Press Release

GMS Reports First Quarter Fiscal 2020 Results

Company Release - 8/29/2019 6:00 AM ET

Q1 Net Sales of $847.2 million up 8.9%; Organic Net Sales up 3.4%

Q1 Reported Net Income of $24.8 Million, or $0.59 per Diluted Share

Q1 Adjusted Net Income of $37.5 Million, or $0.89 per Diluted Share

Q1 Adjusted EBITDA of $83.6 million or 9.9% of net sales

TUCKER, Ga.--(BUSINESS WIRE)-- GMS Inc. (NYSE:GMS), a leading North American specialty distributor of interior building products, today reported financial results for the first quarter of fiscal 2020 ended July 31, 2019.

First Quarter Fiscal 2020 Highlights

  • Net sales of $847.2 million increased 8.9% from $778.1 million in the first quarter of the prior fiscal year. Organic net sales (as described below) increased 3.4% year over year.
  • Reported net income of $24.8 million, or $0.59 per diluted share, compared to $8.7 million, or $0.20 per diluted share, in the first quarter of the prior fiscal year.
  • Adjusted net income of $37.5 million, or $0.89 per diluted share, compared to $35.2 million, or $0.82 per diluted share, in the first quarter of the prior fiscal year.
  • Adjusted EBITDA of $83.6 million, or 9.9% of net sales compared to Adjusted EBITDA of $75.3 million, or 9.7% of net sales, in the first quarter of the prior fiscal year.
  • The Company completed one business acquisition and two greenfield openings during the first quarter of fiscal 2020.

“We are off to a strong start to fiscal 2020 as we remain focused on leveraging the foundation of our business and positioning GMS for long-term growth and profitability,” said John C. Turner, Jr., President and Chief Executive Officer. “Our team achieved record net sales results in the quarter, with organic net sales growth driven by strong sales in the United States, where we continue to see healthy end markets with solid demand, partially offset by continued softness in the Canadian single-family housing market. We also generated greater profitability with higher year-over-year net income and a 20 basis point improvement in Adjusted EBITDA margin.”

Mr. Turner continued, “GMS has a strong market position through our extensive North American network coupled with local expertise and teams focused on superior service delivery. Moving forward, we are committed to advancing the Company’s next phase of growth and success. We will seek to capitalize on the significant organic growth opportunities across our existing platform and continue to enhance and expand our geographic footprint through greenfield operations and accretive acquisitions balanced with our debt reduction priorities. At the same time, we will continue to leverage our scale and employ best practices to deliver further profit improvement.”

First Quarter Fiscal 2020 Results

Net sales for the first quarter of fiscal 2020 of $847.2 million were up 8.9%, or 3.4% on an organic basis, compared to $778.1 million for the first quarter of the prior fiscal year.

  • Wallboard sales of $341.6 million increased 7.5% (3.5% on an organic basis) compared to the first quarter of fiscal 2019, driven by higher organic volumes and benefits from acquisitions, partially offset by a slight decrease in price.
  • Ceilings sales of $129.1 million increased 11.4% (8.3% on an organic basis) compared to the first quarter of fiscal 2019, primarily due to higher organic volumes, the positive impact of acquisitions and higher pricing.
  • Steel framing sales of $131.8 million increased 2.1% (down 0.8% on an organic basis) compared to the first quarter of fiscal 2019, driven by higher organic volumes and the positive impact of acquisitions, partially offset by lower pricing and mix.
  • Other product sales of $244.6 million increased 13.6% (3.1% on an organic basis) compared to the first quarter of fiscal 2019, as a result of the positive impact of acquisitions, as well as higher organic growth.

Gross profit of $273.7 million increased 11.8% from $244.8 million in the first quarter of fiscal 2019, as a result of higher sales, both organically and including the positive impact of acquisitions, as well as $4.1 million of non-cash purchase accounting adjustments recorded in the prior year related to the Titan acquisition. Gross margin of 32.3% increased 80 basis points from 31.5% a year ago primarily due to net favorable price-cost dynamics, Titan purchasing synergies, and the prior year non-cash purchase accounting adjustments.

