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GMS Reports Third Quarter Fiscal 2021 Results

03/04/2021

Continued Execution Amid Residential Market Strength Delivered Higher Daily Sales and Improved Profitability

TUCKER, Ga.--(BUSINESS WIRE)-- GMS Inc. (NYSE: GMS), a leading North American specialty distributor of interior building products, today reported financial results for the third quarter of fiscal 2021 ended January 31, 2021.

Third Quarter Fiscal 2021 Highlights

(Comparisons are to the third quarter of fiscal 2020, except where noted.)

  • Net sales of $751.2 million decreased 1.3%; organic net sales decreased 1.9%. On a per day basis, net sales increased 0.3% and organic net sales declined 0.3%.
  • Net income of $16.1 million, or $0.37 per diluted share, increased 48.2%; adjusted net income of $25.9 million, or $0.60 per diluted share, increased 16.4%.
  • Gross margin of 32.4% compared to 33.3%.
  • SG&A and Adjusted SG&A as a percentage of sales were 24.6% and 24.2%, representing 80 and 100 basis points of improvement, respectively.
  • Adjusted EBITDA of $62.6 million compared to $62.7 million; Adjusted EBITDA margin improved 10 basis points to 8.3% from 8.2%.
  • Net debt leverage was 2.9 times as of the end of the third quarter of fiscal 2021.
  • Cash provided by operating activities and free cash flow of $44.4 million and $38.4 million, respectively, compared to $65.4 million and $59.2 million, respectively.

“As a result of our team’s ability to seize opportunities and address challenges in dynamic market conditions, we delivered better than expected sales, higher net income and an improved Adjusted EBITDA margin in the third quarter,” said John C. Turner, Jr., President and Chief Executive Officer. “We continued to realize benefits from our ongoing commitment to our strategic priorities of 1) expanding share in core products, 2) growing our complementary Other products offering, 3) platform expansion, and 4) improved productivity and profitability. During the quarter, we generated higher volume in wallboard, increased sales of complementary products and opened our Waco, Texas greenfield location.

“We are excited to be celebrating GMS’s 50th anniversary in 2021, and I am confident that our focus on our strategic priorities and our team’s continued drive to execute will position us to generate value for our shareholders well into the future,” Mr. Turner concluded.

Third Quarter Fiscal 2021 Results

Net sales for the third quarter of fiscal 2021 were $751.2 million, down 1.3%, compared to $761.4 million for the third quarter of the prior fiscal year, as a result of continued COVID-19 related market declines. Organic net sales declined 1.9%. There was one less selling day in the third quarter of fiscal 2021 than the same period a year ago. On a per day basis, net sales were up 0.3% and organic net sales declined 0.3%.

  • Wallboard sales of $311.1 million decreased 1.0% (down 1.4% on an organic basis) compared to the third quarter of fiscal 2020, due to a modest decline in price and mix, partially offset by slightly higher volume. On a per day basis, wallboard volume increased 2.1% year over year.
  • Ceilings sales of $101.9 million decreased 9.6% (down 9.7% on an organic basis) year over year driven by lower volume and mix, partially offset by higher price.
  • Steel framing sales of $104.0 million decreased 12.5% (down 12.8% on an organic basis) year over year due principally to a decline in volume and, to a lesser extent, price and mix combined.
  • Other product sales of $234.2 million increased 8.7% (up 7.5% on an organic basis) year over year primarily due to the execution of growth initiatives to increase Other products sales, positive contributions from acquisitions and strong pricing in certain product categories.

Year over year sales declines continued to be more pronounced in ceilings and steel framing, as these product categories are tied primarily to commercial construction which remained challenged during the quarter. Residential activity, on the other hand, continued to strengthen and offset softness in commercial construction to yield the higher wallboard volume and growth in Other products.

Gross profit of $243.3 million decreased 4.0% compared to the third quarter of fiscal 2020. As anticipated, gross margin of 32.4% was largely consistent with levels generated in the first half of fiscal 2021, declining 90 basis points year over year principally due to unfavorable mix and price-cost dynamics for certain product categories.

