Gypsum Management & Supply (GMS) grew net sales, and volume in the company’s fiscal first quarter and announced three transactions.
“We realized volume growth and improved our resilient pricing in most of our major product lines,” John Turner, president and CEO of GMS, said. “Nevertheless, steel price deflation partially offset these results, and economic tightening resulted in weaker than expected activity levels across all of our end markets for the quarter, notably in commercial and multifamily, particularly in July.”
During the fiscal first quarter, ended July 31, the distributor reported net sales of $1.4 billion, a 2.8% increase on a year-over-year basis. GMS said contributions from recent acquisitions helped drive volume growth across all four major product categories—wallboard, ceiling, steel framing, and complementary products—for GMS. The gains were offset by deflation in steel framing.
Wallboard sales increased 2.9% year-over-year to $587.9 million, ceiling sales increased 18.2% year-over-year to $207.2 million, steel framing sales decreased 11.4% year-over-year to $209.9 million, and complementary product sales increased 4.1% year-over-year to $443.5 million.
“Despite current market pressure, we continued to focus on the execution of our strategic pillars and adapting to shifting end market demand, and are managing costs more firmly across the business,” Turner said.
Gross profit in the quarter increased by $1.0 million to $451.6 million with gross margin down 80 basis points to 31.2%. GMS said the mix impacts of steel price deflation, price/cost dynamics in the wallboard sector, and a shift from commercial and multifamily to single-family wallboard deliveries contributed to the decline in margin.
“We believe the market pressures we faced this quarter will likely persist over the next several quarters, at least until the expected reduction in interest rates can positively impact demand for our products,” Turner said. “In spite of near-term headwinds, we remain confident in our model, the resilience of pricing for our major product categories outside of steel, and our ability to execute and capture the evident growth opportunities ahead, particularly with an improved interest rate environment.”
Profit in the quarter decreased 34.1% to $57.2 million. Adjusted EBITDA decreased 15.8% to $145.9 million compared to the prior year quarter. Adjusted EBITDA margin was 10.1%, compared with 12.3% in the prior year period.
During the quarter, GMS closed its previously announced acquisition of Yvon Building Supply and affiliates. Additionally, after the end of the quarter, the company acquired R.S. Elliott Specialty Supply in Florida. The company is a regional distributor of stucco, plaster, siding, exterior insulation and finishing systems (EIFS), and related construction supplies servicing markets across Florida from locations in Orlando, Wildwood, Tampa, West Palm Beach, and Jacksonville.
“This transaction marks an important advancement to our strategy to expand our platform to better serve our customers and grow our complementary product offerings, particularly within one of our key focus areas, EIFS and stucco,” Turner said.
