Form 8-K GMS Inc. For: Jul 12
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 12, 2016
GMS INC.
(Exact name of registrant as specified in charter)
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Delaware |
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001-37784 |
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46-2931287 |
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(State or Other Jurisdiction |
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(Commission |
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(I.R.S. Employer |
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100 Crescent Centre Parkway, Suite 800 |
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30084 |
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(Address of Principal Executive Offices) |
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(Zip Code) |
Registrant’s telephone number, including area code: (800) 392-4619
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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o |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
On July 12, 2016, GMS Inc. (the “Company” or “GMS”) issued a press release, a copy of which is furnished as Exhibit 99.1 hereto and incorporated herein by reference, announcing the Company’s financial results for the three months and full year ended April 30, 2016.
The information contained in Item 7.01 concerning the presentation to GMS investors is hereby incorporated into this Item 2.02 by reference.
In accordance with General Instruction B.2 of Form 8-K, the information in this Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as shall be expressly set forth by specific reference in such a filing.
Item 7.01. Regulation FD Disclosure.
The slide presentation furnished as Exhibit 99.2 hereto, and incorporated herein by reference, will be presented to certain investors of GMS on July 12, 2016 and may be used by GMS in various other presentations to investors.
In accordance with General Instruction B.2 of Form 8-K, the information in this Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.2 attached hereto, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits:
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Exhibit Number |
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Description |
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99.1 |
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Press Release of GMS Inc., dated July 12, 2016. |
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99.2 |
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GMS Inc. presentation to investors. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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GMS INC. | |
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Date: July 12, 2016 |
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By: |
/s/ H. Douglas Goforth |
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Name: H. Douglas Goforth |
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Title: Chief Financial Officer |
EXHIBIT INDEX
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Exhibit Number |
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Description |
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99.1 |
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Press Release of GMS Inc., dated July 12, 2016. |
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99.2 |
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GMS Inc. presentation to investors. |
Exhibit 99.1
GMS REPORTS RESULTS FOR FOURTH QUARTER
AND FISCAL YEAR ENDED APRIL 30, 2016
- Record Annual Net Sales Increase 18.3% to $1.86 Billion
- Completes Initial Public Offering in June 2016
Tucker, Georgia, July 12, 2016. GMS Inc. (NYSE: GMS), a leading North American distributor of wallboard and suspended ceilings systems, today reported financial results for the fourth quarter and fiscal year ended April 30, 2016.
Fiscal Year 2016 Highlights Compared to Fiscal Year 2015
· Net sales increased 18.3% to $1.86 billion; base business net sales up 7.6%
· Wallboard unit volume grew 22.1% to 2.84 billion square feet
· Net income improved significantly to $12.6 million, or $0.38 per share, compared to a net loss of $(11.7) million, or $(0.36) per share in fiscal 2015
· Adjusted EBITDA increased 32.0% to $150.3 million, improving 70bps as a percentage of net sales
· Completed seven acquisitions with a combined $208 million of trailing twelve month net sales
· Branch locations grew to 186 from 156
Fourth Quarter 2016 Highlights Compared to Fourth Quarter 2015
· Net sales increased 30.3% to $527.2 million; base business net sales up 16.0%
· Wallboard unit volume grew 36.0% to 816 million square feet
· Net income improved to $8.9 million, or $0.27 per share, compared to $2.1 million, or $0.07 per share
· Adjusted EBITDA increased 46.8% to $43.7 million
Mike Callahan, President and CEO of GMS, stated, “Fiscal 2016 marked a record year of progress for GMS. We are extremely pleased with the consistent improvement across all of our major product categories throughout the year, resulting in significant growth in our net sales and Adjusted EBITDA. This expansion reflects our balanced business approach along with improving end market demand. Furthermore, we outpaced the market growth rate for the fifth consecutive year as we continued to capture core market share, open additional greenfield locations and complete accretive acquisitions. We also effectively managed our costs and capitalized on our national scale advantages as we delivered a 140 basis point improvement in gross margin along with growth in Adjusted EBITDA as a percentage of net sales to 7.4%.”
Mr. Callahan continued, “In June 2016, we successfully completed our initial public offering, from which we used the net proceeds in combination with cash on hand to pay down $160.0 million of debt and eliminate approximately $12.4 million of annualized cash interest expense. With our strengthened balance sheet and ample capital resources, we are firmly situated to continue capitalizing on the ongoing recovery in construction end markets, which we believe remain in an extended period of expansion, and still have significant upside when compared to historical levels. With our attractive end markets and our ongoing pursuit of select accretive acquisitions, we are well-positioned to further expand our industry leading positions in wallboard and ceilings distribution throughout North America.”
Fiscal Year 2016 Results
Net sales for the fiscal year ended April 30, 2016 increased 18.3% to $1.86 billion, compared to $1.57 billion for the fiscal year ended April 30, 2015. Net sales increased across all product categories driven by stronger commercial and residential construction activity, the opening of new branches and the favorable impact of acquisitions.
· Wallboard sales of $871.0 million in fiscal 2016 increased 21.3%, compared to fiscal 2015, driven by a 22.1% increase in wallboard volume to 2.84 billion square feet. Greater end market demand, market share gains and the impact of acquisitions were the primary contributors to the increase in wallboard volume, which more than offset a slight decline in wallboard prices year-over-year.
· Ceilings sales of $297.1 million in fiscal 2016 rose 6.6%, compared to fiscal 2015, due to improved pricing, a pickup in commercial activity and acquisitions.
· Steel framing sales of $281.3 million in fiscal 2016 grew 15.7%, compared to fiscal 2015, attributable to greater commercial activity and acquisitions, partially offset by price declines as a result of lower industry steel prices.
· Other product sales of $408.8 million in fiscal 2016, which include joint treatment, insulation, tools, fasteners and other complementary products, increased 23.9%, compared to fiscal 2015, due to improved pricing, retail growth initiatives and acquisitions.
Gross profit of $593.2 million in fiscal 2016 increased 23.8%, compared to $479.0 million in fiscal 2015, primarily driven by higher net sales. Gross margin of 31.9% improved by 140 basis points, compared to 30.5% in the prior year. The improvement in gross margin was attributable to better product margins and a favorable sales mix.
Net income of $12.6 million in fiscal 2016, or $0.38 per share, grew $24.3 million, compared to a net loss of $(11.7) million, or $(0.36) per share, in fiscal 2015. Adjusted net income of $47.4 million, or $1.45 per share, increased $15.7 million, compared to $31.7 million, or $0.98 per share, in the prior year. The growth in adjusted net income was primarily attributable to higher net sales and gross profit which more than offset increased selling, general and administrative expenses, including warehouse, delivery and payroll to support expanded operations.
Adjusted EBITDA of $150.3 million in fiscal 2016 million grew 32.0%, compared to $113.9 million in fiscal 2015. Adjusted EBITDA for fiscal 2016 includes $12.1 million of contributions from acquisitions from the predecessor period of acquisitions completed during fiscal 2016. Adjusted EBITDA for fiscal 2015 includes $8.1 million of contributions from acquisitions from the predecessor period of acquisitions completed during fiscal 2015. Adjusted EBITDA margin, which is calculated without consideration of the contributions from acquisitions, was 7.4% as a percentage of net sales in fiscal 2016, compared to 6.7% in fiscal 2015, representing strong overall improvement in operating performance.
