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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 7.01. Regulation FD Disclosure.

 

The slide presentation furnished as Exhibit 99.1 hereto, and incorporated herein by reference, will be presented to certain investors of GMS on December 7, 2023, and may be used by GMS in various other presentations to investors on or after December 7, 2023.

 

In accordance with General Instruction B.2 of Form 8-K, the information in this Item 7.01 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, 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* GMS Inc. presentation to investors.
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

 

Q2 2024 Earnings Call December 7, 2023

 

 

2 Safe Harbor and B asis of Presentation Forward - Looking Statement Safe Harbor — This presentation 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,” “bel ieve,” “confident,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “seek,” or “should,” or the negative thereof or other variations th ere on or comparable terminology. In particular, statements about the markets in which GMS operates and our products, including potential or expected growth in those markets and products, the eco nom y generally, our ability to continue successfully navigating the evolving operating environment and executing our business, strategic initiatives and priorities and growth pot ent ial, future M&A and greenfields, inflation, capital structure, pricing, volumes, net sales, organic sales, gross margins, incremental EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, inter est expense, tax rates, capital expenditures, free cash flow, future financial performance and liquidity, and the ability of the Company to grow stronger contained in this presentat ion may be considered forward - looking statements. Statements about our expectations, beliefs, plans, strategies, objectives, prospects, assumptions or future events or performance may be co nsidered 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 uncerta inties, many of which are beyond its control, including current 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 o f any date subsequent to December 7, 2023. Use of Non - GAAP and Adjusted Financial Information — To supplement GAAP financial information, we use adjusted measures of operating results which are non - GAAP measures. This non - GAAP adjusted financial information is provided as additional information for investors. These adjusted results exclude certain costs, expenses, gains and losses, and we believe their exclusion can enhance an overall understanding of our past financial performance and also our prospects for the fu ture. These adjustments to our GAAP results are made with the intent of providing both management and investors a more complete understanding of our operating performance by excl udi ng non - recurring, infrequent or other non - cash charges that are not believed to be material to the ongoing performance of our business. The presentation of this additional inf ormation is not meant to be considered in isolation or as a substitute for GAAP measures of net income, diluted earnings per share or net cash provided by (used in) operating activities pr epared in accordance with generally accepted accounting principles in the United States. Please see the Appendix to this presentation for a further discussion on these non - GAAP measure s and a reconciliation of these non - GAAP measures to the most directly comparable GAAP measures.

 

 

3 Q224 Net Income $ 81.0 M Q224 Cash from Operations GMS – Q2 FY24 at a Glance Q224 Net Income Margin *For a reconciliation of Adjusted EBITDA and Adjusted EBITDA margin to the most directly comparable GAAP metrics, see Appendi x. Unless indicated otherwise, comparisons are to Q2 2023. Q224 Adj. EBITDA* $ 167.6 M Q224 Net Sales $1.4 B $ 118.1 M 11.8% Q224 Adj. EBITDA Margin* • Solid demand in commercial and multi - family construction drove volume increases in Ceilings, Steel Framing and Complementary Products • Price deflation in Steel Framing offset the benefits from the commercial and multi - family volume increases • Wallboard experienced only a slight volume decline, contributing to continued resilience in pricing. 5.7%

 

 

4 Strategic Growth Priorities Capitalize on existing fixed investments in locations & equipment where we are underpenetrated or below expected share Grow Complementary Product opportunities to diversify and profitably expand our product offerings Expand the platform through accretive acquisition and greenfield opportunities, balanced with debt reduction priorities Leverage our scale and employ technology and best practices to deliver a best - in - class customer experience with an aim to further profit improvement Expand Share in Core Products Grow Complementary Products Platform Expansion Drive Improved Productivity & Profitability • The Gypsum Association, Steel Framing Industry Association and ceilings manufacturers all indicate that we continue to gain share • Q224 was the 14th consecutive quarter of year - over - year growth for our Complementary Products • Focus areas Tools & Fasteners, EIFS/Stucco and Insulation continue to outperform the broader category • During Q224, we completed the acquisition of AMW Construction Supply, a highly respected distributor of Tools & Fasteners and other Complementary Products in the Phoenix, AZ market • Opened 2 greenfield locations and 1 AMES store during the quarter • Efforts to improve productivity and profitability and to reduce complexity costs helped drive favorable SG&A costs for the quarter

