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What changed in Core & Main, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Core & Main, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+397 added−418 removedSource: 10-K (2025-03-25) vs 10-K (2024-03-19)

Top changes in Core & Main, Inc.'s 2025 10-K

397 paragraphs added · 418 removed · 321 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

72 edited+5 added−12 removed48 unchanged
Biggest changeOur branches are strategically located near our customers and vary in size depending on local demand and customer needs. Our branches employ an average of 12 associates including branch management, sales representatives, warehouse staff and other support staff. In our larger branches, the staff may also include a sales manager, purchasing manager or estimator.
Biggest changeOur Distribution Network Our branch-based b usiness model is the core of our operations and the primary component of our distribution network. Our branches are strategically located near our customers and vary in size depending on local demand and customer needs.
Our sales reach, technical product knowledge, broad product portfolio, customer service, project planning and delivery capabilities, and ability to provide local expertise, nationwide, make us a critical partner to both our customers and suppliers.
Our sales reach, technical product knowledge, broad product portfolio, customer service, project planning and delivery capabilities, customer service and ability to provide local expertise, nationwide, make us a critical partner to both our customers and suppliers.
Our fire protection products are typically installed at later stages of construction projects compared to most of our other products and exhibit less seasonal patterns since they are generally installed indoors and are therefore less impacted by weather conditions.
Our fire protection products are typically installed at later stages of construction projects compared to most of our other products, and they exhibit less seasonal patterns since they are generally installed indoors and are therefore less impacted by weather conditions.
Over the long-term, U.S. residential construction activity is expected to grow as a result of population growth, low housing inventory and demographic population shifts. The current under-build of housing in the U.S. compared with household formations implies significant pent-up demand and continued growth going forward.
Over the long-term, residential construction activity is expected to grow as a result of population growth, low housing inventory and demographic population shifts. The current under-build of housing in the U.S. compared with household formations implies significant pent-up demand and continued growth going forward.
We face competition on a national level from only one other national distributor, but we are unique in our dedicated focus on water and fire protection infrastructure. The remainder of our market is served by hundreds of regional, local and specialty niche distributors, and through direct sales by suppliers to end users.
We face competition on a national level from only one other distributor, but we are unique in our dedicated focus on water and fire protection infrastructure. The remainder of our market is served by hundreds of regional, local and specialty niche distributors, and through direct sales by suppliers to end users.
We believe that we are a leader in the local markets that we serve, and our national reach gives us meaningful competitive advantages compared to our smaller competitors. 6 Our Operating Structure We strategically organize our branch network to meet the specific needs of our customers in each local market, and we support our branches with the resources of a large company, delivered through district and regional management, including company-wide sales, operations and back-office functions.
We believe that we are a leader in the local markets we serve, and our national reach gives us meaningful competitive advantages compared to our smaller competitors. 6 Our Operating Structure We strategically organize our branch network to meet the specific needs of our customers in each local market, and we support our branches with the resources of a large company, delivered through district and regional management, including company-wide sales, operations and back-office functions.
Municipalities establish local product specifications based on regulatory requirements and engineering standards. Given our extensive geographic footprint and technical knowledge of products and local municipal specifications, we believe we are well-equipped to anticipate and serve the needs of both local municipalities and large private underground utility contractors who require a national reach and an extensive product offering.
Municipalities establish local product specifications based on regulatory requirements and engineering standards. Given our extensive geographic footprint and knowledge of products and local municipal specifications, we believe we are well-equipped to anticipate and serve the needs of both local municipalities and large private underground utility contractors who require a national reach and an extensive product offering.
Growth in our industry is driven by a broad array of factors, including municipal water infrastructure spendin g, water and wastewater utility rates, interest rates, commercial construction, housing starts, population growth and other demographic trends. 2 Municipal We estimate that approximately 42% of our net sales in fiscal 2023 were to contractors and municipalities for municipal funded projects, including the repair, replacement, upgrade and new construction of water and wastewater supply, filtration, storage and distribution systems.
Growth in our industry is driven by a broad array of factors, including municipal water infrastructure spendin g, water and wastewater utility rates, interest rates, housing starts, commercial construction, population growth and other demographic trends. 2 Municipal We estimate that approximately 42% of our net sales in fiscal 2024 were to contractors and municipalities for municipal funded projects, including the repair, replacement, upgrade and new construction of water and wastewater supply, filtration, storage and distribution systems.
Additionally, the SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us, at www.sec.gov.
Additionally, the SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us, at www.sec.gov. 9
We strategically conduct business with our top suppliers in order to optimize our purchasing advantages, but we also have the flexibility to source the majority of our products from a number of alternate suppliers when necessary. Our Competition The U.S. wa ter, wastewater, storm drainage and fire protection products distribution industry, and the end markets we serve, are highly fragmented.
We strategically conduct business with our top suppliers in order to optimize our purchasing advantages, but we also have the flexibility to source the majority of our products from a number of alternate suppliers when necessary. Our Competition The wa ter, wastewater, storm drainage and fire protection products distribution industry, and the end markets we serve, are highly fragmented.
Our field sales representatives are highly experienced with in-depth product and technical knowledge, significant local insights and strong long-term customer relationships, all of which are critical to our success. On average, our field sales representatives have over 13 years of experience in the water, wastewater, storm drainage and fire protection industries.
Our field sales representatives are highly experienced with in-depth product and technical knowledge, significant local insights and strong long-term customer relationships, all of which are critical to our success. On average, our field sales representatives have over 14 years of experience in the water, wastewater, storm drainage and fire protection industries.
Our mission is to serve as an industry leader, supplying local expertise, products and services to build innovative water, wastewater, storm drainage and fire protection infrastructure solutions for the communities we serve. We support our customers and our communities in their efforts to find both short- and long-term solutions to conserve water.
Our mission is to serve as an industry leader, supplying local expertise, products and services to build resilient water, wastewater, storm drainage and fire protection infrastructure solutions for the communities we serve. We support our customers and our communities in their efforts to find both short- and long-term solutions to conserve water.
We have a strong acquisition platform in place, which bolsters our ability to pursue attractive assets in the market. Our experienced mergers and acquisitions team actively develops a large pipeline of synergistic acquisition targets and coordinates with field leadership to identify, pursue and integrate new businesses.
We have a strong acquisition platform in place, which bolsters our ability to pursue attractive assets in the market. Our experienced mergers and acquisitions (“M&A”) team actively develops a large pipeline of synergistic acquisition targets and coordinates with field leadership to identify, pursue and integrate new businesses.
Our national category management team actively manages our spending with suppliers in order to optimize pricing and supplier incentives to expand gross margins. 4 Additionally, we have a specialized team dedicated to driving sustainable margin improvement through pricing analytics.
Our national category management team actively manages our spending with suppliers in order to optimize pricing and supplier incentives to expand gross margins. 4 Additionally, we have a centralized team dedicated to driving sustainable margin improvement through pricing analytics.
Approximately 105 of our associates were covered by collective bargaining agreements. Pay for Performance We believe that our strong culture, consistent investment in our people and competitive compensation programs help to retain talent across key roles. Sales associates have the opportunity to earn competitive compensation through our performance-based compensation structure, which aligns our interests with those of our associates.
Approximately 91 of our associates were covered by collective bargaining agreements. Pay for Performance We believe that our culture, consistent investment in our people and competitive compensation programs help to retain talent across key roles. Sales associates have the opportunity to earn competitive compensation through our performance-based compensation structure, which aligns our interests with those of our associates.
Pipes, valves & fittings products accounted for approximately 67% of our net sales in fiscal 2023. Storm Drainage Our storm drainage products are used in the construction of stormwater management systems to retain, detain and divert stormwater runoff.
Pipes, valves & fittings products accounted for approximately 67% of our net sales in fiscal 2024. Storm Drainage Our storm drainage products are used in the construction of stormwater management systems to retain, detain and divert stormwater runoff.
Our products and services are used primarily in the maintenance, repair, replacement and new construction of water, wastewater, storm drainage and fire protection infrastructure. We are one of only two national distributors operating across large and highly fragmented markets, which we estimate to represent approximately $39 billion in annual sales.
Our products and services are used primarily in the maintenance, repair, replacement and new construction of water, wastewater, storm drainage and fire protection infrastructure. We are one of only two national distributors operating across large and highly fragmented markets, which we estimate to represent approximatel y $39 billion in annual sales.
Core & Main is a leader in advancing reliable infrastructure with local service, nationwide. As a leading specialty distributor with a focus on water, wastewater, storm drainage and fire protection products, and related services, we provide solutions to municipalities, private water companies and professional contractors across municipal, non- residential and residential end markets, nationwide.
Core & Main is a leading specialty distributor dedicated to advancing reliable infrastructure with local service, nationwide. With a focus on water, wastewater, storm drainage and fire protection products, and related services, we provide solutions to municipalities, private water companies and professional contractors across municipal, non- residential and residential end markets.
Execute on Margin Enhancement Initiatives We have improved our gross margin in part due to several initiatives, including private label product expansion, sourcing optimization, data-driven pricing strategies and an expansion of value-added products and services. We have complemented these initiatives with accretive acquisitions, which has resulted in sustainable margin expansion.
Execute on Margin Enhancement Initiatives We have improved our gross margin over the years due to several initiatives, including private label product expansion, sourcing optimization, data-driven pricing strategies and an expansion of value-added products and services. We have complemented these initiatives with accretive acquisitions, which has resulted in sustainable margin expansion.
Our storm drainage product offering includes corrugated HDPE and metal piping systems, retention basins, inline drains, manholes, grates, geosynthetics and erosion control products, and other related products. Our storm drainage product offering varies by market depending on local codes and engineering specifications. Storm drainage products accounted for approximately 15% of our net sales in fiscal 2023.
Our storm drainage product offering includes corrugated HDPE and metal piping systems, retention basins, inline drains, manholes, grates, geosynthetics and erosion control products, and other related products. Our storm drainage product offering varies by market depending on local codes and engineering specifications. Storm drainage products accounted for approximately 16% of our net sales in fiscal 2024.
Furthermore, we estimate that we had a near-equal mix of sales related to construction on new projects and existing repair and replace projects in fiscal 2023. The Company and our people are committed to advancing reliable infrastructure with local service, nationwide.
Furthermore, we estimate that we had a near-equal mix of sales related to construction on new projects and existing repair and replacement projects in fiscal 2024. The Company and our people are committed to advancing reliable infrastructure with local service, nationwide.
Our leadership incentive programs link compensation levels to the achievement of branch or region-specific profitability and working capital efficiency goals. Our “local service, nationwide” philosophy incentivizes both our sales force and our operations team to be entrepreneurial, making decisions grounded in a customer-centric approach.
Our incentive programs link compensation levels, based on individual roles, to the achievement of branch or region-specific profitability and working capital efficiency goals. Our “local service, nationwide” philosophy incentivizes both our sales force and our operations team to be entrepreneurial, making decisions grounded in a customer-centric approach.
Our private label initiative was established and has accelerated through a series of mergers and acquisitions through which we gained access to a highly scalable assortment of private brands and products utilized throughout the water, wastewater and fire protection industries.
Our private label initiative was established and has accelerated through a series of M&A transactions through which we gained access to a highly scalable assortment of private brands and products utilized throughout the water, wastewater and fire protection industries.
Residential We estimate that approximately 20% of our net sales in fiscal 2023 were directly related to clean water and wastewater infrastructure projects to supply and service residential construction activity. Residential spending in our industry is driven by new land and lot development for single-family housing.
Residential We estimate that approximately 20% of our net sales in fiscal 2024 were directly related to water, wastewater and storm drainage infrastructure projects to supply and service residential construction activity. Residential spending in our industry is driven by new land and lot development for single-family housing.
Based on management’s estimates, we believe that our addressable market in the U.S. for th e distribution of water, wastewater, storm drainage and fire protection products, and related services, represented approximately $39 billion in sales in fiscal 2023.
Based on management’s estimates, we believe that our addressable market in the U.S. for th e distribution of water, wastewater, storm drainage and fire protection products, and related services, represented approximatel y $39 billion in sales in fiscal 2024.
Non-Residential We estimate that approximately 38% of our net sales in fiscal 2023 were directly related to clean water and wastewater infrastructure, storm drainage and fire protection systems supporting U.S. non-residential construction activity, including commercial, industrial, institutional, warehousing, multi-family and highway and street projects.
Non-Residential We estimate that approximately 38% of our net sales in fiscal 2024 were directly related to water, wastewater, storm drainage and fire protection systems supporting non-residential construction activity, including commercial, industrial, institutional, warehousing, multi-family, and highway and street projects.
Our training and leadership curricula and expanded diversity and inclusion programs drive high associate engagement and a positive associate experience. In addition, we deliver attractive career growth opportunities to our associates while leveraging their knowledge and expertise. Our Products & Services Our comprehensive product portfolio consists of more than 200,000 SKUs from approximately 5,000 suppliers.
Our training and leadership curricula and expanded inclusion and belonging programs drive high associate engagement and a positive associate experience. In addition, we deliver attractive career growth opportunities to our associates while leveraging their knowledge and expertise. Our Products & Services Our comprehensive product portfolio consists of more than 225,000 products from over 5,000 suppliers.
Our products are often installed while breaking ground on new lot development during the initial construction phase, though some products, like storm drainage products, are used during both new construction and repair and replace activities.
Our products are often installed while breaking ground on new lot development during the initial construction phase, though some products are used during new construction and repair and replace activities.
Sales through our strategic accounts program represented approximately 5% of our fiscal 2023 net sales.
Sales through our strategic accounts program represented approximately 5% of our fiscal 2024 net sales.
This provides us with a competitive advantage versus smaller competitors, particularly for large and complex projects. Our largest single supplier represented approximately 8% of product expenditures in fiscal 2023, and our top ten suppliers represented approximately 45% of total product expenditures during the same period.
This provides us with a competitive advantage versus smaller competitors, particularly for large and complex projects. Our largest single supplier represented approximately 7% of product expenditures in fiscal 2024, and our top ten suppliers represented approximately 43% of total product expenditures during the same period.
We estimate that our net sales accounted for approximately 17% of our $39 billion addressable market in fiscal 2023. The principal competitive factors in our industry include the breadth, availability, access and pricing of products and services, technical knowledge and project planning capabilities, local expertise, as well as delivery capability and reliability.
We estimate that our net sales accounted for approxi mately 19% of our $39 billion addressable market in fiscal 2024. The principal competitive factors in our industry include the breadth, availability, access and pricing of products and services, technical knowledge and project planning capabilities, local expertise, as well as delivery capability and reliability.
Meter products accounted for approximately 8% of our net sales in fiscal 2023. Our Customers We have a fragmented customer base that consists of over 60,000 customers. Our top 50 customers represented approximately 12% of our net sales in fiscal 2023, with our largest customer accounting for less than 1% of net sales.
Meter products accounted for approximately 9% of our net sales in fiscal 2024. Our Customers We have a fragmented customer base that consists of over 60,000 customers. Our top 50 customers represented approximately 10% of our net sales in fiscal 2024, with our largest customer accounting for less than 1% of net sales.
In the coming years, we expect increased federal infrastructure investment to have a core focus on the upgrade, repair and replacement of municipal water infrastructure systems, and to address demographic shifts and serve the growing population.
In the coming years, we expect, but cannot provide any assurance that, increased federal infrastructure investment to have a core focus on the repair, replacement and upgrade of municipal water infrastructure systems, and to address demographic shifts and serve the growing population.
For specific smart metering, treatment plant, storm drainage, geosynthetics and erosion control, or fusible HDPE pipe solutions, our sales associates partner with a deep and dedic ated team of over 350 national and regional product specialists to assist customers in project scoping and specialized product selection.
For specific smart metering, treatment plant, storm drainage, geosynthetics and erosion control, or fusible HDPE pipe solutions, our sales associates partner with a deep and dedic ated team comprised of several hundred n ational and regional product specialists to assist customers in project scoping and specialized product selection.
We intend to continue pursuing opportunities to strengthen our presence in metropolitan statistical areas (“MSAs”) where we have an established footprint as well as in certain underserved markets. We believe we are well-positioned to do so through our market intelligence and ability to attract and develop sales talent.
We intend to continue opening new branches in metropolitan statistical areas (“MSAs”) where we have an established footprint, as well as in certain underserved markets. We believe we are well-positioned to do so through our market intelligence and ability to attract and develop sales talent.
Demand across the U.S. non-residential construction market has historically lagged residential construction activity as commercial development is necessary to support new housing development. Over the long term, we expect non-residential construction activity to increase as suburban communities expand and demand increases for our clean water, wastewater, storm drainage and fire protection products.
Demand across the non-residential construction market has historically lagged residential construction activity as commercial development is necessary to support new housing development. Over the long term, we expect, but cannot provide any assurance that, non-residential construction activity to increase as suburban communities expand and demand increases for our water, wastewater, storm drainage and fire protection products.
We believe these dynamics, coupled with expanding municipal budgets, create the backdrop for a favorable funding environment and accelerated investment in projects that will benefit our business.
We believe these dynamics create the backdrop for a favorable funding environment and accelerated investment in projects that will benefit our business.
We have identified approximately 165 MSAs where we believe we are underpenetrated and thus have opportunities to pursue greenfield expansion or offer more product lines and services. 3 Increase Share with Strategic Accounts Through our strategic accounts program, we partner with national contractors and large private water companies who typically pursue large-scale, complex projects that require greater technical expertise and specialized procurement needs.
We have identified a substantial number of MSAs where we believe we are underpenetrated and thus have opportunities to open new branches or offer more product lines and services. 3 Increase Share with Strategic Accounts Through our strategic accounts program, we partner with national contractors and large private water companies who typically pursue large-scale, complex projects that require greater technical expertise and specialized procurement needs.
As of January 28, 2024, Core & Main held 95.4% ownership interest in Holdings with the remaining ownership interest held by Core & Main Management Feeder, LLC (“Management Feeder”) . 9 Available Information Our principal executive offices are located at 1830 Craig Park Court, St. Louis, MO 63146, and our telephone number is (314) 432-4700. Our website is www.coreandmain.com.
As of February 2, 2025, Core & Main held 96.1% ownership interest in Holdings with the remaining ownership interest held by Core & Main Management Feeder, LLC (“Management Feeder”) . Available Information Our principal executive offices are located at 1830 Craig Park Court, St. Louis, MO 63146, and our telephone number is (314) 432-4700. Our website is www.coreandmain.com.
In November 2021, the Infrastructure Investment and Jobs Act (“IIJA”) was signed into U.S. law, which included an allocation of $55 billion to invest in water infrastructure across the U.S.
In November 2021, the Infrastructure Investment and Jobs Act (“IIJA”) was signed into U.S. law, which included an allocation of $55 billion to invest in water infrastructure across the U.S., the majority of which, we believe, has yet to be realized.