Selling, general and administrative (“SG&A”) expense as a percentage of net sales was 24.6% for the quarter compared to 25.4% in the third quarter of fiscal 2020. Adjusted SG&A expense as a percentage of net sales of 24.2% improved 100 basis points from 25.2 % in the prior year quarter as a result of continued disciplined cost containment partially offset by deflationary price and unfavorable mix impacts with certain of the Company’s products.

Net income of $16.1 million, or $0.37 per diluted share, compared to $10.9 million, or $0.25 per diluted share, in the third quarter of the prior fiscal year. Adjusted net income of $25.9 million, or $0.60 per diluted share, compared to $22.2 million, or $0.52 per diluted share, in the third quarter of the prior fiscal year. Adjusted EBITDA of $62.6 million compared to $62.7 million in the third quarter of the prior fiscal year. Adjusted EBITDA margin of 8.3% improved 10 basis points from 8.2% a year ago.

Platform Expansion Activity

During the third quarter of fiscal 2021, the Company opened a new greenfield location in Waco, TX. Subsequent to the end of the third quarter, and as previously announced, the Company completed the acquisition of D.L. Building Materials, Inc., providing entrance to the Ottawa-Gatineau market in Canada, and also established four new locations, expanding its presence to two additional markets, Atlantic City, NJ, and Memphis, TN.

Balance Sheet, Liquidity and Cash Flow

As of January 31, 2021, the Company had cash on hand of $150.6 million, total debt of $994.2 million and $407.0 million of available liquidity under its revolving credit facilities. Net debt leverage was 2.9 times as of the end of the quarter, down from 3.0 times at the end of the second quarter of fiscal 2021 and 3.3 times as of the end of the third quarter of fiscal 2020. The Company generated cash provided by operating activities and free cash flow of $44.4 million and $38.4 million, respectively, in the third quarter.

Conference Call and Webcast

GMS will host a conference call and webcast to discuss its results for the third quarter of fiscal 2021 ended January 31, 2021 and other information related to its business at 8:30 a.m. Eastern Time on Thursday, March 4, 2021. 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 April 4, 2021 and can be accessed at 844-512-2921 (domestic) or 412-317-6671 (international) and entering the pass code 13716475.

About GMS Inc.

Celebrating the 50th anniversary of its founding in 1971, GMS operates a network of more than 265 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 as defined in 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,” “confident,” “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 priorities 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 March 4, 2021. 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 March 4, 2021.

GMS Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

January 31,

 

January 31,

 

 

2021

 

2020

 

2021

 

2020

Net sales

 

$

751,191

 

 

$

761,352

 

 

$

2,366,620

 

 

$

2,470,457

 

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

 

 

507,867

 

 

 

507,879

 

 

 

1,597,767

 

 

 

1,658,837

 

Gross profit

 

 

243,324

 

 

 

253,473

 

 

 

768,853

 

 

 

811,620

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

184,844

 

 

 

193,384

 

 

 

556,308

 

 

 

588,472

 

Depreciation and amortization

 

 

25,562

 

 

 

29,422

 

 

 

79,904

 

 

 

88,215

 

Total operating expenses

 

 

210,406

 

 

 

222,806

 

 

 

636,212

 

 

 

676,687

 

Operating income

 

 

32,918

 

 

 

30,667

 

 

 

132,641

 

 

 

134,933

 

Other (expense) income:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(13,454

)

 

 

(16,474

)

 

 

(41,060

)

 

 

(52,310

)

Gain on legal settlement

 

 

1,382

 

 

 

 

 

 

1,382

 

 

 

 

Write-off of debt discount and deferred financing fees

 

 

 

 

 

 

 

 

 

 

 

(707

)

Other income (expense), net

 

 

989

 

 

 

(498

)

 

 

2,441

 

 

 

1,254

 

Total other expense, net

 

 

(11,083

)

 

 

(16,972

)

