CNM - Earnings call transcript Q2 2025

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Hello, and welcome to the Core & Main Q2 2024 Earnings Call. My name is Alex. I'll be ordinating the call today. [Operator Instructions] I'll now hand over to your host, Robyn Bradbury to begin. Please go ahead.

Robyn Bradbury

you. Thank everyone. morning, Good Bradbury, Core President & Robyn Investor Finance Relations for Main. Senior is of Vice and This

and We are am call happy Executive and our Stephen fiscal Brad to our Officer; join us second our will LeClair, will and we Chief earnings this solutions Mark with quarter Cowles, Witkowski, of Brad call. Financial and efficiency President. Steve improve the I overview customers. adoption Chair update the joined effective the how our by municipal XXXX today Chief acquisitions. morning an Officer; and then for a smart today's lead evolution of of business recent our discuss for most our utility to drive latest technologies

quarter and Q&A We by a financial [indiscernible] will turn our results to then update session. over Mark to second discuss

call the presentation posted and Steve's our website. with this issued Relations of closing a release press our section conclude will We earnings morning to Investor the remarks. We

may press our and release, earnings include statements. Commission. results set projections. and made factors are the differ These cause statements Our risks and release this Such our presentation and the forth to our from and and materially press could filings uncertainties include the with Securities to in statements actual that forward-looking expectations subject risks uncertainties call during Exchange

[Audio earnings interest our now I appendix our you for We will in Thank reconciliation measures, of & non-GAAP in Gap] of business. measures assessing results be our certain Core Main. which financial found A we also and in presentation. of discuss release operating believe are your in will investor the useful can press these the

Stephen LeClair

end the I'll business overview for a the you followed updates begin with recent with and an company Good Thanks. brief everyone, morning, and & contractors thank protection our Beginning companies and municipal, by joining quarter, is nonresidential acquisitions. municipalities, for water, overview overview. of us storm and We today. distributor company of products. across water and markets. specialty a fire professional residential wastewater, leading Main serve Core drainage private

repair, products protection replacement and specialty maintenance, fire of in construction the and Our water services and are used infrastructure.

than none consists a Our suppliers customers, diverse more over more critical annual of than which XX,XXX X,XXX of for XX base account of our and states, footprint serves of branches a XXX link as X% which between revenue. across

are leader, XX% have our opportunity we addressable market. fragmented of we billion industry We an believe yet estimate only we $XX share is long-term Therefore, a growth significant.

products Main struggling X.X lose infrastructure, of It existing minutes. by critical needs estimated roughly strengthen our water and built water of also X are that will communities of of Core in and life, significant infrastructure. in disruptions, utilities XX% preventing gallons Our and scarcity solutions plants with in U.S. in to quality, billion treatment & water fragile the surplus approximately from supports from trillion moderate risk Many systems, aging growing these revenue. providing continue demand modern innovative materials, pipes XXXX. There the useful and state water water improving systems maintain all and and expertise remains leaky in water reducing the infrastructure aging ago, are for grow. we pipes, were Without the every contamination life up and role floods, XXXX, $X beyond of and Canada their in break live, which equivalent environmental prone quality to a is lost is meet standards. modernization, critical failure. to to ensuring inefficiencies breaks in of In of decades of XX% the water technologies investment play water XXX,XXX other representing water U.S. work annually repair, main increasingly and a water year, now support equivalent example, main and across every play. the to

Turning now Executive in newly acquired transition. leadership in of Vice of last years, Core with will role assisting business recently is businesses, years as leading Main than protection continue organizational led to core serving line. President. more [indiscernible] After product President Jack Brad update. Jack his of with X which fire the new changes Cowles Brad integration has lead support was for more the previously announced to & first most the organization, leadership the transitioned July. our as the the [indiscernible] to we Starting XX role now the into experience product his expanding waterworks Jack. line, of by has

most our and perspective the margin have joined will Mike [indiscernible], strategies line, led new responsibility and sales protection Executive bringing initiatives. Advanced operations business enhancement and to other to fire In national leadership expertise commercial a to Brad I'm engineering, roles. accounts have and Vice Mike Hubert field development, initiatives. having continue of recently high-growth for Sales overseeing teams. of he and served product addition certain Systems, also brings to and He where waterworks as growth fresh wealth a President for and sales excited experience, Drainage oversaw prior sales retail

milestone thrilled opening record HM Core and into believe leadership our on shareholder team perspective an of We new our proven exist that to us are be strategy marks is strengths his acquisition expanding Main. By value. to have through August new key Pipe opportunities and the progressing fire protection Canada track drive solutions, line contributing integration approximately for the will growth anticipated, profitable & growth of and We the our drainage helping broaden a enhance customer Products. and roughly our Mike commitment for This with board, it growth, market, of we our acquisition ongoing for our provider by long-term capture critical addressable and in market the underscores move our as opportunities in important This allowing achieved the to and opportunity operations storm X% base. offering new to leading to first a becoming and billion. The water, of footprint wastewater, our are to the into our service expands recent acquisitions year. quarter waterworks $X venture Canadian acquisitions us top aligning

the process company each we integration flexible and welcome well-defined, needs Main scalable the of and on into Core Our family. playbook & are highly based

We successful with also acquisitions, new and been in able successfully to to we've growth. been strong all have gain synergies to access compound nearly and talent platforms of importantly, more attract our driving

to Moving our end markets.

