GMS Inc.–aka Gypsum Management and Supply, a wallboard and suspended ceilings systems distributor that went public in May–reported today its net income for the fiscal second quarter ended Oct. 31 shot up more than six-fold to $17.2 million from $2.8 million in the year-earlier period.
Net sales increased 29.2% to $591.8 million, of which roughly two-thirds of the growth came from acquisitions. Base business net sales increased 10.8%. Notably, gross margin climbed 120 basis points to 32.6%, while gross profit was up 34.3% to $193.2 million.
Based in the Atlanta suburb of Tucker, Ga., GMS operates close to 200 branches across the country, all of them flying the flags of roughly 50 local names rather than the GMS banner. Since its acquisition by AEA in April 2014, the company has gone on a buying and expansion spree in an intent to provide total coast-to-coast service. Between August and October, it bought four companies that would have generated $156.7 million in sales had they been on GMS’ books for four quarters, and since Oct. 31 it purchased another company with 12-month sales totaling $12.3 million.
Wallboard sales rose 26.0% to $270 million while unit volume increased 27.2%. Ceiling systems sales increased 14.5% to $85.4 million, steel framing sales went up 36.7% to $96.1 million, and sales of other products climbed 42.0% to $140.4 million.
“In particular, we capitalized on stronger residential activity in wallboard and other products,” President and CEO Mike Callahan said in a statement. “In the commercial markets, end market demand was healthy, resulting in higher ceilings and steel framing volumes.”
The assets side of the company’s balance sheet as of Oct. 31 shows that goodwill accounts for $423.7 million of the company’s $1.41 billion in total assets. Meanwhile, the liability side shows $633.3 million worth of long-term debt that’s not currently due.
GMS likes to measure itself using adjusted EBITDA, which it defines as earnings before interest, taxes, depreciation, and amortization as well as before transaction costs (it had $1.8 million of those in the quarter), changes in redeemable non controlling interests (that totaled $2.5 million) and such other factors as equity-based compensation, severance costs, losses in the disposal of assets, and the effects of fair-value adjustments to inventory.
By that measure, GMS’ adjusted EBITDA totaled $49.5 million in its fiscal second quarter ended Oct. 31, a sharp gain from the $34.8 million in adjusted EBITDA a year earlier. Adjusted EBITDA margin rose to 8.4% from 7.6%.
