Net Sales of $1.15 Billion with Significant Year-Over-Year Growth in Net Income and Adjusted EBITDA

GMS Inc. (NYSE: GMS), a leading North American specialty building products distributor, today reported financial results for the fiscal third quarter ended January 31, 2022.

Third Quarter Fiscal 2022 Highlights

(Comparisons are to the third quarter of fiscal 2021)

  • Net sales of $1,153.6 million increased 53.6%; organic net sales increased 41.5%.
  • Net income of $61.4 million, or $1.40 per diluted share, compared to net income of $16.1 million, or $0.37 per diluted share; Adjusted net income of $76.5 million, or $1.74 per diluted share, compared to $25.9 million, or $0.60 per diluted share.
  • Adjusted EBITDA of $135.1 million increased $72.5 million, or 115.8%; Adjusted EBITDA margin improved 340 basis points to 11.7% from 8.3%.
  • Net debt leverage was 2.3 times as of the end of the third quarter of fiscal 2022, down from 2.9 times a year ago.
  • Completed the acquisition of AMES Taping Tools Holding LLC (“AMES”), the nation’s foremost provider of automatic taping and finishing tools to the professional drywall finishing industry.

“Carrying our momentum into the new calendar year, we achieved record-setting results with higher levels of sales, net income and Adjusted EBITDA than we have ever recorded for our fiscal third quarter,” said John C. Turner, Jr., President and Chief Executive Officer of GMS. “Leveraging our significant scale advantages to deliver outstanding customer service in a solid residential market, coupled with an inflationary pricing environment and successful platform expansion activities, helped us more than triple our net income and double our Adjusted EBITDA as compared to the prior year quarter.”

Turner continued, “The team remains fully focused on the continued execution of our strategic priorities. Looking ahead to close out our fiscal year in April, similar market dynamics as we experienced in the third quarter along with indications of improving levels of commercial activity, serve as a positive backdrop as we are confident we will continue to deliver exceptional levels of service to provide value to customers and to drive strong results for our stakeholders.”

Third Quarter Fiscal 2022 Results

Net sales for the third quarter of fiscal 2022 of $1.15 billion increased 53.6% as compared with the prior year quarter, primarily due to inflationary pricing, healthy residential end markets, strong performance from our complementary products and the acquisitions of D.L. Building Materials, Westside Building Material and AMES. Organic net sales increased 41.5%.

Excluding the impact from one additional selling day in the third quarter of fiscal 2022 compared to the same period a year ago, net sales and organic net sales were up 51.1% and 39.2%, respectively. While the sales growth was, in large part, due to product inflation, the Company also achieved year-over-year volume growth in each of its four product categories.

Year-over-year sales increases by product category were as follows:

  • Wallboard sales of $415.1 million increased 33.4% (up 28.1% on an organic basis).
  • Ceilings sales of $139.9 million increased 34.9% (up 26.8% on an organic basis).
  • Steel framing sales of $282.8 million increased 172.0% (up 151.0% on an organic basis).
  • Complementary product sales of $315.8 million increased 35.9% (up 17.1% on an organic basis).

Gross profit of $367.8 million increased 51.1% compared to the third quarter of fiscal 2021 primarily due to the successful pass through of product inflation, continued strength in residential market demand and incremental gross profit from acquisitions. Gross margin of 31.9%, declined 50 basis points year-over-year primarily due to the timing and elasticity of inflationary price-cost dynamics in the market. On a product line basis, wallboard and steel margins were unfavorably impacted by these dynamics while complementary products and ceilings benefited.

Selling, general and administrative (“SG&A”) expense as a percentage of net sales improved 370 basis points to 20.9% for the quarter compared to 24.6% in the third quarter of fiscal 2021. Adjusted SG&A expense as a percentage of net sales of 20.4% improved 380 basis points from 24.2% in the prior year quarter as product inflation outpaced increases in operating costs.

Net income increased 280.6% to $61.4 million, or $1.40 per diluted share, compared to net income of $16.1 million, or $0.37 per diluted share, in the third quarter of fiscal 2021. Adjusted net income was $76.5 million, or $1.74 per diluted share, compared to $25.9 million, or $0.60 per diluted share, in the third quarter of the prior fiscal year.