We take a disciplined approach to sourcing, acquiring and integrating complementary businesses that help us expand into new geographies, acquire key talent or offer new products and services. In addition, we evaluate and pursue opportunistic acquisitions in industries adjacent to those we currently serve.
Opportunistically Pursue Strategic Acquisitions We have a track record of sourcing, acquiring and integrating complementary businesses that help us expand into new geographies, acquire key talent or offer new products and services. In addition, we evaluate and pursue opportunistic acquisitions in industries adjacent to those we currently serve.
We believe that we can expand our presence in these underpenetrated product categories without investing significant capital or incurring substantial costs as a result of our existing branch network, favorable supplier relationships and low working capital requirements. Opportunistically Pursue Strategic Acquisitions We have a track record of acquiring and integrating businesses.
We believe that we can expand our presence in these underpenetrated product categories without investing significant capital or incurring substantial costs as a result of our existing branch network, favorable supplier relationships and low working capital requirements.
Organizational Structure Core & Main was incorporated on April 9, 2021 for the purpose of facilitating the IPO and other related transactions in order to carry on the business of Holdings and its consolidated subsidiaries.
Organizational Structure Core & Main was incorporated on April 9, 2021 for the purpose of facilitating the IPO and other related transactions in order to carry on the business of Holdings and its consolidated subsidiaries. Core & Main is a holding company that indirectly owns Core & Main LP through its ownership interest in Holdings.
We are focused on attracting, training, promoting and retaining industry-leading talent. Our authentic, purpose-driven culture enables our associates to thrive in our company and our industry. We have a strong track record of developing our associates for success and driving high employee engagement.
Our Human Capital We believe our associates are the key drivers of our success. We are focused on attracting, training, promoting and retaining industry-leading talent. Our people-first culture enables our associates to thrive in our company and our industry. We have a strong track record of developing our associates for success and driving high associate engagement.
Our ability to attract and retain talent is based on four foundational pillars: pay-for-performance philosophy, training and development, diversity and inclusion and benefits. As of January 28, 2024, we employed approximately 5,000 associates, the majority of whom are assigned to local branches across the U.S. to support our customers and their project needs.
Our ability to attract and retain talent is based on four foundational pillars: pay-for-performance philosophy, training and development, associate engagement and benefits. 7 As of February 2, 2025, we employed approximately 5,700 associates, the majority of whom are assigned to local branches to support our customers and their project needs.
Our branch associates have the opportunity to earn competitive compensation through our performance-based compensation plans, which are based on local performance. We support our network of approximately 335 branches with the following company-wide resources: strategic account management, product specialists, category management, sourcing, supply chain, finance, tax, accounting, payroll, marketing and communications, human resources, legal, safety and information technology.
Our branch associates have the opportunity to earn competitive compensation through our performance-based compensation plans, which are based on local performance. We support our network of over 370 branches with the following company-wide resources: sales management, technical product specialists, sourcing, finance, tax, marketing, human resources, legal and information technology, among others.
We also provide customized training, talent reviews and early career rotational programs for college graduates to develop as future leaders. We partner with our suppliers to enhance our knowledge base as new products and best practices are continually introduced.
We also provide customized training, talent reviews and early career rotational programs for college graduates to develop as future leaders. We partner with our suppliers to enhance our knowledge base as new products and best practices are continually introduced. This talent-first approach enables us to develop and promote top talent to drive profitable growth while maintaining a supportive culture.
Our specialized fleet of delivery equipment enables delivery of materials to our customers’ worksites in a timely and cost-efficient manner. We also offer direct distribution options to our customers on a wide range of products.
Our branches receive products in both large and small quantities from our suppliers and stock products in warehouses and yards for purchase. Our specialized fleet of delivery equipment enables delivery of materials to our customers’ worksites in a timely and cost-efficient manner. We also offer direct distribution options to our customers on a wide range of products.
We have been able to generate margin improvement and synergistic value from businesses we acquire through favorable purchasing capabilities, fixed cost leverage, facility optimization, access to new products and working capital optimization.
We have been able to generate margin improvement and synergistic value from businesses we acquire through favorable purchasing capabilities, fixed cost leverage, facility optimization, access to new products and working capital optimization. See an overview of completed acquisitions for fiscal 2024, fiscal 2023 and fiscal 2022 in Item 7.
Fire Protection Our fire protection products are installed in commercial, institutional, industrial, warehouse and multi-family buildings, and they are used to extinguish and prevent the spread of fires. A typical fire protection product offering includes pipe, sprinkler heads and devices, and other accessories.
Fire Protection Our fire protection products are used in commercial, institutional, industrial, warehouse and multi-family buildings to extinguish and prevent the spread of fires. A typical fire protection product offering includes pipe, valves, fittings, sprinkler heads and other accessories. We also offer customized fabrication and kitting services, providing a comprehensive solution for all fire protection product needs.
As of January 28, 2024, we had a network of approxi mately 335 bra nch locations in 48 states across the U.S., which serve as a critical link between approximately 5,000 suppliers and a diverse and long-standing base of over 60,000 customers.
As of February 2, 2025, we had a network of over 370 bra nch locations in 49 U.S. states, which serve as a critical link between more than 5,000 suppliers and a diverse and long-standing base of over 60,000 customers.
Fire protection products accounted for approximately 10% of our net sales in fiscal 2023. 5 Meters Our smart meters are used for water volume measurement and regulation and include automated meter reading and advanced metering infrastructure technologies.
Our fire protection products meet strict quality standards, and our offering varies by market based on local specifications, regulations and fire codes. Fire protection products accounted for approximately 8% of our net sales in fiscal 2024. 5 Meters Our smart meters are used for water volume measurement and regulation and include automated meter reading and advanced metering infrastructure technologies.
Each region is led by a regional vice president who manages a multi-state territory. This regional structure enables us to address the specific management, strategic and operational needs of each region. Our Distribution Network Our branch-based b usiness model is the core of our operations and the primary component of our distribution network.
Our branch operational structure is organized by region and then by district to optimize both the oversight and sharing of resources and products. Each region is led by a regional vice president who manages a multi-state territory. This regional structure enables us to address the specific management, strategic and operational needs of each region.
We also intend to continue selectively driving greenfield expansion, having opened nearly 20 new locations since 2017. We believe we can efficiently open new branches in attractive markets given our talent pool, scale advantages and learning curve advantages based on past successes in entering new geographies.
We can efficiently open new branches in attractive markets given our talent pool, scale, and learning curve advantages based on past successes in entering new geographies.
Our offering consists of pipes, valves & fittings, storm drainage products, fire protection products and fabrication services, and smart metering products and technology. Our customers value our product breadth and geographic reach, as well as our technical product knowledge and consultation services.
Our offering consists of pipes, valves & fittings, storm drainage products, fire protection products and smart metering products. Our customers value our product breadth and geographic reach, as well as our technical product knowledge and consultation services. While pricing is important to our customers, availability, convenience, reliability and expertise are also important factors in their purchase decisions.
We believe that we have the trademarks, trade names and licenses necessary for the operation of our business as we currently conduct it. We rely on both trademark registration and common law protection for trademarks. Trademark rights may potentially extend indefinitely and are dependent upon national laws and our continued use of the trademarks.
Our Intellectual Property We rely on trademarks, trade names and licenses to maintain and improve our competitive position. We believe that we have the trademarks, trade names and licenses necessary for the operation of our business as we currently conduct it. We rely on both trademark registration and common law protection for trademarks.
We have developed an internal inclusion and belonging advisory group, which serves as an umbrella to our mental health council, philanthropic activity and a recently established Veteran’s Network. Through our training programs, we are taking a proactive approach to grow and retain our own talent and develop diverse leaders in our industry.
Some of our efforts are well established, such as our Women’s Network, which is intended to develop women in our industry. We have developed an internal inclusion and belonging advisory group called Culture+, which serves as an umbrella to our mental health council, philanthropic activity and a recently established Veteran’s Network.
Regulation We are subject to various federal, state, and local laws and regulations, compliance with which increases our operating costs and subjects us to the possibility of regulatory actions or proceedings.
Assertions by third parties that we violate their intellectual property rights could have a material adverse effect on our business, financial condition and results of operations. Regulation We are subject to various federal, state, and local laws and regulations, compliance with which increases our operating costs and subjects us to the possibility of regulatory actions or proceedings.
Our Sales Force As of January 28, 2024, we employed approximately 1,800 customer support representatives, the majority of whom were inside sales representatives based at local branches. Inside sales representatives are responsible for project management, coordinating incoming orders, providing estimates and ordering material.
Our Sales Force We employ a large network of customer support representatives, the majority of whom were inside sales representatives based at local branches. Inside sales representatives are responsible for project management, coordinating incoming orders, providing estimates and ordering material. Our customer support representatives also include over 600 field sales representatives who routinely visit existing customers, potential customers and jobsites.
We offer associates a comprehensive benefits package, which includes access to a concierge service to help them navigate their benefits. These efforts are representative of our focus on promoting a consistent, positive experience for all associates. 8 Our Intellectual Property We rely on trademarks, trade names and licenses to maintain and improve our competitive position.
Benefits Our comprehensive benefits program reflects our overall belief that benefits should address the whole associate experience, including health and well-being. We offer associates a comprehensive benefits package, which includes access to a concierge service to help them navigate their benefits. These efforts are representative of our focus on promoting a consistent, positive experience for all associates.
We derived approximately 42% of our net sales for the fiscal year ended January 28, 2024 (“fiscal 2023”) from the municipal construction sector, 38% from the non-residential construction sector and 20% from the residential construction sector.
We have a balanced mix of sales across product categories, end markets and construction sectors. We estimate we derived approximately 42% of our net sales for the fiscal year ended February 2, 2025 (“fiscal 2024”) from the municipal construction sector, 38% from the non-residential construction sector and 20% from the residential construction sector.
They also directly assist and educate customers, taking a consultative approach and helping with custom projects and product solutions tailored to our customers’ needs.
These field sales representatives remain attuned to activity in their local market, identifying and tracking active projects, and they are responsible for generating sales and identifying new customers and projects. They also directly assist and educate customers, taking a consultative approach and helping with custom projects and product solutions tailored to our customers’ needs.
Except for the Core & Main trademark and licenses of commercially available third-party software, we do not consider our trademarks, trade names or licenses to be material to the operation of our business as a whole. As we continue to execute on our private label distribution growth strategy, we anticipate the associated trademarks will grow in value.
Trademark rights may potentially extend indefinitely and are dependent upon national laws and our continued use of the trademarks. 8 Except for the Core & Main trademark and licenses of commercially available third-party software, we do not consider our trademarks, trade names or licenses to be material to the operation of our business as a whole.
We offer a comprehensive portfolio of more than 200,000 stock keeping units (“SKUs”) covering a full spectrum of specialized products and services, including pipes, valves & fittings, storm drainage products, fire protection products and fabrication services, and smart metering products and technology.
We offer a comprehensive portfolio of more than 225,000 products covering a full spectrum of specialized products and services, including pipes, valves & fittings, storm drainage products, fire protection products and smart metering products. Our products are generally unique to our industry and must meet local municipal, state and federal specifications and engineering standards.
Inclusion and Belonging We believe our inclusion and belonging efforts are important to the success of our talent strategy. A core element of our mission is to build strong relationships with one another and in the communities we serve. Some of our efforts are well established, such as our Women’s Network, and are intended to develop women in our industry.
Year after year, associates rate our learning opportunities as one of the most valuable aspects of working at Core & Main. Associate Engagement We believe our associate engagement efforts are important to the success of our talent strategy. A core element of our mission is to build strong relationships with one another and in the communities we serve.
Nearly all of our branches operate on an integrated technology platform, allowing us to utilize our combined capabilities for procurement, inventory management, financial support, data analytics and performance reporting. Our branch operational structure is organized by region and then by district to optimize both the oversight and sharing of resources and products.
Nearly all of our branches operate on an integrated technology platform, allowing us to utilize our combined capabilities for procurement, inventory management, financial support, data analytics and performance reporting. We routinely invest in new technology, data and security systems to enhance and protect the business over the long-term.
We believe being included and having a voice is vital for associate engagement and underscores our core principle: Team members are family. Benefits Our comprehensive benefits program reflects our overall belief that benefits should address the whole associate experience, including health and well-being.
This ongoing, two-way dialogue provides our associates with a voice in creating and improving our culture, and the overall associate experience. We believe being included and having a voice is vital for associate engagement and underscores our core principle: Team members are family.
While pricing is important to our customers, availability, convenience, reliability and expertise are also important factors in their purchase decisions. In addition, our project management capabilities provide us with a competitive advantage over many competitors who offer a more limited selection of services.
In addition, our project management capabilities provide us with a competitive advantage over many competitors who offer a more limited selection of services. Pipes, Valves & Fittings Pipes, valves, hydrants and fittings are used in the distribution and flow control of water within water and wastewater transmission networks.
We believe we are widely viewed as the acquirer of choice in our industry due to our respected reputation, our entrepreneurial culture, and our commitment to the development and well-being of our people. Our integration approach is to partner with the management of the acquired company to tailor the transition of the employees into our systems and processes.
Our integration approach is to partner with the management of the acquired company to tailor the transition of the associates into our systems and processes.
Each branch sells approximately 4,500 SKUs on average, with many of them on hand as inventory and the rest available for delivery. Our branch managers have the autonomy to optimi ze their product and service offerings based on the local specifications, regulations and customer preferences within each local market.
Our branch managers have the autonomy to optimi ze their product and service offerings based on the local specifications, regulations and customer preferences within each market. Our branch network connects large suppliers with smaller volume customers whose consumption patterns tend to make them uneconomical to be served directly by our suppliers.
For more information regarding the IPO, the Reorganization Transactions (as defined below in Item 7. “Management’s Discussion and Analysis of Financial Conditions and Results of Operations—Initial Public Offering and Secondary Offerings”) and our holding company structure, see Note 1 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Core & Main’s primary material assets are its direct and indirect ownership interest in Holdings and deferred tax assets associated with such ownership. For more information regarding our holding company structure, see Note 1 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
We frequently check the pulse of our associates, in addition to our annual engagement survey to listen and act on feedback. This ongoing, two-way dialogue provides our associates with a voice in creating and improving our culture, and the overall associate experience.
Through our training programs, we are taking a proactive approach to grow and retain our own talent and develop leaders with varying backgrounds in our industry. We frequently check the pulse of our associates, in addition to our annual engagement survey to listen and act on feedback.
Removed
Our products are generally unique to our industry and must meet local municipal, state and federal specifications and engineering standards. We have a balanced mix of sales across product categories, end markets and construction sectors.
Added
In January 2025, President Trump issued an executive order to pause funding disbursements under the IIJA; however this funding pause was not related to funding for water or road projects.
Removed
Pipes, Valves & Fittings Pipes, valves, hydrants and fittings are used in the distribution and flow control of water within water and wastewater transmission networks. Our pipe products, which typically range in diameter from 1/2” to 60”, include materials such as PVC, ductile iron, fusible HDPE, steel and copper.
Added
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Factors Affecting Our Business” of this Annual Report on Form 10-K. We believe we are widely viewed as the acquirer of choice in our industry due to our respected reputation, our entrepreneurial culture and our commitment to the development and well-being of our people.
Removed
We also offer customized fabrication and kitting services, providing a comprehensive solution for all fire protection product needs. Our fire protection products meet strict quality standards, and our offering varies by market based on local municipal specifications, regulations and fire codes.
Added
Our pipe products come in a variety of sizes and include materials such as PVC, ductile iron, fusible HDPE and copper. Our pipe products are manufactured specifically for our industry, and they must adhere to the local specifications and regulations of municipalities across the country.
Removed
Our branch network connects large suppliers with smaller volume customers whose consumption patterns tend to make them uneconomical to be served directly by our suppliers. Our branches receive products in both large and small quantities from our suppliers and stock products in warehouses and yards for purchase.
Added
Our branches employ an average of 13 associates including branch management, sales representatives, warehouse staff, drivers and other support staff. Each branch sells approximately 4,500 products on average, with many of them on hand as inventory and the rest available for delivery.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

120 edited+40 added−45 removed206 unchanged
Biggest changeEach Tax Receivable Agreement provides that upon certain mergers, asset sales, other forms of business combinations or other changes of control, nonpayment for a specified period which constitutes a material breach of a material obligation under such Tax Receivable Agreement, or if, at any time, we elect an early termination of such Tax Receivable Agreement, then our obligations, or our successor’s obligations, under such Tax Receivable Agreement to make payments thereunder would be based on certain assumptions, including an assumption that we would have sufficient taxable income to fully utilize all potential future tax benefits that are subject to such Tax Receivable Agreement. 28 As a result of the foregoing, (i) we could be required to make payments under such Tax Receivable Agreement that are greater than the specified percentage of the actual benefits we ultimately realize in respect of the tax benefits that are subject to such Tax Receivable Agreement and (ii) if we elect to terminate such Tax Receivable Agreement early, we would be required to make an immediate cash payment equal to the specified percentage of the present value of the anticipated future tax benefits that are the subject of such Tax Receivable Agreement, which payment may be made significantly in advance of the actual realization, if any, of such future tax benefits.
Biggest changeEach Tax Receivable Agreement provides that upon certain mergers, asset sales, other forms of business combinations or other changes of control, nonpayment for a specified period which constitutes a material breach of a material obligation under such Tax Receivable Agreement, or if, at any time, we elect an early termination in accordance with the terms of the Tax Receivable Agreements or negotiate a settlement of the Tax Receivable Agreements, then our obligations, or our successor’s obligations, under such Tax Receivable Agreement to make payments thereunder would be based on certain assumptions, including an assumption that we would have sufficient taxable income to fully utilize all potential future tax benefits that are subject to such Tax Receivable Agreement.
If Core & Main LP cannot make scheduled payments on its indebtedness under the Senior ABL Credit Facility, the 2028 Senior Term Loan, and/or the 2031 Senior Term Loan, it will be in default and the lenders under the Senior ABL Credit Facility, the 2028 Senior Term Loan and/or the 2031 Senior Term Loan could terminate their commitments to loan money or foreclose against the assets securing the borrowings, and Core & Main LP could be forced into bankruptcy or liquidation.
If Core & Main LP cannot make scheduled payments on its indebtedness under the Senior ABL Credit Facility, the 2028 Senior Term Loan, and/or the 2031 Senior Term Loan, it will be in default and the lenders under the Senior ABL Credit Facility and/or the Senior Term Loan Credit Facility could terminate their commitments to loan money or foreclose against the assets securing the borrowings, and Core & Main LP could be forced into bankruptcy or liquidation.
