TUCKER, Ga. - GMS Inc . (NYSE: NYSE:GMS), a prominent distributor of specialty building products in North America, disclosed its financial outcomes for the fiscal third quarter ending January 31, 2024. The company observed a slight shortfall in earnings per share (EPS) but surpassed revenue expectations.
For the third quarter, GMS reported an adjusted EPS of $1.60, narrowly missing the analyst projection of $1.61. Revenue, however, exceeded analyst forecasts, reaching $1.3 billion against the anticipated $1.27 billion. This revenue figure marks a 1.9% increase compared to the same period last year, although organic net sales saw a marginal decline of 0.2%.
The company's performance was influenced by volume growth in various product categories, particularly in the multi-family and commercial sectors, which helped offset a decrease in single-family volumes. U.S. Wallboard volumes grew by 12.7% in the multi-family segment and 7.9% in the commercial sector, while single-family volumes declined by 2.3%.
Despite higher year-over-year net sales, GMS experienced a decrease in net income from $64.8 million, or $1.53 per diluted share, in the previous year to $51.9 million, or $1.28 per diluted share. Adjusted net income also saw a reduction from the prior year's $78.3 million, or $1.85 per diluted share, to $65.0 million, or $1.60 per diluted share.
John C. Turner, Jr., President and CEO of GMS, commented on the results, highlighting the company's ability to exceed expectations despite challenges such as steel price deflation and adverse weather conditions. Turner also expressed optimism about the company's positioning for the fiscal year's end, with expectations of continued growth in the multi-family sector and a revival in single-family growth due to lower interest rates.
GMS's gross profit increased by 3.1% to $414.7 million, with a gross margin improvement of 40 basis points to 33.0%. However, selling, general, and administrative (SG&A) expenses rose to $295.7 million, up from $267.4 million in the prior year, largely due to acquisitions and higher labor costs associated with increased commercial and multi-family demand.
The company's balance sheet remains strong, with cash on hand of $88.3 million, total debt of $1.0 billion, and a net debt leverage of 1.5 times, an improvement from 1.6 times a year ago. Cash provided by operating activities for the quarter stood at $104.3 million, and free cash flow was $94.1 million.
GMS continues to execute its strategic priorities, including the planned acquisition of Kamco Supply Corporation, which is expected to bolster its presence in the New York City market. The company also opened three new greenfield locations during the quarter.
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