Core & Main's Q3 Earnings: A Bellwether for U.S. Infrastructure?

ST. LOUIS, MO – November 25, 2025 – When specialty distributor Core & Main, Inc. unveils its third-quarter fiscal 2025 results on December 9, investors and industry analysts will be looking for more than just revenue and profit figures. The announcement is poised to be a critical barometer for the health of America's vast infrastructure sector, offering tangible insights into the real-world impact of federal spending, market headwinds, and the persistent demand for modernizing the nation's water and wastewater systems.

For a company whose business is the pipes, valves, and fittings that form the circulatory system of our communities, its financial performance provides a ground-level view of a market caught between powerful tailwinds and challenging crosscurrents. After a second quarter that saw the company lower its full-year guidance, sparking a significant stock sell-off despite sales growth, all eyes are now on Q3 to see if the ship has been righted or if broader economic softness is taking a deeper hold.

Setting the Stage: A High Bar and Lingering Questions

Core & Main enters this reporting period against a complex backdrop. The prior year's third quarter (Q3 FY2024) was a record-setter, with net sales hitting $2.038 billion and Adjusted EBITDA reaching an all-time high of $277 million. This strong historical performance sets a challenging benchmark for year-over-year comparisons, especially as market conditions have evolved.

More recently, the company’s Q2 FY2025 results presented a mixed picture. While net sales grew a respectable 6.6% to $2.093 billion, driven by its municipal and non-residential segments, management revised its full-year outlook downward. The stated culprits were higher-than-anticipated operating costs and persistent weakness in the residential construction market. This revision spooked the market, which had priced in a more optimistic trajectory, leading to a sharp decline in share price. One analyst noted at the time that the market reacted not just to the numbers, but to the uncertainty they introduced about the sector's near-term momentum.

Wall Street's expectations for the upcoming Q3 report reflect this cautious sentiment. The consensus among analysts is for revenue to be largely flat year-over-year at approximately $2.06 billion, with adjusted earnings per share (EPS) projected to land around $0.71. This would represent a decline from the $0.69 diluted EPS reported in the same quarter last year, which benefited from significant share repurchases. The key question investors will be asking is whether flat performance in this environment is a sign of resilience or the beginning of a larger slowdown.

The Macro View: Infrastructure Spending vs. Economic Realities

Core & Main doesn't operate in a vacuum. Its performance is intrinsically linked to broader construction and infrastructure spending trends. Here, the signals are decidedly mixed. On one hand, the long-term outlook for water infrastructure is robust. Capital expenditures for U.S. municipal water and wastewater utilities are projected to grow at a 4.4% compound annual rate over the next decade, potentially exceeding $515 billion by 2035. A significant portion of this is driven by the urgent need to replace aging systems and comply with new regulations, such as those concerning PFAS 'forever chemicals'.

Furthermore, the landmark Infrastructure Investment and Jobs Act (IIJA) has allocated $50 billion specifically for water infrastructure. A critical detail, however, is that only about a quarter of these funds have been disbursed to date. This suggests a long runway for future growth as more projects get underway, a potential tailwind that Core & Main is uniquely positioned to capture with its nationwide footprint.

On the other hand, the immediate economic environment presents significant hurdles. While total construction spending is projected to rise in 2025, the growth is uneven. The nonresidential building sector is slowing, and the once-booming industrial and manufacturing construction segment is expected to contract by 2.7% next year. More directly impactful for Core & Main, single-family residential construction remains soft, a trend the company cited in its Q2 report and one that its chief competitor, Ferguson plc, also highlighted in its recent earnings.

“The challenge for distributors is navigating this divergence,” an industry expert commented. “The long-term, large-scale municipal projects are there, but the private, short-cycle residential and smaller commercial work is feeling the pressure from higher interest rates and tighter lending standards.”

Strategy, Competition, and The Path Forward

Against this backdrop, Core & Main's strategy of growth through acquisition becomes even more critical. The company has remained active on the M&A front, expanding its product lines and geographic reach. Its September 2025 acquisition of Canada Waterworks marked a significant step, establishing a new platform for expansion into the Canadian market. This move, along with several other smaller acquisitions in 2024, demonstrates a clear commercialization strategy: using its scale and capital to consolidate a fragmented market and add new revenue streams that are less dependent on any single end market.

When Core & Main's results are released, they will inevitably be compared to those of Ferguson. In its most recent quarter, Ferguson reported modest U.S. revenue growth of 4.5%, noting strength in non-residential capital projects that helped offset the subdued residential market. This suggests the challenges Core & Main faces are sector-wide. Any significant deviation from Ferguson’s performance—either positive or negative—will be heavily scrutinized as an indicator of Core & Main’s specific operational execution and market positioning.

As management takes to the phones on December 9th, investors will be listening intently for commentary on several key areas. First, any change to the full-year guidance for net sales and Adjusted EBITDA will be the headline event. Second, the detailed performance breakdown between municipal, non-residential, and residential end markets will be crucial for understanding which parts of the economy are firing and which are sputtering. Finally, insights into gross profit margins will reveal how effectively the company is managing inflation, supply chain dynamics, and pricing in a competitive environment. The story of Core & Main's third quarter will ultimately be a story of execution in the face of uncertainty, providing a vital data point for anyone with a stake in the future of American infrastructure.