The agreements governing our indebtedness contain a number of covenants that may limit Core & Main LP ’s ability and the ability of any of its future restricted subsidiaries to: • incur additional indebtedness or issue certain preferred shares; • pay dividends, redeem stock or make other distributions in respect of capital stock; • repurchase, prepay or redeem subordinated indebtedness; • make investments; • create restrictions on the ability of Core & Main LP ’s restricted subsidiaries to pay dividends to Core & Main LP or make other intercompany transfers; • incur additional liens; • transfer or sell assets; • make negative pledges; • consolidate, merge, sell or otherwise dispose of all or substantially all of Core & Main LP ’s assets; • change the nature of Core & Main LP ’s business; • enter into certain transactions with Core & Main LP ’s affiliates; and • designate subsidiaries as unrestricted subsidiaries.
The agreements governing our indebtedness contain a number of covenants that may limit Core & Main LP ’s ability and the ability of any of its future restricted subsidiaries to: • incur additional indebtedness or issue certain preferred shares; • pay dividends, redeem stock or make other distributions in respect of capital stock; • repurchase, prepay or redeem subordinated indebtedness; • make investments; • create restrictions on the ability of Core & Main LP ’s restricted subsidiaries to pay dividends to Core & Main LP or make other intercompany transfers; • incur additional liens; 23 • transfer or sell assets; • make negative pledges; • consolidate, merge, sell or otherwise dispose of all or substantially all of Core & Main LP ’s assets; • change the nature of Core & Main LP ’s business; • enter into certain transactions with Core & Main LP ’s affiliates; and • designate subsidiaries as unrestricted subsidiaries.
Our Certificate of Incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if such court does not have subject matter jurisdiction thereof, the federal district court of the State of Delaware) will, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action, suit or proceeding brought on our behalf, (ii) any action, suit or proceeding asserting a claim of breach of a fiduciary duty owed to us or our stockholders by any of our directors, officers, other employees, agents or stockholders, (iii) any action, suit or proceeding asserting a claim arising out of or pursuant to or seeking to enforce any right, obligation or remedy under any provision of our Certificate of Incorporation or our By-laws (as either may be amended or restated) or the DGCL, or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware or (iv) any action or proceeding asserting a claim that is governed by the internal affairs doctrine, in each case subject to such Court of Chancery of the State of Delaware having personal jurisdiction over the indispensable parties named as defendants.
Our Certificate of Incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if such court does not have subject matter jurisdiction thereof, the federal district court of the State of Delaware) will, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action, suit or proceeding brought on our behalf, (ii) any action, suit or proceeding asserting a claim of breach of a fiduciary duty owed to us or our shareholders by any of our directors, officers, other employees, agents or shareholders, (iii) any action, suit or proceeding asserting a claim arising out of or pursuant to or seeking to enforce any right, obligation or remedy under any provision of our Certificate of Incorporation or our By-laws (as either may be amended or restated) or the DGCL, or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware or (iv) any action or proceeding asserting a claim that is governed by the internal affairs doctrine, in each case subject to such Court of Chancery of the State of Delaware having personal jurisdiction over the indispensable parties named as defendants.
These risks are elevated during periods of supply chain disruption as we may simultaneously be unable to obtain certain products in a timely manner and increase on-hand quantities of other products. Acquisitions and other strategic transactions involve a number of inherent risks, any of which could result in the benefits anticipated not being realized.
These risks are elevated during periods of supply chain disruption as we may simultaneously be unable to obtain certain products in a timely manner and increase on-hand quantities of other products. 13 Acquisitions and other strategic transactions involve a number of inherent risks, any of which could result in the benefits anticipated not being realized.
However, as a distributor, we face an inherent risk of exposure to product liability and other claims in the event that the use of the products we have distributed in the past or may in the future distribute is alleged to have resulted in economic loss, personal injury or property damage or violated environmental, health or safety or other laws.
As a distributor of products, we face an inherent risk of exposure to product liability and other claims in the event that the use of the products we have distributed in the past or may in the future distribute is alleged to have resulted in economic loss, personal injury or property damage or violated environmental, health or safety or other laws.
Our inability to supply a customer’s specific requirements from our branches could materially and adversely affect our relationship with that customer or increase our operating costs. 22 Most of our net sales are made to customers that do not have contracts in place and are not contractually obligated to purchase products from us.
Our inability to supply a customer’s specific requirements from our branches could materially and adversely affect our relationship with that customer or increase our operating costs. Most of our net sales are made to customers that do not have contracts in place and are not contractually obligated to purchase products from us.
Being forced to refinance these borrowings on less favorable terms or not being able to refinance these borrowings could have a material adverse effect on our business or financial condition. 25 The Amended and Restated Limited Partnership Agreement of Holdings and the Tax Receivable Agreements limit our ability to incur additional indebtedness or refinance our existing indebtedness on favorable terms.
Being forced to refinance these borrowings on less favorable terms or not being able to refinance these borrowings could have a material adverse effect on our business or financial condition. The Amended and Restated Limited Partnership Agreement of Holdings and the Tax Receivable Agreements limit our ability to incur additional indebtedness or refinance our existing indebtedness on favorable terms.
See “—Risks Related to Our Indebtedness.” 14 Our industry and the markets in which we operate are fragmented and highly competitive, and increased competitive pressures, including the pressure to consolidate, could adversely affect our business. The markets in which we operate are fragmented and highly competitive. Competition varies depending on product line, type of customer and geographic area.
See “—Risks Related to Our Indebtedness.” Our industry and the markets in which we operate are fragmented and highly competitive, and increased competitive pressures, including the pressure to consolidate, could adversely affect our business. The markets in which we operate are fragmented and highly competitive. Competition varies depending on product line, type of customer and geographic area.
While we may in the future consider approving a plan to pay dividends on our Class A common stock, we currently intend to use our future earnings, if any, to repay debt, to fund our growth, to develop our business, for working capital needs and for general corporate purposes.
While we may in the future consider approving a plan to pay dividends on our Class A common stock, we currently intend to use our future earnings, if any, to repay debt, to fund our growth, to develop our business, for working capital needs, stock repurchases and for general corporate purposes.
Any increase in product costs that are not offset by an increase in our prices, or our inability to maintain price levels in an environment of declining product costs, could have a material adverse effect on our business or financial condition. 13 We are subject to inventory management risks.
Any increase in product costs that are not offset by an increase in our prices, or our inability to maintain price levels in an environment of declining product costs, could have a material adverse effect on our business or financial condition. We are subject to inventory management risks.
However, there can be no assurance that such contractual rights will be obtained or adequate, or that related indemnification claims will be successfully asserted by us. 20 Any difficulties with, or interruptions of, our fabrication services could delay our output of products and harm our relationships with our customers.
However, there can be no assurance that such contractual rights will be obtained or adequate, or that related indemnification claims will be successfully asserted by us. Any difficulties with, or interruptions of, our fabrication services could delay our output of products and harm our relationships with our customers.
The impact of such an increase would be more significant for us than it would be for some other companies because of the total amount of our indebtedness. Changes in our credit ratings and outlook may reduce access to capital and increase borrowing costs.
The impact of such an increase may be more significant for us than it would be for some other companies because of the total amount of our indebtedness. 24 Changes in our credit ratings and outlook may reduce access to capital and increase borrowing costs.
Stock markets have experienced extreme volatility in recent years that has been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our Class A common stock.
Stock markets have experienced extreme volatility in recent years that has been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our Class A common stock , regardless of our operating performance .
We are subject to risks associated with operating internationally. We export and import certain of our products to different jurisdictions outside the U.S. The shipment of goods across international borders is subject to extensive trade laws and regulations.
We are subject to risks associated with operating internationally. We export and import certain of our products to and from different jurisdictions outside the U.S. The shipment of goods across international borders is subject to extensive trade laws and regulations.
We do not believe that we are an “investment company,” as such term is defined in either of those sections of the 1940 Act. 29 As the general partner of Holdings, we control and operate Holdings.
We do not believe that we are an “investment company,” as such term is defined in either of those sections of the 1940 Act. As the general partner of Holdings, we control and operate Holdings.
Although the majority of our overall product offerings relate to distribution for which we engage in no significant manufacturing, we do perform light fabrication services for certain product categories, including fire protection, storm drainage, geosynthetics and erosion control, meter sets and fusible HDPE piping products, which collectively accounted for less than 5% of our net sales in fiscal 2023 and which we believe are products with significant opportunities for growth.
Although the majority of our overall product offerings relate to distribution for which we engage in no significant manufacturing, we do perform light fabrication services for certain product categories, including fire protection, storm drainage, geosynthetics and erosion control, meter sets and fusible HDPE piping products, which collectively accounted for less than 5% of our net sales in fiscal 2024 and which we believe are products with significant opportunities for growth.
Payments of dividends, if any, are at the sole discretion of our board of directors after taking into account various factors, including general and economic conditions, our financial condition and operating results, our available cash and current and anticipated cash needs, capital requirements, contractual, legal and tax restrictions and implications of the payment of dividends by us to our stockholders or by our subsidiaries to us, and such other factors as our board of directors may deem relevant.
Payments of dividends, if any, are at the sole discretion of our board of directors after taking into account various factors, including general and economic conditions, our financial condition and operating results, our available cash and current and anticipated cash needs, capital requirements, contractual, legal and tax restrictions and implications of the payment of dividends by us to our shareholders or by our subsidiaries to us, and such other factors as our board of directors may deem relevant.
We recognize that many of our shareholders, employees, suppliers, customers, regulators and other stakeholders expect us to continue to focus on long-term sustainable performance while considering the positive impact we can have on the environment and in our communities. This includes addressing significant, relevant ESG factors, further working to prioritize sustainable energy practices and reducing our carbon footprint.
We recognize that many of our shareholders, associates, suppliers, customers, regulators and other stakeholders expect us to continue to focus on long-term sustainable performance while considering the positive impact we can have on the environment and in our communities. This includes addressing significant, relevant ESG factors, further working to prioritize sustainable energy practices and reducing our carbon footprint.
Core & Main LP is required to make mandatory prepayments under (a) the Senior ABL Credit Facility, if aggregate outstanding borrowings exceed the then applicable borrowing base or the then effective commitments under the Senior ABL Credit Facility, and (b) the 2028 Senior Term Loan (as defined in Note 6 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K), from excess cash flow, asset sale proceeds, insurance recovery proceeds and proceeds from certain debt incurrences, in each case subject to certain limitations and conditions set forth in the agreements governing such facilities.
Core & Main LP is required to make mandatory prepayments under (a) the Senior ABL Credit Facility, if aggregate outstanding borrowings exceed the then applicable borrowing base or the then effective commitments under the Senior ABL Credit Facility, and (b) the S enior Term Loan Credit Facility (as defined in Note 6 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K), from excess cash flow, asset sale proceeds, insurance recovery proceeds and proceeds from certain debt incurrences, in each case subject to certain limitations and conditions set forth in the agreements governing such facilities.
Conversely, increased federal funding can also adversely affect our business by slowing down state and local spending as a result of delays in appropriating such federal funding to our end customers. In November 2021, the IIJA, which includes $55 billion to invest in water infrastructure across the U.S., was signed into law.
Conversely, increased federal funding may also adversely affect our business by slowing down state and local spending as a result of delays in appropriating such federal funding to our end customers. In November 2021, the IIJA, which includes $55 billion to invest in water infrastructure across the U.S., was signed into law.
These liabilities, if they materialize, could have a material adverse effect on our business or financial condition. In addition, any future acquisition could be financed by additional indebtedness or raising equity, which could increase leverage or result in dilution to our existing stockholders, as applicable, and impact our ability to access capital in the future.
These liabilities, if they materialize, could have a material adverse effect on our business or financial condition. In addition, any future acquisition could be financed by additional indebtedness or raising equity, which could increase leverage or result in dilution to our existing shareholders, as applicable, and impact our ability to access capital in the future.
Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of our Class A common stock if the provisions are viewed as discouraging takeover attempts in the future. Our Certificate of Incorporation and By-laws may also make it difficult for stockholders to replace or remove our management.
Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of our Class A common stock if the provisions are viewed as discouraging takeover attempts in the future. Our Certificate of Incorporation and By-laws may also make it difficult for shareholders to replace or remove our management.
Furthermore, the existence of the foregoing provisions could limit the price that investors might be willing to pay in the future for shares of our Class A common stock. These provisions may facilitate management entrenchment that may delay, deter, render more difficult or prevent a change in our control, which may not be in the best interests of our stockholders.
Furthermore, the existence of the foregoing provisions could limit the price that investors might be willing to pay in the future for shares of our Class A common stock. These provisions may facilitate management entrenchment that may delay, deter, render more difficult or prevent a change in our control, which may not be in the best interests of our shareholders.
Changes to our end markets that decrease demand for products or planned inventory reductions due to more reliable lead times for products may cause us to fall short of minimum quantities or dollar amounts required to earn a rebate or preclude us from reaching the highest rebates offered by our vendors.
Changes to our end markets that decrease demand for products or planned inventory reductions due to more reliable lead times for products may cause us to fall short of minimum quantities or dollar amounts required to earn a rebate or preclude us from reaching the highest rebates offered by our suppliers.
It is possible that a court could find that the exclusive forum provisions described above are inapplicable for a particular claim or action or that such provision is unenforceable, and our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.
It is possible that a court could find that the exclusive forum provisions described above are inapplicable for a particular claim or action or that such provision is unenforceable, and our shareholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.
We believe these customer needs could result in fewer distributors as the remaining distributors become larger and more capable of being consistent sources of supply. If customers grow from consolidation, they may choose to vertically integrate the distribution of products we sell and purchase directly from our vendors.
We believe these customer needs could result in fewer distributors as the remaining distributors become larger and more capable of being consistent sources of supply. If customers grow from consolidation, they may choose to vertically integrate the distribution of products we sell and purchase directly from our suppliers.
Among the factors that could affect our stock price are: • industry, regulatory or general market conditions; • domestic and international economic factors unrelated to our performance; • new regulatory pronouncements and changes in regulatory guidelines; • lawsuits, enforcement actions and other claims by third parties or governmental authorities; • actual or anticipated fluctuations in our quarterly operating results; • lack of research coverage and reports by industry analysts or changes in any securities analysts’ estimates of our financial performance; • action by institutional stockholders or other large stockholders, including future sales of our Class A common stock; • failure to meet any guidance given by us or any change in any guidance given by us, or changes by us in our guidance practices; • changes in our share repurchase or dividend policy; • announcements by us of significant impairment charges; • speculation in the press or investment community; • investor perception of us or our industry; • changes in market valuations or earnings of similar companies; • the impact of short selling or the impact of a potential “short squeeze” resulting from a sudden increase in demand for our Class A common stock; • announcements by us or our competitors of significant contracts, acquisitions, dispositions or strategic partnerships; • war, terrorist acts, epidemic disease or pandemic disease; • any future sales of our Class A common stock or other securities; • additions or departures of key personnel; and • misconduct or other improper actions of our associates .
Among the factors that could affect our stock price are: • industry, regulatory or general market conditions; • domestic and international economic factors unrelated to our performance; • new regulatory pronouncements and changes in regulatory guidelines; • lawsuits, enforcement actions and other claims by third parties or governmental authorities; • actual or anticipated fluctuations in our quarterly operating results; • lack of research coverage and reports by industry analysts or changes in any securities analysts’ estimates of our financial performance; • action by institutional shareholders or other large shareholders, including future sales of our Class A common stock; • failure to meet any guidance given by us or any change in any guidance given by us, or changes by us in our guidance practices; • changes in our share repurchase or dividend policy; • announcements by us of significant impairment charges; • speculation in the press or investment community; • investor perception of us or our industry; • changes in market valuations or earnings of similar companies; 28 • the impact of short selling or the impact of a potential “short squeeze” resulting from a sudden increase in demand for our Class A common stock; • announcements by us or our competitors of significant contracts, acquisitions, dispositions or strategic partnerships; • war, terrorist acts, epidemic disease or pandemic disease; • any future sales of our Class A common stock or other securities; • additions or departures of key personnel; • misconduct or other improper actions of our associates; and • the other risks described herein.
Preferred stock, if issued, could have a preference with respect to liquidating distributions or a preference with respect to dividend payments that could limit our ability to pay dividends to the holders of our Class A common stock. We and, indirectly, our stockholders, will bear the cost of issuing and servicing such securities.
Preferred stock, if issued, could have a preference with respect to liquidating distributions or a preference with respect to dividend payments that could limit our ability to pay dividends to the holders of our Class A common stock. We and, indirectly, our shareholders, will bear the cost of issuing and servicing such securities.
For example, our Certificate of Incorporation and By-laws collectively: • authorize the issuance of “blank check” preferred stock that could be issued by our board of directors to thwart a takeover attempt; • provide for a classified board of directors, which divides our board of directors into three classes, with members of each class serving staggered three-year terms, which prevents stockholders from electing an entirely new board of directors at an annual meeting; • limit the ability of stockholders to remove directors without cause; • provide that vacancies on our board of directors, including vacancies resulting from an enlargement of our board of directors, may be filled only by a majority vote of directors then in office; • prohibit stockholders from calling special meetings of stockholders; • prohibit stockholder action by consent in writing or electronic transmission, thereby requiring all actions to be taken at a meeting of the stockholders; • do not opt out of Section 203 of the Delaware General Corporation Law (the “DGCL”), which generally prohibits a publicly-held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years following the time the person became an interested stockholder, or any successor provision to Section 203; 32 • establish advance notice requirements for nominations of candidates for election as directors or to bring other business before an annual meeting of our stockholders; and • require the approval of holders of at least 66 2/3% of the voting power of the outstanding shares of our common stock then entitled to vote thereon to amend our By-laws and certain provisions of our Certificate of Incorporation.
For example, our Certificate of Incorporation and By-laws collectively: • authorize the issuance of “blank check” preferred stock that could be issued by our board of directors to thwart a takeover attempt; • provide for a classified board of directors, which divides our board of directors into three classes, with members of each class serving staggered three-year terms, which prevents shareholders from electing an entirely new board of directors at an annual meeting; • limit the ability of shareholders to remove directors without cause; • provide that vacancies on our board of directors, including vacancies resulting from an enlargement of our board of directors, may be filled only by a majority vote of directors then in office; 30 • prohibit shareholders from calling special meetings of shareholders; • prohibit shareholder action by consent in writing or electronic transmission, thereby requiring all actions to be taken at a meeting of the shareholders; • do not opt out of Section 203 of the Delaware General Corporation Law (the “DGCL”), which generally prohibits a publicly-held Delaware corporation from engaging in a “business combination” with an “interested shareholder” for a period of three years following the time the person became an interested shareholder, or any successor provision to Section 203; • establish advance notice requirements for nominations of candidates for election as directors or to bring other business before an annual meeting of our shareholders; and • require the approval of holders of at least 66 2/3% of the voting power of the outstanding shares of our common stock then entitled to vote thereon to amend our By-laws and certain provisions of our Certificate of Incorporation.
