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Earnings call · Jul 2026 (Q2 FY27)

Core & Main Q2 FY27 earnings call CNM

Sep 9, 2026 Source

Executive summary

Core & Main Q2 FY27 — Strong Sales, EBITDA, and EPS Growth Driven by Infrastructure Projects and Strategic Investments

Core & Main delivered solid Q2 FY27 results, driven by strong municipal demand, treatment plant solutions, and data center projects, which nearly doubled year-over-year. The company leveraged disciplined cost management to expand adjusted EBITDA margins and continued its aggressive share repurchase program. While residential and traditional commercial construction faced headwinds, an accelerating M&A pipeline and record greenfield openings position the company for future growth.

Highlights

5

  • Net sales increased 2.5% to $2.1 billion.

  • Adjusted EBITDA grew 3% to $274 million, with margin expanding 10 basis points to 12.8%.

  • Adjusted diluted EPS increased 8% to $0.94.

  • Fire protection sales increased 14%, driven by volume and steel pricing.

  • Deployed $169 million to repurchase 3.7 million shares in Q2, totaling nearly $270 million and 5.7 million shares for FY26 YTD.

Concerns

4

  • Residential lot development remained challenged, down high single digits in Q2 FY27.

  • Nonresidential construction saw ongoing softness in light commercial and retail segments.

  • PVC pricing has stabilized but earlier price increases did not stick due to market conditions.

  • Large smart utility project timing variability impacted volume, keeping growth in that business flat.

Guidance & targets

CategoryTargetConfidence
Full year net sales
$7.8 billion to $7.9 billion
high materiality
High
Full year adjusted EBITDA
$950 million to $980 million
high materiality
High
Operating cash flow conversion
60% to 70%
medium materiality
High
Residential market performance
flattish to down slightly
medium materiality
Medium
Residential market performance
mid-single-digit down
medium materiality
Medium
Miami-Dade project volume
5% and 10%
medium materiality
Medium
Miami-Dade project volume
full run rate
medium materiality
Medium
M&A contribution to growth
2 to 4 points of growth range
medium materiality
Medium

Orderbook & backlog

Overall backlog healthy Q2 FY27
Miami-Dade project 100,000 meters per year Q2 FY27

5-year project implementation; expecting 5-10% volume by end of FY27, full run rate by 2027

Deals & partnerships

Walker Industries provider of storm drainage products in Hawaii

This acquisition broadens our product offering in the market and complements existing operations.

Capital programs

Greenfield expansion underway
Spent to date: 7 locations opened YTD

Benefit:strengthen local relationships, expand service capabilities, build market density

On track to open a record number of greenfield locations this year, extending national capabilities into new and underpenetrated markets.

Risks & headwinds

Residential lot development challenges near-term

down high single digits in Q2 FY27

Mitigation:expect comparisons to become considerably more favorable in the back half of the year

Softness in light commercial and retail nonresidential construction

ongoing softness

Mitigation:uplifted by data center activity

PVC pricing inability to support increases

flattish mode

Mitigation:pricing has stabilized, not continually declining

Variability in large smart utility project timing

keeping us kind of in that flat range on top of that great run rate business

Mitigation:tremendous backlog, expect exciting execution starting in latter in the year into 2027

ARPA funding rolling off end of this year (2026)

coming off

Mitigation:vast majority of municipal funding is local; IIJA money available at state level, municipalities pulling small portion

What to watch in Q3 FY27

Residential lot development growth

H2 FY27
Current Down high single digits in Q2 FY27
Target Flat or down slightly

Why it matters

Residential market recovery is key for overall growth, and easier comps are expected to mitigate declines.

Residential lot development remained challenged during the quarter, as expected, particularly in markets that benefited from strong development activity last year. While affordability concerns and higher interest rates continue to influence near-term activity, we expect comparisons to become considerably more favorable in the back half of the year.

Q&A highlights

Can you elaborate on the current strength and future outlook for the municipal market, and how it compares to nonresidential and residential segments?

Municipal demand is strong, stable, and steady, growing in the low single digits, supported by consistent repair and replacement activity and good funding. Nonresidential is flattish, with data centers offsetting weakness in light commercial. Residential is down high single digits, but comps get easier in H2, expecting a mid-single-digit decline for the full year.

“Municipal continues to be strong, stable, steady, kind of up in that low single digits range. Good funding sources, consistent repair and replacement activity. And that's an end market that we expect to be strong, stable as we go forward.”

asked by Brian Biros · answered by Robyn Bradbury

2 min read 6 chapters

Detailed narrative

Municipal Market Strength and Infrastructure Investment

Municipal demand remains a significant source of strength, driven by the critical need to repair, replace, and expand aging water infrastructure. The EPA estimates a $1.2 trillion investment requirement over the next 20 years. This investment is largely nondiscretionary and supported by a diverse mix of state, local, and federal funding, with the majority funded at the state and local level, ensuring consistent activity.

Strategic Growth Initiatives and End Market Performance

Treatment plant solutions delivered strong double-digit growth, now representing a mid-single-digit percentage of total sales, with a focus on higher-value specialty products. Smart utility projects are gaining traction, with recent wins and larger projects expected to ramp over multiple periods. Nonresidential construction showed varied performance, with robust data center development offsetting softness in light commercial and retail segments.

Data Center Impact and Broader Infrastructure Demand

Data center development nearly doubled year-over-year, becoming a high single-digit percentage of nonresidential work. These projects require extensive water, wastewater, storm drainage, and fire protection infrastructure. Beyond the immediate project, data centers often necessitate municipal water and wastewater capacity expansion, spurring additional commercial and residential growth in surrounding communities and creating broader infrastructure demand.

Geographic Expansion and Accelerating M&A Pipeline

Core & Main expanded its footprint by opening 7 new greenfield locations year-to-date, aiming for a record number this fiscal year. The M&A pipeline has significantly accelerated in the last 3-6 months, with several opportunities advancing to the LOI stage. The focus remains on strategic bolt-on acquisitions that expand geographic reach, broaden product offerings, and strengthen positions in attractive end markets.

Disciplined Capital Allocation and Shareholder Returns

The company utilized its strong cash generation and balance sheet flexibility to repurchase 3.7 million shares for $169 million in Q2, bringing the fiscal year-to-date total to 5.7 million shares for nearly $270 million. Since its IPO, Core & Main has repurchased approximately 58 million shares, representing almost 25% of shares outstanding, demonstrating confidence in long-term value and a disciplined approach to capital allocation.

Financial Performance and Outlook

Net sales increased 2.5% to $2.1 billion, and adjusted EBITDA grew 3% to $274 million, with adjusted EBITDA margin expanding 10 basis points to 12.8% due to disciplined cost management and SG&A leverage. Adjusted diluted EPS rose 8% to $0.94. The company affirmed its full-year guidance for net sales, adjusted EBITDA, and operating cash flow conversion, expecting H2 EBITDA expansion driven by gross margin and SG&A leverage.

AI-generated summary of the company's earnings call. Not investment advice.