EPS Forecast
Revenue Forecast
Exhibit 99.1
FOR IMMEDIATE RELEASE
GMS REPORTS THIRD QUARTER FISCAL 2020 RESULTS
Net Sales of $761.4 million up 5.2%; Organic Net Sales up 3.8%
Reported Net Income of $10.9 Million, or $0.25 per Diluted Share, up 87.1%
Adjusted Net Income of $22.2 Million, or $0.52 per Diluted Share, up 28.2%
Adjusted EBITDA of $62.7 million, or 8.2% of net sales, up 5.0%
Tucker, Georgia, March 5, 2020. GMS Inc. (NYSE:GMS), a leading North American specialty distributor of interior building products, today reported financial results for the third quarter of fiscal 2020 ended January 31, 2020.
Third Quarter Fiscal 2020 Highlights
| · | Net sales of $761.4 million increased 5.2% from $723.9 million in the third quarter of the prior fiscal year. Organic net sales increased 3.8% year over year. |
| · | Reported net income of $10.9 million, or $0.25 per diluted share, compared to $5.8 million, or $0.14 per diluted share, in the third quarter of the prior fiscal year. |
| · | Adjusted net income of $22.2 million, or $0.52 per diluted share, compared to $17.3 million, or $0.41 per diluted share, in the third quarter of the prior fiscal year. |
| · | Adjusted EBITDA of $62.7 million, or 8.2% of net sales, compared to Adjusted EBITDA of $59.7 million, or 8.2% of net sales, in the third quarter of the prior fiscal year. |
| · | The company completed one acquisition and two greenfield location openings during the third quarter of fiscal 2020. |
| · | Net leverage was reduced to 3.3 times as of the end of the third quarter of fiscal 2020 from 3.5 times as of the end of the second quarter of fiscal 2020. |
| · | Cash provided by operating activities and free cash flow for the third quarter of fiscal 2020 totaled $65.4 million and $59.2 million, respectively, representing increases of 9.5% and 6.6%, respectively, from the third quarter of fiscal 2019. |
| · | Cash provided by operating activities and free cash flow for the first nine months of fiscal 2020 totaled $135.4 million and $114.5 million, respectively, representing increases of 28.4% and 24.4%, respectively, from the first nine months of fiscal 2019. |
“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 the growth opportunities in our industry,” said John C. Turner, Jr., President and Chief Executive Officer. “We generated robust volume growth across all product groups, expanded gross margin and delivered higher net income and Adjusted EBITDA. We were pleased to complete another acquisition and additional greenfield openings during the quarter, as we continue to pursue prudent geographic and market share expansion. At the same time, we continued to utilize our strong cash from operations and free cash flow to further reduce debt. Conditions in our construction end markets presently remain favorable in the United States, and we are encouraged by signs of stabilization in Canada. As we look forward, we remain optimistic in our market position and ability to create long-term value for our shareholders.”
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Third Quarter Fiscal 2020 Results
Net sales for the third quarter of fiscal 2020 of $761.4 million were up 5.2%, or 3.8% on an organic basis, compared to $723.9 million for the third quarter of the prior fiscal year.
| · | Wallboard sales of $314.4 million increased 5.7% (4.6% on an organic basis) compared to the third quarter of fiscal 2019, driven primarily by higher organic volumes and acquisitions, partially offset by lower pricing/mix. |
| · | Ceilings sales of $112.8 million increased 7.2% (4.7% on an organic basis) compared to the third quarter of fiscal 2019, primarily due to higher organic volumes and acquisitions, as well as higher pricing/mix. |
| · | Steel framing sales of $118.8 million increased 1.2% (flat on an organic basis) compared to the third quarter of fiscal 2019, driven by higher organic volumes and acquisitions, mostly offset by lower pricing/mix. |
| · | Other product sales of $215.4 million increased 5.6% (4.5% on an organic basis) compared to the third quarter of fiscal 2019, due to higher organic growth and acquisitions. |
Gross profit of $253.5 million increased 8.2% from $234.2 million in the third quarter of fiscal 2019. Gross margin of 33.3% increased 90 basis points from 32.4% a year ago primarily due to favorable price-cost dynamics resulting from both higher volume purchases in multiple product groups and other purchasing initiatives. Acquisition-related purchasing synergies and mix also contributed to gross margin improvement.
