Core & Main Inc (CNM)

History and Background

Core & Main was established in August 2017, when Clayton, Dubilier & Rice (CD&R) acquired the Waterworks division from HD Supply. This strategic move positioned Core & Main as an independent, specialized distributor focused on water, wastewater, storm drainage, and fire protection products. It has grown through organic expansion and acquisitions.

Core Business Areas

• Waterworks: Distribution of water, wastewater, and storm drainage products, primarily serving municipalities and private water companies. This segment includes pipes, fittings, valves, hydrants, and related services.
• Fire Protection: Distribution of fire protection products, including fire hydrants, valves, and related accessories, catering to contractors and municipalities.
• Other Related Products: Includes metering products, engineered materials, tools, and other infrastructure products.

Leadership and Structure

Steve LeClair is the Chairman, President, and Chief Executive Officer. The company operates with a decentralized structure, with regional teams managing local operations and customer relationships. Core & Main also has a CFO, COO, and other VPs for specific divisions

Key Offerings

• Ductile Iron Pipe: Used for water and wastewater transmission. Market share information is difficult to get because there is a wide range of competitors. Competitors include McWane and US Pipe.
• High-Density Polyethylene (HDPE) Pipe: Used for storm drainage and other applications. Market share information is difficult to get because there is a wide range of competitors. Competitors include WL Plastics.
• Fire Hydrants: Used for fire suppression systems. Market share information is difficult to get because there is a wide range of competitors. Competitors include Mueller Water Products.

Industry Overview

The waterworks industry is driven by infrastructure spending, aging infrastructure replacement needs, and population growth. The industry is fragmented, with many local and regional distributors.

Positioning

Core & Main is one of the largest distributors in the waterworks industry, benefiting from scale, a national footprint, and strong supplier relationships. Its competitive advantage lies in its breadth of product offerings and value-added services.

Total Addressable Market (TAM)

The estimated TAM for water infrastructure in the US is very difficult to give an exact number. The EPA estimates that hundreds of billions will need to be invested to maintain and improve. Core & Main is positioned to capture a significant portion of this market.

Key Competitors

• Mueller Water Products (MWA)
• Ferguson plc (FERG)
• HD Supply (no US stock symbol - acquired by Home Depot)
• McWane, Inc. (Private Company)

Competitive Landscape

Core & Main competes with a mix of national, regional, and local distributors. Its size and national footprint provide a competitive advantage, but it also faces competition from more specialized distributors and manufacturers.

L&M Bag & Supply

• Year: 2023
• Acquisition Price (USD millions):
• Strategic Rationale: Enhance the product portfolio and offer a complementary product line to enhance customer experience and increase the wallet-share.

Historical Growth: Core & Main has grown rapidly through acquisitions and organic expansion since its founding in 2017. It has benefited from increased infrastructure spending and the need to replace aging water infrastructure.

Future Projections: Analysts expect Core & Main to continue to grow revenue and earnings in the coming years, driven by infrastructure investment and acquisitions.

Recent Initiatives: Core & Main has been focused on acquiring smaller distributors to expand its geographic footprint and product offerings, expanding its digital capabilities, and improving operational efficiency.

Core & Main is a leading distributor in a fragmented market, poised to capitalize on infrastructure spending. Its strengths lie in its size and national presence, but it faces risks from economic cycles and competition. The company's growth strategy includes acquisitions and expansion into new markets. Overall, Core & Main demonstrates a moderately strong fundamental profile within its sector, though economic and competitive factors warrant ongoing monitoring.

Data Sources:

• Company Filings
• Industry Reports
• Analyst Estimates

Disclaimers:

The information provided is for informational purposes only and should not be considered financial advice. Market share data is approximate. AI rating is based on available information and may not reflect all factors.