Core & Main Secures $744 Million in new term loans

Core & Main, Inc. (NYSE:CNM), a distributor of water, sewer, and fire protection products, has amended its credit agreement to secure approximately $744 million in new Tranche E Term Loans, according to a recent 8-K filing with the Securities and Exchange Commission. The company, headquartered in St. Louis, Missouri, will use the proceeds along with other funds to repay existing debts and cover related fees and expenses.

On Monday, Core & Main LP, an indirect wholly owned subsidiary of Core & Main, Inc., entered into the Fifth Amendment of its existing Credit Agreement, initially dated August 1, 2017. This amendment facilitates the borrowing of the Tranche E Term Loans and an additional $200 million in Supplemental Term Loans.

The combined funds are earmarked for repaying Tranche C Term Loans not exchanged for Tranche E Term Loans, repaying a portion of the Tranche D Term Loans, and managing transaction-related costs.

The new Tranche E Term Loans carry a floating interest rate, which can be based on either a secured overnight financing rate (SOFR) with a 2.00% annual margin or an alternate base rate with a 1.00% annual margin. These loans feature nominal quarterly installments of 0.25% of the initial principal per annum, with the balance due at maturity on February 9, 2031. The company's strong liquidity position is evidenced by a healthy current ratio of 2.14, with liquid assets well exceeding short-term obligations.

This strategic financial move comes as Core & Main aims to optimize its capital structure and maintain financial flexibility. The full details of the Fifth Amendment, which governs the terms of the transaction, are outlined in the attached Exhibit 10.1 of the filing.

In other recent news, Core & Main Inc. has been the focus of multiple financial firms following their third-quarter fiscal 2024 report, which showed revenues and adjusted EBITDA surpassing consensus estimates. BofA Securities raised its price target to $40 while maintaining an Underperform rating, attributing the company's performance to recent acquisitions and deferred revenues from the second quarter. Meanwhile, RBC Capital maintained an Outperform rating and increased its price target to $62, noting Core & Main's ability to maintain pricing power.

Baird also maintained an Outperform rating, increasing the price target to $66, citing management's optimistic outlook for fiscal year 2025 and diminishing investor concerns. Goldman Sachs held a Neutral stance with a consistent price target of $57, acknowledging the company's strong third-quarter performance and increased EBITDA guidance for FY24. Lastly, Truist Securities increased its price target to $56 while maintaining a Hold rating, attributing the stock's significant uptick to recovery from a sell-off prompted by litigation news involving PVC producers.

These are recent developments and should be considered by investors interested in Core & Main's financial trajectory. Analysts' analysis from firms such as BofA Securities, RBC Capital, Baird, Goldman Sachs, and Truist Securities provide insight into the company's performance and future expectations.

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