Business Context and Reporting Period
Company: Core & Main, Inc. (CNM)
Filing Type: Form 10-K (Annual Report)
Fiscal Year Ended: February 1, 2026 (Fiscal 2025)
Business Overview: Core & Main is a leading specialty distributor of water, wastewater, storm drainage, and fire protection products and services. It operates a network of over 370 branches across the U.S. and Canada, serving municipal, non-residential, and residential end markets. The company estimates its addressable market at approximately $44 billion.
Key Financial Metrics
| Metric | Fiscal 2025 | Fiscal 2024 |
|---|---|---|
| Net Sales | $7,647 million | $7,441 million |
| Gross Profit | $2,059 million | $1,980 million |
| Gross Margin | 26.9% | 26.6% |
| Operating Income | $722 million | $719 million |
| Net Income | $462 million | $434 million |
| Net Income Attributable to Core & Main | $441 million | $411 million |
| Diluted EPS | $2.31 | $2.13 |
| Adjusted EBITDA | $931 million | $930 million |
| Adjusted Diluted EPS | $2.97 | $2.78 |
| Cash and Cash Equivalents | $220 million | $8 million |
| Total Debt | $2,166 million | $2,283 million |
| Operating Cash Flow | $650 million | $621 million |
Material Changes vs. Prior Period
- Revenue Growth: Net sales increased 2.8% to $7.647 billion, driven by a 4.8% increase in average daily net sales due to higher volumes and acquisitions, partially offset by one fewer selling week in Fiscal 2025 compared to Fiscal 2024.
- Margin Expansion: Gross margin improved to 26.9% from 26.6%, attributed to favorable impacts from gross margin initiatives and disciplined purchasing and pricing management.
- Expense Management: Selling, general, and administrative (SG&A) expenses increased 7.1% to $1.154 billion due to higher acquisition-related costs, personnel expenses, and inflation, offset by cost reduction initiatives.
- Interest Expense: Interest expense decreased 15.5% to $120 million, primarily due to amendments reducing the effective applicable margin on term loans, lower interest rates, and decreased borrowings under the Senior ABL Credit Facility.
- Acquisitions: The company completed acquisitions with an aggregate transaction value of $76 million in Fiscal 2025, compared to $769 million in Fiscal 2024.
Guidance, Outlook, and Risks
Outlook and Strategy: Management expects continued growth driven by municipal infrastructure spending (including the Infrastructure Investment and Jobs Act), non-residential construction recovery, and residential housing demand. The company plans to continue expanding its footprint in underpenetrated geographies, increasing share with strategic accounts, and pursuing value-enhancing acquisitions.
Capital Allocation: The Board authorized an additional $500 million to the share repurchase program in December 2025, bringing the total authorization to $1 billion. The company repurchased $155 million of Class A common stock in Fiscal 2025. No dividends are currently planned.
Key Risks and Contingencies:
- Construction Cyclicality: Approximately 56% of net sales are tied to residential and non-residential construction markets, which are sensitive to interest rates and economic conditions.
- Supply Chain and Pricing: The company faces risks from product cost fluctuations, supply chain disruptions, and tariffs, though over 75% of products are manufactured domestically.
- Debt and Liquidity: The company has significant indebtedness ($2.166 billion) with variable-rate exposure. It maintains $1.226 billion in available borrowing capacity under its Senior ABL Credit Facility.
- Tax Receivable Agreements (TRA): The company has a $720 million liability under TRAs, requiring payments of 85% of tax benefits realized from partnership interest exchanges. Future payments are expected to increase as exchanges occur.
- Cybersecurity: The company faces risks related to IT system interruptions and data breaches, though no material cybersecurity incidents were reported during the period.
Investor Verification Checklist
- Debt Covenants: Verify compliance with the Senior Term Loan and Senior ABL Credit Facility covenants, specifically the consolidated fixed charge coverage ratio and leverage ratios.
- TRA Liability: Monitor the $720 million Tax Receivable Agreement liability and the timing of future payments, which depend on taxable income generation and partnership interest exchanges.
- Acquisition Integration: Assess the integration progress and financial performance of Fiscal 2025 acquisitions (Pioneer Supply, Canada Waterworks) to ensure anticipated synergies are realized.
- Interest Rate Exposure: Evaluate the impact of potential interest rate increases on the $2.166 billion of variable-rate debt, noting the company has hedged approximately $2.2 billion via interest rate swaps.
- Share Repurchases: Track the execution of the $1 billion share repurchase program and its impact on diluted share count and EPS.