Strong Multi-Family and Commercial Activity During the Quarter Amid An Improving Single-Family Demand Backdrop

GMS Inc. (NYSE: GMS), a leading North American specialty building products distributor, today reported financial results for the fiscal second quarter ended October 31, 2023.

Second Quarter Fiscal 2024 Highlights

(Comparisons are to the second quarter of fiscal 2023)

  • Net sales of $1.4 billion decreased 0.7%; organic net sales decreased 3.1%.
  • In the U.S., Wallboard volume growth of 17.0% in multi-family and 6.5% in commercial helped to offset single-family volume declines of 11.4%.
  • Net income of $81.0 million, or $1.97 per diluted share, decreased 21.5% compared to net income of $103.2 million, or $2.41 per diluted share in the previous year; Net income margin declined 150 basis points to 5.7%; Adjusted net income of $94.6 million, or $2.30 per diluted share, compared to $119.5 million, or $2.79 per diluted share in the previous year.
  • Adjusted EBITDA of $167.6 million decreased $28.0 million, or 14.3%; Adjusted EBITDA margin was 11.8%, compared to 13.7%.
  • Improved cash generation with cash provided by operating activities and free cash flow up 10.1% and 5.8%, respectively, as compared to a year ago; Net debt leverage was 1.5 times, improved from 1.6 times a year ago.

“We were pleased to deliver solid results for our fiscal second quarter, including net sales, net income and Adjusted EBITDA that were ahead of our previously stated expectations as commercial and multi-family Wallboard, Ceilings and Steel Framing volumes outpaced our forecast,” said John C. Turner, Jr., President and Chief Executive Officer of GMS. “These solid levels of demand helped to offset a steeper than anticipated steel pricing decline along with single-family demand that is comparatively reduced versus the prior year, but sequentially improving.”

“Our well-balanced product portfolio, with a revenue mix roughly evenly split between commercial and residential construction, allows us to flex our operations to best align with demand as dynamics in our end markets evolve,” Turner continued. “In the near term, we anticipate the backlog in multi-family construction to drive continued growth in this end market through the end of fiscal 2024, albeit at declining year-over-year rates. Despite some potential headwinds from tightened credit conditions, our commercial demand is expected to continue its current pace of activity over the next few quarters. Additionally, we are optimistic about improving single-family activity, as the very recent easing of mortgage rates, limited supply of existing homes for sale and favorable demographics seem to be setting up improved conditions, particularly as we look out to fiscal 2025.”

“While market conditions are fluid, our scale, wide breadth of product offerings, execution and expertise across all of our varying end markets, and our commitment to outstanding service continues to position us well for solid financial performance, growth and realization of value for our shareholders over the long term.”

Second Quarter Fiscal 2024 Results

Net sales for the second quarter of fiscal 2024 of $1.4 billion decreased 0.7% as compared with the prior year quarter. Continued solid demand in commercial and multi-family construction drove volume increases in Ceilings, Steel Framing and Complementary Products, the benefits of which were offset by a marked price deflation in Steel Framing, which reduced net sales by $85 million for the quarter. Despite softness in the single-family market, Wallboard experienced only a slight volume decline, contributing to continued resilience in pricing. Recent acquisitions also contributed positively for the quarter. Organic net sales, which exclude the first year of acquired business net sales as well as the impact of foreign currency translation, declined 3.1%.

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

· Wallboard sales of $585.2 million increased 0.1% (down 0.3% on an organic basis).

· Ceilings sales of $175.3 million increased 9.9% (up 7.2% on an organic basis).

· Steel Framing sales of $232.1 million decreased 16.6% (down 17.4% on an organic basis).

· Complementary Product sales of $428.3 million increased 4.8% (down 1.4% on an organic basis).

Gross profit of $458.6 million decreased $5.9 million, or 1.3%, compared to the second quarter of fiscal 2023 notably due to deflationary dynamics in steel pricing. Gross margin was 32.3%, compared to 32.5% a year ago.

