GMS Reports Second Quarter Fiscal 2022 Results

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

Second Quarter Fiscal 2022 Highlights

(Comparisons are to the second quarter of fiscal 2021)

– Net sales of $1,150.6 million increased 41.5%; organic net sales increased 31.2%.
– Net income of $74.4 million, or $1.69 per diluted share; adjusted net income of $87.8 million, or $2.00 per diluted share.
– Gross margin of 32.3%, down 30 basis points from the prior year.
– SG&A and Adjusted SG&A as a percentage of sales were 20.0% and 19.4%, respectively, representing 320 basis points of improvement for SG&A and 310 basis points of improvement for Adjusted SG&A.
– Adjusted EBITDA of $149.5 million increased 81.2%; Adjusted EBITDA margin improved 280 basis points to 13.0% from 10.2%.
– Net debt leverage was 2.4 times as of the end of the second quarter of fiscal 2022, down from 3.0 times a year ago.

“I am pleased to report another very strong quarter for GMS,” said John C. Turner, Jr., President and Chief Executive Officer. “Net sales again topped a billion dollars with record levels of net income and Adjusted EBITDA. Supply chain dynamics have led to all-time high levels of product inflation, which have been the principal driver of both sales growth and incremental profitability. That said, our relentless focus on customer service and the solid execution of our strategic priorities have enabled us to capture the benefits of both this heightened product inflation across our portfolio as well as continued strength in the residential market.”

Turner continued, “While commercial activity remains well below pre-COVID levels, we were pleased to see certain commercial projects that were previously on hold receive approvals to move forward. With other positive signs also emerging, we believe that we are very well positioned as we head into the next calendar year to benefit from an eventual commercial construction recovery.”

Second Quarter Fiscal 2022 Results

Net sales for the second quarter of fiscal 2022 of $1.15 billion increased 41.5% as compared with the prior year quarter, primarily due to inflationary pricing, healthy residential end markets, strong performance from our complementary products and the acquisitions of D.L. Building Materials and Westside Building Material. Organic net sales increased 31.2%.

Year-over-year sales increases by product category were as follows:

– Wallboard sales of $414.5 million increased 25.4% (up 19.7% on an organic basis).

– Ceilings sales of $140.9 million increased 25.6% (up 17.4% on an organic basis).

– Steel framing sales of $272.0 million increased 144.4% (up 122.2% on an organic basis).

– Complementary product sales of $323.2 million increased 24.8% (up 12.6% on an organic basis).

Gross profit of $371.9 million increased 40.3% compared to the second quarter of fiscal 2021. Gross margin of 32.3%, while above expectations, declined 30 basis points year-over-year primarily due to continued price-cost dynamics principally related to the timing of the implementation of price actions in wallboard.

Selling, general and administrative (“SG&A”) expense as a percentage of net sales improved 320 basis points to 20.0% for the quarter compared to 23.2% in the second quarter of fiscal 2021. Adjusted SG&A expense as a percentage of net sales of 19.4% improved 310 basis points from 22.5% in the prior year quarter as product inflation outpaced increases in operating costs.

Net income increased 161.2% to $74.4 million, or $1.69 per diluted share, compared to net income of $28.5 million, or $0.66 per diluted share, in the second quarter of fiscal 2021. Adjusted net income was $87.8 million, or $2.00 per diluted share, compared to $40.2 million, or $0.93 per diluted share, in the second quarter of the prior fiscal year.

Adjusted EBITDA increased 81.2% to $149.5 million compared to the prior year quarter. Adjusted EBITDA margin of 13.0% improved 280 basis points from 10.2% for the second quarter of fiscal 2021.

Balance Sheet, Liquidity and Cash Flow

As of October 31, 2021, the Company had cash on hand of $59.3 million, total debt of $1.1 billion and $302.2 million of available liquidity under its revolving credit facilities. Net debt leverage was 2.4 times as of the end of the quarter, down from 3.0 times at the end of the second quarter of fiscal 2021.

The Company recorded a use of cash from operating activities and free cash flow of $2.0 million and $11.3 million, respectively, for the quarter ended October 31, 2021. This compared to cash provided by operating activities and free cash flow of $39.8 million and $32.7 million, respectively, in the second quarter of the prior fiscal year.

Platform Expansion Activities

During the second quarter of fiscal 2022, the Company acquired the EIFS division of DK&B Construction Specialties, Inc. (“DK&B”). DK&B is a leading EIFS/stucco distributor serving the Nebraska market through a single location in Omaha, NE. This transaction enabled GMS to expand its complementary product offerings and expertise throughout the region.

Also, during the period, the Company opened a new greenfield location in Johnson City, TN, expanding its coverage to provide enhanced customer service in the Tri-Cities area in Northeast Tennessee.

Subsequent to the end of the quarter, on December 1, 2021, GMS completed the acquisition of AMES Taping Tools Holding LLC (“AMES”.) With more than 85 company-owned stores, a fleet of 100,000 tools available for rent and the most highly respected brand of automatic taping and finishing (“ATF”) tools, AMES is the leading provider of ATF tools and related products in the professional drywall finishing industry. AMES provides a distinctive complement to GMS’s current offerings, significantly expanding the Company’s presence in the tools and fasteners market. AMES’s portfolio includes the finishing tool brand, TapeTech® and specialty interior finishing e-commerce platform, All-Wall®.

For the full second 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. In addition, through its newly acquired AMES Taping Tools business, GMS operates more than 85 retail locations servicing professionals in the interior finishing market.

Contact:

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

Source: GMS, Inc.