GMS - Earnings call transcript Q4 2020

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Operator

Greetings. Welcome to GMS Fiscal Fourth Quarter and Full Year 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. is conference this note being recorded. Please now Vice President, will turn the Kratcoski, Leslie to over Investor conference I Relations. Thank you.

You may begin.

Leslie Kratcoski

Thanks, call quarter thank the joined Deakin, Sherry. you for and Executive Turner, Financial Officer. Vice John joining and Good President Scott us today and by GMS for fiscal of conference fourth the XXXX. I'm President Officer; Chief morning Chief for and

section have the call answers posted contain release prepared morning, our Investors presentation in Reform in defined to to issued management's press statements, Private addition forward-looking gms.com. we In to at Securities Act this slides accompany the call, may On Litigation of website XXXX. this of as the your today's questions and remarks

and Forward-looking may statements today. uncertainties, control beyond actual which cause address from and our are matters of that those risks to to many differ results discussed are subject

full statements a to the the other related references on in this and company non-GAAP to XXXX. forward-looking periodic measures fiscal in no company's obligation slides. The note April fiscal XX-K reminder, XX, that Today's the relate presentation year Please year Risk current future. statements and including discussion Factors XXXX quarter presentation and the company's are press reconciliations call of of includes to fourth As filings reports. are the expectations. certain forward-looking and the measures, forward-looking provided and to non-GAAP also ended in estimates definitions detailed section these SEC, and contained release the quarter and to discussions assumes the in more the Listeners any represent update the management's with statements review encouraged

we interest that that, John I'll of the the in Turner. to kindly to and limit JT? now one once session yourself With question-and-answer of begin the the turn over up. question one Finally, call request follow call, you we time,

John Turner

including My all we by Leslie. thank I'd Good of you review and begin joining that will a us provide of the highlights, who colleagues I'll financial I'll to the we've current results include cover the Scott, turn to are closing operating families pandemic. update then questions. remarks call, over our then response our it you, saying on your you to and sales thoughts like will and in actions taking hope and And today. opening well. Thank some of joining an share morning before for trends. your impacts safe taken

everyone prayers turn our and off, the remains by pandemic. the the ahead impacted well X, to partners to business who has we being and safety thoughts taken health, entire have of the safety go crisis, do recommendations you are COVID-XX equipment. The enhancing can family In response compliance to communities If group by of actions to use routine operating the and our who our showrooms, personal employees, first and been in disciplined with requirements, stakeholders that access promote health including traffic with Slide modifying cleaning, priority. GMS and employees, home guidelines. of top protocols meetings, implementing These public recommending work so curtailing and social precautions include restricting in effectively walk-in or appropriate travel from and distancing, limiting protective facilities of practicing non-essential

to to protocols all support reopening recommendations who appreciation of guidelines and customers we as health share come continue As our together teammates other we this and each sincere officials engaged, of and our monitor proactive governments, I for as will my appropriate. our time. the and be public adjust local during to of we like focused state would

our and be the first gratitude continue every deep who at frontlines responders, to like Additionally, on I on behalf providers the healthcare and have of would everyone workers day. express GMS, essential been to to

we with the strategic priorities. had quarter fourth fiscal our on the entered first of quarters we XXXX, execution experienced trends grounded Through with three X, growth. we volume generated focus our what Slide seen effective on momentum, for team's line mid-March, to Turning favorable robust strong and of market in end

disruptions second deemed Even to half in majority from escalate construction which and were enabled distribution our in building began businesses products March, open. the essential COVID-XX our of of markets, of to fortunately most keep the us as locations

so and demand However, late March significantly in weakened more even in April.

and paused in required of hardest in some several were remodeling COVID-XX order on were and to large and their customers effects MSAs to projects government on focus by Our markets the to of hit businesses. appropriately building close, understandably mandate of responding the operations retrenched

net fiscal sales high-single-digit a sales and down X.X% by more result, offset March double-digit decrease than February of year-over-year, a April. fourth for was XXXX increase in a were in quarter the As as combined

of will we encouraged higher indication half an how As more our to fourth of and pleased year-over-year our significant was see volume sales in to fourth of of trends detail, growth, quarter the disruptions the improved the Scott were in wallboard momentum since prior quarter. the to the we to generated second cover quarter, pleased the have strong Despite just end overall operations escalation were COVID-XX.