inevitably, during Our many second the lower blanketed delays results Heavy expectations, quarter, primarily due operation of rain and wet market conditions and of the quarter from were heavy comparably below volumes. complicating to our weather flooding project country requires the parts end delays, we which a machinery operations contractors the experienced job secured quarter. to is to and construction utility until stop can be leading challenge during project for what making Persistent underground often flooding [indiscernible] precipitation underground and contractors. sites

but customers weather were Gap] to July quarter's investor appendix a highlight last capacity weather for patterns, indicated we During our not we were typical the severity not geographies the of does and an of we lost of more Generally, did that we the the immediate recovery of returned presentation wet call, the labor the wet sales a surge May construction selling impacted. May allow see and to our July. in wet when delayed see season June. in of in weather [Audio weather weather positive some projects if a continued of momentum quarter, the its to weaken benefit but will longer for to projects see but divided improve, due to residential pushed We activity likely a of of expect into experience in it began or interest rates. smaller may the the began the for anticipation potential XXXX. Residential we most phases, we quarter. these lot be in into Otherwise, patterns the fourth development we lower experiencing

quarter and current timing optimistic the project wet temporary. Municipal and to end the local slightly housing land the saw quarter, assess than developed pent-up infrastructure. the lower the have to been we Given delays that difficult market in remain growing term. it activity, in for expected, in our trends aging the the given the we optimistic need primarily the level. that existing significant near But volumes due We of is given demand, at support demand this remain bidding the for project the to late weather state backlogs are about

As break get challenging prospect this outpace the environment of growth reflected start relate to dates back, achieved our weather nonresidential macroeconomic we of financial this the pushed interest and the performance projects marketing trend and mixed in where in starting the end continue recently. activity our meter are sales growth a rate easing project end and quarter. initiative quarter, to protection assessing we markets. we the performance XX% began conditions, could have for we meter our ground to is construction owners the to saw landscape fire projects. Despite see improve existing new before We some quarter. waiting developers conditions of the for projects of nonresidential of which expected, the seen Toward fewer believe and

new able this the the as initiatives the of and thrilled volumes expectations, margins being number year are We chain private we well our supporting we've as line is improved performance supply projects the second sourcing that in through with our bid quarter realize with Gross on driven by and primarily in M&A. to are label as driving. were solid as synergies of the been well awarded

single products customers operating to relationships geographies, of We term. solutions shortly talent. strong acquisitions. quarter, provide projects around new to new access them opportunities drive during successfully. [indiscernible], expansion the and the products that EGW sustainable and The at and and Their product our delivering We a or to [indiscernible] of Texas. M&A over infrastructure to a to providing location value-add X underground the to expect needed offers EGW commitment at actionable acquired which team resources key expanding the Turning Gap] Utilities services addition new has has we long maintain enabled and support [Audio deep growth distributor complete each been in with maintaining customer will recent lines businesses pipeline of after

and and Ontario. other Their Florida EGW core Kentucky. usable part from primarily knowledge opportunities an site polyethylene to look prevention Pipe fusible a in excited Since utilities an and operating and utility will our look to Fort X provides & main Two the a enhances robust dependable of acquisition growth along are in We partnership and and of believe extensive for and geotextile value-added damage services. are distributor in location private and additional Main locations at we [Audio equipment capacity shares location $X training roughly and family expertise is initial industry-leading in offering wastewater products to family. them industry related with expertise supply significant can team and partnering company our the both their to to forward with support ongoing XXXX, high-density and solutions underground new a in and HDPE. commitment excellent the has offering have expanding well. GoGreen team to served The being of opportunities erosion customers us. Geothermal to strong Southeast. in our geothermal, a the sewer products. customers' single [indiscernible] contractors, strong in forward Gap] capabilities which we Texas. leverage Core their exciting and market GSE in collective of our ability Pipe our into pipe provide needs. deliver acquisition single water They and underground fabricator of leading products, connections new one control by the a solutions municipalities projects. catalyst customer industry and customers Mississippi. reputation growth Adding in will complement The market. and construction team We the provider resource Kitchener, we Company industries needs utilizing repair Worth, from is started at the well area of infrastructure They create a Their is of products product expertise and Solutions meet portfolio equipment HM [indiscernible] and a locations: London consistently to and we drive a to important new label X has in existing exceptionally with the existing relationships brings happy distributor billion accelerate Their comprehensive a as products across industrial this variety company fits client of with water Canada, Equipment X have utility Green to out distributor industry about this professional on HDPEproduct water needs. positive in and Georgia, the states, impact a operate offering, protection in partner customers. HM as one

We Core to are them excited welcome team. & the to Main

about wrapping want Before industry. some up, in our address recent I to reports pricing

products industry competitive project-based, drivers previous we fragmented highly on sequence local a are a are federal the discussed in to are pricing As Most us we project. primary suite our supply customers sales the various dynamics. efficiently deliver of often look complete and specifications, state meet our products and where and full the for of to and characteristics operate and to local, must requirements. calls, These in demand of subject

Our local transparent they which factors, the bids the product. pricing. Pricing with local many the on in and can to market, the procured competition field by and based are nearly teams, all are different completed we including and provided fair, for the price competitive the complexity of and project, customer the local demand be specifications

in disruption, categories a Over price the strong experienced course last of costs. and few operating of various product increases demand increasing years, the we chain supply have as result

like copper specifications but not must and specific we our them do fair steel of pricing municipal products specified pricing, provide we overall an transparent industry. for commodity is customers regulated also and or help Our water products sold overall Not our sell we tubing, pipe part typically municipal our what solution. pipe and often as industries. with we than as alternative provide are experience, consider which them pipe In pipe regulations different project specific only products water to as and more across municipal resilient highly true and cost. their are reduce They be industry to made meet infrastructure are

may manufacturers pipe made statements Some of of the have PVC you the against PVC some regarding pricing. seen

industry. be a in in a to are of any involved supply to with our prices pride our take clear, price fixing fair baseless. on that suggesting was are great valued in ethical not manner. be commitment going This Core any & made statements includes and And Main of member aware We We their customers providing chain. working to our

related this further comment or to unsubstantiated matter. made not against will statements main We any claims on core

the look against our we long-term As to ahead on XXXX, executing we will strategy. of remainder be focused

with to I'm to us proud and many rose those quarter their markets. This and to end disruptive despite But presented execute. ability stay and sluggish occasion teams focused weather challenges challenges, our of from the resilience

so you confident to vision. of to leading do We continued to over We'll turn solutions. continue our to our long-term Brad advanced to our regardless ability growth. conditions. Thank one it of trust drive our near-term your I long-term are leverage Cowles position support discuss strengths for in providers now of metering in nation's and economic will as the

