On December 5, 2023, Core & Main Inc (CNM, Financial) released its 8-K filing, announcing financial results for the third quarter ended October 29, 2023. The company reported a slight increase in net sales, but faced challenges with a decrease in gross profit margin and net income compared to the same period last year.
Financial Performance Overview
Core & Main Inc (CNM, Financial) experienced a modest increase in net sales, which rose by 0.5% to $1,827 million. However, the company's gross profit margin saw a decrease of 50 basis points to 27.0%. Net income for the quarter was down by 11.2%, settling at $158 million. Adjusted EBITDA, a non-GAAP financial measure, also decreased by 5.5% to $260 million, with the Adjusted EBITDA margin dropping by 90 basis points to 14.2%.
Income Statement Highlights
The company's net sales growth was primarily driven by acquisitions, which helped offset lower end-market volumes. Despite this, gross profit decreased by 1.2% to $494 million, with the decline in gross profit margin attributed to larger prior year benefits from strategic inventory investments during an inflationary environment, partially offset by favorable impacts from the execution of gross margin initiatives.
Selling, general and administrative (SG&A) expenses increased by 3.9% to $240 million, primarily due to higher personnel expenses and facility and distribution costs related to inflation and acquisitions. This led to an increase in SG&A expenses as a percentage of net sales to 13.1%.
Balance Sheet and Cash Flow Statement
Core & Main Inc (CNM, Financial) reported net cash provided by operating activities of $373 million, a significant improvement from $154 million in the prior year. This was primarily driven by a reduction in inventory due to more predictable product lead times. The company's net debt, calculated as gross consolidated debt net of cash and cash equivalents, was $1,365 million, with a Net Debt Leverage of 1.5x.
Strategic Moves and Outlook
During the quarter, Core & Main Inc (CNM, Financial) opened two new locations and executed a share repurchase transaction, retiring 10 million shares by deploying nearly $300 million of capital. Post-quarter, the company announced three acquisitions, signaling a continued focus on growth through strategic initiatives.
CEO Steve LeClair commented on the results, stating,
We are pleased to have delivered another quarter of strong results. Demand from our customers remains resilient and we continue to execute on both our organic and inorganic growth initiatives."He also highlighted the company's cash generation strength and its ability to reinvest in growth while returning capital to shareholders.
Looking ahead, Core & Main Inc (CNM, Financial) has raised its expectation for fiscal 2023 Adjusted EBITDA to be in the range of $890 to $910 million, reflecting confidence in its ability to sustain margins and capitalize on growth opportunities.
Investor Relations and Future Prospects
Investors can access more details about Core & Main Inc (CNM, Financial)'s financial results and future outlook during the company's conference call and webcast, which was held on December 5, 2023. The company remains committed to advancing reliable infrastructure nationwide and is poised to leverage its nationwide branch network and robust M&A pipeline to drive profitable growth and cash flow.
For detailed financial tables and further information, readers are encouraged to review the full 8-K filing.
Explore the complete 8-K earnings release (here) from Core & Main Inc for further details.
