Post Earnings Coverage as GMS Revenue Surged 29.2%; Net Income More than Tripled

Upcoming AWS Coverage on NCI Building Systems Post-Earnings Results

LONDON, UK / ACCESSWIRE / December 21, 2016 / Active Wall St. announces its post-earnings coverage on GMS Inc. (NYSE: GMS). The Company reported its second quarter fiscal 2017 financial results on December 13, 2016. The gypsum wallboard distributor reported its 21st consecutive quarter of double-digit gains in net sales. Register with us now for your free membership at: http://www.activewallst.com/register/.

One of GMS Inc.’s competitors within the General Building Materials space, NCI Building Systems, Inc. (NYSE: NCS), reported on December 08, 2016, its financial results for the fourth fiscal quarter and fiscal year ended October 30, 2016. AWS will be initiating a research report on NCI Building Systems in the coming days.

Today, AWS is promoting its earnings coverage on GMS; touching on NCS. Get our free coverage by signing up to:

http://www.activewallst.com/registration-3/?symbol=GMS

http://www.activewallst.com/registration-3/?symbol=NCS

Earnings Reviewed

For the three months ended October 31, 2016, GMS reported net sales of $591.8 million, up 29.2% compared to net sales of $458.1 million for Q2 FY16. GMS noted a marginal benefit from one additional shipping day with 65 days in Q2 FY17 compared to 64 days in Q2 FY16. The Company’s sales number surpassed analysts’ expectations of $588.5 million.

For Q2 FY17, GMS’ gross profit surged 34.3% to $193.2 million compared to $143.9 million in Q2 FY16. The Company’s gross margin of 32.6% during the reported quarter, expanded by 120 basis points, compared to 31.4% in the year earlier period. The Company attributed the improvement in gross margin primarily to ongoing price optimization efforts and purchasing to fully leverage its national purchasing power.

GMS reported that its adjusted EBITDA soared 42.3% to $49.5 million in Q2 FY17 compared to $34.8 million in Q2 FY16. Adjusted EBITDA margin was 8.4% as a percentage of net sales for the reported quarter compared to 7.6% in the comparable year ago quarter.

For Q2 FY17, GMS reported that its net income of $17.2 million, or $0.42 per share, more than tripled compared to $2.8 million, or $0.09 per share, in Q2 FY16. On an adjusted basis, the Tucker, Georgia-based Company reported net income of $19.0 million, or $0.46 per diluted share. GMS’ adjusted earnings number fell short of Wall Street’s estimations of $0.49 per share.

Segment Results

During Q2 FY17, sales of GMS’s Wallboard product grew 26.0% to $270.0 million compared to Q2 FY16. The category’s unit volume grew 27.2% million to 891 million square feet, driven by greater end market demand, primarily in residential markets, and the positive contribution from acquisitions. In the reported quarter, GMS’ Ceilings sales rose 14.5% on a y-o-y basis to $85.4 million, primarily due to improved pricing, higher ceiling grid volumes, and the positive impact from acquisitions.

For Q2 FY17, the Company’s Steel framing registered a 36.7% growth to $96.1 million compared to Q2 FY16 on greater commercial activity and modest price gains, along with the benefit from acquisitions. GMS’s Other product sales of $140.4 million were up 42.0% for Q2 FY17 compared to the year earlier same quarter as a result of stronger cross-selling activity, acquisitions, price gains, and greater end market demand.

Acquisition Activity

During Q2 FY17, GMS completed four acquisitions of Steven F. Kempf Building Materials, Inc., Olympia Building Supplies, LLC, United Building Materials, Inc., and Ryan Building Materials Inc., for a purchase price in the aggregate amount of approximately $118.2 million. Steven F. Kempf Building Materials, Olympia Building Supplies, United Building Materials, and Ryan Building Materials distribute wallboard and related building materials in Pennsylvania, Florida, Ohio and Michigan, respectively, from a total of ten locations. For the twelve months ended October 31, 2016, the acquired companies generated approximately $156.7 million in net sales and the earnings of these entities would have contributed approximately $17.6 million to adjusted EBITDA for that period, including operating synergies.

