Core Main Inc

Previous wording

Core & Main, Inc. (“Core & Main” and collectively with its subsidiaries, the “Company”) is a leader in advancing reliable infrastructure with local service, nationwide. As a leading specialized distributor with a focus on water, wastewater, storm drainage and fire protection products, and related services, we provide solutions to municipalities, private water companies and professional contractors across municipal, non-residential and residential end markets, nationwide. Our specialty products and services are used primarily in the maintenance, repair, replacement and new construction of water, wastewater, storm drainage and fire protection infrastructure. We reach customers through a nationwide network of approximately 350 branches across 49 states. Our products include pipes, valves, fittings, storm drainage products, fire protection products, meter products and other products. We complement our core products through additional offerings, including smart meter systems, fusible high-density polyethylene (“fusible HDPE “) piping solutions, specifically engineered treatment plant products, geosynthetics and erosion control products. Our services and capabilities allow for integration with customers and form part of their sourcing and procurement function.

Current wording

Core & Main, Inc. (“Core & Main” and collectively with its subsidiaries, the “Company”) is a leader in advancing reliable infrastructure with local service, nationwide. As a leading specialized distributor with a focus on water, wastewater, storm drainage and fire protection products, and related services, we provide solutions to municipalities, private water companies and professional contractors across municipal, non-residential and residential end markets, nationwide. Our specialty products and services are used primarily in the maintenance, repair, replacement and new construction of water, wastewater, storm drainage and fire protection infrastructure. We reach customers through a network of approximately 350 branches across 49 states. Our products include pipes, valves, fittings, storm drainage products, fire protection products, meter products and other products. We complement our core products through additional offerings, including smart meter systems, fusible high-density polyethylene (“fusible HDPE “) piping solutions, specifically engineered treatment plant products, geosynthetics and erosion control products. Our services and capabilities allow for integration with customers and form part of their sourcing and procurement function.

Previous wording

The Company’s fiscal year is a 52- or 53-week period ending on the Sunday nearest to January 31 st. Quarters within the fiscal year include 13-week periods, unless a fiscal year includes a 53 rd week, in which case the fourth quarter of the fiscal year will be a 14-week period. Each of the three months ended July 28, 2024 and three months ended July 30, 2023 included 13 weeks and each of the six months ended July 28, 2024 and six months ended July 30, 2023 included 26 weeks. The current fiscal year ending February 2, 2025 (“fiscal 2024”) will include 53 weeks.

Current wording

The Company’s fiscal year is a 52- or 53-week period ending on the Sunday nearest to January 31 st. Quarters within the fiscal year include 13-week periods, unless a fiscal year includes a 53 rd week, in which case the fourth quarter of the fiscal year will be a 14-week period. Each of the three months ended October 27, 2024 and three months ended October 29, 2023 included 13 weeks and each of the nine months ended October 27, 2024 and nine months ended October 29, 2023 included 39 weeks. The current fiscal year ending February 2, 2025 (“fiscal 2024”) will include 53 weeks.

Previous wording

Significant Events During the Six Months Ended July 28, 2024

Current wording

Significant Events During the Nine Months Ended October 27, 2024

Previous wording

On June 12, 2024, the Company’s board of directors authorized a share repurchase program (the “Repurchase Program”), pursuant to which the Company may purchase up to $500 million shares of Class A common stock. Shares repurchased under the Repurchase Program are retired immediately and are accounted for as a decrease to stockholders’ equity. For the six months ended July 28, 2024, the Company repurchased 429,996 shares of Class A common stock for a total of $21 million through open market transactions.

Current wording

On June 12, 2024, the Company’s board of directors authorized a share repurchase program (the “Repurchase Program”), pursuant to which the Company may purchase up to $500 million of the Company’s Class A common stock. Shares repurchased under the Repurchase Program are retired immediately and are accounted for as a decrease to stockholders’ equity. For the nine months ended October 27, 2024 the Company repurchased 2,890,483 shares of Class A common stock for a total of $121 million through open market transactions.

Previous wording

Certain of our indebtedness, including borrowings under the Senior Term Loan Credit Facility (as defined in Note 6 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q) and the Senior ABL Credit Facility are subject to variable rates of interest and expose us to interest rate risk. The Senior Term Loan Credit Facility and the Senior ABL Credit Facility each bear interest based on term secured overnight financing rate (“Term SOFR”). If interest rates increase, our debt service obligations on our variable-rate indebtedness will increase and our net income would decrease, even though the amount borrowed under the facilities remains the same. As of July 28, 2024, we had $2,452 million of outstanding variable-rate debt. We seek to mitigate our exposure to interest rate volatility through the entry into interest rate swap instruments, such as our interest rate swap, associated with borrowings under the Senior Term Loan Credit Facility, which effectively converts $800 million of our variable rate debt to fixed rate debt, with notional amount decreases to $700 million on July 27, 2025 through the instrument maturity on July 27, 2026. On February 12, 2024, Core & Main LP entered into an additional interest rate swap, associated with borrowings under the Senior Term Loan Credit Facility, that has a starting notional amount of $750 million that increases to $1,500 million on July 27, 2026 through the instrument maturity on July 27, 2028, which effectively converts our variable rate debt to fixed rate debt. Despite these efforts, unfavorable movement in interest rates may further result in higher interest expense and cash payments.

