Good morning, everyone, and welcome to the Core & Main Q4 2023 Earning Call. My name is Carla, and I'll be coordinating your call today. [Operator Instructions] I will now hand you over to your host, Robyn Bradbury, Vice President of Finance and Investor Relations, to begin. Robyn, you can please go ahead.

Thank you. Good morning, everyone. This is Robyn Bradbury, Vice President of Finance and Investor Relations for Core & Main. We're excited to have you join us this morning for our fiscal 2023 fourth quarter and full year earnings call. I'm joined today by Steve LeClair, our Chairman and Chief Executive Officer, and Mark Witkowski, our Chief Financial Officer. Steve will lead today's call with a review of our fiscal 2023 execution highlights. Mark will then discuss our financial results and fiscal 2024 outlook, followed by a Q&A session. We will conclude the call with Steve's closing remarks. We issued our earnings press release this morning and posted a presentation to the Investor Relations section of our website. As a reminder, our press release presentation and the statements made during this call include forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. Such risks and uncertainties include the factors set forth in our earnings press release and in our filings with the Securities and Exchange Commission. We will also discuss certain non-GAAP financial measures which we believe are useful in assessing the operating results of our business. A reconciliation of these measures can be found in our earnings press release and in the appendix of our investor presentation. Thank you for your interest in Core & Main. I will now turn the call over to our Chairman and Chief Executive Officer, Steve LeClair.

Thanks, Robyn. Good morning, everyone. Thank you for joining us today. If you're following along with our investor presentation, I'll begin on page five with an overview of our unique market position. Core & Main is a leading specialty distributor of water, wastewater, storm drainage, and fire protection products serving municipalities, private water companies, and professional contractors across municipal, non-residential, and residential end markets nationwide. Our specialty products and services are used in the maintenance, repair, replacement, and construction of water and fire protection infrastructure. Our customers partner with Core & Main for a breadth of products and services, extensive industry knowledge, familiarity with local municipal specifications, convenient branch locations, and project management capabilities. We have the ability to serve smaller local customers and larger regional or national customers with relevant expertise, and our sales associates take a consultative approach to provide customer-specific solutions for projects of all sizes. We are deeply involved in our customers' planning processes all the way from project design through project completion. At the end of fiscal 2023, our footprint consisted of 335 branches across 48 states, which serves as a critical link between approximately 5,000 suppliers and a diverse base of over 60,000 customers. With the closing of Eastern Supply and Dana Kepner Acquisitions, we are now operating with more than 350 branches across 49 states. We are a clear industry leader, yet we estimate we have only 17% share of a very fragmented $39 billion addressable market. Accordingly, our long-term growth opportunity remains significant. We maintain a diverse end market exposure, where roughly 42% of our net sales in fiscal 2023 went towards municipal projects, 38% towards non-residential projects, and 20% towards new lot development for new residential construction. We are also balanced geographically and across our product lines. Our end market mix,…

Thanks, Steve, and good morning, everyone. I'll begin on Page nine with highlights of our fourth quarter results. We reported net sales of over $1.4 billion in the fourth quarter. As a reminder, the fourth quarter is traditionally our lowest volume quarter due to seasonality. However, we were pleased with a 5% increase compared with the prior year. Acquisitions contributed approximately three points of the net sales growth, while organic volumes were up low single digits. Gross margin of 26.7% was 40 basis points lower than the prior year as inventory costs continued to catch up with market prices. We anticipated gross margin normalization in the fourth quarter. However, the result was better than expected due to the execution of our gross margin initiatives and benefits from acquisitions. Selling, general and administrative expenses increased 8% to $230 million for the fourth quarter. The increase in SG&A reflects the impact of acquisitions, cost inflation, and investments to drive growth. Diluted earnings per share in the fourth quarter was $0.34, an increase of 10% compared with the prior year period. Diluted earnings per share increased due to lower share counts following the share repurchase transactions we completed during the year. Adjusted EBITDA decreased approximately 2% to $160 million, and adjusted EBITDA margin decreased 80 basis points to 11.1%. Decrease in adjusted EBITDA margin was due to a reduction in gross margin coupled with higher SG&A expenses. Turning to our full year performance on Page 10, net sales grew approximately 1% to $6.7 billion for fiscal 2023. The increase was due to approximately three points of growth from acquisitions and higher average selling prices partially offset by softer end market demand. We estimate that end market volumes were down low to mid-single digits for the year, underpinned by a double-digit decline in residential…

Thank you, Mark. [Operator Instructions] Our first question comes from Matthew Bowley from Barclays. Your line is now open.

