Press Release

View all news

GMS Reports Fourth Quarter and Fiscal Year 2020 Results

06/25/2020

Early Q4 Sales Momentum Tempered by Subsequent COVID-19 Headwinds;

Sequential Improvement in Q1 as Restrictions Lift in Key Markets

TUCKER, Ga.--(BUSINESS WIRE)-- GMS Inc. (NYSE:GMS), a leading North American specialty distributor of interior building products, today reported financial results for the fourth quarter and fiscal year ended April 30, 2020.

Fourth Quarter Fiscal 2020 Highlights

  • Net sales of $770.9 million decreased 1.2% from $780.1 million in the fourth quarter of the prior fiscal year, as COVID-related market declines in late March and April more than offset higher sales earlier in the quarter. Organic net sales decreased 1.8%.
  • Reported net loss of $41.5 million, or $0.98 per diluted share, compared to net income of $16.6 million, or $0.39 per diluted share, in the fourth quarter of the prior fiscal year. Reported net loss reflects a non-cash goodwill impairment charge of $63.1 million related to the Company’s Canada reporting unit, partially offset by a gain on a legal settlement of $14.0 million related to cash proceeds received as part of a class action legal settlement.
  • Adjusted net income of $24.0 million, or $0.56 per diluted share, compared to $28.7 million, or $0.68 per diluted share, in the fourth quarter of the prior fiscal year.
  • Adjusted EBITDA of $63.6 million, or 8.2% of net sales compared to Adjusted EBITDA of $73.5 million, or 9.4% of net sales, in the fourth quarter of the prior fiscal year.
  • The Company completed one business acquisition and one greenfield opening during the fourth quarter of fiscal 2020.
  • Net debt leverage was reduced to 2.9 times as of the end of the fourth quarter of fiscal 2020 from 3.3 times as of the end of the third quarter of fiscal 2020.
  • Cash provided by operating activities of $167.7 million and free cash flow of $163.4 million increased 90.2% and 97.4%, respectively, from the fourth quarter of the prior fiscal year.
  • As of April 30, 2020, the Company had cash on hand of $210.9 million and availability under its revolving credit facilities of $368.3 million.

Full Year Fiscal 2020 Highlights

  • Net sales of $3.2 billion increased 4.0% from $3.1 billion in the prior fiscal year. Organic net sales increased 2.0% year-over-year.
  • Reported net income of $23.4 million, or $0.55 per diluted share, compared to $56.0 million, or $1.31 per diluted share, in the prior fiscal year and reflects the above-mentioned non-cash goodwill impairment charge and gain on legal settlement.
  • Adjusted net income of $126.5 million, or $2.97 per diluted share, compared to $119.5 million, or $2.80 per diluted share, in the prior fiscal year.
  • Adjusted EBITDA of $299.8 million, or 9.2% of net sales, compared to Adjusted EBITDA of $295.7 million, or 9.5% of net sales, in the prior fiscal year.
  • The Company completed three business acquisitions and six greenfield openings during fiscal 2020.
  • Cash provided by operating activities of $303.1 million and free cash flow of $277.9 million increased 56.5% and 58.9%, respectively, from the prior fiscal year.

John C. Turner, Jr., President and Chief Executive Officer, said, “The health, safety and wellbeing of our employees, business partners and communities remains our top priority during this pandemic and I would like to share my appreciation for all of our teammates who continue to be engaged, focused and proactive as we come together to support our customers and each other during these unprecedented times. Additionally, on behalf of everyone at GMS, I would like to express our deep gratitude to the healthcare providers, first responders and essential workers who have been and continue to be on the frontlines every day.”

Mr. Turner continued, “We entered the fourth quarter with strong momentum in line with what we had seen through the first three quarters of fiscal 2020, grounded in our team’s focus on effective execution of our strategic priorities. Through mid-March we experienced favorable end-market trends and generated robust volume growth. Even as disruptions from COVID-19 began to escalate in the second half of March, construction and building products distribution were deemed essential in the majority of our markets, which enabled us to keep most of our locations open. However, demand weakened significantly in late March and in April as customers delayed orders and building projects were paused due to mandated shutdowns in certain markets or as they focused on responding to the effects of COVID-19 on their businesses.

