EX-99.1 2 tm2524520d1_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

 

 

GMS REPORTS FIRST QUARTER FISCAL 2026 RESULTS

 

Net Sales and Adjusted EBITDA Results Consistent With Expectations

 

Tucker, Georgia, August 28, 2025. GMS Inc. (NYSE: GMS), a leading North American specialty building products distributor, today reported financial results for the fiscal first quarter ended July 31, 2025.

 

GMS Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except per share data)

 

​  Three Months Ended 
   July 31, 
   2025   2024 
Net sales  $1,414,332   $1,448,456 
Cost of sales (exclusive of depreciation and amortization shown separately below)   977,807    996,893 
Gross profit   436,525    451,563 
Operating expenses:          
Selling, general and administrative   314,379    315,152 
Depreciation and amortization   40,919    38,032 
Total operating expenses   355,298    353,184 
Operating income   81,227    98,379 
Other (expense) income:          
Interest expense   (21,068)   (22,213)
Other income, net   906    2,028 
Total other expense, net   (20,162)   (20,185)
Income before taxes   61,065    78,194 
Provision for income taxes   17,505    20,946 
Net income  $43,560   $57,248 
Weighted average common shares outstanding:          
Basic   38,064    39,542 
Diluted   38,629    40,226 
Net income per common share:          
Basic  $1.14   $1.45 
Diluted  $1.13   $1.42 

 

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GMS Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except per share data)

 

   July 31,
2025		   April 30,
2025		 
Assets          
Current assets:   ​      
Cash and cash equivalents  $39,931   $55,599 
Trade accounts and notes receivable, net of allowances of $13,333 and $12,947, respectively   879,287    835,888 
Inventories, net   583,801    586,191 
Prepaid expenses and other current assets   36,110    42,438 
Total current assets   1,539,129    1,520,116 
Property and equipment, net of accumulated depreciation of $383,375 and $369,343, respectively   531,047    524,008 
Operating lease right-of-use assets   328,972    325,977 
Goodwill   882,502    881,334 
Intangible assets, net   516,945    536,716 
Deferred income taxes   26,588    24,568 
Other assets   19,899    18,548 
Total assets  $3,845,082   $3,831,267 
Liabilities and Stockholders’ Equity          
Current liabilities:          
Accounts payable  $396,249   $431,494 
Accrued compensation and employee benefits   87,461    126,442 
Other accrued expenses and current liabilities   133,347    127,396 
Current portion of long-term debt   57,740    57,901 
Current portion of operating lease liabilities   53,717    54,325 
Total current liabilities   728,514    797,558 
Non-current liabilities:          
Long-term debt, less current portion   1,255,900    1,206,445 
Long-term operating lease liabilities   288,464    279,373 
Deferred income taxes, net   76,035    76,483 
Other liabilities   44,347    51,228 
Total liabilities   2,393,260    2,411,087 
Commitments and contingencies          
Stockholders' equity:          
Common stock, par value $0.01 per share, 500,000 shares authorized; 38,068 and 38,164 shares issued and outstanding as of July 31, 2025 and April 30, 2025, respectively   381    381 
Preferred stock, par value $0.01 per share, 50,000 shares authorized; 0 shares issued and outstanding as of July 31, 2025 and April 30, 2025   —    — 
Additional paid-in capital   184,712    189,216 
Retained earnings   1,316,076    1,272,516 
Accumulated other comprehensive loss   (49,347)   (41,933)
Total stockholders' equity   1,451,822    1,420,180 
Total liabilities and stockholders' equity  $3,845,082   $3,831,267 

​

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GMS Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