Selling, general and administrative (“SG&A”) expenses were $300.9 million for the quarter, up from $279.0 million in the prior year period. Of the $21.9 million year-over-year increase, $12.6 million related to recent acquisitions and newly-opened greenfield locations. The remaining $9.3 million increase was primarily driven by higher wages and benefits as we executed against more robust sales volumes in our commercial and multi-family end markets, which tend to require a higher cost to serve than our single-family end market. Specifically, volume growth in Steel Framing was 13.0%, commercial Wallboard volumes grew 6.5% and Ceilings volumes grew 5.8%.

SG&A expense as a percentage of net sales increased 170 basis points to 21.2% for the quarter, compared to 19.5% in the second quarter of fiscal 2023 with 120 basis points of the difference due to steel price deflation, 30 basis points related to increased labor costs, primarily associated with the higher level of commercial and multi-family activity levels and the remaining 20 basis points due to recent acquisitions. Adjusted SG&A expense as a percentage of net sales of 20.6% also increased 170 basis points from 18.9% in the prior year quarter.

All in, inclusive of a $2.7 million, or 16.7%, increase in interest expense, net income decreased 21.5% to $81.0 million, or $1.97 per diluted share, compared to net income of $103.2 million, or $2.41 per diluted share, in the second quarter of fiscal 2023. Net income margin declined 150 basis points from 7.2% to 5.7%. Adjusted net income was $94.6 million, or $2.30 per diluted share, compared to $119.5 million, or $2.79 per diluted share, in the second quarter of the prior fiscal year.

Adjusted EBITDA decreased $28.0 million, or 14.3%, to $167.6 million compared to the prior year quarter. Adjusted EBITDA margin was 11.8%, compared with 13.7% for the second quarter of fiscal 2023.

Balance Sheet, Liquidity and Cash Flow

As of October 31, 2023, the Company had cash on hand of $76.5 million, total debt of $1.1 billion and $823.7 million of available liquidity under its revolving credit facilities. Net debt leverage was 1.5 times as of the end of the quarter, down from 1.6 times at the end of the second quarter of fiscal 2023.

For the second quarter of fiscal 2024, cash provided by operating activities improved to $118.1 million, compared to cash provided by operating activities of $107.3 million in the prior year period. Free cash flow improved to $102.1 million for the quarter ended October 31, 2023, compared to $96.5 million for the quarter ended October 31, 2022.

Expanded Share Repurchase Authorization

In October 2023, the Company’s Board of Directors approved an expanded share repurchase program under which the Company is authorized to repurchase up to $250 million of its outstanding common stock. This expanded program replaces the Company’s previous share repurchase authorization of $200 million, which commenced in June 2022, and reflects the Board’s confidence in the business going forward. The repurchases will be made from time to time on the open market at prevailing market prices or in negotiated transactions off the market.

During the quarter, the Company repurchased 688,717 shares of common stock for $44.3 million, of which $8.7 million was purchased under the new and expanded authorization. As of October 31, 2023, the Company had $241.3 million of share repurchase authorization remaining.

Platform Expansion Activities

During the second quarter of fiscal 2024, the Company continued the execution of its platform expansion strategy with the acquisition of AMW Construction Supply, LLC, a highly respected tools and fasteners and other complementary products distributor servicing the Phoenix, AZ metro area.

In addition during the quarter, the Company added two new greenfield locations and one new AMES store location.

Conference Call and Webcast

GMS will host a conference call and webcast to discuss its results for the second quarter of fiscal 2024 ended October 31, 2023 and other information related to its business at 8:30 a.m. Eastern Time on Thursday, December 7, 2023. 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 January 7, 2024 and can be accessed at 844-512-2921 (domestic) or 412-317-6671 (international) and entering the pass code 13741690.

About GMS Inc.

