GMS Inc. (NYSE: GMS) has reported its financial results for the fiscal first quarter ended July 31, 2024, highlighting both positive and challenging aspects. Net sales for the quarter reached $1.4 billion, marking a 2.8% increase from the same period in fiscal 2024. However, organic net sales decreased by 2.2%.
The company experienced volume growth across all four major product categories, with U.S. single-family wallboard organic volume growing by 4.1%, offsetting declines in multi-family and commercial demand.
Net income came in at $57.2 million, or $1.42 per diluted share, a decrease from the previous period's $86.8 million, or $2.09 per diluted share. Adjusted net income saw a decrease from $103.2 million to $77.6 million, or $2.49 to $1.93 per diluted share.
Adjusted EBITDA decreased by 15.8% to $145.9 million, with the adjusted EBITDA margin at 10.1%, down from 12.3% in the first quarter of fiscal 2024.
The company's cash flow also saw changes, with operating activities and free cash flow showing a use of $22.9 million and $31.9 million, respectively, compared to cash provided by operating activities of $6.6 million and a use from free cash flow of $6.9 million in the prior year period. The net debt leverage was 2.1 times at the end of the quarter, up from 1.5 times a year ago.
GMS Inc. completed the acquisitions of Howard & Son Building Materials, Inc., Yvon Building Supply and Affiliates, and subsequently, R.S. Elliott Specialty Supply. These acquisitions are part of the company's strategy for platform expansion and complementary products expansion across the Southeast.
In light of the challenges faced during the quarter, John C. Turner, Jr., President and CEO of GMS, highlighted the company's focus on strategic pillars, cost management, and the implementation of a $25 million annualized cost reduction program.
Looking ahead, GMS Inc. anticipates that market pressures faced in the first quarter will persist over the next several quarters, at least until the expected reduction in interest rates can positively impact demand for its products. Despite near-term headwinds, the company remains confident in its model, pricing resilience for major product categories, and its ability to capture growth opportunities.
The company's balance sheet, liquidity, and cash flow also experienced changes, with cash used by operating activities at $22.9 million, compared to a source of cash in the prior year period. Free cash flow was a use of $31.9 million for the quarter, compared to a use of $6.9 million in the previous year.
GMS Inc. has repurchased 538,078 shares of common stock for $46.2 million during the quarter, with $154.3 million of share repurchase authorization remaining.
The acquisition of R.S. Elliott Specialty Supply, a leading distributor of exterior building products in Florida, was successfully completed after the end of the quarter. R.S. Elliott is expected to contribute significantly to GMS Inc.'s complementary business.
As a result of these announcements, the company's shares have moved -1.0% on the market, and are now trading at a price of $91.15. For the full picture, make sure to review GMS's 8-K report.