Current wording

Certain of our indebtedness, including borrowings under the Senior Term Loan Credit Facility (as defined in Note 6 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q) and the Senior ABL Credit Facility are subject to variable rates of interest and expose us to interest rate risk. The Senior Term Loan Credit Facility and the Senior ABL Credit Facility each bear interest based on term secured overnight financing rate (“Term SOFR”). If interest rates increase, our debt service obligations on our variable-rate indebtedness will increase and our net income would decrease, even though the amount borrowed under the facilities remains the same. As of October 27, 2024, we had $2,430 million of outstanding variable-rate debt. We seek to mitigate our exposure to interest rate volatility through the entry into interest rate swap instruments, such as our interest rate swap, associated with borrowings under the Senior Term Loan Credit Facility, which effectively converts $800 million of our variable rate debt to fixed rate debt, with notional amount decreases to $700 million on July 27, 2025 through the instrument maturity on July 27, 2026. On February 12, 2024, Core & Main LP entered into an additional interest rate swap, associated with borrowings under the Senior Term Loan Credit Facility, that has a starting notional amount of $750 million that increases to $1,500 million on July 27, 2026 through the instrument maturity on July 27, 2028, which effectively converts our variable rate debt to fixed rate debt. Despite these efforts, unfavorable movement in interest rates may further result in higher interest expense and cash payments.

Previous wording

In addition to our organic growth strategy, we opportunistically pursue strategic asset and business acquisitions to grow our business. Below is a summary of the acquisitions that closed during thesix months ended July 28, 2024 (the “Fiscal 2024 Acquisitions”) and the six months ended July 30, 2023 (the "Fiscal 2023 Acquisitions") with an aggregate transaction value of $623 million and $161 million, subject to working capital adjustments, respectively.

Current wording

In addition to our organic growth strategy, we opportunistically pursue strategic asset and business acquisitions to grow our business. Below is a summary of the acquisitions that closed during thenine months ended October 27, 2024 (the “Fiscal 2024 Acquisitions”) and the nine months ended October 29, 2023 (the "Fiscal 2023 Acquisitions") with an aggregate transaction value of $748 million and $161 million, subject to working capital adjustments, respectively.

Previous wording

Gross profit represents the difference between the product cost inclusive of material costs from suppliers (net of earned rebates and discounts and including the cost of inbound freight), labor and overhead costs and depreciation and the net sale price to our customers. Gross profit may be impacted by the time between changes in supplier costs, tariffs and changes in our customer pricing. Gross profit may not be comparable to those of other companies, as other companies may include all of the costs related to their distribution network in cost of sales.

Current wording

Gross profit represents the difference between the product cost inclusive of material costs from suppliers (net of earned rebates and discounts and including the cost of inbound freight), labor and overhead costs and depreciation and the net sale price to our customers. Gross profit may be impacted by the time between changes in supplier costs and changes in our customer pricing. Gross profit may not be comparable to those of other companies, as other companies may include all of the costs related to their distribution network in cost of sales.

Previous wording

Operating expenses are primarily comprised of selling, general and administrative costs, which include personnel expenses (salaries, wages, incentive compensation, associate benefits and payroll taxes), rent, insurance, utilities, professional fees, outbound freight, fuel and repair and maintenance.

Current wording

Operating expenses are primarily comprised of selling, general and administrative costs, which include personnel expenses (salaries, wages, incentive compensation, benefits and payroll taxes), rent, insurance, utilities, professional fees, outbound freight, fuel and repair and maintenance.

Previous wording

Net sales for the three months ended July 28, 2024 increased $103 million, or 5.5%, to $1,964 million compared with $1,861 million for the three months ended July 30, 2023. Net sales increased primarily due to acquisitions partially offset by project delays from wet weather conditions, comparably lower end-market volumes and slightly lower selling prices. Net sales increased for pipes, valves & fittings and storm drainage products primarily due to acquisitions partially offset by project delays from wet weather conditions and comparably lower end-market volumes. Net sales for fire protection products declined due to lower selling prices and comparably lower end-market volumes partially offset by acquisitions. Net sales of meter products benefited from our ability to drive the adoption of smart meter technology through municipalities, increased product availability and acquisitions.