Selling, general and administrative (SG&A) expense as a percentage of net sales was 25.4% for the quarter compared to 24.6% in the third quarter of fiscal 2019. Adjusted SG&A expense as a percentage of net sales was 25.2% compared to 24.2% in the prior year quarter. The 100 basis point increase in Adjusted SG&A as a percentage of sales resulted from the continuation of year-over-year declines in the selling prices of certain of our products and continuing inflationary cost pressures. In addition, the Company continued to make ongoing investments in greenfield locations and business initiatives intended to grow sales, leverage scale and drive profitability.
Net income of $10.9 million, or $0.25 per diluted share, compared to $5.8 million, or $0.14 per diluted share, in the third quarter of fiscal 2019. Adjusted net income of $22.2 million, or $0.52 per diluted share, compared to $17.3 million, or $0.41 per diluted share, in the third quarter of fiscal 2019. Adjusted EBITDA of $62.7 million increased 5.0% year over year and represented an Adjusted EBITDA margin of 8.2%.
Balance Sheet
As of January 31, 2020, the Company had cash of $40.9 million and total debt of $1.07 billion, compared to cash of $36.3 million and total debt of $1.10 billion, as of October 31, 2019.
During the third fiscal quarter, the Company reduced its net debt by $35.7 million and net leverage was 3.3 times as of the end of the quarter compared to 3.5 times as of the end of the second quarter of fiscal 2020.
Platform Expansion Activity
During the third quarter of fiscal 2020, the Company completed the previously announced acquisition of Rigney Building Supplies LTD. in Kingston, Ontario and opened two greenfield locations in Cambridge, Ontario and Austin, Texas. Subsequent to the end of the third quarter, the Company also completed the previously announced acquisition of Trowel Trades Supply, Inc., a single-location distributor based in Colchester, Vermont.
Conference Call and Webcast
GMS will host a conference call and webcast to discuss its results for the third quarter ended January 31, 2020 and other information related to its business at 8:30 a.m. Eastern Time on Thursday, March 5, 2020. Investors who wish to participate in the call should dial 877-407-3982 (domestic) or 201-493-6780 (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 April 5, 2020 and can be accessed at 844-512-2921 (domestic) or 412-317-6671 (international) and entering the pass code 13699024.
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About GMS Inc.
Founded in 1971, GMS operates a network of more than 260 distribution centers across the United States and Canada. GMS’s extensive product offering of wallboard, suspended ceilings systems, or ceilings, and complementary 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, it presents Adjusted net income, free cash flow, Adjusted SG&A, Adjusted EBITDA and Adjusted EBITDA margin, which are not recognized financial measures under GAAP. GMS believes that Adjusted net income, free cash flow, Adjusted SG&A, Adjusted EBITDA and Adjusted EBITDA margin assist investors and analysts in comparing its operating performance across reporting periods on a consistent basis by excluding items that the Company does not believe are indicative of its core operating performance. The Company’s management believes Adjusted net income, Adjusted SG&A, free cash flow, Adjusted EBITDA and Adjusted EBITDA margin are helpful in highlighting trends in its operating results, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which the Company operates and capital investments. In addition, the Company utilizes Adjusted EBITDA in certain calculations under its senior secured asset based revolving credit facility and its senior secured first lien term loan facility.
You are encouraged to evaluate each adjustment and the reasons GMS considers it appropriate for supplemental analysis. In addition, in evaluating Adjusted net income, Adjusted SG&A and Adjusted EBITDA, you should be aware that in the future, the Company may incur expenses similar to the adjustments in the presentation of Adjusted net income, Adjusted SG&A and Adjusted EBITDA. The Company’s presentation of Adjusted net income, Adjusted SG&A, Adjusted SG&A margin, Adjusted EBITDA and Adjusted EBITDA margin should not be construed as an inference that its future results will be unaffected by unusual or non-recurring items. In addition, Adjusted net income, free cash flow, Adjusted SG&A and Adjusted EBITDA may not be comparable to similarly titled measures used by other companies in GMS’s industry or across different industries. Please see the tables at the end of this release for a reconciliation of Adjusted EBITDA, free cash flow, Adjusted SG&A and Adjusted net income to the most directly comparable GAAP financial measures.
