GMS Reports Third Quarter Fiscal 2021 Results

GMS, Inc. (“GMS”), a leading North American specialty distributor of interior building products, today reported financial results for the third quarter of fiscal 2021 ended January 31, 2021.

Third Quarter Fiscal 2021 Highlights

(Comparisons are to the third quarter of fiscal 2020, except where noted.)

– Net sales of $751.2 million decreased 1.3%; organic net sales decreased 1.9%. On a per day basis, net sales increased 0.3% and organic net sales declined 0.3%.
– Net income of $16.1 million, or $0.37 per diluted share, increased 48.2%; adjusted net income of $25.9 million, or $0.60 per diluted share, increased 16.4%.
– Gross margin of 32.4% compared to 33.3%.
– SG&A and Adjusted SG&A as a percentage of sales were 24.6% and 24.2%, representing 80 and 100 basis points of improvement, respectively.
– Adjusted EBITDA of $62.6 million compared to $62.7 million; Adjusted EBITDA margin improved 10 basis points to 8.3% from 8.2%.
– Net debt leverage was 2.9 times as of the end of the third quarter of fiscal 2021.
– Cash provided by operating activities and free cash flow of $44.4 million and $38.4 million, respectively, compared to $65.4 million and $59.2 million, respectively.

“As a result of our team’s ability to seize opportunities and address challenges in dynamic market conditions, we delivered better than expected sales, higher net income and an improved Adjusted EBITDA margin in the third quarter,” said John C. Turner, Jr., President and Chief Executive Officer. “We continued to realize benefits from our ongoing commitment to our strategic priorities of 1) expanding share in core products, 2) growing our complementary Other products offering, 3) platform expansion, and 4) improved productivity and profitability. During the quarter, we generated higher volume in wallboard, increased sales of complementary products and opened our Waco, Texas greenfield location.

“We are excited to be celebrating GMS’s 50th anniversary in 2021, and I am confident that our focus on our strategic priorities and our team’s continued drive to execute will position us to generate value for our shareholders well into the future,” Mr. Turner concluded.

Third Quarter Fiscal 2021 Results

Net sales for the third quarter of fiscal 2021 were $751.2 million, down 1.3%, compared to $761.4 million for the third quarter of the prior fiscal year, as a result of continued COVID-19 related market declines. Organic net sales declined 1.9%. There was one less selling day in the third quarter of fiscal 2021 than the same period a year ago. On a per day basis, net sales were up 0.3% and organic net sales declined 0.3%.

– Wallboard sales of $311.1 million decreased 1.0% (down 1.4% on an organic basis) compared to the third quarter of fiscal 2020, due to a modest decline in price and mix, partially offset by slightly higher volume. On a per day basis, wallboard volume increased 2.1% year over year.

– Ceilings sales of $101.9 million decreased 9.6% (down 9.7% on an organic basis) year over year driven by lower volume and mix, partially offset by higher price.

– Steel framing sales of $104.0 million decreased 12.5% (down 12.8% on an organic basis) year over year due principally to a decline in volume and, to a lesser extent, price and mix combined.

– Other product sales of $234.2 million increased 8.7% (up 7.5% on an organic basis) year over year primarily due to the execution of growth initiatives to increase Other products sales, positive contributions from acquisitions and strong pricing in certain product categories.

Year over year sales declines continued to be more pronounced in ceilings and steel framing, as these product categories are tied primarily to commercial construction which remained challenged during the quarter. Residential activity, on the other hand, continued to strengthen and offset softness in commercial construction to yield the higher wallboard volume and growth in Other products.

Gross profit of $243.3 million decreased 4.0% compared to the third quarter of fiscal 2020. As anticipated, gross margin of 32.4% was largely consistent with levels generated in the first half of fiscal 2021, declining 90 basis points year over year principally due to unfavorable mix and price-cost dynamics for certain product categories.

Selling, general and administrative (“SG&A”) expense as a percentage of net sales was 24.6% for the quarter compared to 25.4% in the third quarter of fiscal 2020. Adjusted SG&A expense as a percentage of net sales of 24.2% improved 100 basis points from 25.2 % in the prior year quarter as a result of continued disciplined cost containment partially offset by deflationary price and unfavorable mix impacts with certain of the Company’s products.

Net income of $16.1 million, or $0.37 per diluted share, compared to $10.9 million, or $0.25 per diluted share, in the third quarter of the prior fiscal year. Adjusted net income of $25.9 million, or $0.60 per diluted share, compared to $22.2 million, or $0.52 per diluted share, in the third quarter of the prior fiscal year. Adjusted EBITDA of $62.6 million compared to $62.7 million in the third quarter of the prior fiscal year. Adjusted EBITDA margin of 8.3% improved 10 basis points from 8.2% a year ago.

Platform Expansion Activity

During the third quarter of fiscal 2021, the Company opened a new greenfield location in Waco, TX. Subsequent to the end of the third quarter, and as previously announced, the Company completed the acquisition of D.L. Building Materials, Inc., providing entrance to the Ottawa-Gatineau market in Canada, and also established four new locations, expanding its presence to two additional markets, Atlantic City, NJ, and Memphis, TN.

Balance Sheet, Liquidity and Cash Flow

As of January 31, 2021, the Company had cash on hand of $150.6 million, total debt of $994.2 million and $407.0 million of available liquidity under its revolving credit facilities. Net debt leverage was 2.9 times as of the end of the quarter, down from 3.0 times at the end of the second quarter of fiscal 2021 and 3.3 times as of the end of the third quarter of fiscal 2020. The Company generated cash provided by operating activities and free cash flow of $44.4 million and $38.4 million, respectively, in the third quarter.

For the full third quarter results, click here.

About GMS Inc.

Celebrating the 50th anniversary of its founding in 1971, GMS operates a network of more than 265 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.

Contact:

Leslie H. Kratcoski – Investor Relations – ir@gms.com – (770) 723-3306

Source: GMS, Inc.