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GMS Q3 Earnings & Revenues Surpass Estimates, Improve Y/Y

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GMS Inc. (GMS - Free Report) reported impressive third-quarter fiscal 2022 results, wherein earnings and revenues not only beat the respective Zacks Consensus Estimate but also improved on a year-over-year basis.

President and CEO of GMS, John C. Turner, Jr, said, “Leveraging our significant scale advantages to deliver outstanding customer service in a solid residential market, coupled with an inflationary pricing environment and successful platform expansion activities, helped us more than triple our net income and double our Adjusted EBITDA as compared to the prior year quarter.”

Quarter in Detail

GMS reported adjusted earnings of $1.74 per share, which outpaced the consensus mark of $1.71 by 1.8%. The figure improved a whopping 190% from the year-ago quarter’s 60 cents.

Meanwhile, net sales of $1,153.6 million surpassed the consensus mark of $1,122 million by 2.8% and increased 53.6% year over year. The upside was primarily driven by robust residential end markets, inflationary pricing, strong demand for the company’s complementary products and the acquisitions of D.L. Building Materials, Westside Building Material and AMES. Organic net sales expanded 41.5% from the prior-year quarter.

GMS Inc. Price, Consensus and EPS Surprise GMS Inc. Price, Consensus and EPS Surprise

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

Segment Discussion

Wallboard sales increased 33.4% from a year ago to $415.1 million. This upside was driven by contributions from acquisitions and strong residential volume growth. Sales were up 28.1% year over year organically.

Ceilings sales increased 34.9% year over year to $139.9 million for the quarter, primarily owing to increased volumes and benefits from acquisitions. Organically, this segment’s sales rose 26.8% from the year-ago quarter.

Steel framing sales of $282.8 million soared 172% from the prior year. This improvement was driven by the rise in volume and benefits from acquisitions. Organically, the segment’s sales rose 151% from the year-ago figure.

Furthermore, Complementary product sales grew 35.9% from the prior-year period to $315.8 million, courtesy of contributions from acquisitions, continued strength in Canadian business and strong pricing in certain product categories. Organically, sales improved 17.1% from the year-ago period.

Operating Highlights

Gross margin contracted 50 basis points (bps) to 31.9% for the quarter, primarily owing to price-cost dynamics related to the timing of the implementation of price actions.

Adjusted selling, general and administrative expenses — as a percentage of net sales — improved 380 bps to 20.4% for the quarter. This was mainly owing to the significant rise of product prices that offset the spike in operating costs.

Adjusted EBITDA margin of 11.7% improved 340 bps from a year ago.

Financials

At the fiscal third quarter-end, the company had cash on hand of $87 million, down from $167 million at fiscal 2021-end. Long-term debt (less current portion) amounted to $1,281.7 million at the fiscal first quarter-end, up from $932.4 million at the fiscal 2021-end.

The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Peer Releases

Fastenal Company (FAST - Free Report) — which currently carries a Zacks Rank #2 — ended 2021 on a solid note.

Fastenal’s earnings and revenues not only beat the Zacks Consensus Estimate but also improved on a year-over-year basis, given the strong demand for manufacturing and construction equipment and supplies along with higher pricing.

Beacon Roofing Supply, Inc. (BECN - Free Report) reported solid results for the calendar fourth-quarter 2021 or the transition period (Oct 1 to Dec 31, 2021). The top and bottom lines surpassed the respective Zacks Consensus Estimate and increased significantly on a year-over-year basis. The solid results were mainly backed by strong net sales, gross margin expansion and operational improvement.

BECN — a Zacks Rank #3 (Hold) stock — registered record calendar fourth-quarter net sales, with strong pricing execution throughout 2021 and revenue growth across all three lines of businesses. It is to be noted that starting Jan 1, 2022, BECN’s fiscal year will end on Dec 31.

Lowe’s Companies, Inc. (LOW - Free Report) , a Zacks Rank #2 stock, reported splendid fourth-quarter fiscal 2021 results, as both the top and bottom lines grew year over year and surpassed the Zacks Consensus Estimate. LOW delivered the 11th straight earnings beat and the eighth consecutive sales surprise.

Lowe’s delivered a robust performance in 2021, which benefited from the solid execution of the Total Home strategy. The strategy helped LOW gain market share across Pro and DIY customers last year. Focus on driving productivity, and efficient pricing favored operating margin growth of 170 bps in 2021.