Adjusted EBITDA increased $72.5 million, or 115.8%, to $135.1 million compared to the prior year quarter. Adjusted EBITDA margin of 11.7% improved 340 basis points from 8.3% for the third quarter of fiscal 2021.

Balance Sheet, Liquidity and Cash Flow

As of January 31, 2022, the Company had cash on hand of $87.0 million, total debt of $1.3 billion and $183.2 million of available liquidity under its revolving credit facilities. Net debt leverage was 2.3 times as of the end of the quarter, down from 2.9 times at the end of the third quarter of fiscal 2021.

The Company recorded cash provided by operating activities and free cash flow of $57.2 million and $40.2 million, respectively, for the quarter ended January 31, 2022. For the quarter ended January 31, 2021, the Company recorded cash provided by operating activities and free cash flow of $44.4 million and $38.4 million, respectively.

Platform Expansion Activities

During the third quarter of fiscal 2022, GMS acquired two companies.

On December 1, 2021, GMS completed the acquisition of AMES Taping Tools Holding LLC (“AMES”). With more than 90 company-owned AMES® stores and a fleet of approximately 100,000 automatic taping and finishing (“ATF”) tools available for rent, AMES is the nation’s leading provider of ATF tools and related products to the professional drywall finishing industry. Its portfolio provides a distinctive complement to GMS’s other product offerings and includes the industry-leading finishing tool brand, TapeTech®, as well as the country’s most widely used specialty interior finishing e-commerce platform, All-Wall.com®.

Also on December 1, 2021, the Company completed the acquisition of Kimco Supply Company (“Kimco”), a highly-respected distributor of drywall and related construction products and architectural elements with two locations in the Greater Tampa and Central Florida markets. Kimco adds density for the Company in the growing Tampa-St. Petersburg-Clearwater market for both core and complementary products.

Also, during the period, the Company opened a new greenfield location in Fort Myers, FL, bringing service to this Top 100 Metropolitan Statistical Area.

In addition, since acquiring AMES in early December, that business has continued to grow and execute against its growth strategy by adding two new stores in Pflugerville, TX and Greenville, SC during the Company’s fiscal third quarter.

Conference Call and Webcast

GMS will host a conference call and webcast to discuss its results for the third quarter of fiscal 2022 ended January 31, 2022 and other information related to its business at 8:30 a.m. Eastern Time on Thursday, March 3, 2022. Investors who wish to participate in the call should dial 877-407-3982 (domestic) or 201-493-6780 (international) at least 5 minutes prior to the start of the call. The live webcast will be available on the Investors section of the Company’s website at www.gms.com. There will be a slide presentation of the results available on that page of the website as well. Replays of the call will be available through April 3, 2022 and can be accessed at 844-512-2921 (domestic) or 412-317-6671 (international) and entering the pass code 13725846.

About GMS Inc.

Founded in 1971, GMS operates a network of nearly 300 distribution centers with extensive product offerings of wallboard, ceilings, steel framing and complementary construction products. In addition, GMS operates more than 90 tool sales, rental and service centers, providing a comprehensive selection of building products and solutions for its residential and commercial contractor customer base across the United States and Canada. The Company’s unique operating model combines the benefits of a national platform and strategy with a local go-to-market focus, enabling GMS to generate significant economies of scale while maintaining high levels of customer service.

Use of Non-GAAP Financial Measures

GMS reports its financial results in accordance with GAAP. However, it presents Adjusted net income, free cash flow, Adjusted SG&A, Adjusted EBITDA, and Adjusted EBITDA margin, which are not recognized financial measures under GAAP. GMS believes that Adjusted net income, free cash flow, Adjusted SG&A, Adjusted EBITDA, and Adjusted EBITDA margin assist investors and analysts in comparing its operating performance across reporting periods on a consistent basis by excluding items that the Company does not believe are indicative of its core operating performance. The Company’s management believes Adjusted net income, Adjusted SG&A, free cash flow, Adjusted EBITDA and Adjusted EBITDA margin are helpful in highlighting trends in its operating results, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which the Company operates and capital investments. In addition, the Company utilizes Adjusted EBITDA in certain calculations in its debt agreements.

