Despite lower sales resulting from the impact of the coronavirus (COVID-19) pandemic, Gypsum Management & Supply (GMS) generated a higher net income, gross margin, and adjusted EBITDA margin in the company’s fiscal first quarter. Net sales for the distributor declined 5.3% on a year-over-year (YOY) basis to $802.6 million, largely due to COVID-19-related market declines. Organic sales during the first quarter decreased 5.7% on a YOY basis, according to GMS’s fiscal first quarter earnings report.
Wallboard sales decreased 4.0% YOY to $328.0 million in the quarter, principally due to a decline in price, mix, and lower volumes. Ceilings sales decreased 11.9% YOY, primarily due to lower volumes and product mix while steel framing sales decreased 16.2% compared to the prior year’s fiscal first quarter. GMS said YOY sales declines were more pronounced in ceilings and steel framing because those product categories are tied primarily to commercial construction, which has remained relatively more challenged than the residential market.
GMS posted a gross profit of $260.5 million in the first quarter, a 4.8% YOY decline driven primarily by lower sales. The company’s gross margin, however, improved 20 basis points from the prior year’s first quarter to 32.5%, largely due to a favorable product mix and purchasing initiatives, according to the distributor.
The company reported net income increased 9.7% on a YOY basis to $27.2 million. GMS reported an adjusted EBITDA of $83.1 million and an adjusted EBITDA margin of 10.3%, a 40 basis point improvement from the prior fiscal year’s first quarter.
“Our first quarter results reflect outstanding execution by our entire team against the backdrop of a business environment that remained challenging throughout the period,” president and CEO John Turner, Jr., said in a news release. “The improvement [in net income, gross margin, and adjusted EBITDA margin] is a result of the rapid alignment of our cost structure to current demand, our balanced product and market mix, which has been strengthened through execution of our growth initiatives, and a relentless focus on serving our customers with operational excellence.”
Tucker, Ga.-based GMS operates a network of more than 260 distribution centers across the United States and Canada, offering wallboard, suspended ceiling systems, and complementary construction products. GMS ranked 8th on the 2020 ProSales 100 list.