“To date in the first quarter of fiscal 2021, we have experienced sequential improvement in net sales levels compared to the latter half of the fourth quarter as the majority of the mandated shutdowns have been eased or lifted and as businesses have begun to reopen. On a year-over-year basis, comparable daily sales thus far in the first quarter of fiscal 2021 are down low single digits, compared to the double-digit year-over-year decline experienced in April.

“Given current macroeconomic conditions, there continues to be uncertainty regarding the near-term outlook for construction. We have taken, and intend to continue to take, the necessary actions to optimize our operations and align our business with demand. We believe the foundation we have built at GMS, coupled with our strong liquidity and cash-generating ability, will enable us to continue navigating the evolving operating environment and position us for long-term success,” Mr. Turner concluded.

Fourth Quarter Fiscal 2020 Results

Net sales for the fourth quarter of fiscal 2020 were $770.9 million, down 1.2%, compared to $780.1 million for the fourth quarter of the prior fiscal year, as an approximately 7% increase in sales in February and March combined was more than offset by an approximately 16% year-over-year decrease in net sales in April as a result of COVID-19 disruptions. Organic net sales declined 1.8%.

  • Wallboard sales of $323.2 million increased 0.3% (decreased 0.3% on an organic basis) compared to the fourth quarter of fiscal 2019, as higher volumes driven by strength in February and March were largely offset by lower price/mix.
  • Ceilings sales of $111.1 million decreased 1.0% (decreased 2.6% on an organic basis) compared to the fourth quarter of fiscal 2019, as higher volumes in February and March and favorable price/mix were more than offset by lower volumes resulting from COVID-19 impacts in April.
  • Steel framing sales of $115.3 million decreased 7.4% (decreased 7.8% on an organic basis) compared to the fourth quarter of fiscal 2019, as higher volumes in February and March were more than offset by lower price/mix as well as lower April volumes resulting from COVID-19 impacts.
  • Other product sales of $221.2 million were essentially flat (decreased 0.3% on an organic basis) compared to the fourth quarter of fiscal 2019, as higher sales in February and March were offset by lower sales in April resulting from COVID-19 impacts.

Gross profit of $251.6 million decreased 2.1% compared to $256.9 million in the fourth quarter of fiscal 2019 primarily as a result of lower sales and gross margin of 32.6% compared to 32.9% a year ago.

Selling, general and administrative (SG&A) expense as a percentage of net sales was 25.4% for the quarter compared to 24.4% in the fourth quarter of fiscal 2019. Adjusted SG&A expense as a percentage of net sales was 24.5% compared to 23.6% in the prior year quarter. The 90 basis point increase in Adjusted SG&A as a percentage of sales resulted from deflationary market pricing of certain of the Company’s products, lower sales and operating inefficiencies related to COVID-19 business interruptions, continuing inflationary cost pressures and the timing of certain expenses.

Net loss of $41.5 million, or $0.98 per diluted share, compared to net income of $16.6 million, or $0.39 per diluted share, in the fourth quarter of fiscal 2019. The net loss for the quarter includes a $63.1 million non-cash goodwill impairment charge related to the Company’s Canada reporting unit recorded in connection with the Company’s annual goodwill impairment test. The primary factors contributing to the impairment were an increase in the discount rate and a decrease in market multiples, combined with a decrease in the reporting unit’s forecasted near-term cash flows, principally resulting from COVID-19 driven economic uncertainty. The net loss for the quarter also includes cash proceeds received by the Company as part of a class action legal settlement and recognized as a gain on legal settlement of $14.0 million.

Adjusted net income of $24.0 million, or $0.56 per diluted share, compared to $28.7 million, or $0.68 per diluted share, in the fourth quarter of fiscal 2019. Adjusted EBITDA of $63.6 million compared to $73.5 million a year ago and represented an Adjusted EBITDA margin of 8.2%.