Brad Cowles

to company. XXXX Good initiatives when my I've the time, who & Main. opportunity faster as Steve. allowed with an have of My the the quick decade became I grow spent name return my morning, independent to Main XX I years joined line HD markets, Since of Brad us several is including Thanks, a Chief the Officer. of my and routes XX several of our to started led Coles, an lead will the I geographies. Today, I smart than in that when President during operating everyone. relationships & over company. yet acquisitions I Core Supply expansions, Information more that I eventually than product have offering. Then new the ago, tire Depot national end Core underlying A & journey to company's and becoming had discuss presence technology account introduction those engineer career Main met, for the Home over with evolution Core formation extension our began of Michelin integration in the utility our not

thousands to to place of States. water nation's to another of regional to innovation attention municipality the potential rely the water close one input complement X/X. with with and United check is This very of on read also only technologies into to [indiscernible] are billing billing, record manual but manufacturers, still labor get we drive errors, or systems municipalities national local, that and drive and system. customers are at Many and access meter or which prone at resources drive revenue their Gap] which for intensive, municipalities leading to top in usage largest delayed [Audio customer by and across meter, loss products meters We process dissatisfaction meters, distributors us each or not the inaccurate data physically

grow, to more communities even As demand become effectively. outdated systems challenging these increases, water manage

we into solutions to decade these advanced have also For accuracy, the metering operations. own solutions that wirelessly and advanced municipal customers now, Once and over improve save found a more we become our solutions face metering data our labor selling have these in that been customers automatically but real technology and complex, water usage time. challenges and as transmit their implemented, implementing more integrating

utility the and integration challenges solutions turnkey delivering by those directly smart tackling game on of Our by behalf the of is customer. strategy changing and execution

ability these Our capabilities are including management, benefits monitoring then software billing, start proactively timely address water and completed quickly the water and ensure more service accurate of with lowers that and users. this to municipality, immediate overall helps they meter installation Proactive like usage integration and improves monitoring loss, detect leaks project the to data costs, end efficiently unusual patterns. or projects issues real-time the and delivery deliver reduce to operational

trends, provide, approach also data systems reliable hardware resource extends analyzing conservation supports services only meter future targeted efforts. lifespan but also usage their and resilient offer decisions allocation, a goals, by existing sustainability and pressure to are not about the advanced ensuring analytics plan and of that implement water municipalities come. This the for water generations to growth we data-driven infrastructure, optimize infrastructure Beyond informed make and installation for empower municipality patterns we can and

without is is offering of needs tailored can the America products compromising to easily examples included as X,XXX scalability utility in illustration, the Pocomoke support grow, a of communities large increasing features [indiscernible] local small technology rural Main partnered its technology. Despite infrastructure our meet demand newest metering population the and capabilities. utility. ensuring presence the and their Maryland of are or can both each & are different town accuracy the the By adopt of area, because and efficiency. XXX,XXX we be water smart in The complexity, place system to two with offering of of recent with project a communities expand One in standout metropolitan a our Core whether population necessary our with of of and or way City, of a size communities value-added nearly helping management these

Our metering even specialists manage integrate become installation, life product. to the of metering have partner product a the for software trusted and networks simplify their

are of We and XXX% than helping community leaks at proud cutting-edge sensing nation faster issues to and the Lauderdale to other be their become pressure accurately more before. ever in that Fort first meters helps with system equip to identify the technology solution

Solutions increased manufacturers like the time ultimately protect to directly burden satisfaction. would of sometimes and to municipalities. large assistant community ease revenues, save sell their Historically, management ease municipalities meter would

However, service presence our solutions, us projects, of these life throughout turnkey which local in the to builds unique be customers. municipal our enables offering trust on-site and

many result, examples a these through sold Core seeing solutions large more of we're As Main. &

lines have those ourselves helped the that the enable growth. gain us We across the to of meter in nation over access will relationships and align top to meter lot with done work a key long-term geographies premier years suppliers

growth solutions and customers our comprehensive responding built have significant that the of us opportunities. directly been provided to Our have needs by listening

distributor projects of the provide sales of and the generate As we as and resulted decade. This and CAGR the the as demand in meters, X% last installed the services. recurring has then, communities base, over these grow revenue exclusive net expand a win more we

outlook. growth by turn second to from I expect quarter very now Witkowski the projects in and above-market Mark results discuss over and Fort size we updated continue that, will into on ahead, to our range Mark. Pokomok well City to are future. With it drive will XXXX We encouraged fiscal success financial to that Lauderdale our Go