When calculating organic net sales growth, the Company excludes from the calculation (i) net sales of acquired businesses until the first anniversary of the acquisition date, and (ii) the impact of foreign currency translation.
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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 the Company’s 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 GMS operates and the economy generally, strategic initiatives and growth potential across the Company’s business and the ability to deliver growth and value creation contained in this press release are forward-looking statements. The Company has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While the Company believes 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 its control, including current public health issues that may affect the Company’s business. Forward-looking statements involve risks and uncertainties, including, but not limited to, those described in the “Risk Factors” section in the Company’s most recent Annual Report on Form 10-K, and in its other periodic reports filed with the SEC. In addition, the statements in this release are made as of March 5, 2020. The Company undertakes 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 the Company’s views as of any date subsequent to March 5, 2020.
Source: GMS Inc.
Contact Information:
Investors:
Leslie H. Kratcoski
ir@gms.com
770-723-3306
Media:
marketing@gms.com
770-723-3378
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GMS Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| January 31, | January 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Net sales | $ | 761,352 | $ | 723,902 | $ | 2,470,457 | $ | 2,335,883 | ||||||||
| Cost of sales (exclusive of depreciation and amortization shown separately below) | 507,879 | 489,676 | 1,658,837 | 1,588,691 | ||||||||||||
| Gross profit | 253,473 | 234,226 | 811,620 | 747,192 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | 193,384 | 178,180 | 588,472 | 548,883 | ||||||||||||
| Depreciation and amortization | 29,422 | 30,220 | 88,215 | 87,329 | ||||||||||||
| Total operating expenses | 222,806 | 208,400 | 676,687 | 636,212 | ||||||||||||
| Operating income | 30,667 | 25,826 | 134,933 | 110,980 | ||||||||||||
| Other (expense) income: | ||||||||||||||||
| Interest expense | (16,474 | ) | (19,526 | ) | (52,310 | ) | (54,896 | ) | ||||||||
| Change in fair value of financial instruments | — | — | — | (6,395 | ) | |||||||||||
| Write-off of debt discount and deferred financing fees | — | — | (707 | ) | — | |||||||||||
| Other (expense) income, net | (498 | ) | 957 | 1,254 | 2,025 | |||||||||||
| Total other expense, net | (16,972 | ) | (18,569 | ) | (51,763 | ) | (59,266 | ) | ||||||||
| Income before taxes | 13,695 | 7,257 | 83,170 | 51,714 | ||||||||||||
| Provision for income taxes | 2,816 | 1,442 | 18,333 | 12,337 | ||||||||||||
| Net income | $ | 10,879 | $ | 5,815 | $ | 64,837 | $ | 39,377 | ||||||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic | 42,223 | 40,912 | 41,663 | 41,053 | ||||||||||||
| Diluted | 42,949 | 41,371 | 42,401 | 41,789 | ||||||||||||
| Net income per common share(1): | ||||||||||||||||
| Basic | $ | 0.26 | $ | 0.14 | $ | 1.55 | $ | 0.94 | ||||||||
| Diluted | $ | 0.25 | $ | 0.14 | $ | 1.52 | $ | 0.92 | ||||||||
(1) The following table sets forth the computation of basic and diluted earnings per share of common stock for periods presented:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| January 31, | January 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| (in thousands, except per share data) | ||||||||||||||||
| Net income | $ | 10,879 | $ | 5,815 | $ | 64,837 | $ | 39,377 | ||||||||
