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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For transition period from         to
Commission File Number 001-40650
cnm-20211031_g1.jpg
Core & Main, Inc.
(Exact name of registrant as specified in its charter)
Delaware86-3149194
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
1830 Craig Park Court
St. Louis, Missouri 63146
(314) 432-4700
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Class A common stock, par value $0.01 per shareCNMThe New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes No
As of December 7, 2021, there were 160,067,161 shares of the registrant’s Class A common stock, par value $0.01 per share, and 85,853,383 shares of the registrant’s Class B common stock, par value $0.01 per share, outstanding.



Table of Contents

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include, without limitation, all statements other than statements of historical facts contained in this Quarterly Report, including statements relating to our intentions, beliefs, assumptions or current expectations concerning, among other things, our future results of operations and financial position, business strategy and plans and objectives of management for future operations, including, among others, statements regarding expected growth, future capital expenditures and debt service obligations, and the anticipated impact of the novel coronavirus, or COVID-19, on our business, are forward-looking statements.
Some of the forward-looking statements can be identified by the use of forward-looking terms such as “believes,” “expects,” “may,” “will,” “shall,” “should,” “would,” “could,” “seeks,” “aims,” “projects,” “is optimistic,” “intends,” “plans,” “estimates,” “anticipates” or the negative versions of these words or other comparable terms.
Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be outside our control and may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We caution you that forward-looking statements are not guarantees of future performance or outcomes and that actual performance and outcomes, including, without limitation, our actual results of operations, financial condition and liquidity, and the development of the market in which we operate, may differ materially from those made in or suggested by the forward-looking statements contained in this Quarterly Report on Form 10-Q. In addition, even if our results of operations, financial condition and cash flows, and the development of the market in which we operate, are consistent with the forward-looking statements contained in this Quarterly Report on Form 10-Q, those results or developments may not be indicative of results or developments in subsequent periods. A number of important factors, including, without limitation, the risks and uncertainties discussed under the captions “Risk Factors” in our prospectus (File No. 333-256382), dated July 22, 2021, filed with the Securities and Exchange Commission (“SEC”) pursuant to Rule 424(b) under the Securities Act on July 26, 2021 (the “Prospectus”) and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q, could cause actual results and outcomes to differ materially from those reflected in the forward-looking statements. Furthermore, new risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. Factors that could cause actual results and outcomes to differ from those reflected in forward-looking statements include, without limitation:

declines, volatility and cyclicality in the U.S. residential and non-residential construction markets;
slowdowns in municipal infrastructure spending and delays in appropriations of federal funds;
price fluctuations in our product costs, particularly with respect to the commodity-based products that we sell;
the spread of, and response to, COVID-19, and the inability to predict the ultimate impact on us;
general business and economic conditions;
risks involved with acquisitions and other strategic transactions, including our ability to identify, acquire, close or integrate acquisition targets successfully;
the impact of seasonality and weather-related impacts, including natural disasters or similar extreme weather events;
the fragmented and highly competitive markets in which we compete and consolidation within our industry;
our ability to competitively bid for municipal contracts;
the development of alternatives to distributors of our products in the supply chain;
our ability to hire, engage and retain key personnel, including sales representatives, qualified branch, district and region managers and senior management;
our ability to identify, develop and maintain relationships with a sufficient number of qualified suppliers and the potential that our exclusive or restrictive supplier distribution rights are terminated;
the availability and cost of freight and energy, such as fuel;
the ability of our customers to make payments on credit sales;
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our ability to identify and introduce new products and product lines effectively;
our ability to manage our inventory effectively, including during periods of supply chain disruptions;
costs and potential liabilities or obligations imposed by environmental, health and safety laws and requirements;
regulatory change and the costs of compliance with regulation;
exposure to product liability, construction defect and warranty claims and other litigation and legal proceedings;
potential harm to our reputation;
difficulties with or interruptions of our fabrication services;
safety and labor risks associated with the distribution of our products as well as work stoppages and other disruptions due to labor disputes;
impairment in the carrying value of goodwill, intangible assets or other long-lived assets;
the domestic and international political environment with regard to trade relationships and tariffs, as well as difficulty sourcing products as a result of import constraints;
our ability to operate our business consistently through highly dispersed locations across the United States;
interruptions in the proper functioning of our IT systems, including from cybersecurity threats;
risks associated with raising capital;
our ability to continue our customer relationships with short-term contracts;
changes in vendor rebates or other terms of our vendor agreements;
risks associated with exporting our products internationally;
our ability to renew or replace our existing leases on favorable terms or at all;
our ability to maintain effective internal controls over financial reporting and remediate any material weaknesses;
our substantial indebtedness and the potential that we may incur additional indebtedness;
the limitations and restrictions in the agreements governing our indebtedness, the Second Amended and Restated Agreement of Limited Partnership of Holdings and the Tax Receivable Agreements (each as defined herein);
increases in interest rates and the impact of transitioning from LIBOR (as defined herein) as the benchmark rate in contracts;
changes in our credit ratings and outlook;
our ability to generate the significant amount of cash needed to service our indebtedness;
our organizational structure, including our payment obligations under the Tax Receivable Agreements, which may be significant;
the significant influence that CD&R (as defined herein) has over us and potential conflicts between the interests of CD&R and other stockholders; and
risks related to other factors discussed under “Risk Factors” in the Prospectus.
You should read this Quarterly Report on Form 10-Q completely and with the understanding that actual future results may be materially different from expectations. All forward-looking statements made in this Quarterly Report on Form 10-Q are qualified by these cautionary statements. These forward-looking statements are made only as of the date of this Quarterly Report on Form 10-Q, and we do not undertake any obligation, other than as may be required by law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, and changes in future operating results over time or otherwise.
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PART I - FINANCIAL STATEMENTS