Balance Sheet and Liquidity

During the fourth fiscal quarter, the Company reduced its net debt by $141.5 million, including a $50.0 million prepayment of outstanding principal of its term loan facility on March 6, 2020. Net debt leverage was 2.9 times as of the end of the quarter compared to 3.3 times as of the end of the third quarter of fiscal 2020.

As of April 30, 2020, the Company had cash on hand of $210.9 million and availability under its revolving credit facilities of $368.3 million.

Platform Expansion

During the fourth quarter of fiscal 2020, the Company completed the previously announced acquisition of Trowel Trades Supply, Inc., a single-location distributor based in Colchester, Vermont, and opened a greenfield location in Panama City Beach, Florida.

Taking Action in Response to Changing Industry Dynamics

In response to the effects of the COVID-19 pandemic, GMS has taken proactive steps to reduce costs, increase liquidity and improve financial flexibility designed to ensure the Company is well positioned for the duration of this period and able to emerge even stronger. Such actions include:

  • Proactively drawing $87.2 million under revolving credit facilities in March 2020;
  • Deferring or limiting non-essential operating or other discretionary expenses;
  • Implementing a wage and hiring freeze and certain permanent headcount reductions;
  • Immediately furloughing employees (with a majority having returned to work following easing of shutdown restrictions);
  • Utilizing appropriate benefits of the CARES Act;
  • Suspending company matching contributions to the 401(k) plan;
  • Closure of certain underperforming branches and distribution centers;
  • Delaying or reducing capital expenditures that are not anticipated to impact near-term business;
  • Temporarily suspending acquisition-related activity; and
  • Optimizing all areas of working capital.

Ensuring the Safety and Health of Employees, Customers and Communities

In response to the COVID-19 pandemic, GMS has taken actions to promote the safety of employees, customers and communities by enhancing operating protocols at its locations in compliance with public health requirements, recommendations and guidelines. These precautions include curtailing non-essential travel and group meetings, implementing routine cleaning and sanitization throughout the day at locations, practicing social distancing, restricting or modifying access to facilities including limiting walk-in traffic in showrooms, recommending that employees who can effectively work from home do so, and use of appropriate personal protective equipment. The Company is continuing to monitor the pandemic, recommendations of public health officials and the reopening guidelines of state and local governments and has made and will continue to make adjustments to its protocols as appropriate.

Conference Call and Webcast

GMS will host a conference call and webcast to discuss its results for the fourth quarter and full year ended April 30, 2020 and other information related to its business at 8:30 a.m. Eastern Time on June 25, 2020. 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 July 25, 2020 and can be accessed at 844-512-2921 (domestic) or 412-317-6671 (international) and entering the pass code 13704852.

About GMS Inc.

Founded in 1971, GMS operates a network of more than 260 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.

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.

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, actions taken to optimize our operations and align our business consistent with demand, our ability to continue successfully navigating the evolving operating environment, strategic initiatives and growth potential across the Company’s business, our efforts in response to COVID-19, and the ability to deliver growth, value creation and long-term success contained in this press release may be considered forward-looking statements. The Company has based 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, including current public health issues that may affect the Company’s business. 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 June 25, 2020. 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 June 25, 2020.

 

GMS Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except per share data)

 

 

 

Three Months Ended

 

Year Ended

 

 

April 30,

 

April 30,

 

 

2020

 

2019

 

2020

 

2019

Net sales

 

$

770,850

 

 

$

780,149

 

 

$

3,241,307

 

 

$

3,116,032

 

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

 

 

519,256

 

 

 

523,222

 

 

 

2,178,093

 

 

 

2,111,913

 

Gross profit

 

 

251,594

 

 

 

256,927

 

 

 

1,063,214

 

 

 

1,004,119

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

195,609

 

 

 

190,577

 

 

 

784,081

 

 

 

739,460

 

Depreciation and amortization

 

 

28,318

 

 

 

