GMS Reports Fourth Quarter and Fiscal Year 2025 Results

Resilient Pricing Despite Challenging and Uncertain End Market Conditions; Additional Structural Cost Reductions Realized

GMS Inc., a leading North American specialty building products distributor, reported financial results for the fourth quarter and fiscal year 2025 ended April 30, 2025.

Fourth Quarter Fiscal 2025 Highlights

(Comparisons are to the fourth quarter of fiscal 2024 unless otherwise noted)

• Net sales of $1,333.8 million decreased 5.6%; organic net sales decreased 9.7%. On a per day basis, net sales were down 4.1% and organic net sales decreased 8.3%.
• Net income of $26.1 million decreased 53.7% from $56.4 million. Net income per diluted share of $0.67, compared to $1.39. Net income margin was 2.0% compared to 4.0%; Adjusted net income of $50.2 million, or $1.29 per diluted share, compared to $81.6 million, or $2.01 per diluted share.
• Adjusted EBITDA of $109.8 million compared to $146.6 million; Adjusted EBITDA margin was 8.2% compared to 10.4%.
• Cash provided by operating activities of $196.8 million, compared to $204.2 million. Free cash flow of $183.4 million, compared with $186.7 million.
• Repurchased 348,599 shares of common stock for $26.4 million at an average cost per share of $75.60, compared to 174,555 shares of common stock for $16.0 million at an average cost per share of $91.86.
• Net debt leverage was 2.4 times Pro Forma Adjusted EBITDA as of the end of the fourth quarter of fiscal 2025, consistent with the end of the third quarter of fiscal 2025 and up from 1.7 times Pro Forma Adjusted EBITDA a year ago.
• Leveraging investments in technology and efficiency optimization, the Company implemented an additional estimated $25 million in annualized cost reductions.

Full Year Fiscal 2025 Highlights

(Comparisons are to the full year of fiscal 2024, unless otherwise noted)

• Net sales of $5,513.7 million increased 0.2%; organic net sales decreased 5.8%. On a per day basis, net sales were up 0.6% and organic net sales were down 5.4%.
• Net income of $115.5 million, decreased 58.2% compared to net income of $276.1 million, inclusive of a $42.5 million non-cash goodwill impairment charge recorded during the Company’s third quarter of fiscal 2025. Net income per diluted share of $2.92 decreased from $6.75. Net income margin was 2.1% compared to 5.0%; Adjusted net income of $244.0 million decreased 30.7% compared to $352.0 million. Adjusted net income per diluted share of $6.18 compared to $8.61.
• Adjusted EBITDA of $500.9 million decreased $114.5 million, or 18.6%; Adjusted EBITDA margin decreased 210 basis points to 9.1% from 11.2%.
• Cash provided by operating activities of $383.6 million, compared to $433.2 million. Free cash flow of $336.1 million, compared to $376.0 million.
• Repurchased 1.9 million shares of common stock for $164.1 million at an average cost per share of $85.27, compared to 1.7 million shares of common stock for $115.6 million at an average cost per share of $67.93.
• Demonstrating the continued execution of our strategic priorities, including platform expansion and Complementary Products growth, the Company completed three strategic acquisitions and opened four greenfield yard locations.
• Leveraging investments in technology and efficiency optimization, the Company implemented a total estimated $55 million in annualized cost reductions.

“We reported solid results for our fourth quarter and full year fiscal 2025 despite deterioration in end market conditions as we moved through the year,” said John C. Turner, Jr, President and Chief Executive Officer of GMS. “The ongoing challenging interest rate environment and general market uncertainty continues to be a headwind for the business, contributing to reduced levels of activity in each of our major end markets. Despite these pressures, we reported $1.33 billion in net sales for the fourth quarter and achieved volume growth for the quarter in Ceilings and Complementary Products, with resilient or expanded pricing in all major product categories except for Steel Framing. Additionally, we generated significant levels of cash flow both for our full year and for the fourth quarter, highlighted by a post-Covid record level of free cash flow conversion of Adjusted EBITDA recorded for the quarter. Our balance sheet remains strong with no near-term maturities, and we are balancing capital allocations among an active pipeline of strategic acquisitions, greenfield expansions, debt reduction and opportunistic share repurchases.”

Turner continued, “As we begin fiscal 2026, we are cautiously optimistic that we are nearing the bottom of this cycle and believe pent-up demand will materialize as the macro-environment improves. Once this market demand returns, we will be well positioned to capture the opportunity as a leaner and more efficient organization.”