You are encouraged to evaluate each adjustment and the reasons GMS considers it appropriate for supplemental analysis. In addition, in evaluating Adjusted net income, Adjusted SG&A and Adjusted EBITDA, you should be aware that in the future, the Company may incur expenses similar to the adjustments in the presentation of Adjusted net income, Adjusted SG&A and Adjusted EBITDA. The Company’s presentation of Adjusted net income, Adjusted SG&A, Adjusted SG&A margin, Adjusted EBITDA, and Adjusted EBITDA margin should not be construed as an inference that its future results will be unaffected by unusual or non-recurring items. In addition, Adjusted net income, free cash flow, Adjusted SG&A and Adjusted EBITDA may not be comparable to similarly titled measures used by other companies in GMS’s industry or across different industries. Please see the tables at the end of this release for a reconciliation of Adjusted EBITDA, free cash flow, Adjusted SG&A and Adjusted net income to the most directly comparable GAAP financial measures.

When calculating organic net sales growth, the Company excludes from the calculation (i) net sales of acquired businesses until the first anniversary of the acquisition date, and (ii) the impact of foreign currency translation.

Forward-Looking Statements and Information

This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You can generally identify forward-looking statements by the Company’s use of forward-looking terminology such as “anticipate,” “believe,” “confident,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “seek,” or “should,” or the negative thereof or other variations thereon or comparable terminology. In particular, statements about the markets in which GMS operates, including in particular residential and commercial construction, and the economy generally, pricing, the demand for the Company’s products, supply chain issues and related project timing, the Company’s strategic priorities and the results thereof, service levels and the ability to drive value and results contained in this press release may be considered forward-looking statements. The Company has based forward-looking statements on its current expectations, assumptions, estimates and projections. While the Company believes these expectations, assumptions, estimates, and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond its control, including current and future public health issues that may affect the Company’s business. Forward-looking statements involve risks and uncertainties, including, but not limited to, those described in the “Risk Factors” section in the Company’s most recent Annual Report on Form 10-K, and in its other periodic reports filed with the SEC. In addition, the statements in this release are made as of March 3, 2022. The Company undertakes no obligation to update any of the forward-looking statements made herein, whether as a result of new information, future events, changes in expectation or otherwise. These forward-looking statements should not be relied upon as representing the Company’s views as of any date subsequent to March 3, 2022.

       

GMS Inc. Condensed Consolidated Statements of Operations (Unaudited) (in thousands, except per share data)

 

Three Months Ended

 

Nine Months Ended

 

January 31,

 

January 31,

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net sales

$

1,153,595

 

 

$

751,191

 

 

$

3,346,222

 

 

$

2,366,620

 

Cost of sales (exclusive of depreciation and amortization shown separately below)

 

785,823

 

 

 

507,867

 

 

 

2,270,747

 

 

 

1,597,767

 

Gross profit

 

367,772

 

 

 

243,324

 

 

 

1,075,475

 

 

 

768,853

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative

 

241,040

 

 

 

184,844

 

 

 

685,652

 

 

 

556,308

 

Depreciation and amortization

 

29,750

 

 

 

25,562

 

 

 

86,867

 

 

 

79,904

 

Total operating expenses

 

270,790

 

 

 

210,406

 

 

 

772,519

 

 

 

636,212

 

Operating income

 

96,982

 

 

 

32,918

 

 

 

302,956

 

 

 

132,641

 

Other (expense) income:

 

 

 

 

 

 

 

Interest expense

 

(15,429

)

 

 

(13,454

)

 

 

(43,830

)

 

 

(41,060

)

Gain on legal settlement

 

 

 

 

1,382

 

 

 

 

 

 

1,382

 

Other income, net

 

1,041

 

 

 

989

 

 

 

2,771

 

 

 

2,441

 

Total other expense, net

 

(14,388

)

 