   Three Months Ended
July 31,		 
   2025   2024 
Cash flows from operating activities:        ​ 
Net income  $43,560   $57,248 
Adjustments to reconcile net income to net cash used in operating activities:   ​    ​ 
Depreciation and amortization   40,919    38,032 
Write-off and amortization of debt discount and debt issuance costs   649    448 
Equity-based compensation   4,697    4,343 
Loss on disposal of assets, net   4    858 
Deferred income taxes   (2,650)   (1,681)
Other items, net   1,631    2,288 
Changes in assets and liabilities net of effects of acquisitions:   ​    ​ 
Trade accounts and notes receivable   (43,108)   (36,373)
Inventories   3,089    (20,640)
Prepaid expenses and other assets   2,694    (3,320)
Accounts payable   (35,320)   (10,644)
Accrued compensation and employee benefits   (39,005)   (66,124)
Other accrued expenses and liabilities   (8,104)   12,626 
Cash used in operating activities   (30,944)   (22,939)
Cash flows from investing activities:          
Purchases of property and equipment   (8,446)   (8,976)
Proceeds from sale of business and sale of assets   1,267    1,218 
Acquisition of businesses, net of cash acquired   (1,444)   (118,461)
Cash used in investing activities   (8,623)   (126,219)
Cash flows from financing activities:          
Repayments on revolving credit facility   (462,165)   (378,641)
Borrowings from revolving credit facility   508,253    468,864 
Payments of principal on long-term debt   (1,247)   (1,247)
Payments of principal on finance lease obligations   (12,686)   (10,839)
Repurchases of common stock   (12,852)   (46,609)
Proceeds from exercises of stock options   809    555 
Proceeds from issuance of stock pursuant to employee stock purchase plan   3,795    3,207 
Cash provided by financing activities   23,907    35,290 
Effect of exchange rates on cash and cash equivalents   (8)   892 
Decrease in cash and cash equivalents   (15,668)   (112,976)
Cash and cash equivalents, beginning of period   55,599    166,148 
Cash and cash equivalents, end of period  $39,931   $53,172 
Supplemental cash flow disclosures:          
Cash paid for income taxes  $6,448   $2,881 
Cash paid for interest   23,646    26,730 

​

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GMS Inc.

Net Sales by Product Group (Unaudited)

(dollars in thousands)

 

   Three Months Ended 
   July 31, 2025   % of
Total		  July 31, 2024   % of
Total
Wallboard  $556,393   39.3%  $587,929   40.6%
Ceilings   220,929   15.6%   207,156   14.3%
Steel framing   196,553   13.9%   209,858   14.5%
Complementary products   440,457   31.1%   443,513   30.6%
Total net sales  $1,414,332      $1,448,456    

 

GMS Inc.

Net Sales and Organic Sales by Product Group (Unaudited)

(dollars in millions)

 

   Net Sales       Organic Sales     
   Three Months Ended July 31,       Three Months Ended July 31,     
   2025   2024   Change   2025   2024   Change 
Wallboard  $556.4   $587.9    (5.4)%  $547.7   $587.9    (6.8)%
Ceilings   220.9    207.2    6.6%   219.7    207.2    6.1%
Steel framing   196.5    209.9    (6.3)%   192.6    209.9    (8.2)%
Complementary products   440.5    443.5    (0.7)%   417.6    443.5    (5.8)%
Total net sales  $1,414.3   $1,448.5    (2.4)%  $1,377.6   $1,448.5    (4.9)%

 

GMS Inc.

Per Day Net Sales and Per Day Organic Sales by Product Group (Unaudited)

(dollars in millions)

 

   Per Day Net Sales       Per Day Organic Sales     
   Three Months Ended July 31,       Three Months Ended July 31,     
   2025   2024   Change   2025   2024   Change 
Wallboard  $8.7   $9.2    (5.4)%  $8.6   $9.2    (6.8)%
Ceilings   3.5    3.2    6.6%   3.4    3.2    6.1%
Steel framing   3.1    3.3    (6.3)%   3.0    3.3    (8.2)%
Complementary products   6.9    6.9    (0.7)%   6.5    6.9    (5.8)%
Total net sales  $22.2   $22.6    (2.4)%  $21.5   $22.6    (4.9)%

 

 

   Per Day Growth(a)   Per Day Organic Growth(a) 
   Three Months Ended July 31, 2025   Three Months Ended July 31, 2025 
   Volume   Price/Mix/Fx   Volume   Price/Mix/Fx 
Wallboard   (5.7)%   0.3%   (7.0)%   0.2%
Ceilings   (4.2)%   10.8%   (5.0)%   11.1%
Steel framing   (5.4)%   (0.9)%   (8.8)%   0.6%

​ 

 

(a) Given the wide breadth of offerings and units of measure in Complementary Products, detailed price vs volume reporting is not available at a consolidated level.

 

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GMS Inc.

