Core & Main (CNM) Q4 FY26 earnings call: guidance and Q&A

Why is there a perceived growth disconnect between Core & Main and its largest competitors, considering vertical end market influence, geographic, and product mix?

Mark Witkowski stated that Core & Main feels good about its presence across all end markets and competes effectively. He noted that both Core & Main and its national competitor are gaining share. He acknowledged the competitor's historical strength in treatment plants and some data center markets (e.g., Northern Virginia, Texas) but highlighted Core & Main's rapid gains in data centers due to expanding geographic reach and local relationships. He views the competitor's good results as positive for the industry.

“I would say that's an area that they've been, I would say, a little ahead of us over the years, but we're rapidly, I would say, gaining ground in that area. And then I think certainly, as part of the data center construction that we've seen pop up, I would say they've been in a little better position in some of those markets...”

asked by David Manthey · answered by Mark Witkowski

Clarification on the timing of the $30 million annualized cost-out program benefits, specifically when the full run rate will be realized and if benefits will extend into FY27.

Robyn Bradbury confirmed that all $30 million of cost actions were implemented in FY25, with $1 million realized in Q3 FY25 and $5 million in Q4 FY25. The remaining benefits will flow through Q1, Q2, and Q3 of FY26 before annualizing. She confirmed that benefits would extend into early FY27.

“We saw -- we completed all of the $30 million of cost out during FY '25. We got about $1 million of that benefit in the third quarter. We got $5 million of that benefit in the fourth quarter. So that remainder of that $30 million, we'll see all of that really hit in the first, second and third quarter of next year before we annualize those cost-out efforts.”

asked by David Manthey · answered by Robyn Bradbury

How is Core & Main dealing with potential near-term diesel surcharges and what are suppliers indicating regarding price increases, especially concerning the flat pricing guide for FY26?

Mark Witkowski stated that direct impact from fuel increases is relatively small and embedded in the guide. More indirectly, they are watching oil and gas market effects on global resin prices, expecting potential increases in PVC and HDPE pipe. He views this as "neutral to positive" for pricing stability, but expressed concern about overall macro uncertainty from rising fuel prices.

“So there is some indications that we're going to start seeing some increases coming through on certain product categories related to that. And frankly, just all the -- if fuel and those prices continue to increase, I think we'll see some of that increase flow through some other product categories more broadly.”

asked by Matthew Bouley · answered by Mark Witkowski

Quantification of investments and specifics on how sales force and capabilities are being enhanced for large projects in data centers and treatment plants.

Brad Cowles explained that resources for treatment plant work adapt well to complex water delivery projects, including data centers. The company plans to invest in an additional 30 people for these national complementary team structures in FY26. These resources are mobile and cover broader geographies, enhancing local branch capabilities and building trust for larger projects.

“And that structure that we put in place, one of those national complementary team structures that we use to kind of enhance the capabilities of the local branch, we're going to be investing upwards of another 30 people in that initiative this year, just to give you a sense of the scale.”

asked by Matthew Bouley · answered by Bradford Cowles

Request for specific quantitative breakdown of residential, nonresidential, and municipal market expectations for FY26, including quarterly trends for residential, and quarter-to-date trends.

Robyn Bradbury detailed that residential is expected to be down low double digits to mid-teens in Q1 FY26, improving to down high single digits in Q2, and flattish in H2, resulting in a mid-single-digit decline for the full year. Nonresidential is expected to be flattish, similar to FY25. Municipal is projected for low single-digit growth. Q1 FY26 trends are in line with guidance, with sales and EBITDA expected to be slightly down year-over-year, but improving sequentially. A $15M-$20M weather impact from late FY25 is being recovered in Q1 FY26.

“So expecting the first part of the year to be down in the low double digits to mid-teens range for residential and then sequentially improving throughout the year. So the second quarter could look something like down high single digits and then maybe it's flattish in the back half of the year.”

asked by Michael Dahl · answered by Robyn Bradbury

Why is pricing guided as flat for FY26 despite recent inflation acceleration, and is it solely due to PVC headwinds or other competitive factors?

Robyn Bradbury explained that all product categories except PVC were up in FY25. PVC was down about 15% in FY25 and is expected to be a headwind for at least the first three quarters of FY26, even if it stabilizes. While oil price increases could help stabilize or increase PVC prices, the current flat pricing guide accounts for this PVC headwind offsetting expected increases in other product categories.

“PVC was down about 15% in the year... we're going to have a headwind at least in the first half to 3 quarters of the year on PVC, even if it stabilizes where it's at today.”

asked by Nigel Coe · answered by Robyn Bradbury