Item 1. Financial Statements
CORE & MAIN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
Amounts in millions (except share and per share data), unaudited
October 31, 2021January 31, 2021
ASSETS
Current assets:
Cash and cash equivalents$4.9 $380.9 
Receivables, net of allowance for credit losses of $5.4 and $4.6
946.1 556.8 
Inventories721.2 383.8 
Prepaid expenses and other current assets24.7 15.6 
Total current assets1,696.9 1,337.1 
Property, plant and equipment, net90.7 86.2 
Operating lease right-of-use assets158.7 128.5 
Intangible assets, net899.3 919.2 
Goodwill1,515.4 1,452.7 
Other assets19.8  
Total assets$4,380.8 $3,923.7 
LIABILITIES AND PARTNERS’ CAPITAL/STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt$15.0 $13.0 
Accounts payable613.3 325.7 
Accrued compensation and benefits97.6 70.7 
Current operating lease liabilities48.7 42.8 
Other current liabilities68.0 70.1 
Total current liabilities842.6 522.3 
Long-term debt1,459.0 2,251.7 
Non-current operating lease liabilities110.1 85.9 
Deferred income taxes97.7 232.1 
Payable to related parties pursuant to Tax Receivable Agreements91.8  
Other liabilities20.9 31.0 
Total liabilities2,622.1 3,123.0 
Commitments and contingencies
Partners’ capital— 800.7 
Class A common stock, par value $0.01 per share, 1,000,000,000 shares authorized, 160,067,161 shares issued and outstanding as of October 31, 2021
1.6 — 
Class B common stock, par value $0.01 per share, 500,000,000 shares authorized, 85,853,383 shares issued and outstanding as of October 31, 2021
0.9 — 
Additional paid-in capital1,168.7 — 
Retained earnings44.4 — 
Accumulated other comprehensive income7.7 — 
Total partners’ capital/stockholders’ equity attributable to Core & Main, Inc.1,223.3 800.7 
Non-controlling interests535.4  
Total partners’ capital/stockholders’ equity 1,758.7 800.7 
Total liabilities and partners’ capital/stockholders’ equity$4,380.8 $3,923.7 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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CORE & MAIN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Amounts in millions (except share and per share data), unaudited

Three Months EndedNine Months Ended
October 31, 2021November 1, 2020October 31, 2021November 1, 2020
Net sales$1,404.8 $1,012.5 $3,757.5 $2,810.5 
Cost of sales1,034.2 768.1 2,804.9 2,136.3 
Gross profit370.6 244.4 952.6 674.2 
Operating expenses:
Selling, general and administrative187.9 144.8 533.6 418.6 
Depreciation and amortization35.2 34.9 102.6 102.7 
Total operating expenses223.1 179.7 636.2 521.3 
Operating income147.5 64.7 316.4 152.9 
Interest expense13.0 35.6 85.3 103.8 
Loss on debt modification and extinguishment0.3  50.7  
Income before provision for income taxes134.2 29.1 180.4 49.1 
Provision for income taxes24.9 7.5 34.2 12.6 
Net income109.3 $21.6 146.2 $36.5 
Less: net income attributable to non-controlling interests (1)
44.9 27.9 
Net income attributable to Core & Main, Inc. (1)
$64.4 $118.3 
Earnings per share (2)
Basic$0.41 $0.27 
Diluted$0.39 $0.26 
Number of shares used in computing EPS (2)
Basic158,986,524 156,869,487 
Diluted244,582,116 243,080,600 

(1) Prior to the Reorganization Transactions, as described in Note 1, there was no income attributable to Core & Main, Inc. See Note 1 for a description of the Basis of Presentation of the consolidated financial statements.

(2) Represents basic and diluted earnings per share of Class A common stock and weighted average shares of Class A common stock outstanding for the three months ended October 31, 2021 and the period from July 23, 2021 through October 31, 2021, which is the period following the Reorganization Transactions described in Note 1. The Company analyzed the calculation of earnings per share for the periods prior to the Reorganization Transactions and determined that it resulted in values that would not be meaningful to the users of the condensed consolidated financial statements. Therefore, there is no earnings per share attributable to Core & Main, Inc. for the periods prior to the Reorganization Transactions on July 22, 2021.















The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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CORE & MAIN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Amounts in millions, unaudited

Three Months EndedNine Months Ended
October 31, 2021November 1, 2020October 31, 2021November 1, 2020
Net income$109.3 $21.6 $146.2 $36.5 
Net interest rate swap gain, net of tax expense of $(2.8), $(0.3), $(4.0) and $(0.2)
14.4 1.8 21.0 1.0 
Total comprehensive income 123.7 $23.4 167.2 $37.5 
Less: comprehensive income attributable to non-controlling interests50.8 35.1 
Total comprehensive income attributable to Core & Main, Inc.$72.9 $132.1 









































The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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CORE & MAIN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS CAPITAL/
STOCKHOLDERS EQUITY
Amounts in millions (except share and per share data), unaudited

