GMS Q4 Earnings & Revenues Top Estimates, Margins Improve Y/Y

GMS Inc. GMS reported solid fourth-quarter fiscal 2022 results, with earnings and revenues beating their respective Zacks Consensus Estimate and improving on a year-over-year basis.

Shares of the company increased 6% in the pre-market trading session on Jun 23.

John C. Turner, Jr., president and chief executive officer of GMS, stated, “Our scale, balanced mix of products and customers, commitment to delivering best-in-class service and continued execution of our growth strategy, coupled with strong residential demand and an inflationary pricing environment, enabled us to deliver record levels of net sales, net income and Adjusted EBITDA. We remain optimistic about the year ahead, which, despite rising rates, is supported by a continuing fundamental underbuild of residential housing stock as well as signs of an improving commercial market.”

Quarter in Detail

GMS reported adjusted earnings of $2.09 per share, beating the consensus mark of $1.87 by 11.8%. The figure surged 95.3% from the year-ago quarter’s $1.07 per share.

GMS Inc. Price, Consensus and EPS Surprise

 

GMS Inc. Price, Consensus and EPS Surprise

GMS Inc. price-consensus-eps-surprise-chart | GMS Inc. Quote

 

Net sales of $1,288.7 million surpassed the consensus mark of $1,265 million by 1.9% and increased 38.2% year over year. The upside was primarily driven by robust residential end markets, inflationary pricing, strong demand for its complementary products and the acquisitions of Westside Building Material and AMES Taping Tools. Organic net sales expanded 28.9% from the prior-year quarter’s levels.

Revenues by Product

Wallboard sales increased 30.3% from a year ago to $491.1 million. Sales were up 26.5% year over year organically.

Ceilings sales increased 22.7% year over year to $148.9 million for the quarter. Organically, this segment’s sales rose 17% from the year-ago quarter.

Steel framing sales of $276.9 million soared 93.3% from the prior year. Organically, the segment’s sales rose 81.6% from the year-ago figure.

Complementary product sales grew 27.9% from the prior-year period to $371.8 million. Organically, sales improved 11.1% from the year-ago period.

Operating Highlights

Gross margin expanded 50 basis points (bps) to 32% for the quarter, primarily owing to the successful pass-through of product price inflation, continued strength in residential market demand and incremental gross profit dollars along with accretive gross margins from acquisitions.

Adjusted selling, general and administrative expenses — as a percentage of net sales — improved 170 bps to 20.2% for the quarter. This was mainly owing to the significant rise in product prices that offset the spike in operating costs.

Adjusted EBITDA margin of 12% increased 220 bps from a year ago.

Fiscal 2022 Highlights

For fiscal 2022, the company generated adjusted earnings of $7.49 per share, more than twice the fiscal 2021 earnings of $3.54. Net sales of $4,634.9 million also increased 40.5%, backed by organic net sales growth of 30.9%. Adjusted EBITDA margin improved 250 bps to 12.2% from 9.7% in fiscal 2021.

Financials

At the fiscal 2022-end, the company had cash and cash equivalents of $101.9 million, down from $167 million at the fiscal 2021-end. GMS had $330.7 million in available liquidity under its revolving credit facilities.

Long-term debt (less current portion) amounted to $1,136.6 million at the fiscal 2022-end, up from $932.4 million at the fiscal 2021-end.

Cash provided by operating activities of $179.6 million was up from $153.3 million reported a year ago. Free cash flow of $138.5 million was also up from the previous year’s $123.4 million.

Zacks Rank & Key Picks

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some Top-Ranked Stocks From the Broader Retail-Wholesale Sector

Some top-ranked stocks in the Zacks Retail-Wholesale sector are Tecnoglass Inc. TGLS, Beacon Roofing Supply, Inc. BECN and BBQ Holdings, Inc. BBQ.

Tecnoglass carries a Zacks Rank #1. Shares of the company have lost 33.5% year to date.

The Zacks Consensus Estimate for TGLS’ 2022 sales and EPS suggests growth of 21.3% and 28.7%, respectively, from the year-ago levels.

Beacon Roofing Supply carries a Zacks Rank #2. Shares of the company have risen 10.6% year to date.

The Zacks Consensus Estimate for BECN’s 2022 sales and EPS suggests growth of 23.5% and 36.2%, respectively, from the year-ago period’s levels.

BBQ Holdings also carries a Zacks Rank #2. Shares of the company have decreased 21.9% year to date.

The Zacks Consensus Estimate for BBQ Holdings’ 2022 sales and EPS suggests growth of 46.1% and 67.6%, respectively, from the year-ago period’s levels.

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