Gypsum Management & Supply (GMS) experienced significant growth in its net income and healthy growth in net sales in the company’s fiscal second quarter, according to the distributor’s quarterly earnings report. GMS saw net income increase to $29.1 million, an increase of 17% year over year (YOY) compared to last year’s second quarter.
Additionally, GMS reported net sales increased 3.4% YOY to $861.9 million in the second quarter. Wallboard sales increased 4.8% YOY to $350.6 million, driven primarily by higher organic volumes and acquisitions, according to GMS. Ceiling sales increased 3.7% YOY and steel framing sales marginally increased by 0.3% YOY. GMS reported other product sales increased 3.0% YOY to $252.3 million.
GMS’ gross profit increased 6.1% from the fiscal second quarter a year ago to $284.5 million, driven by higher sales, both organically and from the positive effects of acquisitions. The company’s gross margin increased 80 basis points YOY to 33.0% largely due to favorable price-cost dynamics, acquisition-related purchasing synergies, and product mix.
Adjusted EBITDA—earnings before interest, taxes, depreciation, and amortization—rose 3.2% YOY to $89.9 million and represented an adjusted EBITDA margin of 10.4%.
“We achieved strong volume performance in the United States, where demand conditions remain solid, while managing continued softness in Canada,” GMS president and CEO John Turner said in a prepared statement. “We also generated strong cash from operations and free cash flow, and continue to pursue our existing capital allocation priorities, including debt reduction and prudent geographic and market share expansion through acquisitions and greenfields.”
Turner said GMS is focused on increasing organic growth through expanding market share in core products and growing complementary product lines. Turner also said the distributor will continue to pursue strategic acquisitions and greenfield branch openings in the future.
During the fiscal second quarter, GMS opened a greenfield location in Wilsonville, Ore., and completed the previously announced acquisition of Rigney Building Supplies in Kingston, Ontario.
The company’s balance sheet as of October 31 showed goodwill accounted for $621.9 million of its $2.3 billion 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.