under ensure include proactively earliest benefits demand, discretionary suspending and we're indications Act, These to industry wage remain freeze expenses, Our are utilizing limiting in non-essential increase $XX of changing and hiring ongoing certain other activity, or delaying or costs, certain and but action of capital actions, immediately that to exit to conditions CARES reductions, capital. credit implementing nearly optimizing permanent the revolving leadership well duration upon expenditures, stronger. this reducing financial to drawing XXX(k) locations, team headcount the most positioned not to suspending and response temporarily acquisition even operating employees of of a facilities, areas certain declining plan, closure certain underperforming company of proactively related or of non-currently matching working our all rapidly million liquidity the furloughing critical for deferring contributions which flexibility the improve able quickly we period, reduce only took and

inefficiencies margin Adjusted SG&A slightly was sales, year-over-year. somewhat was of interruptions mix, percentage related lower to as latter selling COVID-XX As business operating expected. the of demand than of previously due a coupled points to more pronounced higher prices. which a basis was the XX of lower result impact overall down sales The environment with gross and lower year-over-year

sales, action our rapid the late results we addition, as impact escalated, reflect cost took took front, in the due the quarter structure In of nature not the on decline significant fourth of quarter. did the while the place the to full pandemic alignment our of in which very cost

or a As sales. a realized of year-over-year decline result, adjusted we million, $XX.X EBITDA X.X% to in

release basis $XX.X the million related turned impairment in of fiscal of in sales our Scott and a constant currency positive. Canada was continuation Canadian trajectory we triggered COVID-XX in disclosed of quarter, as morning, our in second fourth XXXX Canadian dynamics, quarter this first represented in and since operations been had the growth declines year-over-year reporting organic the goodwill experienced As goodwill we X% This approximately press a fiscal positive of on XXXX. specifics as narrowed, the our have timing This annual the sales throughout quarter generated his to part we Notwithstanding, cover now accounting a fourth despite time which recorded test. increase business, impairment. in remarks, will, impairment non-cash disruptions. sales an charge the the our

believe indicate states in and entrance represents long-term previously Trowel calendar our in profitable XXXX, in operations important remain our firmly England fourth important, Canadian GMS’s Trades the into the further very recovery in compelling and Inc., position Supply, and of in acquisition New quarter, announced for to which construction our call we declines XX our in coverage While market. U.S. the increasing bolstering completed component of Vermont, strategy. XXXX thereby Early the the calendar the we current they Canadian that a forecast growth markets

in Panhandle We Beach, enable location also which us participate in to Hurricane following late the in XXXX. Florida, rebuilding Panama fully opened Michael will a Florida greenfield in efforts more City

generated organic and And the X.X%, an significant $XXX disruptions increase and free flow grew cash in only or EBITDA COVID-XX fiscal as executed quickly preserve Strong you quarters strong three although growth did, if X% Slide contracting made just year. in identified quarter, despite the billion EBITDA, sales it but fiscal the also predicted of net the record of year. $X.X would of and margin of the adjusted adjusted turn fourth We adjusted liquidity. have environment of we our of Now $XXX of XX% of have GMS record. would a months progress. X% concluded no teams sales for a almost when generated the and late was resulted respectively also and way million, our to not meaningful first ago, initiatives in in a it and Reported the few business million was proactively EBITDA to the year, for fiscal overall XXXX year one that X, of

dedication business for our teams As of six their Scott open to our us, suppliers now to With provide and it that, to to from to to results we thanks and to organic of extend for to partnership, of our invest and their for of all acquisitions, greenfield perspective the their able leverage customers times commitment, three year. in over my for course net locations our Scott? X.X more I'll a for all of to shareholders financial X.X reduce all debt result, were on turn entrusting times fiscal support. the I'd our like initiatives, business conclude their all to over business QX. our

