Core & Main Announces Fiscal 2021 Second Quarter Results
Fiscal 2021 Second Quarter Highlights (Compared with Fiscal 2020 Second Quarter)
-
Net sales increased
35.7% to$1,297.6 million
-
Gross profit margin increased 100 basis points to
25.1%
-
Net income decreased
47.5% to$9.5 million
-
Adjusted EBITDA (Non-GAAP) increased
56.8% to$155.2 million
-
Adjusted EBITDA margin (Non-GAAP) increased 160 basis points to
12.0%
-
Net Debt Leverage (Non-GAAP) (using Adjusted EBITDA on a trailing twelve-month basis) decreased to 3.3x as of
August 1, 2021 compared with 5.2x as ofMay 2, 2021
-
Closed two acquisitions subsequent to the quarter: L &
M Bag & Supply Company, Inc. andPacific Pipe Company, Inc.
“Core & Main delivered exceptionally strong performance in the second quarter, achieving record net sales with nearly
“We benefited from strong end market demand attributable to continued growth in municipal water infrastructure spending and robust housing demand. This materialized into strong volume gains as well as improved pricing, in part due to the inflationary trends across many of our product lines. The market momentum and rising material costs put pressure on the industry’s supply chain and our internal resources, and I am very proud of how our team has managed these challenging conditions to provide consistent, reliable products and services to our customers. As a result of this execution and continued traction against our defined growth initiatives, we believe we outperformed our end markets and delivered core market share gains in the quarter.”
“During and subsequent to the second quarter, we successfully completed our initial public offering of approximately 40 million shares of Class A common stock, inclusive of the full exercise of the underwriters’ over-allotment option, generating gross proceeds of approximately
LeClair concluded, “We remained active in M&A during the quarter, announcing the acquisitions of L &
Three Months Ended
Net sales for the three months ended
Gross profit for the three months ended
Selling, general and administrative (“SG&A”) expenses for the three months ended
Net income for the three months ended
Adjusted EBITDA (Non-GAAP) for the three months ended
Six Months Ended
Net sales for the six months ended
Gross profit for the six months ended
SG&A expenses for the six months ended
Net income for the six months ended
Adjusted EBITDA (Non-GAAP) for the six months ended
Balance Sheet and Liquidity
Net debt, calculated as gross consolidated debt net of cash and cash equivalents, as of
As of
Fiscal 2021 Outlook
“We expect the demand and pricing trends we experienced in the first half of the fiscal year to continue into the second half, though tempered against tougher prior year comps and anticipated supply chain constraints,” LeClair continued. “Each of our end markets appears poised for continued growth based on bidding activity and order flow, and the execution of our growth initiatives is expected to continue driving core market share gains. As a result, we expect full year fiscal 2021 Adjusted EBITDA to be in the range of
Conference Call & Webcast Information
About
Based in
Cautionary Note Regarding Forward-Looking Statements
Certain statements contained in this press release include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include information concerning Core & Main’s financial and operating outlook, as well as any other statement that does not directly relate to any historical or current fact. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “could,” “should,” “forecasts,” “expects,” “intends,” “plans,” “anticipates,” “projects,” “outlook,” “believes,” “estimates,” “predicts,” “potential,” “continue,” “preliminary,” or the negative of these terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we can give you no assurance these expectations will prove to have been correct. These forward-looking statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to differ materially from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements.
