Core & Main Inc Q4 2024 Earnings Call Summary

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

Question: David Manthey - Baird - Analyst : Yes, thank you. Good morning and congrats to everyone on the role changes within the company. First question this morning, probably not unsurprising on pricing, could you tell us what percentage of COGS is PVC today and what expectations are baked into the guidance you provided? And then, if maybe you can comment on price expectations in any other category, whether it's commodity products or engineered products like valves, meters, fire protection, etc.

Question: David Manthey - Baird - Analyst : Thank you for that. Second, is there any way you could provide some insight into first quarter trends so far? I mean, there's been a little bit of weather early in the year and any other factors that are influencing the current environment. It doesn't sound like you're expecting conditions to improve too much through 2025 in your outlook. I just wanted to reconfirm that. And then, relative to that also, unannounced acquisitions, there's nothing in guidance for deals you haven't done yet, correct? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 25, 2025 / 12:30PM, CNM.N - Q4 2024 Core & Main Inc Earnings Call

Question: David Manthey - Baird - Analyst : Perfect. Thank you very much.

Question: Anika Dholakia - Barclays - Analyst : Good morning. You have Anika Dholakia on for Matt today. Thank you for taking my questions and congrats to you guys on the new roles. So first off, I wanted to talk about the end market outlook. It assumes resi flat, non-res flat, mean low-single-digits. I'm wondering between res and non-res, where you guys see more upside taking into account some of the top year market trends today. Thanks.

Question: Anika Dholakia - Barclays - Analyst : Great. Thank you for that. And then, on your expectation for gross margin expansion through fiscal '25. I'm wondering on the key levers driving this growth, you have private labels, sourcing, pricing. You guys can just bucket that in terms of what's driving it the most. And then, should we assume the cadence is similar to historic or if there's any differences to consider on that margin expansion through the year? Thanks.

Question: Anika Dholakia - Barclays - Analyst : Thanks, I'll pass it on.

Question: Joe Ritchie - Goldman Sachs - Analyst : Hey, good morning, everyone, and echo everybody's congratulations. Well deserved, Mark and Robyn, and thanks so much for all the help throughout the year, Steve. My first question I guess would be just on margins and thinking through this guidance of 0 to up [30 basis points]. Relative to the long-term expectations and what you had previously stated in Investor Day. I think you guys had historically been planning for 30 basis points to 50 basis points. Just wondering like whether anything has kind of changed on the margin, regarding your ability to expand margins in this environment.

Question: Joe Ritchie - Goldman Sachs - Analyst : Okay. That's helpful, Mark. And I guess, maybe just sticking with the SG&A piece. Thanks for laying out how much SG&A was actually up. I think what you said 1% year-over-year when you excluded the impact from the 53rd week in acquisitions. I guess just in terms of the acquisitions and your ability to get after some of that SG&A, can you just maybe just give us some -- contextualize like what the opportunity is here in 2025 from the recently announced M&A?

Question: Joe Ritchie - Goldman Sachs - Analyst : Okay. Thanks. I'll get back in queue.

Question: Nigel Coe - Wolfe Research - Analyst : Oh, good morning. Thanks. Steve, congrats on a great career. And Mark, Robyn, good luck with the next step. Steve, maybe starting with you, I think you've been very involved in the M&A process for Core & Main. Just wondering, how that cultivation process changes as you sort of move on to the next steps.

Question: Nigel Coe - Wolfe Research - Analyst : Okay, great. Thanks, Steve. And then, just want to dig into the large project pipeline. I think, your large competitor talks about the acceleration, especially in some of the larger projects. So just wondering what you're seeing in both non-res but also in municipal in terms of larger projects, especially with some of this IIJA funding come through. And I'm wondering, on the larger projects, does the margin profile change at all versus MRO?

Question: Joe Ritchie - Goldman Sachs - Analyst : That's great. Thank you.

Question: Patrick Bowman - JPMorgan - Analyst : Well, thanks. Hey, can you hear me?

Question: Patrick Bowman - JPMorgan - Analyst : Great. Okay, well, congrats Mark and Robyn on the new roles. I guess I just wanted to drill down a little bit with Steve, maybe if you give any additional color on what made the timing right for this change. Obviously, I don't want to intrude too much, but curious if you can give any other color.

Question: Patrick Bowman - JPMorgan - Analyst : Helpful color. Thanks and congrats. A couple other quick ones. One on commodity product pricing outside of PVC. Are you seeing any suppliers reacting to recent moves and underlying commodities for those products and maybe any color on that? And then, separately, on the SG&A side, any color -- I mean, I guess I could try to do the math, but the SG&A growth for '25, how are you thinking about that relative to the 2% to 5% sales growth you're getting?

Question: Patrick Bowman - JPMorgan - Analyst : What about (multiple speakers) REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 25, 2025 / 12:30PM, CNM.N - Q4 2024 Core & Main Inc Earnings Call

Question: Christopher Kalata - RBC Capital Markets - Analyst : Hi, this is Chris on for Mike. Just going back to the pricing outlook for this year, what's specifically being assumed for non-commodity price inflation? And when you're thinking about tariffs, the conversations you're having with suppliers, is there any sense, is there any quantification you can provide on potential magnitude of tariff price increases we could see this year and timing of that implementation?

Question: Christopher Kalata - RBC Capital Markets - Analyst : Appreciate that. And just is there any change in the competitive dynamics you're seeing in your markets? How would you characterize

Question: Christopher Kalata - RBC Capital Markets - Analyst : Thank you.

Question: Brian Biros - Thompson Research Group - Analyst : Hey, good morning. Thank you for taking my questions. I guess further on the end market, kind of your market outperformance and share gain expectations for this year, does that differ by end market at all? Maybe it's easier to take share in a slower market for resi or easier in a good market like municipal. I guess just wondering if there's any divergence there or difference, the historical trends, given the outlook where we are today.

Question: Brian Biros - Thompson Research Group - Analyst : Got it. And then maybe on the municipal side or, I guess, really across the entire business. Are you seeing any differences from the new administration on the ease of getting permitting or maybe just new projects going? I know rates aren't really helping on the financial part of the equation. But we have heard some things are getting easier or quicker out there when it comes to regulation type things, I guess. So just curious if you've seen any of that across your business. Thank you.

Question: Brian Biros - Thompson Research Group - Analyst : Yeah. Thank you.