Fourth Quarter 2016 Results
Net sales for the fourth quarter ended April 30, 2016 grew 30.3% to $527.2 million, compared to $404.5 million for the fourth quarter ended April 30, 2015.
· Wallboard sales of $248.8 million in the fourth quarter 2016 increased 31.6%, compared to the fourth quarter 2015. Wallboard unit volume grew 36.0% million to 816 million square feet, helped
by greater end market demand and the impact of acquisitions which more than offset a decline in wallboard prices year-over-year.
· Ceiling sales of $78.2 million in the fourth quarter 2016 rose 12.6%, compared to the fourth quarter 2015, helped by improved pricing, a pickup in commercial activity and acquisitions.
· Steel framing sales of $77.8 million in the fourth quarter 2016 grew 33.0%, compared to the fourth quarter 2015, due to greater commercial activity and acquisitions which more than offset price declines as industry steel prices fell year-over-year.
· Other product sales of $122.4 million in the fourth quarter 2016 were up 39.8%, compared to the fourth quarter 2015, attributable to price gains, retail growth initiatives and acquisitions.
Gross profit of $174.2 million for the fourth quarter 2016 increased 38.0%, compared to $126.2 million in the fourth quarter 2015. Gross margin of 33.0% expanded by 180 basis points, compared to 31.2% in the fourth quarter 2015, marking steady improvement throughout fiscal 2016.
Net income of $8.9 million, or $0.27 per share, for the fourth quarter increased $6.8 million, compared to $2.1 million, or $0.07 per share, in the fourth quarter 2015. Adjusted net income of $17.4 million, or $0.53 per share, grew $8.7 million, compared to $8.7 million, or $0.27 per share, in the fourth quarter 2015.
Adjusted EBITDA of $43.7 million for the fourth quarter 2016 rose 46.8%, compared to $29.8 million in the fourth quarter 2015. Adjusted EBITDA for the fourth quarter 2016 includes $0.1 million of contributions from acquisitions from the predecessor period of acquisitions completed during the fourth quarter 2016. Adjusted EBITDA for fourth quarter 2015 includes $1.0 million of contributions from acquisitions from the predecessor period of acquisitions completed during fourth quarter 2015. Adjusted EBITDA margin, excluding the predecessor period of acquisitions, was 8.3% as a percentage of net sales for the fourth quarter 2016, compared to 7.1% in the fourth quarter 2015.
Capital Resources
At April 30, 2016, the Company had cash of $19.1 million and total debt of $644.6 million, as compared to cash of $12.3 million and total debt of $557.0 million at April 30, 2015. On a pro forma basis, after giving effect to the completion of our initial public offering on June 1, 2016, the Company had cash in the amount of $16.3 million and total debt of $484.6 million at April 30, 2016.
Recent Events
Initial Public Offering
On June 1, 2016, GMS completed the initial public offering of its common stock, raising net proceeds of approximately $157.2 million, including the full exercise of the underwriters’ option to purchase additional shares. Following completion of the offering, the Company had 40,942,905 of basic and 41,605,076 of diluted shares outstanding.
In connection with the offering, the Company used all of the net proceeds, together with cash on hand, to repay, in full, its outstanding indebtedness of $160.0 million plus accrued and unpaid interest under its 7.75% senior secured second lien term loan facility due April 2022.
Acquisition Activity
Subsequent to April 30, 2016, the Company acquired Wall & Ceiling Supply Co., Inc. (Wall & Ceiling Supply) and Rockwise, LLC (Rockwise) for a total purchase price of approximately $26.3 million. Wall & Ceiling Supply and Rockwise distribute wallboard and related building materials from four locations in Washington, Arizona and Colorado. For the twelve months ended April 30, 2016, the combined companies generated approximately $35.2 million in net sales and the earnings of these entities would have contributed approximately $4.5 million to our Adjusted EBITDA for that period, including operating synergies.
Conference Call and Webcast
The Company will host a conference call and webcast to discuss its results for the fourth quarter and fiscal year ended April 30, 2016 at 11:00 a.m. Eastern Time on July 12, 2016. Investors who wish to
participate in the call should dial 877-407-0789 (domestic) or 201-689-8562 (international) at least 5 minutes prior to the start of the call. The live webcast will be available on the Investors section of the Company’s website at www.gms.com. There will be a slide presentation of the results available on that page of the website as well. Replays of the call will be available through August 12, 2016 and can be accessed at 877-870-5176 (domestic) or 858-384-5517 (international) and entering the pass code 13640153.
About GMS Inc.
Founded in 1971, GMS operates a national network of distribution centers across the United States. GMS’s extensive product offering of wallboard, suspended ceilings systems, or ceilings, and complementary interior construction products is designed to provide a comprehensive one-stop-shop for our core customer, the interior contractor who installs these products in commercial and residential buildings.
Use of Non-GAAP Financial Measures
GMS reports its financial results in accordance with GAAP. However, we present Adjusted net income, Adjusted EBITDA and Adjusted EBITDA margin, which are not recognized financial measures under GAAP, because we believe they assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Management believes Adjusted EBITDA, adjusted net income and base business growth are helpful in highlighting trends in our operating results, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments. In addition, we utilize Adjusted EBITDA in certain calculations under our senior secured asset based revolving credit facility and our senior secured first and second lien term loan facilities.
You are encouraged to evaluate each adjustment and the reasons we consider it appropriate for supplemental analysis. In addition, in evaluating Adjusted EBITDA, you should be aware that in the future, we may incur expenses similar to the adjustments in the presentation of Adjusted EBITDA. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. In addition, Adjusted EBITDA may not be comparable to similarly titled measures used by other companies in our industry or across different industries.
Forward-Looking Statements and Information:
This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You can generally identify forward-looking statements by our use of forward-looking terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “seek,” or “should,” or the negative thereof or other variations thereon or comparable terminology. In particular, statements about the markets in which we operate, including the potential for growth in the commercial, residential and repair and remodeling, or R&R, markets, statements about our expectations, beliefs, plans, strategies, objectives, prospects, assumptions or future events or performance, statements related to net sales, gross profit and capital expenditures, as well as non-GAAP financial measures such as Adjusted EBITDA, adjusted net income and base business growth and statements regarding potential acquisitions and future greenfield locations contained in this press release are forward-looking statements. We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. Forward-looking statements involve risks and uncertainties, including, but not limited to,
economic, competitive, governmental and technological factors outside of our control, that may cause our business, strategy or actual results to differ materially from the forward-looking statements. These risks and uncertainties may include, among other things: changes in the prices, supply, and/or demand for products which we distribute; general economic and business conditions in the United States; the activities of competitors; changes in significant operating expenses; changes in the availability of capital and interest rates; adverse weather patterns or conditions; acts of cyber intrusion; variations in the performance of the financial markets, including the credit markets; and other factors described in the “Risk Factors” section in our Annual Report on Form 10-K for the fiscal year ended April 30, 2016, and in our other periodic reports filed with the SEC. In addition, the statements in this release are made as of July 12, 2016. We undertake no obligation to update any of the forward looking statements made herein, whether as a result of new information, future events, changes in expectation or otherwise. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to July 12, 2016.
GMS Inc.