 

(11,083

)

 

 

(41,059

)

 

 

(37,237

)

Income before taxes

 

82,594

 

 

 

21,835

 

 

 

261,897

 

 

 

95,404

 

Provision for income taxes

 

21,211

 

 

 

5,709

 

 

 

64,951

 

 

 

23,590

 

Net income

$

61,383

 

 

$

16,126

 

 

$

196,946

 

 

$

71,814

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Basic

 

43,094

 

 

 

42,726

 

 

 

43,106

 

 

 

42,691

 

Diluted

 

43,945

 

 

 

43,361

 

 

 

43,937

 

 

 

43,184

 

Net income per common share:

 

 

 

 

 

 

 

Basic

$

1.42

 

 

$

0.38

 

 

$

4.57

 

 

$

1.68

 

Diluted

$

1.40

 

 

$

0.37

 

 

$

4.48

 

 

$

1.66

 

         

GMS Inc. Condensed Consolidated Balance Sheets (Unaudited) (in thousands, except per share data)

 

January 31,

2022

 

April 30,

2021

Assets

Current assets:

 

 

 

Cash and cash equivalents

$

86,975

 

 

$

167,012

 

Trade accounts and notes receivable, net of allowances of $9,683 and $6,282, respectively

 

700,255

 

 

 

558,661

 

Inventories, net

 

585,351

 

 

 

357,054

 

Prepaid expenses and other current assets

 

19,055

 

 

 

19,525

 

Total current assets

 

1,391,636

 

 

 

1,102,252

 

Property and equipment, net of accumulated depreciation of $216,541 and $193,364, respectively

 

342,995

 

 

 

311,326

 

Operating lease right-of-use assets

 

146,762

 

 

 

118,413

 

Goodwill

 

693,942

 

 

 

576,330

 

Intangible assets, net

 

480,312

 

 

 

350,869

 

Deferred income taxes

 

20,536

 

 

 

15,715

 

Other assets

 

9,997

 

 

 

8,993

 

Total assets

$

3,086,180

 

 

$

2,483,898

 

Liabilities and Stockholders’ Equity

Current liabilities:

 

 

 

 

Accounts payable

$

293,485

 

 

$

322,965

 

Accrued compensation and employee benefits

 

79,031

 

 

 

72,906

 

Other accrued expenses and current liabilities

 

129,927

 

 

 

87,138

 

Current portion of long-term debt

 

44,624

 

 

 

46,018

 

Current portion of operating lease liabilities

 

40,413

 

 

 

33,474

 

Total current liabilities

 

587,480

 

 

 

562,501

 

Non-current liabilities:

 

 

 

 

Long-term debt, less current portion

 

1,281,737

 

 

 

932,409

 

Long-term operating lease liabilities

 

107,002

 

 

 

90,290

 

Deferred income taxes, net

 

47,174

 

 

 

12,728

 

Other liabilities

 

59,511

 

 

 

63,508

 

Total liabilities

 

2,082,904

 

 

 

1,661,436

 

Commitments and contingencies

 

 

 

 

Stockholders' equity:

 

 

 

 

Common stock, par value $0.01 per share, 500,000 shares authorized; 43,095 and 43,073 shares issued and outstanding as of January 31, 2022 and April 30, 2021, respectively

 

431

 

 

 

431

 

Preferred stock, par value $0.01 per share, 50,000 shares authorized; 0 shares issued and outstanding as of January 31, 2022 and April 30, 2021

 

 

 

 

 

Additional paid-in capital

 

536,635

 

 

 

542,737

 

Retained earnings

 

471,481

 

 

 

274,535

 

Accumulated other comprehensive income (loss)

 

(5,271

)

 

 

4,759

 

Total stockholders' equity

 

1,003,276

 

 

 

822,462

 

Total liabilities and stockholders' equity

$

3,086,180

 

 

$

2,483,898

           

GMS Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands)

 

 

Nine Months Ended

January 31,

 

2022

 

 

 

2021

 

Cash flows from operating activities:

 

 

Net income

$

196,946

 

 

$

71,814

 

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

 

