GMS GMS Inc

Company Reports Volume Gains and Resilient Wallboard Pricing Amid Softening End Market Demands and Continued Steel Price Deflation

Announces Acquisition of R.S. Elliott Specialty Supply, Providing a Platform for Further Complementary Products Expansion Across the Southeast

GMS Inc. (NYSE: GMS), a leading North American specialty building products distributor, today reported financial results for the fiscal first quarter ended July 31, 2024.

First Quarter Fiscal 2025 Highlights

(Comparisons are to the first quarter of fiscal 2024)

• Net sales of $1.4 billion increased 2.8%; organic net sales decreased 2.2%.
• Volume growth across all four major product categories, inclusive of acquisitions.
• U.S. single-family Wallboard organic volume growth of 4.1% helped offset a 2.3% decline in multi-family and essentially flat year-over-year demand in commercial.
• Net income of $57.2 million, or $1.42 per diluted share, decreased from net income of $86.8 million, or $2.09 per diluted share; Net income margin declined 220 basis points to 4.0%.
• Adjusted net income of $77.6 million, or $1.93 per diluted share, decreased from $103.2 million, or $2.49 per diluted share.
• Adjusted EBITDA of $145.9 million decreased $27.4 million, or 15.8%; Adjusted EBITDA margin was 10.1%, compared to 12.3%.
• Cash provided by operating activities and free cash flow was a use of $22.9 million and a use of $31.9 million, respectively, compared to cash provided by operating activities of $6.6 million and a use from free cash flow of $6.9 million in the prior year period; Net debt leverage was 2.1 times at the end of the quarter, up from 1.5 times a year ago.
• Completed the acquisitions of Howard & Son Building Materials, Inc. and Yvon Building Supply and affiliates. Subsequent to the end of the quarter, acquired R.S. Elliott Specialty Supply (“R.S. Elliott”).

“During our first quarter of fiscal 2025, the GMS team delivered net sales of $1.4 billion, net income of $57.2 million and Adjusted EBITDA of $145.9 million amid what has quickly become a more challenging market environment,” said John C. Turner, Jr., President and CEO of GMS. “We realized volume growth and improved or resilient pricing in most of our major product lines. Nevertheless, steel price deflation partially offset these results, and economic tightening resulted in weaker than expected activity levels across all of our end markets for the quarter, notably in commercial and multi-family, particularly in July.”

“Despite current market pressure, we continued to focus on the execution of our strategic pillars and adapting to shifting end market demand, and are managing costs more firmly across the business. In addition to our recently closed acquisition of Yvon, we are pleased to announce the acquisition of R.S. Elliott, which is another meaningful transaction in the Complementary Products space. With five locations across Florida, R.S. Elliott is a leading distributor of stucco, exterior insulation and finishing systems (“EIFS”) and other exterior finishing and cladding products in that state. This transaction marks an important advancement of our strategy to expand our platform to better serve our customers and grow our Complementary Product offerings, particularly within one of our key focus areas, EIFS and Stucco. Distinguished for their customer service and industry expertise, I am pleased to welcome the R.S. Elliott team to GMS.”

Turner continued, “We believe the market pressures we faced this quarter will likely persist over the next several quarters, at least until the expected reduction in interest rates can positively impact demand for our products. As such, we are taking decisive action at this time to implement a $25 million annualized cost reduction program, made possible by prior investments in technology and efficiency optimization.”

“In spite of near-term headwinds, we remain confident in our model, the resilience of pricing for our major product categories outside of Steel, and our ability to execute and capture the evident growth opportunities ahead, particularly with an improved interest rate environment. Our substantial scale and breadth across the U.S. and Canada, our solid balance sheet and the expectation for significant free cash flow generation provide exceptional operational stability and a foundation for long-term shareholder value.”

First Quarter Fiscal 2025 Results

(Comparisons are to the first quarter of fiscal 2024 unless otherwise noted)

Net sales for the first quarter of fiscal 2025 of $1.4 billion increased 2.8%. Contributions from recent acquisitions, which helped drive volume growth across all four major product categories, and otherwise resilient or improved product pricing were markedly offset by year-over-year price deflation in Steel Framing, which reduced net sales by approximately $40 million for the quarter. Notably, in Wallboard, price increases were realized during the quarter and were up sequentially from our fiscal fourth quarter. With a mix shift toward single-family construction and lower priced board, however, average unit pricing for the category was roughly flat versus prior year, consistent with previously communicated expectations.