 

 

(37,237

)

 

 

(51,763

)

Income before taxes

 

 

21,835

 

 

 

13,695

 

 

 

95,404

 

 

 

83,170

 

Provision for income taxes

 

 

5,709

 

 

 

2,816

 

 

 

23,590

 

 

 

18,333

 

Net income

 

$

16,126

 

 

$

10,879

 

 

$

71,814

 

 

$

64,837

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

42,726

 

 

 

42,223

 

 

 

42,691

 

 

 

41,663

 

Diluted

 

 

43,361

 

 

 

42,949

 

 

 

43,184

 

 

 

42,401

 

Net income per common share(1):

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.38

 

 

$

0.26

 

 

$

1.68

 

 

$

1.55

 

Diluted

 

$

0.37

 

 

$

0.25

 

 

$

1.66

 

 

$

1.52

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

January 31,

 

January 31,

 

 

2021

 

2020

 

2021

 

2020

 

 

(in thousands, except per share data)

Net income

 

$

16,126

 

$

10,879

 

$

71,814

 

$

64,837

Less: Net income allocated to participating securities

 

 

 

 

 

 

 

 

273

Net income attributable to common stockholders

 

$

16,126

 

$

10,879

 

$

71,814

 

$

64,564

Basic earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

 

42,726

 

 

42,223

 

 

42,691

 

 

41,663

Basic earnings per common share

 

$

0.38

 

$

0.26

 

$

1.68

 

$

1.55

Diluted earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

 

42,726

 

 

42,223

 

 

42,691

 

 

41,663

Add: Common Stock Equivalents

 

 

635

 

 

726

 

 

493

 

 

738

Diluted weighted average common shares outstanding

 

 

43,361

 

 

42,949

 

 

43,184

 

 

42,401

Diluted earnings per common share

 

$

0.37

 

$

0.25

 

$

1.66

 

$

1.52

GMS Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

January 31,

 

April 30,

 

 

2021

 

2020

Assets

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

150,573

 

 

$

210,909

 

Trade accounts and notes receivable, net of allowances of $6,020 and $5,141, respectively

 

 

410,125

 

 

 

405,254

 

Inventories, net

 

 

327,725

 

 

 

299,815

 

Prepaid expenses and other current assets

 

 

17,684

 

 

 

14,972

 

Total current assets

 

 

906,107

 

 

 

930,950

 

Property and equipment, net of accumulated depreciation of $184,410 and $158,554, respectively

 

 

305,144

 

 

 

305,467

 

Operating lease right-of-use assets

 

 

119,434

 

 

 

115,257

 

Goodwill

 

 

562,204

 

 

 

553,073

 

Intangible assets, net

 

 

333,766

 

 

 

361,884

 

Deferred income taxes

 

 

13,488

 

 

 

8,904

 

Other assets

 

 

11,616

 

 

 

13,247

 

Total assets

 

$

2,251,759

 

 

$

2,288,782

 

Liabilities and Stockholders’ Equity

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

157,892

 

 

$

213,230

 

Accrued compensation and employee benefits

 

 

55,995

 

 

 

67,590

 

Other accrued expenses and current liabilities

 

 

81,913

 

 

 

63,812

 

Current portion of long-term debt

 

 

51,552

 

 

 

50,201

 

Current portion of operating lease liabilities

 

 

32,847

 

 

 

33,040

 

Total current liabilities

 

 

380,199

 

 

 

427,873

 

Non-current liabilities:

 

 

 

 

 

 

Long-term debt, less current portion

 

 

942,598

 

 

 

1,047,279

 

Long-term operating lease liabilities

 

 

92,109

 

 

 

89,605

 

Deferred income taxes, net

 

 

8,965

 

 

 

12,018

 

Other liabilities

 

 

66,874

 

 

 

78,026

 

Total liabilities

 

 

1,490,745

 

 

 

1,654,801

 