Selling, general and administrative (SG&A) expense as a percentage of net sales was 23.0% for the quarter compared to 23.8% in the first quarter of fiscal 2019. Adjusted SG&A expense as a percentage of net sales was 22.6% compared to 22.4% in the prior year quarter. The 20 basis point increase in adjusted SG&A was the result of investments in business initiatives, reduced operating leverage in Canada and inflationary cost pressures including those resulting from adverse weather conditions. These impacts were partially offset by increased cost efficiencies resulting from the Company’s cost reduction initiatives.

Net income of $24.8 million, or $0.59 per diluted share, compared to $8.7 million, or $0.20 per diluted share, in the first quarter of fiscal 2019. Adjusted net income of $37.5 million, or $0.89 per diluted share, compared to $35.2 million, or $0.82 per diluted share, in the first quarter of fiscal 2019. Adjusted EBITDA of $83.6 million increased 11.0% year over year and represented an Adjusted EBITDA margin of 9.9%.

Balance Sheet and Expansion Activity

As of July 31, 2019, the Company had cash of $24.1 million and total debt of $1.16 billion, compared to cash of $36.9 million and total debt of $1.30 billion, as of July 31, 2018. Net leverage was 3.7 times at the end of the first quarter of fiscal 2020 compared to 4.2 times at the end of the first quarter of fiscal 2019.

During the first quarter of fiscal 2020, the Company completed the previously-announced acquisition of Hart Acoustical & Drywall Supply in South Texas with two locations in San Antonio, TX and one location in San Feria, TX. The Company also opened two greenfield locations in Manchester, NH and Wichita Falls, TX.

Organic Net Sales Growth Calculation and Adoption of Lease Standard

At the beginning of fiscal 2020, the Company modified its calculation of organic, or base business, net sales growth. When calculating organic net sales growth, the Company now excludes net sales of acquired businesses until the first anniversary of the acquisition date. Previously, the Company excluded net sales of businesses acquired in the current fiscal year, the prior fiscal year and three months prior to the start of the prior fiscal year. In addition, the Company excludes the impact of foreign currency translation in its calculation of organic net sales growth. Further information, including a presentation of prior years’ results under the new methodology, can be found in the Company’s earnings supplement furnished today on Form 8-K and posted on the Company’s website.

At the beginning of fiscal 2020, the Company also adopted new authoritative guidance issued by the FASB on accounting for leases. The adoption resulted in recording operating lease right-of-use assets and operating lease liabilities on the Company’s Consolidated Balance Sheet of $118.8 million. The Company also reclassed deferred rent of $4.8 million from liabilities into its operating lease right-of-use assets.

Conference Call and Webcast

GMS will host a conference call and webcast to discuss its results for the first quarter ended July 31, 2019 and other information related to its business at 8:30 a.m. Eastern Time on August 29, 2019. Investors who wish to participate in the call should dial 877-407-3982 (domestic) or 201-493-6780 (international) at least 5 minutes prior to the start of the call. The live webcast will be available on the Investors section of the Company’s website at www.gms.com. There will be a slide presentation of the results available on that page of the website as well. Replays of the call will be available through September 29, 2019 and can be accessed at 844-512-2921 (domestic) or 412-317-6671 (international) and entering the pass code 13693769.

About GMS Inc.

Founded in 1971, GMS operates a network of more than 250 distribution centers across the United States and Canada. GMS’s extensive product offering of wallboard, suspended ceilings systems, or ceilings, and complementary construction products is designed to provide a comprehensive one-stop-shop for our core customer, the interior contractor who installs these products in commercial and residential buildings.

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 under its senior secured asset based revolving credit facility and its senior secured first lien term loan facility.