Fourth Quarter Fiscal 2025 Results

(Comparisons are to the fourth quarter of fiscal 2024 unless otherwise noted)

Net sales for the fourth quarter of fiscal 2025 of $1.33 billion decreased 5.6%, or 4.1% on a same day basis, primarily due to softer end market conditions, partially offset by resilient pricing in Wallboard, Ceilings and Complementary Products. Steel price deflation reduced net sales by an estimated $22 million for the quarter. Organic net sales decreased 9.7% in total or 8.3% on a same day basis.

Fourth quarter year-over-year sales by product category were as follows¹:

• Wallboard sales of $526.6 million decreased 10.1% (down 12.5% on an organic basis).
• Ceilings sales of $201.0 million increased 6.4% (up 2.9% on an organic basis).
• Steel framing sales of $189.2 million decreased 14.2% (down 17.9% on an organic basis).
• Complementary product sales of $416.9 million decreased 0.2% (down 7.3% on an organic basis).

Gross profit of $416.2 million decreased $35.0 million, or 7.7%. Gross margin decreased 70 basis points to 31.2%. Gross margins contracted year-over-year across most major product lines driven principally by lower vendor incentive income given reduced sales volumes. Absent the lower incentive income, we experienced generally resilient pricing and margins sequentially in most of our major product categories, consistent with previously-communicated expectations, despite the current market pressures. Developing tariff activity notwithstanding, Steel Framing pricing, for the quarter continued to be a headwind, declining both sequentially and year-over-year.

Selling, general and administrative (“SG&A”) expenses were $315.1 million for the quarter, down from $315.5 million, despite a $14 million year-over-year increase in SG&A expenses related to recent acquisitions. Overall operating costs were lower year-over-year, reflective of the realized savings from the previously disclosed cost reduction actions and reduced activity levels in response to shifting demand.

SG&A expense as a percentage of net sales increased 130 basis points to 23.6% for the quarter compared to 22.3%. This was a sequential improvement from the prior quarter level of 24.7%. General operating cost inflation, including higher rent expense, drove 110 basis points of deleverage, the majority of which was offset by the previously announced cost reduction actions. Accident claim activity contributed 30 basis points of deleverage, and net product price deflation, led by Steel, was also unfavorable to SG&A leverage by 30 basis points. The remainder of the year-over-year difference was related to reduced absorption on lower sales, partially offset by the benefit of acquisitions. Adjusted SG&A expense as a percentage of net sales of 23.1% increased 130 basis points from 21.8%.

All in, net income decreased 53.7% to $26.1 million compared to net income of $56.4 million. Net income per diluted share of $0.67 decreased from $1.39 per diluted share. Adjusted net income was $50.2 million, or $1.29 per diluted share, compared to $81.6 million, or $2.01 per diluted share.

Adjusted EBITDA decreased to $109.8 million compared to $146.6 million. Adjusted EBITDA margin of 8.2% decreased 220 basis points compared to 10.4%.

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1 For more details on sales by product category, including per day organic sales change due to volume and/or price, mix and foreign exchange, please refer to the tables included at the back of this press release.

Balance Sheet, Liquidity and Cash Flow

As of April 30, 2025, the Company had cash on hand of $55.6 million, total debt of $1.3 billion and $631.3 million of available liquidity under its revolving credit facility. Net debt leverage was 2.4 times Pro Forma Adjusted EBITDA as of the end of the quarter, up from 1.7 times Pro Forma Adjusted EBITDA at the end of the fourth quarter of fiscal 2024.

The Company generated cash from operating activities and free cash flow of $196.8 million and $183.4 million, respectively, for the quarter ended April 30, 2025. For the quarter ended April 30, 2024, the Company generated cash from operating activities and free cash flow of $204.2 million and $186.7 million, respectively.

During the quarter, the Company repurchased 348,599 shares of common stock for $26.4 million. As of April 30, 2025, the Company had $192.0 million of share repurchase authorization remaining.

Platform Expansion Activities (Including Subsequent Events)

On June 2, 2025, GMS added to its Complementary Products offerings with the acquisition of the Lutz Company. Founded in 1986 and operating out of a single location in Brooklyn Park, MN, Lutz Company is a highly-respected distributor of Exterior Insulation Finish Systems (“EIFS”), insulation board, tools and other complementary products in the greater Minneapolis, MN area.

In addition, GMS also recently established two new greenfield locations, expanding its presence to provide enhanced service and product offerings in the following markets:

• In Owens Sound, Ontario, Canada, GMS added a new location in March 2025, enhancing the service and geographic reach of its operating company, Watson Building Supplies.
• In Nashville, Tennessee, GMS opened an additional location in June 2025 to enhance the capacity of its existing Valley Interiors yard, thereby providing opportunities to expand share in the Nashville market.

About GMS, Inc.

Founded in 1971, GMS operates a network of more than 300 distribution centers with extensive product offerings of Wallboard, Ceilings, Steel Framing and Complementary Products. In addition, GMS operates more than 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.