Current wording

Net sales for the three months ended October 27, 2024 increased $211 million, or 11.5%, to $2,038 million compared with $1,827 million for the three months ended October 29, 2023. Net sales increased primarily dueto acquisitions and comparably higher end-market volumes partially offset by slightly lower selling prices. Net sales increased for pipes, valves & fittings due to acquisitions and comparably higher end-market volumes partially offset by slightly lower selling prices. Net sales increased for storm drainage products due to acquisitions and our ability to drive the adoption of advanced storm water management systems. Net sales for fire protection products declined due to lower selling prices and comparably lower end-market volumes. Net sales of meter products benefited from our ability to drive the adoption of smart meter technology through municipalities, increased product availability and acquisitions.

Previous wording

Gross profit for the three months ended July 28, 2024 increased $17 million, or 3.4%, to $518 million compared with $501 million for the three months ended July 30, 2023. Gross profit as a percentage of net sales for the three months ended July 28, 2024 was 26.4% compared with 26.9% for the three months ended July 30, 2023. The overall decline in gross profit as a percentage of net sales was primarily attributable to larger prior year benefits from strategic inventory investments during an inflationary environment partially offset by favorable impacts from the execution of our gross margin initiatives and accretive acquisitions.

Current wording

Gross profit for the three months ended October 27, 2024 increased $49 million, or 9.9%, to $543 million compared with $494 million for the three months ended October 29, 2023. Gross profit as a percentage of net sales for the three months ended October 27, 2024 was 26.6% compared with 27.0% for the three months ended October 29, 2023. The overall decline in gross profit as a percentage of net sales was primarily attributable to larger prior year benefits from strategic inventory investments during an inflationary period partially offset by favorable impacts from the execution of our gross margin initiatives and accretive acquisitions.

Previous wording

Interest expense was $36 million for the three months ended July 28, 2024 compared with $22 million for the three months ended July 30, 2023. The increase was primarily attributable to increased borrowings under the Senior ABL Credit Facility and the 2031 Senior Term Loan.

Current wording

Interest expense was $36 million for the three months ended October 27, 2024 compared with $20 million for the three months ended October 29, 2023. The increase was primarily attributable to increased borrowings under the 2031 Senior Term Loan and the Senior ABL Credit Facility.

Previous wording

The provision for income taxes for the six months ended July 28, 2024 increased $4 million, or 5.6%, to $75 million compared with $71 million for the six months ended July 30, 2023. The increase was primarily attributable to an increase in the effective tax rate partially offset by lower operating income. For the six months ended July 28, 2024 and July 30, 2023, our effective tax rate was 24.8% and 19.3%, respectively. The effective tax rate for each period reflects only the portion of net income that is attributable to taxable entities. The increase in the effective tax rate was primarily attributable to a substantial decrease in the non-controlling interest ownership that increased the allocation of net income to taxable entities.

Current wording

The provision for income taxes for the three months ended October 27, 2024 increased $8 million, or 20.5%, to $47 million compared with $39 million for the three months ended October 29, 2023. The increase was primarily attributable to an increase in the effective tax rate and an increase in operating income. For the three months ended October 27, 2024 and October 29, 2023, our effective tax rate was 25.1% and 19.8%, respectively. The effective tax rate for each period reflects only the portion of net income that is attributable to taxable entities. The increase in the effective tax rate was primarily attributable to a decrease in the non-controlling interest ownership that increased the allocation of net income to taxable entities.

Previous wording

Net income for the three months ended July 28, 2024 decreased $38 million, or 23.2%, to $126 million compared with $164 million for the three months ended July 30, 2023. The decrease in net income was primarily attributable to a decrease in operating income and an increase in interest expense.

Current wording

Net income for the three months ended October 27, 2024 decreased $18 million, or 11.4%, to $140 million compared with $158 million for the three months ended October 29, 2023. The decrease in net income was primarily attributable to an increase in interest expense and income tax expense partially offset by an increase in operating income.

Previous wording

Net income attributable to non-controlling interests for the three months ended July 28, 2024 decreased $47 million to $7 million compared with $54 million for the three months ended July 30, 2023. The decrease was primarily attributable to substantial exchanges of Partnership Interests by non-controlling interest holders and a decline in net income.

Current wording

Net income attributable to non-controlling interests for the three months ended October 27, 2024 decreased $39 million to $7 million compared with $46 million for the three months ended October 29, 2023. The decrease was primarily attributable to exchanges of Partnership Interests by non-controlling interest holders and a decline in net income.

