GMS(GMS) - 2026 Q1 - Quarterly Results

Q1 Fiscal 2026 Highlights GMS Inc. reported fiscal first quarter 2026 financial results, with net sales and Adjusted EBITDA aligning with expectations GMS Reports First Quarter Fiscal 2026 Results GMS Inc. announced its financial results for the fiscal first quarter ended July 31, 2025, reporting net sales and Adjusted EBITDA that were consistent with expectations - Net Sales and Adjusted EBITDA results for the fiscal first quarter ended July 31, 2025, were consistent with expectations[1][2] Condensed Consolidated Financial Statements This section presents the company's condensed consolidated statements of operations, balance sheets, and cash flows Condensed Consolidated Statements of Operations For the three months ended July 31, 2025, GMS Inc. experienced a decline in net sales, gross profit, operating income, and net income compared to the prior year, leading to a decrease in diluted earnings per share | Metric | Three Months Ended July 31, 2025 (in thousands) | Three Months Ended July 31, 2024 (in thousands) | Change (YoY) | | :------------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | :----------- | | Net sales | $1,414,332 | $1,448,456 | (2.4%) | | Gross profit | $436,525 | $451,563 | (3.3%) | | Operating income | $81,227 | $98,379 | (17.4%) | | Net income | $43,560 | $57,248 | (23.9%) | | Diluted Net income per common share | $1.13 | $1.42 | (20.4%) | Condensed Consolidated Balance Sheets As of July 31, 2025, GMS Inc. reported a slight increase in total assets and stockholders' equity, while total liabilities decreased compared to April 30, 2025. Cash and cash equivalents saw a notable decrease | Metric | July 31, 2025 (in thousands) | April 30, 2025 (in thousands) | Change (QoQ) | | :-------------------------------- | :----------------------------- | :----------------------------- | :----------- | | Total assets | $3,845,082 | $3,831,267 | 0.4% | | Total liabilities | $2,393,260 | $2,411,087 | (0.7%) | | Total stockholders' equity | $1,451,822 | $1,420,180 | 2.2% | | Cash and cash equivalents | $39,931 | $55,599 | (28.2%) | | Trade accounts and notes receivable, net | $879,287 | $835,888 | 5.2% | | Inventories, net | $583,801 | $586,191 | (0.4%) | | Total current liabilities | $728,514 | $797,558 | (8.7%) | Condensed Consolidated Statements of Cash Flows For the three months ended July 31, 2025, cash used in operating activities increased, while cash used in investing activities significantly decreased due to lower acquisition spending. Cash provided by financing activities also saw a decline | Metric | Three Months Ended July 31, 2025 (in thousands) | Three Months Ended July 31, 2024 (in thousands) | Change (YoY) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :----------- | | Cash used in operating activities | $(30,944) | $(22,939) | (35.0%) | | Cash used in investing activities | $(8,623) | $(126,219) | 93.2% (less outflow) | | Cash provided by financing activities | $23,907 | $35,290 | (32.3%) | | Decrease in cash and cash equivalents | $(15,668) | $(112,976) | 86.1% (less decrease) | | Cash and cash equivalents, end of period | $39,931 | $53,172 | (24.9%) | - Acquisition of businesses, net of cash acquired, decreased substantially from $118,461 thousand in 2024 to $1,444 thousand in 2025[8] Net Sales Analysis by Product Group This section analyzes net sales performance by product group, including organic sales growth and per-day sales trends Net Sales by Product Group Overview Wallboard remained the largest product category by net sales in Q1 Fiscal 2026, though its proportion of total sales decreased. Ceilings increased its share of total net sales | Product Group | Net Sales (Three Months Ended July 31, 2025, in thousands) | % of Total (2025) | % of Total (2024) | | :-------------------- | :------------------------------------------------------- | :---------------- | :---------------- | | Wallboard | $556,393 | 39.3% | 40.6% | | Ceilings | $220,929 | 15.6% | 14.3% | | Steel framing | $196,553 | 13.9% | 14.5% | | Complementary products | $440,457 | 31.1% | 30.6% | | Total net sales | $1,414,332 | | | Net Sales and Organic