Class A
Common Stock
Class B
Common Stock
Partners’ CapitalSharesAmountSharesAmountAdditional
Paid In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Retained EarningsNon-Controlling
Interests
Total
Stockholders’
Equity/
Partners’
Capital
Balances at January 31, 2021
$800.7  $  $ $ $ $ $ $800.7 
Equity investment from partners0.3 — — — — — — — — 0.3 
Equity-based compensation1.0 — — — — — — — — 1.0 
Net income attributable to partners' capital27.4 — — — — — — — — 27.4 
Net interest rate swap gain, net of tax1.9 — — — — — — — — 1.9 
Distributions to partners(10.4)— — — — — — — — (10.4)
Balances at May 2, 2021820.9         820.9 
Equity-based compensation14.0 — — — — — — — — 14.0 
Net income attributable to partners' capital46.5 — — — — — — — — 46.5 
Net interest rate swap gain, net of tax1.7 — — — — — — — — 1.7 
Distributions to partners(12.5)— — — — — — — — (12.5)
Balances at July 22, 2021 prior to Reorganization Transactions and IPO870.6         870.6 
Reclassification of partners’ capital(870.6)— — — — 870.6 — — —  
Reorganization transactions— 119,950,882 1.2 85,853,383 0.9 (2.1)— — —  
Reclassification of non-controlling interests upon reorganization— — — — — (299.5)(2.3)— 301.8  
Issuance of Class A Shares, net of issuance costs— 34,883,721 0.3 — — 655.6 — — — 655.9 
Non-controlling interests adjustment for purchase of Partnership Interests from Core & Main Holdings, LP— — — — — (180.1)(0.2)— 180.3  
Adjustment of deferred tax liability associated with Core & Main investment in Core & Main Holdings, LP— — — — — 139.6 — — — 139.6 
Impact of Former Limited Partners Tax Receivable Agreement— — — — — (88.6)— — — (88.6)
Net loss— — — — — — — (20.0)(17.0)(37.0)
Equity-based compensation— — — — — 2.9 — — 1.6 4.5 
Net old interest rate swap gain, net of tax— — — — — — 2.5 — 1.8 4.3 
Net new interest rate swap loss, net of tax— — — — — — (0.8)— (0.5)(1.3)
Non-controlling interests adjustment for vesting of Core & Main Holdings, LP Partnership Interests held by non-controlling interests— — — — — (8.1)— — 8.1  
Balances at August 1, 2021 154,834,603 1.5 85,853,383 0.9 1,090.3 (0.8)(20.0)476.1 1,548.0 
Net income— — — — — — — 64.4 44.9 109.3 
Equity-based compensation— — — — — 1.8 — — 0.9 2.7 
Net new interest rate swap gain, net of tax— — — — — — 8.5 — 5.9 14.4 
Distributions to non-controlling interest holders— — — — — — — — (16.1)(16.1)
Issuance of Class A Shares, net of issuance costs— 5,232,558 0.1 — — 99.4 — — — 99.5 
Adjustment of deferred tax liability associated with Core & Main investment in Core & Main Holdings, LP— — — — — 4.1 — — — 4.1 
Impact of Former Limited Partners Tax Receivable Agreement— — — — — (3.2)— — — (3.2)
Non-controlling interests adjustment for purchase of Partnership Interests and vesting of Core & Main Holdings, LP Partnership Interests held by non-controlling interests— — — — — (23.7)— — 23.7  
Balances at October 31, 2021$ 160,067,161 $1.6 85,853,383 $0.9 $1,168.7 $7.7 $44.4 $535.4 $1,758.7 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
CORE & MAIN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS CAPITAL/
STOCKHOLDERS EQUITY (continued)
Amounts in millions, unaudited

Class A
Common Stock
Class B
Common Stock
Partners’ CapitalSharesAmountSharesAmountAdditional
Paid In
Capital
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Non-Controlling
Interests
Total
Stockholders’
Equity/
Partners’
Capital
Balances at February 2, 2020
$770.5  $  $ $ $ $ $ $770.5 
Equity investment from partners0.7 — — — — — — — — 0.7 
Equity-based compensation1.0 — — — — — — — — 1.0 
Net loss attributable to partners’ capital(3.2)— — — — — — — — (3.2)
Net interest rate swap loss, net of tax(2.4)— — — — — — — — (2.4)
Distributions to partners(0.2)— — — — — — — — (0.2)
Balances at May 3, 2020766.4         766.4 
Equity investment from partners0.1 — — — — — — — — 0.1 
Equity-based compensation1.0 — — — — — — — — 1.0 
Net income attributable to partners’ capital18.1 — — — — — — — — 18.1 
Net interest rate swap gain, net of tax1.6 — — — — — — — — 1.6 
Distributions to partners(6.6)— — — — — — — — (6.6)
Balances at August 2, 2020780.6         780.6 
Equity-based compensation1.1 — — — — — — — — 1.1 
Net income attributable to partners’ capital21.6 — — — — — — — — 21.6 
Unrealized derivative gain, net of tax1.8 — — — — — — — — 1.8 
Distributions to partners(3.0)— — — — — — — — (3.0)
Balances at November 1, 2020$802.1  $  $ $ $ $ $ $802.1 

























The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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CORE & MAIN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Amounts in millions, unaudited
Nine Months Ended
October 31, 2021November 1, 2020
Cash Flows From Operating Activities:
Net income$146.2 $36.5 
Adjustments to reconcile net cash from operating activities:
Depreciation and amortization112.3 114.3 
Provision for bad debt1.4 2.1 
Non-cash inventory charge0.8 0.6 
Equity-based compensation expense22.2 3.1 
Loss on debt modification and extinguishment 48.7  
Other(8.2)(0.5)
Changes in assets and liabilities:
(Increase) decrease in receivables(373.8)(107.0)
(Increase) decrease in inventories(304.7)(34.0)
(Increase) decrease in other assets(8.2)3.4 
Increase (decrease) in accounts payable278.9 121.1 
Increase (decrease) in accrued liabilities18.9 0.7 
Increase (decrease) in other liabilities(0.7)13.9 
Net cash (used in) provided by operating activities(66.2)154.2 
Cash Flows From Investing Activities:
Capital expenditures(12.0)(8.3)
Acquisitions of businesses, net of cash acquired(172.2)(217.2)
Settlement of interest rate swap(5.2) 
Proceeds from the sale of property and equipment0.5 0.2 
Net cash used in investing activities(188.9)(225.3)
Cash Flows From Financing Activities:
IPO proceeds, net of underwriting discounts and commissions663.7  
Offering proceeds from underwriters’ option, net of underwriting discounts and commissions99.5  
Payments for offering costs(7.8) 
Investments from non-controlling interest holders0.3 0.8 
Distributions to non-controlling interest holders(30.9)(9.8)
Borrowings on asset-based revolving credit facility 460.0 
Repayments on asset-based revolving credit facility (460.0)
Issuance of long-term debt1,500.0 250.0 
Repayments of long-term debt(2,314.8)(9.8)
Payment of contingent consideration(0.3) 
Payment of debt redemption premiums(17.5) 
Debt issuance costs(13.1)(8.1)
Net cash (used in) provided by financing activities(120.9)223.1 
(Decrease) increase in cash and cash equivalents(376.0)152.0 
Cash and cash equivalents at the beginning of the period380.9 180.9 
Cash and cash equivalents at the end of the period$4.9 $332.9 