Founded in 1971, GMS operates a network of more than 300 distribution centers with extensive product offerings of Wallboard, Ceilings, Steel Framing and Complementary Products. In addition, GMS operates more than 100 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, end market mix, backlog, pricing, volumes, the demand for the Company’s products, including Complementary Products, the Company’s strategic priorities and the results thereof, stockholder value, performance, growth, and results thereof, and future share repurchases 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 December 7, 2023. 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 December 7, 2023.

GMS Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except per share data)

 

Three Months Ended

 

Six Months Ended

 

October 31,

 

October 31,

2023

 

2022

 

2023

 

2022

Net sales

$

1,420,930

 

 

$

1,430,979

 

 

$

2,830,530

 

 

$

2,790,532

 

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

 

962,301

 

 

 

966,479

 

 

 

1,921,347

 

 

 

1,891,311

 

Gross profit

 

458,629

 

 

 

464,500

 

 

 

909,183

 

 

 

899,221

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative

 

300,894

 

 

 

278,994

 

 

 

587,690

 

 

 

546,683

 

Depreciation and amortization

 

32,937

 

 

 

32,226

 

 

 

64,955

 

 

 

64,666

 

Total operating expenses

 

333,831

 

 

 

311,220

 

 

 

652,645

 

 

 

611,349

 

Operating income

 

124,798

 

 

 

153,280

 

 

 

256,538

 

 

 

287,872

 

Other (expense) income:

 

 

 

 

 

 

 

Interest expense

 

(18,742

)

 

 

(16,055

)

 

 

(37,656

)

 

 

(30,716

)

Write-off of debt discount and deferred financing fees

 

 

 

 

 

 

 

(1,401

)

 

 

 

Other income, net

 

2,106

 

 

 

1,923

 

 

 

4,245

 

 

 

3,492

 

Total other expense, net

 

(16,636

)

 

 

(14,132

)

 

 

(34,812

)

 

 

(27,224

)

Income before taxes

 

108,162

 

 

 

139,148

 

 

 

221,726

 

 

 

260,648

 

Provision for income taxes

 

27,205

 

 

 

35,995

 

 

 

53,939

 

 

 

68,025

 

Net income

$

80,957

 

 

$

103,153

 

 

$

167,787

 

 

$

192,623

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Basic

 

40,466

 

 

 

42,232

 

 

 

40,608

 

 

 

42,390

 

Diluted

 

41,088

 

 

 

42,887

 

 

 

41,282

 

 

 

43,102

 

Net income per common share:

 

 

 

 

 

 

 

Basic

$

2.00

 

 

$

2.44

 

 

$

4.13

 

 

$

4.54

 

Diluted

$

1.97

 

 

$

2.41

 

 

$

4.06

 

 

$

4.47

 

GMS Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except per share data)

 

October 31, 2023

 

April 30, 2023

Assets

Current assets:

 

 

Cash and cash equivalents

$

76,517

 

 

$

164,745

 

Trade accounts and notes receivable, net of allowances of $16,215 and $13,636, respectively

 

880,196

 

 

 

792,232

 

Inventories, net

 

559,449

 

 

 

575,495

 

Prepaid expenses and other current assets

 

31,270

 

 

 

17,051

 

Total current assets

 

1,547,432

 

 

 

1,549,523

 

Property and equipment, net of accumulated depreciation of $281,550 and $264,650, respectively

 

423,240

 

 

 

396,419

 

Operating lease right-of-use assets

 

190,141

 

 

 

189,351

 

Goodwill

 

720,273

 

 

 

700,813

 

Intangible assets, net

 

393,587

 

 

 

399,660

 

Deferred income taxes

 

21,908

 

 

 

19,839

 

Other assets

 

17,818

 

 

 

11,403

 

Total assets

$

3,314,399

 

 

$

3,267,008

 

Liabilities and Stockholders’ Equity

Current liabilities:

 

 

 

Accounts payable

$

367,405

 

 

$

377,003

 

Accrued compensation and employee benefits

 

83,483

 

 

 

119,887

 

Other accrued expenses and current liabilities

 

118,870

 

 

 

107,675

 

