Tickers

1. Composite Trajectory Verdict

Given CNM's capital-intensive distribution model with significant working capital seasonality, acquisition-driven growth, and active debt/refinancing management, all three statements carry roughly equal weight: the income statement shows earnings trajectory, the cash flow statement reveals operating cash conversion and acquisition investment, and the balance sheet captures leverage, liquidity, and refinancing risk.

Composite Trajectory: Mixed

Annual results show revenue growth decelerating sharply from 11.0% (FY2024) to 2.8% (FY2025) while operating margin compressed from 11.0% to 9.4% (10-K, Consolidated Statements of Operations). However, net income attributable to Core & Main rose 7.3% to $441M and diluted EPS grew 8.5% to $2.31, aided by share repurchases reducing diluted shares from 201.4M to 197.9M (10-K, Consolidated Statements of Operations). Quarterly trends improve: Q3 FY2026 revenue grew 2.5% YoY to $2,145M, operating margin expanded to 10.6% from 10.2%, and diluted EPS rose 10.0% to $0.77 (10-Q 2026-08-02, Condensed Statements of Operations). Cash flow stabilized after a steep drop: annual operating cash flow fell from $1,069M (FY2023) to $621M (FY2024) then ticked up to $650M (FY2025) (10-K, Consolidated Statements of Cash Flows), while six-month operating cash flow improved 29.7% YoY to $144M (10-Q 2026-08-02, Condensed Statements of Cash Flows). The balance sheet improved annually (debt down 5% to $2,148M, equity up 17% to $2,074M, cash up from $8M to $220M) (10-K, Consolidated Balance Sheets) but deteriorated in Q3 FY2026 with debt jumping 14% to $2,449M after issuing $750M of 6.0% 2034 Notes and refinancing the 2028 Term Loan (10-Q 2026-08-02, Note 6). Improving dimensions: recent margin expansion, EPS growth, operating cash flow recovery, annual deleveraging. Deteriorating dimensions: revenue growth deceleration, annual operating margin compression, rising SG&A ratio, quarterly leverage increase, accelerating Tax Receivable Agreement payments.

2. Red Flags

• Revenue growth deceleration: FY2024 +11.0% ($6,702M→$7,441M) vs FY2025 +2.8% ($7,441M→$7,647M) (10-K, Consolidated Statements of Operations)
• Annual operating margin compression: 11.0% (FY2023) → 9.7% (FY2024) → 9.4% (FY2025) (10-K, Consolidated Statements of Operations)
• SG&A as % of net sales rising annually: 13.9% (FY2023) → 14.5% (FY2024) → 15.1% (FY2025) (10-K, Consolidated Statements of Operations)
• Q3 FY2026 debt increased $301M (14%) to $2,449M via $750M 6.0% 2034 Notes and 2033 Term Loan refinancing (10-Q 2026-08-02, Note 6; Condensed Balance Sheets)
• Tax Receivable Agreement payments accelerating: $5M (FY2023) → $11M (FY2024) → $18M (FY2025) → $42M in first six months of FY2026 (10-K, MD&A Liquidity; 10-Q 2026-08-02, Condensed Statements of Cash Flows)
• Share repurchases continued ($257M in six months ended Aug 2026) while debt was increased for refinancing (10-Q 2026-08-02, Condensed Statements of Cash Flows)
• Receivables up 37.3% ($1,048M→$1,439M) and inventories up 15.3% ($986M→$1,137M) quarter-over-quarter (seasonal but large) (10-Q 2026-08-02, Condensed Balance Sheets)
• Interest expense rose QoQ in Q3 FY2026 ($32M vs $31M) despite rate cuts, due to new 6% notes and $3M deferred financing fee write-off (10-Q 2026-08-02, MD&A Interest Expense)
• Non-controlling interest income declined sharply: $160M (FY2023) → $23M (FY2024) → $21M (FY2025) as Partnership Interests were exchanged (10-K, Consolidated Statements of Operations)
• GAAP to non-GAAP EPS gap widening: $0.47 (FY2023) → $0.65 (FY2024) → $0.66 (FY2025) (10-K, Non-GAAP Financial Measures reconciliation)