    

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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CORE & MAIN, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Dollars in millions, except as noted, unaudited

1)    BASIS OF PRESENTATION & DESCRIPTION OF BUSINESS
Organization
Core & Main, Inc. (“Core & Main”) is a Delaware corporation that was incorporated on April 9, 2021 for the purpose of facilitating an initial public offering and other related transactions, as described below, in order to carry on the business of Core & Main Holdings, LP, a Delaware limited partnership (“Holdings”), and its consolidated subsidiaries. Core & Main is a holding company and its sole material asset is its ownership interest in Holdings, a portion of which is held indirectly through CD&R WW, LLC. Holdings has no operations and no material assets of its own other than its indirect ownership interest in Core & Main LP, a Florida limited partnership, the legal entity that conducts the operations of Core & Main. Core & Main, together with its wholly-owned subsidiaries, including Holdings and its consolidated subsidiaries, are referred to as the “Company”.
The Company is a leading specialized distributor of water, wastewater, storm drainage and fire protection products and related services to municipalities, private water companies and professional contractors across municipal, non-residential and residential end markets nationwide. The Company’s specialty products and services are used in the maintenance, repair, replacement, and construction of water and fire protection infrastructure. The Company reaches customers through a nationwide network of approximately 300 branches across 48 states. The Company’s products include pipes, valves, fittings, storm drainage products, fire protection products, meter products and other products for use in the construction, maintenance and repair of water and waste-water systems as well as fire protection systems. The Company has complemented its core products through additional offerings, including smart meter systems, fusible high density polyethylene (“fusible HDPE”) piping solutions and specifically engineered treatment plant products, services and geosynthetics used in erosion control. The Company’s services and capabilities allow for integration with customers and form part of their sourcing and procurement function. All of the Company’s long-lived assets are located within the United States (“U.S.”).
Initial Public Offering
On July 27, 2021, Core & Main completed its initial public offering of 34,883,721 shares of Class A common stock at a price to the public of $20.00 per share (the “IPO”). Core & Main received net proceeds of approximately $663.7 million, after deducting underwriting discounts and commissions. All of the net proceeds from the IPO, less $7.8 million of transactions costs directly attributable to the IPO, were utilized to purchase 34,883,721 newly issued limited partner interests of Holdings (“Partnership Interests”) for approximately $655.9 million in the aggregate. In turn, Holdings and Core & Main LP utilized the net proceeds of the IPO directly or indirectly received from Core & Main in the Refinancing Transactions (as defined below in Note 6), as discussed in Note 6.
On August 20, 2021, Core & Main issued 5,232,558 shares of Class A common stock pursuant to the full exercise of the underwriters’ option to purchase additional shares of Class A common stock in connection with the IPO at the initial public offering price of $20.00 per share before underwriting discounts and commissions (the “IPO Overallotment Option Exercise”). Core & Main received net proceeds of approximately $99.5 million after deducting underwriting discounts and commissions. All of the net proceeds were utilized to purchase 5,232,558 newly issued Partnership Interests of Holdings at a price per unit equal to the public offering price per share less underwriting discounts and commissions. In turn, Holdings and Core & Main LP utilized the net proceeds of the IPO Overallotment Option Exercise directly or indirectly received from Core & Main for general corporate purposes.
Reorganization Transactions
In connection with the IPO, the Company completed the following transactions (collectively the “Reorganization Transactions”):

the formation of Core & Main as a Delaware corporation to function as the direct and indirect parent of Holdings and a publicly traded entity;
the amendment and restatement of the limited partnership agreement of Holdings to, among other things first, modify the capital structure of Holdings and second, admit Core & Main as the general partner and a limited partner of Holdings;
Core & Main’s acquisition of the Partnership Interests held by certain Former Limited Partners (as defined below) and the issuance of Class A common stock to the Former Limited Partners, pursuant to the mergers of CD&R WW Advisor, LLC and CD&R WW Holdings, LLC (the “Blocker Companies”) with and into Core & Main via merger subsidiaries of Core & Main (the “Blocker Mergers”); and
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entry into a Master Reorganization Agreement, dated as of July 22, 2021 (the “Master Reorganization Agreement”), with Holdings, the Continuing Limited Partners (as defined below), the Blocker Companies, CD&R Waterworks Holdings GP, CD&R Associates X Waterworks, L.P., CD&R WW Holdings, L.P., Core & Main GP, LLC, CD&R Plumb Buyer, LLC, CD&R Fund X Advisor Waterworks B, L.P., CD&R Fund X Waterworks B1, L.P., CD&R Fund X-A Waterworks B, L.P., CD&R WW, LLC, Brooks Merger Sub 1, Inc. and Brooks Merger Sub 2, Inc. Pursuant to the Master Reorganization Agreement, the Former Limited Partners received Partnership Interests in exchange for their indirect ownership interests in Holdings and exchanged these Partnership Interests for shares of Class A common stock of Core & Main prior to the consummation of the IPO.
The Former Limited Partners are defined as CD&R Fund X Advisor Waterworks B, L.P., CD&R Fund X Waterworks B1, L.P., CD&R Fund X-A Waterworks B, L.P. and the other Original Limited Partners (as defined below) that transferred all or a portion of their Partnership Interests (including those held indirectly through the Blocker Companies) for shares of Class A common stock in connection with the Reorganization Transactions and the IPO, and represent entities that transferred all of their Partnership Interests (including Partnership Interests held indirectly through certain “blocker” corporations) for shares of Class A common stock in connection with the consummation of the Reorganization Transactions.
The Continuing Limited Partners are defined as CD&R Waterworks Holdings, LLC (“CD&R Waterworks Holdings”) and Core & Main Management Feeder, LLC (“Management Feeder”), and represent the Original Limited Partners that continued to own Partnership Interests after the Reorganization Transactions and that are entitled to exchange their Partnership Interests, together with the retirement of a corresponding number of shares of Class B common stock for shares of Class A common stock.
The Original Limited Partners are defined as CD&R Waterworks Holdings, the Former Limited Partners and Management Feeder and represent the direct and indirect owners of Holdings prior to the Reorganization Transactions and the IPO.
Immediately following and as a result of the IPO and Reorganization Transactions and the use of proceeds therefrom as described above:
the investors in the IPO collectively held 34,883,721 shares of Class A common stock and, following the closing of the issuance and sale of an additional 5,232,558 shares of Class A common stock on August 20, 2021 pursuant to the IPO Overallotment Option Exercise, collectively held 40,116,279 shares of Class A common stock;
the Former Limited Partners collectively held 119,950,882 shares of Class A common stock;
Core & Main, directly or indirectly through its wholly-owned subsidiary, held 154,834,603 Partnership Interests and, following the closing of the issuance and sale of an additional 5,232,558 shares of Class A common stock described above and the issuance of an additional 5,232,558 Partnership Interests from Holdings to Core & Main, held 160,067,161 Partnership Interests; and
the Continuing Limited Partners collectively held 85,853,383 Partnership Interests and 85,853,383 shares of Class B common stock.
Core & Main is a holding company whose sole material asset is its direct and indirect ownership interest in Holdings, which also is a holding company and indirectly holds the sole equity interests in the Company’s operating subsidiary. Because Core & Main is the general partner of Holdings, it operates and controls all of the business and affairs of Holdings, and through Holdings and its subsidiaries, conducts the Company’s business. Accordingly, Core & Main consolidates Holdings on its consolidated financial statements and records a non-controlling interest related to the Partnership Interests held by the Continuing Limited Partners on its consolidated statements of operations and comprehensive income. The ownership interest of the Continuing Limited Partners related to Partnership Interests held by the Continuing Limited Partners is reflected as non-controlling interests in Core & Main’s condensed consolidated financial statements.
As the Reorganization Transactions are accounted for as transactions between entities under common control, the financial statements for the periods prior to the IPO and Reorganization Transactions have been adjusted to combine previously separate entities for presentation purposes. These entities include Core & Main, Holdings and its consolidated subsidiaries and the Blocker Companies. Prior to the Reorganization Transactions, Core & Main had no operations and the Blocker Companies were holding companies for indirect investments in Holdings. The Blocker Companies had no operations but did receive distributions from Holdings associated with their tax obligations from allocations of Holdings' taxable income. As such, the Blocker Companies' financial statements reflected tax provisions and operating cash outflows for payments to taxing authorities. Their balance sheets collectively included $330.0 million of goodwill and deferred tax liabilities and equity. In connection with the Blocker Mergers, Core & Main assumed the balance sheets of the Blocker Companies.

