Core & Main Inc Q2 2025 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Matthew Bouley - Barclays Services Corp - Analyst : Hey, good morning guys. Thank you for taking the questions. So just a question on the, I guess, the makeup of the guide. So at the midpoint, I guess, revenue cut by $50 million and EBITDA cut by $45 million, so I guess I hear you on the higher operating expenses but then you're also taking these targeted cost actions as well. So is it more -- it just simply takes a lot of time to get these cost actions into place, you mentioned more of a 2026 impact, I believe. Or is the kind of maybe changed mix of business with residential a lot weaker impacting the margin as well? I guess just what else would explain that kind of larger decremental EBITDA margin?

Question: Matthew Bouley - Barclays Services Corp - Analyst : Okay. Got it. And then secondly, just on residential, specifically, obviously, a fairly substantial change to the outlook over the past relative to 90 days ago. So I guess what I'm trying to get at is, sort of, a, your visibility into that end market; and b, maybe how did residential look during both Q1 and Q2? You're talking about kind of low double digits. I'm wondering if the expectation is that it would weaken a lot further in the second half? And so, yes, just any color on the kind of cadence of residential? And then just more specifically, what you're hearing from customers in that group? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 09, 2025 / 12:30PM, CNM.N - Q2 2025 Core & Main Inc Earnings Call

Question: David Manthey - Robert W. Baird & Co Inc - Analyst : Thank and you might have just answered this in relation to 1 of Matt's questions there, but what was the residential market in the first half in terms of growth rate? And then your down low double-digit outlook, what does that imply for the back half?

Question: David Manthey - Robert W. Baird & Co Inc - Analyst : Got it. Okay. And then maybe back on the SG&A side. I think last quarter, you said that your organic revenues were up mid-single digits and organic same-store SG&A was up 4% year-over-year. Could you provide those organic figures for this quarter as well, so we can compare that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 09, 2025 / 12:30PM, CNM.N - Q2 2025 Core & Main Inc Earnings Call

Question: David Manthey - Robert W. Baird & Co Inc - Analyst : Okay. And then also last quarter, thinking about operating expenses, I believe you sort of implied you're expecting to see improving SG&A as a percentage of sales each quarter as we move through the year, which, on the old forecast, I think, sort of implied lower dollars each quarter. But assuming no major M&A from here, do you think that the second quarter will be the high watermark for SG&A dollars this year as you implement these cost-out actions and normal seasonality impacts those numbers?

Question: David Manthey - Robert W. Baird & Co Inc - Analyst : Yeah, Okay. And if I could sneak 1 more in here as talking about all the seasonality and 2025 being an unusual year in terms of lack of acquisitions versus all the deals you've done historically, when you think about normal seasonality ex acquisitions, sort of the organic progression, how do you think about that? Do you think about it in terms of percentage of total full year sales per quarter?

Question: David Manthey - Robert W. Baird & Co Inc - Analyst : Got it. Thank you very much.

Question: Sam Reid - Wells Fargo Securities LLC - Analyst : Awesome thanks so much. I wanted to touch on your updated guide perhaps from a slightly different perspective. Just on the second half EBITDA margins, so it sounds like you're still expecting favorable year-over-year gross margin, if I heard correctly, Robyn. But can you talk about what that looks like sequentially on the gross margin line relative to Q2, so just basically the guide path for gross margin as we look into Q3 and Q4?

Question: Sam Reid - Wells Fargo Securities LLC - Analyst : That helps. And then as a follow-up. So one, could you just give us a rough sense as to the size of private label today, perhaps how much you were able to grow that in the second quarter relative to the first quarter? And then just a follow-up on the SG&A optimization initiatives. Could you just offer up some perspective on sizing those, just so we have a rough sense as to where you're going to exit the year into 2026? Thanks.

Question: Sam Reid - Wells Fargo Securities LLC - Analyst : It was on the sizing of the SG&A and.