Scott Deakin

Thank JT. you

to X, Looking fiscal down year. of $XXX.X the sales compared net the million, were X.X% prior quarter at Slide fourth

shutdowns, an marked the on was in the decline quarter to more Washington offset and sales an XX% together more the negative aggregate, XX% million combined, of declined was This $XX pandemic of for Pennsylvania, in in As Overall, to Michigan, sales a modest net momentum, million. by net X% mandatory indication -- subject with we impact February X% in X.X%. range be of markets including decline change In a deep to in a COVID-XX elsewhere. decline $XX increase approximate an approximately much organic of a estimate April. State, more March comprised and sales notably than fourth

from decline sales product mix, by but on pricing X.X% the increase than organic were groups, further decreased price product was year. of was a the shutdowns were volume an declines the of February wallboard sales by April ceiling quarter we impact an the organic respectively. framing, Sales products in which decreased X.X% X.X% than X.X% line X.X% including and X.X% disruptions in included in organic last volume steel increase serve. the a other and mix lower mix flat framing down on April, positive to ceilings more X%. basis. pricing experienced mandated and of X.X% basis, basis, X.X% April other exacerbated disproportionately year-over-year or were an of in with of down Sales growth a Fourth terms markets offset steel Across organic of the on having quarter March sales we same in period a volume or while X.X% of and while volumes case base, On X% mix compared an residential the decline. ones greater projects In In declined. and the on commercial or X.X% organic volume marginally,

wallboard decreased commercial fourth to million the $XXX.X This quarter addition, third was year call. pricing our ago fiscal both declines higher from we given a Gross a of compared impact lower COVID-XX toward environment disruptions, was notably lower range noted anticipated larger our to given at resulting of XXXX, result disruption the related earlier. sales we the margin the for and provided In as call. QX to COVID-XX, the in X.X% quarter due of $XXX.X changes for end the jobs quarter. projects, again was in well higher residential as saw as and fourth competitive The fourth to mix we in from sales. in XX.X% demand related further a this residential both on to pricing steel of the further contribution earnings compared market market the to quarter well Gross deflation earnings deflationary primarily million a was as projects. than due This of had mix, of to XX.X% profit resulting and

to of months pricing net basis due COVID-XX Approximately year to quarter. we to deflationary realized of SG&A first in X, timing was sales Turning the inefficiencies interruptions, certain well as sales two The the related of more as market lower Slide SG&A a expenses the XX previously related XX.X% basis in increased April, experienced. compared than points to to prior remainder adjusted XX.X%, expenses and offsetting in XX of the business this points quarter. percent was the mentioned to leverage as

the time connection of a the we an to impairment our pronounced impairment goodwill annual the resulting in a market goodwill in each the related unit. test, decline Canadian from charge uncertainty The and million in our with non-cash decrease reporting impairment valuations were recorded to $XX.X at primary contributing noted, increase As quarter factors the market discount in and the in rate, impairment analysis. prevalent multiples, fourth

remain near-term COVID-XX flows long-term was reporting cash favorable, consideration. to a resulting in unit’s outlook mid the from forecasted the also While principally evaluation decrease

represented of Fourth $XX.X and class In addition, $XX and settlement and the from proceeds million legal as a settlement. cash of are year we in of ago income. a adjusted with to excluded adjusted margin recorded Both action also adjusted X.X%. quarter goodwill gain an EBITDA net compared a million million a connection the received EBITDA $XX.X charge part adjusted legal EBITDA

responded late March, COVID-XX meaningfully of environment the margin quarter in would the JT our anticipate decremental the higher disruptions to cost realignment rapid of we the a prevented and change While going sudden mentioned, from our the in structure. forward. EBITDA the reflecting adjusted we demand that resulted full escalation This fourth as timing swiftly in nature of results

of For XXXX, first have been businesses the sequential March business the and some to around of end mandated shutdowns reopen. the in begun activity or quarter context in that, majority as fiscal basis. relative as improved have a eased we the net on have since To-date levels, sales lifted, of improvement has experienced

were April. the from weeks levels in levels thus a basis, comparable XX% per up June day in in realized higher down decline April, sequentially in are May per are the double-digit first approximately On through to in June day year-over-year sales in sales and experienced than Specifically, three low-single-digits, far the daily year-over-year compared sales May.

day. sales approximately For per the month an year-over-year May, realized in X% we of decline

recovery June, for of range to adjusted While our to quarter uncertainty pace a fiscal XX% and remainder a in in significant based we the the fiscal we first decline, as market generate EBITDA believe believe XXXX, assumption a the remains and of we with on trajectory year-over-year to-date the quarter for July, to the our coupled digit of first a experience decremental sales similarly within year-over-year single can margin that XX%.