Organic net sales were down 2.2%, primarily impacted by price deflation in Steel Framing together with soft Canadian single-family residential activity, which resulted in a year-over-year decline in Complementary Product sales, particularly in roofing and lumber.

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

· Wallboard sales of $587.9 million increased 2.9% (up 1.1% on an organic basis).

· Ceilings sales of $207.2 million increased 18.2% (up 5.7% on an organic basis).

· Steel Framing sales of $209.9 million decreased 11.4% (down 15.3% on an organic basis).

· Complementary Product sales of $443.5 million increased 4.1% (down 2.7% on an organic basis).

Gross profit of $451.6 million increased $1.0 million, or 0.2%. Gross margin was 31.2%, down 80 basis points as compared to 32.0% a year ago, primarily due to the mix impacts of Steel price deflation, price/cost dynamics in Wallboard, and a shift from commercial and multi-family to single-family Wallboard deliveries, all of which were more pronounced than expected.

Selling, general and administrative (“SG&A”) expenses were $315.2 million for the quarter, up from $286.8 million. Of the $28.4 million year-over-year difference, approximately $16 million related to recent acquisitions. The remainder of the variance was primarily due to inflationary and activity-based employee compensation and warehouse costs.

SG&A expense as a percentage of net sales increased 150 basis points to 21.8% for the quarter, compared to 20.3%. Operating cost inflation and activity-based increases impacted SG&A leverage by approximately 85 basis points while steel price deflation contributed approximately 55 basis points of deleverage. Costs associated with recent acquisitions and greenfield openings negatively impacted SG&A leverage by an estimated 10 basis points. Adjusted SG&A expense as a percentage of net sales of 21.2% also increased 140 basis points from 19.8%.

Inclusive of a $3.3 million, or 17.4%, increase in interest expense, and a $3.2 million prior year one-time tax benefit, net income decreased 34.1% to $57.2 million, or $1.42 per diluted share, compared to net income of $86.8 million, or $2.09 per diluted share. Net income margin declined 220 basis points from 6.2% to 4.0%.

Adjusted EBITDA decreased $27.4 million, or 15.8%, to $145.9 million compared to the prior year quarter. Adjusted EBITDA margin was 10.1%, compared with 12.3% for the first quarter of fiscal 2024.

New Presentation for Adjusted Net Income

Please note, to make the Company’s financial presentation more consistent with other public building products companies, beginning in the first quarter of fiscal 2025, we are now including adjustments for all non-cash amortization expense related to acquisitions. Past practice included non-cash amortization and depreciation for only certain transactions.

Using the new methodology, Adjusted net income was $77.6 million, or $1.93 per diluted share, for the first quarter of fiscal 2025, compared to $103.2 million, or $2.49 per diluted share. The normalized cash tax rate of 26.0% was consistent with previously communicated expectations for fiscal 2025.

The tables included herein provide both the legacy and new presentations for reference.

Balance Sheet, Liquidity and Cash Flow

As of July 31, 2024, the Company had cash on hand of $53.2 million, total debt of $1.4 billion and $565.3 million of available liquidity under its revolving credit facilities. Net debt leverage was 2.1 times as of the end of the quarter, up from 1.5 times at the end of the first quarter of fiscal 2024.

For the first quarter of fiscal 2025, which seasonally represents the highest use of cash for the Company, cash used by operating activities was $22.9 million, compared to a $6.6 million source of cash in the prior year period. Free cash flow was a use of $31.9 million for the quarter ended July 31, 2024, compared to a use of $6.9 million for the quarter ended July 31, 2023.

Share Repurchases

During the quarter, the Company repurchased 538,078 shares of common stock for $46.2 million. As of July 31, 2024, the Company had $154.3 million of share repurchase authorization remaining.

Platform Expansion Activities, Including Subsequent Event: Purchase of R.S. Elliott Specialty Supply

During the first quarter of fiscal 2025, the Company continued the execution of its platform expansion strategy with the closing of its previously announced acquisition of Yvon Building Supply and affiliates, representing a strategic expansion to the Company’s presence in the Ontario, Canada market.