| Less: Net income allocated to participating securities | — | 156 | 273 | 940 | ||||||||||||
| Net income attributable to common stockholders | $ | 10,879 | $ | 5,659 | $ | 64,564 | $ | 38,437 | ||||||||
| Basic earnings per common share: | ||||||||||||||||
| Basic weighted average common shares outstanding | 42,223 | 40,912 | 41,663 | 41,053 | ||||||||||||
| Basic earnings per common share | $ | 0.26 | $ | 0.14 | $ | 1.55 | $ | 0.94 | ||||||||
| Diluted earnings per common share: | ||||||||||||||||
| Basic weighted average common shares outstanding | 42,223 | 40,912 | 41,663 | 41,053 | ||||||||||||
| Add: Common Stock Equivalents | 726 | 459 | 738 | 736 | ||||||||||||
| Diluted weighted average common shares outstanding | 42,949 | 41,371 | 42,401 | 41,789 | ||||||||||||
| Diluted earnings per common share | $ | 0.25 | $ | 0.14 | $ | 1.52 | $ | 0.92 | ||||||||
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GMS Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except per share data)
| January 31, | April 30, | |||||||
| 2020 | 2019 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 40,949 | $ | 47,338 | ||||
| Trade accounts and notes receivable, net of allowances of $5,600 and $6,432, respectively | 434,801 | 445,771 | ||||||
| Inventories, net | 296,117 | 290,829 | ||||||
| Prepaid expenses and other current assets | 17,142 | 18,368 | ||||||
| Total current assets | 789,009 | 802,306 | ||||||
| Property and equipment, net of accumulated depreciation of $149,924 and $123,583, respectively | 306,472 | 282,349 | ||||||
| Operating lease right-of-use assets | 118,092 | — | ||||||
| Goodwill | 624,070 | 617,327 | ||||||
| Intangible assets, net | 386,346 | 429,313 | ||||||
| Deferred income taxes | 8,014 | 4,676 | ||||||
| Other assets | 13,274 | 13,583 | ||||||
| Total assets | $ | 2,245,277 | $ | 2,149,554 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 143,689 | $ | 173,751 | ||||
| Accrued compensation and employee benefits | 51,256 | 62,858 | ||||||
| Other accrued expenses and current liabilities | 73,759 | 79,848 | ||||||
| Current portion of long-term debt | 48,688 | 42,118 | ||||||
| Current portion of operating lease liabilities | 33,131 | — | ||||||
| Total current liabilities | 350,523 | 358,575 | ||||||
| Non-current liabilities: | ||||||||
| Long-term debt, less current portion | 1,020,306 | 1,099,077 | ||||||
| Long-term operating lease liabilities | 90,336 | — | ||||||
| Deferred income taxes, net | 12,977 | 10,226 | ||||||
| Other liabilities | 63,809 | 52,500 | ||||||
| Total liabilities | 1,537,951 | 1,520,378 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders' equity: | ||||||||
| Common stock, par value $0.01 per share, 500,000 shares authorized; 42,310 and 40,375 shares issued and outstanding as of January 31, 2020 and April 30, 2019, respectively | 423 | 404 | ||||||
| Preferred stock, par value $0.01 per share, 50,000 shares authorized; 0 shares issued and outstanding as of January 31, 2020 and April 30, 2019 | — | — | ||||||
| Exchangeable shares | — | 29,639 | ||||||
| Additional paid-in capital | 524,313 | 480,113 | ||||||
| Retained earnings | 210,431 | 145,594 | ||||||
| Accumulated other comprehensive loss | (27,841 | ) | (26,574 | ) | ||||
| Total stockholders' equity | 707,326 | 629,176 | ||||||
| Total liabilities and stockholders' equity | $ | 2,245,277 | $ | 2,149,554 | ||||
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GMS Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
| Nine Months Ended | ||||||||
| January 31, | ||||||||
| 2020 | 2019 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 64,837 | $ | 39,377 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 88,215 | 87,329 | ||||||
| Write-off and amortization of debt discount and debt issuance costs | 2,964 | 2,505 | ||||||