and XXX% a a $XX.X EBITDA. a lower year-over-year net increase XX.X% $X.X range from fourth to resulting our a to strong million in net reduced defensive as capital Now business. capital, of expenditures quarter turning cash is adjustments term increased million of result tightly of to Slide previous cash million end flow model This changes the non-cash and of on for capital flow fiscal million after generation were income expenditures in for adjusted X. This of working anticipated is at million million XXXX of higher of distribution year items $XX.X Free working $X.X the expenditures. million not for nature of $X.X and free cash or of a is $XXX.X impact improvement and delayed $XX.X but we not only our near business direct result lower estimated actions that quarter representative to liquidity. our the capital Capital came manage the of fiscal and preserve represents

disciplined market. on greater remain the there's clarity will in this until We front

to reduction obligations approximate expenditures the As to in $XX capital anticipate XXXX year in in a fiscal fiscal we result, cash same the anticipate time, XXXX. we a lease At million. finance

we our flow the in fiscal in to expect typical excuse cash, relative use we decline the recovery of cadence capital be -- use our significant the quarter working net the overall April. As quarterly of cash markets of quarter. typical XXXX, look the we experienced seen will cash a generating since an fiscal generation, quarterly free free first of first me Combined in anticipate with cash, given

During as million of compared was Net our principal X.X net-debt a the $XX fiscal early million, fourth quarter, times end leverage of fiscal the the quarter of of third by to times end including quarter. XXXX. reduced of the we quarter the X.X prepayment fourth $XXX.X the in as of outstanding

the for free typically quarter. net-debt the aforementioned increase the flow for we that will of result expectations as fiscal first sequentially a quarter, our cash As is leverage expect case in first the

precautionary we credit $XX.X cash to financial hand a flexibility, late our million As measure increase facilities. in and March, on under revolving borrowed

$XX April markets credit about XXXX, of as significant repaid of quarter, we materialize. result, a not prevailing facilities the the As as $XXX.X under credit disruptions the concerns million of XX, revolving Subsequent facilities on of had credit we to availability hand cash million in end borrowings and fourth did the on our our $XXX.X revolving of million.

terms our debt majority XXXX. a of In of until not large structure, our due stability is of overall the capital

back before let line me Now, over we to turn open the questions. call for JT, the

John Turner

you, Thank Scott.

X. and ahead turn go to Slide Let's

operations, made potential. business adjustments of our a on near priorities industry guide While attractive we strategic with continue have the to we business remains significant growth our term our what to and to growth very believe long-term long-term capitalize management

about a in priorities underpenetrated; our where profitably other to and expand reminder, growth are diversifying opportunities and core select we our offering; these growing expanding product geographies of outside As expanding employing core expansion. strategic best include: share product debt in products, products and technology through deliver practices leveraging the further market balanced to expansion. scale acquisition and and with reduction priorities; acquisitions accretive opportunities; greenfield our and A platform and few new words margin

GMS's this financial to downturn. we now Moreover, in in and working recovery, temporary business anticipate who potential with reengage acquisition operational cases as engage we execution on potential from actively in conversations While better pause in in and market continuing earnest the improve. until with taken we dialogue during we're or strength have some are benefit a deal conditions have targets, into active might visibility candidates activity resuming

prepared so are to implement we greenfield expansion working them, our when plans, actively appropriate. most We also that and where to advance are

strategic We out geographic continue important to acquisitions footprint. our as growth and of to see an and component story our greenfield expansion build

year, elements past believe which helping we of the we us is the Over current effectively navigate on more made other have our growth progress also strategy, environment.

has employing to to example, our our productivity but the our throughout enhance potential leverage top-line For strategic and and e-commerce lasting business. our initiative further only scale commitment represents drive growth, not technology further

more begin spectrum With positioned how relationships a complement further the evolution of in to deep business. in are and we customers of the more conducted our offering and and experiences result as a change we broader to wider for virtual business COVID-XX our the pandemic, potential believe is inherent well of in-person

strategy experiences e-commerce have Our customer and to focused a will allow control developing invested deliver to digital has accommodate unified how business a unique be the the way, updated platform input multiyear future. Picking journey to we continue on business a conducted our end-to-end in the been customers along processes to platform to us our experience in platform on and and customers.

