TUCKER, Ga. - GMS Inc . (NYSE: NYSE:GMS), a key distributor of specialty building products in North America, has announced a definitive agreement to purchase several Canadian entities including Yvon Building Supply, Inc. and related companies, for a sum that could reach CAD$196.5 million. This acquisition, subject to regulatory approvals and standard closing conditions, is anticipated to be finalized in July 2024.
Yvon, with a decade-long history, has established itself as a provider of quality building materials, serving customers across Greater Toronto and Ontario. The company, which operates seven locations, specializes in a range of products such as drywall, insulation, and steel. In the fiscal year ending February 29, 2024, Yvon reported net revenues surpassing CAD$190 million.
John C. Turner, Jr., President and CEO of GMS, expressed enthusiasm over the expansion in southern Ontario and the integration of Yvon's seasoned team into GMS's operations. This move is seen as an alignment with GMS's growth strategy, aiming to enhance its product and service offerings, particularly in the expanding Greater Toronto Area.
Tom Scott, President of Yvon, also remarked on the acquisition as a pivotal moment for Yvon's team, citing the aligned values and customer service commitment between Yvon and GMS. He sees the merger as an opportunity for growth and improved customer service with a broader range of products and services.
The transaction is expected to be financed through GMS's available cash and borrowings under its current credit facilities. Post-acquisition, Yvon is slated to maintain its brand identity and leadership under President Tom Scott, and will collaborate with GMS Canada's Watson and Blair brands locally.
GMS, founded in 1971, manages over 300 distribution centers and operates more than 100 tool sales, rental, and service centers across the United States and Canada, providing a variety of building products and solutions.
InvestingPro Insights
GMS Inc. has made a significant move in the North American building products market with its latest acquisition, and investors are taking note. The company's market capitalization stands robust at 3.84 billion USD, reflecting the substantial size and influence of GMS in the industry. With a P/E ratio of 13.25 and an adjusted P/E ratio for the last twelve months as of Q3 2024 at 12.9, GMS presents a valuation that may attract investors looking for reasonable earnings multiples in the sector.
Additionally, the company has demonstrated a solid financial performance with a gross profit margin of 32.44% in the same period, indicating efficiency in its operations and the potential for sustained profitability. This is further supported by an InvestingPro Tip indicating that analysts predict the company will be profitable this year. The company's strategic expansion, including the acquisition of Yvon Building Supply, aligns with its growth objectives and may contribute positively to future revenue streams.
An InvestingPro Tip also highlights that GMS's stock has experienced a large price uptick over the last six months, with a 47.87% total return, showcasing the market's positive reception to the company's performance and strategic initiatives. For investors interested in deeper analysis and additional insights, there are 11 more InvestingPro Tips available, providing a comprehensive look at GMS's financial health and market position. To access these tips and benefit from the full suite of tools, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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