Previous wording

Net income attributable to Core & Main, Inc. for the three months ended July 28, 2024 increased $9 million, or 8.2%, to $119 million compared with $110 million for the three months ended July 30, 2023. The increase was primarily attributable to a decreased allocation to non-controlling interest holders following exchanges of Partnership Interests partially offset by a decline in net income.

Current wording

Net income attributable to Core & Main, Inc. for the three months ended October 27, 2024 increased $21 million, or 18.8%, to $133 million compared with $112 million for the three months ended October 29, 2023. The increase was primarily attributable to a decreased allocation to non-controlling interest holders following exchanges of Partnership Interests partially offset by a decline in net income.

Previous wording

The Class A common stock basic earnings per share for the three months ended July 28, 2024 decreased 6.1% to$0.62 compared with$0.66 forthe three months ended July 30, 2023. The Class A common stock diluted earnings per share for the three months ended July 28, 2024 decreased 7.6% to $0.61 compared with$0.66 forthe three months ended July 30, 2023. The decrease in basic earnings per share was attributable to higher Class A share counts from exchanges of Partnership Interests partially offset by an increase in net income attributable to Core & Main, Inc. Diluted earnings per share decreased due to a decline in net income partially offset by lower share counts following the share repurchase transactions executed throughout fiscal 2023.

Current wording

The Class A common stock basic and diluted earnings per share for the three months ended October 27, 2024 both increased 6.2% to$0.69 compared with$0.65 forthe three months ended October 29, 2023. The increase in basic earnings per share was attributable to an increase in net income attributable to Core & Main, Inc. partially offset by higher Class A share counts from exchanges of Partnership Interests. Diluted earnings per share increased due to lower share counts following the share repurchase transactions executed throughout fiscal 2023 and fiscal 2024 partially offset by a decline in net income.

Previous wording

Adjusted EBITDA for the three months ended July 28, 2024 decreased $13 million, or 4.8%, to $257 million compared with $270 million for the three months ended July 30, 2023. The decrease in Adjusted EBITDAwas primarily attributable to higher SG&A expenses partially offset by higher gross profit. For a reconciliation of Adjusted EBITDA to net income or net income attributable to Core & Main, Inc., the most comparable GAAP financial metric, as applicable, see “—Non-GAAP Financial Measures.”

Current wording

Adjusted EBITDA for the three months ended October 27, 2024 increased $17 million, or 6.5%, to $277 million compared with $260 million for the three months ended October 29, 2023. The increase in Adjusted EBITDAwas primarily attributable to higher gross profit partially offset by higher SG&A expenses. For a reconciliation of Adjusted EBITDA to net income or net income attributable to Core & Main, Inc., the most comparable GAAP financial metric, as applicable, see “—Non-GAAP Financial Measures.”

Previous wording

Net sales for the six months ended July 28, 2024 increased $270 million, or 7.9%, to $3,705 million compared with $3,435 million for the six months ended July 30, 2023. Net sales increased primarily due to acquisitions partially offset by comparably lower selling prices. Net sales increased for pipes, valves & fittings due to acquisitions. Net sales increasedfor storm drainage due to acquisitions and our ability to drive the adoption of advanced storm water management systems. Net sales for fire protection products declined due to comparably lower selling prices and end-market volumes partially offset by acquisitions. Net sales of meter products benefited fromour ability to drive the adoption of smart meter technology through municipalities, increased product availability and acquisitions.

Current wording

Net sales for the nine months ended October 27, 2024 increased $481 million, or 9.1%, to $5,743 million compared with $5,262 million for the nine months ended October 29, 2023. Net sales increased primarily due to acquisitions and higher end-market volumes partially offset by slightly lower selling prices. Net sales increased for pipes, valves & fittings due to acquisitions partially offset by slightly lower selling prices. Net sales increasedfor storm drainage due to acquisitions and our ability to drive the adoption of advanced storm water management systems. Net sales for fire protection products declined due to slightly lower selling prices and end-market volumes partially offset by acquisitions. Net sales of meter products benefited fromour ability to drive the adoption of smart meter technology through municipalities, increased product availability and acquisitions.

Previous wording

Gross profit for the six months ended July 28, 2024 increased $46 million, or 4.9%, to $986 million compared with $940 million for the six months ended July 30, 2023. Gross profit as a percentage of net sales for the six months ended July 28, 2024 was 26.6% compared with 27.4% for the six months ended July 30, 2023. The overall decrease in gross profit as a percentage of net sales was primarily attributable to larger prior year benefits from strategic inventory investments during an inflationary environment partially offset by favorable impacts from the execution of our gross margin initiatives and accretive acquisitions.