The prices of products we purchase and sell increased in the fiscal year ended January 30, 2022 (“fiscal 2021”) and the fiscal year ended January 29, 2023 (“fiscal 2022”) due to several factors, including, but not limited to, constraints in the supply chain associated with labor, global logistics, general inflationary pressures and availability of raw materials, that are in part due to conflict in countries that export raw materials in our products and other weather events.
The prices of products we purchase and sell increased in the fiscal year ended January 29, 2023 (“fiscal 2022”) due to several factors, including, but not limited to, constraints in the supply chain associated with labor, global logistics, general inflationary pressures and availability of raw materials, that are in part due to conflict in countries that export raw materials in our products and other weather events.
The length and magnitude of these cycles have varied over time and by market. Approximately 20% and 38% of our net sales in fiscal 2023 were directly related to the U.S. residential and non-residential end markets, respectively.
The length and magnitude of these cycles have varied over time and by market. Approximately 20% and 38% of our net sales in fiscal 2024 were directly related to the U.S. residential and non-residential end markets, respectively.
Our Certificate of Incorporation and By-laws include a number of provisions that may discourage, delay or prevent a change in our management or control over us even if our stockholders might consider such changes to be favorable.
Our Certificate of Incorporation and By-laws include a number of provisions that may discourage, delay or prevent a change in our management or control over us even if our shareholders might consider such changes to be favorable.
We supply many of our products to contractors in connection with municipal projects. Approximately 42% of our net sales in fiscal 2023 were related to the municipal market. Many of the factors that influence municipal infrastructure spending are not within our control.
We supply many of our products to contractors in connection with municipal projects. Approximately 42% of our net sales in fiscal 2024 were related to the municipal market. Many of the factors that influence municipal infrastructure spending are not within our control.
Approximately 98% of our net sales volume in fiscal 2023 was facilitated through the extension of credit to our customers whose ability to pay is dependent, in part, upon the economic strength of the industry in the areas in which they operate.
Approximately 98% of our net sales volume in fiscal 2024 was facilitated through the extension of credit to our customers whose ability to pay is dependent, in part, upon the economic strength of the industry in the areas in which they operate.
These provisions may prevent our stockholders from receiving the benefit from any premium to the market price of our Class A common stock offered by a bidder in a takeover context or from changing our management and board of directors.
These provisions may prevent our shareholders from receiving the benefit from any premium to the market price of our Class A common stock offered by a bidder in a takeover context or from changing our management and board of directors.
Further, if we do not adapt to or comply with investor or other stakeholder expectations and standards, which are evolving, or if we are perceived not to have responded appropriately to growing concern for ESG and sustainability issues, our business could suffer, including from reputational damage. Additionally, activist shareholders may submit proposals to promote or oppose an ESG-related position.
Further, if we do not adapt to or comply with investor or other stakeholder expectations and standards, which are evolving, or if we are perceived not to have responded appropriately to ESG and sustainability issues, our business could suffer, including from reputational damage. Additionally, activist shareholders may submit proposals to promote or oppose an ESG-related position.
The rebate programs we negotiate with our vendors often require us to purchase minimum quantities or dollar amount of purchases to qualify for the rebate and result in higher rebates with increased quantities or dollars purchased.
The rebate programs we negotiate with our suppliers often require us to purchase minimum quantities or dollar amount of purchases to qualify for the rebate and result in higher rebates with increased quantities or dollars purchased.
Additionally, a court could determine that the exclusive forum provision is unenforceable, and our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.
Additionally, a court could determine that the exclusive forum provision is unenforceable, and our shareholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.
Such costs could have a material adverse effect on our business or financial condition. In addition to these proposed SEC rule changes, California passed a series of climate disclosure bills in October 2023 which may lead to other states proposing climate-related regulations that require additional climate-related disclosures.
Such costs could have a material adverse effect on our business or financial condition. In addition to these proposed SEC rule changes, California passed a series of climate disclosure bills in October 2023, that require initial disclosures beginning in 2026, which may lead to other states proposing climate-related regulations that require additional climate-related disclosures.
Future sales of shares by us or our existing stockholders could cause our stock price to decline. Sales of substantial amounts of our Class A common stock in the public market, or the perception that these sales could occur, could cause the market price of our Class A common stock to decline.
Future sales of shares by us or our existing shareholders could cause our stock price to decline. Sales of substantial amounts of our Class A common stock in the public market, or the perception that these sales could occur, could cause the market price of our Class A common stock to decline.
To the fullest extent permitted by law, by becoming a stockholder in our Company, you will be deemed to have notice of and have consented to the provisions of our Certificate of Incorporation related to choice of forum.
To the fullest extent permitted by law, by becoming a shareholder in our Company, you will be deemed to have notice of and have consented to the provisions of our Certificate of Incorporation related to choice of forum.
These risks are discussed in more detail in “Risk Factors.” These risks include: • declines, volatility and cyclicality in the U.S. residential and non-residential construction markets; • slowdowns in municipal infrastructure spending and delays in appropriations of federal funds; • our ability to competitively bid for municipal contracts; • price fluctuations in our product costs; • our ability to manage our inventory effectively, including during periods of supply chain disruptions; • risks involved with acquisitions and other strategic transactions, including our ability to identify, acquire, close or integrate acquisition targets successfully; • the fragmented and highly competitive markets in which we compete and consolidation within our industry; • the development of alternatives to distributors of our products in the supply chain; • our ability to hire, engage and retain key personnel, including sales representatives, qualified branch, district and regional managers and senior management; • our ability to identify, develop and maintain relationships with a sufficient number of qualified suppliers and the potential that our exclusive or limited supplier distribution rights are terminated; • the availability of freight; • the ability of our customers to make payments on credit sales; • changes in supplier rebates or other terms of our supplier agreements; • our ability to identify and introduce new products and product lines effectively; • the spread of, and response to, public health crises and the inability to predict the ultimate impact on us; • costs and potential liabilities or obligations imposed by environmental, health and safety laws and requirements; 10 • regulatory change and the costs of compliance with regulation; • changes in stakeholder expectations in respect of environmental, social and governance (“ESG”) and sustainability practices; • exposure to product liability, construction defect and warranty claims and other litigation and legal proceedings; • potential harm to our reputation; • difficulties with or interruptions of our fabrication services; • safety and labor risks associated with the distribution of our products; • interruptions in the proper functioning of the Company’s and our third-party service providers’ information systems, including from cybersecurity threats; • impairment in the carrying value of goodwill, intangible assets or other long-lived assets; • our ability to continue our customer relationships with short-term contracts; • risks associated with importing and exporting our products internationally; • our ability to maintain effective internal controls over financial reporting and remediate any material weaknesses; • our indebtedness and the potential that we may incur additional indebtedness that might restrict our operating flexibility; • the limitations and restrictions in the agreements governing our indebtedness, the Amended and Restated Limited Partnership Agreement of Holdings, as amended, and th e Tax Receivable Agreements (each as defined herein); • increases in interest rates; • changes in our credit ratings and outlook; • our ability to generate the significant amount of cash needed to service our indebtedness; • our organizational structure, including our payment obligations under the Tax Receivable Agreements, which may be significant; • our ability to sustain an active, liquid trading market for our Class A common stock; and • risks related to other factors discussed under “Risk Factors” in this Annual Report on Form 10-K.
These risks are discussed in more detail in “Risk Factors.” These risks include: • declines, volatility and cyclicality in the U.S. residential and non-residential construction markets; • slowdowns in municipal infrastructure spending and delays in appropriations of federal funds; • our ability to competitively bid for contracts; • price fluctuations in our product costs (including effects of tariffs); • our ability to manage our inventory effectively, including during periods of supply chain disruptions; • risks involved with acquisitions and other strategic transactions, including our ability to identify, acquire, close or integrate acquisition targets successfully; • the fragmented and highly competitive markets in which we compete and consolidation within our industry; • the development of alternatives to distributors of our products in the supply chain; • our ability to hire, engage and retain key personnel, including sales representatives, qualified branch, district and regional managers and senior management; • our ability to identify, develop and maintain relationships with a sufficient number of qualified suppliers and the potential that our exclusive or limited supplier distribution rights are terminated; • changes in supplier rebates or other terms of our supplier agreements; • the availability of freight; • the ability of our customers to make payments on credit sales; • our ability to identify and introduce new products and product lines effectively; • the spread of, and response to public health crises and the inability to predict the ultimate impact on us; • costs and potential liabilities or obligations imposed by environmental, health and safety laws and requirements; • regulatory change and the costs of compliance with regulation; • changes in stakeholder expectations in respect of environmental, social and governance (“ESG”) and sustainability practices; • exposure to product liability, construction defect and warranty claims and other litigation and legal proceedings; • potential harm to our brand or reputation; • difficulties with or interruptions of our fabrication services; • safety and labor risks associated with the distribution of our products; • interruptions in the proper functioning of the Company’s and our third-party service providers’ information technology systems, including from cybersecurity threats; 10 • impairment in the carrying value of goodwill, intangible assets or other long-lived assets; • our ability to continue o ur customer relationships with short-term contracts; • risks associated with operating internationally including exporting and importing of certain products; • our indebtedness and the potential that we may incur additional indebtedness that might restrict our operating flexibility; • the limitations and restrictions in th e agreements governing our indebtedness, the Amended and Restated Limited Partnership Agreement of Holdings, as amended, and th e Tax Receivable Agreements (each as defined herein); • increases in interest rates on our variable rate indebtedness; • changes in our credit ratings and outlook; • our ability to generate the significant amount of cash needed to service our indebtedness; • our organizational structure, including our payment obligations under the Tax Receivable Agreements, which may be significant; • our ability to sustain an active, liquid trading market for our Class A common stock; and • risks related to other factors discussed under “Risk Factors” in this Annual Report on Form 10-K.
Further, the performance of fabrication services on the products we sell may increase our exposure to product defect liabilities for which we have no recovery of losses through vendor indemnification.
Further, the performance of fabrication services on the products we sell may increase our exposure to product defect liabilities for which we have no recovery of losses through supplier indemnification.
There is no guarantee that shares of our Class A common stock will appreciate in value or even maintain the price at which our stockholders have purchased their shares.
There is no guarantee that shares of our Class A common stock will appreciate in value or even maintain the price at which our shareholders have purchased their shares.
Issuing additional shares of our Class A common stock or other equity securities or securities convertible into equity may dilute the economic and voting rights of our stockholders or reduce the market price of our Class A common stock.
Issuing additional shares of our Class A common stock or other equity securities or securities convertible into equity may dilute the economic and voting rights of our shareholders or reduce the market price of our Class A common stock.
It remains unclear what future actions may be taken by the U.S. or other governments with respect to international trade agreements, the imposition or removal of tariffs on goods imported into the U.S., the creation or removal of barriers to trade, tax policy related to international commerce, or other trade matters, and the impact of those actions of the cost of products we sell.
It remains unclear what, and the timing of, future actions may be taken by the U.S. or other governments with respect to international trade agreements, the imposition or removal of tariffs on goods imported into or exported from the U.S., the creation or removal of barriers to trade, tax policy related to international commerce, or other trade matters, and the impact of those actions on the cost of products we purchase and sell.
Any of these issuances could result in substantial dilution to our existing stockholders and could cause the trading price of our Class A common stock to decline.
Any of these issuances could result in substantial dilution to our existing shareholders and could cause the trading price of our Class A common stock to decline.
We may experience price volatility associated with the implementation or rescission of tariffs or other restrictions placed on foreign imports by the U.S. or any related counter-measures are taken by impacted foreign countries. Tariff-related activities may also impact the level of demand associated with products subject to tariffs as our customers may seek alternative products.
We may experience price volatility associated with the implementation or rescission of tariffs or other restrictions placed on foreign imports by the U.S. or any related countermeasures taken by impacted foreign countries. Tariff-related activities may also impact the level of demand associated with products subject to tariffs as our customers may seek alternative products.
We currently do not have an approved plan to pay dividends on our Class A common stock or repurchase shares and, consequently, your ability to achieve a return on your investment depends on appreciation in the price of our Class A common stock.
We currently do not have an approved plan to pay dividends on our Class A common stock and consequently, your ability to achieve a return on your investment depends on appreciation in the price of our Class A common stock.
The choice of forum provision in our Certificate of Incorporation may limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or any of our directors, officers, other employees, agents or stockholders, which could discourage lawsuits with respect to such claims.
The choice of forum provision in our Certificate of Incorporation may limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or any of our directors, officers, other employees, agents or shareholders, which could discourage lawsuits with respect to such claims.
Because of our indebtedness: • our ability to obtain additional financing for working capital, make capital expenditures, complete acquisitions, meet debt service requirements, make Tax Receivable Agreements payments, pay dividends and make other distributions or to purchase, redeem or retire capital stock or for general corporate purposes and our ability to satisfy our obligations with respect to our indebtedness may be impaired in the future; • a portion of our cash flow from operations must be dedicated to the payment of principal and interest on our indebtedness, thereby reducing the funds available to us for other purposes; • we are exposed to the risk of increased interest rates because a significant portion of our borrowings are at variable rates of interest; • it may be more difficult for us to satisfy our obligations to our creditors, resulting in possible defaults on, and acceleration of, such indebtedness; • we may be more vulnerable to general adverse economic and industry conditions; • we may be at a competitive disadvantage compared to our competitors with proportionately less indebtedness or with comparable indebtedness on more favorable terms and, as a result, they may be better positioned to withstand economic downturns; • our ability to refinance indebtedness may be limited or the associated costs may increase; • our flexibility to adjust to changing market conditions and ability to withstand competitive pressures could be limited; • our ability to pay dividends and make other distributions or to purchase, redeem or retire capital stock may be limited; and • we may be prevented from carrying out capital spending and restructurings that are necessary or important to our growth strategy and efforts to improve our operating margins. 24 Despite our indebtedness levels, we and our subsidiaries may be able to incur substantially more indebtedness, which may increase the risks to our financial condition and results of operations created by our indebtedness.
Because of our indebtedness: • our ability to obtain additional financing for working capital, make capital expenditures, complete acquisitions, meet debt service requirements, make Tax Receivable Agreements payments, pay dividends and make other distributions or to purchase, redeem or retire capital stock or for general corporate purposes and our ability to satisfy our obligations with respect to our indebtedness may be impaired in the future; • a portion of our cash flow from operations may be dedicated to the payment of principal and interest on our indebtedness, thereby reducing the funds available to us for other purposes; • we are exposed to the risk of increased interest rates because a significant portion of our borrowings are at variable rates of interest; • it may be more difficult for us to satisfy our obligations to our creditors, resulting in possible defaults on, and acceleration of, such indebtedness; • we may be more vulnerable to general adverse economic and industry conditions; • we may be at a competitive disadvantage compared to our competitors with proportionately less indebtedness or with comparable indebtedness on more favorable terms and, as a result, they may be better positioned to withstand economic downturns; • our ability to refinance indebtedness may be limited or the associated costs may increase; • our flexibility to adjust to changing market conditions and ability to withstand competitive pressures could be limited; • our ability to pay dividends and make other distributions or to purchase, redeem or retire capital stock may be limited; and • we may be prevented from carrying out capital spending and restructurings that are necessary or important to our growth strategy and efforts to improve our operating margins.
An increase in interest rates would increase the cost of servicing our indebtedness and could reduce our profitability, increase cash outflows, decrease our liquidity or impact our solvency. Our indebtedness under the Senior ABL Credit Facility, the 2028 Senior Term Loan and the 2031 Senior Term Loan bears interest at variable rates.
An increase in interest rates would increase the cost of servicing our indebtedness and could reduce our profitability, increase cash outflows, decrease our liquidity or impact our solvency. Our indebtedness under the Senior ABL Credit Facility and the S enior Term Loan Credit Facility bears interest at variable rates.
The laws and regulations concerning import-export activity, recordkeeping and reporting, import-export control, interactions with government officials and economic sanctions are complex and constantly changing, and we cannot provide assurance that we will not incur material costs or liabilities in connection with these or other regulatory requirements. In addition, we are subject to the U.S.
The laws and regulations concerning import-export activity, recordkeeping and reporting, import-export control, interactions with government officials and economic sanctions are complex and constantly changing, and we cannot provide assurance that we will not incur material costs or liabilities in connection with these or other regulatory requirements.
Moreover, because we regularly consider and enter into strategic mergers and acquisitions, the integration of businesses may create complexity in our financial systems and internal controls and make them more difficult to manage. Such integration into our internal control system could cause us to fail to meet our financial reporting obligations.
Moreover, because we regularly consider and enter into strategic M&A transactions, the integration of businesses may create complexity in our financial systems and internal controls and make them more difficult to manage. Such integration into our internal control system could cause us to fail to meet our financial reporting obligations.
While the actual increase in tax basis, as well as the actual amount and timing of any payments under the Tax Receivable Agreements, will vary depending upon a number of factors, including the timing of exchanges, the price of shares of our Class A common stock at the time of the exchange, the extent to which such exchanges are taxable, future tax rates, and the amount and timing of our income, we expect that, as a result of the size of the increases in the tax basis of the tangible and intangible assets of Holdings attributable to our interests in Holdings, during the expected term of the Tax Receivable Agreements, the payments that we may make to the Continuing Limited Partners could be substantial.
While the actual increase in tax basis, as well as the actual amount and timing of any payments under the Tax Receivable Agreements, will vary depending upon a number of factors, including the timing of exchanges, the price of shares of our Class A common stock at the time of the exchange, the extent to which such exchanges are taxable, future tax rates, and the amount and timing of our income, we expect that, as a result of the size of the increases in the tax basis of the tangible and intangible assets of Holdings attributable to our interests in Holdings, during the expected term of the Tax Receivable Agreements, the payments that we may make could be substantial. 27 The payment obligations under the Tax Receivable Agreements are our obligation and not an obligation of Holdings.
The Tax Receivable Agreements require us to make cash payments to the Continuing Limited Partners and certain Former Limited Partners in respect of certain tax benefits to which we may become entitled, and we expect that the payments we will be required to make will be substantial.
The Tax Receivable Agreements require us to make cash payments in respect of certain tax benefits to which we may become entitled, and we expect that the payments we will be required to make will be substantial.
We and our subsidiaries may be able to incur substantial additional indebtedness in the future. The terms of the agreements governing our indebtedness provide our subsidiaries with the flexibility to incur a substantial amount of secured and unsecured indebtedness in the future, if our subsidiaries are in compliance with certain incurrence ratios set forth in these agreements.
The terms of the agreements governing our indebtedness provide our subsidiaries with the flexibility to incur a substantial amount of secured and unsecured indebtedness in the future, if our subsidiaries are in compliance with certain incurrence ratios set forth in these agreements.
