Gypsum Management & Supply (GMS) reported healthy growth in net sales and a large rise in net income in the company’s fiscal first quarter, according to the distributor’s quarterly earnings report. Tucker, Ga.-based GMS saw net sales increase to $847.2 million, an 8.9% increase year over year (YOY), compared to last year’s fiscal first quarter.
Wallboard sales increased 7.5% YOY to $341.6 million, driven primarily by higher organic volumes and the benefits of acquisitions. Ceiling sales, boosted by organic growth and the impact of higher pricing and acquisitions, rose 11.4% YOY to $129.1 million. Steel framing sales grew 2.1% YOY and other product sales for GMS rose 13.6% YOY.
GMS’s reported net income rose significantly compared to the first quarter in the previous fiscal year. Net income increased to $24.8 million from $8.7 million. Adjusted EBITDA—earnings before interest, taxes, depreciation, and amortization—rose 11.0% YOY to $83.6 million and represented and adjusted EBITDA margin of 9.9%.
“We are off to a strong start to fiscal 2020 as we remain focused on leveraging the foundation of our business and positioning GMS for long-term growth and profitability,” president and CEO of GMS John Turner said in a press release. “Our team achieved record net sales results in the quarter, with organic net sales growth driven by strong sales in the United States, where we continue to see healthy end markets with solid demand, partially offset by continued softness in the Canadian single-family housing market.”
Turner said the distributor will seek to capitalize on “significant growth opportunities” across its existing platform and expand the company’s geographic footprint through greenfield operations and acquisitions balanced with debt reduction priorities. GMS opened two greenfield locations in Manchester, N.H., and Wichita Falls, Texas, in the fiscal first quarter and completed the acquisition of two-unit Hart Acoustical & Drywall Supply in Texas.
Gross profit for the distributor increased 11.8% YOY to $273.7 million. GMS attributed the growth in profit to higher sales—from both organic growth and acquisitions—and $4.1 million of non-cash purchase accounting adjustments recorded in the prior year related to the company’s acquisition of Canadian company WSB Titan. Gross margin increased 80 basis points on an YOY basis to 32.3%, primarily due to favorable price-cost dynamics and Titan purchasing synergies.
The company’s balance sheet, as of July 31, showed goodwill accounted for $622 million of its $2.27 billion in total assets. On the liabilities side, the distributor’s long-term debt is $1.1 billion.
GMS operates a network of more than 250 distribution centers across the U.S. and Canada, offering wallboard, suspended ceiling systems, and complementary construction products. The company ranked 8th on the 2019 ProSales 100.
