GMS Reports First Quarter Fiscal 2022 Results

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

First Quarter Fiscal 2022 Highlights

(Comparisons are to the first quarter of fiscal 2021, except where noted.)

– Net sales of $1.04 billion increased 29.8%; organic net sales increased 23.2%. On a per day basis, net sales increased 31.9% and organic net sales increased 25.2%.
– Net income of $61.2 million, or $1.39 per diluted share; adjusted net income of $73.3 million, or $1.67 per diluted share.
– Gross margin of 32.2%, down slightly.
– SG&A and Adjusted SG&A as a percentage of sales were 20.5% and 20.2%, representing 230 and 200 basis points of improvement, respectively.
– Adjusted EBITDA of $128.1 million increased 54.2%; Adjusted EBITDA margin improved 200 basis points to 12.3% from 10.3%.
– Completed two business acquisitions and five greenfield location openings.
– Net debt leverage was 2.7 times as of the end of the first quarter of fiscal 2022, down from 3.0 times a year ago.

“GMS’s outstanding performance continued, as we delivered another quarter of record net sales, net income and Adjusted EBITDA, including recording more than a billion dollars in quarterly net sales for the first time in the Company’s history,” said John C. Turner, Jr., President and Chief Executive Officer. “We are continuing to benefit from a robust residential market, an inflationary environment and strong demand for our complementary products, while our team’s solid execution of our strategic growth priorities helped offset continuing softness in many commercial markets. We successfully navigated a very dynamic business environment, while leveraging our scale and operational strength to ensure the continuity of supply needed to provide best-in-class service to our customers. This resulted in greater profitability, including more than double the net income and 200 basis points of improvement in Adjusted EBITDA margin compared to the first quarter of fiscal 2021.”

Turner continued, “As we look ahead to the remainder of fiscal 2022 and beyond, we expect to continue both greenfields and acquisitions to enter underserved markets and boost our product offerings. 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.”

First Quarter Fiscal 2022 Results

Net sales for the first quarter of fiscal 2022 of $1.04 billion increased 29.8% as compared with the COVID-19 impacted prior year quarter, primarily due to strong residential end markets, inflationary pricing, solid demand for our complementary products and the acquisitions of D.L. Building Materials and Westside Building Material. Organic net sales increased 23.2%.

Including the impact from one less selling day in the first quarter of fiscal 2022 than the same period a year ago, net sales and organic net sales were up 31.9% and 25.2%, respectively.

Year-over-year sales increases by product category, which in all cases resulted from both higher volumes and higher price and mix combined, were as follows:

– Wallboard sales of $390.1 million increased 18.9% (up 14.0% on an organic basis).
– Ceilings sales of $138.1 million increased 20.4% (up 16.7% on an organic basis).
– Steel framing sales of $196.3 million increased 77.6% (up 68.7% on an organic basis).
– Complementary product sales of $317.6 million increased 27.4% (up 18.1% on an organic basis).

Gross profit of $335.8 million increased 28.9% compared to the first quarter of fiscal 2021. Gross margin of 32.2% declined 30 basis points year-over-year primarily due to price-cost dynamics related to the timing of the implementation of price actions, particularly in wallboard.

Selling, general and administrative (“SG&A”) expense as a percentage of net sales improved 230 basis points to 20.5% for the quarter compared to 22.8% in the first quarter of fiscal 2021. Adjusted SG&A expense as a percentage of net sales of 20.2% improved 200 basis points from 22.2 % in the prior year quarter as significant product inflation outpaced increases in operating costs.

Net income more than doubled to $61.2 million, or $1.39 per diluted share, compared to net income of $27.2 million, or $0.63 per diluted share, in the first quarter of fiscal 2021. Adjusted net income was $73.3 million, or $1.67 per diluted share, compared to $40.3 million, or $0.94 per diluted share, in the first quarter of the prior fiscal year.

Adjusted EBITDA increased 54.2% to $128.1 million compared to the prior year quarter. Adjusted EBITDA margin of 12.3% improved 200 basis points from 10.3% for the first quarter of fiscal 2021.

Platform Expansion Activity

During the first quarter of fiscal 2022, the Company completed two acquisitions, including the previously announced acquisition of Westside Building Material (“Westside”), one of the largest independent distributors of interior building products in the U.S. The transaction closed on July 1, 2021, expanding and enhancing GMS’s presence in multiple California metro areas and providing entry into the Las Vegas market. In addition, on June 3, 2021, the Company purchased Architectural Coatings Distributors, Inc. to further expand its complementary product offerings and add an EIFS/Stucco product line in the Cleveland, Ohio market, a top 40 Metropolitan Statistical Area (“MSA”.)

During the first quarter of fiscal 2022, the Company also opened five new greenfield locations, furthering its platform expansion activities to better serve its customers and to expand its service territory and product offerings.

Balance Sheet, Liquidity and Cash Flow

As of July 31, 2021, the Company had cash on hand of $43.6 million, total debt of $1.1 billion and $354.6 million of available liquidity under its revolving credit facilities. Net debt leverage was 2.7 times as of the end of the quarter, down from 3.0 times at the end of the first quarter of fiscal 2021 but up slightly from the fourth quarter of fiscal 2021 due principally to the funding of the Westside acquisition.

As is typical during its fiscal first quarter, the Company recorded a use of cash from operating activities and free cash flow, which totaled $75.1 million and $81.9 million, respectively, for the quarter ended July 31, 2021. This compared to a use of cash from operating activities and free cash flow of $15.7 million and $20.5 million, respectively, in the first quarter of the prior fiscal year. This increase in the use of cash was related to the Company’s discipline in ensuring product availability and managing price inflation amid an environment of tight and less reliable supply, coupled with the impact of increasing sales on accounts receivable.

For the full first quarter results, click here.

About GMS Inc.

Celebrating the 50th anniversary of its founding in 1971, GMS operates a network of more than 280 distribution centers across the United States and Canada. GMS’s extensive product offering of wallboard, suspended ceilings, steel framing 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:

Carey Phelps – Vice President Investor Relations – ir@gms.com – (770) 723-3369

Source: GMS, Inc.