Core & Main, Inc.

Welcome to the Core and Main Q3 2025 Earnings Call. My name is Alex. I'll be coordinating today's call. If you'd like to ask a question at the end of the presentation, please press star followed by one on your telephone keypad. I'll now hand it over to Glenn Floyd, Director of Investor Relations. Please go ahead.

Good morning and thank you for joining us. I'm Glenn Floyd, Director of Investor Relations at Core and Main. We appreciate you taking the time to be with us today for Core and Main's fiscal 2025 third quarter earnings call. Joining me this morning are Mark Witkowski, our chief executive officer, and Robin Bradbury, our chief financial officer. Mark will begin today's call by sharing an update on our business and recent performance. Robin will follow with a review of our third quarter results and our outlook for the year. We'll then open the line for Q&A, and Mark will wrap up with closing remarks. As a reminder, our press release, presentation materials, and the statements made during today's call may include forward looking statements. These are subject to various risks and uncertainties that could cause actual results to differ materially from our expectations. For more information, please refer to the cautionary statements included in our earnings press release and in our filings with the SEC. We will also reference certain non-GAAP financial measures during today's discussion. We believe these metrics provide useful insight into the underlying performance of our business. Reconciliations to the most comparable gap measure are available in both our press release and in the appendix of today's investor presentation. Thank you again for your interest in CornMain. I'll now turn the call over to our Chief Executive Officer, Mark Witkowski.

