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GMS Stock Jumps 17.4% as Q1 Earnings and Sales Top Estimates
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GMS Inc.’s (GMS - Free Report) shares rose more than 17% on Aug 29, as the company reported solid results in first-quarter fiscal 2020 (ended Jul 31, 2019). Both the top and bottom lines surpassed the Zacks Consensus Estimate, as well as improved on a year-over-year basis.
During the reported quarter, the company’s adjusted earnings of 89 cents per share topped the consensus mark of 84 cents by 6%. The reported figure also increased 8.5% from the year-ago figure of 82 cents.
Net sales during the quarter totaled $847.18 million, beating the consensus estimate of $837.13 million by 1.2%. Also, the said figure improved 8.9% year over year. Organically, sales grew 3.4% year over year, given healthy end markets with solid demand in the United States.
Wallboard’s sales increased 7.5% year over year to $341.6 million. Organically, sales in the segment grew 3.5% from the prior-year quarter. This was driven by acquisitions and higher organic volumes, partially offset by a slight decrease in price.
In the Ceilings segment, sales improved 11.4% on a year-over-year basis to $129.1 million, given increased organic volumes, positive impact of acquisitions and higher pricing. Organic sales also grew 8.3% from the year-ago period.
Sales in the Steel Framing unit totaled $131.8 million, up 2.1% from the prior-year period. However, on an organic basis, sales fell 0.8% from the year-ago quarter due to lower pricing and mix.
Other Products’ sales increased 13.3% year over year to $244.6 million and 3.1% on an organic basis.
Operating Highlights
Gross profit of $273.7 million rose 11.8% year over year, mainly as a result of higher sales and positives related to the Titan acquisition. Gross margin also grew 80 basis points (bps) year over year to 32.3%, owing to positive contributions from the Titan acquisition, favorable price-cost dynamics and mix, along with non-cash purchase accounting adjustments in the prior year.
Adjusted selling, general and administrative expenses, as a percentage of net sales, increased 20 bps to 22.6% in the quarter. The increase was mainly due to greater investments in business initiatives, reduced operating leverage in Canada, inflationary cost pressures and adverse weather conditions.
Adjusted EBITDA margin came in at 9.9%, which grew 20 bps in the quarter.
Liquidity & Cash Flow
As of Jul 31, 2019, GMS had cash and cash equivalents of $24.1 million compared with $74.3 million on Jan 31, 2019. Total long-term debt — less current portion — at the end of the fiscal first quarter amounted to $1.1 billion compared with $1.1 billion on Jan 31, 2019.
At the end of the fiscal first quarter, cash used in operations was $12.4 million compared with $47.8 million reported in the comparable year-ago period.
During the quarter, the company completed the previously-announced acquisition of Hart Acoustical & Drywall Supply in South Texas, with two locations in San Antonio, TX and one in San Feria, TX. It also opened two greenfield locations in Manchester, NH and Wichita Falls, TX.
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GMS Stock Jumps 17.4% as Q1 Earnings and Sales Top Estimates
GMS Inc.’s (GMS - Free Report) shares rose more than 17% on Aug 29, as the company reported solid results in first-quarter fiscal 2020 (ended Jul 31, 2019). Both the top and bottom lines surpassed the Zacks Consensus Estimate, as well as improved on a year-over-year basis.
During the reported quarter, the company’s adjusted earnings of 89 cents per share topped the consensus mark of 84 cents by 6%. The reported figure also increased 8.5% from the year-ago figure of 82 cents.
Net sales during the quarter totaled $847.18 million, beating the consensus estimate of $837.13 million by 1.2%. Also, the said figure improved 8.9% year over year. Organically, sales grew 3.4% year over year, given healthy end markets with solid demand in the United States.
GMS Inc. Price, Consensus and EPS Surprise
GMS Inc. price-consensus-eps-surprise-chart | GMS Inc. Quote
Product Line Discussion
Wallboard’s sales increased 7.5% year over year to $341.6 million. Organically, sales in the segment grew 3.5% from the prior-year quarter. This was driven by acquisitions and higher organic volumes, partially offset by a slight decrease in price.
In the Ceilings segment, sales improved 11.4% on a year-over-year basis to $129.1 million, given increased organic volumes, positive impact of acquisitions and higher pricing. Organic sales also grew 8.3% from the year-ago period.
Sales in the Steel Framing unit totaled $131.8 million, up 2.1% from the prior-year period. However, on an organic basis, sales fell 0.8% from the year-ago quarter due to lower pricing and mix.
Other Products’ sales increased 13.3% year over year to $244.6 million and 3.1% on an organic basis.
Operating Highlights
Gross profit of $273.7 million rose 11.8% year over year, mainly as a result of higher sales and positives related to the Titan acquisition. Gross margin also grew 80 basis points (bps) year over year to 32.3%, owing to positive contributions from the Titan acquisition, favorable price-cost dynamics and mix, along with non-cash purchase accounting adjustments in the prior year.
Adjusted selling, general and administrative expenses, as a percentage of net sales, increased 20 bps to 22.6% in the quarter. The increase was mainly due to greater investments in business initiatives, reduced operating leverage in Canada, inflationary cost pressures and adverse weather conditions.
Adjusted EBITDA margin came in at 9.9%, which grew 20 bps in the quarter.
Liquidity & Cash Flow
As of Jul 31, 2019, GMS had cash and cash equivalents of $24.1 million compared with $74.3 million on Jan 31, 2019. Total long-term debt — less current portion — at the end of the fiscal first quarter amounted to $1.1 billion compared with $1.1 billion on Jan 31, 2019.
At the end of the fiscal first quarter, cash used in operations was $12.4 million compared with $47.8 million reported in the comparable year-ago period.
During the quarter, the company completed the previously-announced acquisition of Hart Acoustical & Drywall Supply in South Texas, with two locations in San Antonio, TX and one in San Feria, TX. It also opened two greenfield locations in Manchester, NH and Wichita Falls, TX.
Zacks Rank
GMS — which share space with BMC Stock Holdings, Inc. , Builders FirstSource, Inc. (BLDR - Free Report) and Fastenal Company (FAST - Free Report) in the Zacks Building Products - Retail industry — currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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