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.

Forward-Looking Statements and Information:

This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You can generally identify forward-looking statements by the Company’s use of forward-looking terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “seek,” or “should,” or the negative thereof or other variations thereon or comparable terminology. In particular, statements about the markets in which GMS operates and the economy generally and statements about growth potential across the Company’s business and the ability to deliver growth and value creation contained in this press release are forward-looking statements. The Company has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While the Company believes these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond its control. Forward-looking statements involve risks and uncertainties, including, but not limited to, those described in the “Risk Factors” section in the Company’s most recent Annual Report on Form 10-K, and in its other periodic reports filed with the SEC. In addition, the statements in this release are made as of August 29, 2019. The Company undertakes no obligation to update any of the forward-looking statements made herein, whether as a result of new information, future events, changes in expectation or otherwise. These forward-looking statements should not be relied upon as representing the Company’s views as of any date subsequent to August 29, 2019.

GMS Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

July 31,

 

 

2019

 

2018

Net sales

 

$

847,176

 

$

778,144

Cost of sales (exclusive of depreciation and amortization shown separately below)

 

 

573,522

 

 

533,328

Gross profit

 

 

273,654

 

 

244,816

Operating expenses:

 

 

 

 

 

 

Selling, general and administrative

 

 

194,631

 

 

185,435

Depreciation and amortization

 

 

29,275

 

 

26,322

Total operating expenses

 

 

223,906

 

 

211,757

Operating income

 

 

49,748

 

 

33,059

Other (expense) income:

 

 

 

 

 

 

Interest expense

 

 

(18,277)

 

 

(16,188)

Change in fair value of financial instruments

 

 

 

 

(6,019)

Other income, net

 

 

939

 

 

634

Total other expense, net

 

 

(17,338)

 

 

(21,573)

Income before taxes

 

 

32,410

 

 

11,486

Provision for income taxes

 

 

7,590

 

 

2,836

Net income

 

$

24,820

 

$

8,650

Weighted average common shares outstanding:

 

 

 

 

 

 

Basic

 

 

41,001

 

 

41,094

Diluted

 

 

41,615

 

 

42,074

Net income per common share(1):

 

 

 

 

 

 

Basic

 

$

0.60

 

$

0.21

Diluted

 

$

0.59

 

$

0.20

 

 

 

 

 

 

 

 

(1) The following table sets forth the computation of basic and diluted earnings per share of common stock for periods presented:

 

 

 

Three Months Ended

 

 

July 31,

 

 

2019

 

2018

 

 

(in thousands, except per share data)

Net income

 

$

24,820

 

$

8,650

Less: Net income allocated to participating securities

 

 

319

 

 

156

Net income attributable to common stockholders

 

$

24,501

 

$

8,494

Basic earnings per common share:

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

 

41,001

 

 

41,094

Basic earnings per common share

 

$

0.60

 

$

0.21

Diluted earnings per common share:

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

 

41,001

 

 

41,094

Add: Common Stock Equivalents

 

 

614

 

 

980

Diluted weighted average common shares outstanding

 

 

41,615

 

 

42,074

Diluted earnings per common share

 

$

0.59

 

$

0.20

 

GMS Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

July 31,

 

April 30,

 

 

2019

 

2019

Assets

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

24,123

 

$

47,338

Trade accounts and notes receivable, net of allowances of $6,683 and $6,432, respectively

 

 

473,411

 

 

445,771

Inventories, net

 

 

295,553

 

 

290,829

Prepaid expenses and other current assets

 

 

17,925

 

 

18,368

Total current assets

 

 

811,012

 

 

802,306

Property and equipment, net of accumulated depreciation of $132,815 and $123,583, respectively

 

 

287,535

 

 

282,349

Operating lease right-of-use assets

 

 

111,213

 

 

Goodwill

 

 

622,032

 

 

617,327

Intangible assets, net

 

