GMS Inc. (NYSE:GMS) Q1 Fiscal 2025 Earnings Overview
- GMS Inc. reported an EPS of $1.93, missing the estimated $2.11, and revenue of approximately $1.45 billion, below the expected $1.48 billion.
- The company's price-to-earnings (P/E) ratio stands at approximately 13.92, indicating moderate investor confidence.
- Challenges such as increased costs and steel price deflation have led to a miss in earnings and sales estimates, alongside a year-over-year decline in margins.
On Thursday, August 29, 2024, GMS Inc. (NYSE:GMS), a key player in the distribution of wallboard and suspended ceiling systems, reported its earnings before the market opened, revealing an earnings per share (EPS) of $1.93. This figure fell short of the estimated $2.11, indicating a discrepancy between expected and actual financial performance. The company's revenue for the period was approximately $1.45 billion, also below the expected $1.48 billion. This report marked the beginning of the fiscal year 2025 for GMS, setting a tone of financial scrutiny as the company navigates through its operational challenges and market expectations.
The earnings call, as detailed by Seeking Alpha, featured key company participants including Carey Phelps, Vice President of Investor Relations; John Turner, President and CEO; and Scott Deakin, Senior Vice President and CFO. The presence of analysts from notable firms such as Stephens, Baird, and RBC Capital Markets underscores the investment community's interest in GMS's financial health and strategic direction. This level of engagement reflects the market's anticipation of how GMS plans to address its current financial challenges and leverage opportunities for growth.
GMS's financial metrics provide a deeper insight into the company's market valuation and financial health. With a price-to-earnings (P/E) ratio of approximately 13.92, GMS's shares are trading at nearly 14 times its earnings over the last twelve months, suggesting a moderate level of investor confidence in the company's future earnings potential. The price-to-sales (P/S) ratio stands at about 0.62, indicating that investors are paying 62 cents for every dollar of sales, a metric that offers perspective on the company's valuation relative to its revenue generation. Additionally, the enterprise value to sales (EV/Sales) ratio of roughly 0.91 and the enterprise value to operating cash flow (EV/OCF) ratio of approximately 12.46 further elucidate the company's valuation in relation to its sales and operating cash flow, respectively.
Despite witnessing improving volume trends and benefiting from favorable pricing, GMS faced setbacks due to increased costs and steel price deflation, as highlighted by Zacks Investment Research. These challenges not only led to a miss in both earnings and sales estimates but also contributed to a year-over-year decline in margins. The financial figures and ratios, such as the debt-to-equity (D/E) ratio near 0.88 and the current ratio sitting at about 2.31, reveal a moderate level of debt relative to equity and the company's ability to cover its short-term liabilities with its short-term assets, respectively. These metrics are crucial for investors and analysts in assessing the company's financial stability and operational efficiency amidst the reported challenges.
In summary, GMS's first-quarter fiscal 2025 results reflect a mix of improving and challenging factors that have impacted its financial performance. The detailed financial metrics and the engagement of key company participants and analysts during the earnings call provide a comprehensive view of GMS's current financial health and strategic direction. As the company navigates through increased costs and market fluctuations, its financial ratios and market valuation metrics will continue to be key indicators of its ability to adapt and grow in the competitive distribution market.
| Symbol | Price | %chg |
|---|---|---|
| 6367.T | 18265 | 0.27 |
| ARNA.JK | 605 | 0 |
| TOTO.JK | 218 | 0 |
| MLIA.JK | 308 | 0 |
GMS Inc. (NYSE:GMS) Earnings Report Highlights
- GMS Inc. (NYSE:GMS) reported revenue of $1.47 billion, surpassing estimates.
- The company's quarterly earnings were $2.02 per share, missing the Zacks Consensus Estimate.
- Adjusted EBITDA was $152.2 million, with a margin decrease to 10.3%.
GMS Inc. (NYSE:GMS) is a leading distributor of specialty building products in North America. The company provides a wide range of construction materials, including wallboard, ceilings, and insulation. GMS competes with other major distributors in the industry, striving to maintain its market position through strategic growth and operational efficiency.
On December 5, 2024, GMS reported its earnings, revealing a revenue of approximately $1.47 billion, which exceeded the estimated $1.46 billion. This achievement highlights the company's ability to generate sales despite challenging market conditions. Despite the revenue growth, GMS faced challenges in profitability. The company reported quarterly earnings of $2.02 per share, falling short of the Zacks Consensus Estimate of $2.26 per share. This performance also marks a decline from the $2.30 per share earnings reported in the same quarter last year. Net income for the quarter was $53.5 million, or $1.35 per diluted share, down from $81 million, or $1.97 per diluted share, in the previous year.
The company's adjusted EBITDA was $152.2 million, reflecting a decrease of $15.3 million, or 9.2%, with the adjusted EBITDA margin dropping to 10.3% from 11.8%. Cash provided by operating activities amounted to $115.6 million, while free cash flow was $101.5 million, compared to $118.1 million in the previous year. These figures indicate a decline in operational efficiency and cash generation.
GMS's financial ratios provide further insight into its performance. The company has a price-to-earnings (P/E) ratio of approximately 18.56, a price-to-sales ratio of about 0.72, and an enterprise value to sales ratio of around 0.77. The debt-to-equity ratio is approximately 0.24, indicating a relatively low level of debt compared to equity. The current ratio is around 2.23, suggesting a strong ability to cover short-term liabilities with short-term assets.
Stephens Lowers Price Target on GMS to $95 Following Recent Earnings
Stephens analysts reduced their price target for GMS (NYSE:GMS) to $95 from $112, while maintaining an Overweight rating on the stock. The analysts explained that GMS’s recent earnings release has increased uncertainty regarding near-term pricing dynamics in the wallboard distribution sector.
Although manufacturers have had some success with price hikes earlier this year, GMS has experienced delays in passing these increases on to its customers. This situation is expected to improve in the coming months, potentially mitigating the negative impact of product mix as residential demand is anticipated to surpass commercial demand in the near future.
Additionally, fluctuating steel prices are creating short-term margin pressures. Despite discussions about possible price increases, current guidance assumes that steel pricing will remain subdued. Although the immediate outlook does not appear particularly promising, the analysts believe that the pricing environment for GMS will improve in the upcoming quarters. Following a recent pullback, they also noted that GMS’s valuation is among the most attractive in the building product distribution sector.
