Core & Main: A Record Buyback and a Reopened Deal Pipeline — While the Stock Sits 38% Off Its High

Fiscal Q2 was steady-as-she-goes, but the capital-allocation pivot and a suddenly crowded LOI pipeline tell a louder story than a share price down 16% in 90 days.

CNM · Earnings Call · 2026-09-09

A steady quarter the tape refuses to reward

Core & Main's fiscal Q2 was, by management's own framing, unremarkable in the best way. Net sales rose 2.5% to roughly $2.1 billion with volume, price and tuck-in M&A each contributing a sliver; adjusted EBITDA grew ~3% to $274 million; adjusted diluted EPS rose 8% to $0.94; and full-year guidance was simply affirmed at $7.8–$7.9 billion of sales and $950–$980 million of adjusted EBITDA. Mark Witkowski's opening line set the tone: “Combined with our strong cash generation and balance sheet flexibility, Core & Main is well positioned to capitalize on the opportunities ahead, drive long-term growth and create value for shareholders.” — Mark Witkowski, Chief Executive Officer · 2026-09-09 Yet the tape is telling a harsher story. CNM sits roughly 38% below its September 2025 peak of $66.98 and is down 16% over the trailing ninety trading days alone, having peaked at $52.65 in early June. That gap — a stable operator with a beaten-down equity — is the central tension of this report, and it is exactly the backdrop against which a buyback-and-deals story becomes interesting.

The fresh signal is capital allocation, not the top line

What genuinely changed this quarter is how the company is spending its cash. Core & Main posted its second consecutive quarter of record open-market repurchases, deploying $169 million for 3.7 million shares, and Robyn Bradbury spelled out the scale: “Including buybacks completed subsequent to quarter end, we have now deployed nearly $270 million to repurchase approximately 5.7 million shares during fiscal 2026. Since our IPO, we have deployed nearly $2 billion to repurchase approximately 58 million shares, representing almost 25% of the shares outstanding.” — Robyn Bradbury, Chief Financial Officer · 2026-09-09 That shrinkage is not cosmetic; it is a material tailwind to per-share earnings at a moment when the multiple is compressing. Stock repurchases hit $88 million last quarter, up 126% year-over-year. The bigger narrative shift, though, is the M&A pipeline. For several quarters the story was a deal drought; now management says the logjam has broken. “We've seen that, I'd say, pick up pretty significantly here over the last 3 to 6 months... We've advanced now several... through the LOI stage. So, we're making some really good progress there.” — Mark Witkowski, Chief Executive Officer · 2026-09-09 That phrasing — deals at the LOI stage — is new versus the June call, when the same executive conceded a lull: “We've definitely been in a lull from an M&A standpoint. And we haven't really seen a lot of deals in the space.” — Mark Witkowski, Chief Executive Officer · 2026-06-10 Bradbury closed the loop on the math: management targets M&A contributing its long-standing 2–4 points of incremental growth, and "it's possible we could exceed that in any given year."

Riding someone else's wave on the water side

The quarter's operating star was the data-center buildout, which is emphatically not a company-unique theme — it is one of the loudest cross-market currents in the global tape, where AI data centers rank among the biggest multi-month advancers. Brad Cowles quantified the pull-through:

We've seen our data center project run rate... we've doubled this quarter year-over-year... That's taken it from, I would say, low single digit to the mid-single-digit range in terms of our total business... The data center is now in the high single-digit range as a percentage of our nonresidential work.
Bradford Cowles, Senior Vice President · 2026-09-09

The elegance of the Core & Main version is that it plays to the local-distribution playbook rather than a new product line — water, wastewater and storm drainage for site prep, then fire protection systems as the shell closes. Other recent reporters echo the same demand: Perma Pipe (PPIH) flagged "data center opportunities," Avon (CAN) cited its data-center development team, and OCC called out "data center market sectors." This is a shared wave, not a fresh company insight — which is fine, so long as the wave keeps building.

What quietly cooled

The contrast worth flagging is what fell out of this quarter's keyword set. Last quarter, Smart utility was the company's single top-ranked theme (momentum 304). This quarter it is essentially absent from the top tier, and the call explains why: the business grew only ~1%, with volume essentially flat. Cowles was candid about the cause — “We are seeing a little bit of a large project start timing impact here that's keeping us, kind of, in that flat range” — Bradford Cowles, Senior Vice President · 2026-09-09 — pointing to the long pre-construction runway on mega-wins like Miami-Dade, where only 5–10% of volume ships this year and the full run rate arrives in 2027. A star growth engine decelerating to flat is precisely the kind of subtle deterioration a drawdown-sensitive tape tends to punish. Two other threads deserve a mention. First, pricing: PVC pricing has stabilized but refuses to rise, and Bradbury guided to a full-year gross margin of about 27.2%, up half a point year-over-year. Second, the funding backdrop: management pushed back on fears over the roll-off of ARPA funding, arguing the vast majority of municipal water spend is locally rate-funded and that IIJA dollars remain largely unspent at the municipality level. The bullish counterweight is fire protection product line, up 14% on share gains and higher steel prices, and the balance sheet itself — leverage of ~2.3x, $1.5 billion of liquidity, and a deep-net-cash position of about -$2.0 billion. With the equity cheapening — Price-to-Net-Income of 19.2x, down 26% year-over-year — the company is buying its own stock aggressively and reloading the deal machine. Whether that proves the smartest use of the next dollar depends entirely on whether the residential lot-development headwind really does ease in the back half, as management insists, and whether those LOI-stage deals close on schedule in 2027. For a name this far below its high, the stakes are unusually clear.