Income Taxes

12 Months Ended

Feb. 02, 2025

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Core & Main is 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 generated by Holdings is passed through to and included in the taxable income or loss of its partners, including Core & Main. Core & Main is subject to U.S. federal income taxes, in addition to state and local income taxes, with respect to its allocable share of any taxable income of Holdings.

The provision for income taxes consisted of the following:

	Fiscal Years Ended
	February 2, 2025		January 28, 2024		January 29, 2023
Current:
Federal	$	101	$	98	$	110
State	29		28		25
	130		126		135
Deferred:
Federal	11		2		(5)
State	2		—		(2)
	13		2		(7)
Total	$	143	$	128	$	128

The reconciliations of the provision for income taxes at the federal corporate statutory rate of 21% to the tax provision for fiscal 2024, fiscal 2023 and fiscal 2022 are as follows:

	Fiscal Years Ended
	February 2, 2025		January 28, 2024		January 29, 2023
Income taxes at federal statutory rate	21.0	%	21.0	%	21.0	%
State income taxes	4.5		3.5		3.2
Partnership income not subject to U.S. tax	(0.8)		(5.0)		(6.3)
Corporate subsidiary tax	—		(0.3)		0.1
Permanent differences	0.3		0.4		0.3
Other	(0.2)		(0.2)		(0.2)
Total provision	24.8	%	19.4	%	18.1	%

The variations between the Company’s estimated effective tax rate and the U.S. and state statutory rates are primarily due to the portion of the Company’s earnings attributable to non-controlling interests partially offset by certain permanent book-tax differences.

The tax effects of temporary differences that give rise to the deferred tax assets and liabilities were as follows:

	February 2, 2025		January 28, 2024
Deferred Tax Assets:
Basis difference in partnership investments of Core & Main, Inc.	$	503	$	489
Imputed interest on Tax Receivable Agreements	49		48
Intangibles	4		5
Other	2		—
Deferred Tax Liabilities:
Basis difference in partnership investments of Core & Main Buyer, Inc.	(87)		(48)

The Company’s operations have resulted in income, and as such, the Company maintains no valuation allowance against its deferred tax assets.

Core & Main, Inc. Partnership Investment

As part of the reorganization transactions performed at the time of the initial public offering, the Company assumed a deferred tax liability associated with the difference between its financial reporting investment and tax basis in Holdings. The assumed deferred tax liability was adjusted to reflect the initial public offering and subsequent book-tax differences. Subsequent exchanges of Partnership Interests by certain stockholders affiliated with CD&R and Management Feeder that continued to own Partnership Interests beyond the time of the initial public offering created additional tax basis that may reduce taxable income in the future. This resulted in the recognition of deferred tax assets that have been partially offset by incremental recognition of the deferred tax liability assumed at the initial public offering. As of February 2, 2025 and January 28, 2024, the Company had a $503 million and $489 million, respectively, in deferred tax asset associated with the difference between Core & Main’s financial reporting basis and the tax basis of Core & Main’s investment in Holdings.

Buyer Deferred Tax Liability

The Company completed the acquisitions of all the outstanding shares of certain acquired companies through Core & Main Buyer, Inc. (“Buyer”), a wholly-owned subsidiary of the Company. Buyer subsequently contributed these acquired companies to Core & Main LP. As part of the opening balance sheets, Buyer recorded deferred tax liabilities of $41 million during fiscal 2024 related to the difference between Buyer’s financial reporting basis and tax basis of Buyer’s investment in Core & Main LP. The taxable income that is allocated to Buyer, for its contribution of these acquired companies to Core & Main LP, is subject to corporate federal and state income tax in substantially all fifty states. As of February 2, 2025 and January 28, 2024, this deferred tax liability was $87 million and $48 million, respectively.

Tax Receivable Agreements and Reorganization Transactions

The Company is party to the Former Limited Partners Tax Receivable Agreement and the Continuing Limited Partners Tax Receivable Agreement. The Company has generated tax attributes, and expects to generate additional tax attributes with future exchanges of Partnership Interests, that will reduce amounts that it would otherwise pay in the future to various tax authorities. The Tax Receivable Agreements provide payments to the parties subject to the Tax Receivable Agreements, or their permitted transferees, of 85% of the tax benefits realized by the Company, or in some circumstances are deemed to be realized.

The Company recorded payables to related parties pursuant to the Tax Receivable Agreements of $725 million and $717 million as of February 2, 2025 and January 28, 2024, respectively. Payments under the Tax Receivable Agreements within the next 12 months are expected to be $19 million, which is included within other current liabilities in the Balance Sheet.

The actual amount and timing of any potential additional payments under the Tax Receivable Agreements will vary depending upon a number of factors, including the timing of exchanges by the holders of Partnership Interests, the amount of gain recognized by such holders of Partnership Interests, the amount and timing of the taxable income the Company generates in the future and the federal tax rates then applicable. Assuming (i) that Management Feeder exchanged all of their remaining Partnership Interests at $56.44 per share of our Class A common stock (the closing stock price on January 31, 2025), (ii) no material changes in relevant tax law, (iii) a constant corporate tax rate of 25.1%, which represents a pro forma tax rate that includes a provision for U.S. federal income taxes and assumes the highest statutory rate apportioned to each state and local jurisdiction and (iv) that the Company earns sufficient taxable income in each year to realize on a current basis all tax benefits that are subject to the Continuing Limited Partners Tax Receivable Agreement, the Company would recognize a deferred tax asset (subject to offset with existing deferred tax liabilities) of approximately $131 million and a liability of approximately $111 million, payable over the life of the Continuing Limited Partners Tax Receivable Agreement. The full exchange will also decrease Core & Main's aforementioned deferred tax asset associated with its investment in Holdings by $5 million, as Core & Main recognizes the deferred tax consequences associated with the non-controlling Partnership Interests being exchanged. These amounts are estimates only and are subject to change.

Uncertain tax positions

Total gross unrecognized tax benefits as of February 2, 2025 and January 28, 2024, as well as activity within each of the years, were not material.