30,130

 

 

 

116,533

 

 

 

117,459

 

Impairment of goodwill

 

 

63,074

 

 

 

 

 

 

63,074

 

 

 

 

Total operating expenses

 

 

287,001

 

 

 

220,707

 

 

 

963,688

 

 

 

856,919

 

Operating income (loss)

 

 

(35,407

)

 

 

36,220

 

 

 

99,526

 

 

 

147,200

 

Other (expense) income:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(15,408

)

 

 

(18,781

)

 

 

(67,718

)

 

 

(73,677

)

Gain on legal settlement

 

 

14,029

 

 

 

 

 

 

14,029

 

 

 

 

Write-off of debt discount and deferred financing fees

 

 

(624

)

 

 

 

 

 

(1,331

)

 

 

 

Change in fair value of financial instruments

 

 

 

 

 

 

 

 

 

 

 

(6,395

)

Other income, net

 

 

565

 

 

 

888

 

 

 

1,819

 

 

 

2,913

 

Total other expense, net

 

 

(1,438

)

 

 

(17,893

)

 

 

(53,201

)

 

 

(77,159

)

Income (loss) before taxes

 

 

(36,845

)

 

 

18,327

 

 

 

46,325

 

 

 

70,041

 

Provision for income taxes

 

 

4,611

 

 

 

1,702

 

 

 

22,944

 

 

 

14,039

 

Net income (loss)

 

$

(41,456

)

 

$

16,625

 

 

$

23,381

 

 

$

56,002

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

42,435

 

 

 

40,487

 

 

 

41,853

 

 

 

40,914

 

Diluted

 

 

42,435

 

 

 

40,976

 

 

 

42,504

 

 

 

41,589

 

Net income (loss) per common share(1):

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.98

)

 

$

0.40

 

 

$

0.56

 

 

$

1.33

 

Diluted

 

$

(0.98

)

 

$

0.39

 

 

$

0.55

 

 

$

1.31

 

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

 

 

 

Three Months Ended

 

Year Ended

 

 

April 30,

 

April 30,

 

 

2020

 

2019

 

2020

 

2019

 

 

(in thousands, except per share data)

Net income (loss)

 

$

(41,456

)

 

$

16,625

 

$

23,381

 

$

56,002

Less: Net income allocated to participating securities

 

 

 

 

 

451

 

 

74

 

 

1,382

Net income (loss) attributable to common stockholders

 

$

(41,456

)

 

$

16,174

 

$

23,307

 

$

54,620

Basic earnings (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

 

42,435

 

 

 

40,487

 

 

41,853

 

 

40,914

Basic earnings (loss) per common share

 

$

(0.98

)

 

$

0.40

 

$

0.56

 

$

1.33

Diluted earnings (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

 

42,435

 

 

 

40,487

 

 

41,853

 

 

40,914

Add: Common Stock Equivalents

 

 

 

 

 

489

 

 

651

 

 

675

Diluted weighted average common shares outstanding

 

 

42,435

 

 

 

40,976

 

 

42,504

 

 

41,589

Diluted earnings (loss) per common share

 

$

(0.98

)

 

$

0.39

 

$

0.55

 

$

1.31

 

GMS Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except per share data)

 

 

 

April 30,

 

April 30,

 

 

2020

 

2019

Assets

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

210,909

 

 

$

47,338

 

Trade accounts and notes receivable, net of allowances of $5,141 and $6,432, respectively

 

 

405,254

 

 

 

445,771

 

Inventories, net

 

 

299,815

 

 

 

290,829

 

Prepaid expenses and other current assets

 

 

14,972

 

 

 

18,368

 

Total current assets

 

 

930,950

 

 

 

802,306

 

Property and equipment, net of accumulated depreciation of $158,554 and $123,583, respectively

 

 

305,467

 

 

 

282,349

 

Operating lease right-of-use assets

 

 

115,257

 

 

 

 

Goodwill

 

 

553,073

 

 

 

617,327

 

Intangible assets, net

 

 

