
Net sales |
|
$ |
1,741 |
|
$ |
1,574 |
Cost of sales |
|
|
1,273 |
|
|
1,135 |
Gross profit |
|
|
468 |
|
|
439 |
Operating expenses: |
|
|
|
|
||
Selling, general and administrative |
|
|
257 |
|
|
223 |
Depreciation and amortization |
|
|
43 |
|
|
35 |
Total operating expenses |
|
|
300 |
|
|
258 |
Operating income |
|
|
168 |
|
|
181 |
Interest expense |
|
|
34 |
|
|
17 |
Income before provision for income taxes |
|
|
134 |
|
|
164 |
Provision for income taxes |
|
|
33 |
|
|
31 |
Net income |
|
|
101 |
|
|
133 |
Less: net income attributable to non-controlling interests |
|
|
6 |
|
|
47 |
Net income attributable to |
|
$ |
95 |
|
$ |
86 |
|
|
|
|
|
||
Earnings per share |
|
|
|
|
||
Basic |
|
$ |
0.49 |
|
$ |
0.50 |
Diluted |
|
$ |
0.49 |
|
$ |
0.50 |
Number of shares used in computing EPS |
|
|
|
|
||
Basic |
|
|
192,194,061 |
|
|
171,597,317 |
Diluted |
|
|
202,615,824 |
|
|
243,716,764 |
|
|||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||
Amounts in millions (except share and per share data), unaudited |
|||||
|
|
|
|
||
ASSETS |
|
|
|
||
Current assets: |
|
|
|
||
Cash and cash equivalents |
$ |
30 |
|
$ |
1 |
Receivables, net of allowance for credit losses of |
|
1,200 |
|
|
973 |
Inventories |
|
945 |
|
|
766 |
Prepaid expenses and other current assets |
|
48 |
|
|
33 |
Total current assets |
|
2,223 |
|
|
1,773 |
Property, plant and equipment, net |
|
160 |
|
|
151 |
Operating lease right-of-use assets |
|
206 |
|
|
192 |
Intangible assets, net |
|
971 |
|
|
784 |
|
|
1,845 |
|
|
1,561 |
Deferred income taxes |
|
546 |
|
|
542 |
Other assets |
|
90 |
|
|
66 |
Total assets |
$ |
6,041 |
|
$ |
5,069 |
|
|
|
|
||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
||
Current liabilities: |
|
|
|
||
Current maturities of long-term debt |
$ |
23 |
|
$ |
15 |
Accounts payable |
|
777 |
|
|
504 |
Accrued compensation and benefits |
|
68 |
|
|
106 |
Current operating lease liabilities |
|
61 |
|
|
55 |
Other current liabilities |
|
109 |
|
|
94 |
Total current liabilities |
|
1,038 |
|
|
774 |
Long-term debt |
|
2,401 |
|
|
1,863 |
Non-current operating lease liabilities |
|
145 |
|
|
138 |
Deferred income taxes |
|
92 |
|
|
48 |
Tax receivable agreement liabilities |
|
697 |
|
|
706 |
Other liabilities |
|
24 |
|
|
16 |
Total liabilities |
|
4,397 |
|
|
3,545 |
Commitments and contingencies |
|
|
|
||
Class A common stock, par value |
|
2 |
|
|
2 |
Class B common stock, par value |
|
— |
|
|
— |
Additional paid-in capital |
|
1,221 |
|
|
1,214 |
Retained earnings |
|
284 |
|
|
189 |
Accumulated other comprehensive income |
|
63 |
|
|
46 |
Total stockholders’ equity attributable to |
|
1,570 |
|
|
1,451 |
Non-controlling interests |
|
74 |
|
|
73 |
Total stockholders’ equity |
|
1,644 |
|
|
1,524 |
Total liabilities and stockholders’ equity |
$ |
6,041 |
|
$ |
5,069 |
|
|||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
Amounts in millions, unaudited |
|||||||
|
Three Months Ended |
||||||
|
|
|
|
||||
Cash Flows From Operating Activities: |
|
|
|
||||
Net income |
$ |
101 |
|
|
$ |
133 |
|
Adjustments to reconcile net cash from operating activities: |
|
|
|
||||
Depreciation and amortization |
|
46 |
|
|
|
37 |
|
Equity-based compensation expense |
|
3 |
|
|
|
2 |
|
Deferred income tax expense |
|
2 |
|
|
|
— |
|
Other |
|
2 |
|
|
|
— |
|
Changes in assets and liabilities: |
|
|
|
||||
(Increase) decrease in receivables |
|
(170 |
) |
|
|
(135 |
) |
(Increase) decrease in inventories |
|
(104 |
) |
|
|
35 |
|
(Increase) decrease in other assets |
|
(17 |
) |
|
|
(4 |
) |
Increase (decrease) in accounts payable |
|
244 |
|
|
|
98 |
|