Factors that could cause actual results and outcomes to differ from those reflected in forward-looking statements include, without limitation, declines, volatility and cyclicality in the
Additional information concerning these and other factors can be found in our filings with the
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Amounts in millions (except share and per share data), unaudited |
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Three Months Ended |
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Six Months Ended |
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Net sales |
$ |
1,297.6 |
|
|
$ |
955.9 |
|
|
$ |
2,352.7 |
|
|
$ |
1,798.0 |
|
Cost of sales |
972.4 |
|
|
725.3 |
|
|
1,770.7 |
|
|
1,368.2 |
|
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Gross profit |
325.2 |
|
|
230.6 |
|
|
582.0 |
|
|
429.8 |
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Operating expenses: |
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|
|
|
|
|
|
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Selling, general and administrative |
191.8 |
|
|
136.8 |
|
|
345.7 |
|
|
273.8 |
|
||||
Depreciation and amortization |
33.6 |
|
|
34.3 |
|
|
67.4 |
|
|
67.8 |
|
||||
Total operating expenses |
225.4 |
|
|
171.1 |
|
|
413.1 |
|
|
341.6 |
|
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Operating income |
99.8 |
|
|
59.5 |
|
|
168.9 |
|
|
88.2 |
|
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Interest expense |
36.8 |
|
|
35.0 |
|
|
72.3 |
|
|
68.2 |
|
||||
Loss on debt modification and extinguishment |
50.4 |
|
|
— |
|
|
50.4 |
|
|
— |
|
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Income before provision for income taxes |
12.6 |
|
|
24.5 |
|
|
46.2 |
|
|
20.0 |
|
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Provision for income taxes |
3.1 |
|
|
6.4 |
|
|
9.3 |
|
|
5.1 |
|
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Net income |
9.5 |
|
|
$ |
18.1 |
|
|
36.9 |
|
|
$ |
14.9 |
|
||
Less: net loss attributable to non-controlling interests |
(17.0 |
) |
|
|
|
(17.0 |
) |
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|
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Net income attributable to |
$ |
26.5 |
|
|
|
|
$ |
53.9 |
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|
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|
|
|
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Loss per share (1) |
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Basic |
$ |
(0.14 |
) |
|
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|
$ |
(0.14 |
) |
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Diluted |
$ |
(0.14 |
) |
|
|
|
$ |
(0.14 |
) |
|
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Number of shares used in computing EPS (1) |
|
|
|
|
|
|
|
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Basic |
138,978,366 |
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|
|
|
138,978,366 |
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|
|
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Diluted |
138,978,366 |
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|
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|
138,978,366 |
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(1) |
Represents basic and diluted loss per share of Class A common stock and weighted average shares of Class A common stock outstanding for the period from |
CONDENSED CONSOLIDATED BALANCE SHEETS Amounts in millions (except share and per share data), unaudited |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ |
66.6 |
|
|
$ |
380.9 |
|
Receivables, net of allowance for credit losses of |
832.9 |
|
|
556.8 |
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Inventories |
593.2 |
|
|
383.8 |
|
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Prepaid expenses and other current assets |
15.6 |
|
|
15.6 |
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Total current assets |
1,508.3 |
|
|
1,337.1 |
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Property, plant and equipment, net |
82.2 |
|
|
86.2 |
|
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Operating lease right-of-use assets |
144.2 |
|
|
128.5 |
|
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Intangible assets, net |
861.7 |
|
|
919.2 |
|
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|
1,452.5 |
|
|
1,452.7 |
|
||
Other assets |
4.4 |
|
|
— |
|
||
Total assets |
$ |
4,053.3 |
|
|
$ |
3,923.7 |
|
|
|
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LIABILITIES AND PARTNERS' CAPITAL/STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Current maturities of long-term debt |
$ |
15.0 |
|
|
$ |
13.0 |
|
Accounts payable |
564.9 |
|
|
325.7 |
|
||
Accrued compensation and benefits |
68.0 |
|
|
70.7 |
|
||
Current operating lease liabilities |
45.4 |
|
|
42.8 |
|
||
Other current liabilities |
51.5 |
|
|
70.1 |
|
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Total current liabilities |
744.8 |
|
|
522.3 |
|
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Long-term debt |
1,462.0 |
|
|
2,251.7 |
|
||
Non-current operating lease liabilities |
98.8 |
|
|
85.9 |
|
||
Deferred income taxes |
87.8 |
|
|
232.1 |
|
||
Payable to related parties pursuant to Tax Receivable Agreements |
88.6 |
|
|
— |
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||
Other liabilities |
23.3 |
|
|
31.0 |
|
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Total liabilities |