| Provision for losses on accounts and notes receivable | 104 | 240 | ||||||
| Provision for obsolescence of inventory | 221 | 416 | ||||||
| Effects of fair value adjustments to inventory | 461 | 4,129 | ||||||
| Increase in fair value of contingent consideration | 1,601 | 535 | ||||||
| Equity-based compensation | 6,345 | 4,706 | ||||||
| Gain on sale and disposal of assets | (872 | ) | (412 | ) | ||||
| Change in fair value of financial instruments | — | 6,395 | ||||||
| Deferred income taxes | 174 | (18,470 | ) | |||||
| Changes in assets and liabilities net of effects of acquisitions: | ||||||||
| Trade accounts and notes receivable | 16,561 | 23,243 | ||||||
| Inventories | 317 | (11,576 | ) | |||||
| Prepaid expenses and other assets | 4,210 | (968 | ) | |||||
| Accounts payable | (30,420 | ) | (17,856 | ) | ||||
| Accrued compensation and employee benefits | (11,729 | ) | (3,824 | ) | ||||
| Derivative liability | — | (10,778 | ) | |||||
| Other accrued expenses and liabilities | (7,622 | ) | 446 | |||||
| Cash provided by operating activities | 135,367 | 105,437 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | (20,884 | ) | (13,385 | ) | ||||
| Proceeds from sale of assets | 1,299 | 910 | ||||||
| Acquisition of businesses, net of cash acquired | (20,803 | ) | (579,731 | ) | ||||
| Cash used in investing activities | (40,388 | ) | (592,206 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Repayments on the revolving credit facility | (794,623 | ) | (748,999 | ) | ||||
| Borrowings from the revolving credit facility | 760,444 | 886,896 | ||||||
| Payments of principal on long-term debt | (57,476 | ) | (7,476 | ) | ||||
| Payments of principal on finance lease obligations | (17,971 | ) | (13,923 | ) | ||||
| Borrowings from term loan amendment | — | 996,840 | ||||||
| Repayments from term loan amendment | — | (571,840 | ) | |||||
| Repurchases of common stock | — | (11,514 | ) | |||||
| Debt issuance costs | (1,286 | ) | (7,933 | ) | ||||
| Proceeds from exercises of stock options | 8,280 | 1,280 | ||||||
| Other financing activities | 1,261 | 1,355 | ||||||
| Cash (used in) provided by financing activities | (101,371 | ) | 524,686 | |||||
| Effect of exchange rates on cash and cash equivalents | 3 | (7 | ) | |||||
| (Decrease) increase in cash and cash equivalents | (6,389 | ) | 37,910 | |||||
| Cash and cash equivalents, beginning of period | 47,338 | 36,437 | ||||||
| Cash and cash equivalents, end of period | $ | 40,949 | $ | 74,347 | ||||
| Supplemental cash flow disclosures: | ||||||||
| Cash paid for income taxes | $ | 30,199 | $ | 16,121 | ||||
| Cash paid for interest | 49,224 | 45,724 | ||||||
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GMS Inc.
Net Sales by Product Group (Unaudited)
(dollars in thousands)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||
| January 31, | % of | January 31, | % of | January 31, | % of | January 31, | % of | |||||||||||||||||||||||||
| 2020 | Total | 2019 | Total | 2020 | Total | 2019 | Total | |||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||
| Wallboard | $ | 314,391 | 41.3 | % | $ | 297,358 | 41.1 | % | $ | 1,006,604 | 40.7 | % | $ | 949,781 | 40.7 | % | ||||||||||||||||
| Ceilings | 112,768 | 14.8 | % | 105,219 | 14.5 | % | 364,685 | 14.8 | % | 339,450 | 14.5 | % | ||||||||||||||||||||
| Steel framing | 118,823 | 15.6 | % | 117,432 | 16.2 | % | 386,811 | 15.7 | % | 382,304 | 16.4 | % | ||||||||||||||||||||
| Other products | 215,370 | 28.3 | % | 203,893 | 28.2 | % | 712,357 | 28.8 | % | 664,348 | 28.4 | % | ||||||||||||||||||||
| Total net sales | $ | 761,352 | $ | 723,902 | $ | 2,470,457 | $ | 2,335,883 | ||||||||||||||||||||||||
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GMS Inc.
