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What were the key takeaways from Core & Main's earnings call?

- **Topline Growth**: Q2 net sales of $2.1B (+7% YoY) driven by 5% organic growth and M&A, despite -10% residential sales decline.
- **Margin Challenges**: Gross margin improved to 26.8%, but SG&A rose 13% YoY to $302M due to M&A costs and inflation.
- **Strategic Moves**: $34M cost-out actions announced; Canada Waterworks acquisition expands Ontario footprint.
- **Residential Risk**: FY25 residential outlook revised to -10% YoY due to macro headwinds.
- **Long-Term Drivers**: Municipal infrastructure growth and data center projects offset near-term residential weakness.

**【CEO Summary Section】**
- Core & Main reported net sales of $2.1 billion in Q2, up 7% year-over-year, driven by 5% organic growth and 2% from acquisitions.
- Gross margin improved to 26.8%, up 10 basis points sequentially, due to private label initiatives and cost control.
- Residential sales declined 10% YoY due to higher interest rates and affordability concerns, while municipal and nonresidential markets remained stable.
- The company announced the acquisition of Canada Waterworks, expanding its presence in Ontario.

**【CFO Financial Commentary】**
- GAAP net income was $420 million, with Non-GAAP EPS of $1.08, exceeding expectations.
- SG&A expenses rose 13% YoY to $302 million, driven by M&A integration costs, inflation, and one-time expenses.
- Operating cash flow was $34 million, with $47 million in share repurchases year-to-date.
- Adjusted EBITDA was $266 million, up 4% YoY, but margin declined 40 basis points due to higher SG&A.

**【Q&A Key Highlights】**
- **Residential Market Weakness**: Management lowered FY25 residential sales outlook to -10% YoY, citing soft lot development and higher mortgage rates.
- **Cost-Out Actions**: CFO Robyn Bradbury outlined $34 million in targeted cost reductions, with savings expected to materialize in FY26.
- **M&A Pipeline**: CEO Mark Witkowski highlighted a healthy M&A pipeline, including greenfield expansions in priority markets.
- **Gross Margin Stability**: CFO expects gross margins to remain stable in H2, supported by private label growth and sourcing initiatives.
- **Nonresidential Growth**: Data center and highway projects offset weakness in commercial/retail nonresidential sectors.

Core & Main, Inc. (CNM) Q2 2026 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

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Cost of Financing Services

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Operating Expenses

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Net Income

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CNM

CNM fundamentals

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