Also, after the end of the quarter, on August 26, 2024, the Company successfully acquired R.S. Elliott Specialty Supply, a leading distributor of exterior building products within the state of Florida.

Headquartered in Orlando, R.S. Elliott is a leading regional distributor of stucco, plaster, siding, EIFS and related construction supplies servicing markets across Florida from five locations in Orlando, Wildwood, Tampa, West Palm Beach and Jacksonville.

For the twelve months ended June 2024, R.S. Elliott generated net revenues of approximately $70 million with EBITDA margins that are expected to be nicely accretive to GMS and to the Company’s Complementary business.

Conference Call and Webcast

GMS will host a conference call and webcast to discuss its results for the first quarter of fiscal 2025 ended July 31, 2024 and other information related to its business at 8:30 a.m. Eastern Time on Thursday, August 29, 2024. 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 March 29, 2024 and can be accessed at 844-512-2921 (domestic) or 412-317-6671 (international) and entering the pass code 13748110.

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 approximately 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 August 29, 2024. 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 August 29, 2024.

GMS Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except per share data)

 

​

Three Months Ended

 

July 31,

​

 

2024

 

 

 

2023

 

Net sales

$

1,448,456

 

 

$

1,409,600

 

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

 

996,893

 

 

 

959,046

 

Gross profit

 

451,563

 

 

 

450,554

 

Operating expenses:

 

 

 

Selling, general and administrative

 

315,152

 

 

 

286,796

 

Depreciation and amortization

 

38,032

 

 

 

32,018

 

Total operating expenses

 

353,184

 

 

 

318,814

 

Operating income

 

98,379

 

 

 

131,740

 

Other (expense) income:

 

 

 

Interest expense

 

(22,213

)

 

 

(18,914

)

Write-off of debt discount and deferred financing fees

 

—

 

 

 

(1,401

)

Other income, net

 

2,028

 

 

 

2,139

 

Total other expense, net

 

(20,185

)

 

 

(18,176

)

Income before taxes

 

78,194

 

 

 

113,564

 

Provision for income taxes

 

20,946

 

 

 

26,734

 

Net income

$

57,248

 

 

$

86,830

 

Weighted average common shares outstanding:

 

 

 

Basic

 

39,542

 

 

 

40,749

 

Diluted

 

40,226

 

 

 

41,477

 

Net income per common share:

 

 

 

Basic

$

1.45

 

 

$

2.13

 

Diluted

$

1.42

 

 

$

2.09

 

GMS Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except per share data)

 

​

July 31, 2024

 

April 30, 2024

Assets

Current assets:

​

 

 

Cash and cash equivalents

$

53,172

 

 

$

166,148

 

Trade accounts and notes receivable, net of allowances of $16,924 and $16,930, respectively

 

929,508

 

 

 

849,993

 

Inventories, net

 

607,403

 

 

 

580,830

 

Prepaid expenses and other current assets

 

43,183

 

 

 

42,352

 

Total current assets

 

1,633,266

 

 

 

1,639,323

 

Property and equipment, net of accumulated depreciation of $320,106 and $309,850, respectively

 

490,713

 

 

 

472,257

 

Operating lease right-of-use assets

 

288,335

 

 

 

251,207

 

Goodwill

 

890,699

 

 

 

853,767

 

Intangible assets, net

 

553,341

 

 

 

502,688

 

Deferred income taxes

 

22,591

 

 

 

21,890

 

Other assets

 

14,357

 

 

 

18,708

 

Total assets

$

3,893,302

 

 

$

3,759,840

 

Liabilities and Stockholders’ Equity

Current liabilities:

 

 

 

Accounts payable

$

420,288

 

 

$

420,237

 

Accrued compensation and employee benefits

 

59,451

 

 

 

125,610

 

Other accrued expenses and current liabilities

 

122,346

 

 

 

111,204

 

Current portion of long-term debt

 

53,743

 

 

 

50,849

 

Current portion of operating lease liabilities

 

52,372

 

 

 

49,150

 

Total current liabilities

 

708,200

 

 

 

757,050

 

