Debt

12 Months Ended

Jan. 28, 2024

Debt Disclosure [Abstract]

Debt

DEBT

Debt consisted of the following:

	January 28, 2024				January 29, 2023
	Principal		Unamortized Discount and Debt Issuance Costs		Principal		Unamortized Discount and Debt Issuance Costs
Current maturities of long-term debt:
Senior Term Loan due July 2028	$	15	$	—	$	15	$	—
Long-term debt:
Senior ABL Credit Facility due July 2026	430		—		—		—
Senior Term Loan due July 2028	1,448		15		1,463		19
	1,878		15		1,463		19
Total	$	1,893	$	15	$	1,478	$	19

The debt obligations as of January 28, 2024 include the following debt agreements:

2028 Senior Term Loan

On July 27, 2021, Core & Main LP entered into a $1,500 million senior term loan, which matures on July 27, 2028 (the “2028 Senior Term Loan”). The 2028 Senior Term Loan was amended on February 26, 2023 in order to implement a forward-looking rate based on Term SOFR in lieu of LIBOR. The 2028 Senior Term Loan requires quarterly principal payments, payable on the last business day of each fiscal quarter in an amount equal to approximately 0.25% of the original principal amount of the 2028 Senior Term Loan. The remaining balance is payable upon final maturity of the 2028 Senior Term Loan on July 27, 2028. The 2028 Senior Term Loan bears interest at a rate equal to (i) Term SOFR plus, in each case, an effective applicable margin of 2.60% or (ii) the base rate, which will be the highest of (x) the corporate base rate established by the administrative agent as its prime rate in effect at its principal office in New York City from time to time, (y) the overnight federal funds rate plus 0.50% per annum and (z) one-month Term SOFR (adjusted for maximum reserves) plus 1.00% per annum, plus, in each case, an applicable margin of 1.50%. The 2028 Senior Term Loan is subject to a Term SOFR “floor” of 0.00%. The weighted average interest rate, excluding the effect of the interest rate swap, of Core & Main LP’s outstanding borrowings under the 2028 Senior Term Loan as of January 28, 2024 was 7.99%. See further discussion of the interest rate swap below. Based on quotes from financial institutions (i.e., level 2 of the fair value hierarchy), the fair value of the 2028 Senior Term Loan was $1,461 million as of January 28, 2024.

Asset-Based Credit Facility

Core & Main LP has a senior asset-based revolving credit facility with a borrowing capacity of up to $1,250 million, subject to borrowing base availability, with a maturity date of July 27, 2026 (the “Senior ABL Credit Facility”). Borrowings under the Senior ABL Credit Facility bear interest at either a Term SOFR rate plus an applicable margin ranging from 1.25% to 1.75%, or an alternate base rate plus an applicable margin ranging from 0.25% to 0.75%, depending on the borrowing capacity under the Senior ABL Credit Facility. Additionally, Core & Main LP pays a fee of 0.25% on unfunded commitments under the Senior ABL Credit Facility. As of January 28, 2024 there was $430 million outstanding under the Senior ABL Credit Facility with a weighted average interest rate of 8.75%. The book value of the Senior ABL Credit Facility approximates the fair value due to the variable interest rate nature of these borrowings.

The aforementioned debt agreements include customary affirmative and negative covenants, which include, among other things, restrictions on Core & Main LP’s ability to pay dividends, create liens, incur additional indebtedness, make investments, dispose of assets and merge or consolidate with any other person. The 2028 Senior Term Loan may require accelerated repayment based upon cash flows generated in excess of operating and investing requirements when the Consolidated Secured Leverage Ratio (as defined in the agreement governing the 2028 Senior Term Loan) is greater than or equal to 3.25. No such repayment was required for any of the periods presented. In addition, the Senior ABL Credit Facility requires Core & Main LP to comply with a consolidated fixed charge coverage ratio of greater than or equal to 1.00 when availability under the Senior ABL Credit Facility is less than 10.0% of the lesser of (i) the then applicable borrowing base or (ii) the then aggregate effective commitments. The Company was in compliance with all debt covenants as of January 28, 2024.

Substantially all of Core & Main LP’s assets are pledged as collateral for the 2028 Senior Term Loan and the Senior ABL Credit Facility.

The aggregate amount of debt payments for the next five fiscal years are as follows:

Fiscal 2024	$	15
Fiscal 2025	15
Fiscal 2026	445
Fiscal 2027	15
Fiscal 2028	1,403

Interest Rate Swaps

On February 28, 2018, Core & Main LP entered into an instrument pursuant to which it made payments to a third party based upon a fixed interest rate of 2.725% and received payments based upon the three-month LIBOR rate, based on a $500 million notional amount, which mirrored then outstanding borrowings under the Prior Term Loan. On July 27, 2021, Core & Main LP repaid the approximately $1,258 million outstanding under the Prior Term Loan and settled the interest rate swap.

	Fiscal Year Ended
Accumulated Other Comprehensive Loss	January 30, 2022
Beginning of period balance	$	(8)
Reclassification of expense to interest expense	4
Loss on debt modification and extinguishment	5
Tax (expense) on interest rate swap adjustments
Reclassification of expense to interest expense	(1)
Loss on debt modification and extinguishment	—
End of period balance	$	—

On July 27, 2021, Core & Main LP entered into an instrument in which it makes payments to a third-party based upon a fixed interest rate and receives payments based upon the one-month LIBOR rate. On February 26, 2023, Core & Main LP amended the terms of this instrument to adjust the fixed interest rate to 0.693% and receive payments based upon the one-month Term SOFR rate, based on notional amounts associated with borrowings under the 2028 Senior Term Loan. The interest rate swap has a notional amount of $900 million as of January 28, 2024. The notional amount decreases to $800 million on July 27, 2024, $700 million on July 27, 2025 through the instrument maturity on July 27, 2026. This instrument is intended to reduce the Company’s exposure to variable interest rates under the 2028 Senior Term Loan. As of January 28, 2024, this instrument resulted in an effective fixed rate of 3.293%, based upon the 0.693% fixed rate plus an effective applicable margin of 2.60%.

The fair value of this cash flow interest rate swap was a $67 million and $84 million asset as of January 28, 2024 and January 29, 2023, respectively, which is included within other assets in the Balance Sheet. The cash flows related to settlement of the interest rate swap are classified in the consolidated statements of cash flows based on the nature of the underlying hedged items. Fair value is based upon the present value of future cash flows under the terms of the contract and observable market inputs (level 2). Significant inputs used in determining fair value include forward-looking one-month Term SOFR rates and the discount rate applied to projected cash flows.

	Fiscal Years Ended
Accumulated Other Comprehensive Income	January 28, 2024		January 29, 2023		January 30, 2022
Beginning of period balance	$	70	$	26	$	—
Measurement adjustment gain for interest rate swap	21		66		28
Reclassification of (income) expense to interest expense	(42)		(13)		3
Tax benefit (expense) on interest rate swap adjustments
Measurement adjustment gain for interest rate swap	(4)		(11)		(4)
Reclassification of (income) expense to interest expense	8		2		(1)
Tax impact of exchange of Partnership Interests	(5)		—		—
End of period balance	$	48	$	70	$	26

As of January 28, 2024, the Company estimates $35 million of the cash flow interest rate swap gains will be reclassified from accumulated other comprehensive income into earnings over the next 12 months.