Consolidated Statements of Operations (Unaudited)
Three Months Ended April 30, 2016 and 2015 and Years Ended April 30, 2016 and 2015
(in thousands of dollars, except for share and per share data)
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Three Months Ended |
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Year Ended |
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2016 |
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2015 |
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2016 |
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2015 |
| ||||
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Net sales |
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$ |
527,182 |
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$ |
404,499 |
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$ |
1,858,182 |
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$ |
1,570,085 |
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Cost of sales (exclusive of depreciation and amortization shown separately below) |
|
352,979 |
|
278,263 |
|
1,265,018 |
|
1,091,114 |
| ||||
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Gross profit |
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174,203 |
|
126,236 |
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593,164 |
|
478,971 |
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Operating expenses: |
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|
|
|
|
|
|
|
| ||||
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Selling, general and administrative |
|
133,231 |
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103,311 |
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470,035 |
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396,155 |
| ||||
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Depreciation and amortization |
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16,879 |
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15,997 |
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64,215 |
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64,165 |
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Total operating expenses |
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150,110 |
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119,308 |
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534,250 |
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460,320 |
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Operating income |
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24,093 |
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6,928 |
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58,914 |
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18,651 |
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Other (expense) income: |
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|
|
|
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Interest expense |
|
(9,428 |
) |
(8,871 |
) |
(37,418 |
) |
(36,396 |
) | ||||
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Change in fair value of financial instruments |
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(19 |
) |
— |
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(19 |
) |
(2,494 |
) | ||||
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Other income, net |
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2,219 |
|
416 |
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3,671 |
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1,916 |
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Total other (expense), net |
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(7,228 |
) |
(8,455 |
) |
(33,766 |
) |
(36,974 |
) | ||||
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Income (loss) before taxes |
|
16,865 |
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(1,527 |
) |
25,148 |
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(18,323 |
) | ||||
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Provision for (benefit from) income taxes |
|
7,925 |
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(3,663 |
) |
12,584 |
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(6,626 |
) | ||||
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Net income (loss) |
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$ |
8,940 |
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$ |
2,136 |
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$ |
12,564 |
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$ |
(11,697 |
) |
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Weighted average shares outstanding: |
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Basic |
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32,892,905 |
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32,551,182 |
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32,799,098 |
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32,450,401 |
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Diluted |
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33,155,140 |
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32,684,348 |
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33,125,242 |
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32,450,401 |
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Net income (loss) per share: |
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Basic |
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$ |
0.27 |
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$ |
0.07 |
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$ |
0.38 |
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$ |
(0.36 |
) |
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Diluted |
|
$ |
0.27 |
|
$ |
0.07 |
|
$ |
0.38 |
|
$ |
(0.36 |
) |
GMS Inc.
Consolidated Balance Sheets (Unaudited)
April 30, 2016 and 2015
(in thousands of dollars, except share data)
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April 30, |
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April 30, |
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Assets |
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Current assets: |
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Cash and cash equivalents |
|
$ |
19,072 |
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$ |
12,284 |
|
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Trade accounts and notes receivable, net of allowances of $8,607 and $8,633, respectively |
|
270,257 |
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214,321 |
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Inventories, net |
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165,766 |
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147,603 |
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Deferred income tax assets, net |
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11,047 |
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9,836 |
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Prepaid expenses and other current assets |
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16,548 |
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42,936 |
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Total current assets |
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482,690 |
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426,980 |
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Property and equipment, net |
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153,260 |
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158,824 |
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Goodwill |
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386,306 |
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348,811 |
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Intangible assets, net |
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221,790 |
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215,762 |
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Other assets |
|
7,815 |
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10,599 |
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Total assets |
|
$ |
1,251,861 |
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$ |
1,160,976 |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
|
|
|
|
| ||
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Accounts payable |
|
$ |
91,500 |
|
$ |
77,834 |
|
|
Accrued compensation and employee benefits |
|
51,680 |
|
48,069 |
| ||
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Other accrued expenses and current liabilities |
|
41,814 |
|
57,172 |
| ||
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Current portion of long-term debt |
|
8,667 |
|
6,759 |
| ||
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Revolving credit facility |
|
26,914 |
|
16,950 |
| ||
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Total current liabilities |
|
220,575 |
|
206,784 |
| ||
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Non-current liabilities: |
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|
|
|
| ||
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Long-term debt, less current portion |
|
609,029 |
|
533,275 |
| ||
|
Deferred income taxes, net |
|
52,250 |
|
69,671 |
| ||
|
Other liabilities |
|
33,600 |
|
23,222 |
| ||
|
Liabilities to noncontrolling interest holders, less current portion |
|
25,247 |
|
28,452 |
| ||
|
Total liabilities |
|
940,701 |
|
861,404 |
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|
Commitments and contingencies |
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|
|
|
| ||
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Stockholders’ equity: |
|
|
|
|
| ||
|
Common stock, $0.01 par value, authorized 500,000,000 shares; 32,892,905 and 32,757,905 shares issued and outstanding at April 30, 2016 and 2015, respectively |
|
329 |
|
328 |
| ||
|
Preferred stock, $0.01 par value, authorized 50,000,000 shares; 0 shares issued and outstanding at April 30, 2016 and 2015 |
|
— |
|
— |
| ||
|
Additional paid-in capital |
|
334,244 |
|
329,884 |
| ||
|
Accumulated deficit |
|
(22,265 |
) |
(30,650 |
) | ||
|
Accumulated other comprehensive (loss) income |
|
(1,148 |
) |
10 |
| ||
|
Total stockholders’ equity |
|
311,160 |
|
299,572 |
| ||
|
Total liabilities and stockholders’ equity |
|
$ |
1,251,861 |
|
$ |
1,160,976 |
|
GMS Inc.