 

419,250

 

 

429,313

Deferred income taxes

 

 

7,410

 

 

4,676

Other assets

 

 

15,942

 

 

13,583

Total assets

 

$

2,274,394

 

$

2,149,554

Liabilities and Stockholders’ Equity

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

164,794

 

$

173,751

Accrued compensation and employee benefits

 

 

36,606

 

 

62,858

Other accrued expenses and current liabilities

 

 

70,669

 

 

79,848

Current portion of long-term debt

 

 

49,308

 

 

42,118

Current portion of operating lease liabilities

 

 

32,622

 

 

Total current liabilities

 

 

353,999

 

 

358,575

Non-current liabilities:

 

 

 

 

 

 

Long-term debt, less current portion

 

 

1,111,697

 

 

1,099,077

Long-term operating lease liabilities

 

 

83,384

 

 

Deferred income taxes, net

 

 

9,647

 

 

10,226

Other liabilities

 

 

45,191

 

 

41,571

Liabilities to noncontrolling interest holders, less current portion

 

 

8,181

 

 

10,929

Total liabilities

 

 

1,612,099

 

 

1,520,378

Commitments and contingencies

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Common stock, par value $0.01 per share, 500,000 shares authorized; 41,589 and 40,375 shares issued and outstanding as of July 31, 2019 and April 30, 2019, respectively

 

 

416

 

 

404

Preferred stock, par value $0.01 per share, 50,000 shares authorized; 0 shares issued and outstanding as of July 31, 2019 and April 30, 2019

 

 

 

 

Exchangeable shares

 

 

 

 

29,639

Additional paid-in capital

 

 

512,244

 

 

480,113

Retained earnings

 

 

170,414

 

 

145,594

Accumulated other comprehensive loss

 

 

(20,779)

 

 

(26,574)

Total stockholders' equity

 

 

662,295

 

 

629,176

Total liabilities and stockholders' equity

 

$

2,274,394

 

$

2,149,554

 

GMS Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

July 31,

 

 

2019

 

2018

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

24,820

 

$

8,650

Adjustments to reconcile net income to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

29,275

 

 

26,322

Write-off and amortization of debt discount and debt issuance costs

 

 

835

 

 

825

Provision for losses on accounts and notes receivable

 

 

657

 

 

148

Provision for obsolescence of inventory

 

 

119

 

 

(22)

Effects of fair value adjustments to inventory

 

 

151

 

 

4,129

Increase in fair value of contingent consideration

 

 

228

 

 

229

Equity-based compensation

 

 

2,071

 

 

1,269

Gain on sale and disposal of assets

 

 

(156)

 

 

(121)

Change in fair value of financial instruments

 

 

 

 

6,019

Deferred income taxes

 

 

(1,440)

 

 

(571)

Changes in assets and liabilities net of effects of acquisitions:

 

 

 

 

 

 

Trade accounts and notes receivable

 

 

(23,230)

 

 

(40,974)

Inventories

 

 

18

 

 

(20,943)

Prepaid expenses and other assets

 

 

(1,359)

 

 

416

Accounts payable

 

 

(9,526)

 

 

(1,696)

Accrued compensation and employee benefits

 

 

(26,347)

 

 

(22,945)

Derivative liability

 

 

 

 

(10,778)

Other accrued expenses and liabilities

 

 

(8,556)

 

 

2,219

Cash used in operating activities

 

 

(12,440)

 

 

(47,824)

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(5,891)

 

 

(3,793)

Proceeds from sale of assets

 

 

232

 

 

266

Acquisition of businesses, net of cash acquired

 

 

(10,633)

 

 

(575,499)

Cash used in investing activities

 

 

(16,292)

 

 

(579,026)

Cash flows from financing activities:

 

 

 

 

 

 

Repayments on the revolving credit facility

 

 

(262,107)

 

 

(176,769)

Borrowings from the revolving credit facility

 