361,884

 

 

 

429,313

 

Deferred income taxes

 

 

8,904

 

 

 

4,676

 

Other assets

 

 

13,247

 

 

 

13,583

 

Total assets

 

$

2,288,782

 

 

$

2,149,554

 

Liabilities and Stockholders’ Equity

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

213,230

 

 

$

173,751

 

Accrued compensation and employee benefits

 

 

67,590

 

 

 

62,858

 

Other accrued expenses and current liabilities

 

 

63,812

 

 

 

79,848

 

Current portion of long-term debt

 

 

50,201

 

 

 

42,118

 

Current portion of operating lease liabilities

 

 

33,040

 

 

 

 

Total current liabilities

 

 

427,873

 

 

 

358,575

 

Non-current liabilities:

 

 

 

 

 

 

Long-term debt, less current portion

 

 

1,047,279

 

 

 

1,099,077

 

Long-term operating lease liabilities

 

 

89,605

 

 

 

 

Deferred income taxes, net

 

 

12,018

 

 

 

10,226

 

Other liabilities

 

 

78,026

 

 

 

52,500

 

Total liabilities

 

 

1,654,801

 

 

 

1,520,378

 

Commitments and contingencies

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Common stock, par value $0.01 per share, 500,000 shares authorized; 42,554 and 40,375 shares issued and outstanding as of April 30, 2020 and 2019, respectively

 

 

426

 

 

 

404

 

Preferred stock, par value $0.01 per share, 50,000 shares authorized; 0 shares issued and outstanding as of April 30, 2020 and 2019

 

 

 

 

 

 

Exchangeable shares

 

 

 

 

 

29,639

 

Additional paid-in capital

 

 

529,662

 

 

 

480,113

 

Retained earnings

 

 

168,975

 

 

 

145,594

 

Accumulated other comprehensive loss

 

 

(65,082

)

 

 

(26,574

)

Total stockholders' equity

 

 

633,981

 

 

 

629,176

 

Total liabilities and stockholders' equity

 

$

2,288,782

 

 

$

2,149,554

 

GMS Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

 

 

 

Year Ended April 30,

 

 

2020

 

2019

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

23,381

 

 

$

56,002

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

116,533

 

 

 

117,459

 

Impairment of goodwill

 

 

63,074

 

 

 

 

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

 

 

4,541

 

 

 

3,332

 

Provision for losses on accounts and notes receivable

 

 

1,602

 

 

 

617

 

Provision for obsolescence of inventory

 

 

333

 

 

 

432

 

Effects of fair value adjustments to inventory

 

 

575

 

 

 

4,176

 

Increase in fair value of contingent consideration

 

 

1,600

 

 

 

759

 

Equity-based compensation

 

 

8,970

 

 

 

7,643

 

Loss (gain) on disposal and impairment of assets

 

 

658

 

 

 

(525

)

Change in fair value of financial instruments

 

 

 

 

 

6,395

 

Deferred income taxes

 

 

926

 

 

 

(17,487

)

Changes in assets and liabilities net of effects of acquisitions:

 

 

 

 

 

 

Trade accounts and notes receivable

 

 

41,424

 

 

 

(13,586

)

Inventories

 

 

(4,579

)

 

 

5,137

 

Prepaid expenses and other assets

 

 

6,623

 

 

 

(4,842

)

Accounts payable

 

 

40,290

 

 

 

26,816

 

Accrued compensation and employee benefits

 

 

4,740

 

 

 

6,631

 

Other accrued expenses and liabilities

 

 

(7,612

)

 

 

(5,344

)

Cash provided by operating activities

 

 

303,079

 

 

 

193,615

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(25,193

)

 

 

(18,770

)

Proceeds from sale of assets

 

 

2,229

 

 

 

1,170

 

Acquisition of businesses, net of cash acquired

 

 

(24,136

)

 

 

(583,092

)

Cash used in investing activities

 

 

(47,100

)

 

 

(600,692

)

Cash flows from financing activities:

 

 

 

