Core & Main (NYSE:CNM) posted first-quarter earnings that matched expectations and revenue that came in ahead of forecasts, yet the stock slipped over 2% intra-day today as investors reacted to tighter margins and an unchanged full-year outlook.

The company reported adjusted earnings per share of $0.52 for the quarter, aligning with analyst projections. Revenue rose nearly 10% year-over-year to $1.91 billion, topping the $1.85 billion consensus estimate, driven by robust demand across its core markets.

Gross profit climbed to $510 million, up 9% from the prior year, but gross margin edged down to 26.7% from 26.9%. The company attributed the margin contraction to higher average inventory costs, despite ongoing efforts to enhance profitability.

Looking ahead, Core & Main reaffirmed its fiscal 2025 net sales guidance of $7.6 billion to $7.8 billion, implying modest annual growth of 2% to 5%.

Despite healthy top-line growth, investors appeared cautious about margin pressures and a guidance range that suggests tempered optimism in the face of rising costs.