In addition, if Holdings does not have sufficient funds to make distributions, our ability to declare and pay cash dividends on our Class A common stock will also be restricted or impaired.
In addition, if Holdings does not have sufficient funds to make distributions, our ability to declare and pay cash dividends on our Class A common stock will also be restricted or impaired. See “—Risks Related to Our Class A Common Stock”.
In certain cases, payments under the Tax Receivable Agreements to Continuing Limited Partners or Former Limited Partners may be accelerated or significantly exceed the actual benefits we realize in respect of the tax attributes subject to the Tax Receivable Agreements.
In certain cases, payments under the Tax Receivable Agreements may be accelerated or significantly exceed the actual benefits we realize in respect of the tax attributes subject to the Tax Receivable Agreements.
As a result, all shares of Class A common stock acquired upon exercise of stock options and other securities convertible or exchangeable into shares of Class A common stock granted under our equity compensation plans will be freely tradable under the Securities Act, subject to the terms of the lock-up agreements, unless purchased by our affiliates.
As a result, all shares of Class A common stock acquired upon exercise of stock options and other securities convertible or exchangeable into shares of Class A common stock granted under our equity compensation plans will be freely tradable under the Securities Act unless purchased by our affiliates.
As described in Note 1 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K, exchanges of Partnership Interests by the Continuing Limited Partners and Former Limited Partners may generate tax attributes for the Company for which we must pay 85% of the realized, or deemed to be realized, benefits to the exchanging party under the respective Tax Receivable Agreement.
As described in Note 2 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K, exchanges of Partnership Interests may generate tax attributes for the Company for which we must pay 85% of the realized, or deemed to be realized, benefits to the exchanging party under the respective Tax Receivable Agreement.
In fiscal 2023, our top supplier accounted for approximately 8% of our product expenditures. Our top ten largest suppliers accounted for approximately 45% of our total purchases in fiscal 2023. We generally have multiple sources of supply, however, in some cases, materials are provided by a single supplier.
In fiscal 2024, our top supplier accounted for approximately 7% of our product expenditures. Our top ten largest suppliers accounted for approximately 43% of our total purchases in fiscal 2024. We generally have multiple sources of supply, however, in some cases, materials are provided by a single supplier.
If adopted as proposed, the rule changes would cause us to incur additional compliance and reporting costs, certain of which could be material, including related to monitoring, collecting, analyzing and reporting new metrics and implementing systems and procuring additional internal and external personnel with the requisite skills and expertise to serve those functions and provide necessary attestation, as applicable.
If the final rules are implemented, they would cause us to incur additional compliance and reporting costs, certain of which could be material, including related to monitoring, collecting, analyzing and reporting new metrics and implementing systems and procuring additional internal and external personnel with the requisite skills and expertise to serve those functions and provide necessary attestation, as applicable.
Disruptions in transportation lines, such as the March 2021 blockage of the Suez Canal and the adverse impact to the global shipping industry, may also cause global supply chain issues that affect us or our suppliers. Global economic conditions may also result in global supply chain issues that adversely impact our access to products and supplies.
Disruptions in transportation lines, such as the March 2021 blockage of the Suez Canal and the adverse impact to the global shipping industry, may also cause global supply chain issues that affect us or our suppliers.
In addition, municipal budget processes and conditions in the municipal bond market can impact municipal spending. If a municipality is experiencing budget difficulties, or if a municipality is unable to access capital through the municipal bond market or state revolving funds, it may allocate less funding to infrastructure projects, which could also adversely affect our net sales.
If a municipality is experiencing budget difficulties, or if a municipality is unable to access capital through the municipal bond market or state revolving funds, it may allocate less funding to infrastructure projects, which could also adversely affect our net sales.
We have only one major national competitor, but we also face competition from regional and local competitors and a limited number of manufacturers who sell directly to large customers within our customer base. We estimate that our net sales accounted for approximately 17% of our $39 billion addressable market in fiscal 2023.
We have only one major national competitor, but we also face competition from regional and local competitors and a limited number of manufacturers who sell directly to large customers within our customer base. We estimate that our net sales accounted for approximatel y 19% of our $39 billion addres sable market in fiscal 2024.
If we experience delays and defaults in client payments and we pay our suppliers before receiving payment from our customers for the related products or services, we could experience a material adverse effect on our business or financial condition. 16 A change in supplier terms could adversely affect our income and margins .
If we experience delays and defaults in client payments and we pay our suppliers before receiving payment from our customers for the related products or services, we could experience a material adverse effect on our business or financial condition.
Our acquisitions frequently result in the recording of goodwill and other intangible or long-lived assets. As of January 28, 2024, goodwill and amortizing intangible assets, net of accumulated amortization, represented 31% and 15%, respectively, of our total assets. Goodwill is not amortized and is subject to impairment testing at least annually using a fair value-based approach.
Our acquisitions frequently result in the recording of goodwill and other intangible or long-lived assets. As of February 2, 2025, goodwill and amortizing intangible assets, net of accumulated amortization, represented 32% and 16%, respectively, of our total assets. Goodwill is not amortized and is subject to impairment testing at least annually using a fair value-based approach.
The full exchange by the Continuing Limited Partners will also decrease our aforementioned deferred tax asset associated with our investment in Holdings by $4 million. These amounts are estimates only and are subject to change.
The full exchange by Management Feeder will also decrease our aforementioned deferred tax asset associated with our investment in Holdings by $5 million. These amounts are estimates only and are subject to change.
Our operating results are sensitive to the availability of freight. We are dependent on third-party freight carriers to transport some of our products. Our access to third-party freight carriers is not guaranteed, and we may be unable to transport our products at economically attractive rates in certain circumstances, particularly in cases of adverse market conditions or disruptions to transportation infrastructure.
Our access to third-party freight carriers is not guaranteed, and we may be unable to transport our products at economically attractive rates in certain circumstances, particularly in cases of adverse market conditions or disruptions to transportation infrastructure.
As of January 28, 2024, assuming all Senior ABL Credit Facility revolving loans were fully drawn, and excluding the impact of any interest rate hedging instruments, each one percentage point change in interest rates would have resulted in an approximately $27 million increase in annual interest expense on the Senior ABL Credit Facility and the 2028 Senior Term Loan.
As of February 2, 2025, assuming all Senior ABL Credit Facility revolving loans were fully drawn, and excluding the impact of any interest rate hedging instruments, each one percentage point change in interest rates would have resulted in an approximately $34 million increase in annual interest expense on the Senior ABL Credit Facility and the S enior Term Loan Credit Facility .
Fluctuations in federal funding can also negatively impact municipal spending. Reduced federal funding and corresponding reductions in federal fund appropriations can adversely affect many of our customers, who derive funding from federal, state and local bodies, which in turn can reduce the demand for our products and services.
Reduced federal funding and corresponding reductions in federal fund appropriations may adversely affect many of our customers, who derive funding from federal, state and local bodies, which in turn may reduce the demand for our products and services.
Based upon certain assumptions, described in greater detail in Note 7 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K, we estimate that if we had exercised our termination right as of January 28, 2024, the amount of the termination payment pursuant to the Tax Receivable Agreements recorded on the Consolidated Balance Sheets for the exchange of Partnership Interests would be approximately $470 million and the amount of the termination payment to the Continuing Limited Partners holding the remaining exchangeable Partnership Interests would be approximately $58 million.
Based upon certain contractual assumptions, described in greater detail in Note 7 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K, we estimate that if we had exercised our termination right as of February 2, 2025, the amount of the termination payment pursuant to the Tax Receivable Agreements recorded on the Consolidated Balance Sheets for the exchange of Partnership Interests would be approximately $517 million and the amount of the termination payment to Management Feeder holding the remaining exchangeable Partnership Interests would be approximately $76 million.
In addition, even if we are successful in defending any claim relating to the products we distribute, claims of this nature could negatively impact customer confidence in our products and us.
In addition, even if we are successful in defending any claim relating to the products we distribute, claims of this nature could negatively impact customer confidence in our products and us. 19 Litigation and regulatory proceedings may be protracted and expensive.
The loss of their services could limit our ability to grow our business and cause disruptions in our operations. 15 If we fail to identify, develop and maintain relationships with a sufficient number of qualified suppliers or our exclusive or limited supplier distribution rights are terminated, our ability to timely and efficiently access products that meet our standards for quality could be adversely affected or we may experience an increase in the costs of our products that could reduce our overall profitability.
In addition, a leadership transition may cause volatility in our stock price regardless of the success of the transition. 15 If we fail to identify, develop and maintain relationships with a sufficient number of qualified suppliers or our exclusive or limited supplier distribution rights are terminated, our ability to timely and efficiently access products that meet our standards for quality could be adversely affected or we may experience an increase in the costs of our products that could reduce our overall profitability.
We provide medical coverage to some of our associates through a self-insured preferred provider organization. Though we believe that we have adequate insurance coverage in excess of self-insured retention levels, our business or financial condition may be adversely affected if the number and severity of insurance claims increases.
Though we believe that we have adequate insurance coverage in excess of self-insured retention levels, our business or financial condition may be adversely affected if the number and severity of insurance claims increases.
As described in greater detail in Note 7 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K, under the Tax Receivable Agreements, we are required to make cash payments to the Continuing Limited Partners or their permitted transferees and to certain Former Limited Partners or their permitted transferees.
As described in greater detail in Note 7 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K, under the Tax Receivable Agreements, we are required to make cash payments under the Tax Receivable Agreements.
As a result, the costs to defend any action or the potential liability resulting from any such accident or death or arising out of any other litigation, and any negative publicity associated therewith or negative effects on associate morale, could have a material adverse effect on our business or financial condition.
As a result, the costs to defend any action or the potential liability resulting from any such accident or death or arising out of any other litigation, and any negative publicity associated therewith or negative effects on associate morale, could have a material adverse effect on our business or financial condition. 20 We provide medical coverage to some of our associates through a self-insured preferred provider organization.
For example, on March 21, 2022, the SEC released proposed rule changes that would require new climate-related disclosure in SEC filings, including certain climate-related metrics and greenhouse gas emissions, information about climate-related targets and goals, transition plans, if any, and extensive attestation requirements.
For example, on March 6, 2024, the SEC adopted final rules that would require new climate-related disclosure in SEC filings, including certain climate-related metrics and greenhouse gas emissions, information about climate-related targets and goals, transition plans, if any, and extensive attestation requirements.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Company also maintains an incident response plan, which sets forth processes the Company will follow to address a significant cybersecurity threat or incident. The incident response plan provides for, among other things, inter-departmental coordination and management of cybersecurity threats or incidents to quickly assess the impact, mitigate risks to information systems, and work to resolve vulnerabilities.
Biggest changeThe incident response plan provides for, among other things, inter-departmental coordination and management of cybersecurity threats or incidents to quickly assess the impact, mitigate risks to information systems, and work to resolve vulnerabilities. Depending on the threat or incident, the Company may utilize third-parties for assistance in investigating and addressing cybersecurity incidents or threats.
The Company’s cybersecurity team investigates system alerts that may indicate the presence of a cybersecurity threat or incident and escalates information to the Company’s Chief Information Security Officer (“CISO”) regarding the threat or incident as necessary to address it in a timely manner.
The Company’s cybersecurity team investigates system alerts that may indicate the presence of a cybersecurity threat or incident and escalates information to the Company’s CISO regarding the threat or incident as necessary to address it in a timely manner.
This assessment considers the significance of the third-party to our operations, availability of alternative suppliers, the type of data provided to the third-party and publicly available information regarding the third-party. 34 The Company describes whether and how risks from identified cybersecurity threats have materially affected or are reasonably likely to materially affect the Company under the heading “Interruptions in the proper functioning of the Company’s and our third-party service providers’ IT systems or compromise of our or our customers’ confidential data, including from cybersecurity threats, could disrupt operations and cause unanticipated reputational harm, litigation and regulatory risk, as well as increases in costs or decreases in net sales, or both” included as part of the Company’s risk factor disclosures in Item 1A of this Annual Report on Form 10-K.
The Company describes whether and how risks from identified cybersecurity threats have materially affected or are reasonably likely to materially affect the Company under the heading “Interruptions in the proper functioning of the Company’s and our third-party service providers’ IT systems or compromise of our or our customers’ confidential data, including from cybersecurity threats, could disrupt operations and cause unanticipated reputational harm, litigation and regulatory risk, as well as increases in costs or decreases in net sales, or both” included as part of the Company’s risk factor disclosures in Item 1A of this Annual Report on Form 10-K.
The Company’s CISO regularly reports to the board’s audit committee on the current state of the Company’s cybersecurity program (including but not limited to, the current threat landscape, cybersecurity risks, and as needed, any significant incidents).
The Company’s Chief Information Security Officer (“CISO”) regularly reports to the board’s audit committee on the current state of the Company’s cybersecurity program (including but not limited to, the current threat landscape, cybersecurity risks, and as needed, any significant incidents).
During the period covered by this report, there have not been any cybersecurity threats or incidents that have materially affected, or are reasonably likely to materially affect, the Company, including its financial condition, results of operations, or business strategies. Governance The Company’s board of directors, primarily through its audit committee, oversees the Company’s cybersecurity program.
During the period covered by this report, there have not been any cybersecurity threats or incidents that have materially affected, or are reasonably likely to materially affect, the Company, including its financial condition, results of operations, or business strategies.
Senior information technology and cybersecurity leadership meets regularly with the Company’s risk-management team, internal auditors and engages with external service providers to evaluate the effectiveness of the Company’s cybersecurity program, as well as its systems, controls, and management processes with respect to cybersecurity risks.
The governance structure ensures proper oversight and accountability at all levels of the organization. Senior information technology and cybersecurity leadership meets regularly with the Company’s risk-management team, internal auditors and engages with external service providers to evaluate the effectiveness of the Company’s cybersecurity program, as well as its systems, controls, and management processes with respect to cybersecurity risks.
The Company also engages third-party cybersecurity experts to assess its processes and suggest improvements, which are reviewed with the Company’s executive leadership, the board of directors and its audit committee. The Company extends the risk assessment elements described above to our evaluation of third-party suppliers.
The Company also engages third-party cybersecurity experts to assess its processes and suggest improvements, which are reviewed with the Company’s executive leadership, the board of directors and its audit committee. The Company’s board of directors, primarily through its audit committee, oversees the Company’s cybersecurity program.
If management determines a significant cybersecurity incident has occurred, the Company’s policies require management to promptly inform the board of directors. The CISO is responsible for the cybersecurity program, which includes security architecture, security operations, incident response, IT risk and compliance and security awareness and training and the CIO is responsible for IT disaster recovery.
The CISO is responsible for the cybersecurity program, which includes security architecture, security operations, incident response, IT risk and compliance and security awareness and training and the CIO is responsible for IT disaster recovery. The CISO and CIO each have over 25 years of security and IT experience.
The CISO and the CIO each have over 25 years of security and IT experience. The other members of the Company’s security organization also have extensive cybersecurity, business, and technology experience and hold certifications in their area of expertise.
The other members of the Company’s security organization also have extensive cybersecurity, business, and technology experience and hold certifications in their area of expertise. 32 Risk Management and Strategy The Company monitors its information systems to assess, identify, and manage risks and assess cybersecurity threats.
The Company monitors risks through active (e.g., penetration tests and vulnerability scans) and passive (e.g., end-point protection) methods.
The Company’s cybersecurity program and related process for identifying and assessing material risks from cybersecurity threats operate alongside the Company’s broader overall risk assessment process. The Company monitors risks through active (e.g., penetration tests and vulnerability scans) and passive (e.g., end-point protection) methods and addresses system alerts.
Removed
Item 1C. Cybersecurity Risk Management and Strategy The Company monitors its information systems to assess, identify, and manage risks and assess cybersecurity threats. The Company’s cybersecurity program and related process for identifying and assessing material risks from cybersecurity threats are incorporated within the Company’s enterprise risk management program.
Added
Item 1C. Cybersecurity Governance The Company maintains a comprehensive cybersecurity program based in-part on the National Institute of Standards and Technology’s Cybersecurity Framework. This program is integrated within the Company’s enterprise risk management program. This program operates under the oversight of the board of directors, primarily through the audit committee.
Removed
Depending on the threat or incident, the Company may utilize third-parties for assistance in investigating and addressing cybersecurity incidents or threats.
Added
If management determines a significant cybersecurity incident has occurred, the Company’s policies require management to promptly inform the board of directors. The Company maintains an incident response plan, which sets forth processes the Company will follow to address a significant cybersecurity threat or incident.
Removed
The Company utilizes a risk-based approach to assess third-party suppliers prior to commencement of a relationship, and on an ongoing basis following initial engagement.
Added
The Company maintains procedures for screening and evaluating third-party suppliers, including those who have access to customer and employee data, prior to engaging with them. The Company assesses each such prospective supplier’s system security in light of the product or service to be provided to the Company.
Added
The security team analyzes high-value or high-risk third-party suppliers through review of system and organization controls reports, and/or interviews and surveys prior to engagement. Additionally, the Company reviews third-party suppliers on an ongoing basis post-engagement to identify any changes in their security risk profile, including the occurrence of cybersecurity events affecting such suppliers.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur facilities typically include a small office space, an in-store counter and/or merchandising display area, inside warehouse space and a yard for outside storage. In addition, we have 12 distribution facilities strategically located around the U.S. to maximize efficiency of product distribution. We enter into leases with terms typically ra nging from three to five years that include renewal options.
Biggest changeOur facilities typically include a small office space, an in-store counter and/or merchandising display area, inside warehouse space and a yard for outside storage. In addition, we have 7 d istribution facilities strategically located around the U.S. to maximize efficiency of product distribution.
Item 2. Properties We own our headquarters, located in St. Louis, Missouri, which we use for our principal corporate activities. In addition to our headquarters, as of January 28, 2024, we leased 292 properties and owned 43 properties.
Item 2. Properties We own our headquarters, located in St. Louis, Missouri, which we use for our principal corporate activities. In addition to our headquarters, as of February 2, 2025, we leased 324 properties and owned 47 properties.
We believe that these facilities are well-maintained and adequate to support the current needs of our business. 35
We enter into leases with terms typically ra nging from three to seven years that include renewal options. We believe that these facilities are well-maintained and adequate to support the current needs of our business. 33

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Removed
“Risk Factors—Risks Related to Our Business—The nature of our business exposes us to product liability, construction defect and warranty claims and other litigation and legal proceedings” in this Annual Report on Form 10-K. Item 4. Mine Safety Disclosures Not applicable. PART II - OTHER INFORMATION
Added
“Risk Factors—Risks Related to Our Business—Due to the nature of our business, from time to time we may be subject to legal proceedings, regulatory disputes, and governmental inquiries that could cause us to incur significant expenses, divert our management’s attention, and materially harm our business, financial condition, and operating results” in this Annual Report on Form 10-K. Item 4.