 

 

 

Repayments on the revolving credit facility

 

 

(837,424

)

 

 

(937,176

)

Borrowings from the revolving credit facility

 

 

880,698

 

 

 

981,148

 

Payments of principal on long-term debt

 

 

(109,968

)

 

 

(9,968

)

Payments of principal on finance lease obligations

 

 

(25,275

)

 

 

(19,474

)

Borrowings from term loan

 

 

 

 

 

996,840

 

Repayments from term loan

 

 

 

 

 

(571,840

)

Repurchases of common stock

 

 

 

 

 

(16,520

)

Payments for contingent consideration

 

 

(11,133

)

 

 

 

Debt issuance costs

 

 

(1,286

)

 

 

(7,933

)

Proceeds from exercises of stock options

 

 

11,793

 

 

 

2,538

 

Payments for taxes related to net share settlement of equity awards

 

 

(532

)

 

 

(50

)

Other financing activities

 

 

1,793

 

 

 

1,405

 

Cash (used in) provided by financing activities

 

 

(91,334

)

 

 

418,970

 

Effect of exchange rates on cash and cash equivalents

 

 

(1,074

)

 

 

(992

)

Increase in cash and cash equivalents

 

 

163,571

 

 

 

10,901

 

Cash and cash equivalents, beginning of year

 

 

47,338

 

 

 

36,437

 

Cash and cash equivalents, end of year

 

$

210,909

 

 

$

47,338

 

Supplemental cash flow disclosures:

 

 

 

 

 

 

Cash paid for income taxes

 

$

29,761

 

 

$

19,351

 

Cash paid for interest

 

 

63,745

 

 

 

66,435

 

Supplemental schedule of noncash activities:

 

 

 

 

 

 

Assets acquired under finance lease

 

$

50,484

 

 

$

111,826

 

Issuance of installment notes associated with equity-based compensation liability awards

 

 

5,163

 

 

 

5,356

 

(Decrease) increase in insurance claims payable and insurance recoverable

 

 

(634

)

 

 

619

 

GMS Inc.

Net Sales by Product Group (Unaudited)

(dollars in thousands)

 

 

 

Three Months Ended

 

 

Year Ended

 

 

 

April 30,

 

% of

 

 

April 30,

 

% of

 

 

April 30,

 

% of

 

 

April 30,

 

% of

 

 

 

2020

 

Total

 

 

2019

 

Total

 

 

2020

 

Total

 

 

2019

 

Total

 

 

 

 

Wallboard

 

$

323,171

 

41.9

%

 

$

322,287

 

41.3

%

 

$

1,329,775

 

41.0

%

 

$

1,272,068

 

40.8

%

Ceilings

 

 

111,142

 

14.4

%

 

 

112,245

 

14.4

%

 

 

475,827

 

14.7

%

 

 

451,695

 

14.5

%

Steel framing

 

 

115,311

 

15.0

%

 

 

124,501

 

16.0

%

 

 

502,122

 

15.5

%

 

 

506,805

 

16.3

%

Other products

 

 

221,226

 

28.7

%

 

 

221,116

 

28.3

%

 

 

933,583

 

28.8

%

 

 

885,464

 

28.4

%

Total net sales

 

$

770,850

 

 

 

 

$

780,149

 

 

 

 

$

3,241,307

 

 

 

 

$

3,116,032

 

 

 

GMS Inc.

Reconciliation of Net Income (Loss) to Adjusted EBITDA (Unaudited)

(in thousands)

 

 

 

Three Months Ended

 

Year Ended

 

 

 

April 30,

 

April 30,

 

 

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(41,456

)

 

$

16,625

 

 

$

23,381

 

 

$

56,002

 

 

Interest expense

 

 

15,408

 

 

 

18,781

 

 

 

67,718

 

 

 

73,677

 

 

Write-off of debt discount and deferred financing fees

 

 

624

 

 

 

 

 

 

1,331

 

 

 

 

 

Interest income

 

 

(62

)

 

 

(23

)

