GMS Inc. (GMS) Tops Q4 EPS by 4c, Revenues Beat

GMS Inc. (NYSE: GMS) reported Q4 EPS of $0.56, $0.04 better than the analyst estimate of $0.52. Revenue for the quarter came in at $770.9 million versus the consensus estimate of $723.46 million.

Fourth Quarter Fiscal 2020 Highlights

• Net sales of $770.9 million decreased 1.2% from $780.1 million in the fourth quarter of the prior fiscal year, as COVID-related market declines in late March and April more than offset higher sales earlier in the quarter. Organic net sales decreased 1.8%.
• Reported net loss of $41.5 million, or $0.98 per diluted share, compared to net income of $16.6 million, or $0.39 per diluted share, in the fourth quarter of the prior fiscal year. Reported net loss reflects a non-cash goodwill impairment charge of $63.1 million related to the Company’s Canada reporting unit, partially offset by a gain on a legal settlement of $14.0 million related to cash proceeds received as part of a class action legal settlement.
• Adjusted net income of $24.0 million, or $0.56 per diluted share, compared to $28.7 million, or $0.68 per diluted share, in the fourth quarter of the prior fiscal year.
• Adjusted EBITDA of $63.6 million, or 8.2% of net sales compared to Adjusted EBITDA of $73.5 million, or 9.4% of net sales, in the fourth quarter of the prior fiscal year.
• The Company completed one business acquisition and one greenfield opening during the fourth quarter of fiscal 2020.
• Net debt leverage was reduced to 2.9 times as of the end of the fourth quarter of fiscal 2020 from 3.3 times as of the end of the third quarter of fiscal 2020.
• Cash provided by operating activities of $167.7 million and free cash flow of $163.4 million increased 90.2% and 97.4%, respectively, from the fourth quarter of the prior fiscal year.
• As of April 30, 2020, the Company had cash on hand of $210.9 million and availability under its revolving credit facilities of $368.3 million.

John C. Turner, Jr., President and Chief Executive Officer, said, “The health, safety and wellbeing of our employees, business partners and communities remains our top priority during this pandemic and I would like to share my appreciation for all of our teammates who continue to be engaged, focused and proactive as we come together to support our customers and each other during these unprecedented times. Additionally, on behalf of everyone at GMS, I would like to express our deep gratitude to the healthcare providers, first responders and essential workers who have been and continue to be on the frontlines every day.”

Mr. Turner continued, “We entered the fourth quarter with strong momentum in line with what we had seen through the first three quarters of fiscal 2020, grounded in our team’s focus on effective execution of our strategic priorities. Through mid-March we experienced favorable end-market trends and generated robust volume growth. Even as disruptions from COVID-19 began to escalate in the second half of March, construction and building products distribution were deemed essential in the majority of our markets, which enabled us to keep most of our locations open. However, demand weakened significantly in late March and in April as customers delayed orders and building projects were paused due to mandated shutdowns in certain markets or as they focused on responding to the effects of COVID-19 on their businesses.

“To date in the first quarter of fiscal 2021, we have experienced sequential improvement in net sales levels compared to the latter half of the fourth quarter as the majority of the mandated shutdowns have been eased or lifted and as businesses have begun to reopen. On a year-over-year basis, comparable daily sales thus far in the first quarter of fiscal 2021 are down low single digits, compared to the double-digit year-over-year decline experienced in April.

“Given current macroeconomic conditions, there continues to be uncertainty regarding the near-term outlook for construction. We have taken, and intend to continue to take, the necessary actions to optimize our operations and align our business with demand. We believe the foundation we have built at GMS, coupled with our strong liquidity and cash-generating ability, will enable us to continue navigating the evolving operating environment and position us for long-term success,” Mr. Turner concluded.

For earnings history and earnings-related data on GMS Inc. (GMS) click here.

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