Gypsum Management & Supply (GMS) experienced significant growth in its net income for the second consecutive quarter and saw net sales grow healthily in the company’s fiscal third quarter. After net income increased 17% year over year (YOY) in the fiscal second quarter, GMS’s net income increased 87.1% YOY in the fiscal third quarter, rising to $10.9 million.
GMS reported net sales for the third quarter of the fiscal year grew 5.2% from the previous third quarter to $761.4 million, according to the company’s quarterly earnings report. The growth in net sales primarily came from organic sales growth in the quarter. Wallboard sales grew 5.7% YOY to $314.4 million in the third quarter, quarterly ceiling sales increased 7.2% YOY to $112.8 million, and steel framing sales grew 1.2% YOY to $118.8 million. All segment sales growth was primarily a result of higher organic volumes and acquisitions, according to GMS.
The company’s gross profit increased 8.2% from $234.2 million in the previous fiscal third quarter to $253.5 million. The distributor reported gross margin increased 90 basis points YOY to 33.3%, primarily due to favorable price-cost dynamics resulting from higher volume purchases in product groups and other purchasing initiatives. Acquisition-related purchasing synergies and mix also positively contributed to gross margin improvement.
“GMS’s third quarter results demonstrate our team’s momentum and effective execution and we remain focused on our strategic priorities in order to further capitalize on growth opportunities in our industry,” John Turner, president and CEO of GMS, said in a news release. “We generated robust volume growth across all product groups, expanded gross margin, and delivered higher net income and adjusted EBITDA.”
Adjusted EBITDA–earnings before interest, taxes, depreciation, and amortization–rose 5.0% YOY to $62.8 million and represented an adjusted EBITDA margin of 8.2%.
The company completed the acquisition of Trowel Trades Supply in Vermont during the fiscal third quarter and also opened two greenfield locations during the quarter. Turner said the company will continue to pursue “prudent geographic and market share expansion.”
The company’s balance sheet as of January 31, 2020 showed goodwill accounted for $624.1 million of its $2.3 billion in total assets. On the liabilities side, the distributor’s long-term debt is $1.07 billion.
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. The company ranked 8th on the 2019 ProSales 100 list.