 

 

5 Q2 Fiscal 2024 Sales Highlights Solid demand in commercial and multi - family construction drove volume increases in Ceilings, Steel Framing and Complementary Products, offset by price deflation in Steel Framing U.S. Residential Sales Q224 Net Sales $ 1.4 B Per Day Net Sales 2.1% U.S. Commercial Sales 0.4% U.S. Wallboard Volume For GMS Multi - Family – Up 17.0% Commercial – Up 6.5% Single - Family – Down 11.4% 5.7% 0.7% Deflationary price dynamics in Steel Framing reduced net sales by $85 million for the quarter Q224 Q223 Change Q224 Q223 Change Volume Price/Mix/Fx Wallboard 9.0$ 9.0$ 0.1% 9.0$ 9.0$ -0.3% -1.0% 0.7% Ceilings 2.7$ 2.5$ 9.9% 2.6$ 2.5$ 7.2% 5.8% 1.4% Steel Framing 3.6$ 4.3$ -16.6% 3.5$ 4.3$ -17.4% 13.1% -30.5% Complementary Products 6.6$ 6.3$ 4.8% 6.2$ 6.3$ -1.4% Total 21.9$ 22.1$ -0.7% 21.3$ 22.1$ -3.1% Per Day Net Sales Per Day Organic Sales Per Day Organic Growth

 

 

6 $464.5 $458.6 32.5% 32.3% 31.1% 31.6% 32.1% 32.6% $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 Fiscal Q2 2023 Fiscal Q2 2024 Gross Profit Gross Margin ($ mm) Deflationary Steel Pricing Impacts Profitability Cost Containment and Efficiency Gains Drive Favorable SG&A Results 1 For a reconciliation of Adjusted SG&A, Adjusted Net Income, Adjusted EBITDA and Adjusted EBITDA Margin to the most directly c omp arable GAAP metrics, see Appendix. 1 1 1 $270.9 $293.0 18.9% 20.6% 18.0% 18.5% 19.0% 19.5% 20.0% 20.5% 21.0% 21.5% $0 $50 $100 $150 $200 $250 $300 Fiscal Q2 2023 Fiscal Q2 2024 Adj. SG&A Adj. SG&A as % of Sales ($ mm) 1 $195.5 $167.6 13.7% 11.8% 10.5% 11.0% 11.5% 12.0% 12.5% 13.0% 13.5% 14.0% 14.5% 15.0% 15.5% 16.0% $0 $50 $100 $150 $200 $250 $300 Fiscal Q2 2023 Fiscal Q2 2024 Adj. EBITDA Adj. EBITDA Margin ($ mm) Gross Profit & Gross Margin Gross Profit up year - over - year and Gross Margin down due to deflationary steel pricing SG&A SG&A and Adj. SG&A expenses were up YOY due to the costs related to recently acquired businesses & greenfields and more robust multi - family and commercial volumes; Adj. SG&A percent of sales leverage was primarily negatively impacted by steel price deflation. Net Income & Adj. EBITDA 1 Net income decreased 21.5% YOY to $81.0M. Included a 16.7% increase in interest expense. Adjusted EBITDA of $167.6 million with 11.8% Adjusted EBITDA margin.