Non-current liabilities:

 

 

 

Long-term debt, less current portion

 

1,326,695

 

 

 

1,229,726

 

Long-term operating lease liabilities

 

241,041

 

 

 

204,865

 

Deferred income taxes, net

 

80,403

 

 

 

62,698

 

Other liabilities

 

66,660

 

 

 

44,980

 

Total liabilities

 

2,422,999

 

 

 

2,299,319

 

Commitments and contingencies

 

 

 

Stockholders' equity:

 

 

 

Common stock, par value $0.01 per share, 500,000 shares authorized; 39,282

and 39,754 shares issued and outstanding as of July 31, 2024 and April 30, 2024, respectively

 

393

 

 

 

397

 

Preferred stock, par value $0.01 per share, 50,000 shares authorized; 0 shares issued and outstanding as of July 31, 2024 and April 30, 2024

 

—

 

 

 

—

 

Additional paid-in capital

 

295,431

 

 

 

334,596

 

Retained earnings

 

1,214,295

 

 

 

1,157,047

 

Accumulated other comprehensive loss

 

(39,816

)

 

 

(31,519

)

Total stockholders' equity

 

1,470,303

 

 

 

1,460,521

 

Total liabilities and stockholders' equity

$

3,893,302

 

 

$

3,759,840

 

GMS Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

 

 

Three Months Ended July 31,

​

 

2024

 

 

 

2023

 

Cash flows from operating activities:

 

 

​

Net income

$

57,248

 

 

$

86,830

 

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

​

 

​

Depreciation and amortization

 

38,032

 

 

 

32,018

 

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

 

448

 

 

 

2,077

 

Equity-based compensation

 

4,343

 

 

 

5,002

 

Loss (gain) on disposal and impairment of assets

 

858

 

 

 

(131

)

Deferred income taxes

 

(1,681

)

 

 

(2,587

)

Other items, net

 

2,288

 

 

 

820

 

Changes in assets and liabilities net of effects of acquisitions:

​

 

​

Trade accounts and notes receivable

 

(36,373

)

 

 

(38,244

)

Inventories

 

(20,640

)

 

 

(1,359

)

Prepaid expenses and other assets

 

(3,320

)

 

 

(19,331

)

Accounts payable

 

(10,644

)

 

 

(28,280

)

Accrued compensation and employee benefits

 

(66,124

)

 

 

(64,038

)

Other accrued expenses and liabilities

 

12,626

 

 

 

33,870

 

Cash (used in) provided by operating activities

 

(22,939

)

 

 

6,647

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(8,976

)

 

 

(13,538

)

Proceeds from sale of assets

 

1,218

 

 

 

982

 

Acquisition of businesses, net of cash acquired

 

(118,461

)

 

 

(38,976

)

Cash used in investing activities

 

(126,219

)

 

 

(51,532

)

Cash flows from financing activities:

 

 

 

Repayments on revolving credit facility

 

(378,641

)

 

 

(187,784

)

Borrowings from revolving credit facility

 

468,864

 

 

 

190,673

 

Payments of principal on long-term debt

 

(1,247

)

 

 

—

 

Borrowings from term loan amendment

 

—

 

 

 

288,266

 

Repayments from term loan amendment

 

—

 

 

 

(287,768

)

Payments of principal on finance lease obligations

 

(10,839

)

 

 

(9,793

)

Repurchases of common stock

 

(46,609

)

 

 

(30,784

)

Payment for debt issuance costs

 

—

 

 

 

(5,825

)

Proceeds from exercises of stock options

 

555

 

 

 

1,248

 

Proceeds from issuance of stock pursuant to employee stock purchase plan

 

3,207

 

 

 

2,664

 

Cash provided by (used in) financing activities

 

35,290

 

 

 

(39,103

)

Effect of exchange rates on cash and cash equivalents

 

892

 

 

 

692

 

Decrease in cash and cash equivalents

 

(112,976

)

 

 

(83,296

)

Cash and cash equivalents, beginning of period

 

166,148

 

 

 

164,745

 

Cash and cash equivalents, end of period

$

53,172

 

 

$

81,449

 

Supplemental cash flow disclosures:

 

 

 

Cash paid for income taxes

$

2,881

 

 

$

3,167

 

Cash paid for interest

 

26,730

 

 

 

21,853

 

GMS Inc.