Added
Mine Safety Disclosures Not applicable. PART II - OTHER INFORMATION

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIndexed Returns Years Ended Company/Index July 23, 2021 January 30, 2022 January 29, 2023 January 28, 2024 Core & Main (1) $ 100.00 $ 98.95 $ 91.43 $ 171.10 S&P 500 Index 100.00 100.45 92.27 110.86 Russell 2000 Index 100.00 89.07 86.51 89.53 S&P MidCap 400 Industrials Index 100.00 96.77 102.27 121.62 (1) For the July 23, 2021 initial investment in Core & Main, we utilized the closing market price of $23.70. 37 Issuer Purchases of Equity Securities The following is a summary of our repurchases of shares of Class A common stock during the fiscal quarter ended January 28, 2024: Period Total Number of Shares (or Units) Purchased (1) Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) or Shares (or Units) that May Yet Be Purchased Under the Plans or Programs October 30, 2023 - November 30, 2023 (1)(2) 3,133,012 $ 30.45 N/A N/A December 1, 2023 -December 31, 2023 (1)(3) 3,140,097 35.54 N/A N/A January 1, 2024 - January 28, 2024 (1)(4) 6,256,112 39.55 N/A N/A 12,529,221 $ 36.27 — — (1) Reflects repurchases by the Company of shares of our Class A common stock pursuant to employee tax withholding obligations and strike price settlement upon exercise of unit appreciation rights and vesting of restricted stock units pursuant to terms of the Company’s 2021 Omnibus Equity Incentive Plan, except for the transactions described in footnotes (2), (3) and (4) below.
Biggest changeIndexed Returns Years Ended Company/Index July 23, 2021 January 30, 2022 January 29, 2023 January 28, 2024 February 2, 2025 Core & Main (1) $ 100.00 $ 98.95 $ 91.43 $ 171.10 $ 238.14 S&P 500 Index 100.00 100.45 92.27 110.86 136.92 Russell 2000 Index 100.00 89.07 86.51 89.53 103.53 S&P MidCap 400 Industrials Index 100.00 96.77 102.27 121.62 145.01 (1) For the July 23, 2021 initial investment in Core & Main, we utilized the closing market price of $23.70. 35 Issuer Purchases of Equity Securities The following is a summary of our repurchases of shares of Class A common stock during the fiscal quarter ended February 2, 2025: Period Total Number of Shares (or Units) Purchased (1) Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) or Shares (or Units) that May Yet Be Purchased Under the Plans or Programs October 28, 2024 - November 30, 2024 — N/A — $ 379 December 1, 2024 -December 31, 2024 (1)(2) 1,115,628 50.78 1,084,337 324 January 1, 2025 - February 2, 2025 (1) 5,551 52.78 — 324 1,121,179 $ 50.79 1,084,337 $ 324 (1) Reflects repurchases by the Company of shares of our Class A common stock pursuant to employee tax withholding obligations and strike price settlement upon exercise of unit appreciation rights and vesting of restricted stock units pursuant to terms of the Company’s 2021 Omnibus Equity Incentive Plan.
Our Class B common stock is not entitled to receive dividends, or to receive a distribution upon our liquidation, dissolution or winding-up. 36 Performance Graph The following graph and table compare the total shareholder return from July 23, 2021, the date on which our Class A common stock commenced trading on the New York Stock Exchange, through January 28, 2024 of (i) our Class A common stock, (ii) the Standard and Poor’s 500 Stock Index, or S&P 500 Index, (iii) the Russell 2000 Index and (iv) the S&P MidCap 400 Industrials Index.
Our Class B common stock is not entitled to receive dividends, or to receive a distribution upon our liquidation, dissolution or winding-up. 34 Performance Graph The following graph and table compare the total shareholder return from July 23, 2021, the date on which our Class A common stock commenced trading on the New York Stock Exchange, through February 2, 2025 of (i) our Class A common stock, (ii) the Standard and Poor’s 500 Stock Index, or S&P 500 Index, (iii) the Russell 2000 Index and (iv) the S&P MidCap 400 Industrials Index.
Holders of Record As of January 28, 2024, there were five holders of record of our Class A common stock. We believe there are a significantly larger number of beneficial owners of our common stock because many shares are held by brokers and other institutions on behalf of stockholders.
Holders of Record As of February 2, 2025, there were three holders of record of our Class A common stock. We believe there are a significantly larger number of beneficial owners of our common stock because many shares are held by brokers and other institutions on behalf of shareholders.
(2) Includes the repurchase by the Company of 3,125,728 shares of our Class A common stock for a price per share of $30.440 on November 9, 2023 in connection with the Repurchase Transactions (as defined elsewhere in this Annual Report on Form 10-K).
(2) Includes the repurchase by the Company of 1,084,337 shares of our Class A common stock for an average price per share of $50.74 through open market transactions during the three months ended February 2, 2025 as part of the Repurchase Program (as defined in Note 1 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K).
Removed
The Company also repurchased 1,874,272 shares of our Class B common stock in connection with the repurchase transaction completed on November 9, 2023 for no additional consideration. (3) Includes the repurchase by the Company of 3,125,728 shares of our Class A common stock for a price per share of $35.540 on December 11, 2023 in connection with the Repurchase Transactions.
Removed
The Company also repurchased 1,874,272 shares of our Class B common stock in connection with the repurchase transaction completed on December 11, 2023 for no additional consideration.
Removed
(4) Includes the repurchase by the Company of 3,125,728 shares of our Class A common stock for a price per share of $38.120 on January 10, 2024 and 3,125,728 shares of our Class A common stock for a price per share of $40.985 on January 25, 2024 in connection with the Repurchase Transactions.
Removed
The Company also repurchased 1,874,272 shares and 1,874,272 shares of our Class B common stock on January 10, 2024 and January 25, 2024, respectively, in connection with the repurchase transactions completed on January 10, 2024 and January 25, 2024 for no additional consideration. Item 6. [Reserved] 38

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table sets forth a reconciliation of net income or net income attributable to Core & Main, Inc. to EBITDA and Adjusted EBITDA for the periods presented: Fiscal Years Ended January 28, 2024 January 29, 2023 January 30, 2022 Net income attributable to Core & Main, Inc. $ 371 $ 366 $ 166 Plus: net income attributable to non-controlling interests 160 215 59 Net income 531 581 225 Depreciation and amortization (1) 149 143 142 Provision for income taxes 128 128 51 Interest expense 81 66 98 EBITDA $ 889 $ 918 $ 516 Loss on debt modification and extinguishment — — 51 Equity-based compensation 10 11 25 Acquisition expenses (2) 6 5 7 Offering expenses (3) 5 1 5 Adjusted EBITDA $ 910 $ 935 $ 604 (1) Includes depreciation of certain assets which are reflected in “cost of sales” in our Statement of Operations. 50 (2) Represents expenses associated with acquisition activities, including transaction costs, post-acquisition employee retention bonuses, severance payments, expense recognition of purchase accounting fair value adjustments (excluding amortization) and contingent consideration adjustments.
Biggest changeThe following table sets forth a reconciliation of net income or net income attributable to Core & Main, Inc. to EBITDA and Adjusted EBITDA for the periods presented: Fiscal Years Ended February 2, 2025 January 28, 2024 January 29, 2023 Net income attributable to Core & Main, Inc. $ 411 $ 371 $ 366 Plus: net income attributable to non-controlling interests 23 160 215 Net income 434 531 581 Depreciation and amortization (1) 186 149 143 Provision for income taxes 143 128 128 Interest expense 142 81 66 EBITDA $ 905 $ 889 $ 918 Equity-based compensation 14 10 11 Acquisition expenses (2) 11 6 5 Offering expenses (3) — 5 1 Adjusted EBITDA $ 930 $ 910 $ 935 (1) Includes depreciation of certain assets which are reflected in “cost of sales” in our Statement of Operations.
(3) Represents costs related to the IPO and subsequent secondary offerings reflected in SG&A expenses in our Statement of Operations. Recently Issued and Adopted Accounting Pronouncements and Accounting Pronouncements Issued But Not Yet Adopted See Note 2 to the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
(3) Represents costs related to the IPO and subsequent secondary offerings reflected in SG&A expenses in our Statement of Operations. 48 Recently Issued and Adopted Accounting Pronouncements and Accounting Pronouncements Issued But Not Yet Adopted See Note 2 to the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Gross profit may be impacted by the time between changes in supplier costs, tariffs and changes in our customer pricing. Gross profit may not be comparable to those of other companies, as other companies may include all of the costs related to their distribution network in cost of sales.
Gross profit may be impacted by the time between changes in supplier costs and changes in our customer pricing. Gross profit may not be comparable to those of other companies, as other companies may include all of the costs related to their distribution network in cost of sales.
Operating Expenses Operating expenses are primarily comprised of selling, general and administrative costs, which include personnel expenses (salaries, wages, incentive compensation, associate benefits and payroll taxes), rent, insurance, utilities, professional fees, outbound freight, fuel and repair and maintenance.
Operating Expenses Operating expenses are primarily comprised of selling, general and administrative costs, which include personnel expenses (salaries, wages, incentive compensation, benefits and payroll taxes), rent, insurance, utilities, professional fees, outbound freight, fuel and repair and maintenance.
These entities’ ability to make distributions may be limited as a practical matter by our growth plans as well as Core & Main LP’s 2028 Senior Term Loan and Senior ABL Credit Facility.
These entities’ ability to make distributions may be limited as a practical matter by our growth plans as well as Core & Main LP’s Senior Term Loan Credit Facility and Senior ABL Credit Facility.
On February 12, 2024, Core & Main LP entered into an interest rate swap that has a starting notional amount of $750 million that increases to $1,500 million on July 27, 2026 through the instrument maturity on July 27, 2028. The instrument is intended to reduce the Company’s exposure to variable interest rates under the 2031 Senior Term Loan.
On February 12, 2024, Core & Main LP entered into an interest rate swap that has a starting notional amount of $750 million that increases to $1,500 million on July 27, 2026 through the instrument maturity on July 27, 2028. The instrument is intended to reduce the Company’s exposure to variable interest rates under the senior term loan facilities.
Pipe includes PVC, ductile iron, fusible HDPE and copper tubing. • Storm drainage products primarily include corrugated piping systems, retention basins, manholes, grates, geosynthetics, erosion control and other related products. • Fire protection products primarily include fire protection pipe, sprinkler heads and devices as well as custom fabrication services. • Meter products primarily include smart meter products, meter sets, meter accessories, installation, software and other services.
Pipe includes PVC, ductile iron, fusible HDPE and copper tubing. • Storm drainage products primarily include corrugated piping systems, retention basins, manholes, grates, geosynthetics, erosion control and other related products. • Fire protection products primarily include fire protection pipe, sprinkler heads, fittings, valves and devices as well as custom fabrication services. • Meter products primarily include smart meter products, meter sets, meter accessories, installation, software and other services.
An early termination of our obligations, or our successor’s obligations, under such Tax Receivable Agreement to make payments thereunder would be based on certain assumptions, including an assumption that we would have sufficient taxable income to fully utilize all potential future tax benefits that are subject to such Tax Receivable Agreement.
An early termination or negotiated settlement of our obligations, or our successor’s obligations, under such Tax Receivable Agreement to make payments thereunder would be based on certain assumptions, including an assumption that we would have sufficient taxable income to fully utilize all potential future tax benefits that are subject to such Tax Receivable Agreement.
Key Factors Affecting Our Business End-Markets and General Economic Conditions Historically, demand for our products has been closely tied to municipal infrastructure spending, non-residential construction and residential construction in the U.S. We estimate that, based on fiscal 2023 net sales, our exposure by end market was approximately 42% municipal, 38% non-residential and 20% residential.
Key Factors Affecting Our Business End-Markets and General Economic Conditions Historically, demand for our products has been tied to municipal infrastructure spending, non-residential construction and residential construction in the U.S. We estimate that, based on fiscal 2024 net sales, our exposure by end market was approximately 42% municipal, 38% non-residential and 20% residential.
Despite these efforts, unfavorable movement in interest rates may further result in higher interest expense and cash payments. 41 Acquisitions In addition to our organic growth strategy, we opportunistically pursue strategic asset and business acquisitions to grow our business.
Despite these efforts, unfavorable movement in interest rates may further result in higher interest expense and cash payments. 39 Acquisitions In addition to our organic growth strategy, we opportunistically pursue strategic asset and business acquisitions to grow our business.
Non-controlling interests represent owners of Partnership Interests of Holdings other than Core & Main.
Non-controlling interests represent owners of Partnership Interests of Holdings other than Core & Main, Inc.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended January 29, 2023, filed with the SEC on March 28, 2023, which discussion is incorporated herein by reference and which is available, free of charge, on the SEC’s website at www.sec.gov and on our website at www.coreandmain.com.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended January 28, 2024, filed with the SEC on March 19, 2024, which discussion is incorporated herein by reference and which is available, free of charge, on the SEC’s website at www.sec.gov and on our website at www.coreandmain.com.
Leases The Company occupies certain facilities and operates certain equipment and vehicles under operating leases that expire at various dates through the year 2037.
Leases The Company occupies certain facilities and operates certain equipment and vehicles under operating leases that expire at various dates through the year 2038.
Proceeds of the 2031 Senior Term Loan were used or may be used in the future to, among other things, (a) repay total outstanding borrowings under the Senior ABL Credit Facility, (b) invest in organic growth and productivity initiatives, mergers and acquisitions, share repurchases or other initiatives aligned with Core & Main’s capital allocation strategy and (c) pay related fees, premiums and expenses.
Proceeds of the 2031 Senior Term Loan were used to, among other things, (a) repay total outstanding borrowings under the Senior ABL Credit Facility, (b) invest in organic growth and productivity initiatives, M&A, share repurchases or other initiatives aligned with Core & Main’s capital allocation strategy and (c) pay related fees, premiums and expenses.
We seek to mitigate our exposure to interest rate volatility through the entry into interest rate swap instruments, such as our interest rate swap, associated with borrowings under the 2028 Senior Term Loan, which effectively converts $900 million of our variable rate debt to fixed rate debt, with notional amount decreases to $800 million on July 27, 2024, and $700 million on July 27, 2025 through the instrument maturity on July 27, 2026.
We seek to mitigate our exposure to interest rate volatility through the entry into interest rate swap instruments, such as our interest rate swap, associated with borrowings under the Senior Term Loan Credit Facility, which effectively converts $800 million of our variable rate debt to fixed rate debt, with notional amount decreases to $700 million on July 27, 2025 through the instrument maturity on July 27, 2026.
Interest Rate Swap (3) 750 July 27, 2028 Effective fixed rate of 6.163%, based upon the 3.913% fixed rate plus an applicable margin of 2.25% associated with the 2031 Senior Term Loan. (1) Aggregate amount of commitments under the asset-based revolving credit facility of $1,250 million overall, subject to borrowing base availability.
Interest Rate Swap (3) 750 July 27, 2028 Effective fixed rate of 5.913%, based upon the 3.913% fixed rate plus an applicable margin of 2.00% associated with the Senior Term Loan Credit Facility. (1) Aggregate amount of commitments under the asset-based revolving credit facility of $1,250 million overall, subject to borrowing base availability.
The amount of these payments are dependent upon various factors, including the amount of taxable income allocated to them from Holdings, changes in the ownership percentage of the non-controlling interest holders, changes in tax rates and the timing of distributions relative to the corresponding tax year. Tax distributions to non-controlling interest holders were $41 million in fiscal 2023 .
The amount of these payments are dependent upon various factors, including the amount of taxable income allocated to them from Holdings, changes in the ownership percentage of the non-controlling interest holders, changes in tax rates and the timing of distributions relative to the corresponding tax year.
We expect to obtain an increase in our share of the tax basis in the net assets of Holdings as Partnership Interests are exchanged by Continuing Limited Partners. We intend to treat any exchanges of Partnership Interests as direct purchases of Partnership Interests for U.S. federal income tax purposes.
We expect to obtain an increase in our share of the tax basis in the net assets of Holdings as Partnership Interests are exchanged by Management Feeder. We intend to treat any exchanges of Partnership Interests as direct purchases of Partnership Interests for U.S. federal income tax purposes.
The decrease in basic earnings per share was attributable to higher Class A share counts from exchanges of Partnership Interests partially offset by an increase in net income attributable to Core & Main, Inc.
The basic earnings per share decreased due to higher Class A share counts from exchanges of Partnership Interests partially offset by an increase in net income attributable to Core & Main, Inc.
There can be no assurance that the anticipated benefits of the acquisitions will be realized on the timeline we expect, or at all. 42 Key Business Metrics Net Sales We generate net sales primarily from the sale of water, wastewater, storm drainage and fire protection products and the provision of related services to over 60,000 customers, as of January 28, 2024, including municipalities, private water companies and professional contractors.
There can be no assurance that the anticipated benefits of the acquisitions will be realized on the timeline we expect, or at all. 40 Key Business Metrics Net Sales We generate net sales primarily from the sale of water, wastewater, storm drainage and fire protection products and the provision of related services to over 60,000 customers, as of February 2, 2025, including municipalities, private water companies and professional contractors.
(“UPSCO”) Pipes, Valves & Fittings; Meter products April 2023 Landscape & Construction Supplies LLC (“LCS”) Storm Drainage March 2023 Fiscal 2022 Lanier Municipal Supply (“Lanier”) Pipes, Valves & Fittings; Storm Drainage December 2022 Distributors, Inc. (“Distributors”) Fire Protection October 2022 Trumbull Industries, Inc. (“Trumbull”) Pipes, Values & Fittings October 2022 Inland Water Works Supply Co.
Pipes, Valves & Fittings; Meter products April 2023 Landscape & Construction Supplies LLC Storm Drainage March 2023 Fiscal 2022 Lanier Municipal Supply Pipes, Valves & Fittings; Storm Drainage December 2022 Distributors, Inc. Fire Protection October 2022 Trumbull Industries, Inc. Pipes, Values & Fittings October 2022 Inland Water Works Supply Co.
In the coming years, including as a result of the IIJA, we expect increased federal infrastructure investment to have a core focus on the upgrade, repair and replacement of municipal waterworks systems and to address demographic shifts and serve the growing population.
In the coming years, including as a result of the IIJA, we expect, but cannot provide any assurance that, increased federal infrastructure investment to have a core focus on the upgrade, repair and replacement of municipal waterworks systems and to address demographic shifts and serve the growing population.
(“Inland”) Pipes, Valves & Fittings; Storm Drainage August 2022 Earthsavers Erosion Control, LLC (“Earthsavers”) Storm Drainage June 2022 Lock City Supply, Inc. (“Lock City”) Pipes, Valves & Fittings; Storm Drainage; Meter products May 2022 Dodson Engineered Products, Inc.