 

 

7 Attractive Capital Structure Supports Strategic Priorities Expanded repurchase authorization up to $250 million approved in October; $241.3 million of repurchase authorization remaining at 10/31/23 1.6x 1.6x 1.4x 1.5x 1.5x 10/31/2022 1/31/2023 4/30/2023 7/31/2023 10/31/2023 $25 $45 $38 $32 $106 $840 FY24 FY25 FY26 FY27 FY28 Thereafter LTM Net Debt / PF Adjusted EBITDA 2 Debt 3 Maturity Schedule $ in millions 1. For a reconciliation of free cash flow to cash used in operating activities, the most directly comparable GAAP metric, see Ap pen dix. 2. For detail, including a reconciliation of Pro Forma Adjusted EBITDA to net income, the most directly comparable GAAP metric, see Appendix. 3. Debt includes First Lien Term Loan, ABL Facility, Senior Notes, Finance Leases & Installment Notes. 4. Includes cash used for Capital Expenditures, Acquisitions, Share Repurchases, Payments on Principal on Long - Term Debt and Paymen ts on Principal on Finance Lease Obligations for fiscal years 2021, 2022 and 2023 5. Balance sheet, capital structure and share repurchase authorization references are as of 10/31/23. Expanded Share Repurchase Authorization Q224 Cash from Operations $118.1M Improved 10% YOY Q224 Free Cash Flow 1 Substantial Liquidity $76.5 million of cash on hand and $823.7 million available under our revolving credit facility. Acquisitions 53% Share Repurchases 18% Capital Expenditures 15% Debt/Lease Payments 14% 3 - Year Historical Use of Cash 4 For Fiscal Years 2021, 2022 and 2023 Improved 6% YOY $102.1M

 

 

8 End Market & Product - Level Expectations for Q3 FY2024 Product Category Q3 FY24 YOY Volume Expectations Q3 FY24 YOY Price/Mix Expectations Wallboard • Multi - family: Up mid - teens • Single - family: Down low single - digits • Commercial: Up mid single - digits • Total Wallboard: Up mid single - digits Flat to down slightly Ceilings Up mid - to - high single - digits Up low single - digits Steel Framing Up low double - digits Down nearly 25% Complementary Products Total sales growth in Complementary Products, including the benefits of recent acquisitions, is expected to be up high single to low double - digits

 

 

9 Consolidated GMS Expectations for Q3 FY24 and Full Year Fiscal 2024 Metric for Q3 FY24 Q3 FY24 Expectation Net Sales Up low single - digits Gross Margin Similar to Q224’s Gross Margin of 32.3% Adjusted EBITDA 1 $123 million - $127 million Metric for Full Year FY24 Full Year FY24 Expectation Interest Expense ~$70 - $72 million Capital Expenditures ~$55 million Free Cash Flow 1 ~ 50% - 60% of FY24 Adj. EBITDA 1 Tax Rate 2 ~25.5% - 26.0% 1 For a reconciliation of Adjusted EBITDA, Adjusted Net Income or Free Cash Flow to the most directly comparable GAAP metrics, see Appendix. 2 Tax rate refers to the normalized cash tax rate excluding the impact of acquisition accounting and certain other deferred tax am ounts.

 

 

10 Appendix

 

 

11 Summary Quarterly Financials (In millions) 1Q23 2Q23 3Q23 4Q23 FY23 1Q24 2Q24 (Unaudited) Wallboard Volume (MSF) 1,191 1,232 1,058 1,130 4,611 1,204 1,231 Wallboard Price ($ / '000 Sq. Ft.) 438$ 474$ 473$ 481$ 467$ 475$ 476$ Wallboard 522$ 585$ 501$ 545$ 2,152$ 571$ 585$ Ceilings 167 160 147 155 629 175 175 Steel framing 275 278 234 224 1,011 237 232 Complementary products 396 409 353 380 1,538 426 428 Net sales 1,360 1,431 1,235 1,304 5,329 1,410 1,421 Cost of sales 925 966 832 880 3,603 959 962 Gross profit 435 465 402 424 1,726 451 459 Gross margin 32.0% 32.5% 32.6% 32.5% 32.4% 32.0% 32.3% Operating expenses: Selling, general and administrative expenses 268 279 267 280 1,094 287 301 Depreciation and amortization 32 32 31 31 127 32 33 Total operating expenses 300 311 299 311 1,221 319 334 Operating income 135 153 103 114 505 132 125 Other (expense) income: Interest expense (15) (16) (17) (18) (66) (19) (19) Write-off of discount and deferred financing costs - - - - - (1) - Other income, net 2 2 2 3 8 2 2 Total other expense, net (13) (14) (15) (16) (58) (18) (17) Income before taxes 122 139 88 98 448 114 108 Income tax expense 32 36 24 23 115 27 27 Net income 90$ 103$ 65$ 76$ 333$ 87$ 81$ Business Days 63 65 62 63 253 64 65 Net Sales by Business Day 21.6$ 22.0$ 19.9$ 20.7$ 21.1$ 22.0$ 21.9$ Beginning Branch Count 286 289 291 297 286 304 305 Added Branches 3 2 6 7 18 1 3 Ending Branch Count 289 291 297 304 304 305 308