Net Sales by Product Group (Unaudited)

(dollars in thousands)

 

​

Three Months Ended

​

July 31, 2024

 

% of Total

 

July 31, 2023

 

% of Total

​

 

 

 

 

 

 

 

Wallboard

$

587,929

 

40.6

%

 

$

571,425

 

40.5

%

Ceilings

 

207,156

 

14.3

%

 

 

175,205

 

12.4

%

Steel framing

 

209,858

 

14.5

%

 

 

236,760

 

16.8

%

Complementary products

 

443,513

 

30.6

%

 

 

426,210

 

30.2

%

Total net sales

$

1,448,456

 

 

 

$

1,409,600

 

 

GMS Inc.

Net Sales and Organic Sales by Product Group (Unaudited)

(dollars in millions)

 

​

Net Sales

 

 

Organic Sales

 

​

Three Months Ended July 31,

 

 

Three Months Ended July 31,

 

​

 

2024

 

 

2023

Change

 

 

2024

 

 

2023

Change

Wallboard

$

587.9

 

$

571.4

2.9

%

 

$

577.4

 

$

571.4

1.1

%

Ceilings

 

207.2

 

 

175.2

18.2

%

 

 

185.2

 

 

175.2

5.7

%

Steel framing

 

209.9

 

 

236.8

(11.4

)%

 

 

200.5

 

 

236.8

(15.3

)%

Complementary products

 

443.5

 

 

426.2

4.1

%

 

 

414.9

 

 

426.2

(2.7

)%

Total net sales

$

1,448.5

 

$

1,409.6

2.8

%

 

$

1,378.0

 

$

1,409.6

(2.2

)%

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 July 31,

 

 

Three Months Ended July 31,

 

​

 

2024

 

 

2023

Change

 

 

2024

 

 

2023

Change

Wallboard

$

9.2

 

$

8.9

2.9

%

 

$

9.0

 

$

8.9

1.1

%

Ceilings

 

3.2

 

 

2.7

18.2

%

 

 

2.9

 

 

2.7

5.7

%

Steel framing

 

3.3

 

 

3.7

(11.4

)%

 

 

3.1

 

 

3.7

(15.3

)%

Complementary products

 

6.9

 

 

6.7

4.1

%

 

 

6.5

 

 

6.7

(2.7

)%

Total net sales

$

22.6

 

$

22.0

2.8

%

 

$

21.5

 

$

22.0

(2.2

)%

​

Per Day Organic Growth

 

Three Months Ended July 31, 2024

​

Volume

 

Price/Mix/Fx

Wallboard

0.9

%

 

0.2

%

Ceilings

1.1

%

 

4.6

%

Steel framing

(0.6

)%

 

(14.7

)%

_____________________

(a) Given the wide breadth of offerings and units of measure in Complementary Products, detailed price vs volume reporting is not available at a consolidated level.

GMS Inc.

Reconciliation of Net Income to Adjusted EBITDA (Unaudited)

(in thousands)

 

​

Three Months Ended

​

July 31,

​

 

2024

 

 

 

2023

 

 

 

 

 

Net income

$

57,248

 

 

$

86,830

 

Interest expense

 

22,213

 

 

 

18,914

 

Write-off of debt discount and deferred financing fees

 

—

 

 

 

1,401

 

Interest income

 

(370

)

 

 

(474

)

Provision for income taxes

 

20,946

 

 

 

26,734

 

Depreciation expense

 

19,228

 

 

 

16,327

 

Amortization expense

 

18,804

 

 

 

15,691

 

EBITDA

$

138,069

 

 

$

165,423

 

Stock appreciation expense(a)

 

243

 

 

 

1,218

 

Redeemable noncontrolling interests and deferred compensation(b)

 

422

 

 

 

480

 

Equity-based compensation(c)

 

3,678

 

 

 

3,304

 

Severance and other permitted costs(d)

 

956

 

 

 

406

 

Transaction costs (acquisitions and other)(e)

 

1,280

 

 

 

1,385

 

Loss (gain) on disposal of assets(f)

 

858

 

 

 