Current portion of long-term debt

 

47,766

 

 

 

54,035

 

Current portion of operating lease liabilities

 

48,788

 

 

 

47,681

 

Total current liabilities

 

666,312

 

 

 

706,281

 

Non-current liabilities:

 

 

 

Long-term debt, less current portion

 

1,028,284

 

 

 

1,044,642

 

Long-term operating lease liabilities

 

142,577

 

 

 

141,786

 

Deferred income taxes, net

 

55,142

 

 

 

51,223

 

Other liabilities

 

46,199

 

 

 

48,319

 

Total liabilities

 

1,938,514

 

 

 

1,992,251

 

Commitments and contingencies

 

 

 

Stockholders' equity:

 

 

 

Common stock, par value $0.01 per share, 500,000 shares authorized; 40,055

and 40,971 shares issued and outstanding as of October 31, 2023 and April 30, 2023, respectively

 

401

 

 

 

410

 

Preferred stock, par value $0.01 per share, 50,000 shares authorized; 0 shares issued and outstanding as of October 31, 2023 and April 30, 2023

 

 

 

 

 

Additional paid-in capital

 

362,021

 

 

 

428,508

 

Retained earnings

 

1,048,755

 

 

 

880,968

 

Accumulated other comprehensive loss

 

(35,292

)

 

 

(35,129

)

Total stockholders' equity

 

1,375,885

 

 

 

1,274,757

 

Total liabilities and stockholders' equity

$

3,314,399

 

 

$

3,267,008

 

GMS Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

 

 

Six Months Ended

October 31,

2023

 

2022

Cash flows from operating activities:

 

 

Net income

$

167,787

 

 

$

192,623

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

Depreciation and amortization

 

64,955

 

 

 

64,666

 

Write-off and amortization of debt discount and debt issuance costs

 

2,726

 

 

 

802

 

Equity-based compensation

 

10,698

 

 

 

13,322

 

Gain on disposal and impairment of assets

 

(441

)

 

 

(203

)

Deferred income taxes

 

(5,085

)

 

 

(2,925

)

Other items, net

 

3,590

 

 

 

4,662

 

Changes in assets and liabilities net of effects of acquisitions:

 

Trade accounts and notes receivable

 

(89,384

)

 

 

(133,445

)

Inventories

 

20,267

 

 

 

(32,270

)

Prepaid expenses and other assets

 

(19,578

)

 

 

(4,913

)

Accounts payable

 

(9,849

)

 

 

3,821

 

Accrued compensation and employee benefits

 

(36,293

)

 

 

(17,859

)

Other accrued expenses and liabilities

 

15,354

 

 

 

14,580

 

Cash provided by operating activities

 

124,747

 

 

 

102,861

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(29,546

)

 

 

(21,670

)

Proceeds from sale of assets

 

1,701

 

 

 

896

 

Acquisition of businesses, net of cash acquired

 

(55,964

)

 

 

(2,620

)

Cash used in investing activities

 

(83,809

)

 

 

(23,394

)

Cash flows from financing activities:

 

 

 

Repayments on revolving credit facilities

 

(389,409

)

 

 

(251,247

)

Borrowings from revolving credit facilities

 

360,173

 

 

 

280,113

 

Payments of principal on long-term debt

 

 

 

 

(2,555

)

Borrowings from term loan amendment

 

288,266

 

 

 

 

Repayments from term loan amendment

 

(287,768

)

 

 

 

Payments of principal on finance lease obligations

 

(19,304

)

 

 

(16,450

)

Repurchases of common stock

 

(75,356

)

 

 

(49,571

)

Payment of acquisition holdback liability

 

 

 

 

(13,500

)

Payment for debt issuance costs

 

(5,825

)

 

 

 

Proceeds from exercises of stock options

 

1,756

 

 

 

701

 

Payments for taxes related to net share settlement of equity awards

 

(3,975

)

 

 

(3,960

)

Proceeds from issuance of stock pursuant to employee stock purchase plan

 