Sales Growth Total net sales decreased by 2.4% and total organic sales decreased by 4.9% year-over-year. Ceilings was the only product group to achieve positive net sales and organic sales growth | Product Group | Net Sales Change (YoY) | Organic Sales Change (YoY) | | :-------------------- | :--------------------- | :------------------------- | | Wallboard | (5.4)% | (6.8)% | | Ceilings | 6.6% | 6.1% | | Steel framing | (6.3)% | (8.2)% | | Complementary products | (0.7)% | (5.8)% | | Total net sales | (2.4)% | (4.9)% | - Organic net sales growth excludes net sales of acquired businesses until their first anniversary and the impact of foreign currency translation[34] Per Day Net Sales and Organic Sales Growth Per day net sales and organic sales trends mirrored overall sales, with volume declines being a primary factor for most product groups. Ceilings benefited significantly from positive price/mix/Fx contributions | Product Group | Per Day Net Sales Change (YoY) | Per Day Organic Sales Change (YoY) | | :-------------------- | :---------------------------- | :-------------------------------- | | Wallboard | (5.4)% | (6.8)% | | Ceilings | 6.6% | 6.1% | | Steel framing | (6.3)% | (8.2)% | | Complementary products | (0.7)% | (5.8)% | | Total net sales | (2.4)% | (4.9)% | | Product Group | Volume (Net Sales) | Price/Mix/Fx (Net Sales) | Volume (Organic Sales) | Price/Mix/Fx (Organic Sales) | | :-------------------- | :----------------- | :----------------------- | :--------------------- | :--------------------------- | | Wallboard | (5.7)% | 0.3% | (7.0)% | 0.2% | | Ceilings | (4.2)% | 10.8% | (5.0)% | 11.1% | | Steel framing | (5.4)% | (0.9)% | (8.8)% | 0.6% | - Detailed price vs volume reporting is not available for Complementary Products at a consolidated level due to the wide breadth of offerings and units of measure[14] Non-GAAP Financial Measures Reconciliations This section provides reconciliations of various non-GAAP financial measures to their most directly comparable GAAP counterparts Reconciliation of Net Income to Adjusted EBITDA Adjusted EBITDA for Q1 Fiscal 2026 decreased to $135.5 million from $145.9 million in the prior year, resulting in a lower Adjusted EBITDA Margin of 9.6%. Transaction costs related to acquisitions, including the pending merger with The Home Depot, significantly increased | Metric | Three Months Ended July 31, 2025 (in thousands) | Three Months Ended July 31, 2024 (in thousands) | Change (YoY) | | :-------------------- | :---------------------------------------------- | :---------------------------------------------- | :----------- | | Net income | $43,560 | $57,248 | (23.9%) | | EBITDA | $122,968 | $138,069 | (10.9%) | | Adjusted EBITDA | $135,489 | $145,881 | (7.2%) | | Adjusted EBITDA Margin | 9.6% | 10.1% | (0.5 pp) | - Transaction costs (acquisitions and other) increased to $6,150 thousand in 2025 from $1,280 thousand in 2024, including costs for the pending merger with The Home Depot[16][17] Reconciliation of Cash Used In Operating Activities to Free Cash Flow Free cash flow for Q1 Fiscal 2026 was negative $39.4 million, representing an increased cash outflow compared to the prior year, primarily driven by higher cash used in operating activities | Metric | Three Months Ended July 31, 2025 (in thousands) | Three Months Ended July 31, 2024 (in thousands) | Change (YoY) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :----------- | | Cash used in operating activities | $(30,944) | $(22,939) | (35.0%) | | Purchases of property and equipment | $(8,446) | $(8,976) | 5.9% (less outflow) | | Free cash flow | $(39,390) | $(31,915) | (23.4%) | - Free cash flow is defined as net cash provided by (used in) operations less capital expenditures[20] Reconciliation of Selling, General and Administrative Expense to Adjusted SG&A Adjusted SG&A decreased slightly to $302.3 million in Q1 Fiscal 2026, but the Adjusted SG&A margin increased to 21.4% due to lower net sales. Transaction costs were a significant adjustment, increasing year-over-year | Metric | Three Months Ended July 31, 2025 (in thousands) | Three Months Ended July 31, 2024 (in thousands) | Change (YoY) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :----------- | | Selling, general and administrative expense | $314,379 | $315,152 | (0.2%) | | Adjusted SG&A | $302,343 | $307,715 | (1.7%) | | Adjusted SG&A margin | 21.4% | 21.2% | 0.2 pp | - Transaction costs (acquisitions and other) increased from $1,280 thousand in 2024 to $6,150 thousand in 2025, including costs for the pending merger with The Home Depot[21][22] Reconciliation of Income Before Taxes to Adjusted Net Income Adjusted net income for Q1 Fiscal 2026 was $68.0 million, a decrease from $77.6 million in the prior year, with diluted adjusted net income per share falling to $1.76. The effective tax rate increased to 27.0% | Metric | Three Months Ended July 31, 2025 (in thousands) | Three Months Ended July 31, 2024 (in thousands) | Change (YoY) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :----------- | | Income before taxes | $61,065 | $78,194 | (21.9%) | | Adjusted pre-tax income | $93,215 | $104,810 | (11.1%) | | Adjusted net income | $68,047 | $77,559 | (12.3%) | | Diluted Adjusted net income per share | $1.76 | $1.93 | (8.7%) | | Effective tax rate | 27.0% | 26.0% | 1.0 pp | Reconciliation of Net Income to Pro Forma Adjusted EBITDA (Last Twelve Months) For the last twelve months ended July 31, 2025, Pro Forma Adjusted EBITDA decreased to $491.6 million from $623.2 million in the prior year. The net debt to Pro Forma Adjusted EBITDA ratio increased to 2.6x, and a significant goodwill impairment was recorded in 2025 | Metric | Last Twelve Months Ended July 31, 2025 (in thousands) | Last Twelve Months Ended July 31, 2024 (in thousands) | Change (YoY) | | :-------------------------------- | :---------------------------------------------------- | :---------------------------------------------------- | :----------- | | Net income | $101,781 | $246,497 | (58.7%) | | EBITDA | $411,503 | $555,956 | (26.0%) | | Adjusted EBITDA | $490,530 | $588,037 | (16.6%) | | Pro Forma Adjusted EBITDA | $491,641 | $623,248 | (21.1%) | | Net debt | $1,273,709 | $1,327,266 | (4.0%) | | Net debt / Pro Forma Adjusted EBITDA | 2.6x | 2.1x | 0.5x | - A goodwill impairment of $42,454 thousand was recognized in the last twelve months ended July 31, 2025, compared to none in the prior year[28] - Contributions from acquisitions were significantly lower in 2025 ($1,111 thousand) compared to 2024 ($35,211 thousand)[28] Company Information and Non-GAAP Disclosure This section provides an overview of GMS Inc. and explains the company's use of non-GAAP financial measures About GMS Inc. GMS Inc., established in 1971, is a leading North American distributor of specialty building products, operating over 320 distribution centers and nearly 100 tool sales, rental, and service centers. The company serves residential and commercial contractors across the US and Canada with a broad product offering and a hybrid national-local operating model - Founded in 1971, GMS operates a network of more than 320 distribution centers and nearly 100 tool sales, rental, and service centers[31] - Product offerings include Wallboard, Ceilings, Steel Framing, and Complementary Products, serving residential and commercial contractors across the United States and Canada[31] - The company utilizes a unique operating model combining a national platform and strategy with a local go-to-market focus[31] Use of Non-GAAP Financial Measures GMS Inc. utilizes non-GAAP financial measures such as Adjusted net income, free cash flow, Adjusted SG&A, Adjusted EBITDA, and Adjusted EBITDA margin to provide a consistent view of operating performance, excluding items not indicative of core operations. These metrics are also integral to the company's debt agreements - GMS presents non-GAAP financial measures including Adjusted net income, free cash flow, Adjusted SG&A, Adjusted EBITDA, and Adjusted EBITDA margin[32] - These non-GAAP measures assist investors and analysts in comparing operating performance across reporting periods by excluding items not indicative of core operating performance[32] - Adjusted EBITDA is used in certain calculations within the Company's debt agreements[32]