Commitments and contingencies

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Common stock, par value $0.01 per share, 500,000 shares authorized; 42,854 and 42,554 shares issued and outstanding as of January 31, 2021 and April 30, 2020, respectively

 

 

428

 

 

 

426

 

Preferred stock, par value $0.01 per share, 50,000 shares authorized; 0 shares issued and outstanding as of January 31, 2021 and April 30, 2020

 

 

 

 

 

 

Additional paid-in capital

 

 

539,289

 

 

 

529,662

 

Retained earnings

 

 

240,789

 

 

 

168,975

 

Accumulated other comprehensive loss

 

 

(19,492

)

 

 

(65,082

)

Total stockholders' equity

 

 

761,014

 

 

 

633,981

 

Total liabilities and stockholders' equity

 

$

2,251,759

 

 

$

2,288,782

 

GMS Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

January 31,

 

 

2021

 

2020

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

71,814

 

 

$

64,837

 

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

 

 

 

 

 

 

Depreciation and amortization

 

 

79,904

 

 

 

88,215

 

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

 

 

2,257

 

 

 

2,964

 

Equity-based compensation

 

 

10,318

 

 

 

6,345

 

Gain on disposal and impairment of assets

 

 

(529

)

 

 

(872

)

Deferred income taxes

 

 

(9,645

)

 

 

174

 

Other items, net

 

 

105

 

 

 

2,387

 

Changes in assets and liabilities net of effects of acquisitions:

 

 

 

 

 

 

Trade accounts and notes receivable

 

 

1,352

 

 

 

16,561

 

Inventories

 

 

(24,391

)

 

 

317

 

Prepaid expenses and other assets

 

 

1,040

 

 

 

4,210

 

Accounts payable

 

 

(58,104

)

 

 

(30,420

)

Accrued compensation and employee benefits

 

 

(11,932

)

 

 

(11,729

)

Other accrued expenses and liabilities

 

 

6,307

 

 

 

(7,622

)

Cash provided by operating activities

 

 

68,496

 

 

 

135,367

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(17,857

)

 

 

(20,884

)

Proceeds from sale of assets

 

 

1,233

 

 

 

1,299

 

Acquisition of businesses, net of cash acquired

 

 

(51

)

 

 

(20,803

)

Cash used in investing activities

 

 

(16,675

)

 

 

(40,388

)

Cash flows from financing activities:

 

 

 

 

 

 

Repayments on revolving credit facilities

 

 

(102,189

)

 

 

(794,623

)

Borrowings from revolving credit facilities

 

 

14,750

 

 

 

760,444

 

Payments of principal on long-term debt

 

 

(7,476

)

 

 

(57,476

)

Payments of principal on finance lease obligations

 

 

(22,662

)

 

 

(17,971

)

Repurchases of common stock

 

 

(2,000

)

 

 

 

Debt issuance costs

 

 

 

 

 

(1,286

)

Proceeds from exercises of stock options

 

 

3,656

 

 

 

8,280

 

Payments for taxes related to net share settlement of equity awards

 

 

(807

)

 

 

(532

)

Other financing activities

 

 

2,076

 

 

 

1,793

 

Cash used in financing activities

 

 

(114,652

)

 

 

(101,371

)

Effect of exchange rates on cash and cash equivalents

 

 

2,495

 

 

 

3

 

Decrease in cash and cash equivalents

 

 

(60,336

)

 

 

(6,389

)

Cash and cash equivalents, beginning of period

 

 

210,909

 

 

 

47,338

 

Cash and cash equivalents, end of period

 

$

150,573

 

 

$

40,949

 

Supplemental cash flow disclosures:

 

 

 

 

 

 

Cash paid for income taxes

 

$

31,942

 

 

$

30,199

 

Cash paid for interest

 

 

38,114

 

 

 

49,224

 

GMS Inc.