Reconciliation of Net Income to Adjusted EBITDA (Unaudited)

(in thousands)

 

   Three Months Ended 
   July 31, 
   2025   2024 
Net income  $43,560   $57,248 
Interest expense   21,068    22,213 
Interest income   (84)   (370)
Provision for income taxes   17,505    20,946 
Depreciation expense   21,290    19,228 
Amortization expense   19,629    18,804 
EBITDA  $122,968   $138,069 
Stock appreciation expense(a)   867    243 
Redeemable noncontrolling interests and deferred compensation(b)   86    422 
Equity-based compensation(c)   3,744    3,678 
Severance and other permitted costs(d)   1,185    956 
Transaction costs (acquisitions and other)(e)   6,150    1,280 
Loss on disposal of assets(f)   4    858 
Effects of fair value adjustments to inventory(g)   —    375 
Change in fair value of contingent consideration(h)   485    — 
EBITDA adjustments   12,521    7,812 
Adjusted EBITDA  $135,489   $145,881 
​          
Net sales  $1,414,332   $1,448,456 
Adjusted EBITDA Margin   9.6%   10.1%

 

 

(a)Represents changes in the fair value of stock appreciation rights.
(b)Represents changes in the fair values of noncontrolling interests and deferred compensation agreements.
(c)Represents non-cash equity-based compensation expense related to the issuance of share-based awards.
(d)Represents severance expenses and certain other cost adjustments as permitted under the ABL Facility and the Term Loan Facility.
(e)Represents costs related to acquisitions paid to third parties, including costs for the pending merger with The Home Depot.
(f)Includes gains and losses from the sale and disposal of assets.
(g)Represents the non-cash cost of sales impact of acquisition accounting adjustments to increase inventory to its estimated fair value.
(h)Represents the change in fair value of contingent consideration arrangements.

 

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GMS Inc.

Reconciliation of Cash Used In Operating Activities to Free Cash Flow (Unaudited)

(in thousands)

 

 

   Three Months Ended 
   July 31, 
   2025   2024 
Cash used in operating activities  $(30,944)  $(22,939)
Purchases of property and equipment   (8,446)   (8,976)
Free cash flow (a)  $(39,390)  $(31,915)

 

 

(a) Free cash flow is a non-GAAP financial measure that we define as net cash provided by (used in) operations less capital expenditures.

 

 

 

GMS Inc.

Reconciliation of Selling, General and Administrative Expense to Adjusted SG&A (Unaudited)

(in thousands)

 

 

   Three Months Ended 
   July 31, 
   2025   2024 
Selling, general and administrative expense  $314,379   $315,152 
           
Adjustments          
Stock appreciation expense(a)   (867)   (243)
Redeemable noncontrolling interests and deferred compensation(b)   (86)   (422)
Equity-based compensation(c)   (3,744)   (3,678)
Severance and other permitted costs(d)   (1,185)   (956)
Transaction costs (acquisitions and other)(e)   (6,150)   (1,280)
Loss on disposal of assets(f)   (4)   (858)
Adjusted SG&A  $302,343   $307,715 
           
Net sales  $1,414,332   $1,448,456 
Adjusted SG&A margin   21.4%   21.2%

 

 

(a)Represents changes in the fair value of stock appreciation rights.
(b)Represents changes in the fair values of noncontrolling interests and deferred compensation agreements.
(c)Represents non-cash equity-based compensation expense related to the issuance of share-based awards.
(d)Represents severance expenses and certain other cost adjustments as permitted under the ABL Facility and the Term Loan Facility.
(e)Represents costs related to acquisitions paid to third parties, including costs for the pending merger with The Home Depot.
(f)Includes gains and losses from the sale and disposal of assets.

 

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GMS Inc.

Reconciliation of Income Before Taxes to Adjusted Net Income (Unaudited)

(in thousands, except per share data)

 

   Three Months Ended 
   July 31, 
   2025   2024 
Income before taxes  $61,065   $78,194 
EBITDA adjustments   12,521    7,812 
Amortization expense (1)   19,629    18,804 
Adjusted pre-tax income   93,215    104,810 
Adjusted income tax expense   25,168    27,251 
Adjusted net income  $68,047   $77,559 
Effective tax rate (2)   27.0%   26.0%
           
Weighted average shares outstanding:          
Basic   38,064    39,542 
Diluted   38,629    40,226 
Adjusted net income per share:          
Basic  $1.79   $1.96 
Diluted  $1.76   $1.93 

 

 

(1) Represents all non-cash amortization resulting from business combinations.

 

(2) Normalized cash tax rate excluding the impact of acquisition accounting and certain other deferred tax amounts.

 

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GMS Inc.