2,664

 

 

 

1,329

 

Cash used in financing activities

 

(128,778

)

 

 

(55,140

)

Effect of exchange rates on cash and cash equivalents

 

(388

)

 

 

(2,042

)

(Decrease) increase in cash and cash equivalents

 

(88,228

)

 

 

22,285

 

Cash and cash equivalents, beginning of period

 

164,745

 

 

 

101,916

 

Cash and cash equivalents, end of period

$

76,517

 

 

$

124,201

 

Supplemental cash flow disclosures:

 

 

 

Cash paid for income taxes

$

69,224

 

 

$

60,792

 

Cash paid for interest

 

35,321

 

 

 

29,268

 

GMS Inc.

Net Sales by Product Group (Unaudited)

(dollars in thousands)

 

Three Months Ended

 

Six Months Ended

October 31, 2023

 

% of Total

 

October 31, 2022

 

% of Total

 

October 31, 2023

 

% of Total

 

October 31, 2022

 

% of Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wallboard

$

585,174

 

41.2

%

 

$

584,557

 

40.9

%

 

$

1,156,599

 

40.9

%

 

$

1,106,111

 

39.6

%

Ceilings

 

175,329

 

12.3

%

 

 

159,601

 

11.2

%

 

 

350,534

 

12.4

%

 

 

326,876

 

11.7

%

Steel framing

 

232,108

 

16.3

%

 

 

278,152

 

19.4

%

 

 

468,868

 

16.6

%

 

 

553,048

 

19.8

%

Complementary products

 

428,319

 

30.1

%

 

 

408,669

 

28.6

%

 

 

854,529

 

30.2

%

 

 

804,497

 

28.8

%

Total net sales

$

1,420,930

 

 

 

$

1,430,979

 

 

 

$

2,830,530

 

 

 

$

2,790,532

 

 

GMS Inc.

Net Sales and Organic Sales by Product Group (Unaudited)

(dollars in millions)

 

Net Sales

 

 

Organic Sales

 

Three Months Ended October 31,

 

 

Three Months Ended October 31,

 

2023

 

2022

Change

 

2023

 

2022

Change

Wallboard

$

585.2

 

$

584.5

0.1

%

 

$

582.7

 

$

584.5

(0.3

)%

Ceilings

 

175.3

 

 

159.6

9.9

%

 

 

171.0

 

 

159.6

7.2

%

Steel framing

 

232.1

 

 

278.2

(16.6

)%

 

 

229.8

 

 

278.2

(17.4

)%

Complementary products

 

428.3

 

 

408.7

4.8

%

 

 

403.0

 

 

408.7

(1.4

)%

Total net sales

$

1,420.9

 

$

1,431.0

(0.7

)%

 

$

1,386.5

 

$

1,431.0

(3.1

)%

GMS Inc.

Per Day Net Sales and Per Day Organic Sales by Product Group (Unaudited)

(dollars in millions)

 

Per Day Net Sales

 

 

Per Day Organic Sales

 

Three Months Ended October 31,

 

 

Three Months Ended October 31,

 

2023

 

2022

Change

 

2023

 

2022

Change

Wallboard

$

9.0

 

$

9.0

0.1

%

 

$

9.0

 

$

9.0

(0.3

)%

Ceilings

 

2.7

 

 

2.5

9.9

%

 

 

2.6

 

 

2.5

7.2

%

Steel framing

 

3.6

 

 

4.3

(16.6

)%

 

 

3.5

 

 

4.3

(17.4

)%

Complementary products

 

6.6

 

 

6.3

4.8

%

 

 

6.2

 

 

6.3

(1.4

)%

Total net sales

$

21.9

 

$

22.1

(0.7

)%

 

$

21.3

 

$

22.1

(3.1

)%

Per Day Organic Growth

 

Three Months Ended October 31, 2023

Volume

 

Price/Mix/Fx

Wallboard

(1.0

)%

 

0.7

%

Ceilings

5.8

%

 

1.4

%

Steel framing

13.1

%

 

(30.5

)%

GMS Inc.