(131

)

Effects of fair value adjustments to inventory(g)

 

375

 

 

 

302

 

Debt transaction costs(h)

 

—

 

 

 

911

 

EBITDA adjustments

 

7,812

 

 

 

7,875

 

Adjusted EBITDA

$

145,881

 

 

$

173,298

 

​

 

 

 

Net sales

$

1,448,456

 

 

$

1,409,600

 

Adjusted EBITDA Margin

 

10.1

%

 

 

12.3

%

____________________

(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 (Used In) Operating Activities to Free Cash Flow (Unaudited)

(in thousands)

 

​

Three Months Ended

​

July 31,

​

 

2024

 

 

 

2023

 

Cash provided by (used in) operating activities

$

(22,939

)

 

$

6,647

 

Purchases of property and equipment

 

(8,976

)

 

 

(13,538

)

Free cash flow (a)

$

(31,915

)

 

$

(6,891

)

____________________

(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

​

July 31,

​

 

2024

 

 

 

2023

 

Selling, general and administrative expense

$

315,152

 

 

$

286,796

 

 

 

 

 

Adjustments

 

 

 

Stock appreciation expense(a)

 

(243

)

 

 

(1,218

)

Redeemable noncontrolling interests and deferred compensation(b)

 

(422

)

 

 

(480

)

Equity-based compensation(c)

 

(3,678

)

 

 

(3,304

)

Severance and other permitted costs(d)

 

(956

)

 

 

(406

)

Transaction costs (acquisitions and other)(e)

 

(1,280

)

 

 

(1,385

)

(Loss) gain on disposal of assets(f)

 

(858

)

 

 

131

 

Debt transaction costs(g)

 

—

 

 

 

(911

)

Adjusted SG&A

$

307,715

 

 

$

279,223

 

 

 

 

 

Net sales

$

1,448,456

 

 

$

1,409,600

 

Adjusted SG&A margin

 

21.2

%

 

 

19.8

%

____________________

(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)

 

Legacy Presentation

 

​

Three Months Ended

​

July 31,

​

 

2024

 

 

 

2023

 

 

 

 

 

Income before taxes

$

78,194

 

 

$

113,564

 

EBITDA adjustments

 

7,812

 

 

 

7,875

 

Write-off of debt discount and deferred financing fees

 

—

 

 

 

1,401

 

Acquisition accounting depreciation and amortization (1)

 

14,157

 

 

 

10,915

 

Adjusted pre-tax income

 

100,163

 

 

 

133,755

 

Adjusted income tax expense

 

26,042

 

 

 

34,108

 

Adjusted net income

$

74,121

 

 

$

99,647

 

Effective tax rate (2)

 

26.0

%

 

 

25.5

%

 

 

 

 

Weighted average shares outstanding:

 

 

 

Basic

 

39,542

 

 

 

40,749

 

Diluted

 

40,226

 

 

 

41,477

 

Adjusted net income per share:

 

 

 

Basic

$

1.87

 

 

$

2.45

 

Diluted

$

1.84

 

 

$

2.40

 

____________________

(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, Ames Taping Tools, Kamco Supply Corporation and Yvon Building Supplies.

 

 

(2)

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

GMS Inc.

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

(in thousands, except per share data)

 

New Presentation

 

​

Three Months Ended

​

July 31,

​

 

2024

 

 

 

2023

 

 

 

 

 

Income before taxes

$

78,194

 

 

$

113,564

 

EBITDA adjustments

 

7,812

 

 

 

7,875

 

Write-off of debt discount and deferred financing fees

 

—

 

 

 

1,401

 

Amortization expense (1)

 

18,804

 

 

 

15,691

 

Adjusted pre-tax income

 

104,810

 

 

 

138,531

 

Adjusted income tax expense

 

27,251

 

 

 

35,325

 

Adjusted net income

$

77,559

 

 

$

103,206

 

Effective tax rate (2)

 

26.0

%

 

 

25.5

%

 

 

 

 

Weighted average shares outstanding:

 

 

 

Basic

 

39,542

 

 

 

40,749

 

Diluted

 

40,226

 

 

 

41,477

 

Adjusted net income per share:

 

 

 

Basic

$

1.96

 

 

$

2.53

 

Diluted

$

1.93

 

 

$

2.49

 

____________________

(1)

Represents all non-cash amortization resulting from business combinations. To make the financial presentation more consistent with other public building products companies, beginning in the first quarter 2025 we are now including an adjustment for all non-cash amortization expense related to acquisitions, as opposed to non-cash amortization and depreciation for select acquisitions.