Pipes, Valves & Fittings; Storm Drainage August 2022 Earthsavers Erosion Control, LLC Storm Drainage June 2022 Lock City Supply, Inc. Pipes, Valves & Fittings; Storm Drainage; Meter products May 2022 Dodson Engineered Products, Inc.
As of January 28, 2024, our cash and cash equivalents totaled $1 million. We maintain our cash deposits according to a banking policy that requires diversification across a variety of highly-rated financial institutions. However, this could result in a concentration of cash and cash equivalents across these financial institutions in excess of Federal Deposit Insurance Corporation-insured limits.
We maintain our cash deposits according to a banking policy that requires diversification across a variety of highly-rated financial institutions. However, this could result in a concentration of cash and cash equivalents across these financial institutions in excess of Federal Deposit Insurance Corporation-insured limits.
The 2028 Senior Term Loan may require accelerated repayment based upon cash flows generated in excess of operating and investing requirements when Core & Main LP’s net total leverage ratio is greater than or equal to 3.25.
The Senior Term Loan Credit Facility may require accelerated repayment based upon cash flows generated in excess of operating and investing requirements when Core & Main LP’s net total leverage ratio (as defined in the agreement governing the Senior Term Loan Credit Facility) is greater than or equal to 3.25.
Purchase Obligations As of January 28, 2024, the Company had agreements in place with various suppliers to purchase goods and services, primarily inventory, in the aggregate amount of $1,033 million. These purchase obligations are generally cancellable, but the Company does not currently intend to cancel. Payment is generally expected to be made during fiscal 2024 for these obligations.
Purchase Obligations As of February 2, 2025, the Company had agreements in place with various suppliers to purchase goods and services, primarily inventory, in the aggregate amount of $1,225 million. These purchase obligations are generally cancellable, but the Company does not currently intend to cancel. Payment is generally expected to be made during fiscal 2025 for these obligations.
Following establishment of the tax receivable agreement liabilities we may remeasure the liabilities due to changes in estimates which could result in an impact to earnings. Off-Balance Sheet Arrangements We had no off-balance sheet arrangements as of January 28, 2024.
Following establishment of the tax receivable agreement liabilities we may remeasure the liabilities due to changes in estimates which could result in an impact to earnings. Off-Balance Sheet Arrangements We had no off-balance sheet arrangements as of February 2, 2025.
Below is a summary of the acquisitions that closed in fiscal 2023, fiscal 2022 and fiscal 2021 with an aggregate transaction value of $244 million, $124 million and $174 million, subject to working capital adjustments, respectively.
Below is a summary of the acquisitions that closed in fiscal 2024 (the “Fiscal 2024 Acquisitions”), fiscal 2023 (the “Fiscal 2023 Acquisitions”) and fiscal 2022 (the “Fiscal 2022 Acquisitions”) with an aggregate transaction value of $769 million, $244 million and $124 million, subject to working capital adjustments, respectively.
Except to the extent that any benefits are realized, we will receive the full benefit in tax savings from relevant taxing authorities and provide payment of 85% of the amount of any of our actual or deemed tax benefits to the Former Limited Partners or Continuing Limited Partners, as applicable, or their permitted transferees.
Except to the extent that any benefits are deemed realized, we will receive the full benefit in tax savings from relevant taxing authorities and provide payment of 85% of the amount of any of our actual or deemed tax benefits to the parties subject to Tax Receivable Agreements, as applicable, or their permitted transferees.
Our actual results could differ materially from those discussed below and elsewhere in this Annual Report on Form 10-K for a number of important factors, particularly those described under the caption “Cautionary Note Regarding Forward-Looking Statements. ” Overview Core & Main is a leader in advancing reliable infrastructure with local service, nationwide.
Our actual results could differ materially from those discussed below and elsewhere in this Annual Report on Form 10-K for a number of important factors, particularly those described under the caption “Cautionary Note Regarding Forward-Looking Statements. ” Overview Core & Main, Inc.
Earnings Per Share The Class A common stock basic earnings per share for fiscal 2023 decreased 0.5% to $2.15 compared with $2.16 for fiscal 2022. The Class A common stock diluted earnings per share for fiscal 2023 in creased 0.9% to $2.15 compared with $2.13 for fiscal 2022.
Earnings Per Share The Class A common stock basic earnings per share for fiscal 2024 decreased 0.5% to $2.14 compared with $2.15 for fiscal 2023. The Class A common stock diluted earnings per share for fiscal 2024 decreased 0.9% to $2.13 compared with $2.15 for fiscal 2023 .
The establishment of the $717 million liability under the Tax Receivable Agreements as of January 28, 2024 did not impact earnings as the payments were recorded against equity since Core & Main entered into the Tax Receivable Agreements as part of common control transactions.
The establishment of the $725 million liability under the Tax Receivable Agreements as of February 2, 2025 did not impact earnings as the payments were recorded against equity since Core & Main entered into the Tax Receivable Agreements as part of common control transactions.
Net income attributable to Core & Main, Inc. for fiscal 2023 increased $5 million, or 1.4%, to $371 million compared with $366 million for fiscal 2022. The increase was primarily attributable to a decreased allocation to non-controlling interest holders following exchanges of Partnership Interests partially offset by an 8.6% decline in net income.
Net income attributable to Core & Main, Inc. for fiscal 2024 increased $40 million , or 10.8% , to $411 million compared with $371 million for fiscal 2023. The increase was primarily attributable to a decreased allocation to non-controlling interest holders following exchanges of Partnership Interests partially offset by a decline in net income.
The fiscal years ended January 28, 2024, January 29, 2023 and January 30, 2022 included 52 weeks. The next fiscal year ending February 2, 2025 (“fiscal 2024”) will include 53 weeks.
The fiscal year ended February 2, 2025 (“fiscal 2024”) included 53 weeks and the fiscal years ended January 28, 2024 (“fiscal 2023”) and January 29, 2023 (“fiscal 2022”) included 52 weeks. The next fiscal year ending February 1, 2026 (“fiscal 2025”) will include 52 weeks.
On February 12, 2024, Core & Main LP entered into an interest rate swap that has a starting notional amount of $750 million that increases to $1,500 million on July 27, 2026 through the instrument maturity on July 27, 2028.
On February 12, 2024, Core & Main LP entered into an additional interest rate swap, associated with borrowings under the Senior Term Loan Credit Facility, that has a starting notional amount of $750 million that increases to $1,500 million on July 27, 2026 through the instrument maturity on July 27, 2028.
There was $430 million outstanding under the Senior ABL Credit Facility as of January 28, 2024. (2) Notional amount of $900 million as of January 28, 2024 . The notional amount decreases to $800 million on July 27, 2024 and $700 million on July 27, 2025 through the instrument maturity on July 27, 2026.
There was $93 million outstanding under the Senior ABL Credit Facility as of February 2, 2025. (2) Notional amount of $800 million as of February 2, 2025 . The notional amount decreases to $700 million on July 27, 2025 through the instrument maturity on July 27, 2026.
Substantially all of Core & Main LP’s assets secure the 2028 Senior Term Loan and the Senior ABL Credit Facility. 47 Information about our cash flows, by category, is presented in the consolidated Statements of Cash Flows and is summarized as follows: Fiscal Years Ended January 28, 2024 January 29, 2023 January 30, 2022 Cash flows provided by (used in) operating activities $ 1,069 $ 401 $ (31) Cash flows used in investing activities (270) (152) (203) Cash flows used in financing activities (975) (73) (146) (Decrease) increase in cash and cash equivalents $ (176) $ 176 $ (380) Operating Activities Net cash provided by operating activities increased by $668 million to $1,069 million for fiscal 2023 compared with $401 million for fiscal 2022 .
Substantially all of Core & Main LP’s assets secure the Senior Term Loan Credit Facility and the Senior ABL Credit Facility. 45 Information about our cash flows, by category, is presented in the consolidated Statements of Cash Flows and is summarized as follows: Fiscal Years Ended February 2, 2025 January 28, 2024 January 29, 2023 Cash flows provided by operating activities $ 621 $ 1,069 $ 401 Cash flows used in investing activities (788) (270) (152) Cash flows provided by (used in) financing activities 174 (975) (73) Increase (decrease) in cash and cash equivalents $ 7 $ (176) $ 176 Operating Activities Net cash provided by operating activities decreased by $448 million to $621 million for fiscal 2024 compared with $1,069 million for fiscal 2023 .
Fiscal Year Ended January 29, 2023 Compared with Fiscal Year Ended January 30, 2022 A discussion of changes in our financial condition and results of operations during the fiscal year ended January 29, 2023, compared to the fiscal year ended January 30, 2022 has been omitted from this Annual Report on Form 10-K, but may be found in “Item 7.
Fiscal Year Ended January 28, 2024 Compared with Fiscal Year Ended January 29, 2023 A discussion of changes in our cash flows during the fiscal year ended January 28, 2024, compared to the fiscal year ended January 29, 2023 has been omitted from this Annual Report on Form 10-K, but may be found in “Item 7.
We believe these dynamics, coupled with expanding municipal budgets, create the backdrop for a favorable funding environment and accelerated investment in projects that will benefit our business. Seasonality Our operating results within a fiscal year are typically impacted by seasonality.
We believe these dynamics, coupled with expanding municipal budgets, create the backdrop for a favorable funding environment and accelerated investment in projects that will benefit our business. Seasonality Our operating results within a fiscal year are typically impacted by seasonality. Colder weather and shorter daylight hours historically have reduced construction, maintenance and repair activity.
As of January 28, 2024, we had $430 million outstanding borrowings on our Senior ABL Credit Facility, which provides for borrowings of up to $1,250 million, subject to borrowing base availability.
As of February 2, 2025, we had $93 million outstanding borrowings on our Senior ABL Credit Facility, which provides for borrowings of up to $1,250 million, subject to borrowing base availability.
Diluted earnings per share increased due to lower share counts following the Repurchase Transactions partially offset by a decline in net income. 45 Adjusted EBITDA Adjusted EBITDA for fiscal 2023 decreased $25 million, or 2.7%, to $910 million compared with $935 million for fiscal 2022 .
Diluted earnings per share decreased due to a decline in net income partially offset by lower share counts following the share repurchase transactions executed throughout fiscal 2023 and fiscal 2024. 43 Adjusted EBITDA Adjusted EBITDA for fiscal 2024 increased $20 million , or 2.2% , to $930 million compared with $910 million for fiscal 2023 .
Our short term debt obligations of $15 million are related to quarterly principal payments on the 2028 Senior Term Loan. We commenced payments under the Tax Receivable Agreements in fiscal 2023, as the Company had a financing cash outflow related to the payment of $5 million under the Tax Receivable Agreements.
Our short term debt obligations of $24 million are related to quarterly principal payments on the Senior Term Loan Credit Facility. In fiscal 2024 and fiscal 2023, the Company had a financing cash outflow related to the payment of $11 million and $5 million, respectively, under the Tax Receivable Agreements.
Interest Rate Swap (2) 900 July 27, 2026 Effective fixed rate of 3.293%, based upon the 0.693% fixed rate plus an applicable margin of 2.60% associated with the 2028 Senior Term Loan.
Interest Rate Swap (2) 800 July 27, 2026 Effective fixed rate of 2.693%, based upon the 0.693% fixed rate plus an applicable margin of 2.00% associated with the Senior Term Loan Credit Facility.
As of January 28, 2024, after giving effect to approximately $16 million of letters of credit issued under the Senior ABL Credit Facility, Core & Main LP would have been able to borrow approximately $804 million under the Senior ABL Credit Facility, subject to borrowing base availability.
As of February 2, 2025, after giving effect to approximately $15 million of letters of credit issued under the Senior ABL Credit Facility, Core & Main LP would have been able to borrow approximately $1,142 million under the Senior ABL Credit Facility, subject to borrowing base availability.
For a further description of basic and diluted earnings per share, refer to Note 12 to the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K. 43 Results of Operations Fiscal Year Ended January 28, 2024 Compared with Fiscal Year Ended January 29, 2023 Amounts in millions (except per share data) Fiscal Years Ended January 28, 2024 January 29, 2023 Net sales $ 6,702 $ 6,651 Cost of sales 4,884 4,856 Gross profit 1,818 1,795 Operating expenses: Selling, general and administrative 931 880 Depreciation and amortization 147 140 Total operating expenses 1,078 1,020 Operating income 740 775 Interest expense 81 66 Income before provision for income taxes 659 709 Provision for income taxes 128 128 Net income 531 581 Less: net income attributable to non-controlling interests 160 215 Net income attributable to Core & Main, Inc. $ 371 $ 366 Earnings per share: Basic $ 2.15 $ 2.16 Diluted $ 2.15 $ 2.13 Non-GAAP Financial Data: Adjusted EBITDA $ 910 $ 935 Net Sales Net sales for fiscal 2023 increased $51 million, or 0.8%, to $6,702 million compared with $6,651 million for fiscal 2022 .
For a further description of basic and diluted earnings per share, refer to Note 12 to the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K. 41 Results of Operations Fiscal Year Ended February 2, 2025 Compared with Fiscal Year Ended January 28, 2024 Amounts in millions (except per share data) Fiscal Years Ended February 2, 2025 January 28, 2024 Net sales $ 7,441 $ 6,702 Cost of sales 5,461 4,884 Gross profit 1,980 1,818 Operating expenses: Selling, general and administrative 1,078 931 Depreciation and amortization 183 147 Total operating expenses 1,261 1,078 Operating income 719 740 Interest expense 142 81 Income before provision for income taxes 577 659 Provision for income taxes 143 128 Net income 434 531 Less: net income attributable to non-controlling interests 23 160 Net income attributable to Core & Main, Inc. $ 411 $ 371 Earnings per share: Basic $ 2.14 $ 2.15 Diluted $ 2.13 $ 2.15 Non-GAAP Financial Data: Adjusted EBITDA $ 930 $ 910 Net Sales Net sales for fiscal 2024 increased $739 million, or 11.0%, to $7,441 million compared with $6,702 million for fiscal 2023.
The timing of payments associated with the Tax Receivable Agreements are summarized below: 46 Fiscal 2024 $ 11 Fiscal 2025 18 Fiscal 2026 40 Fiscal 2027 40 Fiscal 2028 41 Thereafter 567 Total Tax Receivable Agreements liability $ 717 Further exchanges by Management Feeder will result in additional tax deductions to us and require additional payables pursuant to Tax Receivable Agreements.
The timing of payments associated with the Tax Receivable Agreements are summarized below: Fiscal 2025 $ 19 Fiscal 2026 41 Fiscal 2027 42 Fiscal 2028 42 Fiscal 2029 43 Thereafter 538 Total Tax Receivable Agreements liability $ 725 Further exchanges of Partnership Interest by Management Feeder will result in additional tax deductions to us and require additional payables pursuant to Tax Receivable Agreements.
Liquidity and Capital Resources Historically, we have financed our liquidity requirements through cash flows from operating activities, borrowings under our credit facilities, issuances of equity and debt securities and working capital management activities. Our principal historical liquidity requirements have been for working capital, capital expenditures, acquisitions, servicing indebtedness and the Repurchase Transactions.
Liquidity and Capital Resources Historically, we have financed our liquidity requirements through cash flows from operating activities, borrowings under our credit facilities, issuances of equity and debt securities and working capital management activities.
For a further description of the Secondary Offerings and the Repurchase Transactions, refer to Note 1 to the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Refer to Note 1 to the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further discussion of the share repurchase transactions completed in fiscal 2023.
If during the measurement period (a period not to exceed 12 months from the acquisition date) we receive additional information that existed as of the acquisition date but at the time of the original allocation described above was unknown to us, we make the appropriate adjustments to the purchase price allocation in the reporting period that the amounts are determined. 51 For each acquisition, we value intangible assets acquired which may include customer relationships, non-compete agreements and/or trademarks.
If during the measurement period (a period not to exceed 12 months from the acquisition date) we receive additional information that existed as of the acquisition date but at the time of the original allocation described above was unknown to us, we make the appropriate adjustments to the purchase price allocation in the reporting period that the amounts are determined.
Net Income Attributable to Non-controlling Interests Net income attributable to non-controlling interests for fiscal 2023 decreased $55 million, or 25.6%, to $160 million compared with $215 million for fiscal 2022. The decrease was attributable to exchanges of Partnership Interests by non-controlling interest holders and an 8.6% decline in net income. Net Income Attributable to Core & Main, Inc.
Net Income Attributable to Non-controlling Interests Net income attributable to non-controlling interests for fiscal 2024 decreased $137 million to $23 million compared with $160 million for fiscal 2023 . The decrease was primarily attributable to exchanges of Partnership Interests by non-controlling interest holders and a decline in net income. Net Income Attributable to Core & Main, Inc.
On February 9, 2024, Core & Main LP entered into an incremental $750 million term loan in conjunction with the 2031 Senior Term Loan, which matures on February 9, 2031.
On February 9, 2024, Core & Main LP entered into a $750 million senior term loan, which matures on February 9, 2031 (the “2031 Senior Term Loan”).
As a leading specialty distributor with a focus on water, wastewater, storm drainage and fire protection products, and related services, we provide solutions to municipalities, private water companies and professional contractors across municipal, non-residential and residential end markets, nationwide.
(“Core & Main” and collectively with its subsidiaries, the “Company”) is a leading specialty distributor dedicated to advancing reliable infrastructure with local service, nationwide. With a focus on water, wastewater, storm drainage and fire protection products, and related services, we provide solutions to municipalities, private water companies and professional contractors across municipal, non-residential and residential end markets, nationwide.
Fiscal Year Our fiscal year is a 52- or 53-week period ending on the Sunday nearest to January 31 st . Quarters within the fiscal year include 13-week periods, unless a fiscal year includes a 53 rd week, in which case the fourth quarter of the fiscal year will be a 14-week period.
Quarters within the fiscal year include 13-week periods, unless a fiscal year includes a 53 rd week, in which case the fourth quarter of the fiscal year will be a 14-week period.
Petroleum prices have fluctuated as a result of the conflict in Ukraine and other factors. In addition, we are exposed to fluctuations in prices for imported products due to logistical challenges and changes in labor, fuel, shipping container and other importation-related costs.
We are also exposed to fluctuations in costs for petroleum as we distribute a substantial portion of our products by truck. In addition, we are exposed to fluctuations in prices for imported products due to logistical challenges and changes in labor, fuel, shipping container and other importation-related costs.
( “ Pacific Pipe ” ) Pipes, Valves & Fittings; Storm Drainage August 2021 Triple T Pipe & Supply, LLC (“Triple T”) Pipes, Values & Fittings March 2021 As we integrate these and other acquisitions into our existing operations, we may not be able to identify the specific financial statement impacts associated with these acquisitions.