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Basis of Presentation
The accompanying unaudited condensed consolidated financial statements present the results of operations, financial position and cash flows of Core & Main and its subsidiaries, which includes the consolidated financial statements of Holdings and its consolidated subsidiary, Core & Main LP, as the legal entity that conducts the operations of the Company. Holdings is considered a variable interest entity. Core & Main is the primary beneficiary and general partner of Holdings and has decision making authority that significantly affects the economic performance of the entity. As a result, Core & Main consolidates the consolidated financial statements of Holdings. All intercompany balances and transactions have been eliminated in consolidation. The Company records non-controlling interests related to Partnership Interest held by the Continuing Limited Partners in Holdings.
For the periods prior to the Reorganization Transactions, the condensed consolidated financial statements of the Company include the Blocker Companies, which were merged into Core & Main as part of the Blocker Mergers.
In management’s opinion, the unaudited condensed consolidated financial information for the interim periods presented include all normal recurring adjustments necessary for a fair statement of the Company's results of operations, financial position and cash flows, which include all disclosures required by accounting principles generally accepted in the United States of America (“U.S. GAAP”). Revenues, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim unaudited condensed consolidated financial statements may not be the same as those for the full year. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Holdings audited consolidated financial statements and the related notes thereto as of and for the fiscal year ended January 31, 2021 included in the prospectus (File No. 333-256382), dated July 22, 2021, filed with the Securities and Exchange Commission (the “SEC”) pursuant to Rule 424(b) under the Securities Act of 1933, as amended, on July 26, 2021 (the “Prospectus”).
Segments
The Company’s chief operating decision maker (“CODM”) manages the business as a single operating and reportable segment. The Company operates approximately 300 branch locations across the U.S. The nature of the products and services, vendors, customers and distribution methods are similar across branches. Accordingly, the CODM evaluates the performance of the business and makes management decisions on a consolidated basis. Performance is most notably measured based on Adjusted EBITDA at the consolidated level. The consolidated performance of the Company is utilized to determine incentive compensation for executive officers, annual merit decisions, management of national vendor relationships, allocation of resources and in evaluating acquisitions and the Company's capital structure.
Fiscal Year
The Company’s fiscal year is a 52- or 53-week period ending on the Sunday nearest to January 31st. Quarters within the fiscal year include 13-week periods, unless a fiscal year includes a 53rd week, in which case the fourth quarter of the fiscal year will be a 14-week period. Both the three months ended October 31, 2021 and three months ended November 1, 2020 included 13 weeks, and both the nine months ended October 31, 2021 and nine months ended November 1, 2020 included 39 weeks. The current fiscal year ending January 30, 2022 (“fiscal 2021”) will include 52 weeks.
Estimates
Management has made a number of estimates and assumptions relating to the reporting of certain assets and liabilities, the disclosure of contingent assets and liabilities, and reported amounts of revenues and expenses in preparing the elements of these financial statements in conformity with U.S. GAAP. Actual results could differ from these estimates.
Accounting Policies
The Company’s significant accounting policies are discussed in Note 2 to Holdings' audited consolidated financial statements in the Prospectus. There have been no significant changes to these policies which have had a material impact on the Company’s interim unaudited condensed consolidated financial statements and related notes during the three and nine months ended October 31, 2021, except as noted below.