So I want to pick up on that last point around where you are from a leverage perspective, after all the success around M&A and share repurchase. Any quantification on sort of your pro forma leverage at this point, and then just sort of higher level? How do you think about this pace of M&A? You mentioned room to accelerate M&A and timing of share repurchase, given where you are from a leverage perspective. Thank you.

Thanks, Matthew, for the question. First, just from a leverage standpoint, as we've talked about, target there is two to three pro forma. With the recent acquisitions, we'll be certainly at the low end of that range, so feel really good about where we're going to be, especially as we work through the year and get those acquisitions integrated. So looking good there. And I would say as we look at capital allocation, as we've talked about, the priorities are going to continue to be organic growth, investments into that to grow organically. The M&A will continue to be a big priority for us. Our pipeline is looking really healthy there. So we're going to assess those things. Obviously, we consider the valuation of the company. We still believe our value is undervalued compared to the peers that we've been outperforming, and we'll continue to assess that and provide some more details on that as we roll through 2024.

Great. Thanks for that, Mark. Secondly, on the gross margin, the 30 to 50 basis points of additional normalization, could you describe what is still in inventory that you would consider to be low-cost inventory that still has to come out, so to speak? I think the prior discussion of 100 to 150 basis points, you had spoken that included or that did not include a lot of offsets you were making, organic initiatives and some M&A. When we talk about the 30 to 50 basis points, is that a net of additional offsets, or do you have room to offset that further, so to speak? Thank you.

Thanks, Matthew. First, on the 30 to 50 off the fourth quarter number, I would say that assumes we continue to benefit from some M&A, some of the private label efforts there. So that 30 to 50 does have some benefit that we would expect as we go through 2024. I'll say there's still going to be opportunities that we can offset hopefully more of that, but that's really our expectation for all in throughout 2024. As it relates to some of the low-cost inventory that still has to come out, we did expect, like I said, about 100 to 150 basis points to normalize. We did experience a lot of that in 2023. I would say about 40 basis points of normalization did happen more of that later in the year. It came from a lot of the higher-turn inventory items, and we're able to see those gross margins normalize. There are some items that we carry in inventory that are slower turns, take a little longer to work through the system. We saw a lot of that really start to normalize as we wrapped up 2023 and as we've gotten into the first part of 2024. So those slower-turn items now are working their way out and expect that's the headwind that we're seeing as we start 2024, but again, we're going to work to offset as much of that as we can with the initiatives that we've got. And we'll see how it progresses here into the first part of the year.

Our next question comes from Nigel Coe from Wolfe Research. Your line is now open.

So I think, Mark, you said three points of contribution from M&A in the quarter, so two points from organic. I just want to confirm that's two points of volume, flat price. Please correct me if I'm wrong there. But then the outlook for flat price in --

That's right, Nigel. Two points of buying, roughly. Yes.

Great. And then the flat price assumption for 2024, you called out in the PR, you're seeing some deflation on the steel products in fire suppression. Can you just confirm that you're not seeing broad pressure in PVC, which obviously is where a lot of the attention is from investors? And then just given the move up in steel prices recently, does that mean that there's maybe a bit of upward pressure on some of those prices for the steel products?

Yes. First, Nigel, I guess on steel, that is a more true, I'd say, commodity product that we distribute primarily in the fire protection space. And we've seen really pressure there throughout all of 2023. So we're going to start anniversarying some of that as we get into 2024. It's been relatively, I'd say, stable, though that does move, as we've talked about, can be more volatile. We did call out for the full year a neutral pricing environment. There are obviously some puts and takes in there. I would say, as it relates to municipal PVC, as we've talked about, not as volatile as those true commodities like steel pipe. But it has come off its peak levels, I would say. And that's embedded in our guide overall to be a neutral overall price environment, but really came off the peak. But really, as expected, we did see a lot of supply chain normalized with municipal PVC. And you saw a lot of buying declines throughout 2023 from the distributor base. So I think there was a lot of destocking that likely took place in the industry. And that really has normalized as we've exited 2023. So I've been pretty pleased with how that's held up. And now that we're really returned back to normal buying patterns, I think that's good evidence. We could see some more stability there as we go forward as well.