 

274,810

 

 

392,170

Payments of principal on long-term debt

 

 

(2,492)

 

 

(2,492)

Payments of principal on finance lease obligations

 

 

(6,021)

 

 

(3,998)

Borrowings from term loan

 

 

 

 

996,840

Repayments from term loan

 

 

 

 

(571,840)

Debt issuance costs

 

 

 

 

(7,933)

Proceeds from exercises of stock options

 

 

133

 

 

431

Other financing activities

 

 

1,022

 

 

873

Cash provided by financing activities

 

 

5,345

 

 

627,282

Effect of exchange rates on cash and cash equivalents

 

 

172

 

 

(4)

(Decrease) increase in cash and cash equivalents

 

 

(23,215)

 

 

428

Cash and cash equivalents, beginning of period

 

 

47,338

 

 

36,437

Cash and cash equivalents, end of period

 

$

24,123

 

$

36,865

Supplemental cash flow disclosures:

 

 

 

 

 

 

Cash paid for income taxes

 

$

18,776

 

$

958

Cash paid for interest

 

 

17,011

 

 

10,980

 

GMS Inc.

Net Sales by Product Group (Unaudited)

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

July 31,

 

% of

 

 

 

July 31,

 

% of

 

 

 

2019

 

Total

 

 

 

2018

 

Total

 

 

 

Wallboard

 

$

341,595

 

40.3

%

 

$

317,735

 

40.8

%

Ceilings

 

 

129,110

 

15.2

%

 

 

115,855

 

14.9

%

Steel framing

 

 

131,829

 

15.6

%

 

 

129,112

 

16.6

%

Other products

 

 

244,642

 

28.9

%

 

 

215,442

 

27.7

%

Total net sales

 

$

847,176

 

 

 

 

$

778,144

 

 

 

 

 

GMS Inc.

Reconciliation of Net Income to Adjusted EBITDA (Unaudited)

(in thousands)

 

 

 

Three Months Ended

 

 

 

July 31,

 

 

 

 

2019

 

2018

 

 

 

 

 

 

 

 

 

Net income

 

$

24,820

 

$

8,650

 

Interest expense

 

 

18,277

 

 

16,188

 

Interest income

 

 

(12)

 

 

(236)

 

Provision for income taxes

 

 

7,590

 

 

2,836

 

Depreciation expense

 

 

12,422

 

 

10,610

 

Amortization expense

 

 

16,853

 

 

15,712

 

EBITDA

 

$

79,950

 

$

53,760

 

Stock appreciation expense (a)

 

 

60

 

 

334

 

Redeemable noncontrolling interests(b)

 

 

662

 

 

531

 

Equity-based compensation(c)

 

 

1,395

 

 

404

 

Severance and other permitted costs(d)

 

 

554

 

 

4,836

 

Transaction costs (acquisitions and other)(e)

 

 

972

 

 

4,753

 

Gain on disposal of assets

 

 

(156)

 

 

(121)

 

Effects of fair value adjustments to inventory(f)

 

 

151

 

 

4,129

 

Change in fair value of financial instruments(g)

 

 

 

 

6,019

 

Debt transaction costs(h)

 

 

 

 

627

 

EBITDA add-backs

 

 

3,638

 

 

21,512

 

Adjusted EBITDA

 

$

83,588

 

$

75,272

 

 

 

 

 

 

 

 

 

Net sales

 

$

847,176

 

$

778,144

 

Adjusted EBITDA margin

 

 

9.9

%

 

9.7

%

_________________________

(a)

 

Represents non cash expense related to stock appreciation rights agreements.

(b)

 

Represents non cash compensation expense related to changes in the values of noncontrolling interests.

(c)

 

Represents non cash equity based compensation expense related to the issuance of share-based awards.

(d)

 

Represents severance expenses and other costs permitted in calculations under the ABL Facility and the First Lien Facility.