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended April 30, 2016 and 2015 and Years Ended April 30, 2016 and 2015
(in thousands of dollars)
|
|
|
Three Months |
|
Year Ended |
| ||||||||
|
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
| ||||
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Cash flows from operating activities: |
|
|
|
|
|
|
|
|
| ||||
|
Net income (loss) |
|
$ |
8,940 |
|
$ |
2,136 |
|
$ |
12,564 |
|
$ |
(11,697 |
) |
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
| ||||
|
Depreciation and amortization of property and equipment |
|
6,460 |
|
7,181 |
|
26,667 |
|
32,208 |
| ||||
|
Accretion and amortization of debt discount and deferred financing fees |
|
878 |
|
833 |
|
3,438 |
|
3,374 |
| ||||
|
Amortization of intangible assets |
|
10,419 |
|
8,798 |
|
37,548 |
|
31,957 |
| ||||
|
Provision for losses on accounts and notes receivable |
|
(1,035 |
) |
(408 |
) |
(1,032 |
) |
(233 |
) | ||||
|
Provision for obsolescence of inventory |
|
(3 |
) |
5 |
|
80 |
|
1,077 |
| ||||
|
Equity-based compensation |
|
991 |
|
2,274 |
|
4,733 |
|
9,012 |
| ||||
|
(Gain) loss on sale or impairment of assets |
|
(721 |
) |
250 |
|
(645 |
) |
1,089 |
| ||||
|
Loss on fair value of financial instruments |
|
— |
|
— |
|
— |
|
2,494 |
| ||||
|
Deferred income tax expense |
|
(13,842 |
) |
11,740 |
|
(20,499 |
) |
(21,664 |
) | ||||
|
Prepaid expenses and other assets |
|
(559 |
) |
1,021 |
|
(4,682 |
) |
1,989 |
| ||||
|
Accrued compensation and employee benefits |
|
15,383 |
|
10,639 |
|
3,454 |
|
8,204 |
| ||||
|
Other accrued expenses and liabilities |
|
132 |
|
3,735 |
|
5,551 |
|
9,170 |
| ||||
|
Liabilities to noncontrolling interest holders |
|
(743 |
) |
539 |
|
446 |
|
1,862 |
| ||||
|
Income taxes |
|
17,998 |
|
(22,089 |
) |
7,106 |
|
(905 |
) | ||||
|
|
|
44,298 |
|
26,654 |
|
74,729 |
|
67,937 |
| ||||
|
Changes in primary working capital components, net of acquisitions: |
|
|
|
|
|
|
|
|
| ||||
|
Trade accounts and notes receivable |
|
(29,212 |
) |
(3,395 |
) |
(27,338 |
) |
(11,649 |
) | ||||
|
Inventories |
|
(428 |
) |
7,579 |
|
(699 |
) |
(4,610 |
) | ||||
|
Accounts payable |
|
15,187 |
|
15,985 |
|
1,055 |
|
(3,655 |
) | ||||
|
Cash provided by operating activities |
|
29,845 |
|
46,823 |
|
47,747 |
|
48,023 |
| ||||
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
| ||||
|
Purchases of property and equipment |
|
(3,697 |
) |
(2,940 |
) |
(7,692 |
) |
(13,940 |
) | ||||
|
Proceeds from sale of assets |
|
3,084 |
|
1,160 |
|
9,847 |
|
3,807 |
| ||||
|
Purchase of financial instruments |
|
— |
|
— |
|
— |
|
(4,638 |
) | ||||
|
Acquisitions of businesses, net of cash acquired |
|
(29,886 |
) |
(48,095 |
) |
(113,597 |
) |
(66,695 |
) | ||||
|
Cash used in investing activities |
|
(30,499 |
) |
(49,875 |
) |
(111,442 |
) |
(81,466 |
) | ||||
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
| ||||
|
Repayments on the revolving credit facility |
|
(252,438 |
) |
(100,006 |
) |
(697,144 |
) |
(303,099 |
) | ||||
|
Borrowings from the revolving credit facility |
|
269,257 |
|
106,481 |
|
782,104 |
|
320,049 |
| ||||
|
Debt issuance costs |
|
(391 |
) |
— |
|
(391 |
) |
— |
| ||||
|
Payments of principal on long-term debt |
|
(975 |
) |
(990 |
) |
(3,931 |
) |
(3,927 |
) | ||||
|
Principal repayments of capital lease obligations |
|
(1,067 |
) |
(1,084 |
) |
(4,249 |
) |
(4,327 |
) | ||||
|
Proceeds from sales of common stock |
|
— |
|
3,820 |
|
— |
|
5,370 |
| ||||
|
Payment of contingent consideration |
|
(2,043 |
) |
(526 |
) |
(6,598 |
) |
(1,001 |
) | ||||
|
Stock repurchases |
|
— |
|
— |
|
(5,827 |
) |
— |
| ||||
|
Exercise of stock options |
|
— |
|
— |
|
6,519 |
|
— |
| ||||
|
Cash provided by financing activities |
|
12,343 |
|
7,695 |
|
70,483 |
|
13,065 |
| ||||
|
Increase (decrease) in cash and cash equivalents |
|
11,689 |
|
4,643 |
|
6,788 |
|
(20,378 |
) | ||||
|
Balance, beginning of period |
|
7,383 |
|
7,641 |
|
12,284 |
|
32,662 |
| ||||
|
Balance, end of period |
|
$ |
19,072 |
|
$ |
12,284 |
|
$ |
19,072 |
|
$ |
12,284 |
|
|
Supplemental cash flow disclosures: |
|
|
|
|
|
|
|
|
| ||||
|
Cash paid for income taxes |
|
$ |
3,817 |
|
$ |
6,658 |
|
$ |
26,067 |
|
$ |
16,111 |
|
|
Cash paid for interest |
|
9,688 |
|
8,134 |
|
34,557 |
|
31,720 |
| ||||
GMS Inc.
Net Sales by Product Group (Unaudited)
Three Months Ended April 30, 2016 and 2015 and Years Ended April 30, 2016 and 2015
(in thousands of dollars)
|
|
|
Three Months Ended April 30, |
|
Year Ended April 30, |
| ||||||||||||||||
|
|
|
2016 |
|
% of |
|
2015 |
|
% of |
|
2016 |
|
% of |
|
2015 |
|
% of |
| ||||
|
Wallboard |
|
$ |
248,829 |
|
47.2 |
% |
$ |
189,032 |
|
46.7 |
% |
$ |
870,952 |
|
46.9 |
% |
$ |
718,102 |
|
45.7 |
% |
|
Ceilings |
|
78,159 |
|
14.8 |
% |
69,414 |
|
17.2 |
% |
297,110 |
|
16.0 |
% |
278,749 |
|
17.8 |
% | ||||
|
Steel framing |
|
77,769 |
|
14.8 |
% |
58,466 |
|
14.5 |
% |
281,340 |
|
15.1 |
% |
243,173 |
|
15.5 |
% | ||||
|
Other products |
|
122,425 |
|
23.2 |
% |
87,587 |
|
21.6 |
% |
408,780 |
|
22.0 |
% |
330,061 |
|
21.0 |
% | ||||
|
Total net sales |
|
$ |
527,182 |
|
|
|
$ |
404,499 |
|
|
|
$ |
1,858,182 |
|
|
|
$ |
1,570,085 |
|
|
|
GMS Inc.
Reconciliation of Net Income (Loss) to Adjusted EBITDA (Unaudited)
Three Months Ended April 30, 2016 and 2015 and Years Ended April 30, 2016 and 2015
(in thousands of dollars)
|
|
|
Three Months Ended |
|
Year Ended |
| ||||||||
|
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
| ||||
|
Net income (loss) |
|
$ |
8,940 |
|
$ |
2,136 |
|
$ |
12,564 |
|
$ |
(11,697 |
) |
|
Interest expense |
|
9,428 |
|
8,871 |
|
37,418 |
|
36,396 |
| ||||
|
Interest income |
|
(243 |
) |
(223 |
) |
(928 |
) |
(1,010 |
) | ||||
|
Income tax expense (benefit) |
|
7,925 |
|
(3,663 |
) |
12,584 |
|
(6,626 |
) | ||||
|
Depreciation expense |
|
6,460 |
|
7,199 |
|
26,667 |
|
32,208 |
| ||||
|
Amortization expense |
|
10,419 |
|
8,798 |
|
37,548 |
|
31,957 |
| ||||
|
EBITDA |
|
$ |
42,929 |
|
$ |
23,118 |
|
$ |
125,853 |
|
$ |
81,228 |
|
|
Stock appreciation rights expense |
|
$ |
365 |
|
$ |
763 |
|
$ |
1,988 |
|
$ |
2,268 |
|
|
Redeemable noncontrolling interests |
|
(292 |
) |
703 |
|
880 |
|
1,859 |
| ||||
|
Equity-based compensation |
|
610 |
|
1,346 |
|
2,699 |
|
6,455 |
| ||||
|
Acquisition related costs |
|
— |
|
— |
|
— |
|
837 |
| ||||
|
Severance, other costs related to discontinued operations and closed branches, and certain other costs |
|
(1,054 |
) |
150 |
|
379 |
|
413 |
| ||||
|
Transaction costs (acquisitions and other) |
|
939 |
|
1,615 |
|
3,751 |
|
1,891 |
| ||||
|
(Gain) loss on disposal of assets |
|
(720 |
) |
250 |
|
(645 |
) |
1,089 |
| ||||
|
Management fee to related party |
|
563 |
|
563 |
|
2,250 |
|
2,250 |
| ||||
|
Effects of fair value adjustments to inventory |
|
223 |
|
266 |
|
1,009 |
|
5,012 |
| ||||
|
Interest rate swap and cap mark-to-market |
|
19 |
|
— |
|
19 |
|
2,494 |
| ||||
|
Contributions from acquisitions |
|
132 |
|
1,005 |
|
12,093 |
|
8,064 |
| ||||
|
EBITDA add-backs (1) |
|
785 |
|
6,661 |
|
24,423 |
|
32,632 |
| ||||
|
Adjusted EBITDA |
|
$ |
43,714 |
|
$ |
29,779 |
|
$ |
150,276 |
|
$ |
113,860 |
|
|
Adjusted EBITDA margin (2) |
|
8.3 |
% |
7.1 |
% |
7.4 |
% |
6.7 |
% | ||||
(1) Refer to Exhibit 99.2, GMS Inc. presentation to investors, for more information about EBITDA add-backs.