Reconciliation of Net Income to Pro Forma Adjusted EBITDA (Unaudited)

(in thousands)

 

   Last Twelve Months Ended 
   July 31, 
   2025   2024 
Net income  $101,781   $246,497 
Interest expense   87,935    78,760 
Write-off of debt discount and deferred financing fees   —    674 
Interest income   (633)   (1,650)
Provision for income taxes   55,385    92,299 
Depreciation expense   85,069    72,107 
Amortization expense   81,966    67,269 
EBITDA  $411,503   $555,956 
Impairment of goodwill   42,454    — 
Stock appreciation expense(a)   2,920    4,416 
Redeemable noncontrolling interests and deferred compensation(b)   924    1,369 
Equity-based compensation(c)   15,712    15,992 
Severance and other permitted costs(d)   12,080    3,178 
Transaction costs (acquisitions and other)(e)   8,790    4,751 
(Gain) loss on disposal of assets(f)   (6,330)   260 
Effects of fair value adjustments to inventory(g)   110    1,706 
Change in fair value of contingent consideration(h)   2,367    — 
Debt transaction costs(i)   —    409 
EBITDA adjustments   79,027    32,081 
Adjusted EBITDA   490,530    588,037 
Contributions from acquisitions(j)   1,111    35,211 
Pro Forma Adjusted EBITDA  $491,641   $623,248 
           
Cash and cash equivalents  $39,931   $53,172 
Total debt   1,313,640    1,380,438 
Net debt  $1,273,709   $1,327,266 
Net debt / Pro Forma Adjusted EBITDA   2.6x   2.1x

 

 

(a)Represents changes in the fair value of stock appreciation rights.
(b)Represents changes in the fair values of noncontrolling interests and deferred compensation agreements.
(c)Represents non-cash equity-based compensation expense related to the issuance of share-based awards.
(d)Represents severance expenses and certain other cost adjustments as permitted under the ABL Facility and the Term Loan Facility.
(e)Represents costs related to acquisitions paid to third parties, including costs for the pending merger with The Home Depot.
(f)Includes gains and losses from the sale of assets and the sale of the Company’s Michigan-based installed insulation contracting business, net of losses and impairments.
(g)Represents the non-cash cost of sales impact of acquisition accounting adjustments to increase inventory to its estimated fair value.
(h)Represents the change in fair value of contingent consideration arrangements.
(i)Represents costs paid to third-party advisors related to debt refinancing activities.
(j)Represents the pro forma impact of earnings from acquisitions from the beginning of the last twelve month period to the date of acquisition, including synergies.

 

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About GMS Inc.

 

Founded in 1971, GMS operates a network of more than 320 distribution centers with extensive product offerings of Wallboard, Ceilings, Steel Framing and Complementary 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.

 

Use of Non-GAAP Financial Measures

 

GMS reports its financial results in accordance with GAAP. However, it presents Adjusted net income, free cash flow, Adjusted SG&A, Adjusted EBITDA, and Adjusted EBITDA margin, which are not recognized financial measures under GAAP. GMS believes that Adjusted net income, free cash flow, Adjusted SG&A, Adjusted EBITDA, and Adjusted EBITDA margin assist investors and analysts in comparing its operating performance across reporting periods on a consistent basis by excluding items that the Company does not believe are indicative of its core operating performance. The Company’s management believes Adjusted net income, Adjusted SG&A, free cash flow, Adjusted EBITDA and Adjusted EBITDA margin are helpful in highlighting trends in its operating results, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which the Company operates and capital investments. In addition, the Company utilizes Adjusted EBITDA in certain calculations in its debt agreements.

 

You are encouraged to evaluate each adjustment and the reasons GMS considers it appropriate for supplemental analysis. In addition, in evaluating Adjusted net income, Adjusted SG&A and Adjusted EBITDA, you should be aware that in the future, the Company may incur expenses similar to the adjustments in the presentation of Adjusted net income, Adjusted SG&A and Adjusted EBITDA. The Company’s presentation of Adjusted net income, Adjusted SG&A, Adjusted SG&A margin, Adjusted EBITDA, and Adjusted EBITDA margin should not be construed as an inference that its future results will be unaffected by unusual or non-recurring items. In addition, Adjusted net income, free cash flow, Adjusted SG&A and Adjusted EBITDA may not be comparable to similarly titled measures used by other companies in GMS’s industry or across different industries. Please see the tables at the end of this release for a reconciliation of Adjusted EBITDA, free cash flow, Adjusted SG&A and Adjusted net income to the most directly comparable GAAP financial measures.

 

When calculating organic net sales growth, the Company excludes from the calculation (i) net sales of acquired businesses until the first anniversary of the acquisition date, and (ii) the impact of foreign currency translation.

 

Contact Information:

Investors:

Carey Phelps

ir@gms.com

770-723-3369

 

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