Question: Sam Reid - Wells Fargo Securities LLC - Analyst : That helps. Thanks so much. I'll pass it on.

Question: Mike Dahl - RBC Capital Markets Inc - Analyst : Good Morning, thanks for taking my questions. Sorry to keep harping on the SG&A. But in terms of the actual variance versus expectations, you've noted some things were even more pronounced. Can you just be more specific on what came in worse than expected? And then back to the question of kind of segment actions, when you think about all those different actions, do you have a good way of giving us kind of roughly how much is headcount related versus kind of fleet and infrastructure related in terms of the cost outs?

Question: Mike Dahl - RBC Capital Markets Inc - Analyst : Okay. Got it. My second question just on the pricing. I think you said it was neutral. Can you just give us a better sense of kind of how the commodity side trended through the quarter into 3Q? And as you think about kind of natural and better for the year, just more elaborate a little more on what you're seeing on finished goods versus commodity right now?

Question: Patrick Baumann - JPMorgan Chase & Co - Analyst : Oh hi, good morning, Lot's been covered already. Just wanted to go back to the resi side quickly. So the move from flat to down low double, it just seems like a bigger revision than what we've seen from the starts data, so from that perspective. Just trying to understand, was there like an overbuild of lots that are now being reduced to at a greater magnitude than what we're seeing in starts? Maybe just address where lot development stands today to provide some context versus history and for the revision?

Question: Patrick Baumann - JPMorgan Chase & Co - Analyst : Okay. And then on the acquisition you did, just to clean up here, I assume that's not in the guidance since it hasn't closed. Any perspective on size of that deal? And then any update on how the pipeline for M&A looks these days?

Question: Anthony Pettinari - Citibank Cameroon SA - Analyst : This is Asher Sohnen on for Anthony. I just wanted to ask about the current kind of competitive environment, if that's changed at all from the prior quarter. Maybe there's industry response to kind of resi demand slowing? Just any thoughts on competitive environment?

Question: Anthony Pettinari - Citibank Cameroon SA - Analyst : Great. And then can you just remind us which of your product groups are kind of most exposed to the resi end markets? And if that softness as resis making a kind of -- or that you anticipate kind of in the second half as well, kind of driving any shift in the mix or strategy around inventory positioning? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 09, 2025 / 12:30PM, CNM.N - Q2 2025 Core & Main Inc Earnings Call

Question: Anthony Pettinari - Citibank Cameroon SA - Analyst : Great thanks I'll send it over.

Question: Keith Hughes - Truist Securities - Analyst : This is Julian on for Keith. I know you already touched on it a little bit, but how should we think about pricing in third quarter versus fourth quarter?

Question: Nigel Coe - Wolfe Research - Analyst : Oh thanks. Good morning. Yeah, we've touched on a lot of the stuff here, but just to want to circle back to SGNA, if I may, just so I understand the guide, if gross margins are going to be fairly flat to second quarter, it seems like SGA dollars stepped down versus REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 09, 2025 / 12:30PM, CNM.N - Q2 2025 Core & Main Inc Earnings Call a 302 into 2. I just want to make sure that's correct. And I'm just wondering what the impact of the fifty-3rd week has on SGNA specifically.

Question: Nigel Coe - Wolfe Research - Analyst : Okay, that's helpful. Thanks. And then obviously, I think we understand that the drivers of the residential weakness and and maybe the flat outlook was a tad optimistic, in hindsight, non-res I think is the big debate though, and it seems it could go in two directions here, we've got a weakening economy, but then we've got a lot of, these mega projects, data centers, etc. So. I'm just curious, Mark Robin, how you see, based on, I don't know, feedback from the fields, customers, what sort of direction do you think this breaks into as we go into 2026? Do you think non-res as a category gets stronger, or is there some risk there as you go to 26?

Question: Anthony Pettinari - Citibank Cameroon SA - Analyst : Yeah. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 09, 2025 / 12:30PM, CNM.N - Q2 2025 Core & Main Inc Earnings Call