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01/11 16:19
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary reveals strong financial performance with record sales, increased net sales guidance, and a robust share repurchase program. Despite slight declines in gross margin and increased expenses, optimistic guidance and strategic initiatives like acquisitions and private label expansion are promising. The Q&A session supports positive sentiment, with management indicating strong market positioning and potential upside in both residential and non-residential markets. The overall sentiment is positive, suggesting a likely stock price increase of 2% to 8% over the next two weeks.
Net Sales Q4 2024 $1.7 billion, up 18% year-over-year; driven by acquisitions contributing about 9% and an extra selling week.
Net Sales FY 2024 $7.4 billion, up approximately 11% year-over-year; growth driven by acquisitions (9 points), organic market share gains, and a 2-point contribution from the 53rd selling week.
Gross Margin Q4 2024 26.6%, consistent with last quarter; maintained through private label, sourcing, and pricing initiatives.
Gross Margin FY 2024 26.6%, down from 27.1% in FY 2023; decline attributed to higher average cost of inventory.
SG&A Expenses Q4 2024 $279 million, up 21% year-over-year; increase due to acquisitions, inflation, growth investments, and costs from the 53rd week.
SG&A Expenses FY 2024 $1.1 billion, up approximately 16% year-over-year; primarily due to acquisitions, inflation, growth investments, and costs from the 53rd week.
Adjusted EBITDA Q4 2024 $179 million, up approximately 12% year-over-year; adjusted EBITDA margin decreased 60 basis points to 10.5%.
Adjusted EBITDA FY 2024 $930 million, up 2% year-over-year; adjusted EBITDA margin decreased 110 basis points to 12.5%.
Interest Expense FY 2024 $142 million, up from $81 million in FY 2023; increase due to higher average borrowings, partially offset by lower rates on variable rate debt.
Provision for Income Taxes FY 2024 $143 million, up from $128 million in FY 2023; increase due to a more normalized ongoing rate and reallocation of taxes from partnership interest exchanges.
Operating Cash Flow FY 2024 $621 million; allocated to growth priorities, including $741 million on acquisitions and $176 million on share repurchases.
Net Debt FY 2024 $2.3 billion, with net debt leverage of 2.4 times; total liquidity over $1.1 billion.
Share Repurchases FY 2024 $176 million spent to buy back approximately 4 million shares at an average price of $44 per share.
New Product Development: We continue to develop a scalable assortment of private label brands and products used in water, wastewater, geosynthetics and fire protection applications. We added over 30,000 square feet of distribution space and more than 1,000 private label SKUs to our offerings since the end of last year.
Market Expansion: We opened two new locations in attractive markets during the year to expand our reach, building on our commitment to make our products and expertise more accessible nationwide.
Acquisition Strategy: We welcomed 10 complementary businesses to the Core & Main family, adding over $600 million of annual sales while expanding our presence in key geographies, gaining access to new product lines and adding key talent.
Sales Growth: We achieved 18% sales growth and solid gross margins in the fourth quarter, with record net sales of over $7.4 billion for fiscal 2024.
Operational Efficiency: Our teams navigated a dynamic environment to deliver strong financial performance, including adjusted EBITDA of $930 million and operating cash flow of more than $620 million.
Leadership Transition: Steve LeClair will transition to Executive Chair, with Mark Witkowski succeeding him as CEO and Robyn Bradbury becoming CFO.
Focus on Municipal Demand: Our strategy is rooted in a people-first culture, with stable, nondiscretionary municipal demand accounting for over 40% of our sales.
Executive Leadership Changes: Transition of leadership may create uncertainty among stakeholders and could impact company performance during the adjustment period.
Tariffs: Potential rising product costs due to tariffs could affect pricing strategies and profit margins, creating uncertainty in the market.
Federal Funding: Uncertainty surrounding federal funding for water infrastructure projects may limit growth opportunities in the near term.
Economic Factors: The broader macroeconomic environment may restrain investment in construction, particularly in the nonresidential sector, leading to cautious behavior from businesses.
Interest Rates: Uncertainties regarding interest rates could impact construction activity and overall market growth.
Supply Chain Challenges: The evolving tariff environment and potential supply chain disruptions may affect product availability and costs.
Market Competition: As one of only two national distributors, competitive pressures from numerous local and regional distributors could impact market share and pricing.
Leadership Transition: Steve LeClair will transition to Executive Chair, Mark Witkowski will become CEO, and Robyn Bradbury will become CFO.
Market Position: Core & Main holds a 19% share of a $39 billion addressable market, with significant growth opportunities.
Acquisition Strategy: Core & Main has completed over 40 acquisitions since 2017 and plans to continue adding businesses in 2025.
Product Expansion: The company added over 30,000 square feet of distribution space and more than 1,000 private label SKUs.
Customer Focus: Core & Main emphasizes a consultative approach to customer service, enhancing project management capabilities.
Fiscal 2025 Net Sales Guidance: Expected to range from $7.6 billion to $7.8 billion, reflecting 2% to 5% year-over-year growth.
Adjusted EBITDA Guidance: Expected to range from $950 million to $1 billion, reflecting 2% to 8% year-over-year growth.
Gross Margin Expectations: Anticipated gross margin expansion supported by private label and sourcing optimization.
Operating Cash Flow: Expected to generate strong operating cash flow, with capital allocation focused on growth and shareholder returns.
Sales Growth Drivers: Expecting 2 to 4 points of above-market volume growth through geographic expansion and new product adoption.
Share Repurchase Program: In fiscal 2024, Core & Main allocated $176 million to repurchase approximately 4 million shares under their repurchase program, at an average price of approximately $44 per share. They have returned over $1.5 billion to shareholders through share repurchases in the past two years, with $324 million remaining under the current repurchase authorization.
The earnings call summary provides mixed signals: strong financial metrics are offset by slightly lower guidance, and residential market softness is concerning. The Q&A reveals positive insights on municipal growth and smart meter adoption, but concerns about cost inflation and unclear responses temper enthusiasm. Overall, the sentiment is neutral, reflecting balanced positives and negatives.
Despite positive net sales growth and stable financial health, the outlook for the residential market is negative, with significant declines expected. While stable gross margins and strategic initiatives are positives, the lack of clear guidance on cost-out actions and organic revenue growth introduces uncertainty. The Q&A section highlighted concerns about residential market declines and management's reluctance to provide specific details, balancing the overall sentiment to neutral.
The earnings call presents a mixed picture. Financial performance shows growth in net sales and EPS, but margins have declined slightly, and there are concerns about economic conditions affecting residential construction and interest rates. The Q&A reveals management's optimism for SG&A productivity and flat pricing, but there is a lack of clarity on cost-out initiatives and residential market slowdown. Share repurchases are positive, but the guidance is cautious with only modest growth expected. Overall, the sentiment is balanced, leading to a neutral prediction for stock movement.
The earnings call summary reveals record sales and strong financial metrics, despite a slight decline in gross margin. The raised guidance for net sales and EBITDA, along with a significant share repurchase program, suggests confidence in future growth. The Q&A section indicates stable market conditions and potential for margin expansion. The positive sentiment from analysts and management's optimistic outlook, combined with strategic acquisitions and a robust cash flow, support a positive stock price movement prediction in the range of 2% to 8%.
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