GMS Reports Fourth Quarter and Fiscal Year 2022 Results

GMS, Inc. (“GMS” or the “Company”), a leading North American specialty building products distributor, reported financial results for the fourth quarter and fiscal year ended April 30, 2022.

Fourth Quarter Fiscal 2022 Highlights

(Comparisons are to the fourth quarter of fiscal 2021 unless otherwise noted)

• Net sales of $1,288.7 million increased 38.2%; organic net sales increased 28.9%.

• Net income of $76.5 million, or $1.75 per diluted share, was more than double the net income of $33.7 million, or $0.77 per diluted share, recorded a year ago; Adjusted net income of $91.3 million, or $2.09 per diluted share, compared to $46.9 million, or $1.07 per diluted share.

• Adjusted EBITDA of $154.2 million increased $63.0 million, or 69.1%; Adjusted EBITDA margin improved 220 basis points to 12.0% from 9.8%.

• Cash provided by operating activities of $199.5 million, compared to $84.8 million. Free cash flow of $191.6 million, compared with $72.8 million.

• Net debt leverage was 1.8 times as of the end of the fourth quarter of fiscal 2022, down from 2.3 at the end of the third quarter and down from 2.5 times at the end of the fourth quarter of fiscal 2021.

Full Year Fiscal 2022 Highlights

(Comparisons are to the full year of fiscal 2021, unless otherwise noted.)

• Net sales of $4,634.9 million increased 40.5%; organic net sales increased 30.9%.

• Net income of $273.4 million, or $6.23 per diluted share, compared to net income of $105.6 million or $2.44 per diluted share; Adjusted net income of $328.8 million, or $7.49 per diluted share, compared to $153.3 million, or $3.54 per diluted share.

• Adjusted EBITDA of $566.9 million increased $247.6 million, or 77.5%; Adjusted EBITDA margin improved 250 basis points to 12.2% from 9.7%.

• The Company completed five business acquisitions, including the acquisition of Westside Building Material, one of the largest independent distributors of interior building products in the US with nine locations across California and one in Nevada, as well as the acquisition of Ames Taping Tools Holding, LLC, the leading provider of automatic taping and finishing tools and related products to the professional drywall finishing industry. During fiscal 2022, the Company also opened 13 greenfield locations and five new AMES store locations under GMS ownership.

“GMS achieved outstanding results for the fourth quarter and full year fiscal 2022,” said John C. Turner, Jr., President and Chief Executive Officer of GMS. “Our scale, balanced mix of products and customers, commitment to delivering best-in-class service and continued execution of our growth strategy, coupled with strong residential demand and an inflationary pricing environment, enabled us to deliver record levels of net sales, net income and Adjusted EBITDA. We remain optimistic about the year ahead, which, despite rising rates, is supported by a continuing fundamental underbuild of residential housing stock as well as signs of an improving commercial market.”

Turner continued, “We are also very pleased to announce that our Board of Directors has approved the repurchase of up to $200 million of the Company’s common stock. This expanded authorization demonstrates our Board’s continued confidence in the strength and future prospects of our business. We remain focused on the execution of our strategic priorities, including expanding our platform through both acquisitions and greenfield opportunities, as well as enhancing our product and service offerings and delivering improved profitability as we leverage technology and best practices to achieve advancements in productivity. Looking ahead, we are committed to driving long-term shareholder value with a disciplined capital allocation strategy that balances investing in our organic growth initiatives, pursuing accretive M&A transactions and opportunistically leveraging favorable market conditions for share repurchases as they arise.

Fourth Quarter Fiscal 2022 Results

Net sales for the fourth quarter of fiscal 2022 of $1.29 billion increased 38.2% as compared with the prior year quarter, primarily due to inflationary pricing, healthy residential end market demand, strong performance from our complementary products and the acquisitions of Westside Building Material and AMES Taping Tools. Organic net sales increased 28.9%.

Excluding the impact from one less selling day in the fourth quarter of fiscal 2022 compared to the same period a year ago, net sales and organic net sales were up 40.4% and 30.9%, respectively.

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

• Wallboard sales of $491.1 million increased 30.3% (up 26.5% on an organic basis).
• Ceilings sales of $148.9 million increased 22.7% (up 17.0% on an organic basis).
• Steel framing sales of $276.9 million increased 93.3% (up 81.6% on an organic basis).
• Complementary product sales of $371.8 million increased 27.9% (up 11.1% on an organic basis).

Gross profit of $412.8 million increased 40.5% compared to the fourth quarter of fiscal 2021, and gross margin improved 50 basis points to 32.0%, both primarily due to the successful pass through of product price inflation, continued strength in residential market demand and incremental gross profit dollars along with accretive gross margins from acquisitions.

Selling, general and administrative (“SG&A”) expense as a percentage of net sales improved 170 basis points to 20.5% for the quarter compared to 22.2% in the fourth quarter of fiscal 2021. Adjusted SG&A expense as a percentage of net sales of 20.2% improved 170 basis points from 21.9% in the prior year quarter as product price inflation outpaced increases in operating costs.

Net income increased 126.7% to $76.5 million, or $1.75 per diluted share, compared to net income of $33.7 million, or $0.77 per diluted share, in the fourth quarter of fiscal 2021. Adjusted net income was $91.3 million, or $2.09 per diluted share, compared to $46.9 million, or $1.07 per diluted share, in the fourth quarter of the prior fiscal year.

Adjusted EBITDA increased $63.0 million, or 69.1%, to $154.2 million compared to the prior year quarter. Adjusted EBITDA margin of 12.0% improved 220 basis points from 9.8% for the fourth quarter of fiscal 2021.

Balance Sheet, Liquidity and Cash Flow

As of April 30, 2022, the Company had cash on hand of $101.9 million, total debt of $1.2 billion and $330.7 million of available liquidity under its revolving credit facilities. Net debt leverage was 1.8 times as of the end of the quarter, down from 2.5 times at the end of the fourth quarter of fiscal 2021.

The Company generated cash from operating activities and free cash flow of $199.5 million and $191.6 million, respectively, for the quarter ended April 30, 2022. For the quarter ended April 30, 2021, the Company generated cash from operating activities and free cash flow of $84.8 million and $72.8 million, respectively.

Expanded Share Repurchase Authorization

The Company’s Board of Directors has approved an expanded share repurchase program under which the Company is authorized to repurchase up to $200 million of its outstanding common stock. This expanded program replaces the Company’s previous share repurchase authorization of $75 million, which commenced in 2018, and reflects the Board’s confidence in the business going forward. The repurchases will be made from time to time on the open market at prevailing market prices or in negotiated transactions off the market.

For the full fourth quarter results, click here.

About GMS, Inc.

Founded in 1971, GMS operates a network of nearly 300 distribution centers with extensive product offerings of wallboard, ceilings, steel framing and complementary construction products. In addition, GMS operates nearly 100 tool sales, rental and service centers, providing a comprehensive selection of building products and solutions for its residential and commercial contractor customer base across the United States and Canada. The Company’s unique operating model combines the benefits of a national platform and strategy with a local go-to-market focus, enabling GMS to generate significant economies of scale while maintaining high levels of customer service.

Contact:

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

Source: GMS, Inc.