(2) Adjusted EBITDA margin, which is calculated as a percentage of net sales, excludes contributions from acquisitions for the periods presented to be consistent with our calculation of net sales for the same period
GMS Inc.
Reconciliation of Income (Loss) Before Taxes to Adjusted Net Income (Loss) (Unaudited)
Three Months Ended April 30, 2016 and 2015 and Years Ended April 30, 2016 and 2015
(in thousands of dollars, except for share and per share data)
|
|
|
Three Months Ended |
|
Year Ended |
| ||||||||
|
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
| ||||
|
Income (loss) before taxes |
|
$ |
16,865 |
|
$ |
(1,527 |
) |
$ |
25,148 |
|
$ |
(18,323 |
) |
|
EBITDA add-backs (1) |
|
653 |
|
5,656 |
|
12,330 |
|
24,568 |
| ||||
|
Purchase accounting depreciation and amortization (2) |
|
12,492 |
|
11,484 |
|
44,099 |
|
50,399 |
| ||||
|
Adjusted pre-tax income |
|
30,010 |
|
15,613 |
|
81,577 |
|
56,644 |
| ||||
|
Adjusted income tax expense |
|
12,574 |
|
6,885 |
|
34,181 |
|
24,980 |
| ||||
|
Adjusted net income |
|
$ |
17,436 |
|
$ |
8,728 |
|
$ |
47,396 |
|
$ |
31,664 |
|
|
Effective tax rate (3) |
|
41.9 |
% |
44.1 |
% |
41.9 |
% |
44.1 |
% | ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
| ||||
|
Basic |
|
32,892,905 |
|
32,551,182 |
|
32,799,098 |
|
32,450,401 |
| ||||
|
Diluted |
|
33,155,140 |
|
32,684,348 |
|
33,125,242 |
|
32,450,401 |
| ||||
|
Net income (loss) per share: |
|
|
|
|
|
|
|
|
| ||||
|
Basic |
|
$ |
0.53 |
|
$ |
0.27 |
|
$ |
1.45 |
|
$ |
0.98 |
|
|
Diluted |
|
$ |
0.53 |
|
$ |
0.27 |
|
$ |
1.43 |
|
$ |
0.98 |
|
(1) EBITDA add-backs, exclusive of contributions from acquisitions, as shown on the Reconciliation of net income (loss) to adjusted EBITDA table.
(2) Depreciation, amortization and certain other adjustments related to the increase in value of certain long-term assets associated with the April 1, 2014 acquisition of the predecessor company.
(3) Normalized effective tax rate excluding the impact of purchase accounting and certain other deferred tax amounts.
Contact Information:
Investor Relations:
678-353-2883
Media Relations:
770-723-3378
Exhibit 99.2
GMS Quarterly Review Fiscal Q4 2016
Safe Harbor and Basis of Presentation Forward-Looking Statement Safe Harbor - This presentation includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All of these forward-looking statements are based on estimates and assumptions made by our management that, although believed by us to be reasonable, are inherently uncertain. Forward-looking statements involve risks and uncertainties, including, but not limited to, economic, competitive, governmental and technological factors outside of our control, that may cause our business, strategy or actual results to differ materially from the forward-looking statements. These risks and uncertainties may include, among other things: changes in the prices, supply, and/or demand for products which we distribute; general economic and business conditions in the United States; the activities of competitors; changes in significant operating expenses; changes in the availability of capital and interest rates; adverse weather patterns or conditions; acts of cyber intrusion; variations in the performance of the financial markets, including the credit markets; and other factors described in the "Risk Factors" section in our Annual Report on Form 10-K for the fiscal year ended April 30, 2016, and in our other periodic reports filed with the SEC. In addition, the statements in this presentation are made as of July 12, 2016. We undertake no obligation to update any of the forward looking statements made herein, whether as a result of new information, future events, changes in expectation or otherwise. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to July 12, 2016. Use of Non-GAAP and Adjusted Financial Information - To supplement GAAP financial information, we use adjusted measures of operating results which are non-GAAP measures. This non-GAAP adjusted financial information is provided as additional information for investors. These adjusted results exclude certain costs, expenses, gains and losses, and we believe their exclusion can enhance an overall understanding of our past financial performance and also our prospects for the future. These adjustments to our GAAP results are made with the intent of providing both management and investors a more complete understanding of our operating performance by excluding non-recurring, infrequent or other non-cash charges that are not believed to be material to the ongoing performance of our business. The presentation of this additional information is not meant to be considered in isolation or as a substitute for GAAP measures of net earnings, diluted earnings per share or net cash provided by (used in) operating activities prepared in accordance with generally accepted accounting principles in the United States. 2
GMS at a Glance Based on FY2015 results. Wallboard share based on volume. Ceilings share based on sales. GMS Overview Net Sales Breakdown (FY 2016) #1 North American specialty distributor of interior construction products (1) 13% market share in wallboard 14% market share in ceilings Critical link between suppliers and highly fragmented customer base 20,000+ interior contractor customers National scale with more than 185 branches across 41 states and the District of Columbia Broad product offering of 20,000+ SKUs enabling GMS to be a one-stop-shop for the interior contractor Substantial diversification across customers, geographies and end markets Balanced mix of commercial and residential construction as well as new construction and R&R National Scale Combined With Local Expertise Wallboard $871mm 47% Ceilings $297mm 16% Steel Framing $281mm 15% Other $409mm 22% 3 GMS Branch Locations Residential ~40% Commercial ~60% Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä Ä