That's great. Thanks, Mark. And then my follow-up question is really, could we just size the Dana Kepner acquisition? I think 19 branches, I think that's your largest acquisition as a public company. So if you just size that. And then on your EBITDA margin, the 80 basis points of midpoint down year-to-year, any of that would be attributed to M&A dilution?

Okay, sure, Nigel. First on Dana Kepner, I'd say roughly those 19 branches, kind of that average branch size, ends up being around a $300 million top line for the full year. It'll end up being slightly accretive for us, I would say, at the bottom line. So no real, I'd say M&A dilution in the EBITDA figures for 2024. I would think of M&A as neutral to slightly accretive.

Our next question comes from David Manthey from Baird.

My first question, and maybe I'm reading this wrong, but in your remarks, it sounded a bit like you're downplaying IIJA. And it's fine, I guess, relative to guidance, if those dollars are incremental. But I'm wondering if we could just check your head here and make sure you're as optimistic today as you were a year ago, or has something changed?

Hey, Dave, this is Steve. So yes, we really didn't put much into this year for that. We do view this as upside if it should start really rolling through. But as you've heard from us in the last several quarterly calls, we're seeing signs of this, but we're not seeing anything material really starting to move through. Seeing some great opportunities that are, really being sketched out right now for treatment plan operations in Arizona, out in Florida, and a couple other areas. But it'll be a bit before those things actually result in orders and deliveries. So some work to do there. We're continuing to push that, doing everything we can to make sure our municipalities are aware of the available funding and their state revolving funds. And we'll see kind of how that moves throughout the year, but not a whole lot put into the guide for '24.

Okay. And second, excluding the benefits that you've gotten via acquisition, how satisfied are you currently with the progress you're making towards your margin goals?

Yes, Dave, I would say we're very satisfied, as it relates to our margin initiatives, especially on the gross margin side, really made a lot of, I'd say, critical investments into private label. During 2023, we added, as you heard, a lot of distribution space, along with a lot of SKUs. And I think we're going to see some acceleration there in private label as we work through 2024. Still scratching the surface on some of the pricing analytics but expect some really good movement there. And then, really had some nice benefits come through in '23 on some sourcing work the teams have been doing. So really pleased there. I'd say the area that we're watching closely is the SG&A side. We have seen some cost inflation come through, in particular, with a lot of our facilities and fleets that we lease, that's been under, I'd say, some more cost pressure. And then, we've continued to make investments in technology to make this business more modern and more efficient as we go forward. And then, you heard we made some investments in some green fields this year and some other investments for growth. So, obviously need those to pay off. That's part of our guide here as we go into '24 and achieving and getting, I'd say, back to our consistent track record of delivering on above market growth. I believe we've made the right investments there, but, obviously need that to pay off here in 2024.

The next question comes from Mike Dahl from RBC Capital Markets.

To piggyback off of some of the margin questions, can you give us a sense in terms of the cadence, how you're thinking about both gross margin and SG&A, kind of the start of the year in the first half versus the second half? And I guess just as a point of clarification, I think you alluded to some of the M&A as still being gross margin accretive. So, just in totality, since you now have a couple of big acquisitions rolling through for the full year guide, does it assume that the M&A contributions are coming in at or above company average gross margin? Thanks.

Yes. Thanks, Mike. I would say on the gross margin side related to acquisitions, I'd say just slightly accretive there. I wouldn't expect really much in terms of significant benefit coming through there to offset any of that normalization. In terms of the cadence, I would say most of that we expect to show up in the first quarter. First quarter I'd say, our toughest comp. That was our best quarter as you look back to 2023. And really, I would say that 30 to 50 coming off the fourth quarter number on gross margin, I would look to that to be pretty steady throughout the year. But that first quarter comp will obviously show the toughest pressure from a year-over-year perspective.

Okay, got it. And then back on the S&GA dynamic, Mark, your comments. I think that's ultimately going to be an important lever for you guys. The guide seems to imply kind of flattish to maybe a little slight de-leveraging again, despite, what should be a pretty strong top line, both organically and inorganically. So, specific to 2024, can you talk about, the levels of inflation that you're seeing or maybe parse out some of those other investments in terms of quantification to help us understand kind of, okay, what's it going to take in terms of rate of growth or timing to get back to a position where you're better leveraging SG&A?