Depreciation and amortization

 

86,867

 

 

 

79,904

 

Amortization of debt discount and debt issuance costs

 

2,037

 

 

 

2,257

 

Equity-based compensation

 

12,461

 

 

 

10,318

 

(Gain) loss on disposal and impairment of assets

 

(474

)

 

 

(529

)

Deferred income taxes

 

(1,740

)

 

 

(9,645

)

Other items, net

 

5,357

 

 

 

105

 

Changes in assets and liabilities net of effects of acquisitions:

 

Trade accounts and notes receivable

 

(109,948

)

 

 

(15,381

)

Inventories

 

(191,103

)

 

 

(24,391

)

Prepaid expenses and other assets

 

2,215

 

 

 

1,040

 

Accounts payable

 

(46,310

)

 

 

(41,371

)

Accrued compensation and employee benefits

 

3,618

 

 

 

(11,932

)

Other accrued expenses and liabilities

 

20,187

 

 

 

6,307

 

Cash (used in) provided by operating activities

 

(19,887

)

 

 

68,496

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(33,161

)

 

 

(17,857

)

Proceeds from sale of assets

 

1,124

 

 

 

1,233

 

Acquisition of businesses, net of cash acquired

 

(345,376

)

 

 

(51

)

Cash used in investing activities

 

(377,413

)

 

 

(16,675

)

Cash flows from financing activities:

 

 

 

Repayments on revolving credit facilities

 

(823,583

)

 

 

(102,189

)

Borrowings from revolving credit facilities

 

1,182,774

 

 

 

14,750

 

Payments of principal on long-term debt

 

(3,832

)

 

 

(7,476

)

Payments of principal on finance lease obligations

 

(23,154

)

 

 

(22,662

)

Repurchases of common stock

 

(17,858

)

 

 

(2,000

)

Proceeds from exercises of stock options

 

4,024

 

 

 

3,656

 

Payments for taxes related to net share settlement of equity awards

 

(2,850

)

 

 

(807

)

Proceeds from issuance of stock pursuant to employee stock purchase plan

 

2,332

 

 

 

2,076

 

Cash provided by (used in) financing activities

 

317,853

 

 

 

(114,652

)

Effect of exchange rates on cash and cash equivalents

 

(590

)

 

 

2,495

 

Decrease in cash and cash equivalents

 

(80,037

)

 

 

(60,336

)

Cash and cash equivalents, beginning of period

 

167,012

 

 

 

210,909

 

Cash and cash equivalents, end of period

$

86,975

 

 

$

150,573

 

Supplemental cash flow disclosures:

 

 

 

Cash paid for income taxes

$

61,066

 

 

$

31,942

 

Cash paid for interest

 

35,721

 

 

 

38,114

         

GMS Inc. Net Sales by Product Group (Unaudited) (dollars in thousands)

 

 

Three Months Ended

 

Nine Months Ended

January 31,

2022

 

% of

Total

 

January 31,

2021

 

% of

Total

 

January 31,

2022

 

% of

Total

 

January 31,

2021

 

% of

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wallboard

$

415,132

 

36.0

%

 

$

311,122

 

41.4

%

 

$

1,219,789

 

36.5

%

 

$

969,722

 

41.0

%

Ceilings

 

139,894

 

12.1

%

 

 

103,711

 

13.8

%

 

 

418,831

 

12.5

%

 

 

330,480

 

14.0

%

Steel framing

 

282,764

 

24.5

%

 

 

103,957

 

13.8

%

 

 

751,040

 

22.4

%

 

 

325,782

 

13.8

%

Complementary products

 

315,805

 

27.4

%

 

 

232,401

 

31.0

%

 

 

956,562

 

28.6

%

 

 

740,636

 

31.2

%

Total net sales

$

1,153,595

 

 

 

$

751,191

 

 

 

$

3,346,222

 

 

 

$

2,366,620

 

 

         

GMS Inc. Reconciliation of Net Income to Adjusted EBITDA (Unaudited) (in thousands)

 

 

Three Months Ended

 

Nine Months Ended

January 31,

 