Current wording

Gross profit for the nine months ended October 27, 2024 increased $95 million, or 6.6%, to $1,529 million compared with $1,434 million for the nine months ended October 29, 2023. Gross profit as a percentage of net sales for the nine months ended October 27, 2024 was 26.6% compared with 27.3% for the nine months ended October 29, 2023. The overall decrease in gross profit as a percentage of net sales was primarily attributable to larger prior year benefits from strategic inventory investments during an inflationary period partially offset by favorable impacts from the execution of our gross margin initiatives and accretive acquisitions.

Previous wording

SG&A expenses for the six months ended July 28, 2024 increased $64 million, or 13.9%, to $525 million compared with $461 million during the six months ended July 30, 2023. The increase includes $41 million in personnel expenses primarily related to acquisitions. The remaining increase is driven by acquisitions, inflation and other growth investments. SG&A expenses as a percentage of net sales were 14.2% for the six months ended July 28, 2024 compared with 13.4% for the six months ended July 30, 2023. The increase was primarily attributable to investments in growth, inflationary cost impacts and acquisitions.

Current wording

SG&A expenses for the nine months ended October 27, 2024 increased $98 million, or 14.0%, to $799 million compared with $701 million during the nine months ended October 29, 2023. The increase includes $68 million in personnel expenses primarily related to acquisitions. The remaining increase is driven by acquisitions, inflation and other growth investments. SG&A expenses as a percentage of net sales were 13.9% for the nine months ended October 27, 2024 compared with 13.3% for the nine months ended October 29, 2023. The increase was primarily attributable to acquisitions, investments in growth and inflationary cost impacts.

Previous wording

D&A expense was $89 million for the six months ended July 28, 2024 compared with $72 million for the six months ended July 30, 2023. The increase was primarily attributable to recent acquisitions.

Current wording

D&A expense was $135 million for the nine months ended October 27, 2024 compared with $109 million for the nine months ended October 29, 2023. The increase was primarily attributable to recent acquisitions.

Previous wording

Operating income for the six months ended July 28, 2024 decreased $35 million, or 8.6%, to $372 million compared with $407 million during the six months ended July 30, 2023. The decrease in operating income was primarily attributable to higher SG&A and amortization expenses partially offset by higher gross profit.

Current wording

Operating income for the nine months ended October 27, 2024 decreased $29 million, or 4.6%, to $595 million compared with $624 million during the nine months ended October 29, 2023. The decrease in operating income was primarily attributable to higher SG&A and amortization expenses partially offset by higher gross profit.

Previous wording

Interest expense was $70 million for the six months ended July 28, 2024 compared with $39 million for the six months ended July 30, 2023. The increase was primarily attributable to increased borrowings under the Senior ABL Credit Facility and the 2031 Senior Term Loan.

Current wording

Interest expense was $106 million for the nine months ended October 27, 2024 compared with $59 million for the nine months ended October 29, 2023. The increase was primarily attributable to increased borrowings under the 2031 Senior Term Loan and the Senior ABL Credit Facility.

Previous wording

The provision for income taxes for the three months ended July 28, 2024 increased $2 million, or 5.0%, to $42 million compared with $40 million for the three months ended July 30, 2023. The increase was primarily attributable to an increase in the effective tax rate partially offset by lower operating income. For the three months ended July 28, 2024 and July 30, 2023, our effective tax rate was 25.0% and 19.6%, respectively. The effective tax rate for each period reflects only the portion of net income that is attributable to taxable entities. The increase in the effective tax rate was primarily attributable to a substantial decrease in the non-controlling interest ownership that increased the allocation of net income to taxable entities.

Current wording

The provision for income taxes for the nine months ended October 27, 2024 increased $12 million, or 10.9%, to $122 million compared with $110 million for the nine months ended October 29, 2023. The increase was primarily attributable to an increase in the effective tax rate partially offset by lower operating income. For the nine months ended October 27, 2024 and October 29, 2023, our effective tax rate was 24.9% and 19.5%, respectively. The effective tax rate for each period reflects only the portion of net income that is attributable to taxable entities. The increase in the effective tax rate was primarily attributable to a decrease in the non-controlling interest ownership that increased the allocation of net income to taxable entities.

Previous wording

Net income for the six months ended July 28, 2024 decreased $70 million, or 23.6% to $227 million compared with $297 million for the six months ended July 30, 2023. The decrease in net income was primarily attributable to a decrease in operating income and an increase in interest expenses.

Current wording

Net income for the nine months ended October 27, 2024 decreased $88 million, or 19.3% to $367 million compared with $455 million for the nine months ended October 29, 2023. The decrease in net income was primarily attributable to a decrease in operating income, an increase in interest expenses and an increase in income tax expenses.

Previous wording

Net income attributable to non-controlling interests for the six months ended July 28, 2024 decreased $88 million to $13 million compared with $101 million for the six months ended July 30, 2023. Thedecrease was primarily attributable to substantial exchanges of Partnership Interests by non-controlling interest holders and a decline in net income.

