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Core & Main Inc. (NYSE: CNM), a leading provider of reliable infrastructure solutions, today announced its financial results for the first quarter ended April 28, 2024.
Strong Net Sales Growth
Core & Main reported a robust increase in net sales for the first quarter of 2024, rising by $167 million, or 10.6%, to $1,741 million compared to $1,574 million in the same period last year. This growth was primarily driven by recent acquisitions and modest improvements in key end-markets. The company saw notable sales increases in its pipes, valves, fittings, and storm drainage segments, largely attributed to strategic acquisitions and slight market improvements. However, net sales for fire protection products experienced a decline due to lower selling prices, which was partially mitigated by acquisitions. Sales of meter products surged, benefiting from higher volumes due to increased adoption of smart meter technology by municipalities, enhanced product availability, acquisitions, and higher selling prices.
Gross Profit Insights
Gross profit for Q1 2024 increased by $29 million, or 6.6%, reaching $468 million compared to $439 million in the first quarter of 2023. Despite the increase in gross profit, the gross profit margin as a percentage of net sales slightly declined to 26.9% from 27.9% in the previous year. This decrease was primarily due to the significant benefits reaped from strategic inventory investments during last year's inflationary period, which were partially offset by ongoing gross margin initiatives and accretive acquisitions.
Net Income Decline
Net income for the quarter saw a decrease of $32 million, or 24.1%, falling to $101 million from $133 million in the same period last year. The decline in net income was mainly due to higher operating expenses, including increased selling, general, and administrative (SG&A) costs, amortization expenses, and higher interest expenses.
Adjusted EBITDA Performance
Adjusted EBITDA for the first quarter of 2024 slightly decreased by $3 million, or 1.4%, to $217 million from $220 million in Q1 2023. The marginal decline in Adjusted EBITDA was attributed to higher SG&A expenses, which were only partially offset by the increase in gross profit. For a detailed reconciliation of Adjusted EBITDA to net income, the most comparable GAAP financial metric, please refer to the “Non-GAAP Financial Measures” section below.
Liquidity and Capital Resources
Core & Main reported that net cash provided by operating activities for the first quarter of 2024 was $78 million, a decrease from $120 million in the same period last year. This reduction in operating cash flow underscores the increased operational costs and higher interest expenses faced by the company during the quarter.