Mark Witkowski

XX.X% the about highlights Gross from everyone. in approximately prior coupled stable X% $X.XX joining for I'll Well our thanks inventory. and was sales inventory sequentially the new us cost quarterly Good by begin done, grew second today. impacted acquisitions. net The with points our our of at with record of to the basis Brad, morning, XX finished expectations. X which margins quarter, first offset average billion quarter selling Pricing and growth year, end a the expectations. Gross line our We year, results. in were a for comparably was of margin the lower activity levels Steve compared from to achieved of with through quarter this of growth acquisitions. markets disruptive points mentioned by last higher in lower and from with weather his driven in we were a remarks, we cost year when XX.X% consistent inventory with compared optimizing difference still partially

that demand unusual [ gross supply now margins. have in We and anniversaried dynamics ] our chain drove fluctuations

administrative to of Going forward, XX% to in the driving enhancement initiatives. Selling, will continue million. $XXX on we increased through our margin gross execution expenses quarter and focus general second the

essentially growth compared acquisitions, as to SG&A and in both first the as SG&A by costs. immediate were revenues we offset margins, reductions in compensation lower year variable last reduction experienced from resulting expenses. quarter organic a growth investments personnel sequentially Excluding in flat moderated expenses were in

in our of term was million debt. Provision out compared primarily variable the ABL under compensation structure addition borrowings in million year. personnel The the allows senior enables was which with $XX in us due take higher cost Our quarter increase loan quickly increase for the the and rate second the $XX business. Interest $XX million compared our on interest expense reduction to $XXX second XXXX, quarter a prior in of taxes for due expenses, to year. in $XX credit rates an prior income facility million in variable the was with

was this and diluted to approximately conjunction per partnership secondary net in quarter and The in respectively. primarily The sales tax in The and fiscal XX% $XXX our primarily rate lower following to the tax in earnings effective of increase during share primarily year share million due repurchase in in fiscal income year increase by interest completed income, earnings XXXX. We we operating the net lower recorded an in partially $X.XX. count Diluted transactions exchange and decline per decreased compared prior the in to repurchased due shares interest XX reduction with $XXX offset EBITDA was the income in and expense. second approximately was share million the income and last with XXXX. Adjusted X% XX.X%, decrease year. to effective adjusted to offerings margin million, of decreased in were in rates net margin Our quarter to million second the percentage XXX due and EBITDA $XXX EBITDA decreased as decrease adjusted to XX.X%. profit due SG&A points X% higher lower was The expenses. basis a of in gross net

and to Now flow an in the provide a quarter. with cash second pleased balance we Net cash on are provided million, $XX by lower activities result and I'd in update this was what sheet. company is quarter typically like our generation cash

is year, the XX% most the our Given year-to-date target the expectation different. With our exceed cash our from operating half we in flow the of to $XXX we business, this seasonal generate for of full year year. our needs adjusted EBITDA million, are for on pace pattern XX% typically of of of second to working no and conversion for capital cash

approved over [indiscernible] million $XXX Green June, commitment quarter: during second million the under geothermal repurchased capital complete to X we additional X million returning a our approximately product paid in those. In in third shareholders. quarter We to remaining Equipment We disciplined and Company to share for to $XXX $XXX acquisitions complete $XX now repurchase complete deployed have Directors generating announced acquisitions and to and after allocation and nearly quarter, having after continue Solutions EGW the shares expect million capital pay shortly and currently strategy, a of growth $XXX acquisitions. quarter, to our HM shareholders. reflecting authorization. during investments balancing returns Board maintain We We with supply the program, XXX,XXX to the the million over the

of liquidity our forma nearly Excluding the senior $X X.Xx, were of margin the annual pro in closed leverage May available points of on our or no changes There savings was points, other where facility. interest XXXX maturities current we million. from debt in refinancing the loan is resulting and for terms acquisitions, term billion. We applicable reduced the basis net the end the quarter of basis XXX due our $X to at XXX effect approximately to

outlook we Q&A, prepared head Before a fiscal with XXXX. new on remarks up for my to our discussion I'll wrap

We growth likely the projects. anticipated macroeconomic second developers landscape and be some assess as will in new to the expect year we into starting half of of the the pushed continue owners that before XXXX project

to As markets our to to compared of up ability markets to be year for and the such, to long-term though, our now the we quarter. We demand expect down expectation optimistic, flat slightly end about very flat slightly of our above-market our last drive remain growth. end characteristics

second achieved half that positive August, to accelerate optimism. that supports poised the growth year. We bidding strong of which Our activity is volumes and also the field our project backlogs are in and the sentiment in are sales from

done primary expect will they points our a achieved [Audio expectation gross the through driving and first our have synergies allow the gross to through that sustain margin levers structurally and future. margins and label enhancement M&A allowed margins continue to normalization and remain we've XXX We today initiatives well acquisitive mid-XX% the expect to half to have as gross previously is behind is These the in opportunities us of range, initiatives. strategy, over completed contribute us the private Gross gross throughout through are XXX on of us referenced basis the margins the sustained that a through years, expansion and the Gap] enhancing will M&A of we that progress sequential addition fantastic job acquisition basis. We've sourcing they margin year. in the

full volumes, our net As $X.X lowering million a sales market full adjusted million. result we lowering to billion, we to $X.X $XXX and are are range of to year lower-than-expected range billion to $XXX EBITDA our end year

We operating cash capital our are our a range to raising flow working EBITDA XX% disciplined management. adjusted result conversion of as XX% of to

the through this are for comments open this focus wrap morning, growth, economic on business long-term operating shareholder enable up like and we the up opportunities attractive continuing current returns. superior it to At questions. we As I'd in invest performance to our reiterating our backdrop while that managing time,

Operator

Our today Instructions] comes first Thompson Research from Kathryn for question [Operator Group. of Thompson

Kathryn Thompson

Just in my a sales the higher. and housekeeping first quarter little question around is bit more just SG&A

You our the as out mostly the for little for and should active puts for and which M&A related the Could in in related was had has that very quarter what year? expect takes the it quarter. we noted SG&A to remainder to bit parse greater the that detail been and you activity, other of a factors

Mark Witkowski

This is Mark.