Current wording

Net income attributable to non-controlling interests for the nine months ended October 27, 2024 decreased $127 million to $20 million compared with $147 million for the nine months ended October 29, 2023. Thedecrease was primarily attributable to exchanges of Partnership Interests by non-controlling interest holders and a decline in net income.

Previous wording

Net income attributable to Core & Main, Inc. for the six months ended July 28, 2024 increased $18 million, or 9.2%, to $214 million compared with $196 million for the six months ended July 30, 2023. The increase was primarily attributable to a decreased allocation to non-controlling interest holders following exchanges of Partnership Interests partially offset by a decline in net income.

Current wording

Net income attributable to Core & Main, Inc. for the nine months ended October 27, 2024 increased $39 million, or 12.7%, to $347 million compared with $308 million for the nine months ended October 29, 2023. The increase was primarily attributable to a decreased allocation to non-controlling interest holders following exchanges of Partnership Interests partially offset by a decline in net income.

Previous wording

The Class A common stock basic earnings per share for the six months ended July 28, 2024 decreased 4.3% to $1.11 compared with $1.16 for the six months ended July 30, 2023. The Class A common stock diluted earnings per share for the six months ended July 28, 2024 decreased 3.5% to$1.11 compared with$1.15 for the six months ended July 30, 2023. The decrease in basic earnings per share was attributable to higher Class A share counts from exchanges of Partnership Interests partially offset by an increase in net income attributable to Core & Main, Inc. Diluted earnings per share decreased due to a decline in net income partially offset by lower share counts following the share repurchase transactions executed throughout fiscal 2023.

Current wording

The Class A common stock basic earnings per share for the nine months ended October 27, 2024 and the nine months ended October 29, 2023 was $1.81 in each period. The Class A common stock diluted earnings per share for the nine months ended October 27, 2024 decreased 0.6% to$1.79 compared with$1.80 for the nine months ended October 29, 2023. The basic earnings per share was flat due to an increase in net income attributable to Core & Main, Inc. offset by higher Class A share counts from exchanges of Partnership Interests. Diluted earnings per share decreased due to a decline in net income partially offset by lower share counts following the share repurchase transactions executed throughout fiscal 2023 and fiscal 2024.

Previous wording

Adjusted EBITDA for the six months ended July 28, 2024 decreased $16 million, or 3.3%, to $474 million compared with $490 million for the six months ended July 30, 2023. The decrease in Adjusted EBITDAwas primarily attributable to higher SG&A expenses partially offset by higher gross profit. For a reconciliation of Adjusted EBITDA to net income or net income attributable to Core & Main, Inc., the most comparable GAAP financial metric, as applicable, see “—Non-GAAP Financial Measures.”

Current wording

Adjusted EBITDA for the nine months ended October 27, 2024 increased $1 million, or 0.1%, to $751 million compared with $750 million for the nine months ended October 29, 2023. The increase in Adjusted EBITDAwas primarily attributable to higher gross profit partially offset by higher SG&A expenses. For a reconciliation of Adjusted EBITDA to net income or net income attributable to Core & Main, Inc., the most comparable GAAP financial metric, as applicable, see “—Non-GAAP Financial Measures.”

Previous wording

Historically, we have financed our liquidity requirements through cash flows from operating activities, borrowings under our credit facilities, issuances of equity and debt securities and working capital management activities. Our principal historical liquidity requirements have been for working capital, capital expenditures, acquisitions, servicing indebtedness, share repurchases and the Repurchase Transactions (as defined in Note 1 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q).

Current wording

Historically, we have financed our liquidity requirements through cash flows from operating activities, borrowings under our credit facilities, issuances of equity and debt securities and working capital management activities. Our principal historical liquidity requirements have been for working capital, capital expenditures, acquisitions, servicing indebtedness, share repurchases (including under the Repurchase Program) and the Repurchase Transactions (as defined in Note 1 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q).

Previous wording

As of July 28, 2024, our cash and cash equivalents totaled $13 million. We maintain our cash deposits according to a banking policy that requires diversification across a variety of highly-rated financial institutions. However, this could result in a concentration of cash and cash equivalents across these financial institutions in excess of Federal Deposit Insurance Corporation-insured limits.

Current wording

As of October 27, 2024, our cash and cash equivalents totaled $10 million. We maintain our cash deposits according to a banking policy that requires diversification across a variety of highly-rated financial institutions. However, this could result in a concentration of cash and cash equivalents across these financial institutions in excess of Federal Deposit Insurance Corporation-insured limits.