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Income Taxes
As a result of the Reorganization Transactions, Core & Main became the general partner of Holdings, which is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, Holdings is generally not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss from Holdings is passed through to and included in the taxable income or loss of its partners, including Core & Main, following the Reorganization Transactions. Core & Main is subject to U.S. federal income taxes, in addition to state and local income taxes, with respect to Core & Main’s allocable share of any taxable income or loss of Holdings following the Reorganization Transactions.
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in income in the period that includes the enactment date.
The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies and results of recent operations. If it is determined that the Company is not able to realize deferred tax assets in the future, a valuation allowance would be established, which would impact the provision for income taxes.
Uncertain tax positions are recorded on the basis of a two-step process in which (1) it is determined if a tax position is more-likely-than-not of being sustained on the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority. The Company records interest and penalties related to uncertain tax positions in the provision for income taxes in the unaudited Condensed Consolidated Statements of Operations.
The tax provision for interim periods is determined using an estimate of the Company's annual effective tax rate, adjusted for discrete items, if any, that arise during the period. Each quarter, the Company updates its estimate of its annual effective tax rate, and if the estimated annual effective tax rate changes, the Company makes a cumulative adjustment in such period. The quarterly tax provision, and estimate of the Company's annual effective tax rate, are subject to variation due to several factors, including variability in pre-tax income (or loss), the mix of jurisdictions to which such income relates, changes in how the Company conducts business, and tax law developments.
Tax Receivable Agreements
In connection with the Reorganization Transactions and the IPO, Core & Main entered into a tax receivable agreement with the Former Limited Partners (the “Former Limited Partners Tax Receivable Agreement”) and a tax receivable agreement with the Continuing Limited Partners (the “Continuing Limited Partners Tax Receivable Agreement”) (collectively, the “Tax Receivable Agreements”). Under these agreements, Core & Main expects to generate tax attributes that will reduce amounts that it would otherwise pay in the future to various tax authorities.
The Former Limited Partners Tax Receivable Agreement provides for the payment by Core & Main to certain Former Limited Partners, or their permitted transferees, of 85% of the tax benefits, if any, that Core & Main actually realizes, or in some circumstances is deemed to realize, as a result of (i) certain tax attributes of the Partnership Interests Core & Main holds in respect of such Former Limited Partners’ interest in Core & Main, including such attributes which resulted from such Former Limited Partners’ prior acquisition of ownership interests in Holdings and Core & Main's allocable share of existing tax basis acquired in connection with the IPO attributable to the Former Limited Partners and (ii) certain other tax benefits.








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The Continuing Limited Partners Tax Receivable Agreement provides for the payment by Core & Main to the Continuing Limited Partners, or their permitted transferees, of 85% of the benefits, if any, that Core & Main realizes, or in some circumstances is deemed to realize, as a result of (i) increases in tax basis or other similar tax benefits as a result of exchanges of Partnership Interests for cash or shares of Class A common stock pursuant to the Exchange Agreement, dated as of July 22, 2021 (the “Exchange Agreement”), by and among Core & Main, Holdings, CD&R Waterworks Holdings and Management Feeder, (ii) Core & Main’s allocable share of existing tax basis acquired in connection with the IPO attributable to the Continuing Limited Partners and in connection with exchanges of Partnership Interests for cash or shares of Class A common stock pursuant to the Exchange Agreement and (iii) Core & Main’s utilization of certain other tax benefits related to Core & Main's entering into the Continuing Limited Partners Tax Receivable Agreement, including tax benefits attributable to payments under the Continuing Limited Partners Tax Receivable Agreement. Core & Main expects to obtain an increase in its share of the tax basis in the net assets of Holdings as Partnership Interests are exchanged by Continuing Limited Partners. Core & Main intends to treat any exchanges of Partnership Interests as direct purchases of Partnership Interests for U.S. federal income tax purposes. These increases in tax basis may reduce the amounts that it would otherwise pay in the future to various tax authorities.
Core & Main will receive the full benefit in tax savings from relevant taxing authorities and provide payment of 85% of the amount of any tax benefits Core & Main actually realizes to the Former Limited Partners or the Continuing Limited Partners, as applicable, or their permitted transferees. Core & Main expects to benefit from the remaining 15% of any cash tax savings that it realizes. For the Tax Receivable Agreements, Core & Main will assess the tax attributes to determine if it is more likely than not that the benefit of any deferred tax assets will be realized. Following that assessment, Core & Main will recognize a liability under the applicable Tax Receivable Agreements, reflecting approximately 85% of the expected future realization of such tax benefits. Amounts payable under the Tax Receivable Agreements are contingent upon, among other things, (i) generation of sufficient future taxable income during the term of the applicable Tax Receivable Agreements and (ii) future changes in tax laws.
Equity-Based Compensation
The Company recognizes the cost of employee services received in exchange for awards of equity instruments based on the grant date fair value of those awards. That cost is recognized over the requisite service period (generally the vesting period), which is the period during which an employee is required to provide service in exchange for the award.
In connection with the Reorganization Transactions, which included the recapitalization of Management Feeder and entry into the Exchange Agreement, the equity awards issued by Holdings and held by Management Feeder were deemed to be modified for accounting purposes. The Company calculated the incremental fair value associated with the modification and will recognize this incremental fair value immediately for each vested award with no remaining service period and over the remaining service period associated with each unvested award. The incremental fair value associated with previously vested awards was expensed immediately as there was no remaining service period.
Basic and Diluted Earnings per Share
Basic earnings per share is computed by dividing net income attributable to Core & Main for the period following the Reorganization Transactions by the weighted average number of shares of Class A common stock outstanding during the same period. Shares of Class A common stock issued during that period, including shares of Class A common stock issued in the IPO and the IPO Overallotment Option Exercise, were weighted for the portion of that period in which the shares of Class A common stock were outstanding. The Company did not apply the two-class method because shares of Class B common stock do not participate in earnings or losses of Core & Main. As a result, no earnings per share of Class B common stock were presented. Net income allocated to holders of non-controlling interests was excluded from net income available to the Class A common stock. There were no preferred dividends and no shares of preferred stock outstanding for the period.
The diluted net earnings per share calculation includes the basic weighted average number of shares of Class A common stock outstanding plus the dilutive impact of potential outstanding shares of Class A common stock that would be issued upon exchange of Partnership Interests together with the retirement of a corresponding number of shares of Class B common stock, under the if-converted method, if dilutive. The treasury stock method is applied to outstanding awards, including unvested Partnership Interests and outstanding stock appreciation rights.