 

 

12 Quarterly Cash Flows (1) Free cash flow is a non - GAAP financial measure defined as net cash provided by (used in) operations less capital expenditures. D ifferences may occur due to rounding. ($ in millions) (Unaudited) 1Q23 2Q23 3Q23 4Q23 FY23 1Q24 2Q24 Net income $ 89.5 $ 103.2 $ 64.8 $ 75.6 $ 333.0 $ 86.8 $ 81.0 Non-cash changes & other changes 8.9 63.3 21.8 62.0 155.9 (12.3) 48.2 Changes in primary working capital components: Trade accounts and notes receivable (69.6) (63.8) 105.3 (8.9) (37.0) (38.2) (51.1) Inventories (28.7) (3.6) (2.4) 17.9 (16.8) (1.4) 21.6 Accounts payable (4.4) 8.2 (55.3) 58.2 6.7 (28.3) 18.4 Cash provided by (used in) operating activities (4.4) 107.3 134.1 204.8 441.7 6.6 118.1 Purchases of property and equipment (10.9) (10.7) (11.6) (19.4) (52.7) (13.5) (16.0) Proceeds from sale of assets 0.3 0.6 0.8 1.2 2.9 1.0 0.7 Acquisitions of businesses, net of cash acquired (2.6) (0.0) (17.8) (41.3) (61.7) (39.0) (17.0) Cash (used in) investing activities (13.3) (10.1) (28.6) (59.5) (111.5) (51.5) (32.3) Cash provided by (used in) financing activities 22.2 (77.4) (43.8) (166.7) (265.6) (39.1) (89.7) Effect of exchange rates 0.2 (2.2) 0.8 (0.6) (1.8) 0.7 (1.1) Increase (decrease) in cash and cash equivalents 4.7 17.6 62.5 (21.9) 62.8 (83.3) (4.9) Balance, beginning of period 101.9 106.6 124.2 186.7 101.9 164.7 - Balance, end of period $ 106.6 $ 124.2 $ 186.7 $ 164.7 $ 164.7 $ 81.4 $ (4.9) Supplemental cash flow disclosures: Cash paid for income taxes $ 3.2 $ 57.6 $ 24.9 $ 24.7 $ 110.4 $ 3.2 $ 66.1 Cash paid for interest $ 17.8 $ 11.5 $ 19.9 $ 12.6 $ 61.8 $ 21.9 $ 13.5 Cash provided by (used in) operating activities $ (4.4) $ 107.3 $ 134.1 $ 204.8 $ 441.7 $ 6.6 $ 118.1 Purchases of property and equipment (10.9) (10.7) (11.6) (19.4) (52.7) (13.5) (16.0) Free cash flow (1) $ (15.3) $ 96.5 $ 122.5 $ 185.4 $ 389.1 $ (6.9) $ 102.1

 

 

