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Section 1: 8-K (8-K)

 

 

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): June 27, 2019

 


 

GMS INC.

(Exact name of registrant as specified in charter)

 


 

Delaware

 

001-37784

 

46-2931287

(State or Other Jurisdiction
of Incorporation)

 

(Commission
File Number)

 

(I.R.S. Employer
Identification No.)

 

100 Crescent Centre Parkway, Suite 800
Tucker, Georgia

 

30084

(Address of Principal Executive Offices)

 

(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:

 

o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchanged on which registered

Common Stock, par value $0.01 per share

 

GMS

 

New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company  o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act  o

 

 

 


 

Item 2.02. Results of Operations and Financial Condition.

 

On June 27, 2019, 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 fourth quarter and fiscal year ended April 30, 2019.

 

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 Exhibits 99.1 and 99.2 attached hereto, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), 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 (the “Securities Act”), or the Exchange Act, 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 June 27, 2019 and may be used by GMS in various other presentations to investors on or after June 27, 2019.

 

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 Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit

 

Description

99.1*

 

Press release, dated June 27, 2019.

99.2*

 

GMS Inc. presentation to investors.

 


*Furnished herewith

 

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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.

 

 

GMS INC.

 

 

 

Date: June 27, 2019

By:

/s/ Craig D. Apolinsky

 

 

Name:

Craig D. Apolinsky

 

 

Title:

General Counsel and Corporate Secretary

 

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Section 2: EX-99.1 (EX-99.1)

Exhibit 99.1

 

 

GMS REPORTS FOURTH QUARTER AND FISCAL YEAR 2019 RESULTS

Q4 Net Sales up 22.7%; Organic Net Sales up 7.0%

Reported Q4 Net Income of $16.6 Million, or $0.39 per Diluted Share

Adjusted Q4 Net Income of $28.7 Million, or $0.68 per Diluted Share

Q4 Adjusted EBITDA of $73.5 million or 9.4% of net sales

 

Tucker, Georgia, June 27, 2019. GMS Inc. (NYSE:GMS), a leading North American specialty distributor of interior building products, today reported financial results for the fourth quarter and fiscal year ended April 30, 2019.

 

Fourth Quarter Fiscal 2019 Highlights

 

·                  Net sales of $780.1 million increased 22.7% from $635.8 million in the fourth quarter of the prior fiscal year. Organic net sales increased 7.0% year over year as a result of higher volumes and pricing improvement across all product groups.

·                  Reported net income of $16.6 million, or $0.39 per diluted share, compared to $9.9 million, or $0.24 per diluted share, in the fourth quarter of the prior fiscal year.

·                  Adjusted net income of $28.7 million, or $0.68 per diluted share, compared to $23.5 million, or $0.56 per diluted share, in the fourth quarter of the prior fiscal year.

·                  Adjusted EBITDA of $73.5 million, or 9.4% of net sales compared to Adjusted EBITDA of $50.1 million, or 7.9% of net sales, in the fourth quarter of the prior fiscal year.

·                  Cash provided by operating activities of $88.2 million and free cash flow of $82.8 million increased from $24.9 million and $14.6 million, respectively, in the fourth quarter of the prior fiscal year.

·                  Net leverage decreased to 3.6 times at the end of the fourth quarter of fiscal 2019 from 3.8 times at the end of the third quarter of fiscal 2019.

·                  The Company completed one business acquisition and four greenfield openings during the fourth quarter of fiscal 2019.

·                  The Company repurchased $5.0 million of common stock during the fourth quarter of fiscal 2019.

 

Full Year Fiscal 2019 Highlights

 

·                  Net sales of $3.12 billion increased 24.1% from $2.51 billion in the prior fiscal year. Organic net sales increased 7.1% year over year.

·                  Reported net income of $56.0 million, or $1.31 per diluted share, compared to $63.0 million, or $1.49 per diluted share, in the prior fiscal year.

·                  Adjusted net income of $119.5 million, or $2.80 per diluted share, compared to $84.7 million, or $2.01 per diluted share, in the prior fiscal year.

·                  Adjusted EBITDA of $295.7 million, or 9.5% of net sales, compared to Adjusted EBITDA of $199.3 million, or 7.9% of net sales, in the prior fiscal year.

·                  Cash provided by operating activities of $193.6 million and free cash flow of $174.8 million increased from $91.3 million and $67.5 million, respectively, in the prior fiscal year.

·                  Net leverage decreased to 3.6 times at the end of fiscal 2019 from 4.2 times at the end of the first quarter of fiscal 2019, following the acquisition of Titan.

·                  The Company completed three business acquisitions and eight greenfield openings during fiscal 2019.

·                  The Company repurchased $16.5 million of common stock during fiscal 2019.

 

“We were pleased to deliver a strong finish to fiscal 2019 with record net sales and earnings for our fourth fiscal quarter,” said Mike Callahan, Chief Executive Officer. “Strong organic sales growth of 7.0% reflects higher volumes and pricing across all our product

 

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groups. Activity levels across our end markets in the United States remain solid and continue to exhibit healthy fundamentals. While long-term factors contributing to housing demand and overall economic growth for Canada remain positive, we currently face some challenging conditions in the Canadian single-family housing market. We generated significant cash from operations and free cash flow in the quarter, enabling us to execute on our capital allocation priorities, which include reducing our net leverage, expanding through accretive acquisitions and greenfield investments and repurchasing our common stock.”

 

Mr. Callahan continued, “We made significant progress throughout fiscal 2019 on a number of fronts, surpassing $3.0 billion in net sales through both organic growth and acquisitions, including the strategic acquisition of WSB Titan, which increased our scale and footprint in North America, provided entry into the highly attractive Canadian market, and created a well-balanced platform for long-term growth. At the same time, we significantly improved our operating leverage in fiscal 2019. We believe our market-leading position, broad product portfolio and diversified exposure across attractive commercial and residential new and R&R construction markets will enable us to continue to take advantage of further growth opportunities.”

 

Fourth Quarter Fiscal 2019 Results

 

Net sales for the fourth quarter of fiscal 2019 were $780.1 million, up 22.7%, or 7.0% on an organic basis, compared to $635.8 million for the fourth quarter of the prior fiscal year.

 

·                  Wallboard sales of $322.3 million increased 15.1% (3.8% on an organic basis) compared to the fourth quarter of fiscal 2018, driven by acquisitions, higher organic volumes and pricing.

 

·                  Ceilings sales of $112.2 million increased 17.4% (13.7% on an organic basis) compared to the fourth quarter of fiscal 2018, primarily due to higher organic volumes as a result of increased commercial business, the positive impact of acquisitions and pricing.

 

·                  Steel framing sales of $124.5 million increased 16.3% (8.3% on an organic basis) compared to the fourth quarter of fiscal 2018, driven by the positive impact of acquisitions, higher organic volumes as a result of greater commercial activity and pricing.

 

·                  Other product sales of $221.1 million increased 44.4% (7.8% on an organic basis) compared to the fourth quarter of fiscal 2018, as a result of the positive impact of acquisitions, as well as higher organic growth.