through customer can for in drivers going digital et data different time. as in integrated companies dispatchers, with all experience Employees, cetera, products such interact and unified each commerce, to While the salespeople, work investment often and on offering, including platform offer delivery, customers we a a together transformation platform. look same tightly payments, and real

in past that to the trends now the digital construction our I pandemic. experience, recent in strong laid our you'll with encouraging. Unfortunately, e-commerce hearing of more customer provide wanted In downturn, and prior unlike you adoption be importance ever. future, market Scott is providing we've the fundamentals update the this evolving accelerating end were While customers conclusion, as a the perhaps to are today, out given than about seen indeed strategies very more

projects uncertainty continue family. the operations, views Current slowly outlook having a both back shape However, conditions. and of the XXXX duration and Within subsequent and single commercial multi macroeconomic downturn to recovery. with XXXX regarding vary ones, construction include variety there construction calendar more to than the external to both underway continuing being in and residential are online forecasts of and projects our as with commercial residential and and be own current for does completed respect given come

of most pipelines Our principally are generally near-term customers and optimistic. backlogs remain intact our project and

in the depending activity On geography project and type. we commercial variation on side, see

residential most On steady activity are levels side, the for the currently part.

what see than could can. few will the With disruption remains dynamics, market visibility the to months we more Not respective all Although at pause said, be starts we a due our cloudy a of focus that past in best. on spring. this out controlling

prudent necessary to that order and navigating long-term We the open to and now with to service have costs, to respect and to we with and business. liquidity foundation I'm only extent position success. our reintroducing the will to doing the for our the cash operating so time taken optimize need we align continue demand. for strong the business call effectively we we environment being, take ability built will operations be with And to in and have cautious GMS, actions us continue questions. ready enable strategic coupled us confident at generating to the evolving Operator, our for the are will

Operator

Thank you. Instructions]. [Operator

Baird. question from Manthey with proceed. David is first Our Please

David Manthey

new So double-digit fiscal are in fiscal the sort construction you view you that to the can renovation? and we just next everyone some the non-res here. we’re you shapes understand in guidelines thinking decline look mentioned the XX for recovery navigating that's to what as non-res at to give non-res And months? mentioned. next focused would you construction, What relates odds XX terms you it imagine residential, of there's I'm on. to all it the as year relates as any the over wondering, that us of of keenly And an have the you of But curves, a you area if I uncertainty new year, then think is new as are

John Turner

first. address Well, let me the non-res

XX% work I developers XX% months, ABI move architects. kind or type a here course do to I But beyond when And supports office Those in people reconditioned in months, to a tenant a as the cetera. get only more in hold out and good see think a are in likely, nine what after office the Ws, happens the an we'll that We commercial day-to-day navigating the it's three is saw actually see said, replace difficult recovery to expect spotty the commercial is probably row a we'll being I floor I be, of of which the to cetera. everything that be probably people when that issue have that is work But not lousy, think starts The we commercial, think as have our also we pretty most floors spending, and being and in home things W forecast that that tenant call to Today, commercial on et wait which call an pandemic. pipeline spike All have basis. of double building and from related digits space perspective. recovery, environment today going improvement et come from ceilings, recover commercial I see for people back right, business we downs. on of work, has all could the commercial what back low-teens work come expected. and was some you'd to of the to as situation work ABI to people to right don't the is or repositioning notable think expect, that that. would expect think and think I pale definitely to in call it, we ups immediate the I'll there's an forward. decline as that the XX months work,

in months going then we're and but XX% do housing in is unknowns, that if the XX% fully of think I really most to think I the by screaming of will The lot from recovered. probably that good six the be pandemic mirror this commercial to I back. be a recession at in kind And is in is to point plus news going out So mirror come rearview likely residential range rearview putting down generally time, think is now.

to Now, into situation we suburbs, further. wants want the the to demand homes in to you're get up out little bit and this significant. feel where going a demand, pent I people had And for to going be out just have now just is get new situation already like

Operator

Our Capital Dahl the Please RBC proceed. Markets. next Mike with is question from