13 Q2 2024 Net Sales 1. Organic net sales growth calculation excludes net sales of acquired businesses until first anniversary of acquisition date an d i mpact of foreign currency translation. ($ in millions) (Unaudited) FY24 FY23 Reported Organic (1) Organic (1) 1,386.5$ 1,431.0$ Acquisitions 38.3 - Fx Impact (3.8) - Total Net Sales 1,420.9$ 1,431.0$ (0.7%) (3.1%) Wallboard 585.2$ 584.6$ 0.1% (0.3%) Ceilings 175.3 159.6 9.9% 7.2% Steel Framing 232.1 278.2 (16.6%) (17.4%) Complementary Products 428.3 408.7 4.8% (1.4%) Total Net Sales 1,420.9$ 1,431.0$ (0.7%) (3.1%) Fiscal Q2 Variance

 

 

14 Quarterly Net Income to Adjusted EBITDA Reconciliation Commentary A. Represents changes in the fair value of stock appreciation rights B. Represents changes in the fair value of noncontrolling interests 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 one - time 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 purchase accounting adjustments to increase inventory to its estimated fair value H. Represents expenses paid to third party advisors related to debt refinancing activities ( $ in 000s) 1Q23 2Q23 3Q23 4Q23 FY23 1Q24 2Q24 (Unaudited) Net Income 89,470$ 103,153$ 64,775$ 75,593$ 332,991$ 86,830$ 80,957$ Add: Interest Expense 14,661 16,055 16,943 18,184 65,843 18,914 18,742 Add: Write off of debt discount and deferred financing fees - - - - - 1,401 - Less: Interest Income (56) (154) (180) (897) (1,287) (474) (292) Add: Income Tax Expense 32,030 35,995 23,697 22,790 114,512 26,734 27,205 Add: Depreciation Expense 14,993 15,058 15,162 15,964 61,177 16,327 16,963 Add: Amortization Expense 17,447 17,168 16,257 14,858 65,730 15,691 15,974 EBITDA 168,545$ 187,275$ 136,654$ 146,492$ 638,966$ 165,423$ 159,549$ Adjustments Stock appreciation rights (A) 2,344 3,230 314 1,815 7,703 1,218 401 Redeemable noncontrolling interests (B) 495 340 368 (25) 1,178 480 184 Equity-based compensation (C) 3,132 3,781 3,285 3,019 13,217 3,304 5,111 Severance and other permitted costs (D) 352 379 (315) 2,372 2,788 406 882 Transaction costs (acquisition and other) (E) 386 292 476 807 1,961 1,385 1,223 (Gain) loss on disposal of assets (F) (284) 81 (411) (799) (1,413) (131) (310) Effects of fair value adjustments to inventory (G) 44 135 457 487 1,123 302 140 Gain on legal settlement - - - - - - Debt transaction costs (H) - - - 173 173 911 378 Total Adjustments 6,469$ 8,238$ 4,174$ 7,849$ 26,730$ 7,875$ 8,009$ Adjusted EBITDA (as reported) 175,014$ 195,513$ 140,828$ 154,341$ 665,696$ 173,298$ 167,558$ Net Sales $1,359,553 $1,430,979 $1,234,618 $1,304,102 $5,329,252 $1,409,600 $1,420,930 Adjusted EBITDA Margin 12.9% 13.7% 11.4% 11.8% 12.5% 12.3% 11.8%

 

 