2,505.3 |
|
|
3,123.0 |
|
||
Commitments and contingencies |
|
|
|
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Partners' capital |
— |
|
|
800.7 |
|
||
Class A common stock, par value |
1.5 |
|
|
— |
|
||
Class B common stock, par value |
0.9 |
|
|
— |
|
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Additional paid-in capital |
1,090.3 |
|
|
— |
|
||
Accumulated deficit |
(20.0 |
) |
|
— |
|
||
Accumulated other comprehensive loss |
(0.8 |
) |
|
— |
|
||
Total partners' capital/stockholders equity attributable to |
1,071.9 |
|
|
800.7 |
|
||
Non-controlling interests |
476.1 |
|
|
— |
|
||
Total partners' capital/stockholders equity |
1,548.0 |
|
|
800.7 |
|
||
Total liabilities and partners' capital/stockholders equity |
$ |
4,053.3 |
|
|
$ |
3,923.7 |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Amounts in millions, unaudited |
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Six Months Ended |
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Cash Flows From Operating Activities: |
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|
|
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Net income |
$ |
36.9 |
|
|
$ |
14.9 |
|
Adjustments to reconcile net cash from operating activities: |
|
|
|
||||
Depreciation and amortization |
75.2 |
|
|
75.6 |
|
||
Provision for bad debt |
0.9 |
|
|
1.6 |
|
||
Non-cash inventory charge |
— |
|
|
0.6 |
|
||
Equity-based compensation expense |
19.5 |
|
|
2.0 |
|
||
Loss on debt modification and extinguishment |
48.4 |
|
|
— |
|
||
Other |
(3.6 |
) |
|
(0.2 |
) |
||
Changes in assets and liabilities: |
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|
|
||||
(Increase) decrease in receivables |
(276.5 |
) |
|
(79.9 |
) |
||
(Increase) decrease in inventories |
(209.4 |
) |
|
(21.2 |
) |
||
(Increase) decrease in other assets |
(0.3 |
) |
|
4.0 |
|
||
Increase (decrease) in accounts payable |
238.7 |
|
|
91.6 |
|
||
Increase (decrease) in accrued liabilities |
(23.8 |
) |
|
(3.0 |
) |
||
Increase (decrease) in other liabilities |
(5.1 |
) |
|
7.2 |
|
||
Net cash (used in) provided by operating activities |
(99.1 |
) |
|
93.2 |
|
||
Cash Flows From Investing Activities: |
|
|
|
||||
Capital expenditures |
(8.1 |
) |
|
(5.7 |
) |
||
Acquisitions of businesses, net of cash acquired |
— |
|
|
(206.1 |
) |
||
Settlement of interest rate swap |
(5.2 |
) |
|
— |
|
||
Proceeds from the sale of property and equipment |
0.4 |
|
|
0.1 |
|
||
Net cash used in investing activities |
(12.9 |
) |
|
(211.7 |
) |
||
Cash Flows From Financing Activities: |
|
|
|
||||
IPO proceeds, net of underwriting discounts and commissions |
663.7 |
|
|
— |
|
||
Payments for offering costs |
(5.1 |
) |
|
— |
|
||
Partnership investment |
0.3 |
|
|
0.8 |
|
||
Partnership distributions |
(19.5 |
) |
|
(6.8 |
) |
||
Borrowings on asset-based revolving credit facility |
— |
|
|
460.0 |
|
||
Repayments on asset-based revolving credit facility |
— |
|
|
(460.0 |
) |
||
Issuance of long-term debt |
1,500.0 |
|
|
250.0 |
|
||
Repayments of long-term debt |
(2,311.1 |
) |
|
(6.5 |
) |
||
Payment of contingent consideration |
(0.3 |
) |
|
— |
|
||
Payment of debt redemption premiums |
(17.5 |
) |
|
— |
|
||
Debt issuance costs |
(12.8 |
) |
|
(8.1 |
) |
||
Net cash (used in) provided by financing activities |
(202.3 |
) |
|
229.4 |
|
||
(Decrease) increase in cash and cash equivalents |
(314.3 |
) |
|
110.9 |
|
||
Cash and cash equivalents at the beginning of the period |
380.9 |
|
|
180.9 |
|
||
Cash and cash equivalents at the end of the period |
$ |
66.6 |
|
|
$ |
291.8 |
|
Non-GAAP Financial Measures
In addition to providing results that are determined in accordance with GAAP, we present EBITDA, Adjusted EBITDA, Adjusted EBITDA margin and Net Debt Leverage, which are non-GAAP financial measures. These measures are not considered measures of financial performance or liquidity under GAAP and the items excluded therefrom are significant components in understanding and assessing our financial performance or liquidity. These measures should not be considered in isolation or as alternatives to GAAP measures such as net income attributable to
We define EBITDA as net income attributable to
We use EBITDA, Adjusted EBITDA, Adjusted EBITDA margin and Net Debt Leverage to assess the operating results and effectiveness and efficiency of our business. Adjusted EBITDA includes amounts otherwise attributable to non-controlling interests as we manage the consolidated company and evaluate operating performance in a similar manner. We present these non-GAAP financial measures because we believe that investors consider them to be important supplemental measures of performance, and we believe that these measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. Non-GAAP financial measures as reported by us may not be comparable to similarly titled metrics reported by other companies and may not be calculated in the same manner. These measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. For example, EBITDA and Adjusted EBITDA:
- do not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on debt;
- do not reflect income tax expenses, the cash requirements to pay taxes or related distributions;
- do not reflect cash requirements to replace in the future any assets being depreciated and amortized; and
- exclude certain transactions or expenses as allowed by the various agreements governing our indebtedness.