 

 

(88

)

 

 

(66

)

 

Provision for income taxes

 

 

4,611

 

 

 

1,702

 

 

 

22,944

 

 

 

14,039

 

 

Depreciation expense

 

 

13,388

 

 

 

12,389

 

 

 

51,332

 

 

 

46,456

 

 

Amortization expense

 

 

14,930

 

 

 

17,741

 

 

 

65,201

 

 

 

71,003

 

 

EBITDA

 

$

7,443

 

 

$

67,215

 

 

$

231,819

 

 

$

261,111

 

 

Impairment of goodwill

 

 

63,074

 

 

 

 

 

 

63,074

 

 

 

 

 

Stock appreciation expense(a)

 

 

592

 

 

 

1,305

 

 

 

1,572

 

 

 

2,730

 

 

Redeemable noncontrolling interests(b)

 

 

194

 

 

 

410

 

 

 

520

 

 

 

1,188

 

 

Equity-based compensation(c)

 

 

1,885

 

 

 

1,268

 

 

 

7,060

 

 

 

3,906

 

 

Severance and other permitted costs(d)

 

 

2,085

 

 

 

2,205

 

 

 

5,733

 

 

 

8,152

 

 

Transaction costs (acquisitions and other)(e)

 

 

681

 

 

 

1,198

 

 

 

2,414

 

 

 

7,858

 

 

Loss (gain) on disposal and impairment of assets(f)

 

 

1,530

 

 

 

(113

)

 

 

658

 

 

 

(525

)

 

Effects of fair value adjustments to inventory(g)

 

 

114

 

 

 

47

 

 

 

575

 

 

 

4,176

 

 

Gain on legal settlement

 

 

(14,029

)

 

 

 

 

 

(14,029

)

 

 

 

 

Change in fair value of financial instruments(h)

 

 

 

 

 

 

 

 

 

 

 

6,395

 

 

Secondary public offering costs(i)

 

 

 

 

 

 

 

 

363

 

 

 

 

 

Debt transaction costs(j)

 

 

 

 

 

 

 

 

 

 

 

678

 

 

EBITDA add-backs

 

 

56,126

 

 

 

6,320

 

 

 

67,940

 

 

 

34,558

 

 

Adjusted EBITDA

 

$

63,569

 

 

$

73,535

 

 

$

299,759

 

 

$

295,669

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

770,850

 

 

$

780,149

 

 

$

3,241,307

 

 

$

3,116,032

 

 

Adjusted EBITDA margin

 

 

8.2

 

%

 

9.4

 

%

 

9.2

 

%

 

9.5

 

%

_______________________

(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 Term Loan Facility, including certain unusual, nonrecurring costs due to COVID-19.

(e)

Represents costs related to acquisitions paid to third parties.

(f)

The three months and year ended April 30, 2020 includes a $1.9 million impairment of operating lease right-of-use assets resulting from a restructuring plan to close one of the Company’s facilities.

(g)

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

(h)

Represents the mark-to-market adjustments for derivative financial instruments.

(i)

Represents costs paid to third-party advisors related to secondary offerings of our common stock.

(j)

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

GMS Inc.

Reconciliation of Cash Provided By Operating Activities to Free Cash Flow (Unaudited)

(in thousands)

 

 

 

Three Months Ended

 

Year Ended

 

 

April 30,

 

April 30,

 

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash provided by operating activities

 

$

167,712

 

 

$

88,178

 

 

$

303,079

 

 

$

193,615

 

Purchases of property and equipment

 

 

(4,309

)

 

 

(5,385

)

 

 

(25,193

)

 

 

(18,770

)

Free cash flow(a)

 

$

163,403

 

 

$

82,793

 

 

$

277,886

 

 

$

174,845

 

_______________________

(a)

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

GMS Inc.