15 Net Income to Pro Forma Adjusted EBITDA Reconciliation Commentary A. Represents changes in the fair value of stock appreciation rights B. Represents changes in the fair value of noncontrolling interests 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 one - time costs related to our initial public offering and acquisitions paid to third party advisors as well as costs related to the retirement of corporate stock appreciation rights F. Represents the non - cash cost of sales impact of purchase accounting adjustments to increase inventory to its estimated fair value G. Represents mark - to - market adjustments for derivative financial instruments H. Represents one - time costs related to our secondary offerings paid to third party advisors I. Represents expenses paid to third party advisors related to debt refinancing activities J. Pro forma impact of earnings from acquisitions from the beginning of the LTM period to the date of acquisition, including synergies ( $ in 000s) 2Q24 LTM 2023 2022 2021 2020 2019 2018 2017 (Unaudited) Net Income 308,155$ 332,991$ 273,442$ 105,560$ 23,381$ 56,002$ 62,971$ 48,886$ Add: Interest Expense 72,783 65,843 58,097 53,786 67,718 73,677 31,395 29,360 Add: Write off of debt discount and deferred financing fees 1,401 - - 4,606 1,331 - 74 7,103 Less: Interest Income (1,843) (1,287) (163) (86) (88) (66) (177) (152) Add: Income Tax Expense 100,426 114,512 91,377 31,534 22,944 14,039 20,883 22,654 Add: Depreciation Expense 64,416 61,177 55,437 50,480 51,332 46,456 24,075 25,565 Add: Amortization Expense 62,780 65,730 63,795 57,645 65,201 71,003 41,455 43,675 EBITDA 608,118$ 638,966$ 541,985$ 303,525$ 231,819$ 261,111$ 180,676$ 177,091$ Adjustments Impairment of goodwill - - 63,074 - - - Stock appreciation rights (A) 3,748 7,703 4,403 3,173 1,572 2,730 2,318 148 Redeemable noncontrolling interests (B) 1,007 1,178 1,983 1,288 520 1,188 1,868 3,536 Equity-based compensation (C) 14,719 13,217 10,968 8,442 7,060 3,906 1,695 2,534 Severance and other permitted costs (D) 3,345 2,788 1,132 2,948 5,733 8,152 581 (157) Transaction costs (acquisition and other) (E) 3,891 1,961 3,545 1,068 2,414 7,858 3,370 2,249 (Gain) loss on disposal of assets (1,651) (1,413) (913) (1,011) 658 (525) (509) (338) Effects of fair value adjustments to inventory (F) 1,386 1,123 3,818 788 575 4,176 324 946 Gain on legal settlement - - - (1,382) (14,029) - - - Change in fair value of financial instruments (G) - - - - - 6,395 6,125 382 Secondary public offerings (H) - - - - 363 - 1,525 1,385 Debt transaction costs (I) 1,462 173 - 532 - 678 1,285 265 Total Adjustments 27,907$ 26,730$ 24,936$ 15,846$ 67,940$ 34,558$ 18,582$ 11,138$ Adjusted EBITDA (as reported) 636,025$ 665,696$ 566,921$ 319,371$ 299,759$ 295,669$ 199,258$ 188,229$ Contributions from acquisitions (J) 11,386 9,535 21,348 4,948 1,480 6,717 1,280 9,500 Pro Forma Adjusted EBITDA 647,411$ 675,231$ 588,269$ 324,319$ 301,239$ 302,386$ 200,538$ 197,729$ Net Sales $5,369,250 $5,329,252 $4,634,875 $3,298,823 $3,241,307 $3,116,032 $2,511,469 $2,319,146 Adjusted EBITDA margin (as reported) 11.8% 12.5% 12.2% 9.7% 9.2% 9.5% 7.9% 8.1%

 

 

16 Income Before Taxes to Adjusted Net Income Reconciliation Commentary A. 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 Materials, and AMES Taping Tools B. Normalized cash tax rate determined based on our estimated taxes excluding the impact of purchase accounting and certain other deferred tax amounts ($ in 000s) 2Q24 2Q23 (Unaudited) Income before taxes 108,162$ 139,148$ EBITDA adjustments 8,009 8,238 Write-off of debt discount and deferred financing fees - - Purchase accounting depreciation and amortization (A) 10,823 13,057 Adjusted pre-tax income 126,994 160,443 Adjusted income tax expense 32,383 40,913 Adjusted net income 94,611$ 119,530$ Effective tax rate (B) 25.5% 25.5% Weighted average shares outstanding: Basic 40,466 42,232 Diluted 41,088 42,887 Adjusted net income per share: Basic 2.34$ 2.83$ Diluted 2.30$ 2.79$

 

 