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Non-controlling Interests
The non-controlling interests represent the Partnership Interests of Holdings held by the Continuing Limited Partners. Income or loss is attributed to the non-controlling interests based on the weighted average percentage of Partnership Interests held by Continuing Limited Partners, excluding unvested Partnership Interests held by Management Feeder, relative to all Partnership Interests of Holdings during the period following the Reorganization Transactions. Non-controlling interests presented in the consolidated Balance Sheets represents, the ownership percentage of Partnership Interests held by Continuing Limited Partners as of the balance sheet date multiplied by the equity of Holdings, prior to distributions, less distributions to non-controlling interest holders. The non-controlling interests’ ownership percentage may fluctuate over time as the Continuing Limited Partners exchange Partnership Interests, together with the retirement of a corresponding number of shares of Class B common stock, for shares of Class A common stock and Partnership Interests held by Management Feeder vest.

2)    RECENT ACCOUNTING PRONOUNCEMENTS
Cloud computing arrangements - In August 2018, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” (“ASU 2018-15”). The new guidance aligns the requirements for capitalizing implementation costs in a cloud computing arrangement service contract with the requirements for capitalizing implementation costs incurred for an internal-use software license. ASU 2018-15 is effective for annual periods beginning after December 15, 2019, and interim periods within these annual periods. The standard permits two approaches, one requiring prospective application to eligible costs incurred on or after the date this guidance is first applied and one requiring retrospective application.
The Company adopted the provisions of ASU 2018-15 during the first quarter of the fiscal year ended January 31, 2021 (“fiscal 2020”) using the prospective method. The adoption of ASU 2018-15 did not have a material impact on the Company's financial position, results of operations or cash flows. The Company made no adjustments to its financial position upon adoption.
Measurement of Credit Losses - In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). The new guidance introduces a new accounting model for recognizing expected credit losses upon the initial recognition of certain financial instruments, including accounts receivable, based on historical information, current information, and forecasted future events. ASU 2016-13 is effective for annual periods beginning after December 15, 2019, and interim periods within these annual periods.
The Company adopted the provisions of ASU 2016-13 during the first quarter of fiscal 2020, using the modified retrospective approach. The adoption of ASU 2016-13 did not result in a material impact to the Company's financial position, results of operations or cash flows upon adoption.
Accounting for Income Taxes - In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes” (“ASU 2019-12”). The amendments in ASU 2019-12 simplify the accounting for income taxes by removing certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside tax basis. The transition requirements are dependent upon each amendment within ASU 2019-12 and will be applied either prospectively or retrospectively. The Company adopted the provisions of ASU 2019-12, during the first quarter of fiscal 2021. The adoption of ASU 2019-12 did not result in a material impact to the Company’s financial position, results of operations or cash flows upon adoption.
Not Yet Adopted
Reference Rate Reform - In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”). The new guidance provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by ASU 2020-04 are effective for prospective contract modifications made and qualifying hedging relationships entered into as of March 12, 2020 through December 31, 2022. As discussed in Note 6, the debt modification performed by the Company on July 27, 2021 did not qualify under the guidance of ASU 2020-04 as the debt and interest rate swap instruments continue to reference LIBOR. At the time of a qualifying transaction and/or modification of debt and interest rate swap instruments to replace LIBOR with a new interest rate index, the Company will consider the application of ASU 2020-04.
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3)    REVENUE
Disaggregation of Revenue
The following table represents net sales disaggregated by product category:
Three Months EndedNine Months Ended
Product CategoryOctober 31, 2021November 1, 2020October 31, 2021November 1, 2020
Pipes, valves & fittings products$943.4 $683.9 $2,536.2 $1,844.2 
Storm drainage products206.3136.2508.8382.8
Fire protection products152.4104.6409.0313.8
Meter products102.787.8303.5269.7
Total Net Sales$1,404.8 $1,012.5 $3,757.5 $2,810.5 