Yes, thanks, Mike. In terms of, what it's going to take, I will say, most of our growth in 2024 is either tied to volume and big part of that being above-market growth in the M&A. I'd say the M&A has had a little higher SG&A base to it. And obviously, this is a heavy resource and personnel business. So, when we're growing volume, it does take a little tougher time to leverage that, especially when we're seeing some of the cost inflation come through, primarily with some of the leased facilities and vehicles that we use to deliver the product. So, we need to see those start to ease a little bit. And, that can allow us to leverage that a little better. Obviously, if we get a little bit more benefit, from price on the top line, we can leverage that as well, but not really something we're expecting at this stage. So, if we see those investments we've made into growth payoff and get us more on the high end of that above-market range, I think you're going to start seeing the deleveraging start to happen again in SG&A.

Our next question comes from Kathryn Thompson from Thompson Research Group.

I'll just follow up on a clarification on guidance. With the M&A activity this year, we have a pretty good sense of the product breakout contribution by your four major operating segments. But could you clarify which segments should see relatively higher growth, or should it be somewhat evenly split among the four groups?

Yeah. Thanks, Katheryn. I would say as it relates to 2024, given the market growth, the above-market growth in the M&A that we've got built in, I would say, your higher growth categories are going to be, pipe valves fittings, storm drainage, and smart meters, just given the acceleration we continue to see there. Fire protection, typically a higher growth category for us, I would say, won't see as much of the benefit from M&A that's already closed. And they're primarily tied to non-resi for us, which we expect to be kind of flattish. So I would expect the other categories to be higher growth and probably a little softer, on the fire protection side, given some of those dynamics.

Yes. And shifting gears to non-res, could you clarify, are there certain types of projects that are incrementally or tougher as you look into '24, in other words, schools versus data centers versus warehousing? And then also a better understanding of the type of projects that you see or anticipate '24 and how that plays into your overall margin guidance.

Yes, Katheryn, this is Steve. So take you through a couple areas that we're expecting some softness in non-residential, certainly like commercial retail. And as you know, we group multifamily into that. Those will continue to be depressed. I think we'll say the same thing about warehousing as well. On the strength side, the highway, street, and bridge projects have been incredibly strong. Our position that we've got with storm drainage and with geosynthetics really should allow us to have some accelerated growth in those areas. And then, we see pockets in parts around the country where industrial manufacturing facilities are still going strong. Really good opportunities for us, both with land development there and also with fire protection. Data centers continues to be a lot of buzz around that. So we're positioning ourselves pretty well to capitalize on those areas as well.

Okay, great. And then a final question is around private label. One of your recent acquisitions, Eastern Supply has custom fabrication abilities in addition to normal pipe offerings. I appreciate the color you gave in the prepared commentary in terms of the bogeys of where you're seeking to grow private label. But could you pull the string a little bit more and help us understand the types of categories where you expect to see the greatest momentum in building out private label? And is there any type of geographic or project type that lends itself to greater private label? Thanks.

Okay, thanks, Katheryn. I wouldn't put Eastern Supply really into our private label piece as much. When we talk about private label, we're talking about a lot of categories that go into a lot of non-specified type products that go in. Fire protection, we've really done a nice job there pulling product through there, whether they're lowly specified items like some minor valves. And certainly you get into things like hangers and struts and things along those lines that play really well for us to be able to distribute across our network. In waterworks, we're still continuing to find opportunities there, whether it gets into packaging of glands and valve packages that will get into a lot of the nuts and bolts and accessory packs that go into that. So, there are just numerous areas for us to do that. As Mark shared with you, we've added a thousand SKUs in this last year. And I would say that if you look at kind of what our inventory plan was as we went into 2023 and bleeding off a lot of inventory, obviously that impacted private label as well, too. So, we just weren't bringing in as much material on private label. And we feel now that we're much more stabilized in the inventory levels. Our ability to pull through is going to be much stronger as we get into 2024.

Our next question is from Anthony Pettinari from Citigroup.

You talked about private label and sourcing and pricing analytics. I'm wondering if you could talk a little bit about some of the strategic customer initiatives you have around kind of the design build space and sort of what inning you are in terms of penetrating that. And is that an initiative where there's maybe some quantifiable benefit in 2024, or is that more kind of an investment to 2025 and beyond?