 

Gross profit of $256.9 million increased 24.8% compared to $205.8 million in the fourth quarter of fiscal 2018, as a result of higher sales, both organically and including the positive impact of acquisitions, as well as pricing improvement. Gross margin of 32.9% improved 50 basis points from 32.4% a year ago due to contributions from the Titan acquisition, favorable price-cost dynamics and mix. On a sequential basis, gross margin also improved 50 basis points from 32.4% in the third quarter of fiscal 2019.

 

Selling, general and administrative (SG&A) expense as a percentage of net sales was 24.4% for the quarter compared to 25.4% in the fourth quarter of fiscal 2018.  Adjusted SG&A expense as a percentage of net sales was 23.6% compared to 24.6% in the prior year quarter. Of the 100 basis point improvement in adjusted SG&A, 20 basis points was the result of increased cost efficiencies which were partially offset by inflationary pressures, primarily in logistics, as well as unanticipated insurance costs and the timing of certain other expenses.  The remaining 80 basis points was the result of the amendment of certain equipment operating leases that are now being accounted for as capital leases.

 

Net income of $16.6 million, or $0.39 per diluted share, compared to $9.9 million, or $0.24 per diluted share, in the fourth quarter of fiscal 2018.  Adjusted net income of $28.7 million, or $0.68 per diluted share, compared to $23.5 million, or $0.56 per diluted share, in the fourth quarter of fiscal 2018.  Adjusted EBITDA of $73.5 million increased 46.9% year over year and represented an Adjusted EBITDA margin of 9.4%.

 

Capital Allocation and Expansion Activity

 

As of April 30, 2019, the Company had cash of $47.3 million and total debt of $1.14 billion, compared to cash of $74.3 million and total debt of $1.23 billion, as of January 31, 2019. During the fourth fiscal quarter, the Company reduced its net debt by $65.6 million and net leverage was 3.6 times as of the end of the quarter and fiscal year.

 

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Under the previously announced $75.0 million stock repurchase program, the Company repurchased $5.0 million, or approximately 287,000 shares, of common stock during the fourth quarter of fiscal 2019.  As of April 30, 2019, approximately $58.5 million of availability remained under the program.

 

During the fourth quarter of fiscal 2019, the Company completed the previously-announced acquisition of Commercial Builders Group, LLC in southern Louisiana and opened four greenfield locations in Carrollton, TX, Fredericksburg, VA, Harrisburg, PA and Portland, ME.  For fiscal year 2019, the Company completed a total of three business acquisitions and opened eight greenfield locations.

 

Conference Call and Webcast

 

GMS will host a conference call and webcast to discuss its results for the fourth quarter and full year ended April 30, 2019 and other information related to its business at 8:30 a.m. Eastern Time on June 27, 2019. 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 July 27, 2019 and can be accessed at 844-512-2921 (domestic) or 412-317-6671 (international) and entering the pass code 13691409.

 

About GMS Inc.

 

Founded in 1971, GMS operates a network of more than 250 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 and Adjusted EBITDA 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.

 

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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 and statements about 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. Forward-looking statements involve risks and uncertainties, including, but not limited to, economic, competitive, governmental and technological factors outside of the Company’s control, that may cause its 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 GMS distributes; general economic and business conditions in the United States and Canada; the activities of competitors; changes in significant operating expenses; changes in the availability of capital and interest rates; adverse weather patterns or conditions; cybersecurity breaches and other disruptions to our IT systems; our recently announced leadership succession plan; variations in the performance of the financial markets, including the credit markets; the possibility that the expected synergies and cost savings and final impacts from the Titan acquisition will not be realized, or will not be realized within the expected time period; the risk that the GMS and Titan businesses will not be integrated successfully; disruption from the transaction making it more difficult to maintain business and operational relationships and to accomplish other GMS objectives; the risk of customer attrition; our ability to efficiently manage and control our costs and the success of our previously announced cost reduction plan; and other factors 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 June 27, 2019. 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 June 27, 2019.

 

Contact Information:

 

Investors:

Leslie H. Kratcoski

[email protected]

770-723-3306

 

Media:

[email protected]

770-723-3378

 

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GMS Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except per share data)

 

 

 

Three Months Ended

 

Year Ended

 

 

 

April 30, 

 

April 30, 

 

 

 

2019

 

2018

 

2019

 

2018

 

Net sales

 

$

780,149

 

$

635,800

 

$

3,116,032

 

$

2,511,469

 

Cost of sales (exclusive of depreciation and amortization shown separately below)

 

523,222

 

430,008

 

2,111,913

 

1,692,893

 

Gross profit

 

256,927

 

205,792

 

1,004,119

 

818,576

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

190,577

 

161,645

 

739,460

 

633,877

 

Depreciation and amortization

 

30,130

 

15,982

 

117,459

 

65,530

 

Total operating expenses

 

220,707

 

177,627

 

856,919

 

699,407

 

Operating income

 

36,220

 

28,165

 

147,200

 

119,169

 

Other (expense) income:

 

 

 

 

 

 

 

 

 

Interest expense

 

(18,781

)

(8,107

)

(73,677

)

(31,395

)

Change in fair value of financial instruments

 

 

(5,415

)

(6,395

)

(6,125

)

Write-off of debt discount and deferred financing fees

 

 

 

 

(74

)

Other income, net

 

888

 

604

 

2,913

 

2,279

 

Total other expense, net

 

(17,893

)

(12,918

)

(77,159

)

(35,315

)

Income before taxes

 

18,327

 

15,247

 

70,041

 

83,854

 

Provision for income taxes

 

1,702

 

5,328

 

14,039

 

20,883

 

Net income

 

$

16,625

 

$

9,919

 

$

56,002

 

$

62,971

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

40,487

 

41,048

 

40,914

 

41,015

 

Diluted

 

40,976

 

42,151

 

41,589

 

42,163

 

Net income per common share(1):

 

 

 

 

 

 

 

 

 

Basic

 

$

0.40

 

$

0.24

 

$

1.33

 

$

1.54

 

Diluted

 

$

0.39

 

$

0.24

 

$

1.31

 

$

1.49

 

 


(1) The following table sets forth the computation of basic and diluted earnings per share of common stock for periods presented:

 

 

 

Three Months Ended

 

Year Ended

 

 

 

April 30, 

 

April 30, 

 

 

 

2019

 

2018

 

2019

 

2018

 

 

 

(in thousands, except per share data)

 

Net income

 

$

16,625

 

$

9,919

 

$

56,002

 

$

62,971

 

Less: Net income allocated to participating securities

 

451

 

 

1,382

 

 

Net income attributable to common stockholders

 

$

16,174

 

$

9,919

 

$

54,620

 

$

62,971

 

Basic earnings per common share:

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

40,487

 

41,048

 

40,914

 

41,015

 

Basic earnings per common share

 

$

0.40

 

$

0.24

 

$

1.33

 

$

1.54

 

Diluted earnings per common share:

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

40,487

 

41,048

 

40,914

 

41,015

 

Add: Common Stock Equivalents

 

489

 

1,103

 

675

 

1,148

 