3. Earnings Assessment (Income Statement)

Earnings Trajectory: Mixed

Overall Assessment: Annual revenue growth decelerated markedly from 11.0% in FY2024 to 2.8% in FY2025, reaching $7,647M (10-K, Consolidated Statements of Operations). Gross margin was stable at 26.9% vs 26.6% but operating margin compressed from 9.7% to 9.4% as SG&A rose to 15.1% of sales from 14.5% (10-K, MD&A Results of Operations). Net income attributable to Core & Main grew 7.3% to $441M and diluted EPS rose 8.5% to $2.31, driven partly by a 1.8% reduction in diluted shares outstanding from repurchases (10-K, Consolidated Statements of Operations). Quarterly trends are more favorable: Q3 FY2026 revenue grew 2.5% YoY to $2,145M, gross margin held at 26.7%, SG&A ratio improved to 14.0% from 14.4%, operating margin expanded to 10.6% from 10.2%, and diluted EPS rose 10.0% to $0.77 (10-Q 2026-08-02, Condensed Statements of Operations). Six-month YTD figures show similar improvement: revenue +1.3% to $4,055M, operating margin 10.0% vs 9.6%, diluted EPS +9.8% to $1.34 (10-Q 2026-08-02, Condensed Statements of Operations). Interest expense declined annually ($142M→$120M) but ticked up quarterly ($31M→$32M) due to new 6% notes and financing fee write-off (10-K, MD&A Interest Expense; 10-Q 2026-08-02, MD&A Interest Expense).

4. Cash Generation Assessment (Statement of Cash Flows)

Cash Trajectory: Mixed

Overall Assessment: Annual operating cash flow dropped 41.9% from $1,069M (FY2023) to $621M (FY2024) then modestly recovered 4.7% to $650M (FY2025) (10-K, Consolidated Statements of Cash Flows). The FY2024 decline reflected higher working capital investment and $197M cash interest paid vs $105M in FY2023 (10-K, Consolidated Statements of Cash Flows). Investing cash flow swung from -$270M (FY2023) to -$788M (FY2024, heavy acquisitions) to -$145M (FY2025, minimal acquisitions) (10-K, Consolidated Statements of Cash Flows). Financing cash flow shifted from -$975M (FY2023, $1,344M repurchases) to +$174M (FY2024, $950M debt issuance offsetting $176M repurchases) to -$293M (FY2025, $155M repurchases and debt repayment) (10-K, Consolidated Statements of Cash Flows). Recent six-month trends are stronger: operating cash flow rose 29.7% YoY to $144M (vs $111M), investing outflows doubled to $56M (vs $28M) on higher capex and $17M tax-advantaged investments, and financing flipped to +$4M (vs -$66M) as $929M debt issuance funded $257M repurchases and $42M Tax Receivable Agreement payments (10-Q 2026-08-02, Condensed Statements of Cash Flows). Cash balance grew from $8M (Feb 2025) to $220M (Feb 2026) to $312M (Aug 2026) (10-K and 10-Q 2026-08-02, Condensed Balance Sheets).

5. Balance Sheet Assessment

Balance Sheet Trajectory: Mixed

Overall Assessment: Annually, the balance sheet improved: total debt fell 5% from $2,261M to $2,148M, total equity rose 17% from $1,774M to $2,074M, and cash surged from $8M to $220M (10-K, Consolidated Balance Sheets). Debt-to-equity improved from 1.27x to 1.04x. However, quarterly (Feb to Aug 2026) shows deterioration: total debt jumped 14% to $2,449M after issuing $750M 6.0% 2034 Notes and replacing the 2028 Term Loan with an $800M 2033 Term Loan (10-Q 2026-08-02, Note 6). Receivables increased 37% to $1,439M and inventories 15% to $1,137M (seasonal build), pushing current assets to $2,937M from $2,302M while current liabilities rose to $1,190M from $874M (10-Q 2026-08-02, Condensed Balance Sheets). Total liabilities increased 15% to $4,605M; equity grew only 1.4% to $2,104M as $257M repurchases and $42M Tax Receivable Agreement payments offset $252M net income attributable (10-Q 2026-08-02, Condensed Statements of Changes in Stockholders' Equity). Debt-to-equity rose to 1.16x. The Senior ABL Credit Facility was extended to 2031 with no borrowings outstanding; $1,226M remains available (10-Q 2026-08-02, MD&A Liquidity). Tax Receivable Agreement liability declined modestly from $680M to $644M (10-Q 2026-08-02, Condensed Balance Sheets).

6. Data Gaps

• Standalone Q1 FY2026 and Q2 FY2026 income statements and cash flows (only six-month YTD and Q3 provided in 10-Q 2026-08-02)
• Standalone Q4 FY2025 results (only full-year FY2025 in 10-K)
• Full FY2026 annual results (not yet filed)
• Free cash flow (operating cash flow minus capex) not explicitly disclosed; capex shown but operating cash flow components differ between annual and interim presentations
• Working capital days (DIO, DSO, DPO) not provided in filings
• Debt covenant compliance metrics (Consolidated Secured Leverage Ratio, Fixed Charge Coverage Ratio) not quantified, only stated "in compliance"
• Segment-level profitability or gross margin by product category not disclosed
• Organic vs acquisition revenue growth split for quarterly periods (only described qualitatively in MD&A)
• Standalone quarterly cash flow statements for Q3 FY2026 and Q3 FY2025 (only six-month YTD provided in 10-Q 2026-08-02)