Previous wording

As of July 28, 2024, we had$250 million outstanding borrowings on our Senior ABL Credit Facility, which provides for borrowings of up to $1,250 million, subject to borrowing base availability. As of July 28, 2024, after giving effect to approximately $14 million of letters of credit issued under the Senior ABL Credit Facility, Core & Main LP would have been able to borrow approximately $986 million under the Senior ABL Credit Facility, subject to borrowing base availability. Our short term debt obligations of $23 million are related to quarterly amortization principal payments on the Senior Term Loan Credit Facility.

Current wording

As of October 27, 2024, we had$235 million outstanding borrowings on our Senior ABL Credit Facility, which provides for borrowings of up to $1,250 million, subject to borrowing base availability. As of October 27, 2024, after giving effect to approximately $15 million of letters of credit issued under the Senior ABL Credit Facility, Core & Main LP would have been able to borrow approximately $1,000 million under the Senior ABL Credit Facility, subject to borrowing base availability. Our short term debt obligations of $23 million are related to quarterly amortization principal payments on the Senior Term Loan Credit Facility.

Previous wording

In addition to making distributions to Core & Main, Inc. to fund tax obligations and payments under the Tax Receivable Agreements, in accordance with the Partnership Agreement, Holdings also makes distributions to Management Feeder representing the non-controlling interests of Core & Main, Inc. to fund their income tax obligations with various taxing authorities. The amount of these payments are dependent upon various factors, including the amount of taxable income allocated to them from Holdings, changes in the ownership percentage of the non-controlling interest holders, changes in tax rates and the timing of distributions relative to the corresponding tax year. Tax distributions to non-controlling interest holders were$7 million for the six months ended July 28, 2024. Further exchanges by Management Feeder may result in lower tax distributions subject to any changes to income before provision to income taxes.

Current wording

In addition to making distributions to Core & Main, Inc. to fund tax obligations and payments under the Tax Receivable Agreements, in accordance with the Partnership Agreement, Holdings also makes distributions to Management Feeder representing the non-controlling interests of Core & Main, Inc. to fund their income tax obligations with various taxing authorities. The amount of these payments are dependent upon various factors, including the amount of taxable income allocated to them from Holdings, changes in the ownership percentage of the non-controlling interest holders, changes in tax rates and the timing of distributions relative to the corresponding tax year. Tax distributions to non-controlling interest holders were$9 million for the nine months ended October 27, 2024. Further exchanges by Management Feeder may result in lower tax distributions subject to any changes to income before provision to income taxes.

Previous wording

Additionally, we continuously evaluate our approach to our capital allocation, which may include acquisitions, greenfields, debt reduction (including through open market debt repurchases, negotiated repurchases, other retirements of outstanding debt and opportunistic refinancing of debt), stock repurchases, dividends or other distributions. During thesix months ended July 28, 2024, we completed $21 million of repurchases of Class A common stock under the Repurchase Program. For further details, refer to Note 1 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. We may continue to return capital to our shareholders through share repurchases and/or dividends. The execution of these, and other, capital allocation activities may be at the discretion of, and subject to the approval by, our board of directors and will depend on our financial condition, earnings, liquidity and capital requirements, market conditions, level of indebtedness, contractual restrictions, compliance with our debt covenants, restrictions imposed by applicable law, general business conditions and any other factors that our board of directors deems relevant in making any such determination. Therefore, there can be no assurance that we will engage in any or all of these actions or to what amount of capital we will allocate to each option.

Current wording

Additionally, we continuously evaluate our approach to our capital allocation, which may include acquisitions, greenfields, debt reduction (including through open market debt repurchases, negotiated repurchases, other retirements of outstanding debt and opportunistic refinancing of debt), stock repurchases, dividends or other distributions. During thenine months ended October 27, 2024, we completed $121 million of repurchases of Class A common stock under the Repurchase Program. For further details, refer to Note 1 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. We may continue to return capital to our shareholders through share repurchases including pursuant to the Repurchase Program and/or dividends. The execution of these, and other, capital allocation activities may be at the discretion of, and subject to the approval by, our board of directors and will depend on our financial condition, earnings, liquidity and capital requirements, market conditions, level of indebtedness, contractual restrictions, compliance with our debt covenants, restrictions imposed by applicable law, general business conditions and any other factors that our board of directors deems relevant in making any such determination. Therefore, there can be no assurance that we will engage in any or all of these actions or to what amount of capital we will allocate to each option.

Previous wording

Net cash provided by operating activities was $126 million for the six months ended July 28, 2024 compared with $402 million for the six months ended July 30, 2023. The $276 million decrease in cash provided by operating activities was primarily driven by more typical investment in working capital in the six months ended July 28, 2024 compared with a reduction in inventory during fiscal 2023 due to inventory optimization subsequent to supply chain improvements. Increased interest payments and higher income tax payments due to higher taxable income of Core & Main, Inc. following exchanges of Partnership Interests throughout fiscal 2023 also reduced cash flows.

