A specialty distributor that supplies pipes, valves, fittings, storm drainage, water meters, and fire protection gear to municipalities, contractors, and private water companies across the U.S. and Canada, stocking hundreds of thousands of products in more than 370 branches. It was born in 2017 when private equity firm Clayton, Dubilier & Rice carved the waterworks arm out of HD Supply, which itself grew from Home Depot's brief push into wholesale. Its name nods to the "core" essentials of infrastructure and the water "mains" at the heart of what it sells.
Q1 FY2026 revenue was flat at $1,910M as acquisitions offset volume declines
flattened for the first time in six quarters. Revenue was $1,910M, down 0.1% , while expanded 0.5 points to 27.2% and rose 9.6% to $0.57 on gross margin initiatives and lower . Growth has stalled, but liquidity is intact with $150M cash and full ABL availability.
Key takeaways
were essentially flat at $1,910M as lower volumes in pipes, valves & fittings and storm drainage were offset by acquisition contributions.
improved 50 to 27.2% from 26.7%, driven by gross margin initiatives and disciplined purchasing and pricing management, lifting 2.0% to $520M.
rose 2.0% to $299M from higher distribution costs and greenfield and sales investments, partially offset by recent cost actions.
Section summaries
Management's Discussion and Analysis
Net sales were flat at $1,910M as acquisition contributions offset volume declines; gross margin expanded 50 bps to 27.2%.
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were essentially flat at $1,910 million, as lower volumes in pipes, valves & fittings and storm drainage were offset by contributions from acquisitions.
increased 2.0% to $520 million, with improving to 27.2% from 26.7%, driven by gross margin initiatives and disciplined purchasing and pricing management.
grew 3.5% to $177M and attributable to Core & Main rose 8.0% to $108M, aided by lower .
Liquidity stood at $150M cash with full $1,250M Senior ABL availability; the company repurchased $88M of shares.
What changed
Q1 FY2025 rose 9.8%; this quarter it fell 0.1%, the first non-growth quarter after five straight increases — the moderation management flagged in the FY2025 10-K has arrived.
rose to 27.2% from 26.7% a year earlier, extending the expansion that began in Q2 FY2025 after four quarters of contraction through Q1 FY2025.
ratio was 15.6% of sales ($299M on $1,910M), above the 14.8% in Q1 FY2024 and the 15.3% in Q1 FY2025, continuing the elevated cost load flagged as a watch item.
Cash rose to $150M from $8M at Q1 FY2025 and $220M at FY2025 year-end, reversing the thin balances that followed and acquisition deployment.
fell versus the prior year, consistent with the lower Term Loan margins and reduced ABL borrowings noted across FY2025 and Q1 FY2025.
What to watch
Q2 FY2026 direction as volumes in pipes, valves & fittings and storm drainage stay soft against acquisition contributions.
ratio trajectory after it held at 15.6% of sales, above the 13.4% level two years earlier.
Future cash outflows under the $720M recorded at FY2025 year-end and their effect on capacity.
Any draw on the $500M authorization with $88M deployed this quarter and full $1,250M ABL available.
expenses rose 2.0% to $299 million due to higher distribution costs and investments in expansion and sales initiatives, partially offset by recent cost actions.
grew 3.5% to $177 million, and attributable to Core & Main increased 8.0% to $108 million, aided by lower .
Liquidity remains strong with $150 million in cash and full availability on the $1,250 million Senior ABL ; capital allocation included $88 million in share repurchases.
Quantitative and Qualitative Disclosures About Market Risk
Floating-rate debt of $2.16B drives interest-rate sensitivity; foreign-currency and credit risks are described as not material.
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A 1-percentage-point rate rise would increase annual by ~$22M on the Senior Term Loan and ~$12M if the Senior ABL Credit Facility were fully drawn.
Credit risk on is mitigated by a large, diverse customer base where the top 50 customers represent ~12% of and the largest is under 1%.
The company manages product-cost price risk by passing increases to customers, strategic purchases, and gross-margin initiatives, though petroleum and logistics costs can create volatility.
Foreign-currency exposure is deemed not material; a hypothetical 10% move in the U.S. dollar would not materially impact .
We are not currently party to any material legal proceedings. Nevertheless, we are from time to time involved in litigation incidental to the ordinary conduct of our business, including personal injury, workers’ compensation and business operations. Regardless of the outcome, li…
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We are not currently party to any material legal proceedings. Nevertheless, we are from time to time involved in litigation incidental to the ordinary conduct of our business, including personal injury, workers’ compensation and business operations. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
Like other companies in our industry, we have been subject to personal injury and property damage claims arising from the types of products that we distribute. As a distributor in this industry, we face an inherent risk of exposure to product liability claims in the event that the use of the products we have distributed in the past or may in the future distribute is alleged to have resulted in economic loss, personal injury or property damage or violated environmental, health or safety or other laws. Such product liability claims in the past have included, and may in the future include, allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability or a breach of warranties. In particular, we have been and continue to be a defendant in asbestos-related litigation matters. See Item 1A. “Risk Factors—Risks Related to Our Business—The nature of our business exposes us to product liability, construction defect and warranty claims and other litigation and legal proceedings” in our Fiscal 2025 Annual Report on Form 10-K.