These the a new quarter, synergies we That as through due about identified On we of SG&A, we cost entirely $XX higher was some acquired of grew scale we the these there. average, to definitely by structure have those a SG&A, second acquired when little time as and to SG&A. for synergies ways our than those acquisitions, work we SG&A we our through find then work businesses, expect to new margins. And basically add some been products, over period enhance million.

it as From we're not that organic something usually able scale was to an out for but we SG&A that's grow. we flat standpoint, take the quarter. So roughly immediately, pretty significantly

in investments of by reductions we've make to the compensation. variable continued experienced of immediate some some were with offset largely that growth. have We Those our

identified much pattern. acquired more you'll say So SG&A I'd that start those as SG&A growth are with really typical the we get drivers. absorb some in main back SG&A, synergies, forward line seeing we of some look that as

Kathryn Thompson

a quite had of headwinds. handful You

you're for current market outperforming the obviously a are about percentage lower softening pricing, are and puts navigate of are you're any demand, And you How you the weather, not commodity realities shifts a what the margin type commodity-type of You although reminder, takes commodity the more facing seeing and commentary industry had as in to pricing, managing from any products expectations still but and meaningful meeting doing manage just -- standpoint, those a cost products? sold? quarter. goods to just from how

Stephen LeClair

Yes. is Yes, Steve. Kathryn, this

and put second last the from alarm for temporary. about quarter. a chart about that a but factors really the in of as mentioned, really there it a challenge, scale there. Texas impacted was were this. quarter. And so which a saw upper to That situation. we really XX from Midwest in of of May by standpoint, talk generally to and we weather caught the you up performance our view external some May in shared pervasive was in about little in we that weather don't us. the bit were really As was weather, way We the bit results real impacting a wide lot There close just certainly the quarter of that this all We an this branches us

And our of branches some are branches. top-performing those

that May the for amplified we June and impact in that had So sure.

or You estimating was million couple that, we're that about around $XX a sales X% so. of headwind there, somewhere

softness, will that and couple appropriately market that take The anticipating impact historic regards sizing Texas, where season. to of that. that that at a of they've little for come up on in commodity impacted to with see steel areas, that are fire we going shape working as been We're In Upper we're in line. shape product see We're some there's how really Midwest. really little to bit a a starting talked So takes nonresidential, about back. have other protection already pipe, in nonconstruction And the to longer the those our of lows.

piece to So end lot we're we've do and that lot initiatives look and at to gross down our the in of believe incredibly markets had some seeing go label of a be business. right the private of really of terms temporary field backlog drag ability margin I M&A and our controllables accelerate that. strong. from activity the in a positivity performance, look this back to drive had and our is that continue harness lot long our still some the in of offset space all a We in drive a term bidding a to able and and lot helped now the what of have coming to the of in But

and for a of And certainly good that. of the tough headwinds, but offset to quarter feel long we term. portion able the build were we some about So those for solid a

Operator

question Manthey Baird. David next Our from comes with

David Manthey

of A contingency in gross or to to from And on related regardless percentage with suppliers pipe material couple have business and else, here again, or anything you plan happens that. PVC of pipe. today? rightsize Approximately whatever of to PVC sort margin drop see PVC you the of if what pipe further a And some quick do sales the pricing? were dollars questions

Mark Witkowski

Thanks, Yes. David. This is Mark.

In which those is terms ductal I'd made XX% commodity business balance pipe I be between tubing, to nature. of nature. related of business I'd split municipal that of of specified that's type is talked pipe, our PVC fire things that think the regarding of About pipe say the of our PVC that we've about about, would contribution, XX% valves previous products, and steel, go pipe. being evenly municipal back our to and things we've to categories copper X% roughly more highly hydrant related to business municipal iron comments The

of this we've talked planning highly anything business In like as flexible. contingency terms or is about, that,

personnel a Our that lot cost expenses of structure is largely the with variable have. we

various a this for or growth incredible operating planning through cycles. an business experience So got the various decline of like moderation amount and of we in we've scenarios do of lot feel company

to continue now. So invest that's feel we our the of right right characteristics and intact, way business this to like demand opportunities are really, the continue initiatives in margin we our do we planned. growth now, long-term for and enhancement, focus as But

David Manthey

you you things the that can square to weather-related And recover later this during growth shortfall to that. Okay. what saw And I'm trying second, I'm can with strong belief to together, that in trying those if that you quarter? versus put quantify you saw just then help that me with your not the just X will year. you And differentiate sales the August,

Mark Witkowski

volume I'd we that Dave. expected. the we've in some what contributions sure, trend organic on good solid was to a growth say of experienced August, what back with experienced we top Yes, that was acquisition

So patterns. growth August back pattern. what expected a weather normal the line and say, into kind getting normal of I considered trend with, We we got into good with felt I'd

is we're expecting kind given what year we unless geographies. maybe not in our So customers, just longer the of at a experienced seasonal surge certain capacity that a Northern beyond

the So be a year, to could season longer year. say, but little if baked haven't a this upside end that necessarily I'd more favorable see we we in,

Operator

next comes Matthew Our question Barclays. from of Bouley

Matthew Bouley

that normalization it is the really think private now label side, I gross on around initiatives, et the was margin On And you. focusing like commentary your fully sounded cetera. behind from lot the a and of here forward sourcing going

and So to increasing margins that implication color half? Or on this, or in cadence expect is gross me the missed stable forward is going the initiatives? with any these but be given that the you implication I if second -- do forgive additional margins

Mark Witkowski

Yes. Sure, Matt. Thanks for the question.