Diluted weighted average common shares outstanding

 

40,976

 

42,151

 

41,589

 

42,163

 

Diluted earnings per common share

 

$

0.39

 

$

0.24

 

$

1.31

 

$

1.49

 

 

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GMS Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except per share data)

 

 

 

April 30, 

 

April 30, 

 

 

 

2019

 

2018

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

47,338

 

$

36,437

 

Trade accounts and notes receivable, net of allowances of $6,432 and $9,633, respectively

 

445,771

 

346,450

 

Inventories, net

 

290,829

 

239,223

 

Prepaid expenses and other current assets

 

18,368

 

11,726

 

Total current assets

 

802,306

 

633,836

 

Property and equipment, net of accumulated depreciation of $123,583 and $85,761, respectively

 

282,349

 

163,582

 

Goodwill

 

617,327

 

427,645

 

Intangible assets, net

 

429,313

 

222,682

 

Deferred income taxes

 

4,676

 

 

Other assets

 

13,583

 

6,766

 

Total assets

 

$

2,149,554

 

$

1,454,511

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

173,751

 

$

116,168

 

Accrued compensation and employee benefits

 

62,858

 

56,323

 

Other accrued expenses and current liabilities

 

79,848

 

45,146

 

Current portion of long-term debt

 

42,118

 

16,284

 

Total current liabilities

 

358,575

 

233,921

 

Non-current liabilities:

 

 

 

 

 

Long-term debt, less current portion

 

1,099,077

 

579,602

 

Deferred income taxes, net

 

10,226

 

10,742

 

Other liabilities

 

41,571

 

35,088

 

Liabilities to noncontrolling interest holders, less current portion

 

10,929

 

15,707

 

Total liabilities

 

1,520,378

 

875,060

 

Commitments and contingencies

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Common stock, par value $0.01 per share, 500,000 shares authorized; 40,375 and 41,069 shares issued and outstanding as of April 30, 2019 and 2018, respectively

 

404

 

411

 

Preferred stock, par value $0.01 per share, 50,000 shares authorized; 0 shares issued and outstanding as of April 30, 2019 and 2018

 

 

 

Exchangeable shares

 

29,639

 

 

Additional paid-in capital

 

480,113

 

489,007

 

Retained earnings

 

145,594

 

89,592

 

Accumulated other comprehensive income (loss)

 

(26,574

)

441

 

Total stockholders’ equity

 

629,176

 

579,451

 

Total liabilities and stockholders’ equity

 

$

2,149,554

 

$

1,454,511

 

 

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GMS Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

 

 

 

Year Ended April 30,

 

 

 

2019

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

Net income

 

$

56,002

 

$

62,971

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

117,459

 

65,530

 

Write-off and amortization of debt discount and debt issuance costs

 

3,332

 

2,851

 

Provision for losses on accounts and notes receivable

 

617

 

(622

)

Provision for obsolescence of inventory

 

432

 

106

 

Effects of fair value adjustments to inventory

 

4,176

 

324

 

Increase in fair value of contingent consideration

 

759

 

195

 

Equity-based compensation

 

7,643

 

5,745

 

Gain on sale and disposal of assets

 

(525

)

(509

)

Change in fair value of financial instruments

 

6,395

 

6,125

 

Deferred income taxes

 

(17,487

)

(16,224

)

Changes in assets and liabilities net of effects of acquisitions:

 

 

 

 

 

Trade accounts and notes receivable

 

(13,586

)

(11,752

)

Inventories

 

5,137

 

(35,098

)

Prepaid expenses and other assets

 

(4,842

)

(3,109

)

Accounts payable

 

26,816

 

11,365

 

Accrued compensation and employee benefits

 

6,631

 

(236

)

Derivative liability

 

(10,778

)

 

Other accrued expenses and liabilities

 

5,434

 

3,601

 

Cash provided by operating activities

 

193,615

 

91,263

 

Cash flows from investing activities:

 

 

 

 

 

Purchases of property and equipment

 

(18,770

)

(23,741

)

Proceeds from sale of assets

 

1,170

 

2,865

 

Acquisition of businesses, net of cash acquired

 

(583,092

)

(28,333

)

Cash used in investing activities

 

(600,692

)

(49,209

)

Cash flows from financing activities:

 

 

 

 

 

Repayments on the revolving credit facility

 

(937,176

)

(617,230

)

Borrowings from the revolving credit facility

 

981,148

 

513,878

 

Payments of principal on long-term debt

 

(9,968

)

(5,776

)

Payments of principal on capital lease obligations

 

(19,474

)

(6,132

)

Borrowings from term loan

 

996,840

 

577,616

 

Repayments from term loan

 

(571,840

)

(477,616

)

Repurchases of common stock

 

(16,520

)

 

Debt issuance costs

 

(7,933

)

(3,283

)

Payments for taxes related to net share settlement of equity awards

 

(50

)

(1,441

)

Proceeds from exercises of stock options

 

2,538

 

477

 

Other financing activities

 

1,405

 

(671

)

Cash provided by (used in) financing activities

 

418,970

 

(20,178

)

Effect of exchange rates on cash and cash equivalents

 

(992

)

 

Increase in cash and cash equivalents

 

10,901

 

21,876

 

Cash and cash equivalents, beginning of year

 

36,437

 

14,561

 

Cash and cash equivalents, end of year

 

$

47,338

 

$

36,437

 

Supplemental cash flow disclosures:

 

 

 

 

 

Cash paid for income taxes

 

$

19,351

 

$

38,954

 

Cash paid for interest

 

66,435

 

28,613

 

Supplemental schedule of noncash activities:

 

 

 

 

 

Assets acquired under capital lease

 

$

111,826

 

$

9,086

 

Issuance of installment notes associated with equity-based compensation liability awards

 

5,356

 

12,433

 

Increase (decrease) in insurance claims payable and insurance recoverable

 

619

 

(2,362

)

 

7


 

GMS Inc.

Net Sales by Product Group (Unaudited)

(dollars in thousands)

 

 

 

Three Months Ended 

 

Year Ended 

 

 

 

April 30, 

 

% of

 

April 30, 

 

% of

 

April 30, 

 

% of

 

April 30, 

 

% of

 

 

 

2019

 

Total

 

2018

 

Total

 

2019

 

Total

 

2018

 

Total

 

 

 

(dollars in thousands)

 

Wallboard

 

$

322,287

 

41.3

%

$

279,984

 

44.0

%

$

1,272,068

 

40.8

%

$

1,109,552

 

44.2

%

Ceilings

 

112,245

 

14.4

%

95,644

 

15.0

%

451,695

 

14.5

%

387,360

 

15.4

%

Steel framing

 

124,501

 

16.0

%

107,032

 

16.8

%

506,805

 

16.3

%

411,630

 

16.4

%

Other products

 

221,116

 

28.3

%

153,140

 

24.1

%

885,464

 

28.4

%

602,927

 

24.0

%

Total net sales

 

$

780,149

 

 

 

$

635,800

 

 

 

$

3,116,032

 

 

 

$

2,511,469

 

 

 

 

8


 

GMS Inc.

Reconciliation of Net Income to Adjusted EBITDA (Unaudited)

(in thousands)

 

 

 

Three Months Ended

 

Year Ended

 

 

 

April 30, 

 

April 30, 

 

 

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

16,625

 

$

9,919

 

$

56,002

 

$

62,971

 

Interest expense

 

18,781

 

8,107

 

73,677

 

31,395

 

Write-off of debt discount and deferred financing fees

 

 

 

 

74

 

Interest income

 

(23

)

(84

)

(66

)

(177

)

Provision for income taxes

 

1,702

 

5,328

 

14,039

 

20,883

 

Depreciation expense

 

12,389

 

6,054

 

46,456

 

24,075

 

Amortization expense

 

17,741

 

9,928

 

71,003

 

41,455

 

EBITDA

 

$

67,215

 

$

39,252

 

$

261,111

 

$

180,676

 

Stock appreciation expense(a)

 

1,305

 

455

 

2,730

 

2,318

 

Redeemable noncontrolling interests(b)

 

410

 

498

 

1,188

 

1,868

 

Equity-based compensation(c)

 

1,268

 

418

 

3,906

 

1,695

 

Severance and other permitted costs(d)

 

2,205

 

256

 

8,152

 

581

 

Transaction costs (acquisitions and other)(e)

 

1,198

 

3,049

 

7,858

 

3,370

 

(Gain) loss on disposal of assets

 

(113

)

139

 

(525

)

(509

)

Effects of fair value adjustments to inventory(f)

 

47

 

48

 

4,176

 

324

 

Change in fair value of financial instruments(g)

 

 

5,415

 

6,395

 

6,125

 

Secondary public offering costs(h)

 

 

 

 

1,525

 

Debt transaction costs(i)

 

 

527

 

678

 

1,285

 

EBITDA add-backs

 

6,320

 

10,805

 

34,558

 

18,582

 

Adjusted EBITDA

 

$

73,535

 

$

50,057

 

$

295,669

 

$

199,258

 

Adjusted EBITDA margin

 

9.4

%

7.9

%

9.5

%

7.9

%

 


(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 related to our secondary offerings paid to third-party advisors.

 

(i)                                     Represents expenses 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

 

Year Ended

 

 

 

April 30, 

 

April 30, 

 

 

 

2019

 

2018

 

2019

 

2018

 

Cash provided by operating activities

 

$

88,178

 

$

24,883

 

$

193,615

 

$

91,263

 

Purchases of property and equipment

 

(5,385

)

(10,333

)

(18,770

)

(23,741

)

Free cash flow(a)

 

$

82,793

 

$

14,550

 

$

174,845

 

$

67,522

 

 


(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

 

Year Ended

 

 

 

April 30, 

 

April 30, 

 

 

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expense

 

$

190,577

 

$

161,645

 

$

739,460

 

$

633,877

 

 

 

 

 

 

 

 

 

 

 

Adjustments

 

 

 

 

 

 

 

 

 

Stock appreciation expense(a)

 

(1,305

)

(455

)

(2,730

)

(2,318

)

Redeemable noncontrolling interests(b)

 

(410

)

(498

)

(1,188

)

(1,868

)

Equity-based compensation(c)

 

(1,268

)

(418

)

(3,906

)

(1,695

)

Severance and other permitted costs(d)

 

(2,205

)

(256

)

(8,152

)

(581

)

Transaction costs (acquisitions and other)(e)

 

(1,198

)

(3,049

)

(7,858

)

(3,370

)

Gain on disposal of assets

 

113

 

(139

)

525

 

509

 

Secondary public offering costs(f)

 

 

 

 

(1,525

)

Debt transaction costs(g)

 

 

(527

)

(678

)

(1,285

)

Adjusted SG&A

 

$

184,304

 

$

156,303

 

$

715,473

 

$

621,744

 

Adjusted SG&A margin

 

23.6

%

24.6

%

23.0

%

24.8

%

 


(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 related to our secondary offerings paid to third-party advisors.

 

(g)                                  Represents expenses paid to third-party advisors related to debt refinancing activities.

 

10


 

GMS Inc.

Reconciliation of Income Before Taxes to Adjusted Net Income (Unaudited)

(in thousands, except per share data)

 

 

 

Three Months Ended

 

Year Ended

 

 

 

April 30, 

 

April 30, 

 

 

 

2019

 

2018

 

2019

 

2018

 

Income before taxes

 

$

18,327

 

$

15,247

 

$

70,041

 

$

83,854

 

EBITDA add-backs

 

6,320

 

10,805

 

34,558

 

18,582

 

Write-off of debt discount and deferred financing fees

 

 

 

 

74

 

Purchase accounting depreciation and amortization (1)

 

12,369

 

5,233

 

49,619

 

21,271

 

Adjusted pre-tax income

 

37,016

 

31,285

 

154,218

 

123,781

 

Adjusted income tax expense

 

8,329

 

7,790

 

34,699

 

39,077

 

Adjusted net income

 

$

28,687

 

$

23,495

 

$

119,519

 

$

84,704

 

Effective tax rate (2)

 

22.5

%

24.9

%

22.5

%

31.6

%

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

40,487

 

41,048

 

40,914

 

41,015

 

Diluted (3)

 

42,105

 

42,151

 

42,718

 

42,163

 

Adjusted net income per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.71

 

$

0.57

 

$

2.92

 

$

2.07

 

Diluted

 

$

0.68

 

$

0.56

 

$

2.80

 

$

2.01

 

 


(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 for fiscal 2019 excluding the impact of purchase accounting and certain other deferred tax amounts.

 

(3)          Includes 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 as of April 30, 2019.

 

11


(Back To Top)

Section 3: EX-99.2 (EX-99.2)

Exhibit 99.2

GMS Quarterly Review Fiscal Q4 2019

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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. 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, statements about growth potential across the Company’s business and the ability to deliver growth and value creation, and the anticipated benefits of the Company’s cost reduction and operational improvements plan, including future SG&A savings, contained in this presentation are forward-looking statements. In addition, forward looking statements may include statements regarding the Company’s expectations concerning management's plans for execution of a stock repurchase program, including the maximum amount, manner and duration of purchases of the Company’s common stock under its authorized stock repurchase program. 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. Forward-looking statements involve risks and uncertainties, including, but not limited to, economic, competitive, governmental and technological factors outside of the Company’s control, that may cause its 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 GMS distributes; general economic and business conditions in the United States and Canada; the activities of competitors; changes in significant operating expenses; changes in the availability of capital and interest rates; adverse weather patterns or conditions; cybersecurity breaches and other disruptions to our IT systems; our recently announced leadership succession plan; variations in the performance of the financial markets, including the credit markets; the possibility that the expected synergies and cost savings and final impacts from the Titan acquisition will not be realized, or will not be realized within the expected time period; the risk that the GMS and Titan businesses will not be integrated successfully; disruption from the transaction making it more difficult to maintain business and operational relationships and to accomplish other GMS objectives; the risk of customer attrition; our ability to efficiently manage and control our costs and the success of our previously announced cost reduction plan; and other factors 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 presentation are made as of June 27, 2019. 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 June 27, 2019. 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 income, 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. Please see the Appendix to this presentation for a further discussion on these non-GAAP measures and a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures. 2

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Q4 Fiscal 2019 Highlights 3 We had a strong finish to fiscal 2019 Net sales in the fourth fiscal quarter of 2019 increased 22.7% to a record $780.1 million Organic net sales growth of 7.0% Wallboard sales increased 15.1% (3.8% organic) Ceilings sales increased 17.4% (13.7% organic) Steel framing sales increased 16.3% (8.3% organic) Other product sales increased 44.4% (7.8% organic) Reported net income of $16.6 million, or $0.39 per diluted share Adjusted net income of $28.7 million, or $0.68 per diluted share (1) Adjusted EBITDA increased 46.9% to $73.5 million (1); Improved Adjusted EBITDA margin (1) by 150 basis points to 9.4% from 7.9% in FY 2018 Completed the acquisition of Commercial Builders Group, LLC in southern Louisiana on March 4, 2019 Opened four greenfield locations: Carrollton, TX, Fredericksburg, VA, Harrisburg, PA and Portland, ME Subsequent to end of quarter, completed acquisition of Hart Acoustical and Drywall Supply in South Texas Generated strong operating and free cash flow (1) of $88.2 million and $82.8 million, respectively Net leverage decreased to 3.6 times at end of Q4 2019 from 3.8 times at end of Q3 2019 Repurchased $5.0 million, or 287,000 shares, of our common stock We are encouraged by activity levels in our US markets; Canadian single-family market remains challenging For a reconciliation of Adjusted Net Income, Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow to the most directly comparable GAAP metrics, see Appendix.

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Full Year Fiscal 2019 Highlights 4 We made significant progress on a number of fronts in an operationally and strategically important year Net sales increased 24.1% (7.1% on organic basis) to surpass $3.0 billion for fiscal 2019 Reported net income of $56.0 million, or $1.31 per diluted share Adjusted net income of $119.5 million, or $2.80 per diluted share (1) Adjusted EBITDA increased 48.4% to $295.7 million (1); improved Adjusted EBITDA margin(1) by 160 basis points to 9.5% from 7.9% in FY 2018 Completed three acquisitions, including WSB Titan, a strategic acquisition which provided entry to the Canadian market and extended our leadership position in North America with expanded scale and footprint Opened eight greenfield locations Generated strong operating and free cash flow(1) of $193.6 and $174.8 million, respectively Net leverage decreased to 3.6 times at end of Q4 2019 from 4.2 times at end of Q1 2019 Repurchased $16.5 million, or 978,000 shares, of our common stock; approximately $58.5 million of availability remaining under the existing authorization For a reconciliation of Adjusted Net Income, Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow to the most directly comparable GAAP metrics, see Appendix.

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Fiscal Q4 2019 Performance Gross Profit ($ mm) Gross Profit & Margin Net Sales & Mix 5 Net Sales ($ mm) +22.7% YOY Organic net sales growth of 7.0% Wallboard: +3.8% organic (Volume ~+3%/Price ~+1%) Ceilings: +13.7% organic (Volume ~+5%/Price ~+9%) Steel: +8.3% organic (Volume ~+4%/Price ~+4%) Other: +7.8% organic Gross Profit up 24.8% as a result of higher sales, both organically and including positive impact of acquisitions, as well as pricing improvement Gross margin of 32.9% up from 32.4% last year due to contributions from Titan, favorable price-cost dynamics and mix On a sequential basis, gross margin improved 50 basis points from 32.4% in Q3 $635.8 $780.1 $0 $100 $200 $300 $400 $500 $600 $700 $800 Fiscal Q4 2018 Fiscal Q4 2019 44% 15% 17% 24% 41% 14% 16% 28%

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Fiscal Q4 2019 Performance Adj. EBITDA ($ mm) Net Income & Adjusted EBITDA (1) For a reconciliation of Adjusted SG&A, Adjusted EBITDA, Adjusted Net Income and Adjusted EBITDA Margin to the most directly comparable GAAP metrics, see Appendix. Fiscal Q4 2019 includes a $5.9 million favorable impact to Adjusted SG&A and Adjusted EBITDA related to the amendment of existing GMS equipment operating leases to capital leases. We have excluded this impact here for comparability. +46.9% YOY 6 24.6% 23.6% SG&A and Adjusted SG&A (1) Adj. SG&A ($ mm) 7.9% 9.4% SG&A% ex. Leases(2): 24.4% -20 bps Reported net income was $16.6 million in Q4 2019 and $9.9 million in Q4 2018 Adjusted net income was $28.7 million in Q4 2019 and $23.5 million in Q4 2018 Adjusted EBITDA up 46.9% reflecting contributions from Titan, growth in base business and operational improvements Adjusted EBITDA margin up 150 bps year over year; excluding leases, up 70 bps Reported SG&A was $190.6 million (24.4% of sales) in Q4 2019 and $161.6 million (25.4% of sales) in Q4 2018 Adjusted SG&A was $184.3 million (23.6% of sales) in Q4 2019 and $156.3 million (24.6% of sales) in Q4 2018 Adjusted SG&A as % of sales reduced by 100 bps year over year: 20 bps due to increased cost efficiencies partially offset by inflationary pressures, primarily in logistics, as well as unanticipated insurance and the timing of certain other costs Remaining 80 bps due to lease changes Margin ex. Leases(2): 8.6% +70 bps $50.1 $73.5 $0 $30 $60 $90 Fiscal Q4 2018 Fiscal Q4 2019 $156.3 $184.3 $0 $25 $50 $75 $100 $125 $150 $175 Fiscal Q4 2018 Fiscal Q4 2019

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Attractive Capital Structure Generated operating and free cash flow (1) of $88.2 million and $82.8 million, respectively, reducing net debt by $65.6 million and repurchasing $5.0 million of common stock Substantial liquidity, with $47.3 million of cash on hand and an additional $313.7 million available under our revolving credit facilities First Lien Term Loan at L+275 (~80% of total long term debt) matures 2025 Commentary Leverage Summary Net Debt / PF Adjusted EBITDA (2) For a reconciliation of Free Cash Flow to the most directly comparable GAAP metric, see Appendix. See appendix for a reconciliation of Pro Forma Adjusted EBITDA. Net of unamortized discount of $2.4mm, $2.3mm, $2.2mm and $2.1mm as of July 31, 2018, October 31, 2018, January 31, 2019 and April 30, 2019, respectively. Net of deferred financing costs of $13.6mm, $13.1mm, $12.6mm and $12.1 mm as of July 31, 2018, October 31, 2018, January 31, 2019 and April 30, 2019, respectively. Net of unamortized discount of $1.5mm, $1.4mm, $1.3mm and $1.2 mm as of July 31, 2018, October 31, 2018, January 31, 2019 and April 30, 2019, respectively. 7 4.2x 3.8x 3.8x 3.6x 7/31/18 LTM 10/31/18 LTM 1/31/2019 LTM 4/30/2019 LTM ($ mm) 7/31/18 10/31/18 1/31/19 4/30/19 LTM LTM LTM LTM Cash and cash equivalents $37 $53 $74 $47 Asset-Based Revolver $215 $153 $138 $44 First Lien Term Loan (3)(4) 978 976 975 973 Capital Lease Obligations 94 100 105 109 Installment Notes (5) 16 15 16 15 Total Debt $1,304 $1,245 $1,234 $1,141 Total Net Debt $1,267 $1,192 $1,160 $1,094 PF Adj. EBITDA (2) $304 $310 $305 $302 Total Debt / PF Adj. EBITDA 4.3x 4.0x 4.0x 3.8x Net Debt / PF Adj. EBITDA 4.2x 3.8x 3.8x 3.6x

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Leading Specialty Distributor Poised for Continued Growth 8 Market – Leading Distributor of Interior Building Products with significant scale and local expertise Differentiated Service Model Drives Market Leadership Multiple Levers to Drive Growth – Organic Growth, Greenfields, M&A, Operating Leverage Capitalizing on growth in Large, Diverse End Markets Entrepreneurial Culture with Dedicated Employees and Experienced Leadership Driving Superior Execution

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Appendix

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Summary Quarterly Financials 10 Note: Fiscal year end April 30. Includes greenfields, which we consider extensions of “base business.” FY18 acquired branches have been updated to reflect the number of acquired branches that are included within the sales from acquisitions. (In millions, except per share data) 1Q18 2Q18 3Q18 4Q18 FY18 1Q19 2Q19 3Q19 4Q19 FY19 (Unaudited) Wallboard Volume (MSF) 914 929 826 878 3,548 985 1,025 912 993 3,915 Wallboard Price ($ / '000 Sq. Ft.) 311 $ 311 $ 312 $ 319 $ 313 $ 323 $ 327 $ 326 $ 324 $ 325 $ Wallboard 285 $ 288 $ 256 $ 280 $ 1,110 $ 318 $ 335 $ 297 $ 322 $ 1,272 $ Ceilings 100 102 90 96 387 116 118 105 112 452 Steel framing 105 103 97 107 412 129 136 117 125 507 Other products 153 155 142 153 603 215 245 204 221 885 Net sales 642 648 586 636 2,511 778 834 724 780 3,116 Cost of sales 437 436 390 430 1,693 533 566 490 523 2,112 Gross profit 205 212 195 206 819 245 268 234 257 1,004 Gross margin 31.9% 32.8% 33.4% 32.4% 32.6% 31.5% 32.2% 32.4% 32.9% 32.2% Operating expenses: Selling, general and administrative expenses 156 160 156 162 634 185 185 178 191 739 Depreciation and amortization 16 17 16 16 66 26 31 30 30 117 Total operating expenses 172 177 173 178 699 212 216 208 221 857 Operating income 33 36 23 28 119 33 52 26 36 147 Other (expense) income: Interest expense (8) (8) (8) (8) (31) (16) (19) (20) (19) (74) Change in fair value of financial instruments (0) (0) (0) (5) (6) (6) (0) - - (6) Write-off of discount and deferred financing costs (0) - - - (0) - - - - - Other income, net 0 1 1 1 2 1 0 1 1 3 Total other expense, net (7) (8) (7) (13) (35) (22) (19) (19) (18) (77) Income from continuing operations, before tax 25 28 15 15 84 11 33 7 18 70 Income tax expense (benefit) 10 10 (4) 5 21 3 8 1 2 14 Net income 15 $ 18 $ 20 $ 10 $ 63 $ 9 $ 25 $ 6 $ 17 $ 56 $ Business Days 64 65 62 63 254 64 65 62 63 254 Net Sales by Business Day 10.0 $ 10.0 $ 9.4 $ 10.1 $ 9.9 $ 12.2 $ 12.8 $ 11.7 $ 12.4 $ 12.3 $ Base Business Branches (1) (2) 206 206 207 207 207 209 209 210 214 214 Acquired Branches (2) - 4 5 7 7 37 38 38 40 40 Total Branches 206 210 212 214 214 246 247 248 254 254

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Quarterly Cash Flows 11 Free cash flow is a non-GAAP financial measure defined as net cash provided by (used in) operations less capital expenditures. Differences may occur due to rounding. ($ in millions) (Unaudited) 1Q18 2Q18 3Q18 4Q18 FY18 1Q19 2Q19 3Q19 4Q19 FY19 Net income $ 15.3 $ 18.0 $ 19.7 $ 9.9 $ 63.0 $ 8.7 $ 24.9 $ 5.8 $ 16.6 $ 56.0 Non-cash changes & other changes (0.2) 13.3 14.9 35.3 63.4 7.1 45.3 19.8 47.0 119.3 Changes in primary working capital components: Trade accounts and notes receivable (12.9) (8.9) 36.4 (26.3) (11.8) (41.0) (4.4) 68.6 (36.8) (13.7) Inventories (3.3) (4.0) (16.3) (11.2) (34.8) (20.9) 16.4 (7.0) 16.7 5.2 Accounts payable 9.5 5.1 (20.3) 17.1 11.4 (1.7) 11.2 (27.4) 44.7 26.8 Cash provided by (used in) operating activities 8.5 23.5 34.4 24.9 91.2 (47.8) 93.5 59.8 88.2 193.6 Purchases of property and equipment (5.5) (2.9) (5.0) (10.3) (23.7) (3.8) (5.4) (4.2) (5.4) (18.8) Proceeds from sale of assets 1.4 0.5 0.4 0.5 2.9 0.3 0.4 0.3 0.3 1.2 Acquisitions of businesses, net of cash acquired (3.1) (15.3) (5.2) (4.8) (28.3) (575.5) (3.4) (0.8) (3.4) (583.1) Cash (used in) investing activities (7.2) (17.7) (9.7) (14.6) (49.2) (579.0) (8.4) (4.8) (8.5) (600.7) Cash provided by (used in) financing activities 3.9 (5.8) (15.5) (2.8) (20.2) 627.3 (68.7) (33.9) (105.7) 419.0 Effect of exchange rates - - - - - (0.0) (0.4) 0.4 (1.0) (1.0) Increase in cash and cash equivalents 5.2 0.0 9.2 7.5 21.8 0.4 16.0 21.5 (27.0) 10.9 Balance, beginning of period 14.6 19.7 19.8 28.9 14.6 36.4 36.8 52.9 74.3 36.4 Balance, end of period $ 19.7 $ 19.8 $ 28.9 $ 36.4 $ 36.4 $ 36.8 $ 52.9 $ 74.3 $ 47.3 $ 47.3 Supplemental cash flow disclosures: Cash paid for income taxes $ 1.8 $ 26.7 $ 6.6 $ 3.9 $ 39.0 $ 1.0 $ 9.5 $ 5.7 $ 3.2 $ 19.4 Cash paid for interest $ 6.8 $ 7.3 $ 7.1 $ 7.4 $ 28.6 $ 11.0 $ 20.0 $ 14.8 $ 20.7 $ 66.4 Cash provided by (used in) operating activities $ 8.5 $ 23.5 $ 34.4 $ 24.9 $ 91.2 $ (47.8) $ 93.5 $ 59.8 $ 88.2 $ 193.6 Purchases of property and equipment (5.5) (2.9) (5.0) (10.3) (23.7) (3.8) (5.4) (4.2) (5.4) (18.8) Free cash flow (1) 3.0 20.6 29.5 14.6 67.4 (51.6) 88.1 55.6 82.8 174.8 Historical

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Quarterly Net 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. FY18 quarterly sales from acquisitions have been updated in accordance with our presentation of base business for the FY19 vs. FY18 comparative period. 12 ($ in millions) 1Q18 2Q18 3Q18 4Q18 FY18 1Q19 2Q19 3Q19 4Q19 FY19 (Unaudited) Base Business (1) (2) 642 $ 642 $ 579 $ 627 $ 2,490 $ 681 $ 698 $ 617 $ 671 $ 2,667 $ Acquisitions (2) - 6 7 8 21 97 136 107 109 449 Total Net Sales 642 $ 648 $ 586 $ 636 $ 2,512 $ 778 $ 834 $ 724 $ 780 $ 3,116 $ Total Net Sales Growth Wallboard 13.3% 6.9% 0.6% (0.8%) 4.8% 11.6% 16.0% 16.0% 15.1% 14.6% Ceilings 15.5% 19.0% 10.5% 9.3% 13.6% 16.2% 16.5% 16.4% 17.4% 16.6% Steel Framing 24.1% 7.4% 3.5% 6.8% 10.0% 23.4% 31.5% 21.4% 16.3% 23.1% Other Products 19.8% 10.2% 7.4% 5.6% 10.5% 40.7% 58.4% 43.6% 44.4% 46.9% Total Net Sales 16.8% 9.5% 4.1% 3.4% 8.3% 21.2% 28.7% 23.6% 22.7% 24.1% Base Business Sales Growth Wallboard 4.9% 3.0% (1.0%) (1.4%) 1.5% 2.5% 3.7% 3.9% 3.8% 3.5% Ceilings 10.6% 12.9% 7.4% 5.1% 9.0% 8.1% 10.0% 10.6% 13.7% 10.5% Steel Framing 10.0% 2.3% 3.6% 5.5% 5.4% 16.1% 21.9% 13.1% 8.3% 14.8% Other Products 10.0% 6.1% 7.2% 4.6% 7.0% 4.6% 8.5% 4.5% 7.8% 6.4% Total Base Business Net Sales 7.8% 5.1% 2.9% 2.0% 4.5% 6.1% 8.7% 6.6% 7.0% 7.1%

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Quarterly Net Income to Adjusted EBITDA Adjusted EBITDA Reconciliation Commentary Represents non-cash expense related to stock appreciation rights agreements Represents non-cash compensation expense related to changes in the values of noncontrolling interests Represents non-cash equity-based compensation expense related to the issuance of share-based awards Represents severance expenses and other costs permitted in calculations under the ABL Facility and the First Lien Facility Represents one-time costs related to acquisitions paid to third parties Represents the non-cash cost of sales impact of purchase accounting adjustments to increase inventory to its estimated fair value Represents mark-to-market adjustments for derivative financial instruments Represents costs related to our secondary offering paid to third-party advisors Represents expenses paid to third-party advisors related to debt refinancing activities 13 ( $ in 000s) 1Q18 2Q18 3Q18 4Q18 FY18 1Q19 2Q19 3Q19 4Q19 FY19 (Unaudited) Net Income 15,343 $ 18,023 $ 19,686 $ 9,919 $ 62,971 $ 8,650 $ 24,912 $ 5,815 $ 16,625 $ 56,002 $ Add: Interest Expense 7,500 7,917 7,871 8,107 31,395 16,188 19,182 19,526 18,781 73,677 Add: Write off of debt discount and deferred financing fees 74 - - - 74 - - - - - Less: Interest Income (23) (26) (44) (84) (177) (236) 203 (10) (23) (66) Add: Income Tax Expense (Benefit) 10,060 9,983 (4,488) 5,328 20,883 2,836 8,059 1,442 1,702 14,039 Add: Depreciation Expense 5,990 6,023 6,009 6,054 24,075 10,610 11,538 11,919 12,389 46,456 Add: Amortization Expense 10,355 10,690 10,481 9,928 41,455 15,712 19,249 18,301 17,741 71,003 EBITDA 49,299 $ 52,610 $ 39,515 $ 39,252 $ 180,676 $ 53,760 $ 83,143 $ 56,993 $ 67,215 $ 261,111 $ Adjustments Stock appreciation rights expense (A) 590 642 631 455 2,318 334 649 442 1,305 2,730 Redeemable noncontrolling interests (B) 866 164 340 498 1,868 531 282 (35) 410 1,188 Equity-based compensation (C) 473 375 430 418 1,695 404 1,094 1,140 1,268 3,906 Severance and other permitted costs (D) 205 113 8 256 581 4,836 882 229 2,205 8,152 Transaction costs (acquisition and other) (E) 159 88 75 3,049 3,370 4,753 841 1,066 1,198 7,858 (Gain) loss on disposal of assets (390) (207) (51) 139 (509) (121) (173) (118) (113) (525) Effects of fair value adjustments to inventory (F) - 187 89 48 324 4,129 - - 47 4,176 Change in fair value of financial instruments (G) 196 238 276 5,415 6,125 6,019 376 - - 6,395 Secondary public offerings (H) 631 - 894 - 1,525 - - - - - Debt transaction costs (I) 723 35 - 527 1,285 627 51 - - 678 Total Add-Backs 3,453 $ 1,635 $ 2,692 $ 10,805 $ 18,582 $ 21,512 $ 4,002 $ 2,724 $ 6,320 $ 34,558 $ Adjusted EBITDA (as reported) 52,752 $ 54,245 $ 42,207 $ 50,057 $ 199,258 $ 75,272 $ 87,145 $ 59,717 $ 73,535 $ 295,669 $

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LTM Net Income to Pro Forma Adjusted EBITDA Pro Forma Adjusted EBITDA Reconciliation Commentary 14 Represents non-cash expense related to stock appreciation rights agreements Represents non-cash compensation expense related to changes in the values of noncontrolling interests Represents non-cash equity-based compensation expense related to the issuance of share-based awards Represents severance expenses and other costs permitted in calculations under the ABL Facility and the First Lien Facility Represents one-time costs related to our initial public offering and acquisitions paid to third party advisors as well as costs related to the retirement of corporate stock appreciation rights Represents management fees paid to AEA, which were discontinued after the IPO Represents the non-cash cost of sales impact of purchase accounting adjustments to increase inventory to its estimated fair value Represents mark-to-market adjustments for derivative financial instruments Represents one-time costs related to our secondary offerings paid to third party advisors Represents expenses paid to third party advisors related to debt refinancing activities Pro forma impact of earnings from acquisitions from the beginning of the LTM period to the date of acquisition, including synergies ( $ in 000s) 2019 2018 2017 2016 (Unaudited) Net Income 56,002 $ 62,971 $ 48,886 $ $ 12,564 Add: Interest Expense 73,677 31,395 29,360 37,418 Add: Write off of debt discount and deferred financing fees - 74 7,103 - Less: Interest Income (66) (177) (152) (928) Add: Income Tax Expense 14,039 20,883 22,654 12,584 Add: Depreciation Expense 46,456 24,075 25,565 26,667 Add: Amortization Expense 71,003 41,455 43,675 37,548 EBITDA 261,111 $ 180,676 $ 177,091 $ $ 125,853 Adjustments Stock appreciation rights expense (A) 2,730 2,318 148 1,988 Redeemable noncontrolling interests (B) 1,188 1,868 3,536 880 Equity-based compensation (C) 3,906 1,695 2,534 2,699 Severance and other permitted costs (D) 8,152 581 (157) 379 Transaction costs (acquisition and other) (E) 7,858 3,370 2,249 3,751 Gain on disposal of assets (525) (509) (338) (645) AEA management fee (F) - - 188 2,250 Effects of fair value adjustments to inventory (G) 4,176 324 946 1,009 Change in fair value of financial instruments (H) 6,395 6,125 382 - Secondary public offerings (I) - 1,525 1,385 19 Debt transaction costs (J) 678 1,285 265 - Total Add-Backs 34,558 $ 18,582 $ 11,138 $ 12,330 $ Adjusted EBITDA (as reported) 295,669 $ 199,258 $ 188,229 $ 138,183 $ Contributions from acquisitions (K) 6,717 1,280 9,500 12,093 Pro Forma Adjusted EBITDA 302,386 $ 200,538 $ 197,729 $ 150,276 $

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Reconciliation of Income Before Taxes to Adjusted Net Income Adjusted Net Income Reconciliation Commentary 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. Full year amount for FY19 was $49.6 million. Normalized cash tax rate determined based on our estimated taxes for fiscal 2019 excluding the impact of purchase accounting and certain other deferred tax amounts. Includes the effect of 1.1 million shares of equity issued in connection with the acquisition of Titan that were exchangeable for the Company’s common stock as of April 30, 2019. 15 ($ in 000s) 4Q19 4Q18 FY19 FY18 (Unaudited) Income before taxes 18,327 $ 15,247 $ 70,041 $ 83,854 $ EBITDA add-backs 6,320 10,805 34,558 18,582 Write-off of debt discount and deferred financing fees - - - 74 Purchase accounting depreciation and amortization (A) 12,369 5,233 49,619 21,271 Adjusted pre-tax income 37,016 31,285 154,218 123,781 Adjusted income tax expense 8,329 7,790 34,699 39,077 Adjusted net income 28,687 23,495 119,518 84,704 Effective tax rate (B) 22.5% 24.9% 22.5% 31.6% Weighted average shares outstanding: Basic 40,487 41,048 40,914 41,015 Diluted (C) 42,105 42,151 42,718 42,163 Adjusted net income per share: Basic 0.71 $ 0.57 $ 2.92 $ 2.07 $ Diluted 0.68 $ 0.56 $ 2.80 $ 2.01 $

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Reconciliation of Gross Profit to Adjusted Gross Profit Adjusted Gross Profit Reconciliation Commentary Represents the non-cash cost of sales impact of purchase accounting adjustments to increase inventory to its estimated fair value 16 (Unaudited) 1Q18 2Q18 3Q18 4Q18 FY2018 1Q19 2Q19 3Q19 4Q19 FY2019 ($ in millions) Gross Profit - Reported 205.1 $ 212.3 $ 195.4 $ 205.8 $ 818.6 $ 244.8 $ 268.2 $ 234.2 $ 256.9 $ 1,004.1 $ Adjustments Effects of fair value adjustments to inventory (A) - 0.2 0.1 0.0 0.3 4.1 - - 0.0 4.2 Gross Profit - Adjusted 205.1 $ 212.4 $ 195.5 $ 205.8 $ 818.9 $ 248.9 $ 268.2 $ 234.2 $ 257.0 $ 1,008.3 $ Gross Margin - Adjusted 31.9% 32.8% 33.4% 32.4% 32.6% 32.0% 32.2% 32.4% 32.9% 32.4%

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Reconciliation of SG&A to Adjusted SG&A & Organic Adjusted SG&A Adjusted SG&A Reconciliation Commentary Represents non-cash expense related to stock appreciation rights agreements Represents non-cash compensation expense related to changes in the values of noncontrolling interests Represents non-cash equity-based compensation expense related to the issuance of share-based awards Represents severance expenses and other costs permitted in calculations under the ABL Facility and the First Lien Facility Represents one-time costs related to acquisitions paid to third parties. Represents costs paid to third-party advisors related to the secondary public offering of our common stock Represents expenses paid to third-party advisors related to debt refinancing activities Represents SG&A incurred by 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 17 (Unaudited) 1Q18 2Q18 3Q18 4Q18 FY2018 1Q19 2Q19 3Q19 4Q19 FY2019 ($ in millions) SG&A - Reported 156.1 $ 159.9 $ 156.3 $ 161.6 $ 633.9 $ 185.4 $ 185.3 $ 178.2 $ 190.6 $ 739.5 $ Adjustments Stock appreciation rights (expense) benefit (A) (0.6) (0.6) (0.6) (0.5) (2.3) (0.3) (0.6) (0.4) (1.3) (2.7) Redeemable noncontrolling interests (B) (0.9) (0.2) (0.3) (0.5) (1.9) (0.5) (0.3) 0.0 (0.4) (1.2) Equity-based compensation (C) (0.5) (0.4) (0.4) (0.4) (1.7) (0.4) (1.1) (1.1) (1.3) (3.9) Severance and other permitted costs (D) (0.2) (0.1) (0.0) (0.3) (0.6) (4.8) (0.9) (0.2) (2.2) (8.2) Transaction costs (acquisition and other) (E) (0.2) (0.1) (0.1) (3.0) (3.4) (4.8) (0.8) (1.1) (1.2) (7.9) Gain (loss) on disposal of assets 0.4 0.2 0.1 (0.1) 0.5 0.1 0.2 0.1 0.1 0.5 Secondary Public Offering (F) (0.6) - (0.9) - (1.5) - - - - - Debt Related Costs (G) (0.7) (0.0) - (0.5) (1.3) (0.6) (0.1) - - (0.7) SG&A - Adjusted 152.8 $ 158.7 $ 153.9 $ 156.3 $ 621.7 $ 174.1 $ 181.6 $ 175.5 $ 184.3 $ 715.5 $ % of net sales 23.8% 24.5% 26.3% 24.6% 24.8% 22.4% 21.8% 24.2% 23.6% 23.0% SG&A - Acquistions (H) - $ 1.0 $ 1.2 $ 0.5 $ 2.7 $ 17.8 $ 25.6 $ 22.8 $ 23.8 $ 90.0 $ Organic Adjusted SG&A 152.8 $ 157.7 $ 152.7 $ 155.8 $ 619.0 $ 156.3 $ 156.1 $ 152.7 $ 160.5 $ 625.5 $

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Q&A

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