(e)

 

Represents costs related to acquisitions paid to third parties.

(f)

 

Represents the non cash cost of sales impact of purchase accounting adjustments to increase inventory to its estimated fair value.

(g)

 

Represents the mark to market adjustments for derivative financial instruments.

(h)

 

Represents expenses paid to third-party advisors related to debt refinancing activities.

 

GMS Inc.

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

(in thousands)

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

July 31,

 

 

 

 

2019

 

2018

 

 

 

 

 

 

 

 

 

Cash used in operating activities

 

$

(12,440)

 

$

(47,824)

 

Purchases of property and equipment

 

 

(5,891)

 

 

(3,793)

 

Free cash flow(a)

 

$

(18,331)

 

$

(51,617)

 

_________________________

(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,

 

 

 

 

2019

 

2018

 

 

 

 

 

 

 

 

 

Selling, general and administrative expense

 

$

194,631

 

$

185,435

 

 

 

 

 

 

 

 

 

Adjustments

 

 

 

 

 

 

 

Stock appreciation expense (a)

 

 

(60)

 

 

(334)

 

Redeemable noncontrolling interests(b)

 

 

(662)

 

 

(531)

 

Equity-based compensation(c)

 

 

(1,395)

 

 

(404)

 

Severance and other permitted costs(d)

 

 

(554)

 

 

(4,836)

 

Transaction costs (acquisitions and other)(e)

 

 

(972)

 

 

(4,753)

 

Gain on disposal of assets

 

 

156

 

 

121

 

Debt transaction costs(f)

 

 

 

 

(627)

 

Adjusted SG&A

 

$

191,144

 

$

174,071

 

 

 

 

 

 

 

 

 

Net sales

 

$

847,176

 

$

778,144

 

Adjusted SG&A margin

 

 

22.6

%

 

22.4

%

_________________________

(a)

 

Represents non cash expense related to stock appreciation rights agreements.

(b)

 

Represents non cash compensation expense related to changes in the values of noncontrolling interests.

(c)

 

Represents non cash equity based compensation expense related to the issuance of share-based awards.

(d)

 

Represents severance expenses and other costs permitted in calculations under the ABL Facility and the First Lien Facility.

(e)

 

Represents costs related to acquisitions paid to third parties.

(f)

 

Represents expenses paid to third-party advisors related to debt refinancing activities.

 

GMS Inc.

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

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

July 31,

 

 

 

2019

 

 

2018

 

Income before taxes

 

$

32,410

 

 

$

11,486

 

EBITDA add-backs

 

 

3,638

 

 

 

21,512

 

Purchase accounting depreciation and amortization (1)

 

 

12,385

 

 

 

12,455

 

Adjusted pre-tax income

 

 

48,433

 

 

 

45,453

 

Adjusted income tax expense

 

 

10,897

 

 

 

10,227

 

Adjusted net income

 

$

37,536

 

 

$

35,226

 

Effective tax rate (2)

 

 

22.5

%

 

 

22.5

%

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

41,001

 

 

 

41,094

 

Diluted (3)

 

 

42,148

 

 

 

43,203

 

Adjusted net income per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.92

 

 

$

0.86

 

Diluted

 

$

0.89

 

 

$

0.82

 

________________________

(1)

 

Depreciation and amortization from the increase in value of certain long-term assets associated with the April 1, 2014 acquisition of the predecessor company and the acquisition of Titan.

(2)

 

Normalized cash tax rate determined based on our estimated taxes for fiscal 2020 excluding the impact of purchase accounting and certain other deferred tax amounts.

(3)

 

Includes the effect of 1.1 million shares of equity issued in connection with the acquisition of Titan that were exchangeable for the Company’s common stock as of April 30, 2019.

 

Investors:
Leslie H. Kratcoski
ir@gms.com
770-723-3306

Media:
marketing@gms.com
770-723-3378

Source: GMS Inc.