Current wording

Net cash provided by operating activities was $386 million for the nine months ended October 27, 2024 compared with $775 million for the nine months ended October 29, 2023. The $389 million decrease in cash provided by operating activities was primarily driven by more typical investment in working capital in the nine months ended October 27, 2024 compared with a reduction in inventory during fiscal 2023 due to inventory optimization subsequent to supply chain improvements. Increased interest payments and higher income tax payments due to higher taxable income of Core & Main, Inc. following exchanges of Partnership Interests throughout fiscal 2023 also reduced cash flows.

Previous wording

Net cash used in investing activities increased by $454 million to $618 million for the six months ended July 28, 2024 compared with $164 million for the six months ended July 30, 2023, primarily attributable to a$445 million increase in cash outflows for acquisitions during fiscal 2024.

Current wording

Net cash used in investing activities increased by $575 million to $757 million for the nine months ended October 27, 2024 compared with $182 million for the nine months ended October 29, 2023, primarily attributable to a$571 million increase in cash outflows for acquisitions during fiscal 2024.

Previous wording

Net cash provided by financing activities was $504 million for the six months ended July 28, 2024 compared with net cash used in financing activities of $395 million for the six months ended July 30, 2023. The change of $899 million was primarily attributed to the $750 million issuance of the 2031 Senior Term Loan, a $452 million reduction in outflows related to the Repurchase Transactions, and $18 million reduction in distributions to non-controlling interest holders during fiscal 2024. These factors were partially offset by a $295 million decrease in net borrowings on the Senior ABL Credit Facility activity and a $14 million of debt issuance costs associated with the debt offerings during fiscal 2024.

Current wording

Net cash provided by financing activities was $380 million for the nine months ended October 27, 2024 compared with net cash used in financing activities of $669 million for the nine months ended October 29, 2023. The change of $1,049 million was primarily attributed to the $750 million issuance of the 2031 Senior Term Loan, a $497 million reduction in outflows related to the Repurchase Transactions and $24 million reduction in distributions to non-controlling interest holders during fiscal 2024. These factors were partially offset by a $195 million decrease in net borrowings on the Senior ABL Credit Facility and a $14 million of debt issuance costs associated with the debt offerings during fiscal 2024.

Previous wording

(1)Aggregate amount of commitments under the asset-based revolving credit facility of $1,250 million overall, subject to borrowing base availability. There were $250 million outstanding under the Senior ABL Credit Facility as of July 28, 2024.

Current wording

(1)Aggregate amount of commitments under the asset-based revolving credit facility of $1,250 million overall, subject to borrowing base availability. There were $235 million outstanding under the Senior ABL Credit Facility as of October 27, 2024.

Previous wording

As of July 28, 2024, the Company had agreements in place with various suppliers to purchase goods and services, primarily inventory, in the aggregate amount of $1,147 million. These purchase obligations are generally cancellable, but the Company foresees no intent to cancel. Payments are generally expected to be made during fiscal 2024 and the fiscal year ended February 1, 2026 for these obligations.

Current wording

As of October 27, 2024, the Company had agreements in place with various suppliers to purchase goods and services, primarily inventory, in the aggregate amount of $1,009 million. These purchase obligations are generally cancellable, but the Company foresees no intent to cancel. Payments are generally expected to be made during fiscal 2024 and the fiscal year ended February 1, 2026 for these obligations.

Previous wording

A summary of our significant accounting policies are discussed in Note 2 to the audited consolidated financial statements in our 2023 Annual Report on Form 10-K. The preparation of condensed consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Our estimates and assumptions are based on historical experiences and changes in the business environment. However, actual results may differ from estimates under different conditions, sometimes materially. Critical accounting policies and estimates are defined as those that are both most important to the portrayal of our financial condition and results of operations and require management judgment. There have been no significant changes to these policies which have had a material impact on the Company’s interim unaudited condensed consolidated financial statements and related notes during the three and six months ended July 28, 2024.

Current wording

A summary of our significant accounting policies are discussed in Note 2 to the audited consolidated financial statements in our 2023 Annual Report on Form 10-K. The preparation of condensed consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Our estimates and assumptions are based on historical experiences and changes in the business environment. However, actual results may differ from estimates under different conditions, sometimes materially. Critical accounting policies and estimates are defined as those that are both most important to the portrayal of our financial condition and results of operations and require management judgment. There have been no significant changes to these policies which have had a material impact on the Company’s interim unaudited condensed consolidated financial statements and related notes during the three and nine months ended October 27, 2024.