Core & Main, Inc. (CNM Quick QuoteCNM - Free Report) used its first-quarter fiscal 2026 call to make a consistent point: municipal water infrastructure demand remains durable even as residential construction stays weak. Management paired that message with margin expansion, steady bidding activity and an unchanged full-year outlook.

The setup mattered because investors were looking for signs that softer private construction or funding concerns could dent the year. Instead, executives emphasized stable demand, pricing discipline and a growing pipeline in smart utility, treatment plant and data center-related work.

CNM Leans on Municipal Demand

Chief executive officer Mark Witkowski said municipal demand remained the company’s most stable growth engine, supported by repair-and-replace work, aging infrastructure and the fact that most water infrastructure funding comes from state and local sources rather than a single federal cycle. He said that the foundation helped offset continued weakness in residential lot development.

Management described nonresidential demand as mixed but stable, with healthy activity in data centers and manufacturing helping balance softer traditional commercial construction. Witkowski also pointed to fire protection as a standout category, supported by data center and multifamily activity as well as higher steel prices.

The company reported first-quarter adjusted earnings of 72 cents, which topped the Zacks Consensus Estimate of 70 cents, delivering a surprise of 2.9%. CNM reported revenues of $1.91 billion, which came above the Zacks Consensus Estimate of $1.90 billion by 0.3%. Gross margin improved 50 basis points to 27.2%.

Core & Main, Inc. Price, Consensus and EPS Surprise

Core & Main, Inc. price-consensus-eps-surprise-chart | Core & Main, Inc. Quote

Core & Main Expands Smart Utility Reach

President Bradford Cowles spent much of the call on smart utility and treatment plant solutions, two categories that management called important municipal growth drivers. He said customers increasingly want full-project partners that can handle hardware, software, analytics, installation, project management and ongoing service.

Cowles said Core & Main has been winning larger and more complex smart utility contracts, including multiyear programs, because it can integrate offerings from multiple technology partners and support the full project life cycle. He said that capability is helping the company gain share across municipalities of different sizes.

Treatment plant work drew similar emphasis. Cowles said the business continues to post double-digit growth, while Witkowski later said it now represents a mid-single-digit percentage of sales. Management framed the category as a durable, less-cyclical opportunity tied to modernization, regulatory needs and broader system upgrades.

CNM Keeps Full-Year Outlook Intact

Chief financial officer Robyn Bradbury said first-quarter results were in line with internal expectations, which supported the decision to reaffirm fiscal 2026 guidance. Core & Main still expects net sales of $7.8 billion to $7.9 billion and adjusted EBITDA of $950 million to $980 million.

Bradbury said overall end-market volumes are still expected to be roughly flat for the year, with municipal strength offsetting a cautious view of private construction. She added that the company expects low- to mid-single-digit sales growth in the second half as comparisons ease and backlog converts.

On margins, management continued to point to private-label growth, sourcing optimization, disciplined pricing and prior cost actions. Adjusted EBITDA rose to $226 million from $224 million, and adjusted EBITDA margin improved 10 basis points to 11.8%.

Core & Main Uses Cash Aggressively

Capital allocation was another notable theme. Bradbury said operating cash flow rose to $82 million from $77 million, while the company used $88 million to repurchase about 1.8 million shares in the quarter and another $37 million after quarter-end.

Management presented those buybacks as a sign of confidence in the business and in cash generation, not as a shift away from growth spending. Witkowski said the company remains committed to greenfields and acquisitions, and the quarter included five new greenfield openings.

Bradbury said net debt ended the quarter at about $2.0 billion, with leverage at 2.2 times and liquidity near $1.4 billion. That gives the company room to keep balancing repurchases, organic investment and M&A.

CNM Q&A Adds Detail on Pricing

Analyst questions centered on pricing, meters, treatment plants, data centers and the durability of the guide. In response, Bradbury said PVC pricing was stable in the quarter, and recent supplier increases had not yet flowed through revenue, though they could become a modest tailwind later in the year.

A Barclays analyst asked why Core & Main’s meter business appeared firmer than some original equipment manufacturers. Cowles said the company is benefiting from large, integrated project wins, while smaller, maintenance-driven meter demand remains flatter and more exposed to soft residential conditions.

Questions from Wolfe Research, Deutsche Bank and Truist also pushed on infrastructure funding and treatment plant momentum. Management said the remaining IIJA funding is still moving through state revolving funds, treatment plant demand remains broad-based, and the acquisition pipeline has picked up after a slower period.

Core & Main Maintains an Expansion Focus

The overall tone of the call was steady rather than celebratory. Management acknowledged weak residential demand and a mixed macro backdrop, but repeatedly returned to share gains, municipal resilience and a stronger project pipeline as reasons to stay on offense.

That stance also showed up in greenfield expansion, targeted investment in technical teams and continued interest in acquisitions tied to treatment plant capabilities and municipal exposure. The message coming out of the call was that Core & Main sees room to widen its reach even in a slower private construction environment.

CNM Zacks Signals

CNM carries a Zacks Rank #3 (Hold), along with a Value Score of C, Growth Score of B, Momentum Score of C and VGM Score of B. Under the Zacks framework, higher letter grades indicate stronger style characteristics, while the most favorable combinations typically pair A or B Style Scores with a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

That leaves CNM in a more balanced position than a top-ranked idea. The Growth and VGM scores point to some supportive traits, while the Zacks Rank #3 suggests a more neutral near-term signal. As Zacks notes, Rank changes are driven by earnings estimate revisions, so that reading can shift after analysts fully digest the just-reported results.