GMS(US:GMS)2022-12-08 17:03Financial Data and Key Metrics Changes - Net sales increased by 24.4% year-over-year to $1.4 billion, with organic sales rising 22.2% after adjusting for acquisitions and foreign exchange impacts [17][18] - Net income improved by 38.7% to $103.2 million, and adjusted EBITDA grew by 30.7% to $195.5 million, with adjusted EBITDA margin increasing by 70 basis points to 13.7% [10][34] - Gross profit rose by 24.9% to $464.5 million, with a gross margin of 32.5%, up 20 basis points year-over-year [31][32] Business Line Data and Key Metrics Changes - Wallboard sales reached $584.6 million, up 41% year-over-year, driven by a 28.9% increase in price and mix and a 9.9% increase in volume [18][21] - Ceiling tile and grid sales increased by 13.3% to $159.6 million, with a 9.6% benefit from price and mix and a 2% increase in volume [23] - Steel framing sales rose by 2.3% to $278.2 million, primarily due to a 7.5% price increase, offset by a 6.8% decline in volume [24][26] - Complementary product sales increased by 26.5% to $408.7 million, with organic sales rising 17.8% [29][30] Market Data and Key Metrics Changes - Residential market sales increased by over 34%, with multi-family sales growing more than 50% and single-family sales up 29% year-over-year [18] - Commercial sales improved by 17% year-over-year, indicating a recovery in the commercial market [18] Company Strategy and Development Direction - The company aims to expand its share in core products, grow complementary products, and pursue accretive acquisitions while improving productivity and profitability [11][14][15] - The focus remains on enhancing customer service and product availability, with a commitment to leveraging scale and technology [15][16] Management's Comments on Operating Environment and Future Outlook - Management expects continued strength in multi-family and some recovery in the commercial market, but anticipates a decline in single-family demand [40][41] - The company is well-positioned to weather the expected slowdown due to a balanced revenue split between commercial and residential segments [42] - Inflation is moderating, and while Wallboard price increases are expected to slow, year-over-year pricing favorability is anticipated [44][45] Other Important Information - Cash on hand was $124.2 million, with net adjusted EBITDA debt leverage improving to 1.6 times [35][36] - The company repurchased approximately 601,000 shares for $25.8 million during the quarter [38] Q&A Session Summary Question: What percentage of U.S. MSAs does the company have a presence in today? - The company is present in all top MSAs in the U.S. except New York City and Utah, with multi-family mix at about 15% of Wallboard sales and 10% of overall sales [50] Question: Can you discuss the commercial landscape and visibility? - The commercial market is expected to remain flat to up low single digits, with office space being a significant drag on performance [62] Question: How is the company approaching M&A in the current environment? - The company remains cautious about M&A due to inflated seller expectations and market risks, but continues to have strong relationships with potential sellers [66] Question: What is the outlook for the residential business and its impact on the company? - The company expects a slight growth in Wallboard volume but strong pricing, while steel prices are anticipated to decline year-over-year [80] Question: How is the company managing SG&A costs in light of changing volumes? - The company has a flexible cost structure and can adjust variable expenses based on business performance, maintaining focus on strategic investments [102]