Reconciliation of Net Income to Adjusted EBITDA (Unaudited)
(in thousands)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| January 31, | January 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Net income | $ | 10,879 | $ | 5,815 | $ | 64,837 | $ | 39,377 | ||||||||
| Interest expense | 16,474 | 19,526 | 52,310 | 54,896 | ||||||||||||
| Write-off of debt discount and deferred financing fees | — | — | 707 | — | ||||||||||||
| Interest income | (8 | ) | (10 | ) | (26 | ) | (43 | ) | ||||||||
| Provision for income taxes | 2,816 | 1,442 | 18,333 | 12,337 | ||||||||||||
| Depreciation expense | 12,930 | 11,919 | 37,944 | 34,067 | ||||||||||||
| Amortization expense | 16,492 | 18,301 | 50,271 | 53,262 | ||||||||||||
| EBITDA | $ | 59,583 | $ | 56,993 | $ | 224,376 | $ | 193,896 | ||||||||
| Stock appreciation expense(a) | (347 | ) | 442 | 980 | 1,425 | |||||||||||
| Redeemable noncontrolling interests(b) | (318 | ) | (35 | ) | 326 | 778 | ||||||||||
| Equity-based compensation(c) | 1,465 | 1,140 | 5,175 | 2,638 | ||||||||||||
| Severance and other permitted costs(d) | 1,700 | 229 | 3,648 | 5,947 | ||||||||||||
| Transaction costs (acquisitions and other)(e) | 434 | 1,066 | 1,733 | 6,660 | ||||||||||||
| Gain on disposal of assets | (130 | ) | (118 | ) | (872 | ) | (412 | ) | ||||||||
| Effects of fair value adjustments to inventory(f) | 310 | — | 461 | 4,129 | ||||||||||||
| Change in fair value of financial instruments(g) | — | — | — | 6,395 | ||||||||||||
| Secondary public offering costs(h) | — | — | 363 | — | ||||||||||||
| Debt transaction costs(i) | — | — | — | 678 | ||||||||||||
| EBITDA add-backs | 3,114 | 2,724 | 11,814 | 28,238 | ||||||||||||
| Adjusted EBITDA | $ | 62,697 | $ | 59,717 | $ | 236,190 | $ | 222,134 | ||||||||
| Net sales | $ | 761,352 | $ | 723,902 | 2,470,457 | 2,335,883 | ||||||||||
| Adjusted EBITDA margin | 8.2 | % | 8.2 | % | 9.6 | % | 9.5 | % | ||||||||
| (a) | Represents non-cash expense related to stock appreciation rights agreements. |
| (b) | Represents non-cash compensation expense related to changes in the values of noncontrolling interests. |
| (c) | Represents non-cash equity-based compensation expense related to the issuance of share-based awards. |
| (d) | Represents severance expenses and other costs permitted in calculations under the ABL Facility and the First Lien Facility. |
| (e) | Represents costs related to acquisitions paid to third parties. |
| (f) | Represents the non-cash cost of sales impact of purchase accounting adjustments to increase inventory to its estimated fair value. |
| (g) | Represents the mark-to-market adjustments for derivative financial instruments. |
| (h) | Represents costs paid to third-party advisors related to secondary offerings of our common stock. |
| (i) | Represents costs paid to third-party advisors related to debt refinancing activities. |
9
GMS Inc.
Reconciliation of Cash Provided By Operating Activities to Free Cash Flow (Unaudited)
(in thousands)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| January 31, | January 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Cash provided by operating activities | $ | 65,440 | $ | 59,780 | $ | 135,367 | $ | 105,437 | ||||||||
| Purchases of property and equipment | (6,247 | ) | (4,229 | ) | (20,884 | ) | (13,385 | ) | ||||||||
| Free cash flow(a) | $ | 59,193 | $ | 55,551 | $ | 114,483 | $ | 92,052 | ||||||||
| (a) | Free cash flow is a non-GAAP financial measure that we define as net cash provided by operations less capital expenditures. |
GMS Inc.