Balance Sheet

In September 2016, GMS closed the refinancing of its existing term loan. The new borrowings consist of a $481.2 million term loan facility due in 2021. Borrowings under the new term loan will bear interest at a floating rate based on LIBOR, with a 1.00% floor, plus 3.50%, compared to the previous term loan which had a floating rate based on LIBOR, with a 1.00% floor, plus 3.75%. Net proceeds plus cash on hand were used to repay its existing first lien term loan of $381.0 million and will be applied to repay approximately $99.0 million of loans under its asset based revolving credit facility.

As of October 31, 2016, GMS had cash of $16.4 million and total debt of $644.5 million compared to cash of $19.1 million and total debt of $644.6 million at April, 30, 2016. At October 31, the Company’s net debt to pro-forma adjusted EBITDA stood at 3.4 times, down from 4.3 times at April 30, 2016. During Q2 FY17, GMS generated $31.3 million of operating cash flow compared to $16.1 million generated in Q2 FY16.

Stock Performance

GMS Inc.’s share price finished yesterday’s trading session at $29.88, rising 1.74%. A total volume of 136.99 thousand shares exchanged hands. The stock has advanced 35.63% and 34.78% in the last three months and past six months, respectively. Furthermore, since the start of the year, shares of the company have soared 36.38%. The stock is trading at a PE ratio of 36.80 and currently has a market cap of $1.18 billion.

Active Wall Street:

Active Wall Street (AWS) produces regular sponsored and non-sponsored reports, articles, stock market blogs, and popular investment newsletters covering equities listed on NYSE and NASDAQ and micro-cap stocks. AWS has two distinct and independent departments. One department produces non-sponsored analyst certified content generally in the form of press releases, articles and reports covering equities listed on NYSE and NASDAQ and the other produces sponsored content (in most cases not reviewed by a registered analyst), which typically consists of compensated investment newsletters, articles and reports covering listed stocks and micro-caps. Such sponsored content is outside the scope of procedures detailed below.

AWS has not been compensated; directly or indirectly; for producing or publishing this document.

PRESS RELEASE PROCEDURES:

The non-sponsored content contained herein has been prepared by a writer (the “Author”) and is fact checked and reviewed by a third party research service company (the “Reviewer”) represented by a credentialed financial analyst, for further information on analyst credentials, please email info@activewallst.com. Rohit Tuli, a CFA® charterholder (the “Sponsor”), provides necessary guidance in preparing the document templates. The Reviewer has reviewed and revised the content, as necessary, based on publicly available information which is believed to be reliable. Content is researched, written and reviewed on a reasonable-effort basis. The Reviewer has not performed any independent investigations or forensic audits to validate the information herein. The Reviewer has only independently reviewed the information provided by the Author according to the procedures outlined by AWS. AWS is not entitled to veto or interfere in the application of such procedures by the third-party research service company to the articles, documents or reports, as the case may be. Unless otherwise noted, any content outside of this document has no association with the Author or the Reviewer in any way.

NO WARRANTY

AWS, the Author, and the Reviewer are not responsible for any error which may be occasioned at the time of printing of this document or any error, mistake or shortcoming. No liability is accepted whatsoever for any direct, indirect or consequential loss arising from the use of this document. AWS, the Author, and the Reviewer expressly disclaim any fiduciary responsibility or liability for any consequences, financial or otherwise arising from any reliance placed on the information in this document. Additionally, AWS, the Author, and the Reviewer do not (1) guarantee the accuracy, timeliness, completeness or correct sequencing of the information, or (2) warrant any results from use of the information. The included information is subject to change without notice.

NOT AN OFFERING

This document is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only. Please read all associated disclosures and disclaimers in full before investing. Neither AWS nor any party affiliated with us is a registered investment adviser or broker-dealer with any agency or in any jurisdiction whatsoever. To download our report(s), read our disclosures, or for more information, visit http://www.activewallst.com/disclaimer/.

CONTACT

For any questions, inquiries, or comments reach out to us directly. If you’re a company we are covering and wish to no longer feature on our coverage list contact us via email and/or phone between 09:30 EDT to 16:00 EDT from Monday to Friday at:

Email: info@activewallst.com

Phone number: 1-858-257-3144

Office Address: 3rd floor, 207 Regent Street, London, W1B 3HH, United Kingdom

CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.

SOURCE: Active Wall Street

ReleaseID: 451511