Core & Main, Inc. · NYSE:CNM
Core & Main — Q2 2023 Earnings Presentation
21 slides from Core & Main's earnings presentation, Sep 6, 2023
Slide 1: Fiscal 2023 Second Quarter Results
Fiscal 2023 Second Quarter Results SEPTEMBER 6, 2023
Slide 2: Cautionary Statements
CAUTIONARY STATEMENTS Cautionary Note Regarding Forward-Looking Statements This presentation and accompanying discussion may include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, all st
Slide 3: Today's Presenters
TODAY’S PRESENTERS Steve LeClair Mark Witkowski Robyn Bradbury Chief Executive Officer Chief Financial Officer VP, Finance & Investor Relations © Core & Main All Rights Reserved. Confidential and Proprietary Information. 3
Slide 4: Business Update
Business Update STEVE LECLAIR
Slide 5: Business Update
BUSINESS UPDATE Cash Flow & End Markets Pricing Margins Capital Allocation ▪ Municipal repair & replacement ▪ Non-discretionary nature of demand ▪ Gross margin exceeded our ▪ Robust operating cash flow in 1H’23 demand remains steady in our industry provides a resilient expectations as we continue to
Slide 6: Driving Sustainable Growth Through M&A
DRIVING SUSTAINABLE GROWTH THROUGH M&A Foster Supply Dangelo Co. Status Closed July 2023 Closed July 2023 # of Locations 7 3 Geography West Virginia, Kentucky & Tennessee California Pipe, Valves & Fittings Pipe, Valves & Fittings Product Lines Fire Protection Storm Drainage Storm Drainage Combined A
Slide 7: Well-Positioned to Win in Our Industry
WELL-POSITIONED TO WIN IN OUR INDUSTRY High Barriers to Entry Our Competitive Advantages ▪ Local regulation and specification needs; Highly Complex strong participation in governing / Industry Experience Size & Unique Scalability Specification & regulating bodies Regulation Deep knowledge of product
Slide 8: Financial Results
Financial Results MARK WITKOWSKI
Slide 9: Q2 2023 Financial Results
Q2 2023 FINANCIAL RESULTS ($ in Millions, Except Per Share Amounts) Net Sales Gross Profit $1,861 $1,861 $501 $501 0% 0% $1,298 +43% $325 +54% % Margin 25.0% +190 bps 26.9% +0 bps 26.9% Q2'21 Q2'22 Q2'23 Q2'21 Q2'22 Q2'23 Adjusted EBITDA(1) Diluted Earnings Per Share(2) $277 $270 $0.67 (3%) $0.66 (2
Slide 10: Cash Flow & Balance Sheet
CASH FLOW & BALANCE SHEET ($ in Millions) Operating Cash Flow Net Debt Leverage(3) 1.9x Q2’22 Q2’23 Y-o-Y $ 1.7x Adjusted EBITDA(1) $277 $270 ($7) Working Capital (243) 72 315 Q2'22 Q2'23 Cash Interest (14) (20) (6) Liquidity Cash Taxes(2) (34) (34) -- ABL Facility Available Cash & Cash Equivalents
Slide 11: Guidance Update
GUIDANCE UPDATE Key Metric FY23 Outlook Considerations ▪ Expect fiscal 2023 net sales growth to range from -1% to +2% Net Sales $6,600 - $6,800 ̶ Municipal repair & replacement activity expected to be steady for the rest of the year ($ in Millions) ̶ Improving sentiment for new residential construct
Slide 12: Appendix
Appendix
Slide 13: Core & Main at a Glance
CORE & MAIN AT A GLANCE Key Business Highlights Branch Footprint ▪ Leading U.S. specialty distributor focused on water, wastewater, storm Corporate HQ drainage and fire protection products, and related services ▪ Highly fragmented $40 billion addressable market(1) ▪ 1 of only 2 national distributors
Slide 14: Product & Service Offering
PRODUCT & SERVICE OFFERING © Core & Main All Rights Reserved. Confidential and Proprietary Information. 14
Slide 15: Our Approach to M&A
OUR APPROACH TO M&A Driving Sustainable Growth Through M&A… …By Leveraging Our Disciplined Approach October 2017 June 2018 July 2018 August 2018 January 2019 February 2019 ▪ Significant opportunity to fill existing geographies and product Maximize lines or expand into new geographies and product lin
Slide 16: Our Value Creation Targets
OUR VALUE CREATION TARGETS Above Market Operating Operating Market Growth Acquisitions Growth Leverage Cash Flow ▪ Non-discretionary municipal ▪ Attract and develop new sales ▪ Disciplined pursuit of active ▪ Expand private label offering ▪ Resilient business model with repair & replacement demand t
Slide 17: Capital Allocation Framework
CAPITAL ALLOCATION FRAMEWORK Capital Allocation Framework Organic Growth & Expect future capital expenditures to average ~0.5% Operational Initiatives of net sales Normalized Maintain a robust M&A pipeline and a disciplined approach. Expect continued M&A focused on Operating Cash Flow Priority Uses
Slide 18: Secular Market Growth Fundamentals
SECULAR MARKET GROWTH FUNDAMENTALS… U.S. Municipal Water Infrastructure Spending(1) Non-Residential Starts(2) (Sq. Feet Per Million of Population) Historical Spending Management Estimates Significant Underinvestment 7.5 $150 (Sq. Feet in Thousands) 6.0 ($ in Billions) $120 Median 4.5 $90 $60 3.0 $30
Slide 19: Backed by Critical Investment in U.S. Water Infrastructure
…BACKED BY CRITICAL INVESTMENT IN U.S. WATER INFRASTRUCTURE $55 BILLION $50 BILLION $110 BILLION $25 BILLION to expand access to clean to protect against droughts, to repair roads and bridges and to create more modern, resilient drinking water floods, heat and wildfires, in support major transformat
Slide 20: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES ($ in Millions) Adjusted EBITDA & Adjusted EBITDA Margin Three Months Ended Six Months Ended Twelve Months Ended July 30, 2023 July 31, 2022 August 1, 2021 July 30, 2023 July 31, 2022 July 30, 2023 July 31, 2022 Net income attributable to Core & Main, Inc. $ 110 $
Slide 21: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES ($ in Millions) Net Debt Leverage As of July 30, 2023 July 31, 2022 Senior ABL Credit Facility due July 2026 115 142 Senior Term Loan due July 2028 1,470 1,485 Total Debt $ 1,585 $ 1,627 Less: Cash & Cash Equivalents (20) - Net Debt $ 1,565 $ 1,627 Twelve Months E