Core & Main Inc (NYSE:CNM) Non-GAAP EBITDA increased by 56.8% in Q2

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Core & Main Inc (NYSE:CNM), a leading specialized distributor of water, wastewater, storm drainage and fire protection products, and related services, stock rose 2.29% (As on Sep 15, 12:13:36 PM UTC-4, Source: Google Finance) after the company in the second quarter of FY 21 has reported the 47.5% fall in the net income to $9.5 million compared with $18.1 million in the prior year period. The decline in net income was mainly due to a $50.4 million loss on debt modification and extinguishment and a $17.2 million incremental equity-based compensation charge, partially offset by higher operating income. Adjusted EBITDA (Non-GAAP) for the second quarter rose by 56.8%, to $155.2 million compared with $99.0 million in the prior year period. The growth in Adjusted EBITDA was mainly due to higher net sales and improved gross profit, partially offset by higher SG&A expenses, mainly due to higher variable compensation costs during the period and lower SG&A expenses in the prior year period due to COVID-19-related decreases in headcount and discretionary spending. Adjusted EBITDA margin expanded by 160 basis points to 12% from 10.4% in the prior year period.

Further, the company has delivered 35.7% rise in the net sales for the second quarter to $1,297.6 million compared with $955.9 million in the prior year period. The increase in net sales was mainly due to strong volume growth and price inflation, with price inflation representing approximately half of the net sales increase, which helped drive growth in all product lines. Gross profit for the three months ended August 1, 2021 increased by 41%, to $325.2 million compared with $230.6 million in the prior year period. Gross profit as a percentage of net sales for the three months ended August 1, 2021 was 25.1% compared with 24.1% in the prior year period, which represents an improvement of 100 basis points. The overall increase in gross profit as a percentage of net sales was mainly due to sourcing and pricing improvements.

For full year fiscal 2021, the company expects Adjusted EBITDA to be in the range of $470 million to $510 million, representing a year-over-year increase of 37% to 49%

On the other hand, the company has recently closed its previously announced acquisition of substantially all of the assets of L & M Bag & Supply Co. Inc., based in Willacoochee, Georgia, and certain of its affiliates.

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