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

(in thousands)

 

 

 

Three Months Ended

 

Year Ended

 

 

 

April 30,

 

April 30,

 

 

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expense

 

$

195,609

 

 

$

190,577

 

 

$

784,081

 

 

$

739,460

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock appreciation expense(a)

 

 

(592

)

 

 

(1,305

)

 

 

(1,572

)

 

 

(2,730

)

 

Redeemable noncontrolling interests(b)

 

 

(194

)

 

 

(410

)

 

 

(520

)

 

 

(1,188

)

 

Equity-based compensation(c)

 

 

(1,885

)

 

 

(1,268

)

 

 

(7,060

)

 

 

(3,906

)

 

Severance and other permitted costs(d)

 

 

(1,874

)

 

 

(2,205

)

 

 

(4,284

)

 

 

(8,152

)

 

Transaction costs (acquisitions and other)(e)

 

 

(681

)

 

 

(1,198

)

 

 

(2,414

)

 

 

(7,858

)

 

(Loss) gain on disposal and impairment of assets(f)

 

 

(1,530

)

 

 

113

 

 

 

(658

)

 

 

525

 

 

Secondary public offering costs(g)

 

 

 

 

 

 

 

 

(363

)

 

 

 

 

Debt transaction costs(h)

 

 

 

 

 

 

 

 

 

 

 

(678

)

 

Adjusted SG&A

 

$

188,853

 

 

$

184,304

 

 

$

767,210

 

 

$

715,473

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

770,850

 

 

$

780,149

 

 

$

3,241,307

 

 

$

3,116,032

 

 

Adjusted SG&A margin

 

 

24.5

 

%

 

23.6

 

%

 

23.7

 

%

 

23.0

 

%

_______________________

(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 Term Loan Facility, including certain unusual, nonrecurring costs due to COVID-19.

(e)

Represents costs related to acquisitions paid to third parties.

(f)

The three months and year ended April 30, 2020 includes a $1.9 million impairment of operating lease right-of-use assets resulting from a restructuring plan to close one of the Company’s facilities.

(g)

Represents costs paid to third-party advisors related to secondary offerings of our common stock.

(h)

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

GMS Inc.

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

(in thousands, except per share data)

 

 

 

Three Months Ended

 

Year Ended

 

 

 

April 30,

 

April 30,

 

 

 

2020

 

 

2019

 

2020

 

 

2019

 

Income (loss) before taxes

 

$

(36,845

)

 

 

$

18,327

 

$

46,325

 

 

$

70,041

 

EBITDA add-backs

 

 

56,126

 

 

 

 

6,320

 

 

67,940

 

 

 

34,558

 

Write-off of discount and deferred financing fees

 

 

624

 

 

 

 

 

 

1,331

 

 

 

 

Purchase accounting depreciation and amortization (1)

 

 

11,038

 

 

 

 

12,369

 

 

47,568

 

 

 

49,619

 

Adjusted pre-tax income

 

 

30,943

 

 

 

 

37,016

 

 

163,164

 

 

 

154,218

 

Adjusted income tax expense

 

 

6,962

 

 

 

 

8,329

 

 

36,712

 

 

 

34,699

 

Adjusted net income

 

$

23,981

 

 

 

$

28,687

 

$

126,452

 

 

$

119,519

 

Effective tax rate (2)

 

 

22.5

 

%

 

 

22.5

%

 

22.5

%

 

 

22.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

42,435

 

 

 

 

40,487

 

 

41,853

 

 

 

40,914

 

Diluted (3)

 

 

42,826

 

 

 

 

42,105

 

 

42,637

 

 

 

42,718

 

Adjusted net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.57

 

 

 

$

0.71

 

$

3.02

 

 

$

2.92

 

Diluted

 

$

0.56

 

 

 

$

0.68

 

$

2.97

 

 

$

2.80

 

_______________________

(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 excluding the impact of purchase accounting and certain other deferred tax amounts.

(3)

Diluted shares outstanding for periods prior to June 13, 2019 have been adjusted to include 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. On June 13, 2019, the holders exchanged all of the exchangeable shares for 1.1 million shares of the Company’s common stock.

 

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

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

Source: GMS Inc.

View all news