GMS Reports First Quarter Fiscal 2023 Results
GMS Inc., a leading North American specialty building products distributor, today reported financial results for the fiscal first quarter ended July 31, 2022.
First Quarter Fiscal 2023 Highlights
(Comparisons are to the first quarter of fiscal 2022)
- Net sales of $1,359.6 million increased 30.5%; organic net sales increased 24.1%.
- Net income of $89.5 million, or $2.07 per diluted share, increased 46.2% compared to net income of $61.2 million, or $1.39 per diluted share; Adjusted net income of $105.2 million, or $2.43 per diluted share, compared to $73.3 million, or $1.67 per diluted share.
- Adjusted EBITDA of $175.0 million increased $46.9 million, or 36.6%; Adjusted EBITDA margin improved 60 basis points to 12.9% from 12.3%.
- Net debt leverage was 1.8 times as of the end of the first quarter of fiscal 2023, down from 2.7 times a year ago.
“Continuing the solid momentum from fiscal 2022, we again achieved record levels of quarterly net sales, net income and Adjusted EBITDA for our fiscal first quarter of 2023,” said John C. Turner, Jr., President and Chief Executive Officer of GMS. “Volumes were up in Wallboard, Ceilings and Complementary Products, including our first quarterly year-over-year increase in commercial Wallboard volumes since before the pandemic. The inflationary pricing environment together with strong residential construction activity and an improving commercial landscape, combined with our team’s commitment to delivering outstanding service and the execution of our strategic priorities drove our performance this quarter.”
Turner continued, “While builders are reporting an affordability-driven moderation in single-family housing demand, construction activity in this sector remained robust during the first quarter and into our second quarter as the industry works through a sizable backlog of homes started but not yet completed. While single family homebuilding will likely soften, the degree, timing and duration is yet to be determined. However, commercial construction is improving and multi-family construction remains strong. We are confident we are well-positioned to adjust as needed to meet demand in all three end markets.”
First Quarter Fiscal 2023 Results
Net sales for the first quarter of fiscal 2023 of $1.36 billion increased 30.5% as compared with the prior year quarter, primarily due to inflationary pricing, active residential construction, volume growth in Wallboard, Ceilings and Complementary Products, an improving commercial landscape, and the acquisition of AMES Taping Tools. Organic net sales increased 24.1%.
Year-over-year sales increases by product category were as follows:
- Wallboard sales of $521.6 million increased 33.7% (up 31.6% on an organic basis).
- Ceilings sales of $167.3 million increased 21.2% (up 17.8% on an organic basis).
- Steel Framing sales of $274.9 million increased 40.1% (up 34.6% on an organic basis).
- Complementary Product sales of $395.8 million increased 24.6% (up 11.2% on an organic basis).
Gross profit of $434.7 million increased 29.4% compared to the first quarter of fiscal 2022 primarily due to the successful pass through of product inflation, continued strength in residential market demand, an improving commercial landscape, and incremental gross profit from acquisitions. Gross margin of 32.0%, declined 20 basis points year-over-year primarily due to the timing and elasticity of inflationary price-cost dynamics in the market.
Selling, general and administrative (“SG&A”) expense as a percentage of net sales improved 80 basis points to 19.7% for the quarter compared to 20.5% in the first quarter of fiscal 2022. Adjusted SG&A expense as a percentage of net sales of 19.2% improved 100 basis points from 20.2% in the prior year quarter as product inflation outpaced increases in operating costs.
Net income increased 46.2% to $89.5 million, or $2.07 per diluted share, compared to net income of $61.2 million, or $1.39 per diluted share, in the first quarter of fiscal 2022. Adjusted net income was $105.2 million, or $2.43 per diluted share, compared to $73.3 million, or $1.67 per diluted share, in the first quarter of the prior fiscal year.
Adjusted EBITDA increased $46.9 million, or 36.6%, to $175.0 million compared to the prior year quarter. Adjusted EBITDA margin of 12.9% improved 60 basis points from 12.3% for the first quarter of fiscal 2022.
Balance Sheet, Liquidity and Cash Flow
As of July 31, 2022, the Company had cash on hand of $106.6 million, total debt of $1.2 billion and $270.2 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 2.7 times at the end of the first quarter of fiscal 2022.
The Company recorded cash used by operating activities and free cash flow of $4.4 million and $15.3 million, respectively, for the quarter ended July 31, 2022. For the quarter ended July 31, 2021, the Company recorded cash used by operating activities and free cash flow of $75.1 million and $81.9 million, respectively.
During the quarter, the Company repurchased common stock of $23.8 million, of which $10.8 million was repurchased under a previous authorization and $13.0 million was repurchased under an expanded authorization approved during the quarter. As of July 31, 2022, the Company had $187.0 million of repurchase authorization remaining.
Platform Expansion Activities
During the first quarter of fiscal 2023, GMS acquired Construction Supply of Southwest Florida, Inc. (“CSSWF”). CSSWF is a leading distributor of various stucco, building and waterproofing supplies serving the Sarasota, Bradenton, Venice and North Port local markets, with broader outreach to the Tampa and Fort Myers markets. This acquisition further expands GMS’s Complementary Products offerings and establishes an inaugural stucco-focused location in the state of Florida.
Also, during the period, the Company opened two new greenfield yards in Wildwood, Florida and Cleveland, Ohio as well as six new AMES stores.
For the complete press release, click here.
About GMS Inc.
Founded in 1971, GMS (NYSE: GMS) operates a network of approximately 300 distribution centers with extensive product offerings of wallboard, ceilings, steel framing and complementary construction products. In addition, GMS operates approximately 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.
Carey Phelps – Investor Relations – email@example.com – (770) 723-3369
Source: GMS, Inc.