EBITDA, Adjusted EBITDA, Adjusted EBITDA margin and Net Debt Leverage are not alternative measures of financial performance or liquidity under GAAP and therefore should be considered in conjunction with net income attributable to
No reconciliation of the estimated range for Adjusted EBITDA for fiscal 2021 is included herein because we are unable to quantify certain amounts that would be required to be included in net income attributable to
The following tables set forth a reconciliation of net income attributable to
(Amounts in millions, unaudited) |
|
Three Months Ended |
|
Six Months Ended |
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Net income attributable to |
|
$ |
26.5 |
|
|
|
|
$ |
53.9 |
|
|
|
||||
Plus: net loss attributable to non-controlling interests |
|
(17.0 |
) |
|
|
|
(17.0 |
) |
|
|
||||||
Net income |
|
$ |
9.5 |
|
|
$ |
18.1 |
|
|
$ |
36.9 |
|
|
$ |
14.9 |
|
Depreciation and amortization (1) |
|
34.4 |
|
|
35.3 |
|
|
69.1 |
|
|
69.7 |
|
||||
Provision for income taxes |
|
3.1 |
|
|
6.4 |
|
|
9.3 |
|
|
5.1 |
|
||||
Interest expense |
|
36.8 |
|
|
35.0 |
|
|
72.3 |
|
|
68.2 |
|
||||
EBITDA |
|
$ |
83.8 |
|
|
$ |
94.8 |
|
|
$ |
187.6 |
|
|
$ |
157.9 |
|
Loss on debt modification and extinguishment |
|
50.4 |
|
|
— |
|
|
50.4 |
|
|
— |
|
||||
Equity-based compensation |
|
18.5 |
|
|
1.0 |
|
|
19.5 |
|
|
2.0 |
|
||||
Acquisition expenses (2) |
|
1.2 |
|
|
3.2 |
|
|
3.2 |
|
|
7.8 |
|
||||
IPO Transaction expenses (3) |
|
1.3 |
|
|
— |
|
|
3.6 |
|
|
— |
|
||||
Adjusted EBITDA |
|
$ |
155.2 |
|
|
$ |
99.0 |
|
|
$ |
264.3 |
|
|
$ |
167.7 |
|
|
|
|
|
|
|
|
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Adjusted EBITDA Margin: |
|
|
|
|
|
|
|
|
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|
|
$ |
1,297.6 |
|
|
$ |
955.9 |
|
|
$ |
2,352.7 |
|
|
$ |
1,798.0 |
|
Adjusted EBITDA / |
|
12.0 |
% |
|
10.4 |
% |
|
11.2 |
% |
|
9.3 |
% |
(Amounts in millions, unaudited) |
|
Twelve Months Ended |
||||||
|
|
|
|
|
||||
Net income attributable to |
|
$ |
76.3 |
|
|
|
||
Plus: net loss attributable to non-controlling interests |
|
(17.0 |
) |
|
|
|||
Net income |
|
$ |
59.3 |
|
|
$ |
67.9 |
|
Depreciation and amortization (1) |
|
140.2 |
|
|
141.1 |
|||
Provision for income taxes |
|
13.3 |
|
|
16.6 |
|||
Interest expense |
|
143.2 |
|
|
141.4 |
|||
EBITDA |
|
$ |
356.0 |
|
|
$ |
367.0 |
|
Loss on debt modification and extinguishment |
|
50.4 |
|
|
— |
|||
Equity-based compensation |
|
21.6 |
|
|
4.1 |
|||
Acquisition expenses (2) |
|
7.3 |
|
|
9.3 |
|||
IPO Transaction expenses (3) |
|
3.6 |
|
|
2.3 |
|||
Adjusted EBITDA |
|
$ |
438.9 |
|
|
$ |
382.7 |
(1) |
Includes depreciation of certain assets which are reflected in “cost of sales” in our historical statement of operations. |
(2) |
Represents expenses associated with acquisition activities, including transaction costs, post-acquisition employee retention bonuses, severance payments, expense recognition of purchase accounting fair value adjustments (excluding amortization) and contingent consideration adjustments. |
(3) |
Represents costs related to the IPO Transaction. |
The following table sets forth a calculation of Net Debt Leverage for the periods presented:
(Amounts in millions, unaudited) |
|
As Of |
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|
|
|
|
|
||||
ABL Facility |
|
$ |
— |
|
|
$ |
— |
|
Senior Term Loan due 2024 |
|
— |
|
|
1,257.8 |
|
||
2024 Senior Unsecured Notes |
|
— |
|
|
300.0 |
|
||
2025 Senior Unsecured Notes |
|
— |
|
|
750.0 |
|
||
Senior Term Loan due 2028 |
|
1,500.0 |
|
|
— |
|
||
Total Debt |
|
$ |
1,500.0 |
|
|
$ |
2,307.8 |
|
Less: Cash & Cash Equivalents |
|
(66.6 |
) |
|
(320.2 |
) |
||
Net Debt |
|
$ |
1,433.4 |
|
|
$ |
1,987.6 |
|
Twelve Months Ended Adjusted EBITDA |
|
438.9 |
|
|
382.7 |
|
||
Net Debt Leverage |
|
3.3x |
|
5.2x |
View source version on businesswire.com: https://www.businesswire.com/news/home/20210914005294/en/
VP, Investor Relations and FP&A
(314) 995 – 9116
InvestorRelations@coreandmain.com
Source: