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Jan 31, 2023
GMS Q3 2023 Earnings Report
Delivered solid results with heightened levels of net sales, net income, Adjusted EBITDA and cash flow.
Key Takeaways
GMS Inc. reported a 7.0% increase in net sales to $1.2 billion for the third quarter of fiscal 2023. Net income increased by 5.5% to $64.8 million, and Adjusted EBITDA rose by 4.3% to $140.8 million. The company saw strong performance in multi-family construction, improved commercial activity, and continued growth in Complementary Products, which helped offset a slowdown in single-family construction and challenging weather conditions.
Net sales increased by 7.0% compared to the prior year quarter, reaching $1.2 billion.
Net income rose by 5.5% to $64.8 million, or $1.53 per diluted share.
Adjusted EBITDA increased by 4.3% to $140.8 million.
The company acquired Tanner Bolt & Nut, Inc. and opened a new Ceilings-focused greenfield location in Brooklyn, NY.
GMS
GMS
Forward Guidance
Single-family demand is expected to soften, while multi-family and commercial activity should improve seasonally with year-over-year growth. Pricing in Wallboard, Ceilings, and Complementary Products is expected to remain resilient, but Steel Framing pricing and volumes will likely remain challenged. Cost reduction initiatives are expected to reduce fixed SG&A expenses by approximately $15 million on an annualized basis.
Positive Outlook
- Multi-family and commercial activity should improve seasonally with continuing year-over-year growth.
- Pricing in Wallboard, Ceilings and Complementary Products remain resilient.
- Cost reduction initiatives to better align our operations with the current demand outlook.
- These initiatives are expected to reduce fixed SG&A expenses by approximately $15 million on an annualized basis.
- Continue to be well-positioned with the scale, wide range of product offerings and expertise to adjust as needed to service the demands of all of our customers and continue to grow our business over the longer term.
Challenges Ahead
- Single-family demand will continue to soften
- Pricing and volumes in Steel Framing will likely remain challenged.
- Demand pull-backs in single-family construction, resulting in a relative mix shift in end market volumes, which while favorable to gross margin, also require a higher operational cost to serve.
- Inflationary wages, higher fuel and maintenance costs and disruptive weather conditions in several markets ultimately challenged our normal operational efficiency.
- Approximately $2.5 million in one-time execution costs related to these reductions will be recorded during our fiscal fourth quarter.