January 31,

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

 

 

 

 

 

 

 

 

Net income

$

61,383

 

 

$

16,126

 

 

$

196,946

 

 

$

71,814

 

Interest expense

 

15,429

 

 

 

13,454

 

 

 

43,830

 

 

 

41,060

 

Interest income

 

(40

)

 

 

(6

)

 

 

(67

)

 

 

(57

)

Provision for income taxes

 

21,211

 

 

 

5,709

 

 

 

64,951

 

 

 

23,590

 

Depreciation expense

 

13,816

 

 

 

11,371

 

 

 

40,444

 

 

 

36,908

 

Amortization expense

 

15,934

 

 

 

14,191

 

 

 

46,423

 

 

 

42,996

 

EBITDA

$

127,733

 

 

$

60,845

 

 

$

392,527

 

 

$

216,311

 

Stock appreciation expense(a)

 

1,251

 

 

 

1,446

 

 

 

3,126

 

 

 

2,552

 

Redeemable noncontrolling interests(b)

 

182

 

 

 

624

 

 

 

1,085

 

 

 

1,062

 

Equity-based compensation(c)

 

3,077

 

 

 

1,877

 

 

 

8,250

 

 

 

6,734

 

Severance and other permitted costs(d)

 

273

 

 

 

(83

)

 

 

669

 

 

 

2,626

 

Transaction costs (acquisitions and other)(e)

 

921

 

 

 

664

 

 

 

3,889

 

 

 

789

 

Gain on disposal of assets(f)

 

(252

)

 

 

(1,404

)

 

 

(474

)

 

 

(529

)

Effects of fair value adjustments to inventory(g)

 

1,870

 

 

 

 

 

 

3,601

 

 

 

 

Gain on legal settlement

 

 

 

 

(1,382

)

 

 

 

 

 

(1,382

)

EBITDA addbacks

 

7,322

 

 

 

1,742

 

 

 

20,146

 

 

 

11,852

 

Adjusted EBITDA

$

135,055

 

 

$

62,587

 

 

$

412,673

 

 

$

228,163

 

 

 

 

 

 

 

 

Net sales

$

1,153,595

 

 

$

751,191

 

 

$

3,346,222

 

 

$

2,366,620

 

Adjusted EBITDA Margin

 

11.7

%

 

 

8.3

%

 

 

12.3

%

 

 

9.6

%

___________________________________

(a)

Represents changes in the fair value of stock appreciation rights.

(b)

Represents changes in the fair values of noncontrolling interests.

(c)

Represents non-cash equity-based compensation expense related to the issuance of share-based awards.

(d)

Represents severance expenses and other costs permitted in the calculation of Adjusted EBITDA under the ABL Facility and the Term Loan Facility, including certain unusual, nonrecurring costs and credits due to COVID-19.

(e)

Represents costs related to acquisitions paid to third parties.

(f)

Includes gains from the sale of assets.

(g)

Represents the non-cash cost of sales impact of acquisition accounting adjustments to increase inventory to its estimated fair value.

         

GMS Inc. Reconciliation of Cash Provided By (Used In) Operating Activities to Free Cash Flow (Unaudited) (in thousands)

 

Three Months Ended

 

Nine Months Ended

January 31,

 

January 31,

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Cash provided by (used in) operating activities

$

        57,208

 

 

$

        44,448

 

 

$

       (19,887

)

 

$

        68,496

 

Purchases of property and equipment

 

         (17,042

)

 

 

           (6,012

)

 

 

         (33,161

)

 

 

         (17,857

)

Free cash flow (a)

$

        40,166

 

 

$

        38,436

 

 

$

       (53,048

)

 

$

        50,639

 

___________________________________

(a)

Free cash flow is a non-GAAP financial measure that we define as net cash provided by (used in) operations less capital expenditures.