to sequential As go did expect you're QX then line And experienced. we grow QX gross to margin private those gross with It we from we our reduction last as about QX other to margins be right, able expect right we where we have talked given was finished expectations. the from in optimization things. initiatives sourcing forward, that that among quarter, label with we we

now were is So of is normalization going aware we and our expecting we'll us. expectation were forward we behind that the gross that and margins

Matthew Bouley

at weather, the was the for I it's part you reduction pushed revenue number growth as largest expecting that's secondly, kind out a we for into each And the So for then And is August actually there's whether you length revenue it to organic following two million helpful. what I That's of part And one. around year, can change in it. is end what Got mean, be better, if were August, $XXX -- least can, if QX? market. worse, individual if guidance therefore, the the break commentary. of you of guess at contributors the look what in XXXX? same tell is might or that guide that, the Okay. to on up the

Mark Witkowski

one guidance, so at $XXX the about take the split about in was million right, and was it million coming the that impact anticipated. between with growth you're kind and change first Yes, to we volume coming roughly of market that on or midpoint sure, than in I'll expectations, the weather quarter of second Matt. the the $XXX below lower

lower of second due half to just expected As coming $XXX evenly half about the that, the into you say mix end split is markets in that end say the probably miss entirely back there. I'd what of end, across out million I'd of our look markets. the volumes the the with is is year balance

business as of XX% a non-resis municipal the resi the about of reminder, and about is business, about So XX% is XX%.

mix of is terms -- kind million there. across that evenly percentage markets So $XXX end those really as our really what in of

across lighter I'd little in originally of seen, all just what than a expecting. we've So we come were X say, them

a to flat to down market So a full to from we brought really the little that expectation little end down for up bit flat year.

In terms of August...

Matthew Bouley

ahead. go Yes,

Mark Witkowski

Yes.

volumes we to probably of the with saw bit of we a in say August August, be. terms are with line better In kind relief of in those weather, I'd coming them but where some of were little expecting ultimately, organic

for So think got little that week September, in coming August. the there. some our in in QX books seeing watching strength we're about closely. and decent I weakness we We're In so release saw of got we a or probably the we've September out a month, fiscal

early call. different last seeing a our of coming we out So we're the so definitely what first were quarter in optimistic, is the with than we're position quarter, on far say, which I'd feeling

Operator

Wolfe next of Research. Nigel Our from Coe question comes

Nigel Coe

dig to already the wanted some bit you've on comments deeper Just in of a given.

pricing, But it on like second quarter. what sounds So fairly curious I'm stable in price. the is pricing sequentially outlook the half second for

half commentary deflation So of sort a the in the then, year. the made price are And in Mark, you on back of looking stabilizing in back margins half flat at we year-over-year the and first year? half is the the fairly gross more then i.e., growing. the of we're

still is guide quarter third tough. relatively your think I

base sequentially growing into year? are the off we quarter of the the about half back talking So second

Mark Witkowski

Nigel. sure, Yes,

perspective, single in say, the in I'd would of of the question First I still guide of sequentially, really we Most We're a environment. late here I'd the margin think a saw continue baked gross And yes, the margin -- of guidance XXXX. stable, headwind yes, it. low have throughout progress expecting from full which single-digit that tell way to very that's the low our then We'll kind the about from you, in. gross we make of for on pretty to growth on headwind pricing year-over-year, end initiatives. and pricing, progress results was say, kind we because digit resilient But pricing terms continued there. -- in saw expecting we in up low year, other stable second ultimately, QX were expect in good the didn't beyond. We had QX I and show really some some year headwinds quarter,

Nigel Coe

Great. one And SG&A. a then quick on

about these fully the SG&A to what acquisitions is the the we're acquisition revenue, contribution back number? acquisitions. SG&A acquisitions? that working a but rough Number right And for it points numbers, like attached feels one, the right absorbed into seems with for level basis is secondly, like is obviously, revenues XX acquired here on the for Just it the of from

Mark Witkowski

at Nigel, acquisitions of Yes. some I but gross helped would some margin, some cost -- the there. nice we've They've gross got tell accretive they SG&A you, they've had They've carried us that the have level. had margin higher some had. much [indiscernible] structure

expand scale some those of some get that. standpoint, to But and as take got there's opportunities more some they've we've So that drive out, there synergies say, opportunity some everything. from been, we and I'd to EBITDA efficient businesses an neutral to

on not necessarily to the acquired our those been the drive rate that contribution ability what has we them at, focus EBITDA and scale that the that's through but there, So P&L.

Operator

question Our Sachs. comes from next Joe of Goldman Ritchie

Joseph Ritchie

in head is talked a you volume Any of impacted guys the space. this wondering the we little normalizing approximately half as M&A the now you versus bunch of competition parse a talked million talked take I for the weather quarter, a end to bunch being little market volumes seems year. back for just on Steve, be I about there When bit it like the you that in but mentioned you're we've year? last it -- much hundred is really want weakness expected year, helpful. that by the know $XX into few judicious I'm And bit contribution reduction about volumes, million. into the commentary like a about I kind recall about account going we how we've still I more further out think I projects So after so would know expectations of

Stephen LeClair

Yes, viewed haven't that it Joe. we way. really No,

having and go well. to continuing just the are as after there we always We success way projects have

kind recover the continue mark Upper release believe the about of couple challenging in there. in conditions while before will May there But was where that June. piece idea projects we specific -- seeing You're these we're that just categories, of think, a I It's time tackling would to to to an weather started opportunities all a and and of in highlighted some other in in improved, we'll to how started those whether number in forward. seeing to has these product saw these likely pull out challenging kind and meters some we Texas other out And you favorable new pull we the of tackling of as and comes the that in we're give backlog close. became areas addition projects enough of a other there's projects to ways. question Midwest quarter of spring of different a We projects bigger going in weather the quickly first the season the be that the in remaining which

that of in weather very the of weather quarter, particularly So what these back some we're the get by what been year, burned seeing. that's really last we obviously into the the fourth are challenging this We're half as in seasonal. of [indiscernible] quarter areas always