Pipes, Valves & Fittings; Storm Drainage; Meter products March 2022 As we integrate these and other acquisitions into our existing operations, we may not be able to identify the specific financial statement impacts associated with these acquisitions.
Future aggregate rental payments under non-cancelable operating leases as of January 28, 2024 were as follows: $65 million in fiscal 2024 , $53 million in fiscal 2025 , $40 million in fiscal 2026 , $29 million in fiscal 2027, $15 million in fiscal 2028 and $16 million thereafter. 49 Non-GAAP Financial Measures In addition to providing results that are determined in accordance with GAAP, we present EBITDA and Adjusted EBITDA, which are non-GAAP financial measures.
Future aggregate rental payments under non-cancelable operating leases as of February 2, 2025 were as follows: $78 million in fiscal 2025 , $66 million in fiscal 2026 , $52 million in fiscal 2027 , $34 million in fiscal 2028, $19 million in fiscal 2029 and $26 million thereafter. 47 Non-GAAP Financial Measures In addition to providing results that are determined in accordance with GAAP, we present EBITDA and Adjusted EBITDA, which are non-GAAP financial measures.
Our products and services are used primarily in the maintenance, repair, replacement and new construction of water, wastewater, storm drainage and fire protection infrastructure. We reach customers through a nationwide network of approximately 335 branches across 48 states.
Our specialty products and services are used primarily in the maintenance, repair, replacement and new construction of water, wastewater, storm drainage and fire protection infrastructure. We reach customers through a network of over 370 branches across 49 U.S. states. Our products include pipes, valves, fittings, storm drainage products, fire protection products, meter products and other products.
Investing Activities Net cash used in investing activities increased by $118 million to $270 million for fiscal 2023 compared with $152 million for fiscal 2022, primarily attributable to a $103 million increase in cash outflows for acquisitions and a $14 million increase in capital expenditures during fiscal 2023 .
Investing Activities Net cash used in investing activities increased by $518 million to $788 million for fiscal 2024 compared with $270 million for fiscal 2023, primarily attributable to a $510 million increase in cash outflows for acquisitions during fiscal 2024 .
Refer to Note 15 to the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a description of the amendment to the Senior ABL Credit Facility, the 2031 Senior Term Loan and the interest rate swap.
In addition, the amendment reduced the effective applicable margin from 2.25% to 2.00%. 37 Refer to Note 6 to the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further discussion of the amendment to the Senior ABL Credit Facility, the 2028 Senior Term Loan, the 2031 Senior Term Loan and the interest rate swap.
Additionally, we regularly evaluate our approach to our capital allocation, which may include acquisitions, greenfields, debt reduction (including through open market debt repurchases, negotiated repurchases, other retirements of outstanding debt and opportunistic refinancing of debt), stock repurchases, dividends or other distributions. In fiscal 2023, we completed the Repurchase Transactions for total consideration of $1,344 million.
Additionally, we regularly evaluate our approach to our capital allocation, which may include acquisitions, capital expenditures, greenfields, debt reduction (including through open market debt repurchases, negotiated repurchases, other retirements of outstanding debt and opportunistic refinancing of debt), stock repurchases, dividends, payments on Tax Receivable Agreements or other distributions.
The annual payments under the Tax Receivable Agreements are expected to increase as a result of exchanges, including those exchanges made as part of the Secondary Offerings completed in fiscal 2023.
The annual payments under the Tax Receivable Agreements are expected to increase as a result of exchanges, including those exchanges made as part of the Secondary Offerings (as defined in Note 1 to the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K) completed in fiscal 2023.
If we are able to pass through price increases to our customers, our net sales will increase; conversely, during periods of deflation, our customer pricing may decrease to remain competitive, resulting in decreased net sales.
If we are able to pass through price increases to our customers, our net sales will increase; conversely, during periods of deflation, our customer pricing may decrease to remain competitive, resulting in decreased net sales. During fiscal 2022, we experienced supply chain disruption that contributed to significant price inflation and product surcharges with respect to certain products we sell.
Payments under the Tax Receivable Agreements may be accelerated if we elect an early termination of such Tax Receivable Agreement.
Payments under the Tax Receivable Agreements may be accelerated if we elect an early termination in accordance with the terms of the Tax Receivable Agreements or negotiate a settlement of the Tax Receivable Agreements.
Our cash flows from operating activities are typically lower during the first and second fiscal quarters due to investment in working capital and annual incentive compensation payments and are typically higher during the third and fourth fiscal quarters due to cash inflows associated with receivable collections and reduced inventory purchases.
Our cash flows from operating activities are typically lower during the first and second fiscal quarters due to investment in working capital and annual incentive compensation payments and are typically higher during the third and fourth fiscal quarters due to cash inflows associated with receivable collections and reduced inventory purchases. 38 Price Fluctuations Our financial performance is impacted by price fluctuations in the cost to procure substantially all the products we sell and our ability to reflect these changes, in a timely manner, in our customer pricing.
Fiscal Years Ended January 28, 2024 January 29, 2023 Percentage Change Pipes, valves & fittings products $ 4,504 $ 4,548 (1.0) % Storm drainage products 985 949 3.8 % Fire protection products 688 701 (1.9) % Meter products 525 453 15.9 % Total net sales $ 6,702 $ 6,651 0.8 % 44 Gross Profit Gross profit for fiscal 2023 increased $23 million, or 1.3%, to $1,818 million compared with $1,795 million for fiscal 2022 .
Fiscal Years Ended February 2, 2025 January 28, 2024 Percentage Change Pipes, valves & fittings products $ 5,006 $ 4,504 11.1 % Storm drainage products 1,147 985 16.4 % Fire protection products 596 688 (13.4) % Meter products 692 525 31.8 % Total net sales $ 7,441 $ 6,702 11.0 % Gross Profit Gross profit for fiscal 2024 increased $162 million, or 8.9%, to $1,980 million compared with $1,818 million for fiscal 2023.
Operating Income Operating income for fiscal 2023 decreased $35 million, or 4.5%, to $740 million compared with $775 million during fiscal 2022 . The decrease in operating income was attributable to higher SG&A expense partially offset by higher gross profit. Interest Expense Interest expense was $81 million for fiscal 2023 compared with $66 million for fiscal 2022 .
Operating Income Operating income for fiscal 2024 decreased $21 million, or 2.8% , to $719 million compared with $740 million during fiscal 2023 . The decrease in operating income was primarily attributable to higher SG&A and D&A expenses partially offset by higher gross profit.
The actual amount and timing of the additional payments under the Tax Receivable Agreements will vary depending upon a number of factors as discussed further in Note 7 to the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
The actual amount and timing of the additional payments under the Tax Receivable Agreements will vary depending upon a number of factors as discussed further in Note 7 to the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K. 44 In addition to making distributions to Core & Main, Inc. to fund tax obligations and payments under the Tax Receivable Agreements, in accordance with the Partnership Agreement, Holdings also makes distributions to Management Feeder representing the non-controlling interests of Core & Main, Inc. to fund their income tax obligations with various taxing authorities.
Tax Receivable Agreements Under the Tax Receivable Agreements, we expect to generate tax attributes that will reduce amounts that we would otherwise pay in the future to various tax authorities.
Trademark intangible assets represent the value associated with the brand names in place at the date of the acquisition. 49 Tax Receivable Agreements Under the Tax Receivable Agreements, we expect to generate tax attributes that will reduce amounts that we would otherwise pay in the future to various tax authorities.
Gross profit increased due to an increase in net sales and an increase in gross profit as a percentage of net sales. Gross profit as a percentage of net sales for fiscal 2023 was 27.1% compared with 27.0% for fiscal 2022 .
Gross profit as a percentage of net sales for fiscal 2024 was 26.6% compared with 27.1% for fiscal 2023.
The supply chain disruption was due to several factors, including, but not limited to, unpredictable lead times and delays from our suppliers, labor availability, global logistics and the availability of raw materials, in part due to the conflict in Ukraine that limited product availability and further exacerbated the effects of inflation.
The supply chain disruption was due to several factors, including, but not limited to, unpredictable lead times and delays from our suppliers, labor availability, global logistics and the availability of raw materials. In fiscal 2023, we saw improvements in the supply chain and more predictable lead times for certain products, but for other products the supply chain remained constrained.
The increase in net sales was primarily attributable to higher selling prices and acquisitions partially offset by a reduction in volume from comparably lower end-market volumes. Net sales declines for pipes, valves & fittings were due to lower end-market volumes partially offset by higher selling prices and acquisitions.
Net sales increased primarily due to acquisitions, higher volumes and contributions from the 53rd selling week in the current year partially offset by slightly lower selling prices. Net sales increased for pipes, valves & fittings due to acquisitions partially offset by slightly lower selling prices.
Abnormal levels of precipitation may negatively impact our operating results as it may result in the delay of construction projects. Our operating results may also be adversely affected by hurricanes, which typically occur during our third fiscal quarter.
Our operating results may also be adversely affected by hurricanes, which typically occur during our third fiscal quarter.
Customer relationship intangible assets represent the value associated with those customer relationships in place at the date of the acquisition. We value customer relationships using an excess earnings method using various inputs such as customer attrition rate, revenue growth rate, gross margin percentage and discount rate.
We value customer relationships using an excess earnings method using various inputs such as customer attrition rate, revenue growth rate, gross margin percentage and discount rate. Cash flows associated with the existing relationships are expected to diminish over time due to customer turnover.
Cyclicality can also have an impact on the products we procure for our customers or our related services, as further discussed under “—Price Fluctuations” below.
Cyclicality can also have an impact on the products we procure for our customers or our related services, as further discussed under “—Price Fluctuations” below. Interest rate increases in fiscal 2023 slowed home buying and new lot development, which was a contributing factor to a decline in the residential end market in fiscal 2023.
If interest rates increase, our debt service obligations on our variable-rate indebtedness will increase and our net income would decrease, even though the amount borrowed under the facilities remains the same. As of January 28, 2024, we had $1,893 million of outstanding variable-rate debt.
The Senior Term Loan Credit Facility and the Senior ABL Credit Facility each bear interest based on term secured overnight financing rate (“Term SOFR”). If interest rates increase, our debt service obligations on our variable-rate indebtedness will increase and our net income would decrease, even though the amount borrowed under the facilities remains the same.
Accordingly, the consolidated financial information of Core & Main presented herein, including the accompanying audited consolidated financial statements included in this Annual Report on Form 10-K, includes the consolidated financial information of Holdings and its subsidiaries. The Partnership Interests in Holdings held by the Continuing Limited Partners is reflected as non-controlling interests in Core & Main’s consolidated financial statements.
Core & Main’s primary material assets are its direct and indirect ownership interest in Holdings and deferred tax assets associated with such ownership. The consolidated financial information of Core & Main presented herein, including the accompanying audited consolidated financial statements included in this Annual Report on Form 10-K, includes the consolidated financial information of Holdings and its subsidiaries.
The overall increase in gross profit as a percentage of net sales was primarily attributable to execution of our gross margin initiatives partially offset by normalization of larger prior year benefits from strategic inventory investments during an inflationary environment.
The overall decrease in gross profit as a percentage of net sales was primarily attributable to larger prior year benefits from strategic inventory investments during an inflationary period partially offset by favorable impacts from the execution of our gross margin initiatives and accretive acquisitions. 42 Selling, General and Administrative Expenses Selling, general and administrative (“SG&A”) expenses for fiscal 2024 increased $147 million, or 15.8%, to $1,078 million compared with $931 million during fiscal 2023.
Interest Rates Certain of our indebtedness, including borrowings under the 2028 Senior Term Loan and the Senior ABL Credit Facility , are subject to variable rates of interest and expose us to interest rate risk. The 2028 Senior Term Loan and the Senior ABL Credit Facility each bear interest based on term secured overnight financing rate (“Term SOFR”).
Interest Rates Certain of our indebtedness, including borrowings under the Senior Term Loan Credit Facility (as defined in Note 6 to the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K) and the Senior ABL Credit Facility , are subject to variable rates of interest and expose us to interest rate risk.
Net sales growth for storm drainage products benefited from higher selling prices, volume growth and acquisitions. Net sales for fire protection products declined due to lower selling prices and lower volume partially offset by acquisitions.
Net sales increased for storm drainage due to acquisitions and our ability to drive the adoption of advanced storm water management systems. Net sales for fire protection products declined due to lower selling prices and lower end-market volumes partially offset by acquisitions.
On February 9, 2024, Core & Main LP amended the terms of the credit agreement governing the senior asset-based revolving credit facility in order to extend the maturity of the Senior ABL Credit Facility from July 27, 2026 to February 9, 2029.
Significant Events During Fiscal 2024 On February 9, 2024, Core & Main LP amended the terms of the Senior ABL Credit Facility (as defined in Note 6 to the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K) in order to extend the maturity from July 27, 2026 to February 9, 2029.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

11 edited+3 added−2 removed0 unchanged
Biggest changeAs a result, we are exposed to fluctuations in interest rates to the extent of our net borrowings under the 2028 Senior Term Loan and the Senior ABL Credit Facility. As of January 28, 2024, our net borrowings under the 2028 Senior Term Loan and Senior ABL Credit Facility were $1,893 million.
Biggest changeThe Senior Term Loan Credit Facility and the Senior ABL Credit Facility bear interest generally equal to Term SOFR plus an applicable margin. As a result, we are exposed to fluctuations in interest rates to the extent of our net borrowings under the Senior Term Loan Credit Facility and the Senior ABL Credit Facility.
Conversely, decreases in our product costs can correspondingly lower the price levels of the products we sell in order to remain competitive in our markets. Changes to product costs may lead to a risk of a reduction to our margins.
Conversely, decreases in our product costs can correspondingly lower the price levels of the products we sell in order to remain competitive in our markets. Changes to product costs may lead to a reduction to our gross profit margins.
In fiscal 2023 , our 50 largest customers accounted for approximately 12% of our net sales, with our largest customer accounting for less than 1% of net sales. We maintain provisions for potential credit losses and such losses to date have normally been within our expectations.
In fiscal 2024 , our 50 largest customers accounted for approximately 10% of our net sales, with our largest customer accounting for less than 1% of net sales. We maintain provisions for potential credit losses and such losses to date have normally been within our expectations.
As such, excluding the impact of any interest rate swap, each one percentage point change in interest rates would result in an approximately $15 million change in the annual interest expense on the 2028 Senior Term Loan.
As such, excluding the impact of any interest rate swap, each one percentage point change in interest rates would result in an approximately $22 million change in the annual interest expense on the Senior Term Loan Credit Facility.
See Item 7. “Management’s Discussion and Analysis of Financial Conditions and Results of Operations—Key Factors Affecting Our Business—Interest Rates” of this Annual Report on Form 10-K. Credit Risk We are exposed to credit risk on accounts receivable balances. This risk is mitigated due to our large, diverse customer base.
Management’s Discussion and Analysis of Financial Conditions and Results of Operations—Key Factors Affecting Our Business—Interest Rates.” Credit Risk We are exposed to credit risk on accounts receivable balances. This risk is mitigated due to our large, diverse customer base.
We evaluate the solvency of our customers on an ongoing basis to determine if additional allowances for doubtful accounts receivable need to be recorded. We have historically not been exposed to a material amount of uncollectible receivable balances.
We evaluate the solvency of our customers on an ongoing basis to determine if additional allowances for doubtful accounts receivable need to be recorded.
We have a limited ability to control the timing and amount of changes in the cost to procure our products. We seek to recover increases in our product costs by passing product cost increases on to our customers.
Our operating performance may be affected by both upward and downward price fluctuations. We have a limited ability to control the timing and amount of changes in the cost to procure our products including supplier pricing, transportation and governmental fees. We seek to recover increases in our product costs by passing product cost increases on to our customers.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk In the normal course of conducting business, we are exposed to certain risks associated with potential changes in market conditions.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk In the normal course of conducting business, we are exposed to certain risks associated with potential changes in market conditions. These risks include fluctuations in interest rates and prices, including price fluctuations related to substantially all of our products. Interest Rate Risk Our credit facilities bear interest at a floating rate.
As of January 28, 2024, assuming availability under our Senior ABL Credit Facility was fully utilized, each one percentage point change in interest rates would result in an approximately $12 million change in annual interest expense. On February 9, 2024, Core & Main LP entered into an incremental $750 million term loan in conjunction with the 2031 Senior Term Loan.
As of February 2, 2025, assuming availability under our Senior ABL Credit Facility was fully utilized, each one percentage point change in interest rates would result in an approximately $12 million change in annual interest expense. See “Item 7.
Price Risk We are exposed to price fluctuations in the cost to procure substantially all the products we sell and our ability to reflect these changes, in a timely manner, in our customer pricing. Our operating performance may be affected by both upward and downward price fluctuations.
We have historically not been exposed to a material amount of uncollectible receivable balances. 50 Price Risk We are exposed to price fluctuations in the cost to procure substantially all the products we sell and our ability to reflect these changes, in a timely manner, in our customer pricing.
We seek to minimize this risk through strategic inventory investments ahead of announced price increases, the execution of our gross margin initiatives and accretive acquisitions. We are also exposed to fluctuations in petroleum costs as we deliver a substantial portion of the products we sell by truck and fluctuations in prices for imported products due to logistical challenges.
We are also exposed to fluctuations in petroleum costs as we deliver a substantial portion of the products we sell by truck and fluctuations in prices for imported products due to logistical challenges. Such price fluctuations have from time to time produced volatility in our financial performance and could do so in the future.
Removed
These risks include fluctuations in interest rates and prices, including price fluctuations related to substantially all of our products. 52 Interest Rate Risk Our credit facilities bear interest at a floating rate. Both the 2028 Senior Term Loan and the Senior ABL Credit Facility bear interest generally equal to Term SOFR plus an applicable margin.
Added
As of February 2, 2025, our net borrowings under the Senior Term Loan Credit Facility and the Senior ABL Credit Facility were $2,283 million.
Removed
We seek to minimize the effects of changing prices through economies of purchasing, inventory management based on the predictability of product lead teams and recovering product costs by passing cost increases on to customers. Such price fluctuations have from time to time produced volatility in our financial performance and could do so in the future. 53
Added
We seek to minimize this risk through strategic inventory investments ahead of announced price increases, management of our inventory levels, our variable compensation plans for associates and the execution of our gross margin initiatives.
Added
Foreign Currency Risk We are exposed to risks from foreign currency exchange rate fluctuations on the translation of our foreign operations into U.S. dollars. As of February 2, 2025, our foreign currency operations were not material and a hypothetical 10% change in the relative value of the U.S. dollar would not materially impact the Company’s net earnings. 51

Other CNM 10-K year-over-year comparisons