Core & Main, a prominent distributor of water, sewer, and fire protection products, experienced a significant slump in its stock price during intraday trading on Wednesday. The decline followed the company's decision to revise its full-year revenue guidance downwards, as it reported fiscal second-quarter sales that fell short of analyst expectations, attributed in part to project delays caused by adverse wet weather conditions.
In the three months leading up to July 28, the company recorded revenue figures increasing to $1.96 billion, compared to $1.86 billion during the same period the previous year. However, this performance was below the average analyst estimate of $2.06 billion as reported by Capital IQ. Consequently, shares of Core & Main witnessed a sharp decline of approximately 14% during midday trading hours.
Earnings per share for the company also saw a decrease, dipping to $0.61 from the $0.66 year-over-year benchmark. The revenue uptick achieved during the quarter has been noted to be bolstered by strategic acquisitions, which were “partially offset by project delays from wet weather conditions and comparably lower end-market volumes,” as stated by Chief Executive Steve LeClair in a press release.
During and immediately following the quarter, Core & Main successfully acquired five businesses, positioning the company for expanded presence in new geographic territories and the introduction of diversified product lines. Despite these growth endeavors, the second-quarter performance remained below internal expectations, largely due to heavy rainfall and flooding that affected regions across the country during the stated timeframe.
This precipitation complicated operations involving heavy machinery, making underground construction considerably challenging for contractors, as highlighted by LeClair during a conference call with analysts, the details of which were later transcribed by Capital IQ. In light of the challenges encountered in the second quarter, Core & Main has downgraded its full-year sales guidance to a new range of $7.3 billion to $7.4 billion, down from theprevious forecast of $7.5 billion to $7.6 billion.
This revised outlook stands in contrast to the Capital IQ-polled consensus, which anticipates revenue to reach approximately $7.49 billion for the current fiscal year. Additionally, the company has adjusted its earnings before interest, taxes, depreciation, and amortization (EBITDA) outlook to fall between $900 million and $930 million, a downward revision from the earlier forecast range of $935 million to $975 million that was communicated in June.
LeClair further emphasized that besides the weather-related disruptions experienced in the second quarter, the updated forecast reflects management’s anticipation that some of the growth originally targeted for the latter half of the year may be deferred to 2025. Currently trading at $40.49, Core & Main’s stock has observed a change of -6.31 and a notable percent change of -13.48 as a consequence of these developments. $CNM.