Water and fire protection solutions company Core & Main (NYSE:CNM) met Wall Streets revenue expectations in Q3 CY2025, with sales up 1.2% year on year to $2.06 billion. The company’s outlook for the full year was close to analysts’ estimates with revenue guided to $7.65 billion at the midpoint. Its non-GAAP profit of $0.72 per share was 1.8% above analysts’ consensus estimates.
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Core & Main (CNM) Q3 CY2025 Highlights:
- Revenue: $2.06 billion vs analyst estimates of $2.05 billion (1.2% year-on-year growth, in line)
- Adjusted EPS: $0.72 vs analyst estimates of $0.71 (1.8% beat)
- Adjusted EBITDA: $274 million vs analyst estimates of $269.5 million (13.3% margin, 1.7% beat)
- The company reconfirmed its revenue guidance for the full year of $7.65 billion at the midpoint
- EBITDA guidance for the full year is $930 million at the midpoint, in line with analyst expectations
- Operating Margin: 10.7%, in line with the same quarter last year
- Organic Revenue was flat year on year vs analyst estimates of flat growth (15 basis point beat)
- Market Capitalization: $9.73 billion
StockStory’s Take
Core & Main’s third quarter was met with a positive reaction from the market, reflecting modest growth and stable margins despite ongoing pressures in certain end markets. Management pointed to continued strength in municipal construction, as well as disciplined pricing and gross margin expansion, as key drivers. CEO Mark Witkowski emphasized Core & Main’s resilience, citing the company’s “national scale and resources, local market expertise, and comprehensive product solutions” as central to its performance. While residential demand remained subdued—particularly in the Sun Belt—the company benefited from acquisitions and solid execution in nonresidential and municipal segments.
Looking ahead, management expects robust municipal funding and continued momentum in large-scale infrastructure projects to anchor growth. Core & Main is focused on expanding its private label product range, pursuing strategic acquisitions—including its recent entry into the Canadian market—and investing in technology to drive further operational efficiency. CFO Robyn Bradbury noted that the company is “on track to deliver 2 to 4 percentage points of above-market growth” over the next year, supported by ongoing cost-saving initiatives and a disciplined approach to SG&A expenses. Management remains attentive to inflationary pressures and evolving market dynamics.
Key Insights from Management’s Remarks
Management attributed quarterly performance to municipal project stability, targeted cost controls, and private label growth, while executing on branch expansion and M&A to capture new opportunities.
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Municipal demand resilience: Core & Main’s municipal end markets remained robust, aided by steady state and local funding and incremental federal support. Recent legislation in Texas, New York, and Arkansas has bolstered project pipelines, with CEO Mark Witkowski noting that “local utility rate revenues and municipal bonds are dependable sources of funding.”
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Private label expansion: The company’s private label products reached 5% of sales, delivering a significant lift to gross margins. CFO Robyn Bradbury highlighted a long-term target of 10–15% private label mix, suggesting “lots of opportunity to continue to expand.”
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Strategic branch growth: Five new branches were opened year-to-date, including recent expansions in Houston and Denver. Management is evaluating over a dozen additional high-growth markets, supporting geographic diversification and improved service levels.
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M&A and Canadian entry: The acquisition of Canada Waterworks marked Core & Main’s expansion into the $5 billion Canadian addressable market. Integration efforts are underway, aiming to unlock synergies and broaden Core & Main’s reach.
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SG&A cost actions: The company implemented $30 million in annualized cost reductions, primarily through workforce optimization in non-sales roles and leveraging technology to drive further productivity. Bradbury stated that “fourth quarter SG&A [is] expected to be roughly $25 million lower than the third quarter.”
Drivers of Future Performance
Core & Main’s outlook is anchored by continued municipal investment, private label growth, and disciplined cost management, with inflation and residential softness as watchpoints.
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Municipal and infrastructure project funding: Management views sustained state and federal investment in water infrastructure as a primary growth engine, with unspent federal funds and new state-level commitments supporting a multi-year project pipeline. The company expects these dynamics to underpin stable volumes in core markets.
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Private label and margin initiatives: Expansion of private label products is expected to deliver incremental gross margin improvement of 10–20 basis points per year. Continued sourcing and pricing initiatives are seen as additional levers to enhance margins, alongside investments in operational technology.
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SG&A productivity and inflation risks: While $30 million in annualized cost savings are being realized, management highlighted that mid-single-digit inflation in facilities, fleet, and medical costs may persist into the next few quarters. Technology investments are targeted to further optimize SG&A and support future leverage.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will watch (1) the pace of spending from state and federal infrastructure funds, (2) the rate of private label product adoption and its margin impact, and (3) the realization of SG&A cost savings and further productivity gains from technology investments. Progress on greenfield branch openings and the integration of the Canadian acquisition will also be important to track.
Core & Main currently trades at $52.26, up from $50.52 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).
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