4)    ACQUISITIONS
L&M Acquisition
On August 30, 2021, the Company completed the acquisition of certain assets and assumption of certain liabilities of L&M Bag & Supply Co., Inc. (“L&M”) in a transaction valued up to $60.0 million, subject to working capital adjustments (the “L&M Acquisition”). L&M is a specialized supplier of geotextile fabrics and geogrids, as well as silt fences, turbidity barriers and safety fences, weed control fabric and sod staples. The transaction price was funded with cash on hand.
The following represents the preliminary allocation of the transaction price to the fair value of identifiable assets acquired and liabilities assumed in the L&M Acquisition. The amounts below are preliminary, as the Company is still in the process of completing the valuation of certain tangible and intangible assets acquired as part of the L&M Acquisition.
L&M Acquisition
Accounts receivable$7.1 
Inventories16.2 
Intangible assets19.0 
Goodwill17.8 
Operating lease right-of-use assets2.4 
Other assets, current and non-current4.3 
Total assets acquired66.8 
Accounts payable2.0 
Operating lease liabilities2.4 
Net assets acquired$62.4 
The following reconciles the total consideration to net assets acquired:
L&M Acquisition
Total consideration, net of cash$62.4 
Plus: Cash acquired in acquisition 
Total net assets acquired$62.4 
Pacific Pipe Acquisition
On August 9, 2021, the Company completed the acquisition of all of the outstanding shares of Pacific Pipe Company, Inc. (“Pacific Pipe”) in a transaction valued up to $102.5 million, subject to working capital adjustments (the “Pacific Pipe Acquisition”). Pacific Pipe has four branch locations and serves municipalities and contractors in the water, wastewater, storm drainage and irrigation industries throughout Hawaii with a broad product offering. The transaction price was funded with cash on hand.
The following represents the preliminary allocation of the transaction price to the fair value of identifiable assets acquired and liabilities assumed in the Pacific Pipe Acquisition. The amounts below are preliminary, as the Company is still in the process of completing the valuation of certain tangible and intangible assets acquired as part of the Pacific Pipe Acquisition.
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Pacific Pipe Acquisition
Cash$1.7 
Accounts receivable8.9 
Inventories16.9 
Intangible assets46.7 
Goodwill43.0 
Operating lease right-of-use assets16.9 
Other assets, current and non-current6.1 
Total assets acquired140.2 
Accounts payable6.0 
Deferred tax liability11.7 
Operating lease liabilities16.9 
Other liabilities, current and non-current0.1 
Net assets acquired$105.5 
The following reconciles the total consideration to net assets acquired:
Pacific Pipe Acquisition
Total consideration, net of cash$103.8 
Plus: Cash acquired in acquisition1.7 
Total net assets acquired$105.5 
In connection with the Pacific Pipe Acquisition, the Company purchased all of the outstanding shares of Pacific Pipe, a corporate entity, and assumed Pacific Pipe’s tax basis in their assets and liabilities. This resulted in the recognition of $11.7 million in deferred tax liabilities as part of the purchase price allocation, as further described in Note 7.
R&B Co.
On March 11, 2020, the Company completed the acquisition of all of the outstanding shares of R&B Co. (“R&B”) in a transaction valued at $215.0 million, subject to a working capital adjustment (the “R&B Acquisition”). The transaction price consisted of $212.0 million of initial cash consideration, subject to working capital adjustments, and $3.0 million of contingent consideration to be paid upon satisfaction of certain conditions to either the sellers of R&B or certain former R&B employees and recognized as compensation expense. During the nine months ended October 31, 2021, the Company settled the R&B contingent consideration liability. This resulted in a financing cash outflow of $0.3 million to the R&B sellers for the nine months ended October 31, 2021. With the R&B Acquisition, the Company added approximately ten branch locations to the business, which expanded the Company's presence in California and strengthened the Company's ability to offer complementary waterworks products and fusible services. The transaction price was funded with cash on hand.
The following represents the final allocation of the transaction price to the fair value of identifiable assets acquired and liabilities assumed in the R&B Acquisition.
R&B Acquisition
Cash$2.7 
Accounts receivable25.0 
Inventories19.8 
Intangible assets114.5 
Goodwill88.4 
Operating lease right-of-use assets9.5 
Other assets, current and non-current10.7 
Total assets acquired270.6 
Accounts payable17.5 
Deferred tax liability31.2 
Operating lease liabilities9.5 
Other liabilities, current and non-current3.6 
Net assets acquired$208.8 
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The following reconciles the total consideration to net assets acquired:
R&B Acquisition
Total consideration, net of cash$207.4 
Plus: Cash acquired in acquisition2.7 
Less: Working capital adjustment(1.3)
Total consideration208.8 
Less: non-cash contingent consideration 
Net assets acquired$208.8 
The R&B Acquisition included a contingent consideration arrangement of up to $3.0 million that was payable to the R&B sellers if certain R&B employees failed to complete a post-acquisition one-year service period. The range of the undiscounted amounts payable by the Company under the contingent consideration agreement was between zero and $3.0 million. The fair value of the contingent consideration recognized on the acquisition date of zero was determined based on the expectation that all former R&B employees would be retained during the one-year retention period (a level 3 fair value measurement based on unobservable inputs).
In connection with the R&B Acquisition, the Company purchased all of the outstanding shares of R&B, a corporate entity, and assumed R&B’s tax basis in their assets and liabilities. This resulted in the recognition of $31.2 million in deferred tax liabilities as part of the purchase price allocation, as further described in Note 7.
Other Acquisitions
During fiscal 2021, the Company completed the acquisition of certain assets and liabilities in transactions valued at $5.8 million, subject to working capital adjustments (the “Other 2021 Acquisitions”). Given the lack of significance of these transactions, a full purchase price allocation has not been presented. However, a substantial portion of the aggregate purchase price was allocated to customer relationships, goodwill and net working capital.
In the above transactions, to the extent applicable, the excess of purchase price over net tangible and intangible assets acquired resulted in goodwill, which represents the assembled workforce and anticipated long-term growth in new markets, customers and products. Goodwill associated with the L&M Acquisition and the Other 2021 Acquisitions are fully deductible by the Company for U.S. income tax purposes.
Pro Forma Financial Information
The following pro forma information presents a summary of the results of operations for the periods indicated as if the Pacific Pipe and L&M acquisitions had been completed as of February 3, 2020 and the R&B Acquisition and associated senior notes issuance had been completed as of February 4, 2019. The pro forma financial information is based on the historical financial information for the Company and Pacific Pipe, L&M and R&B, along with certain pro forma adjustments. These pro forma adjustments consist primarily of:
Increased amortization expense related to the intangible assets acquired in the Pacific Pipe, L&M and R&B acquisitions;
Increased interest expense to reflect the fixed rate notes entered into in connection with the R&B Acquisition including interest and amortization of deferred financing costs;
Reclassification of direct acquisition transaction costs, retention bonuses and inventory fair value adjustments from the period incurred to periods these expenses would have been recognized given the assumed transaction dates identified above;
The related income tax effects of the aforementioned adjustments and legal entity restructuring performed to effect the R&B Acquisition; and
The related income tax effects of the aforementioned adjustments to the provision for income taxes for Core & Main.
The following pro forma information has been prepared for comparative purposes only and is not necessarily indicative of the results of operations as they would have been had the Pacific Pipe, L&M and R&B acquisitions occurred on the assumed dates, nor is it necessarily an indication of future operating results. In addition, the pro forma information does not reflect the cost of any integration activities, benefits from any synergies that may be derived from the Pacific Pipe, L&M and R&B acquisitions or revenue growth that may be anticipated.
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Three Months EndedNine Months Ended
October 31, 2021November 1, 2020October 31, 2021November 1, 2020
Net sales$1,410.8 $1,047.5 $3,834.5