17 Reported SG&A to Adjusted SG&A Reconciliation Commentary A. Represents changes in the fair value of stock appreciation rights B. Represents changes in the fair value of noncontrolling interests 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 one - time costs related to acquisitions paid to third parties (Unaudited) 1Q23 2Q23 3Q23 4Q23 FY2023 1Q24 2Q24 ($ in millions) SG&A - Reported 267.7$ 279.0$ 267.4$ 279.8$ 1,093.8$ 286.8$ 300.9$ Adjustments Stock appreciation rights (A) (2.3) (3.2) (0.3) (1.8) (7.7) (1.2) (0.4) Redeemable noncontrolling interests (B) (0.5) (0.3) (0.4) 0.0 (1.2) (0.5) (0.2) Equity-based compensation (C) (3.1) (3.8) (3.3) (3.0) (13.2) (3.3) (5.1) Severance and other permitted costs (D) (0.4) (0.4) 0.3 (2.4) (2.9) (0.4) (0.9) Transaction costs (acquisition and other) (E) (0.4) (0.3) (0.5) (0.8) (2.0) (1.4) (1.2) Gain (loss) on disposal of assets (F) 0.3 (0.1) 0.4 0.8 1.4 0.1 0.3 Debt transaction costs (H) - - - (0.2) (0.2) (0.9) (0.4) SG&A - Adjusted 261.3$ 270.9$ 263.6$ 272.4$ 1,068.1$ 279.2$ 293.0$ Net Sales 1,359.6$ 1,431.0$ 1,234.6$ 1,304.1$ 5,329.3$ 1,409.6$ 1,420.9$ Adjusted SG&A Margin 19.2% 18.9% 21.4% 20.9% 20.0% 19.8% 20.6%

 

 

18 Leverage Summary (1) Net of unamortized discount of $0.4mm, $0.3mm, $0.3mm, $2.5mm and $2.4mm as of October 31, 2022, January 31, 2023, April 30, 202 3, July 31, 2023 and October 31, 2023 respectively. (2) Net of deferred financing costs of $2.6 mm, $2.4mm, $2.1mm, $4.1mm and $3.9mm as of October 31, 2022, January 31, 2023, April 30 , 2023, July 31, 2023 and October 31, 2023 respectively. (3) Net of deferred financing costs of $4.5mm, $4.3mm, $4.1mm, $3.9mm and $3.8mm as of October 31, 2022, January 31, 2023, April 30, 2023, July 31, 2023 and October 31, 2023 respectively (4) Net of unamortized discount of $0.2mm, $0.2mm, $0.1mm, $0.1mm, and $0.0mm as of October 31, 2022, January 31, 2023, April 30, 20 23, July 31, 2023 and October 31, 2023 respectively. (5) For a reconciliation Pro Forma Adjusted EBITDA to net income, the most directly comparable GAAP metric, see Appendix. ($ mm) 10/31/22 1/31/23 4/30/23 7/31/23 10/31/23 LTM LTM LTM LTM LTM Cash and cash equivalents $124 $187 $164 $81 $77 Revolving Credit Facilities $240 $240 $110 $113 $81 First Lien Term Loan 499 498 497 493 494 Senior Notes 345 346 346 346 346 Capital Lease Obligations 126 132 137 136 150 Installment Notes 3 8 8 13 6 Total Debt $1,214 $1,223 $1,099 $1,102 $1,076 Total Net Debt $1,090 $1,037 $935 $1,021 $1,000 PF Adj. EBITDA $662 $668 $684 $678 $649 Total Debt / PF Adj. EBITDA 1.8x 1.8x 1.6x 1.6x 1.7x Net Debt / PF Adj. EBITDA 1.6x 1.6x 1.4x 1.5x 1.5x

 

 

19 Net Income to Adjusted EBITDA Outlook Reconciliation ($ in millions) Q3 FY24 Net Income $48 - $50 Interest expense, net 17.1 - 17.6 Provision for income taxes 16.5 - 17.0 Depreciation and amortization expense 29.7 - 30.6 Other Adjustments 12.0 Adjusted EBITDA $123 - $127

 

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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