GMS Reports Second Quarter Fiscal 2021 Results
GMS, Inc. (“GMS” or the “Company”), a leading North American specialty distributor of interior building products, reported financial results for the second quarter of fiscal 2021 ended October 31, 2020.
Second Quarter Fiscal 2021 Highlights
(Comparisons are to the second quarter of fiscal 2020, except where noted.)
– Net sales of $812.9 million decreased 5.7%; organic net sales decreased 6.4%. On a per day basis, net sales and organic net sales declined 4.2% and 5.0%, respectively.
– Net income of $28.5 million, or $0.66 per diluted share; adjusted net income of $40.2 million, or $0.93 per diluted share.
– SG&A and Adjusted SG&A as a percentage of sales were 23.2% and 22.5%, representing 10 and 20 basis points of improvement, respectively.
– Adjusted EBITDA of $82.5 million, or 10.2% of sales, compared to $89.9 million, or 10.4% of sales.
– The Company opened one new greenfield location during the second quarter of fiscal 2021.
– Net debt leverage was 3.0 times as of the end of the second quarter of fiscal 2021.
– Cash provided by operating activities and free cash flow totaled $39.8 million and $32.7 million, respectively.
– As of October 31, 2020, the Company had cash on hand of $118.2 million, and $415.4 million of available liquidity under its revolving credit facilities.
“Outstanding execution by our entire team enabled us to generate solid second quarter results, with net sales levels exceeding our earlier expectations,” said John C. Turner, Jr., President and Chief Executive Officer. “The overall operating environment remained challenged throughout the period, particularly with respect to commercial construction, although we realized benefits from the strong residential market. A disciplined alignment of our cost structure to current demand enabled us to improve SG&A and Adjusted SG&A as a percentage of sales while maintaining a relentless focus on serving our customers. Additionally, we continued to advance our strategic growth initiatives in the second quarter, as evidenced by the opening of a new greenfield location and generating yet another quarter of positive sales growth in our complementary Other products category, despite the difficult market conditions.”
Turner continued, “Looking ahead, the safety of our employees, customers and communities remains our top priority. I am confident in our team’s ability to continue to leverage opportunities, address challenges and ensure that GMS remains well-positioned to generate value for our shareholders.”
Second Quarter Fiscal 2021 Results
Net sales for the second quarter of fiscal 2021 were $812.9 million, down 5.7%, compared to $861.9 million for the second quarter of the prior fiscal year, as a result of continued COVID-19 related market declines. Organic net sales declined 6.4%.
– Wallboard sales of $330.5 million decreased 5.7% (down 6.0% on an organic basis) compared to the second quarter of fiscal 2020, principally due to a decline in mix, volume and, to a lesser extent, price.
– Ceilings sales of $111.3 million decreased 9.4% (down 9.5% on an organic basis) year over year driven by lower volume partially offset by higher price/mix.
– Steel framing sales of $111.3 million decreased 18.3% (down 18.6% on an organic basis) year over year due to a decline in both volumes and price/mix.
– Other product sales of $259.8 million increased 2.9% (up 1.2% on an organic basis) year over year due to positive contributions from acquisitions and execution of strategic growth initiatives.
There was one less selling day in the second quarter of fiscal 2021 than the same period a year ago. Net sales and organic net sales on a per day basis declined 4.2% and 5.0%, respectively.
Year over year sales declines were more pronounced in ceilings and steel framing, as these product categories are tied primarily to commercial construction which remained challenged during the quarter.
Gross profit of $265.1 million decreased 6.8% compared to the second quarter of fiscal 2020 primarily due to lower sales. Gross margin of 32.6% declined 40 basis points year over year principally due to challenging mix dynamics, particularly in the commercial segment.
Selling, general and administrative (“SG&A”) expense as a percentage of net sales was 23.2% for the quarter compared to 23.3% in the second quarter of fiscal 2020. Adjusted SG&A expense as a percentage of net sales was 22.5% compared to 22.7% in the prior year quarter. This 20 basis point improvement resulted from ongoing actions to align the Company’s cost structure with the current demand environment resulting from the COVID-19 pandemic. This SG&A leverage was realized despite deflationary price and unfavorable mix impacts with certain of the Company’s products.
Net income of $28.5 million, or $0.66 per diluted share, compared to $29.1 million, or $0.68 per diluted share, in the second quarter of the prior fiscal year. Adjusted net income of $40.2 million, or $0.93 per diluted share, compared to $42.7 million, or $1.00 per diluted share, in the second quarter of the prior fiscal year. Adjusted EBITDA of $82.5 million compared to $89.9 million in the second quarter of the prior fiscal year. Adjusted EBITDA margin of 10.2% compared to 10.4% a year ago.
Platform Expansion Activity
During the second quarter of fiscal 2021, the Company opened a new greenfield location in Hillsboro, Oregon.
Balance Sheet and Liquidity
As of October 31, 2020, the Company had cash on hand of $118.2 million, total debt of $996.0 million and $415.4 million of available liquidity under its revolving credit facilities. Net debt leverage was 3.0 times as of the end of the quarter, equal to that at the end of the first quarter of fiscal 2021, and down from the 3.5 times as of the end of the second quarter of fiscal 2020. The Company generated cash provided by operating activities and free cash flow of $39.8 million and $32.7 million, respectively, in the second quarter.
For the full second quarter results, click here.
About GMS, Inc.
Founded in 1971, GMS operates a network of more than 260 distribution centers across the United States and Canada. GMS’s extensive product offering of wallboard, suspended ceilings systems, or ceilings, and complementary construction products is designed to provide a comprehensive one-stop-shop for our core customer, the interior contractor who installs these products in commercial and residential buildings.
Leslie H. Kratcoski – Investor Relations – firstname.lastname@example.org – (770) 723-3306
Source: GMS, Inc.