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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 8-K

 

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): December 7, 2023

 

 

 

GMS INC.

(Exact name of registrant as specified in charter)

 

 

 

Delaware   001-37784   46-2931287
(State or Other Jurisdiction
of Incorporation)
  (Commission
File Number)
  (I.R.S. Employer
Identification No.)

 

100 Crescent Centre Parkway, Suite 800
Tucker, Georgia
  30084
(Address of Principal Executive Offices)   (Zip Code)

 

Registrant’s telephone number, including area code: (800) 392-4619

 

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Stock, par value $0.01 per share   GMS   New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company  ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act  ¨

 

 

 

 

 

 

Item 2.02. Results of Operations and Financial Condition.

 

On December 7, 2023, GMS Inc. (the “Company” or “GMS”) issued a press release, a copy of which is furnished as Exhibit 99.1 hereto and incorporated herein by reference, announcing the Company’s financial results for the three and six months ended October 31, 2023.

 

In accordance with General Instruction B.2 of Form 8-K, the information in this Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit Description
99.1* Press release, dated December 7, 2023.
104 The cover page from this Current Report on Form 8-K, formatted in Inline XBRL.

 

*Furnished herewith

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  GMS INC.
       
Date: December 7, 2023 By: /s/ Scott M. Deakin
    Name: Scott M. Deakin
    Title: Chief Financial Officer

 

 

 

 

Exhibit 99.1

 

 

 

GMS REPORTS SECOND QUARTER FISCAL 2024 RESULTS

 

Strong Multi-Family and Commercial Activity During the Quarter 

Amid An Improving Single-Family Demand Backdrop

 

Tucker, Georgia, December 7, 2023. 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.”

 

1

 

 

“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%.

 

2

 

 

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.

 

3

 

 

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.

 

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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.

 

Contact Information: 

 

Investors: 

Carey Phelps 

ir@gms.com 

770-723-3369

 

5

 

 

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  

  

6

 

 

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  

  

7

 

 

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  

  

8

 

 

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 )%

 

9

 

 

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.

 

10

 

 

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.

 

11

 

 

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.

 

12

 

v3.23.3
Cover
Dec. 07, 2023
Cover [Abstract]  
Document Type 8-K
Amendment Flag false
Document Period End Date Dec. 07, 2023
Entity File Number 001-37784
Entity Registrant Name GMS INC.
Entity Central Index Key 0001600438
Entity Tax Identification Number 46-2931287
Entity Incorporation, State or Country Code DE
Entity Address, Address Line One 100 Crescent Centre Parkway
Entity Address, Address Line Two Suite 800
Entity Address, City or Town Tucker
Entity Address, State or Province GA
Entity Address, Postal Zip Code 30084
City Area Code 800
Local Phone Number 392-4619
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, par value $0.01 per share
Trading Symbol GMS
Security Exchange Name NYSE
Entity Emerging Growth Company false

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