         

GMS Inc. Reconciliation of Selling, General and Administrative Expense to Adjusted SG&A (Unaudited) (in thousands)

 

Three Months Ended

 

Nine Months Ended

January 31,

 

January 31,

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Selling, general and administrative expense

$

   241,040

 

 

$

   184,844

 

 

$

   685,652

 

 

$

   556,308

 

 

 

 

 

 

 

 

 

Adjustments

 

 

 

 

 

 

 

Stock appreciation expense(a)

 

        (1,251

)  

 

 

        (1,446

)  

 

 

        (3,126

)  

 

 

        (2,552

)  

Redeemable noncontrolling interests(b)

 

           (182

)  

 

 

           (624

)  

 

 

        (1,085

)  

 

 

        (1,062

)  

Equity-based compensation(c)

 

        (3,077

)  

 

 

        (1,877

)  

 

 

        (8,250

)  

 

 

        (6,734

)  

Severance and other permitted costs(d)

 

           (273

)  

 

 

            104

 

 

 

           (685

)  

 

 

        (2,589

)  

Transaction costs (acquisitions and other)(e)

 

           (921

)  

 

 

           (664

)  

 

 

        (3,889

)  

 

 

           (789

)  

Gain on disposal of assets(f)

 

            252

 

 

 

         1,404

 

 

 

            474

 

 

 

            529

 

Adjusted SG&A

$

   235,588

 

 

$

   181,741

 

 

$

   669,091

 

 

$

   543,111

 

 

 

 

 

 

 

 

 

Net sales

$

1,153,595

 

 

$

   751,191

 

 

$

3,346,222

 

 

$

2,366,620

 

Adjusted SG&A margin

 

20.4

%

 

 

24.2

%

 

 

20.0

%

 

 

22.9

%

___________________________________

(a)

Represents changes in the fair value of stock appreciation rights.

(b)

Represents changes in the fair values of noncontrolling interests.

(c)

Represents non-cash equity-based compensation expense related to the issuance of share-based awards.

(d)

Represents severance expenses and other costs permitted in the calculation of Adjusted EBITDA under the ABL Facility and the Term Loan Facility, including certain unusual, nonrecurring costs and credits due to COVID-19.

(e)

Represents costs related to acquisitions paid to third parties.

(f)

Includes gains from the sale of assets.

 

       

GMS Inc. Reconciliation of Income Before Taxes to Adjusted Net Income (Unaudited) (in thousands, except per share data)

 

Three Months Ended

 

Nine Months Ended

January 31,

 

January 31,

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

 

 

 

 

 

 

 

 

Income before taxes

$

82,594

 

 

$

21,835

 

 

$

261,897

 

 

$

95,404

 

EBITDA add-backs

 

7,322

 

 

 

1,742

 

 

 

20,146

 

 

 

11,852

 

Acquisition accounting depreciation and amortization (1)

 

11,424

 

 

 

9,798

 

 

 

32,553

 

 

 

30,054

 

Adjusted pre-tax income

 

101,340

 

 

 

33,375

 

 

 

314,596

 

 

 

137,310

 

Adjusted income tax expense

 

24,828

 

 

 

7,510

 

 

 

77,076

 

 

 

30,895

 

Adjusted net income

$

76,512

 

 

$

25,865

 

 

$

237,520

 

 

$

106,415

 

Effective tax rate (2)

 

24.5

%

 

 

22.5

%

 

 

24.5

%

 

 

22.5

%

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

43,094

 

 

 

42,726

 

 

 

43,106

 

 

 

42,691

 

Diluted

 

43,945

 

 

 

43,361

 

 

 

43,937

 

 

 

43,184

 

Adjusted net income per share:

 

 

 

 

 

 

 

Basic

$

1.78

 

 

$

0.61

 

 

$

5.51

 

 

$

2.49

 

Diluted

$

1.74

 

 

$

0.60

 

 

$

5.41

 

 

$

2.46

 

___________________________________

(1)

Depreciation and amortization from the increase in value of certain long-term assets associated with the April 1, 2014 acquisition of the predecessor company and amortization of intangible assets from the acquisitions of Titan, Westside Building Material and Ames Taping Tools.

(2)

Normalized cash tax rate excluding the impact of acquisition accounting and certain other deferred tax amounts.

   

 

Investors: Carey Phelps ir@gms.com 770-723-3369

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