Reconciliation of Net Income to Adjusted EBITDA (Unaudited)

(in thousands)

 

Three Months Ended

 

Six Months Ended

October 31,

 

October 31,

2023

 

2022

 

2023

 

2022

 

 

 

 

 

 

 

 

Net income

$

80,957

 

 

$

103,153

 

 

$

167,787

 

 

$

192,623

 

Interest expense

 

18,742

 

 

 

16,055

 

 

 

37,656

 

 

 

30,716

 

Write-off of debt discount and deferred financing fees

 

 

 

 

 

 

 

1,401

 

 

 

 

Interest income

 

(292

)

 

 

(154

)

 

 

(766

)

 

 

(210

)

Provision for income taxes

 

27,205

 

 

 

35,995

 

 

 

53,939

 

 

 

68,025

 

Depreciation expense

 

16,963

 

 

 

15,058

 

 

 

33,290

 

 

 

30,051

 

Amortization expense

 

15,974

 

 

 

17,168

 

 

 

31,665

 

 

 

34,615

 

EBITDA

$

159,549

 

 

$

187,275

 

 

$

324,972

 

 

$

355,820

 

Stock appreciation expense(a)

 

401

 

 

 

3,230

 

 

 

1,619

 

 

 

5,574

 

Redeemable noncontrolling interests and deferred compensation(b)

 

184

 

 

 

340

 

 

 

664

 

 

 

835

 

Equity-based compensation(c)

 

5,111

 

 

 

3,781

 

 

 

8,415

 

 

 

6,913

 

Severance and other permitted costs(d)

 

882

 

 

 

379

 

 

 

1,288

 

 

 

731

 

Transaction costs (acquisitions and other)(e)

 

1,223

 

 

 

292

 

 

 

2,608

 

 

 

678

 

(Gain) loss on disposal of assets(f)

 

(310

)

 

 

81

 

 

 

(441

)

 

 

(203

)

Effects of fair value adjustments to inventory(g)

 

140

 

 

 

135

 

 

 

442

 

 

 

179

 

Debt transaction costs(h)

 

378

 

 

 

 

 

 

1,289

 

 

 

 

EBITDA adjustments

 

8,009

 

 

 

8,238

 

 

 

15,884

 

 

 

14,707

 

Adjusted EBITDA

$

167,558

 

 

$

195,513

 

 

$

340,856

 

 

$

370,527

 

 

 

 

 

 

 

 

Net sales

$

1,420,930

 

 

$

1,430,979

 

 

$

2,830,530

 

 

$

2,790,532

 

Adjusted EBITDA Margin

 

11.8

%

 

 

13.7

%

 

 

12.0

%

 

 

13.3

%

___________________________________

(a)

Represents changes in the fair value of stock appreciation rights.

(b)

Represents changes in the fair values of noncontrolling interests and deferred compensation agreements.

(c)

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

(d)

Represents severance expenses and certain other cost adjustments as permitted under the ABL Facility and the Term Loan Facility.

(e)

Represents costs related to acquisitions paid to third parties.

(f)

Includes gains and losses from the sale and disposal of assets.

(g)

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

(h)

Represents costs paid to third-party advisors related to debt refinancing activities.

GMS Inc.

Reconciliation of Cash Provided By Operating Activities to Free Cash Flow (Unaudited)

(in thousands)

 

Three Months Ended

 

Six Months Ended

October 31,

 

October 31,

2023

 

2022

 

2023

 

2022

Cash provided by operating activities

$

118,100

 

 

$

107,264

 

 

$

124,747

 

 

$

102,861

 

Purchases of property and equipment

 

(16,008

)

 

 

(10,727

)

 

 

(29,546

)

 

 

(21,670

)

Free cash flow (a)

$

102,092

 

 

$

96,537

 

 

$

95,201

 

 

$

81,191

 

 