Joseph Ritchie

it. Got

Okay. That's helpful, Steve.

choppiness that's mean, normalizes maybe this I that the into of And the point. expect expectation mean, weather some year, factor, but always XXXX. back a at basically, in is but So swing I the half you

Stephen LeClair

correct. that's Yes,

Joseph Ritchie

Okay. you Is been seeing some specific market across the as year prices. question, There's capacity. you the providers you specifically, that other about the commentary one want market discipline are planning your regarding pricing any to pricing in and there's I something products of entering your just talk like the that progresses. at of a noise and on lawsuit. But selling that maybe seems third-party today know maintaining And it don't my you're And that distribute? lot lower around

Stephen LeClair

familiar fully I'm not with what you're there. referencing

a and back Core comment going any [indiscernible] simply aren't are made which we really go case defendant that statements with particular, baseless. on to that the discussions to the & we Main, as we involve in are that not to happening Just of in view

with I'm anymore to statements any unsubstantiated So claims associated not that. we're -- comment on not or going

Operator

Capital next from Our Mike comes Dahl of question RBC Markets.

Michael Dahl

pricing I baskets obviously, expected commodity one think that thinking XQ of When follow-up non-commodity that commodity you fear we're seem some been out sequentially, track in would has the that versus the Just have about break a people to through the declined more between on lot sequentially. of conversation. can stability both year-end and because can

offset the just the pricing So You've different been that trajectory opportunities a products specifically seeing it you that? Or on serving? are with to in non-commodity you able seeing side? are you're

Mark Witkowski

little bit Yes, categories. on sure, of of Mike. you color those some a I can give

One and seen those steel of been has you we've our seen commodity, we on the along decreases that can underlying price out. the declines customers. business, and see break and in that definitely bigger fire we to the impacts that pretty protection results with that [indiscernible] pass We've sizable year-over-year with pipe

it So stabilize [Audio last Gap] bottom. or over so. month We've looks like seen the course potentially of at the

Gap] copper. there's stability like through feel [Audio on I coming So

that's offset impacts to some of So helped there. the

have throughout we I'd stable XXXX. or yes, those we for you're As of some PVC on its correct municipal, off it is of is increases the say, And together -- of we've been put but talked categories, increases levels. off some along here to we've pass product our seen customers. peak project other been about, as then, PVC solutions able other it's

is, fairly been can we a pricing what manage resulting hold through overall environment, we've expected that this for stable that in that, again, able So ultimately and to which year, true.

Michael Dahl

is [indiscernible] the -- think I everyone And on weather total then that. Okay. understand obviously,

terms it things your get I project, don't if it's and characterized on. you different the of going being In -- market there think still little versus more some what commentary deferred there, these as the you deferrals of it's out into [indiscernible] our gives I the that there [indiscernible] weakness, are in was just moving insight seems confidence field potentially because or backlog a business more had customers whether it's just that, still that like confidence your give your a not particular recently in the is in little in shift us conversations forward, July out with into insight there. that

Stephen LeClair

July about the of talk phased being chunked started the development. bit seeing And half and that land phasing residential the back out I'll differently year. a first certainly Yes. -- as lot we of little a more closed in land out the of some saw development we and into out

evolve So long demand about We're these that. impending concern know see confident the similar, take standpoint, owners little capabilities -- are much a has nonresidential more that commercial choppy we'll some We and don't term, some we bit that's have out things continue of geographies delayed facilities. just to pushed shape. the more been a it's of there. those From of and and the regards in been throughout something pending the construction saw spotty where but financing or certain that for those lot

on us. for to then doing how we of continue see work very of kind and geosynthetics positive we're the DOT one with and a a work that that lot a track And strong. side, lot drainage we'll area that a moving That one's are storm So that in of harder be little to evolves. with seeing

weather market. it how exactly mixed some weather some we of on which pushed. much into as kind was a define look top it So it's as of bag the And you to much kind of that, is and how of you of some absolute how at it, really have temporary that, being viewed obviously, then clouded was of

ground kind -- some markets. So it's and of say end of standpoint both from just from a I'd soft and the sluggish

Operator

of question Pettinari comes from Our next Anthony Citi.

Anthony Pettinari

that Just on end you softness up following saw. the market

muni, of kind of you environments what understanding kind generalize. and us you to can terms hundreds, talk municipalities, largest maybe to Given demand? have spend seeing is among of your can in market underlying end of it's appetite thousands But there customers, maybe you funding about you're hard tell

Stephen LeClair

in the meter the continue of was projects the you're confidence of projects, Demand some which weather evolve. see that seeing and Yes. aspect if strong that for and are it's That's to related repair highlighted, some And at that, type we'll that in pushed. the look be in done, XXXX, to infrastructure on of to it Brad it if softness Even into you there. if happen some replacement projects of and there. we we've at come believe fully see that the there. you in continues in the that investment where some we been doesn't backlog And XXXX. continue we'll have look

we're meters. treatment into share of It's of generally with to Gap] anything seeing us what not long-term as get Gap] tailwind you that a seeing. an and to [Audio those [Audio -- seeing XXXX, in really that's and I'd taking So lot the like enhancement really in we're funds replace, and some facilities plant of it from start repair would perspective. not for IIJA We're we from into we seeing flow shape. it

Anthony Pettinari

very And helpful. one, could. one last I That's then just Okay. if

penetration? the can to runway inventory that quarter? there And thoughts missed in some half I accelerate the label you back as private you label this, just is maybe in sorry if And update that on was percentage what worked but any . your down or some private maybe