Reconciliation of Selling, General and Administrative Expense to Adjusted SG&A (Unaudited)
(in thousands)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| January 31, | January 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Selling, general and administrative expense | $ | 193,384 | $ | 178,180 | $ | 588,472 | $ | 548,883 | ||||||||
| Adjustments | ||||||||||||||||
| Stock appreciation expense(a) | 347 | (442 | ) | (980 | ) | (1,425 | ) | |||||||||
| Redeemable noncontrolling interests(b) | 318 | 35 | (326 | ) | (778 | ) | ||||||||||
| Equity-based compensation(c) | (1,465 | ) | (1,140 | ) | (5,175 | ) | (2,638 | ) | ||||||||
| Severance and other permitted costs(d) | (462 | ) | (229 | ) | (2,410 | ) | (5,947 | ) | ||||||||
| Transaction costs (acquisitions and other)(e) | (434 | ) | (1,066 | ) | (1,733 | ) | (6,660 | ) | ||||||||
| Gain on disposal of assets | 130 | 118 | 872 | 412 | ||||||||||||
| Secondary public offering costs(f) | — | — | (363 | ) | — | |||||||||||
| Debt transaction costs(g) | — | — | — | (678 | ) | |||||||||||
| Adjusted SG&A | $ | 191,818 | $ | 175,456 | $ | 578,357 | $ | 531,169 | ||||||||
| Net sales | $ | 761,352 | $ | 723,902 | $ | 2,470,457 | $ | 2,335,883 | ||||||||
| Adjusted SG&A margin | 25.2 | % | 24.2 | % | 23.4 | % | 22.7 | % | ||||||||
| (a) | Represents non-cash expense related to stock appreciation rights agreements. |
| (b) | Represents non-cash compensation expense related to changes in the values of noncontrolling interests. |
| (c) | Represents non-cash equity-based compensation expense related to the issuance of share-based awards. |
| (d) | Represents severance expenses and other costs permitted in calculations under the ABL Facility and the First Lien Facility. |
| (e) | Represents costs related to acquisitions paid to third parties. |
| (f) | Represents costs paid to third-party advisors related to secondary offerings of our common stock. |
| (g) | Represents costs paid to third-party advisors related to debt refinancing activities. |
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GMS Inc.
Reconciliation of Income Before Taxes to Adjusted Net Income (Unaudited)
(in thousands, except per share data)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| January 31, | January 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Income before taxes | $ | 13,695 | $ | 7,257 | $ | 83,170 | $ | 51,714 | ||||||||
| EBITDA add-backs | 3,114 | 2,724 | 11,814 | 28,238 | ||||||||||||
| Write-off of discount and deferred financing fees | — | — | 707 | — | ||||||||||||
| Purchase accounting depreciation and amortization (1) | 11,869 | 12,395 | 36,530 | 37,250 | ||||||||||||
| Adjusted pre-tax income | 28,678 | 22,376 | 132,221 | 117,202 | ||||||||||||
| Adjusted income tax expense | 6,453 | 5,035 | 29,750 | 26,370 | ||||||||||||
| Adjusted net income | $ | 22,225 | $ | 17,341 | $ | 102,471 | $ | 90,832 | ||||||||
| Effective tax rate (2) | 22.5 | % | 22.5 | % | 22.5 | % | 22.5 | % | ||||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 42,223 | 40,912 | 41,663 | 41,053 | ||||||||||||
| Diluted (3) | 42,949 | 42,500 | 42,577 | 42,918 | ||||||||||||
| Adjusted net income per share: | ||||||||||||||||
| Basic | $ | 0.53 | $ | 0.42 | $ | 2.46 | $ | 2.21 | ||||||||
| Diluted | $ | 0.52 | $ | 0.41 | $ | 2.41 | $ | 2.12 | ||||||||
| (1) | Depreciation and amortization from the increase in value of certain long-term assets associated with the April 1, 2014 acquisition of the predecessor company and the acquisition of Titan. |
| (2) | Normalized cash tax rate determined based on our estimated taxes excluding the impact of purchase accounting and certain other deferred tax amounts. |
| (3) | Diluted shares outstanding for periods prior to June 13, 2019 have been adjusted to include the effect of 1.1 million shares of equity issued in connection with the acquisition of Titan that were exchangeable for the Company’s common stock. On June 13, 2019, the holders exchanged all of the exchangeable shares for 1.1 million shares of the Company’s common stock. |
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