Multiple Levers to Drive Growth End Market Recovery and Expansion Market Growth Operating Leverage Operational Excellence Margin Expansion Organic Growth Strategic Acquisitions ($ in millions, April FYE) 5-yr CAGR: 16.1% 5-yr CAGR: 50.8% (2) % Margin 2.0% 3.3% 5.0% 6.4% 6.7% 7.4% % Growth NA 12% 17% 16% 16% 18% 10–’15 share gain: ~450 bps GMS Wallboard Market Share Adjusted EBITDA (2) Net Sales (1) Net sales do not reflect net sales attributable to acquired entities for any period prior to their respective dates of acquisition. FY 2015 and FY 2016 Adj. EBITDA includes approximately $8.1 million and $12.1 million, respectively, from entities acquired in FY 2015 and FY 2016, respectively, for the period prior to their respective dates of acquisition. However, Adj. EBITDA margin and the 5 year CAGR exclude the impact of the entities acquired for the period prior to their respective dates of acquisition. For a reconciliation of Adj. EBITDA to Net Income (loss), the most directly comparable GAAP metric, see Appendix. Includes the wallboard volume from entities acquired in FY 2015 assuming they were acquired on January 1, 2014. Includes the wallboard volume from entities acquired in FY 2016 assuming that the entities were acquired on January 1, 2015. (3) (4) 4 Strategic Acquisition Opportunities in Highly Fragmented Market Continued Market Share Gains Greenfield Branch Openings Strong track record of executing profitable growth strategy $106 $138 $8 $12 $18 $32 $58 $87 $114 $150 FY-11 FY-12 FY-13 FY-14 FY-15 FY-16 $881 $991 $1,162 $1,353 $1,570 $1,858 FY-11 FY-12 FY-13 FY-14 FY-15 FY-16 8.6% 8.8% 9.4% 9.9% 13.1% CY2010 CY2011 CY2012 CY2013 CY2014 CY2015 11.1 %
Highly Fragmented Market with Significant Consolidation Opportunity 5 Acquisition Strategy Recent GMS Acquisitions Expansion into metropolitan Chicago area’s residential market Strong cultural fit Target Date Rationale February 2016 January 2016 Strategic entrance into Michigan and Northwestern Ohio Significant scale; excellent market share in Western Michigan High-quality senior management team Marquee expansion into New England Strong presence in both commercial and residential markets Strong brand name November 2015 Bolsters J&B footprint with location servicing the Coachella Valley Major logistical savings; allows existing Perris, CA location to focus on core market Leverages existing J&B salesforce for incremental growth opportunities Key logistical play for GTS Interior Supply platform in South-central Washington Excellent growth available from product line expansion (Acoustical Ceilings, Steel Studs & Track) September 2015 April 2016 February 2016 Strategic entrance into Chicago area commercial market Highly respected management team and excellent brand name Excellent cultural fit Expansion into Wisconsin and Northern Illinois Strong regional presence with good market share Strong senior management team November 2015 Tri-Cities Drywall & Supply Industry Structure: Large, highly fragmented industry comprised of ~400 competitors Similar business operations enable efficient integration Limited number of scaled players Acquisition Strategy: Criteria: leading capabilities in targeted new markets / increase existing network density / enhance strategic capabilities Fit GMS culture and platform Deliver scale benefits Attractive purchase price multiples Dedicated M&A team Pipeline: ~73% of the market, or ~$8bn in sales, comprised of smaller competitors representing significant opportunity Maintain active dialogue with many operators at any given time Given our employee-centric culture and track record in the industry, we are the acquirer of choice, positioning us to continue to drive growth through acquisitions
Record Fiscal Q4 2016 and FY 2016 Sales 6 Net Sales ($ mm) Fiscal Q4 2016 Net Sales (1) +30.3% YOY (5) Net Sales ($ mm) FY 2016 Net Sales (1) +18.3% YOY GMS continues to outpace construction end market expansion (5) +16.0% Base Business YOY +7.6% Base Business YOY Completed three acquisitions in Fiscal Q4 2016 and seven in FY 2016 Net sales do not reflect net sales attributable to acquired entities for any period prior to their respective dates of acquisition. When calculating our “base business” results, we exclude any branches that were acquired in the current fiscal year, prior fiscal year and three months prior to the start of the prior fiscal year. $1,570.1 $404.5 $527.2 Fiscal Q4 2016 Performance FY 2016 Performance ($ in millions) Fiscal Q4 YOY Base FY15 FY16 Growth Business (2) Wallboard Volume (MSF) 600 816 36.0% 18.9% Wallboard Price ($/'000 Sq. Ft.) 315 $ 305 $ (3.2%) Net Sales Wallboard 189.0 $ 248.8 $ 31.6% 16.7% Ceilings 69.4 78.2 12.6% 6.4% Steel Framing 58.5 77.8 33.0% 16.9% Other Products 87.6 122.4 39.8% 22.4% Total Net Sales 404.5 $ 527.2 $ 30.3% 16.0% ($ in millions) Fiscal Q4 YTD YOY Base FY15 FY16 Growth Business (2) Wallboard Volume (MSF) 2,328 2,843 22.1% 9.9% Wallboard Price ($/'000 Sq. Ft.) 309 $ 306 $ (0.7%) Net Sales Wallboard 718.1 $ 871.0 $ 21.3% 9.7% Ceilings 278.7 297.1 6.6% 3.1% Steel Framing 243.2 281.3 15.7% 3.2% Other Products 330.1 408.8 23.9% 10.5% Total Net Sales 1,570.1 1,858.2 18.3% 7.6%