Net Sales by Product Group (Unaudited)

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

January 31,

 

% of

 

 

January 31,

 

% of

 

January 31,

 

% of

 

January 31,

 

% of

 

 

2021

 

Total

 

 

2020

 

Total

 

2021

 

Total

 

2020

 

Total

 

 

(dollars in thousands)

 

Wallboard

 

$

311,122

 

41.4

%

 

$

314,391

 

41.3

%

 

$

969,634

 

41.0

%

 

$

1,006,604

 

40.7

%

Ceilings

 

 

101,909

 

13.6

%

 

 

112,768

 

14.8

%

 

 

326,904

 

13.8

%

 

 

364,685

 

14.8

%

Steel framing

 

 

103,956

 

13.8

%

 

 

118,823

 

15.6

%

 

 

325,736

 

13.8

%

 

 

386,811

 

15.7

%

Other products

 

 

234,204

 

31.2

%

 

 

215,370

 

28.3

%

 

 

744,346

 

31.4

%

 

 

712,357

 

28.8

%

Total net sales

 

$

751,191

 

 

 

 

$

761,352

 

 

 

 

$

2,366,620

 

 

 

 

$

2,470,457

 

 

 

GMS Inc.

Reconciliation of Net Income to Adjusted EBITDA (Unaudited)

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

January 31,

 

January 31,

 

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

16,126

 

 

$

10,879

 

 

$

71,814

 

 

$

64,837

 

 

Interest expense

 

 

13,454

 

 

 

16,474

 

 

 

41,060

 

 

 

52,310

 

 

Write-off of debt discount and deferred financing fees

 

 

 

 

 

 

 

 

 

 

 

707

 

 

Interest income

 

 

(6

)

 

 

(8

)

 

 

(57

)

 

 

(26

)

 

Provision for income taxes

 

 

5,709

 

 

 

2,816

 

 

 

23,590

 

 

 

18,333

 

 

Depreciation expense

 

 

11,371

 

 

 

12,930

 

 

 

36,908

 

 

 

37,944

 

 

Amortization expense

 

 

14,191

 

 

 

16,492

 

 

 

42,996

 

 

 

50,271

 

 

EBITDA

 

$

60,845

 

 

$

59,583

 

 

$

216,311

 

 

$

224,376

 

 

Stock appreciation rights(a)

 

 

1,446

 

 

 

(347

)

 

 

2,552

 

 

 

980

 

 

Redeemable noncontrolling interests(b)

 

 

624

 

 

 

(318

)

 

 

1,062

 

 

 

326

 

 

Equity-based compensation(c)

 

 

1,877

 

 

 

1,465

 

 

 

6,734

 

 

 

5,175

 

 

Severance and other permitted costs(d)

 

 

(83

)

 

 

1,700

 

 

 

2,626

 

 

 

3,648

 

 

Transaction costs (acquisitions and other)(e)

 

 

664

 

 

 

434

 

 

 

789

 

 

 

1,733

 

 

Gain on disposal and impairment of assets(f)

 

 

(1,404

)

 

 

(130

)

 

 

(529

)

 

 

(872

)

 

Effects of fair value adjustments to inventory(g)

 

 

 

 

 

310

 

 

 

 

 

 

461

 

 

Gain on legal settlement

 

 

(1,382

)

 

 

 

 

 

(1,382

)

 

 

 

 

Secondary public offering costs(h)

 

 

 

 

 

 

 

 

 

 

 

363

 

 

EBITDA add-backs

 

 

1,742

 

 

 

3,114

 

 

 

11,852

 

 

 

11,814

 

 

Adjusted EBITDA

 

$

62,587

 

 

$

62,697

 

 

$

228,163

 

 

$

236,190

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

751,191

 

 

$

761,352

 

 

$

2,366,620

 

 

$

2,470,457

 

 

Adjusted EBITDA margin

 

 

8.3

%

 

8.2

%

 

9.6

%

 

9.6

%

(a)

Represents changes in the fair value of stock appreciation rights.

(b)

Represents changes in the fair value 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 and credits received due to the COVID-19 pandemic.

(e)

Represents costs related to acquisitions paid to third parties.

