GMS and Titan WSB comparisons
GMS Presentation to Analysts April 5, 2018

GMS grew dramatically in North America today with its announcement that it has acquired WSB Titan, Canada's largest dealer specializing in gypsum products.

GMS will pay about US$627 million (C$800 million) for the Toronto based firm, which generated sales of US$459 million in the 12 months ending jan. 31. Titan's adjusted EBITDA--earnings before interest, taxes, depreciation, and amortization--totaled $68 million (that's 14.7% of sales) during that period.

GMS figures the combination will create cost synergies of at least US$10 million in the first full year following the deal, so by its calculations the Atlanta-based distributor is paying less than 8 times adjusted EBITDA to acquire Titan. It also estimates that adding Titan would have increased GMS's adjusted EBITDA margin by more than 100 basis points in the year ended Jan. 31 if Titan had been part of the U.S. dealer then.

GMS and Titan WSB locations as of April 5, 2018
GMS presentation to analysts April 5, 2018

The deal calls for GMS to take over WSB Titan's 30 locations operating under several different brand names in the provinces of Ontario, British Columbia, Alberta, Manitoba, and Saskatchewan. These will be the first Canadian properties for Atlanta-based GMS, which has more than 210 facilities in the U.S.

GMS ranks 8th on the current ProSales 100 list, having posted $2.23 billion in sales in 2016, 92% of it to pros. Sales in its fiscal third quarter ended Jan. 31 rose 4.1% to $585.5 million.

“The acquisition of Titan further extends our leadership position as the largest wallboard distributor in North America with significant scale advantages and a well-balanced portfolio built for growth," GMS CEO Mike Callahan said in a news release. "The combination also provides us with a market leading position in Canada and the foundation to support future opportunities in this highly fragmented market while creating opportunities to share best practices across our operations."