Mark Witkowski

into is you contribution and we're penetration areas of where the expect a between adoption end year. of that expecting, a good pretty more label product of this as seeing X% to get the half and COGS private little our that number increase we Anthony, the as back runway over some now see year, Yes, some of of mentioned, and

Operator

comes Baumann JPMorgan. Our from of next question Patrick

Patrick Baumann

guess. I cleanups, Couple

the quarter, know is the quarter? can second how fourth asking this, margins? for EBITDA fourth I extra sales us you reason fourth expectations, On help of in sales quarter, part quarter impacts and which the for cadence and [indiscernible] week have the And half having with growth you for that the third that in

Mark Witkowski

Pat, Yes, for question. the thanks

terms QX, we big our of a lot had say, this like I'd typically, but in In impact looks weather the obviously, QX, QX. cadence, it

the is the QX better that quarter. points little think yes, to XXrd QX. a the sequential about as relative the in year. us growth kind than then you for expecting for full of typical it week in fourth X So worth And That's

kind the So for range that it's for of to quarter. the X% quarter, in X% probably

to sales expect you figure are of be So the QX going QX. the but QX, should to to higher nature absolute relative just due in dollars a down seasonal growth

I'd expectations quarter. the no So unusual that in outside say XXrd week fourth really of

Patrick Baumann

Do down there like to similar drop at a sales? the sales from week margin an margin... Or extra normal better a is

Mark Witkowski

be then it. margins, gross pick margins for week SG&A and the a way the think to we'll extra have. I fair think up extra will we The as gross well that's about that

Patrick Baumann

Okay. M&A that the, the of guess, sales deals? getting I deals And the I from growth? terms green haven't think are And $XXX on, deals? sales maybe are those much that in on spend. the quarter, in additional Those then of you what did extra name million said you contribute How closed

Mark Witkowski

the Green right. acquisitions did then [indiscernible] We was then quarter, so points the green for is locations. of from X Equipment were That's acquisitions. quarter. X GoGreen the Yes, location. Pat, And growth about And X

million location. which Those currently of million that historically, in to are $XX kind about, is $XX guide. of the we've per provided it, you revenue framework not use call So the two

Operator

Obin Our next of of question comes America Bank from Andrew

David Ridley-Lane

David This on Andrew Ridley-Lane is for Obin.

I so commentary. SG&A understand the better Just

were So effectively fluctuation the normal didn't actions you any ex of the flat. you've right and second Is sort right, above cost reduction I in Is of variable acquisitions seen necessarily hear considering that interpretation? as that half. the what comp? over that

Mark Witkowski

attention feel we've weather the obviously Obviously, what like with third here We're the right markets seen the quarter. most we think of to experienced good some now. that's right quarter to to close activity end paying was way start in about it. Yes, the we temporary,

growth. for We're this anticipating at investing point, SG&A obviously say reductions wouldn't we're I sizable So watching still any closely. but

that. We very opportunities, be to in have capture we positioned a long-term lot of and well confidence want to growth our

I'd into So guide say, significant in half the overly any, we don't the because reductions have second of reasons. baked those

David Ridley-Lane

a Got run how guys pace level of proxy about optimistic? ongoing second Are How take the you rate? then a should kind about it. Should we of going we And quarter should for think repurchase? as to the that? be share more think we

Mark Witkowski

in of to the pipelines second expect we million continue The M&A there. a in I'd going looking priority. is organic half operating opportunities. to say, cash the continue be invest really then growth flow We'll our Yes. $XXX good of to And to generate, roughly year.

invest leverage of that repurchasing out. we if So share we in share should price then and balance have in to ample our second capacity complete we some and liquidity we the M&A, quarter. and did that look continue is that If debt we'll growth to at the -- accelerate the potentially can see balance relative attractive, to

did cash likely given the So that accelerate in I about amount that would as QX. we we would generate it think that amount of expect just we to the

Operator

At currently questions. this no have further time, we

back hand remarks. to I'll So Steve any further for LeClair

Stephen LeClair

for Thank today. again you all us joining

demand to tapped of our infrastructure the in new market generate demonstrated financial have generate Pipe fire our and that multibillion after acquisition of during North strong a opportunity including Core that the successful business. We our a for cash adding and in returning continue several and in expanding areas into reach a through protection the shareholders. us geographic enabling deploy investing growth growth to cash water larger We capital for in share to businesses flow best and growing family and Main America. and We to quarter, to returns, generate & the were significant HM the Products, new capture ability dollar Canada acquisitions to

margins expect enhancing our support long-term are strategy. will well, margin growth performing Our initiatives we to and they continue

second were quarter As impacted our by results we wet weather saturated discussed unusually throughout grounds. the and call,

remains characteristics However, in our our associates faced projects. quarter continue to I'm demonstrate our when even the and to adversity. sluggishness We bullish. believe unwavering critical dedication is ability agile long-term and our outlook markets our of focused, experienced the and to temporary of remain end market and demand their customers proud the with

the quarter. We to and our we've opportunities, of from new project realignment sentiment continue positive runway resulting bidding be expertise and perspectives with activity our backlogs. We by encouraged completed this to growth the and our organizational long from capitalizing field teams the look on forward particularly

our As call. for customers, future. our execute deliver you look allocation our we We into forward enter Operator, you Core capital remain the interest & growth now again and to concludes second your industry-leading in in half next creation, and quarter. to our the value priorities XXXX, service to Thank drive fiscal that talking ability of with we and Main. confident

Operator

You call. you Thank today's may lines. your all now for [Audio Gap] disconnect joining

Core & Main (CNM) 4 Sep 242025 Q2 Earnings call transcript