 

 

(2)

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

GMS Inc.

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

(in thousands, except per share data)

 

Historical New Presentation

 

​

Three Months Ended

​

July 31,

 

October 31,

 

January 31,

 

April 30,

​

 

2023

 

 

 

2023

 

 

 

2024

 

 

 

2024

 

 

 

 

 

 

 

 

 

Income before taxes

$

113,564

 

 

$

108,162

 

 

$

69,373

 

 

$

83,067

 

EBITDA adjustments

 

7,875

 

 

 

8,009

 

 

 

7,437

 

 

 

8,823

 

Write-off of discount and deferred financing fees

 

1,401

 

 

 

—

 

 

 

—

 

 

 

674

 

Amortization expense (1)

 

15,691

 

 

 

15,974

 

 

 

15,528

 

 

 

16,963

 

Adjusted pre-tax income

 

138,531

 

 

 

132,145

 

 

 

92,338

 

 

 

109,527

 

Adjusted income tax expense

 

35,325

 

 

 

33,697

 

 

 

23,546

 

 

 

27,929

 

Adjusted net income

$

103,206

 

 

$

98,448

 

 

$

68,792

 

 

$

81,598

 

Effective tax rate (2)

 

25.5

%

 

 

25.5

%

 

 

25.5

%

 

 

25.5

%

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

40,749

 

 

 

40,466

 

 

 

39,864

 

 

 

39,830

 

Diluted

 

41,477

 

 

 

41,088

 

 

 

40,512

 

 

 

40,539

 

Adjusted net income per share:

 

 

 

 

 

 

 

Basic

$

2.53

 

 

$

2.43

 

 

$

1.73

 

 

$

2.05

 

Diluted

$

2.49

 

 

$

2.40

 

 

$

1.70

 

 

$

2.01

 

____________________

(1)

Represents all non-cash amortization resulting from business combinations.

 

 

(2)

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

GMS Inc.

Reconciliation of Net Income to Pro Forma Adjusted EBITDA (Unaudited)

(in thousands)

 

​

Last Twelve Months Ended

​

July 31,

​

 

2024

 

 

 

2023

 

 

 

 

 

Net income

$

246,497

 

 

$

330,351

 

Interest expense

 

78,760

 

 

 

70,096

 

Write-off of debt discount and deferred financing fees

 

674

 

 

 

1,401

 

Interest income

 

(1,650

)

 

 

(1,705

)

Provision for income taxes

 

92,299

 

 

 

109,216

 

Depreciation expense

 

72,107

 

 

 

62,511

 

Amortization expense

 

67,269

 

 

 

63,974

 

EBITDA

$

555,956

 

 

$

635,844

 

Stock appreciation expense(a)

 

4,416

 

 

 

6,577

 

Redeemable noncontrolling interests and deferred compensation(b)

 

1,369

 

 

 

1,163

 

Equity-based compensation(c)

 

15,992

 

 

 

13,389

 

Severance and other permitted costs(d)

 

3,178

 

 

 

2,842

 

Transaction costs (acquisitions and other)(e)

 

4,751

 

 

 

2,960

 

Loss (gain) on disposal of assets(f)

 

260

 

 

 

(1,260

)

Effects of fair value adjustments to inventory(g)

 

1,706

 

 

 

1,381

 

Debt transaction costs(h)

 

409

 

 

 

1,084

 

EBITDA adjustments

 

32,081

 

 

 

28,136

 

Adjusted EBITDA

 

588,037

 

 

 

663,980

 

Contributions from acquisitions(i)

 

35,211

 

 

 

13,583

 

Pro Forma Adjusted EBITDA

$

623,248

 

 

$

677,563

 

____________________

(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.

(i)

Represents the pro forma impact of earnings from acquisitions from the beginning of the last twelve month period to the date of acquisition, including synergies.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240829033904/en/

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