Mike Dahl

Hey, I commercial JT, that, point thanks for follow-up there some and just taking to resi and delayed you guess some also weakness commentary there. noted the that, be the to my falling residential the could on off the insights. and here of interplay starts, to appreciate questions. recovery between

pocket? see in you the you near pocket you air point an then the get sales that some a fiscal understand reacceleration but potentially those you're not now, that maybe then -- the of digits you're the back of so you when is declines term, your in half, to this a bit So see thinking could planning expectation air those about we in stay there's in and half low but it in ton visibility year, single right when back of at declines as work a through

John Turner

is will point in begin -- in just I again, that XX% it's I forecasting. XX% stronger from is the and And think likelihood that the likelihood today. think to is think think decline months I range. be the The at this residential recovery now is commercial decline anybody will six I to going And time. today that than

So we have really a balanced business.

commercial, residential attention the in before not even you category in As getting we guys accelerated our that lot year XX% know a but this products of just arrived, other We’ve here. after I've during space. XX% certainly and put emphasis

commercially. that and I residentially for of area lot both us, product has think opportunity a other

of wallboard like perspective, demand commercials dropping replace some will of the the some just residential I from demand So off. that's a feel

That's align dramatically product we I generating in we gained our selling really managing look not every volume today, what think ceilings now, that we're our prices some and category, our steel share day. according in I and think period the and certainly at very months. what are that could in very cost cash we other abilities going like we category. kind in And product is. and our think of to said the I a be move growth have XX We think align to but move the will whenever today. shape one we But through of residentially be that. next good we while that just call under I And of sale we really things offset we’re next kind robust as we but robust other to view our another also as we're acutely are. expectations my pressure, structure in business into they

Mike Dahl

the the us a there dynamics. was quarter quarter-to-date exit you you expected second I prices Can my on sense are and how on wallboard comment the what of and competitive a just give opening performing wallboard remarks more basis, then June the the And about through question side, a if were they think on sequential could? how prices some

John Turner

absolute exiting a having mix there. dropping that the quarter, number so lower April commercial and the wallboard that well just lot dramatically in Yes, off being of in with in the residential is wallboard

April kind a price the is bad to price of look So at.

think were of would probably they're that's first of you itself, would they bigger the as at you offline experiencing think I taken I tell coming guess was at months if pricing of we what And very and guess you kind the basis. look that's little a I been steel look the that wallboard, we're I And when surprise experiencing didn't in I and now, point maybe steel. at we've really two happen. commodity wallboard. bottoming And what tell the been The sequentially prices We amount quarter we're steel. in sequential less quarter-to-quarter in you bottoming X% bit. look the capacity felt on out low quarter, very, speak than in right down to the would third declines you getting I a where that's of start

So, than actually. surprise that anything, bigger a to was us

Operator

is question Keith Humphrey. Hughes Please with Robinson SunTrust next Our from proceed.

Keith Hughes

ceiling, on us, us? given can you give that better averages To in in a also build particularly or any May, last gave the the last half mix pricing other question, and And than and June, worse you or in month and pricing ceiling, there that deviations so? on serve in to how's due gone the products is

John Turner

our little bit than of Well, all down commercial products are products. more a our residential

strong, I relatively categories trailing. and And product would other our and then say. strong is ceilings business wallboard steel our are So

is trail market prices the up. kind seems We going little be to experience The which kind bottoming have prices. bit. to commodity to to a is little We're of bit, out. decline, pricing but going to expect same trail volume stable we've ceilings the are a okay, had some of Steel

a in we demand and should commercial very, seeing that but may we're that very little still until competitive just So see moment. not Unless that it regard, very, the complete there's becomes more in a deterioration, fall-off stop.