Increase (decrease) in accrued liabilities |
|
(29 |
) |
|
|
(46 |
) |
Net cash provided by operating activities |
|
78 |
|
|
|
120 |
|
Cash Flows From Investing Activities: |
|
|
|
||||
Capital expenditures |
|
(7 |
) |
|
|
(10 |
) |
Acquisitions of businesses, net of cash acquired |
|
(564 |
) |
|
|
(64 |
) |
Other |
|
(3 |
) |
|
|
— |
|
Net cash used in investing activities |
|
(574 |
) |
|
|
(74 |
) |
Cash Flows From Financing Activities: |
|
|
|
||||
Repurchase and retirement of partnership interests |
|
— |
|
|
|
(332 |
) |
Distributions to non-controlling interest holders |
|
(4 |
) |
|
|
(10 |
) |
Payments pursuant to Tax Receivable Agreements |
|
(11 |
) |
|
|
(5 |
) |
Borrowings on asset-based revolving credit facility |
|
585 |
|
|
|
130 |
|
Repayments on asset-based revolving credit facility |
|
(774 |
) |
|
|
— |
|
Issuance of long-term debt |
|
750 |
|
|
|
— |
|
Repayments of long-term debt |
|
(6 |
) |
|
|
(4 |
) |
Debt issuance costs |
|
(12 |
) |
|
|
— |
|
Other |
|
(3 |
) |
|
|
(1 |
) |
Net cash provided by (used in) financing activities |
|
525 |
|
|
|
(222 |
) |
Increase (decrease) in cash and cash equivalents |
|
29 |
|
|
|
(176 |
) |
Cash and cash equivalents at the beginning of the period |
|
1 |
|
|
|
177 |
|
Cash and cash equivalents at the end of the period |
$ |
30 |
|
|
$ |
1 |
|
|
|
|
|
||||
Cash paid for interest (excluding effects of interest rate swap) |
$ |
34 |
|
|
$ |
28 |
|
Cash paid for taxes |
|
47 |
|
|
|
27 |
|
Non-GAAP Financial Measures
In addition to providing results that are determined in accordance with accounting principles generally accepted in
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
(Amounts in millions) |
Three Months Ended |
|
Twelve Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
||||||||
Net income attributable to |
$ |
95 |
|
|
$ |
86 |
|
|
$ |
380 |
|
|
$ |
366 |
|
Plus: net income attributable to non-controlling interest |
|
6 |
|
|
|
47 |
|
|
|
119 |
|
|
|
211 |
|
Net income |
|
101 |
|
|
|
133 |
|
|
|
499 |
|
|
|
577 |
|
Depreciation and amortization (1) |
|
44 |
|
|
|
36 |
|
|
|
157 |
|
|
|
143 |
|
Provision for income taxes |
|
33 |
|
|
|
31 |
|
|
|
130 |
|
|
|
129 |
|
Interest expense |
|
34 |
|
|
|
17 |
|
|
|
98 |
|
|
|
70 |
|
EBITDA |
$ |
212 |
|
|
$ |
217 |
|
|
$ |
884 |
|
|
$ |
919 |
|
Equity-based compensation |
|
3 |
|
|
|
2 |
|
|
|
11 |
|
|
|
10 |
|
Acquisition expenses (2) |
|
2 |
|
|
|
— |
|
|
|
8 |
|
|
|
5 |
|
Offering expenses (3) |
|
— |
|
|
|
1 |
|
|
|
4 |
|
|
|
2 |
|
Adjusted EBITDA |
$ |
217 |
|
|
$ |
220 |
|
|
$ |
907 |
|
|
$ |
936 |
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA Margin: |
|
|
|
|
|
|
|
||||||||
|
$ |
1,741 |
|
|
$ |
1,574 |
|
|
$ |
6,869 |
|
|
$ |
6,627 |
|
Adjusted EBITDA / |
|
12.5 |
% |
|
|
14.0 |
% |
|
|
13.2 |
% |
|
|
14.1 |
% |
(1) |
Includes depreciation of certain assets which are 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 and expense recognition of purchase accounting fair value adjustments (excluding amortization). |
|
|
(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:
(Amounts in millions) |
|
As of |
||||||
|
|
|
|
|
||||
Senior ABL Credit Facility due |
|
$ |
241 |
|
|
$ |
130 |
|
Senior Term Loan due |
|
|
1,459 |
|
|
|
1,474 |
|
Senior Term Loan due |
|
|
749 |
|
|
|
— |
|
Total Debt |
|
|
2,449 |
|
|
|
1,604 |
|
Less: Cash & Cash Equivalents |
|
|
(30 |
) |
|
|
(1 |
) |
Net Debt |
|
$ |
2,419 |
|
|
$ |
1,603 |
|
Twelve Months Ended Adjusted EBITDA |
|
|
907 |
|
|
|
936 |
|
Net Debt Leverage |
|
2.7 |
x |
|
1.7 |
x |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240603394382/en/
Investor Relations:
InvestorRelations@CoreandMain.com
Source: