Exhibit 99.1
FOR IMMEDIATE RELEASE
GMS REPORTS THIRD QUARTER FISCAL 2021 RESULTS
Continued Execution Amid Residential Market Strength Delivered Higher Daily Sales and Improved Profitability
Tucker, Georgia, March 4, 2021. GMS Inc. (NYSE: GMS), a leading North American specialty distributor of interior building products, today reported financial results for the third quarter of fiscal 2021 ended January 31, 2021.
Third Quarter Fiscal 2021 Highlights
(Comparisons are to the third quarter of fiscal 2020, except where noted.)
| · | Net sales of $751.2 million decreased 1.3%; organic net sales decreased 1.9%. On a per day basis, net sales increased 0.3% and organic net sales declined 0.3%. |
| · | Net income of $16.1 million, or $0.37 per diluted share, increased 48.2%; adjusted net income of $25.9 million, or $0.60 per diluted share, increased 16.4%. |
| · | Gross margin of 32.4% compared to 33.3%. |
| · | SG&A and Adjusted SG&A as a percentage of sales were 24.6% and 24.2%, representing 80 and 100 basis points of improvement, respectively. |
| · | Adjusted EBITDA of $62.6 million compared to $62.7 million; Adjusted EBITDA margin improved 10 basis points to 8.3% from 8.2%. |
| · | Net debt leverage was 2.9 times as of the end of the third quarter of fiscal 2021. |
| · | Cash provided by operating activities and free cash flow of $44.4 million and $38.4 million, respectively, compared to $65.4 million and $59.2 million, respectively. |
“As a result of our team’s ability to seize opportunities and address challenges in dynamic market conditions, we delivered better than expected sales, higher net income and an improved Adjusted EBITDA margin in the third quarter,” said John C. Turner, Jr., President and Chief Executive Officer. “We continued to realize benefits from our ongoing commitment to our strategic priorities of 1) expanding share in core products, 2) growing our complementary Other products offering, 3) platform expansion, and 4) improved productivity and profitability. During the quarter, we generated higher volume in wallboard, increased sales of complementary products and opened our Waco, Texas greenfield location.
“We are excited to be celebrating GMS’s 50th anniversary in 2021, and I am confident that our focus on our strategic priorities and our team’s continued drive to execute will position us to generate value for our shareholders well into the future,” Mr. Turner concluded.
1
Third Quarter Fiscal 2021 Results
Net sales for the third quarter of fiscal 2021 were $751.2 million, down 1.3%, compared to $761.4 million for the third quarter of the prior fiscal year, as a result of continued COVID-19 related market declines. Organic net sales declined 1.9%. There was one less selling day in the third quarter of fiscal 2021 than the same period a year ago. On a per day basis, net sales were up 0.3% and organic net sales declined 0.3%.
| · | Wallboard sales of $311.1 million decreased 1.0% (down 1.4% on an organic basis) compared to the third quarter of fiscal 2020, due to a modest decline in price and mix, partially offset by slightly higher volume. On a per day basis, wallboard volume increased 2.1% year over year. |
| · | Ceilings sales of $101.9 million decreased 9.6% (down 9.7% on an organic basis) year over year driven by lower volume and mix, partially offset by higher price. |
| · | Steel framing sales of $104.0 million decreased 12.5% (down 12.8% on an organic basis) year over year due principally to a decline in volume and, to a lesser extent, price and mix combined. |
| · | Other product sales of $234.2 million increased 8.7% (up 7.5% on an organic basis) year over year primarily due to the execution of growth initiatives to increase Other products sales, positive contributions from acquisitions and strong pricing in certain product categories. |
Year over year sales declines continued to be more pronounced in ceilings and steel framing, as these product categories are tied primarily to commercial construction which remained challenged during the quarter. Residential activity, on the other hand, continued to strengthen and offset softness in commercial construction to yield the higher wallboard volume and growth in Other products.
Gross profit of $243.3 million decreased 4.0% compared to the third quarter of fiscal 2020. As anticipated, gross margin of 32.4% was largely consistent with levels generated in the first half of fiscal 2021, declining 90 basis points year over year principally due to unfavorable mix and price-cost dynamics for certain product categories.
Selling, general and administrative (“SG&A”) expense as a percentage of net sales was 24.6% for the quarter compared to 25.4% in the third quarter of fiscal 2020. Adjusted SG&A expense as a percentage of net sales of 24.2% improved 100 basis points from 25.2 % in the prior year quarter as a result of continued disciplined cost containment partially offset by deflationary price and unfavorable mix impacts with certain of the Company’s products.
Net income of $16.1 million, or $0.37 per diluted share, compared to $10.9 million, or $0.25 per diluted share, in the third quarter of the prior fiscal year. Adjusted net income of $25.9 million, or $0.60 per diluted share, compared to $22.2 million, or $0.52 per diluted share, in the third quarter of the prior fiscal year. Adjusted EBITDA of $62.6 million compared to $62.7 million in the third quarter of the prior fiscal year. Adjusted EBITDA margin of 8.3% improved 10 basis points from 8.2% a year ago.
Platform Expansion Activity
During the third quarter of fiscal 2021, the Company opened a new greenfield location in Waco, TX. Subsequent to the end of the third quarter, and as previously announced, the Company completed the acquisition of D.L. Building Materials, Inc., providing entrance to the Ottawa-Gatineau market in Canada, and also established four new locations, expanding its presence to two additional markets, Atlantic City, NJ, and Memphis, TN.
Balance Sheet, Liquidity and Cash Flow
As of January 31, 2021, the Company had cash on hand of $150.6 million, total debt of $994.2 million and $407.0 million of available liquidity under its revolving credit facilities. Net debt leverage was 2.9 times as of the end of the quarter, down from 3.0 times at the end of the second quarter of fiscal 2021 and 3.3 times as of the end of the third quarter of fiscal 2020. The Company generated cash provided by operating activities and free cash flow of $44.4 million and $38.4 million, respectively, in the third quarter.
2
Conference Call and Webcast
GMS will host a conference call and webcast to discuss its results for the third quarter of fiscal 2021 ended January 31, 2021 and other information related to its business at 8:30 a.m. Eastern Time on Thursday, March 4, 2021. 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 4, 2021 and can be accessed at 844-512-2921 (domestic) or 412-317-6671 (international) and entering the pass code 13716475.
About GMS Inc.
Celebrating the 50th anniversary of its founding in 1971, GMS operates a network of more than 265 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 as defined in 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.
3
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,” “confident,” “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, actions taken to optimize our operations and align our business consistent with demand, our ability to continue successfully navigating the evolving operating environment, strategic priorities and growth potential across the Company’s business, our efforts in response to COVID-19, and the ability to deliver growth, value creation and long-term success contained in this press release may be considered forward-looking statements. The Company has based 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 4, 2021. 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 4, 2021.
Contact Information:
Investors:
Leslie H. Kratcoski
ir@gms.com
770-723-3306
4
GMS Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| January 31, | January 31, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Net sales | $ | 751,191 | $ | 761,352 | $ | 2,366,620 | $ | 2,470,457 | ||||||||
| Cost of sales (exclusive of depreciation and amortization shown separately below) | 507,867 | 507,879 | 1,597,767 | 1,658,837 | ||||||||||||
| Gross profit | 243,324 | 253,473 | 768,853 | 811,620 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | 184,844 | 193,384 | 556,308 | 588,472 | ||||||||||||
| Depreciation and amortization | 25,562 | 29,422 | 79,904 | 88,215 | ||||||||||||
| Total operating expenses | 210,406 | 222,806 | 636,212 | 676,687 | ||||||||||||
| Operating income | 32,918 | 30,667 | 132,641 | 134,933 | ||||||||||||
| Other (expense) income: | ||||||||||||||||
| Interest expense | (13,454 | ) | (16,474 | ) | (41,060 | ) | (52,310 | ) | ||||||||
| Gain on legal settlement | 1,382 | — | 1,382 | — | ||||||||||||
| Write-off of debt discount and deferred financing fees | — | — | — | (707 | ) | |||||||||||
| Other income (expense), net | 989 | (498 | ) | 2,441 | 1,254 | |||||||||||
| Total other expense, net | (11,083 | ) | (16,972 | ) | (37,237 | ) | (51,763 | ) | ||||||||
| Income before taxes | 21,835 | 13,695 | 95,404 | 83,170 | ||||||||||||
| Provision for income taxes | 5,709 | 2,816 | 23,590 | 18,333 | ||||||||||||
| Net income | $ | 16,126 | $ | 10,879 | $ | 71,814 | $ | 64,837 | ||||||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic | 42,726 | 42,223 | 42,691 | 41,663 | ||||||||||||
| Diluted | 43,361 | 42,949 | 43,184 | 42,401 | ||||||||||||
| Net income per common share(1): | ||||||||||||||||
| Basic | $ | 0.38 | $ | 0.26 | $ | 1.68 | $ | 1.55 | ||||||||
| Diluted | $ | 0.37 | $ | 0.25 | $ | 1.66 | $ | 1.52 | ||||||||
(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, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| (in thousands, except per share data) | ||||||||||||||||
| Net income | $ | 16,126 | $ | 10,879 | $ | 71,814 | $ | 64,837 | ||||||||
| Less: Net income allocated to participating securities | — | — | — | 273 | ||||||||||||
| Net income attributable to common stockholders | $ | 16,126 | $ | 10,879 | $ | 71,814 | $ | 64,564 | ||||||||
| Basic earnings per common share: | ||||||||||||||||
| Basic weighted average common shares outstanding | 42,726 | 42,223 | 42,691 | 41,663 | ||||||||||||
| Basic earnings per common share | $ | 0.38 | $ | 0.26 | $ | 1.68 | $ | 1.55 | ||||||||
| Diluted earnings per common share: | ||||||||||||||||
| Basic weighted average common shares outstanding | 42,726 | 42,223 | 42,691 | 41,663 | ||||||||||||
| Add: Common Stock Equivalents | 635 | 726 | 493 | 738 | ||||||||||||
| Diluted weighted average common shares outstanding | 43,361 | 42,949 | 43,184 | 42,401 | ||||||||||||
| Diluted earnings per common share | $ | 0.37 | $ | 0.25 | $ | 1.66 | $ | 1.52 | ||||||||
5
GMS Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except per share data)
| January 31, | April 30, | |||||||
| 2021 | 2020 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 150,573 | $ | 210,909 | ||||
| Trade accounts and notes receivable, net of allowances of $6,020 and $5,141, respectively | 410,125 | 405,254 | ||||||
| Inventories, net | 327,725 | 299,815 | ||||||
| Prepaid expenses and other current assets | 17,684 | 14,972 | ||||||
| Total current assets | 906,107 | 930,950 | ||||||
| Property and equipment, net of accumulated depreciation of $184,410 and $158,554, respectively | 305,144 | 305,467 | ||||||
| Operating lease right-of-use assets | 119,434 | 115,257 | ||||||
| Goodwill | 562,204 | 553,073 | ||||||
| Intangible assets, net | 333,766 | 361,884 | ||||||
| Deferred income taxes | 13,488 | 8,904 | ||||||
| Other assets | 11,616 | 13,247 | ||||||
| Total assets | $ | 2,251,759 | $ | 2,288,782 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 157,892 | $ | 213,230 | ||||
| Accrued compensation and employee benefits | 55,995 | 67,590 | ||||||
| Other accrued expenses and current liabilities | 81,913 | 63,812 | ||||||
| Current portion of long-term debt | 51,552 | 50,201 | ||||||
| Current portion of operating lease liabilities | 32,847 | 33,040 | ||||||
| Total current liabilities | 380,199 | 427,873 | ||||||
| Non-current liabilities: | ||||||||
| Long-term debt, less current portion | 942,598 | 1,047,279 | ||||||
| Long-term operating lease liabilities | 92,109 | 89,605 | ||||||
| Deferred income taxes, net | 8,965 | 12,018 | ||||||
| Other liabilities | 66,874 | 78,026 | ||||||
| Total liabilities | 1,490,745 | 1,654,801 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders' equity: | ||||||||
| Common stock, par value $0.01 per share, 500,000 shares authorized; 42,854 and 42,554 shares issued and outstanding as of January 31, 2021 and April 30, 2020, respectively | 428 | 426 | ||||||
| Preferred stock, par value $0.01 per share, 50,000 shares authorized; 0 shares issued and outstanding as of January 31, 2021 and April 30, 2020 | — | — | ||||||
| Additional paid-in capital | 539,289 | 529,662 | ||||||
| Retained earnings | 240,789 | 168,975 | ||||||
| Accumulated other comprehensive loss | (19,492 | ) | (65,082 | ) | ||||
| Total stockholders' equity | 761,014 | 633,981 | ||||||
| Total liabilities and stockholders' equity | $ | 2,251,759 | $ | 2,288,782 | ||||
6
GMS Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
| Nine Months Ended | ||||||||
| January 31, | ||||||||
| 2021 | 2020 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 71,814 | $ | 64,837 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 79,904 | 88,215 | ||||||
| Write-off and amortization of debt discount and debt issuance costs | 2,257 | 2,964 | ||||||
| Equity-based compensation | 10,318 | 6,345 | ||||||
| Gain on disposal and impairment of assets | (529 | ) | (872 | ) | ||||
| Deferred income taxes | (9,645 | ) | 174 | |||||
| Other items, net | 105 | 2,387 | ||||||
| Changes in assets and liabilities net of effects of acquisitions: | ||||||||
| Trade accounts and notes receivable | 1,352 | 16,561 | ||||||
| Inventories | (24,391 | ) | 317 | |||||
| Prepaid expenses and other assets | 1,040 | 4,210 | ||||||
| Accounts payable | (58,104 | ) | (30,420 | ) | ||||
| Accrued compensation and employee benefits | (11,932 | ) | (11,729 | ) | ||||
| Other accrued expenses and liabilities | 6,307 | (7,622 | ) | |||||
| Cash provided by operating activities | 68,496 | 135,367 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | (17,857 | ) | (20,884 | ) | ||||
| Proceeds from sale of assets | 1,233 | 1,299 | ||||||
| Acquisition of businesses, net of cash acquired | (51 | ) | (20,803 | ) | ||||
| Cash used in investing activities | (16,675 | ) | (40,388 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Repayments on revolving credit facilities | (102,189 | ) | (794,623 | ) | ||||
| Borrowings from revolving credit facilities | 14,750 | 760,444 | ||||||
| Payments of principal on long-term debt | (7,476 | ) | (57,476 | ) | ||||
| Payments of principal on finance lease obligations | (22,662 | ) | (17,971 | ) | ||||
| Repurchases of common stock | (2,000 | ) | — | |||||
| Debt issuance costs | — | (1,286 | ) | |||||
| Proceeds from exercises of stock options | 3,656 | 8,280 | ||||||
| Payments for taxes related to net share settlement of equity awards | (807 | ) | (532 | ) | ||||
| Other financing activities | 2,076 | 1,793 | ||||||
| Cash used in financing activities | (114,652 | ) | (101,371 | ) | ||||
| Effect of exchange rates on cash and cash equivalents | 2,495 | 3 | ||||||
| Decrease in cash and cash equivalents | (60,336 | ) | (6,389 | ) | ||||
| Cash and cash equivalents, beginning of period | 210,909 | 47,338 | ||||||
| Cash and cash equivalents, end of period | $ | 150,573 | $ | 40,949 | ||||
| Supplemental cash flow disclosures: | ||||||||
| Cash paid for income taxes | $ | 31,942 | $ | 30,199 | ||||
| Cash paid for interest | 38,114 | 49,224 | ||||||
7
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 | |||||||||||||||||||||||||
| 2021 | Total | 2020 | Total | 2021 | Total | 2020 | Total | |||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||
| Wallboard | $ | 311,122 | 41.4 | % | $ | 314,391 | 41.3 | % | $ | 969,634 | 41.0 | % | $ | 1,006,604 | 40.7 | % | ||||||||||||||||
| Ceilings | 101,909 | 13.6 | % | 112,768 | 14.8 | % | 326,904 | 13.8 | % | 364,685 | 14.8 | % | ||||||||||||||||||||
| Steel framing | 103,956 | 13.8 | % | 118,823 | 15.6 | % | 325,736 | 13.8 | % | 386,811 | 15.7 | % | ||||||||||||||||||||
| Other products | 234,204 | 31.2 | % | 215,370 | 28.3 | % | 744,346 | 31.4 | % | 712,357 | 28.8 | % | ||||||||||||||||||||
| Total net sales | $ | 751,191 | $ | 761,352 | $ | 2,366,620 | $ | 2,470,457 | ||||||||||||||||||||||||
8
GMS Inc.
Reconciliation of Net Income to Adjusted EBITDA (Unaudited)
(in thousands)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| January 31, | January 31, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Net income | $ | 16,126 | $ | 10,879 | $ | 71,814 | $ | 64,837 | ||||||||
| Interest expense | 13,454 | 16,474 | 41,060 | 52,310 | ||||||||||||
| Write-off of debt discount and deferred financing fees | — | — | — | 707 | ||||||||||||
| Interest income | (6 | ) | (8 | ) | (57 | ) | (26 | ) | ||||||||
| Provision for income taxes | 5,709 | 2,816 | 23,590 | 18,333 | ||||||||||||
| Depreciation expense | 11,371 | 12,930 | 36,908 | 37,944 | ||||||||||||
| Amortization expense | 14,191 | 16,492 | 42,996 | 50,271 | ||||||||||||
| EBITDA | $ | 60,845 | $ | 59,583 | $ | 216,311 | $ | 224,376 | ||||||||
| Stock appreciation rights(a) | 1,446 | (347 | ) | 2,552 | 980 | |||||||||||
| Redeemable noncontrolling interests(b) | 624 | (318 | ) | 1,062 | 326 | |||||||||||
| Equity-based compensation(c) | 1,877 | 1,465 | 6,734 | 5,175 | ||||||||||||
| Severance and other permitted costs(d) | (83 | ) | 1,700 | 2,626 | 3,648 | |||||||||||
| Transaction costs (acquisitions and other)(e) | 664 | 434 | 789 | 1,733 | ||||||||||||
| Gain on disposal and impairment of assets(f) | (1,404 | ) | (130 | ) | (529 | ) | (872 | ) | ||||||||
| Effects of fair value adjustments to inventory(g) | — | 310 | — | 461 | ||||||||||||
| Gain on legal settlement | (1,382 | ) | — | (1,382 | ) | — | ||||||||||
| Secondary public offering costs(h) | — | — | — | 363 | ||||||||||||
| EBITDA add-backs | 1,742 | 3,114 | 11,852 | 11,814 | ||||||||||||
| Adjusted EBITDA | $ | 62,587 | $ | 62,697 | $ | 228,163 | $ | 236,190 | ||||||||
| Net sales | $ | 751,191 | $ | 761,352 | $ | 2,366,620 | $ | 2,470,457 | ||||||||
| Adjusted EBITDA margin | 8.3 | % | 8.2 | % | 9.6 | % | 9.6 | % | ||||||||
| (a) | Represents changes in the fair value of stock appreciation rights. |
| (b) | Represents changes in the fair value 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 Term Loan Facility, including certain unusual, nonrecurring costs and credits received due to the COVID-19 pandemic. |
| (e) | Represents costs related to acquisitions paid to third parties. |
| (f) | Includes gains from the sale of assets and impairment of assets resulting from restructuring plans to close certain facilities. |
| (g) | Represents the non-cash cost of sales impact of acquisition accounting adjustments to increase inventory to its estimated fair value. |
| (h) | Represents costs paid to third-party advisors related to secondary offerings of our common stock. |
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, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Cash provided by operating activities | $ | 44,448 | $ | 65,440 | $ | 68,496 | $ | 135,367 | ||||||||
| Purchases of property and equipment | (6,012 | ) | (6,247 | ) | (17,857 | ) | (20,884 | ) | ||||||||
| Free cash flow(a) | $ | 38,436 | $ | 59,193 | $ | 50,639 | $ | 114,483 | ||||||||
| (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, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Selling, general and administrative expense | $ | 184,844 | $ | 193,384 | $ | 556,308 | $ | 588,472 | ||||||||
| Adjustments | ||||||||||||||||
| Stock appreciation rights(a) | (1,446 | ) | 347 | (2,552 | ) | (980 | ) | |||||||||
| Redeemable noncontrolling interests(b) | (624 | ) | 318 | (1,062 | ) | (326 | ) | |||||||||
| Equity-based compensation(c) | (1,877 | ) | (1,465 | ) | (6,734 | ) | (5,175 | ) | ||||||||
| Severance and other permitted costs(d) | 104 | (462 | ) | (2,589 | ) | (2,410 | ) | |||||||||
| Transaction costs (acquisitions and other)(e) | (664 | ) | (434 | ) | (789 | ) | (1,733 | ) | ||||||||
| Gain on disposal and impairment of assets(f) | 1,404 | 130 | 529 | 872 | ||||||||||||
| Secondary public offering costs(g) | — | — | — | (363 | ) | |||||||||||
| Adjusted SG&A | $ | 181,741 | $ | 191,818 | $ | 543,111 | $ | 578,357 | ||||||||
| Net sales | $ | 751,191 | $ | 761,352 | $ | 2,366,620 | $ | 2,470,457 | ||||||||
| Adjusted SG&A margin | 24.2 | % | 25.2 | % | 22.9 | % | 23.4 | % | ||||||||
| (a) | Represents changes in the fair value of stock appreciation rights. |
| (b) | Represents changes in the fair value 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 Term Loan Facility, including certain unusual, nonrecurring costs and credits received due to the COVID-19 pandemic. |
| (e) | Represents costs related to acquisitions paid to third parties. |
| (f) | Includes gains from the sale of assets and impairment of assets resulting from restructuring plans to close certain facilities. |
| (g) | Represents costs paid to third-party advisors related to secondary offerings of our common stock. |
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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, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Income before taxes | $ | 21,835 | $ | 13,695 | $ | 95,404 | $ | 83,170 | ||||||||
| EBITDA add-backs | 1,742 | 3,114 | 11,852 | 11,814 | ||||||||||||
| Write-off of discount and deferred financing fees | — | — | — | 707 | ||||||||||||
| Purchase accounting depreciation and amortization (1) | 9,798 | 11,869 | 30,054 | 36,530 | ||||||||||||
| Adjusted pre-tax income | 33,375 | 28,678 | 137,310 | 132,221 | ||||||||||||
| Adjusted income tax expense | 7,510 | 6,453 | 30,895 | 29,750 | ||||||||||||
| Adjusted net income | $ | 25,865 | $ | 22,225 | $ | 106,415 | $ | 102,471 | ||||||||
| Effective tax rate (2) | 22.5 | % | 22.5 | % | 22.5 | % | 22.5 | % | ||||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 42,726 | 42,223 | 42,691 | 41,663 | ||||||||||||
| Diluted (3) | 43,361 | 42,949 | 43,184 | 42,577 | ||||||||||||
| Adjusted net income per share: | ||||||||||||||||
| Basic | $ | 0.61 | $ | 0.53 | $ | 2.49 | $ | 2.46 | ||||||||
| Diluted | $ | 0.60 | $ | 0.52 | $ | 2.46 | $ | 2.41 | ||||||||
| (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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