Keith Hughes

what coming be those think of some of determination time up And Northwestern to ceilings we do is term demand finish some a kind are the period for projects of in on? the specifically pop of commercials cities, and longer before out going that is openings there to commercial in or of with make Northeast you a it demand

John Turner

they're we're I in Yes, hearing or seeing types cancellations, right? were build foundations that framing being think that not that We're not projects stages of hearing seeing we're the projects, not or stopped. that those the or

of will continue number, for spending purely much the real about that pipeline The right. how versus is COVID/work-from-home/nervousness commercially. last demand is So time. concern month that of some ABI disruption expectation this kind period And of three is money

near-term finished, to the ground be going that finished. will the is demand, be was all So, in projects those anything

good Our regard. in you're And that pipeline looks right. relatively

whatever and/or yet. be to know don't and is be I we big pocket So what until we going ceilings that hit to in think don't air expect I commercial it steel is issues

Operator

with next Our Kevin from Research. is question Northcoast Hocevar

Kevin Hocevar

think do Just bit? quarter. there Curious, you down be is little how in You down getting give flattish any little is a color the pricing the there? I could mentioned anticipated. And helpful. still -- had sales would than it’s a there and volume in in low-single-digit far you're better share so you

John Turner

Yes.

a a data on that's down bit question. thought basis year-over-year but we’re speak or we again, have a there. fairly So Again, flattish We don't prices of little additional subjective share. in lot a wallboard, out as gaining points sequentially

And other I you happy very difficult all how I'm product in fourth a the fourth other quarter, quarter in we're think with our look than doing very having that the better there, done area. essence product we've most, well and the in that the April. category if at about be work category in and as or flat that,

in both for my estimations and very So wallboard fourth quarter. other the strong

multifamilies I XX decline. real of very But driving to is to is And pandemic, pricing roaring competitive pricing we're what of good. X, mean, looks seems multifamily be now the as in So contractors regarding obviously really I be again, multifamily come And commercially see a but us competitive. the It's lot have has end competitively. really anytime Always the the right residential holding worried we'll kids what not okay. to now, back, very, XX, right seeing we're mean, and going been sequentially forward most another seems of surprise now. builder from we'll have markets. is, happens business business. positive to all the kind seems commercial see like holding or for months be on to

Kevin Hocevar

margins tailwind? is in there the cost year-over-year I it being is like now. the a or And a I big is know year here the around gross turned of anniversary front, time that you the some also or there. tailwind sounds I that while. only it guys several that's bit was for last Is think on down for that price thing residential stronger, know so. that And a first impact market mixed

if gross wondering factors little get you So the could and of how gross the year? there on forward think the of we balance going driving a should color margins margins

John Turner

right? first us advantage that and me it's talk big say think the big I'm forward. dynamics disadvantage seeing cost going price forward. fairly let at a for not balanced the not a mean, moment, about I going It's I

it in now. I everybody together is right think

environment moment. that acting and understand we're the at make distributors we're responsibly all all I think the in that somewhat suppliers and

demand about wasn't as That's So and up don’t have I moves it's ago. pretty what with it a think of that with business. more as or I was regard, I easy Scott we balance Scott? think line because about I to and with stable know issues and mostly let cost it as where with I talk decremental to feel gross perspective. will we're in a little side think bit going competitiveness as my six months as around margin the about think in down are. we're good more it gave to guide gross don't the talk doing on I margins, we I

Scott Deakin

a volumes with tougher your been the been nice marketplace it's deliver question exactly Tying mean, be, I how I we've to would take margins. question little to but and full The gains. what is and operating we're delivering pursuing we're that of look, the holding able ranges are not it we're this a about all say to about think back we've to the that kinds the on thing spread share reductions realizing true.

cost a terms same So movement a of the of the is but of kinds the of in pricing in little stay going side our the you business the lot we've things. just got fringes of in operating points, on as we've been in expectation. business basis ranges discipline with bit might And to it's side of of aligning, terms see our the

Operator

Please is with from Barclays. question Matthew Bouley proceed. Our next

Matthew Bouley

around within hear what, with somewhat questions. some flowing cost the you the for are just and and Good doing actions margin. gross now color well. just margin everyone morning. SG&A But additional you on QX Hope the on any the side the that? Scott, assuming of you guide I fully decremental for mentioned the taking Sticking through, Thanks is took side

Scott Deakin

May what working were saw in some mean, those in of by we terms pretty we in of that past April. Yes, our issues I encouraged we saw

our in of course very timing to normal relative downturn May that April the positive being structure, in timing the were the given there flex to really in cost quick some of able sales the the was business, the expenses just decline. pronounced Just the regard.

