Matt Johnson

Matt Johnson asked for more color on Core & Main's greenfield expansion strategy, including ambitions for the rest of the year and FY26 targets, and inquired about the significance of the Texas market and the potential impact of its new $20 billion water funding bill.

Answer

CEO Mark Witkowski expressed excitement about greenfield openings in priority markets like Denver and Houston, with several more expected by year-end and a pipeline of over a dozen for future expansion in both the U.S. and Canada, noting their typical profitability within two to three years. He emphasized Texas as a very important market, expecting to capitalize on the new $20 billion funding and other advancements like corrugated HDPE for storm drainage, signaling continued investment in the state.

Matt Johnson, on for John Lovallo, questioned the implied back-half gross margin, which appears to be down slightly despite significantly higher sales volume. He also asked for a regional breakdown of the expected year-over-year decline in homebuilding operating margins.

Answer

COO Rob McGibney clarified that significant mix shift is not expected and that the forecast reflects current market conditions. He stated that any improvement in housing gross profit margin would be modest and primarily due to leverage. McGibney emphasized that most of the operating income leverage in the second half would come from the SG&A line due to substantially higher volume. The question regarding regional operating margin drivers was not directly addressed before the next analyst was called.