Core & Main, Inc.

Good morning everyone and welcome to the core and main first quarter 2023 earnings call. My name is Carla and I will be coordinating your call today. During the call, if you wish to ask a question, you can register this by pressing start followed by one on your telephone keypad. If you would like to revoke your question, please press start followed by two. I will now hand you over to the management team to begin. Please go ahead.

Thank you. Good morning, everyone. This is Robin Bradbury, Vice President of Finance and Investor Relations for Core and Main. Core and Main is a leader in advancing reliable infrastructure with local service nationwide. We are thrilled to have you join us this morning for our first quarter earnings call. I am joined today by Steve LeClair, our Chief Executive Officer, and Mark Witkowski, our Chief Financial Officer. Steve will lead today's call with a business update, followed by an overview of our recent acquisitions. Mark will then discuss our first quarter financial results and full year outlook, followed by a Q&A session. We will conclude the call with Steve's closing remarks. We issued our first quarter earnings release this morning and posted a presentation to the investor relations section of our website. As a reminder, our press release presentation and the statements made during this call include forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. Such risks and uncertainties include the factors set forth in our earnings press release and in our filings with the Securities and Exchange Commission. We will also discuss certain time gap financial measures which we believe are useful to assess the operating results of our business. A reconciliation of these measures can be found in our earnings press release and in the appendix of our investor presentation. Thank you for your interest in Core and Main. I will now turn the call over to Chief Executive Officer Steve LeClair.

Thanks, Robin. Good morning, everyone. Thank you for joining us today. We're excited to share our results with you. Starting on page five of the presentation, first quarter net sales finished in line with our expectations. reflecting a return to more typical seasonality for the first quarter. Our sales grew 25% in the first quarter of fiscal 2021 and another 52% in the first quarter of last year. This makes year-over-year comparisons tough, especially when confronted with disruptive weather in some of our major markets. We had an excellent quarter from a profitability standpoint, with adjusted EBITDA margin increasing 30 basis points year-over-year to a new first quarter record of 14%. Prices remained elevated against improving supply chains and gross margins outperformed our expectations, offsetting lower sales volume and inflationary cost pressure to deliver a solid adjusted EBITDA outcome for the quarter. Our end markets remained stable throughout the first quarter. Non-discretionary municipal repair and replacement demand continued to show resilience, backed by healthy municipal budgets and strong project backlogs. As we expected, Residential volumes were down significantly compared to a strong prior year comparable. That said, we believe the long-term fundamentals of the housing industry are solid, and we are pleased with the level of demand we are seeing from our customers and many of the public home builders. Residential lot development is still in balance, representing a short supply of vacant developed lots. On the non-residential side, onshoring trends have generated an increasing number of large projects, and our scale advantage has positioned us to capture meaningful growth from these projects in select markets. While we remain optimistic about the opportunities for growth in the non-residential market, we recognize that tightening lending standards could have a short- to medium-term impact on non-residential development, which could impact the demand for our products and services. During the quarter, we made significant strides in executing the capital allocation framework we've laid out in prior quarters. In the first quarter, we deployed over $400 million of capital to organic growth, acquisitions, and share repurchases, and we maintain ample capacity to continue investing in growth opportunities. We continue to invest in resources to support the growth of our product, customer, and geographic expansion initiatives, which help drive market outperformance and long-term value creation. For example, we opened two new locations in underserved markets during the first quarter to grow our footprint and make our products and expertise more accessible nationwide. Our greenfields continue to mature and offer new growth opportunities. We have the ability to efficiently open new branches and attractive markets due to our scale advantage, talent pool, and training programs. We are pleased with the progress we've made across these initiatives as we entered the busiest time of our selling season. We complement our organic growth investments with acquisitions to broaden our geographic footprint, enhance our product lines, enter adjacent markets, and acquire key talent. We completed three acquisitions during the quarter and signed a definitive agreement to acquire another business subsequent to the quarter. Our M&A pipeline remains very active, and we expect to continue adding new businesses to the core and main family throughout 2023 and beyond. Our record first quarter operating cash flow also contributed to the liquidity to fund a $332 million share repurchase from a majority shareholder, which was concurrent with a 5 million share secondary offering. The share repurchase reduced our diluted share count by 15 million shares. Looking ahead, organic and inorganic growth investments remain our number one capital allocation priority, but we will look to return capital to shareholders as opportunities arise. Turning to our recent acquisitions on page six, we added three high performing businesses to our family and subsequent to the quarter signed a fourth, generating combined historical annualized net sales of over $115 million. Landscape and Construction Supplies is a full service provider of geosynthetics products with two locations in the Chicago metropolitan area. Since opening nearly 20 years ago, the team at LCS has built a well regarded business serves customers in more than 15 states the acquisition adds key talent and expands our existing geosynthetics and erosion control product offering to our customers in the upper midwest upsco is a provider of utility infrastructure products and services headquartered in the finger lakes region of new york with sales offices in the northeast mid-atlantic and midwest regions of the u.s since 1965 UPSCO has earned a trusted reputation for providing its customers with best-in-class products and services to build and remediate utility infrastructure. In addition to prefabricated meter sets, they offer a broad range of products and services, including pipe, valves, fittings, and fusible piping solutions to satisfy the needs of its customers. This acquisition brings us adjacent product lines and unique cross-selling opportunities to our existing customer base, thereby expanding the addressable market for our products and services. The team at UPSCO shares our commitment to providing high-quality products and service for reliable utility infrastructure, and we are excited to have them join our business. Midwest Pipe Supply is a single-branch, full-service distributor of storm drainage and water products in Northern Iowa. Since 2002, the team at Midwest Pipe Supply has built a strong reputation as a dependable distributor of drainage, septic, and waterworks solutions. The company offers a wide range of products and services for contractors, municipalities, and agriculture customers throughout the state. This acquisition expands our product offering and geographic reach in the Midwest alongside a team with commitment and dedication to the communities they serve. Foster Supply is a leading producer, installer, and distributor of specialty precast concrete products, storm drains, and other erosion control solutions, operating out of seven locations across Kentucky, Tennessee, and West Virginia. Since 1981, the team at Foster Supply has been the partner of choice for contractors and municipalities seeking innovative solutions for unique worksite challenges. Bringing that team to core and main will allow us to combine our collective expertise and differentiated product and service offerings to better meet the needs of our shared waterworks and geosynthetics customers. Lastly, I want to share that I'm extremely proud to see our vision of advancing reliable infrastructure realized through the achievement of our growth strategies. Our strategy is to leverage the scale, resources, talent, and capabilities we have as one of the largest companies in our industry, all in our support of experience and entrepreneurial local teams to consistently deliver value to our customers and suppliers. We've come a long way in building the foundation for Core and Main and executing our strategy, and we have a significant runway of growth opportunities ahead. Now I'll turn the call over to our Chief Financial Officer, Mark Wieckowski, to discuss our financial results and fiscal 2023 outlook. Go ahead, Mark.