________________________________________

(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

 

Six Months Ended

October 31,

 

October 31,

2023

 

2022

 

2023

 

2022

Selling, general and administrative expense

$

300,894

 

 

$

278,994

 

 

$

587,690

 

 

$

546,683

 

 

 

 

 

 

 

 

 

Adjustments

 

 

 

 

 

 

 

Stock appreciation expense(a)

 

(401

)

 

 

(3,230

)

 

 

(1,619

)

 

 

(5,574

)

Redeemable noncontrolling interests and deferred compensation(b)

 

(184

)

 

 

(340

)

 

 

(664

)

 

 

(835

)

Equity-based compensation(c)

 

(5,111

)

 

 

(3,781

)

 

 

(8,415

)

 

 

(6,913

)

Severance and other permitted costs(d)

 

(882

)

 

 

(411

)

 

 

(1,288

)

 

 

(748

)

Transaction costs (acquisitions and other)(e)

 

(1,223

)

 

 

(292

)

 

 

(2,608

)

 

 

(678

)

Gain (loss) on disposal of assets(f)

 

310

 

 

 

(81

)

 

 

441

 

 

 

203

 

Debt transaction costs(g)

 

(378

)

 

 

 

 

 

(1,289

)

 

 

 

Adjusted SG&A

$

293,025

 

 

$

270,859

 

 

$

572,248

 

 

$

532,138

 

 

 

 

 

 

 

 

 

Net sales

$

1,420,930

 

 

$

1,430,979

 

 

$

2,830,530

 

 

$

2,790,532

 

Adjusted SG&A margin

 

20.6

%

 

 

18.9

%

 

 

20.2

%

 

 

19.1

%

___________________________________

(a)

Represents changes in the fair value of stock appreciation rights.

(b)

Represents changes in the fair values of noncontrolling interests and deferred compensation agreements.

(c)

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

(d)

Represents severance expenses and certain other cost adjustments as permitted under the ABL Facility and the Term Loan Facility.

(e)

Represents costs related to acquisitions paid to third parties.

(f)

Includes gains and losses from the sale and disposal of assets.

(g)

Represents costs paid to third-party advisors related to debt refinancing activities.

GMS Inc.

Reconciliation of Income Before Taxes to Adjusted Net Income (Unaudited)

(in thousands, except per share data)

 

Three Months Ended

 

Six Months Ended

October 31,

 

October 31,

2023

 

2022

 

2023

 

2022

 

 

 

 

 

 

 

 

Income before taxes

$

108,162

 

 

$

139,148

 

 

$

221,726

 

 

$

260,648

 

EBITDA adjustments

 

8,009

 

 

 

8,238

 

 

 

15,884

 

 

 

14,707

 

Write-off of debt discount and deferred financing fees

 

 

 

 

 

 

 

1,401

 

 

 

 

Acquisition accounting depreciation and amortization (1)

 

10,823

 

 

 

13,057

 

 

 

21,738

 

 

 

26,335

 

Adjusted pre-tax income

 

126,994

 

 

 

160,443

 

 

 

260,749

 

 

 

301,690

 

Adjusted income tax expense

 

32,383

 

 

 

40,913

 

 

 

66,491

 

 

 

76,931

 

Adjusted net income

$

94,611

 

 

$

119,530

 

 

$

194,258

 

 

$

224,759

 

Effective tax rate (2)

 

25.5

%

 

 

25.5

%

 

 

25.5

%

 

 

25.5

%

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

40,466

 

 

 

42,232

 

 

 

40,608

 

 

 

42,390

 

Diluted

 

41,088

 

 

 

42,887

 

 

 

41,282

 

 

 

43,102

 

Adjusted net income per share:

 

 

 

 

 

 

 

Basic

$

2.34

 

 

$

2.83

 

 

$

4.78

 

 

$

5.30

 

Diluted

$

2.30

 

 

$

2.79

 

 

$

4.71

 

 

$

5.21

 

________________________________________ (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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