Yes, sure, Anthony. We're fairly far along with that, and we've had some really good results. You'll see that really put into our organic growth above market is where we've really bucketized that. The group that we have has been working with plan engineers and designers in this design build format. It's what I would call fairly new in terms of the application within water and wastewater treatment plants. And we're really on the cutting edge of this. And the use of the design build methodology is really starting to take shape in water and wastewater treatment plants design, and we're really well positioned for that. We have a number of folks that are certified in that, actually sit in some of the boards that apply specifically into our industry and trade organizations. So we'll continue to see benefit from that. You're going to continue to see major projects. And one of the things we're going to start doing as we get into our subsequent year in our earnings calls is to start highlight some of the opportunities that we've been able to achieve there and how that plays out and get a little bit more visibility into that as we go forward this year.

Okay. That's very helpful. And then just following up on IIJA, some of the heavy construction materials companies, they kind of seem to talk about it as once we see volume start to hit, we should see accelerating demand for three to five years as IIJA spending flows through. Understanding you're not baking much in from IIJA this year, is that similar to kind of how you think about it? Once the spigot is turned on, you have a number of years of incremental demand, or do you expect something a little bit more start and stop? I'm just wondering how we should think about IIJA funding and the incremental impact to your volumes maybe over the next five years.

Yes. I'm anticipating we'll see a minor acceleration this year as we get into it. We started seeing more of the funds starting to flow. We're seeing projects now starting to be scoped out. As that starts landing and ultimately results in material being shipped and delivered, we're still encouraged by what we're anticipating could be incremental growth in the municipal piece over the next several years. I would say we have a little different take on the long-term aspects of this. I don't believe this is going to be a one and done type thing where you're going to see these funds utilized. As they're utilized, what we're really encouraged about is the long-term prospects of this. Municipalities will borrow from the state revolving funds. They will pay back into that state revolving fund. That money will be a regenerative source for many years to come, even beyond the initial issuance of the IIJA funds. That's what has us really encouraged. That's what has our municipal customers encouraged as well, too, is ability, medium and long-term, for what those funds can do.

Our next question comes from Joe Ritchie from Goldman Sachs.

Maybe we can start on just the positive comments on resi lot development. And ultimately, what you're seeing in 1Q in terms of volume trends, is it consistent with what the framework that you've laid out for the full year?

Yes, Joe. As we ended 2023 in that fourth quarter, and really as we started the back half of third quarter, we started seeing some positive signs of life in residential, particularly in lot development. That grant, we're coming off from two years of down market in residential, so it was encouraging. But as we looked at the start of this year, the sentiment is really strong. I think people are getting acclimated into the higher interest rates at this point, and then just the inevitable demand that's been out there for housing continues to be robust. So we're encouraged by what we're seeing there. We think that we're going to be anniversarying a lot of downside in residential for the last two years, and so we're encouraged by what we're seeing. Lots of developments continuing to expand, and it seems to be more pervasive across the country than what we experienced before.

Yes, that's great to hear. Steve, maybe just the comments around 1Q, the volume trend you're seeing across your business, that seems fairly consistent with what you're expecting for the full year at this point.

Yes, I'd say we've seen some really strong bidding activity and volumes to start the year. Now, say if you go back to early part of '23, we did experience a little bit of weather and a little softer start to 2023, so relative to the comp, also strong, but feel really good with how we're starting this year.

Awesome. Then, Mark, just one quick follow-up for you. On the gross margin normalization, is it right to expect most of that to be first half-weighted and to be through it then? I know you guys mentioned that some of it is a little bit longer cycle. Just how are you thinking about that from a cadence standpoint for the full year?

Yes, I'd expect most of that to show up in the first quarter and stabilize. Obviously, we'll be working to offset as much of that and build off of that as we get later into the year, but I'd expect it to be early.

The next question comes from Patrick Baumann from JPMorgan.

A lot's been covered already. Just had a couple of cleanups here. On the Dana Kepner deal, just given its size, I'm just wondering if the multiple reflected a more competitive process. I'm asking in context of, I think you said something about $780 million deployed for the year and after the year ended. It looks like in the fiscal '23, the numbers were like $231 million of spend, so most of that came after the year. I'm curious if you have any comments on that. Then related to that, on the business itself, what would be some reasons to pay a higher multiple for it? Are there synergies or something else to consider? Are there any overlaps with your existing footprint, like any risk of cannibalization of existing sales?