(f)

Includes gains from the sale of assets and impairment of assets resulting from restructuring plans to close certain facilities.

(g)

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

(h)

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

GMS Inc.

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

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

January 31,

 

January 31,

 

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash provided by operating activities

 

$

44,448

 

 

$

65,440

 

 

$

68,496

 

 

$

135,367

 

Purchases of property and equipment

 

 

(6,012

)

 

 

(6,247

)

 

 

(17,857

)

 

 

(20,884

)

Free cash flow(a)

 

$

38,436

 

 

$

59,193

 

 

$

50,639

 

 

$

114,483

 

 

(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

 

Nine Months Ended

 

 

January 31,

 

January 31,

 

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expense

 

$

184,844

 

 

$

193,384

 

 

$

556,308

 

 

$

588,472

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments

 

 

 

 

 

 

 

 

 

 

 

 

Stock appreciation rights(a)

 

 

(1,446

)

 

 

347

 

 

 

(2,552

)

 

 

(980

)

Redeemable noncontrolling interests(b)

 

 

(624

)

 

 

318

 

 

 

(1,062

)

 

 

(326

)

Equity-based compensation(c)

 

 

(1,877

)

 

 

(1,465

)

 

 

(6,734

)

 

 

(5,175

)

Severance and other permitted costs(d)

 

 

104

 

 

 

(462

)

 

 

(2,589

)

 

 

(2,410

)

Transaction costs (acquisitions and other)(e)

 

 

(664

)

 

 

(434

)

 

 

(789

)

 

 

(1,733

)

Gain on disposal and impairment of assets(f)

 

 

1,404

 

 

 

130

 

 

 

529

 

 

 

872

 

Secondary public offering costs(g)

 

 

 

 

 

 

 

 

 

 

 

(363

)

Adjusted SG&A

 

$

181,741

 

 

$

191,818

 

 

$

543,111

 

 

$

578,357

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

751,191

 

 

$

761,352

 

 

$

2,366,620

 

 

$

2,470,457

 

Adjusted SG&A margin

 

 

24.2

%

 

 

25.2

%

 

 

22.9

%

 

 

23.4

%

(a)

Represents changes in the fair value of stock appreciation rights.

(b)

Represents changes in the fair value 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 and credits received due to the COVID-19 pandemic.

(e)

Represents costs related to acquisitions paid to third parties.

(f)

Includes gains from the sale of assets and impairment of assets resulting from restructuring plans to close certain facilities.

(g)

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

GMS Inc.

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

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

January 31,

 

January 31,

 

 

 

2021

 

 

2020

 

2021

 

 

2020

 

Income before taxes

 

$

21,835

 

 

$

13,695

 

$

95,404

 

 

$

83,170

 

EBITDA add-backs

 

 

1,742

 

 

 

3,114

 

 

11,852

 

 

 

11,814

 

Write-off of discount and deferred financing fees

 

 

 

 

 

 

 

 

 

 

707

 

Purchase accounting depreciation and amortization (1)

 

 

9,798

 

 

 

11,869

 

 

30,054

 

 

 

36,530

 

Adjusted pre-tax income

 

 

33,375

 

 

 

28,678

 

 

137,310

 

 

 

132,221

 

Adjusted income tax expense

 

 

7,510

 

 

 

6,453

 

 

30,895

 

 

 

29,750

 

Adjusted net income

 

$

25,865

 

 

$

22,225

 

$

106,415

 

 

$

102,471

 

Effective tax rate (2)

 

 

22.5

%

 

 

22.5

%

 

22.5

%

 

 

22.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

42,726

 

 

 

42,223

 

 

42,691

 

 

 

41,663

 

Diluted (3)

 

 

43,361

 

 

 

42,949

 

 

43,184

 

 

 

42,577

 

Adjusted net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.61

 

 

$

0.53

 

$

2.49

 

 

$

2.46

 

Diluted

 

$

0.60

 

 

$

0.52

 

$

2.46

 

 

$

2.41

 

(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

Source: GMS Inc.

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