Continued Margin Expansion in Fiscal Q4 2016 and FY 2016 7 Gross Profit ($ mm) Fiscal Q4 2016 Adjusted Gross Profit & Margin (1) (5) Adj. EBITDA ($ mm) Fiscal Q4 2016 Adjusted EBITDA (2) Gross Profit ($ mm) FY 2016 Adjusted Gross Profit & Margin (1) Tailored investments in yard support center, IT and branch talent to support expanding activity are paying off $29.8 (5) Adj. EBITDA ($ mm) FY 2016 Adjusted EBITDA (2) $113.9 Excludes cost of sales impact of purchase accounting adjustments. See page 15 for GAAP metric. Fiscal Q4 2015, FY 2015, Fiscal Q4 2016 and FY 2016 Adj. EBITDA includes approximately $1.0 million, $8.1 million, $0.1 million, and $12.1 million, respectively, from entities acquired in FY 2015 and FY 2016, respectively, for the period prior to their respective dates of acquisition. However, Adj. EBITDA margin excludes the impact of the entities acquired for the period prior to their respective dates of acquisition. For a reconciliation of Adj. EBITDA to Net Income (loss), the most directly comparable GAAP metric, see Appendix. $43.7 +32.0% YOY Margin(2): 7.1% 8.3% Margin(2): 6.7% 7.4%
Attractive Capital Structure Pro forma leverage of ~3.2x Net Debt / LTM Adj. EBITDA as of 4/30/16, after use of net proceeds from IPO together with cash on hand to pay off $160 million Second Lien Term Loan Continued improvement in credit metrics from 6.0x Net Debt / LTM Adj. EBITDA as of 4/30/14 and 4.9x as of 4/30/15 There remains a significant degree of liquidity in the business, with $19 million of cash on hand and an additional $187 million undrawn on the ABL facility as of 4/30/16 Commentary Leverage Summary Net Debt / Adjusted EBITDA Note: Fiscal year end April 30. 8 ($ mm) 4/30/14 4/30/15 4/30/16 4/30/16 FYE FYE FYE PF Cash $33 $12 $19 $16 US Asset-Based Revolver - 17 102 102 First Lien Term Loan 390 386 382 382 Second Lien Term Loan 160 160 160 - Capital Lease and Other 2 10 14 14 Total Debt $552 $573 $658 $498 LTM PF Adj. EBITDA $87 $114 $150 $150 Total Debt / LTM Adj. EBITDA 6.3x 5.0x 4.4x 3.3x Net Debt / LTM Adj. EBITDA 6.0x 4.9x 4.3x 3.2x 6.0x 4.9x 4.3x 3.2x 4/30/14 4/30/15 4/30/16 4/30/16 PF
Appendix
Quarterly Financials Summary Quarterly Financials Note: Fiscal year end April 30. 10 ($ in millions) 1Q15 2Q15 3Q15 4Q15 FY15 1Q16 2Q16 3Q16 4Q16 FY16 (Unaudited) Wallboard Volume (MSF) 578 613 537 600 2,328 681 700 646 816 2,843 Wallboard Price ($ / '000 Sq. Ft.) 307 $ 305 $ 307 $ 315 $ 309 $ 310 $ 306 $ 305 $ 305 $ 306 $ Wallboard 177 $ 187 $ 165 $ 189 $ 718 $ 211 $ 214 $ 197 $ 249 $ 871 $ Ceilings 72 74 63 69 279 79 75 65 78 297 Steel framing 64 65 56 58 243 67 70 66 78 281 Other products 82 87 74 88 330 95 99 92 122 409 Net sales 394 413 358 404 1,570 452 458 420 527 1,858 Cost of sales (exclusive of depreciation and amortization shown separately below) 280 287 246 278 1,091 312 314 286 353 1,265 Gross profit 115 126 112 126 479 141 144 134 174 593 Operating expenses: Selling, general and administrative expenses 96 99 98 103 396 110 114 112 133 470 Depreciation and amortization 17 16 16 16 64 16 15 16 17 64 Total operating expenses 113 115 113 119 460 126 130 128 150 534 Operating income (loss) 2 11 (1) 7 19 15 14 6 24 59 Other (expense) income: Interest expense (9) (9) (9) (9) (36) (9) (9) (9) (9) (37) Change in fair value of financial instruments - - (2) - (2) - - - (0) (0) Other income, net 1 0 0 0 2 1 0 1 2 4 Total other (expense), net (9) (9) (11) (8) (37) (9) (9) (9) (7) (34) Income (loss) from continuing operations, before tax (7) 2 (12) (2) (18) 6 5 (3) 17 25 Income tax expense (benefit) (1) (0) (1) (4) (7) 3 3 (1) 8 13 Net income (loss) (6) 3 (11) 2 (12) 3 3 (2) 9 13 Weighted average shares outstanding: Basic 32,342 32,413 32,499 32,551 32,450 32,677 32,738 32,891 32,893 32,799 Diluted 32,342 32,413 32,499 32,684 32,450 32,831 32,898 32,891 33,155 33,125 Net income (loss) per share: Basic (0.17) $ 0.08 $ (0.34) $ 0.07 $ (0.36) $ 0.09 $ 0.09 $ (0.07) $ 0.27 $ 0.38 $ Diluted (0.17) $ 0.08 $ (0.34) $ 0.07 $ (0.36) $ 0.09 $ 0.09 $ (0.07) $ 0.27 $ 0.38 $
Quarterly Sales Note: Fiscal year end April 30. When calculating our “base business” results, we exclude any branches that were acquired in the current fiscal year, prior fiscal year and three months prior to the start of the prior fiscal year. Quarterly business days for FY17 are 63, 65, 63 and 63 for 1Q17, 2Q17, 3Q17 and 4Q17, respectively. Includes greenfields, which we consider extensions of “base business.” 11 ($ in millions) 1Q15 2Q15 3Q15 4Q15 FY15 1Q16 2Q16 3Q16 4Q16 FY16 (Unaudited) Base Business (1) 394 $ 406 $ 347 $ 378 $ 1,526 $ 415 $ 420 $ 369 $ 439 $ 1,642 $ Acquisitions 7 11 26 44 38 38 52 88 216 Total Net Sales 394 $ 413 $ 358 $ 404 $ 1,570 $ 452 $ 458 $ 420 $ 527 $ 1,858 $ Business Days (2) 64 65 61 64 254 64 64 61 65 254 Net Sales by Business Day 6.2 $ 6.4 $ 5.9 $ 6.3 $ 6.2 $ 7.1 $ 7.2 $ 6.9 $ 8.1 $ 7.3 $ Base Business Branches (3) 141 143 143 143 143 143 145 146 148 148 Acquired Branches 2 5 6 13 13 13 14 32 38 38 Total Branches 143 148 149 156 156 156 159 178 186 186
Quarterly Net Income to Adjusted EBITDA GAAP Adjusted EBITDA Reconciliation Commentary Represents non-cash compensation expenses related to stock appreciation rights agreements Represents non-cash compensation expense related to changes in the redemption values of noncontrolling interests Represents non-cash equity-based compensation expense related to the issuance of stock options Represents non-recurring expenses related specifically to the AEA acquisition of GMS Represents severance and other costs for discontinued operations and branch closures One-time costs related to the anticipated offering and acquisitions (other than the AEA acquisition) paid to third party advisors Represents management fees paid to AEA, which were discontinued after the IPO Non-cash cost of sales impact of purchase accounting adjustments to increase inventory to its estimated fair value, primarily related to the AEA acquisition Mark to market adjustments for certain financial instruments Full year (i.e. predecessor) pro forma impact of