Yes, Patrick. This is Steve. You would expect on a deal that size, that certainly very incredibly well-respected regional player in our space, that we're on the high end of the multiple as we went in. We do see great synergies associated with this. A lot of the product categories which we carry, which Dana Kepner did not, will have upside opportunity for us as well. We really like the business for a number of reasons. It performs extremely well, great customer relationships, and the geographies are a really strong fit for us. Arizona, Nevada, Colorado, all areas where we complement each other with our locations there, with the customer profile, whether it's adding additional contractor customers or municipal customers, it's really a glove fit for us in all those areas. It helps to strengthen our position in the northeast as well too, where we believe we're under-penetrated. So for all those aspects, this was a really good fit for us. We're really excited about the talent as well too. They have a really strong team. We compete against them previously. We know them well. They have great sales talent, they have great management talent, and we're going to benefit from all that.

Okay. So there's not much overlap then in terms of the footprint, cannibalization risk for sales?

No. We really look at it as complementary at this point. A lot of those markets, there is a lot of fragmentation in those markets. There are a lot of competitors in that space, so we really view it as complementary to what we're doing.

Helpful. And then the ACF West deal that you mentioned, I think, earlier in the call, am I right to assume that that wasn't yet put in the guide? Has it closed yet or no?

Patrick, we just signed that one recently. Expect a normal kind of sign to close. We've historically been right around 30 days or so, so hopefully we'll get that one here close soon, and then that would be additive to the 2024 results.

Thanks. And then just a couple of little cleanups on the guide. So on sales, the 1% to 2% from the extra week, that's embedded in the guide, right? And does that have any margin impact? And then there's a lot moving around below the line, given all the capital allocation toward the end of the year. You mentioned tax rate at 25%. Can you give us any sense on interest expense and share count for 2024 based on where we're at today?

All right. Keep me honest. I'm going to try to catch all those for you. The 53rd week, Patrick, is really no margin impact. That is embedded in the guide. We expect that to be similar on the top and the bottom line. In terms of the ins and outs, I would say from an interest expense standpoint, when you look at the expectations for debt and the rates, I'd say somewhere between 135 and 145 for the full year. And then as you're looking at share counts, fully diluted, I think we're right around 201 million shares. So those should be fully outstanding then for each of the quarters as we go forward. So you should be able to use shares in that range. Obviously, if we end up repurchasing any, you could have some changes there, but those will be things we announce in due course. Any that I missed, Patrick?

Thanks for indulging me with all those details. Really appreciate it and best of luck.

[Operator Instructions] The next question is from Jeffrey Stevenson from Loop Capital.

Congrats on the nice results. I just had one, and Steve, you highlighted share gains with strategic accounts in your opening remarks. Just wondered if you could provide any more color on the primary opportunities for farther share gain opportunities with key accounts over the midterm, just given your diverse customer base.

Yes. We really look at the share gains, particularly with the contractors that are doing a lot of this work that are traveling across the country to work on treatment plant projects, particularly those in design build, whether it's a Garney construction or Archer Western. All of them are looking for consistency in delivery and execution with a national focus, but then ultimately when it comes time to fulfillment at the local levels, being able to do that. With our branch structure now, well over 300 branches, our ability to serve and fulfill through all of those different locations has given us a real powerful competitive advantage in being able to continue to grow with those contractors as we do that. So we're encouraged by what we're seeing there. There's a lot of treatment plant and wastewater treatment plant being sketched out over the next several years. The pipeline for these things can be three to five years in terms of timing for a lot of these projects. A lot of the work that we've done over the last several years has certainly allowed us to continue to grow and the pipeline looks really strong for those projects going forward.

We currently have no further questions. I will hand back to Steve LeClair to conclude.

Thank you all again for joining us today. It was a pleasure to have you on the call. Fiscal 2023 was an outstanding year for Core & Main. We are well positioned to build on our momentum and we have a strong outlook for fiscal 2024. We are confident that our strategy will drive ongoing value creation as we continue to execute our growth strategies and deliver on our capital allocation priorities. We have more levers than ever for driving growth and profitability, the cash flow generation to capitalize on it, and the team to execute it. Thank you for your interest in Core & Main. Operator, that concludes our call.

This concludes today's call. Thank you for joining. You may now disconnect your lines.