Thanks, Glenn, and good morning, everyone. Before we dive into our results, I want to start by reminding everyone of CornMain's value proposition. CornMaine is a leading specialty distributor of water infrastructure products and services in North America, supporting the repair, upgrade, and expansion of our nation's critical water systems. Our competitive advantages, including national scale and resources, local market expertise backed by the best trained sales force, industry specific technology, and comprehensive product solutions, position us to lead an attractive secular growth market driven by aging infrastructure, increasing water demand, and ongoing investment needs. Our business model is built for resilience. Today, municipal projects represent over 40% of our sales, providing steady, predictable demand supported by reliable funding sources. Our non-residential end market, which represents roughly 40% of sales, benefits from a diverse project mix across commercial, industrial, and infrastructure applications, many of which are poised for growth. Residential activity represents less than 20% of our sales. And while near-term dynamics in this market remain challenged, we continue to view the long-term outlook as attractive. supported by population growth and a structural undersupply of housing. This diversification combined with emerging growth drivers like data centers and treatment plant modernization provides a strong foundation for our business. CornMaine consistently produces strong free cash flow and compelling returns on invested capital, giving us the flexibility to reinvest in the business pursue strategic growth opportunities, and return capital to shareholders. We continue to control our own destiny through disciplined execution on multiple fronts. For example, expanding into high-growth geographies, broadening our product offering in areas like treatment plants, smart meters, and fusible HDPE, and deploying our strong balance sheet to pursue accretive M&A opportunities, including our recent expansion into the $5 billion Canadian market. These strategic investments are expanding our addressable market, strengthening customer relationships, and positioning us to capture above-market growth as near-term headwinds subside. Equally important, our pricing discipline and gross margin expansion in recent quarters demonstrate the strength of our value proposition in addition to our team's ability to execute. We are staying focused on what we can control and building the foundation for sustained growth and profitability. Turning now to the quarter, we delivered positive net sales growth despite soft residential demand and a tough comparison from last year, driven by contribution from acquisitions and strong performance across our sales initiatives. Municipal construction remains strong, supported by a highly favorable funding and demand environment. The recent federal government shutdown had little to no impact on the municipal projects we support. as roughly 95% of funding for these projects comes from state and local sources. Local utility rate revenues and municipal bonds are dependable sources of funding, and certain states are also advancing new legislation to repair and upgrade aging infrastructure. Recent actions include Texas authorizing up to $20 billion of funding for new water supply projects over the next two decades. New York deploying approximately $3Billion in new water infrastructure investments and Arkansas committing more than $500Million to water and sewer upgrades, each reinforcing a robust project pipeline. The state revolving funds provide a renewable source of capital to support water and wastewater infrastructure projects with current balances exceeding $100Billion in total. Supplemental funding from the Infrastructure Investment and Jobs Act remains a multi-year tailwind, with roughly $30 billion allocated to states and more expected next year, but only a fraction deployed by municipalities so far. Taken together, these dynamics provide long-term funding for critical water infrastructure projects that can no longer be deferred and remain essential to public health and economic development. In non-residential, we continue to see healthy growth in infrastructure projects such as road and bridges, education and healthcare, and data centers. This growth is helping to offset softness in commercial, retail, and office space projects. Data centers represent a low single-digit portion of our total sales mix today, but they are becoming a more meaningful driver of our growth as AI-driven capacity expands. These projects require more water infrastructure than traditional manufacturing facilities due to cooling needs as they draw large volumes from local water supplies. This often necessitates upgrades to municipal systems and, in some cases, onsite water treatment facilities to conserve usage. We also see private investment flowing into public utilities to build capacity, creating opportunities for corn main across the municipal and private end markets. Data center development doesn't happen in isolation. As these campuses come online, they attract workers and ancillary businesses, driving demand for housing, retail, and commercial services, all of which drive the need for new water infrastructure. And this concentrated population growth places strain on local water systems, triggering further investment in water distribution and treatment infrastructure. We're seeing this firsthand at a major hyperscale campus near South Bend, Indiana, where project-related demand has been so substantial that our local branch has nearly tripled in size over the past few years. In many cases, the initial investment for data centers unlocks capacity for broader municipal, residential, and non-residential expansion, creating a long-term tailwind across our core markets. As we expected and discussed on last quarter's call, residential lot development softened during the quarter, particularly in the Sunbelt markets. Builders are carefully pacing lot development against housing affordability concerns and consumer uncertainty. But as housing affordability improves in the future, we will be well positioned to capitalize on the release of pent-up demand. Our growth initiatives continue to lay the foundation for long-term results. Let me highlight a few areas where our execution is creating competitive advantages. First, our product initiatives, including fusible HDPE, treatment plant solutions, and geosynthetics each achieve double-digit growth in the quarter as we expand our ability to deliver integrated solutions for aging water infrastructure. Meter products return to high single-digit growth in the third quarter. Recent contract awards, including our largest metering contract award to date, give us confidence in both near and long-term demand for our advanced metering products. Driving growth through geographic expansion also remains a key priority. We recently opened new branches near Houston and Denver, bringing our year-to-date total to five new locations. We expect to open more branches before fiscal year end, and we are evaluating over a dozen additional high-growth markets for future expansion. These new branches enhance our proximity to high-growth markets and increase our service levels, supporting continued market share gains. In September, we completed the acquisition of Canada Water Works, further expanding our growth platform in a fragmented $5 billion Canadian addressable market. This acquisition aligns with our core strengths and increases exposure to growing in markets. Canada is a natural adjacency to our U.S. markets, and we're excited to welcome the Canada Water Works team to Corn, Maine. Integration activities are underway with a solid plan to realize synergies. While we continue to invest in growth, we remain equally focused on improving profitability. Gross margins improved by 60 basis points year over year. to 27.2%, reflecting the success of our private label initiative and discipline sourcing and pricing execution. Our private label strategy continues to produce strong results, and we are on track for private label products to represent approximately 5% of our total sales this year. On SG&A, we've implemented roughly $30 million of annualized cost savings in an effort to improve operating leverage and maximize the efficiency of our business. We expect to realize these savings over the next 12 months. We remain disciplined in our headcount decisions by selectively filling critical sales roles while reallocating resources to areas of the business with the greatest growth potential. At the same time, we continue to invest in modern technologies to help us drive future SG&A leverage. These tools strengthen customer service, uncover more selling opportunities, and expand our ability to take advantage of emerging AI capabilities. We expect these investments to enhance productivity and support margin expansion. Our strong free cash flow provides flexibility to pursue strategic M&A, invest in organic growth, and return capital to shareholders. Profitable growth remains our top capital allocation priority. supported by a robust pipeline of acquisition and greenfield opportunities. We will remain disciplined on valuation and returns while maintaining balance sheet flexibility to drive shareholder value. As part of our disciplined capital allocation strategy, earlier this morning we announced a $500 million increase to our share repurchase authorization. This action reflects our conviction in our growth outlook and free cash flow generation and the Board's shared confidence in our ability to continue creating long-term shareholder value. With this expanded capacity, we can act opportunistically as market conditions present attractive opportunities. We are gaining momentum across our sales, growth margin, and operational initiatives, strengthening our ability to drive organic growth, expand margins, and achieving operating leverage. We remain confident in the attractiveness of our end markets over the medium and long term, and we continue to invest in our associates and value-added capabilities to capture growth and market share. In closing, I want to express my sincere appreciation for our teams across the country. Their dedication and focus on execution have been instrumental in advancing our strategic priorities, and I couldn't be more proud of what we've accomplished together this year. Thank you for your continued support and confidence in our vision. With that, I'll turn the call over to Robin to review our third quarter financial results and outlook for the year. Go ahead, Robin.