acquisitions made during FY 2015 and FY 2016 12 ( $ in 000s) 1Q15 2Q15 3Q15 4Q15 FY15 1Q16 2Q16 3Q16 4Q16 FY16 (Unaudited) Net Income (Loss) (5,548) $ 2,728 $ (11,013) $ 2,136 $ (11,697) $ 3,011 $ 2,825 $ (2,212) $ 8,940 $ 12,564 $ Add: Income Tax Expense (1,239) (266) (1,458) (3,663) (6,626) 2,855 2,623 (819) 7,925 12,584 Less: Discontinued Operations, net of tax - - - - - - - - - - Less: Interest Income (305) (244) (238) (223) (1,010) (230) (208) (247) (243) (928) Add: Interest Expense 9,137 9,226 9,162 8,871 36,396 9,257 9,260 9,473 9,428 37,418 Add: Depreciation Expense 9,284 8,097 7,628 7,199 32,208 7,273 6,465 6,469 6,460 26,667 Add: Amortization Expense 7,560 7,714 7,885 8,798 31,957 8,792 8,797 9,540 10,419 37,548 EBITDA 18,889 $ 27,255 $ 11,966 $ 23,118 $ 81,228 $ 30,958 $ 29,762 $ 22,204 $ 42,929 $ 125,853 $ Adjustments Stock appreciation rights expense (benefit) (A) 451 663 391 763 2,268 594 692 337 365 1,988 Redeemable noncontrolling interests (B) 455 452 249 703 1,859 554 451 167 (292) 880 Equity-based compensation (C) 1,864 1,586 1,659 1,346 6,455 498 863 728 610 2,699 AEA transaction related costs (D) 492 345 - - 837 - - - - - Severance costs and discontinued operations (E) - 163 100 150 413 557 824 52 (1,054) 379 Transaction costs (acquisition and other) (F) - 119 157 1,615 1,891 415 1,340 1,057 939 3,751 Loss (gain) on disposal of assets 450 77 312 250 1,089 (25) 305 (205) (720) (645) AEA management fee (G) 562 563 562 563 2,250 562 563 562 563 2,250 Effects of fair value adjustments to inventory (H) 4,486 - 260 266 5,012 - - 786 223 1,009 Interest rate swap / cap mark-to-market (I) - - 2,494 - 2,494 - - - 19 19 Contributions from acquisitions (J) 2,636 3,023 1,400 1,005 8,064 4,896 4,991 2,073 132 12,093 Total Add-Backs 11,396 $ 6,991 $ 7,584 $ 6,661 $ 32,632 $ 8,051 $ 10,029 $ 5,557 $ 785 $ 24,423 $ Adjusted EBITDA 30,285 $ 34,246 $ 19,550 $ 29,779 $ 113,860 $ 39,009 $ 39,791 $ 27,761 $ 43,714 $ 150,276 $
Quarterly Cash Flows 13 ($ in millions) (Unaudited) 1Q15 2Q15 3Q15 4Q15 FY15 1Q16 2Q16 3Q16 4Q16 FY16 Net income (loss) $ (5.5) $ 2.7 $ (11.0) $ 2.1 $ (11.7) $ 3.0 $ 2.8 $ (2.2) $ 8.9 $ 12.6 Non-cash changes 11.1 17.7 26.2 24.5 79.6 (2.6) 17.2 12.2 35.4 62.2 Changes in primary working capital components: Trade accounts and notes receivable (24.2) (10.8) 26.8 (3.4) (11.6) (21.8) (2.1) 25.8 (29.2) (27.3) Inventories (1.6) (5.1) (5.5) 7.6 (4.6) 0.4 (0.6) (0.0) (0.4) (0.7) Accounts payable 10.3 (3.0) (26.9) 16.0 (3.7) 2.7 (1.2) (15.6) 15.2 1.1 Cash provided by (used in) operating activities (9.9) 1.5 9.6 46.8 48.0 (18.4) 16.1 20.2 29.8 47.7 Purchases of property and equipment (3.7) (5.6) (1.7) (2.9) (13.9) (1.5) (1.2) (1.3) (3.7) (7.7) Proceeds from sale of assets 0.4 1.0 1.2 1.2 3.8 0.4 5.7 0.7 3.1 9.8 Purchase of financial instruments - (4.6) - - (4.6) - - - - - Acquisitions of businesses, net of cash acquired - (13.9) (4.7) (48.1) (66.7) - (0.9) (82.9) (29.9) (113.6) Cash (used in) provided by investing activities (3.3) (23.2) (5.1) (49.9) (81.5) (1.0) 3.6 (83.5) (30.5) (111.4) Cash provided by (used in) financing activities (2.1) 11.6 (4.2) 7.8 13.1 20.3 (23.5) 61.3 12.4 70.5 Increase (decrease) in cash and cash equivalents (15.3) (10.1) 0.3 4.7 (20.4) 0.9 (3.8) (2.0) 11.7 6.8 Balance, beginning of period 32.7 17.4 7.3 7.6 32.7 12.3 13.2 9.4 7.4 12.3 Balance, end of period $ 17.4 $ 7.3 $ 7.6 $ 12.3 $ 12.3 $ 13.2 $ 9.4 $ 7.4 $ 19.1 $ 19.1 Supplemental cash flow disclosures: Cash paid for income taxes $ 0.5 $ 8.4 $ 0.5 $ 6.7 $ 16.1 $ 4.5 $ 9.7 $ 8.0 $ 3.9 $ 26.1 Cash paid for interest $ 5.3 $ 10.0 $ 8.3 $ 8.1 $ 31.7 $ 7.9 $ 8.6 $ 8.3 $ 9.8 $ 34.6 Historical
EBITDA Adjustments Table 14 Excludes Contributions from Acquisitions (1) (Unaudited) ($ in millions) 1Q15 2Q15 3Q15 4Q15 FY2015 1Q16 2Q16 3Q16 4Q16 FY2016 Gross Profit - Reported 114.9 $ 125.8 $ 112.0 $ 126.2 $ 479.0 $ 140.9 $ 143.9 $ 134.2 $ 174.2 $ 593.2 $ Adjustments Inventory Fair Value 4.5 - 0.3 0.3 5.0 - - 0.8 0.2 1.0 Gross Profit - Adjusted 119.4 $ 125.8 $ 112.3 $ 126.5 $ 484.0 $ 140.9 $ 143.9 $ 134.9 $ 174.4 $ 594.1 $ SG&A - Reported 96.3 $ 98.8 $ 97.8 $ 103.3 $ 396.2 $ 110.2 $ 114.4 $ 112.2 $ 133.2 $ 470.0 $ Adjustments Stock Appreciation Rights Expense (0.5) (0.7) (0.4) (0.8) (2.3) (0.6) (0.7) (0.3) (0.4) (2.0) Redeemable Noncontrolling Interests (0.5) (0.5) (0.2) (0.7) (1.9) (0.6) (0.5) (0.2) 0.3 (0.9) Equity-Based Compensation (1.9) (1.6) (1.7) (1.3) (6.5) (0.5) (0.9) (0.7) (0.6) (2.7) Acquisition Related Costs (0.5) (0.3) - - (0.8) - - - - - Severance & Disc. Ops - (0.2) (0.1) (0.2) (0.4) (0.6) (0.8) (0.1) (0.1) (1.6) Transaction Costs - (0.1) (0.2) (1.6) (1.9) (0.4) (1.3) (1.1) (0.9) (3.8) Gain / Loss on Disposal of Assets (0.5) (0.1) (0.3) (0.3) (1.1) 0.0 (0.3) 0.2 0.7 0.6 AEA Management Fee (0.6) (0.6) (0.6) (0.6) (2.3) (0.6) (0.6) (0.6) (0.6) (2.2) SG&A - Adjusted 92.0 $ 94.8 $ 94.3 $ 97.9 $ 379.1 $ 107.1 $ 109.3 $ 109.5 $ 131.6 $ 457.6 $ EBITDA Adjustments Stock Appreciation Rights Expense 0.5 $ 0.7 $ 0.4 $ 0.8 $ 2.3 $ 0.6 $ 0.7 $ 0.3 $ 0.4 $ 2.0 $ Redeemable Noncontrolling Interests 0.5 0.5 0.2 0.7 1.9 0.6 0.5 0.2 (0.3) 0.9 Equity-Based Compensation 1.9 1.6 1.7 1.3 6.5 0.5 0.9 0.7 0.6 2.7 Acquisition Related Costs 0.5 0.3 - - 0.8 - - - - - Severance & Disc. Ops - 0.2 0.1 0.2 0.4 0.6 0.8 0.1 (1.1) 0.4 Transaction Costs - 0.1 0.2 1.6 1.9 0.4 1.3 1.1 0.9 3.8 Gain / Loss on Disposal of Assets 0.5 0.1 0.3 0.3 1.1 (0.0) 0.3 (0.2) (0.7) (0.6) AEA Management Fee 0.6 0.6 0.6 0.6 2.3 0.6 0.6 0.6 0.6 2.2 Inventory Fair Value 4.5 - 0.3 0.3 5.0 - - 0.8 0.2 1.0 Interest Rate Swap - - 2.5 - 2.5 - - - 0.0 0.0 Total Add-backs 8.8 $ 4.0 $ 6.2 $ 5.7 $ 24.6 $ 3.2 $ 5.0 $ 3.5 $ 0.7 $ 12.3 $
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