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Investing.com -- Core & Main saw its shares fall sharply Tuesday after the water infrastructure firm reported fiscal second-quarter results that missed market forecasts and issued soft guidance for the current quarter.
The company posted earnings per share (EPS) of $0.70 in Q2, missing Wall Street’s forecast of $0.79.
Revenue climbed 6.6% year-over-year to $2.09 billion, slightly below the consensus estimate of $2.12 billion.
Adjusted EBITDA rose 3.5% year-on-year to $266 million.
The stock was down 22% following the market open at 09:42 ET (13:42 GMT).
“I am proud of our associates’ dedication to supporting customers in delivering critical infrastructure projects,” said Mark Witkowski, CEO of Core & Main. "We achieved roughly 7% net sales growth in the second quarter and our balanced end market exposure served us well, with strength in municipal demand and stability in non-residential demand helping to offset softness in residential lot development."
"At the same time, we are operating in an environment marked by higher operating expenses and softer residential demand. To address these dynamics, we have implemented targeted actions to improve productivity and operating margins," he added.
As a result, the company cut its full-year revenue outlook. It now forecasts revenue to $7.6 billion–$7.7 billion, compared with its earlier projection of $7.6 billion–$7.8 billion and the $7.78 billion Wall Street consensus.
Net sales growth is now expected at 2%–3%, versus the prior 2%–5% range, reflecting daily sales growth of 4%–5%.
Adjusted EBITDA is forecast between $920 million and $940 million, trimmed from the earlier $950 million–$1 billion outlook. The company now expects an adjusted EBITDA margin of 12.1%–12.2%, down from the previous 12.5%–12.8%.
Operating cash flow guidance was also lowered to $550 million–$610 million, compared with $570 million–$650 million previously.
"This is an extremely disappointing quarter that will likely see the stock correct following a significant sales miss and lowering of FY25 guidance that is being attributed to materially weaker Residential markets," Wolfe Research analyst Nigel Coe said in a note.
Coe said this was "easily the worst quarter" for Core & Main as a public company, "and unfortunately comes so quickly after the recent CEO transition."