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ST. LOUIS - Core & Main Inc. (NYSE: CNM), a prominent distributor in the infrastructure sector, has announced a definitive agreement to acquire substantially all the assets of Eastcom Associates Inc., a New Jersey-based distributor of underground utility protection equipment. This acquisition marks a strategic expansion for Core & Main, aiming to enhance its product offerings in the damage prevention space.
Eastcom Associates, operating from a single location in Branchburg, New Jersey, has been serving surveyors and contractors in 13 states since 1972. The company has established a reputation for its commitment to quality products and exceptional service in the field of damage prevention equipment, training, and service.
Mike Huebert, president of Core & Main, expressed enthusiasm about the acquisition, noting the value of Eastcom's expertise in the product area and the potential for the Eastcom team to integrate well into Core & Main's operations. He emphasized the growth opportunity this acquisition presents for Core & Main's existing product line-up.
Dennis Cinelli, general manager of Eastcom Associates, reflected on the company's over 50-year history of serving its customers and expressed confidence that the partnership with Core & Main would foster new opportunities for success and growth.
Core & Main, headquartered in St. Louis, operates more than 350 locations across the United States, specializing in water, wastewater, storm drainage, and fire protection products and services. The company is known for combining local expertise with a national supply chain to support various municipal, non-residential, and residential markets.
The financial terms of the acquisition were not disclosed in the press release statement. Core & Main's nearly 5,500 associates continue to focus on providing safe and reliable infrastructure solutions to communities nationwide.
The statements in the press release regarding the future outlook of the combined entities are forward-looking and are subject to risks and uncertainties. Core & Main has stated that it does not intend to update these forward-looking statements except as required by law.
In other recent news, Core & Main, a distributor of water and fire protection products, reported a 6% increase in second-quarter net sales, reaching $1.96 billion. However, due to lower-than-expected end-market volumes, the company has revised its full-year net sales and adjusted EBITDA projections downwards. Wells Fargo initiated coverage on Core & Main, assigning an Overweight rating and a price target of $52.00 for the stock. In contrast, Loop Capital, Truist Securities, RBC Capital, and Baird have all adjusted their outlook on Core & Main shares, lowering the price target while maintaining a neutral to positive rating. Despite these adjustments, these firms anticipate potential positive developments for Core & Main in the longer term. As part of its growth strategy, Core & Main announced a $500 million share repurchase program and completed several acquisitions, with two more announced post-quarter. These are among the recent developments for Core & Main.
InvestingPro Insights
Core & Main's acquisition of Eastcom Associates aligns with the company's growth strategy, as reflected in recent financial data and analyst insights from InvestingPro. The company's market cap stands at $8.72 billion, indicating its significant presence in the infrastructure sector.
Core & Main's revenue growth of 5.21% over the last twelve months suggests a steady expansion, which could be further bolstered by this strategic acquisition. The company's gross profit margin of 26.74% and operating income margin of 10.18% demonstrate its ability to maintain profitability while pursuing growth opportunities.
InvestingPro Tips highlight that Core & Main has been profitable over the last twelve months, with analysts predicting continued profitability this year. This financial stability provides a solid foundation for the company to integrate Eastcom's operations and potentially realize synergies.
Another relevant InvestingPro Tip notes that management has been aggressively buying back shares, which could signal confidence in the company's future prospects, including the potential benefits of this acquisition.
It's worth noting that Core & Main's stock has experienced a significant decline over the past six months, with a -25.36% price return. However, this may present an opportunity for investors who believe in the company's long-term growth strategy, including acquisitions like Eastcom.
For readers interested in a more comprehensive analysis, InvestingPro offers 8 additional tips that could provide further insights into Core & Main's financial health and market position.
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