Core & Main’s second quarter results were met with a significant negative reaction from the market, reflecting concerns around both top-line performance and forward-looking expectations. Management attributed the quarter’s growth to healthy municipal demand and execution in treatment plant and fusible HDPE projects, but noted that residential lot development slowed, particularly in Sunbelt regions. CEO Mark Witkowski highlighted, “We believe higher interest rates, affordability concerns, and lower consumer confidence are weighing on demand for new homes.” Operating costs were also higher than anticipated, with inflation in facilities and fleet contributing to margin pressures.
Is now the time to buy CNM? Find out in our full research report (it’s free).
Core & Main (CNM) Q2 CY2025 Highlights:
- Revenue: $2.09 billion vs analyst estimates of $2.11 billion (6.6% year-on-year growth, 1% miss)
- Adjusted EPS: $0.70 vs analyst expectations of $0.79 (10.9% miss)
- Adjusted EBITDA: $266 million vs analyst estimates of $285.5 million (12.7% margin, 6.8% miss)
- The company dropped its revenue guidance for the full year to $7.65 billion at the midpoint from $7.7 billion, a 0.6% decrease
- EBITDA guidance for the full year is $930 million at the midpoint, below analyst estimates of $979.1 million
- Operating Margin: 10.2%, in line with the same quarter last year
- Organic Revenue rose 4.8% year on year vs analyst estimates of 5.5% growth (66.7 basis point miss)
- Market Capitalization: $9.43 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Core & Main’s Q2 Earnings Call
- Brian Biros (Thomson Research Group) asked about the puts and takes behind the revised revenue guidance. CFO Robyn Bradbury clarified that residential weakness was the main driver, with municipal and select non-residential projects partially offsetting the decline.
- Matthew Adrien Bouley (Barclays) probed the timing and effectiveness of cost reduction actions. Bradbury explained that while some savings will be realized in the second half, the bulk of benefits from cost initiatives and acquisition synergies will materialize in 2026.
- Sam Reid (Wells Fargo) requested details on gross margin stability and private label growth. CEO Mark Witkowski said private label now accounts for about 4% of revenue and is expected to increase as more products are introduced and adoption grows.
- Collin Andrew Verron (Deutsche Bank) inquired about the rationale for greenfield expansion versus M&A. Witkowski described both as valuable growth levers, noting that acquisitions deliver faster returns but greenfield branches are key for long-term market penetration.
- Patrick Bauman (JP Morgan) sought clarification on residential lot development trends and the implications for inventory and future demand. Witkowski acknowledged that some lot buildup occurred earlier in the year, but emphasized that overall weakness is likely temporary and will create pent-up demand.
Catalysts in Upcoming Quarters
Our analysts will be watching (1) signs of stabilization or improvement in residential lot development, particularly in Sunbelt markets; (2) realization of SG&A cost-out actions and their impact on operating margins; and (3) continued progress in municipal and non-residential project pipelines, including the impact of the Canada Waterworks acquisition. Expansion of private label offerings and greenfield locations will also be important markers for Core & Main’s execution.
Core & Main currently trades at $49.76, down from $66.54 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).
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