-- low think maintain the to decline or pretty is that we're our able percentages, a as continue increase, So relatively are relatively discipline expenses margins with I to if as volume ability good. relative to long practice

So we're May. by encouraged

on significant continue months is ability volume but to that, this. manage is this We of flexing got the quite to flex alignment the an obviously quarter, quickly, costs balance it and for right our The for to up of as of expect us. the we tightly the I maybe with into to those solid ability a think be there. the of careful some in There remaining But revenues costs pretty just issue now. shift

So we're with that's that pretty why range. comfortable

Matthew Bouley

the Okay, called strength perfect. flow just free in out capital in then strength the working cash and And you secondly, management.

better strength else timing that. was of specific working year, obviously kind a there broadly? that Anything year on last nature benefit than call QX. capital out I just in one-time year in payables think And to performed was still really or or this in management you this

Scott Deakin

et just concerns very through we after. as at the a we that, what went were around the marketplace, availability, There that’s say time in was unknowns would was liquidity I managing credit there of talk aggressively cetera. lot

lot very balance from we quickly working a and the very went So cash very accordingly conservative improved flow we nicely saw on of capital sheet.

to can stabilized, the credit released what of we've things in markets, comforts gotten that. better some in we've we avail As as ourselves

but XQ, that fourth So with that focus you'll it of you'll swing. we the is very in quarter working capital all on as reversal see see in -- specific some indicated, really our just

Operator

from proceed. Grooms is Please with question next Trey Our Stephens.

Noah Merkousko

actually This Trey. Noah is morning. for Merkousko on Good

Is at in so a was there level? level mentioned, my a distribution supplier the wallboard, at And more first question, that you or competitive.

John Turner

I Well, everybody little I think I both, to manufacturers. that think had And of a a adapting the environment. little year, of a mean, bit last bit of consolidation with you expectation a right, is volume lower

in levels, markets say So, but both than competitive Mostly with distribution more really at manufacturers. with would I the probably end residential.

Noah Merkousko

the the swing factor a XX% guide higher about low talking And follow-up. end? know XX% to then we've XQ, you what's for for that biggest get I just but that'll quick been to decrementals,

John Turner

volumes. and margins Gross

little gross little mean, the a bit arms our our cost structure, bit can in got that. up have a volume we we the what around think with control the I In and happens still our margin air. arms -- I around -- near-term we

Operator

And Research Group. our Steven next question with Ramsey Thompson is from

Steven Ramsey

April, given April on ceiling wanted trends? thinking publicly guess on seems the have -- some -- June it about guess, I frame discussed suppliers what in I morning. to hone Good volume volumes, quarter, time I time decline, the through maybe June fairly in modest

John Turner

for in hole, that ceilings three steel I only sure. was months six to we're months month a that lousy I and right, It's seeing mean was Yes, don't for again, going commercial. for it's to bounce. And in deep that going it April hole we means. balance what if I or refill pretty know as balance mean April

Projects that commercial hole product. certainly bouncing we're are back. So commercial but -- exclusively are ceilings coming refilling back,

tenant most volume And so, mentioned as be improvement in work. back perspective not it's immediately evident And going work. the lot that I to is in the directly as tenant to that tie a from improvement well a ceilings area, would one out bouncing of that's

be think I So under pressure. is going to certainly ceilings

hand, spike coming some could see there of the starts start out if to that that sort back reconfiguration after activity people nicely, is you other On work.

volumes near So term, in ceilings the sure challenged. for

Steven Ramsey

Great. Thanks there to or for off and cancellations Canada US maybe to talked producing a the the you trending as hone in projects. Canada outlook color. but as And broadly, question, in in on April similarly far recovery trends, the then last your divergence of lows

John Turner

lot for declines team a there. the housing they're doing COVID-XX up managing disappointed through really of a they're job. face government-inflicted of recently I'm -- now doing such job to another really I'm good having fantastic that better. performing But challenge Canadian was in this situation after Canada huge a our

in Canada was business May strong. Our

a And on on business country. expect, Coast In couple little the center. different Canada, home most Vancouver a you of months we've as in the very bit. strong know, and out like the of there as come would the in West back particular, of a Our DIY, West very, and much very we're will is you Island, of had that a Coast than balance

that is in in look good. Canada looks do As work, to is do of in people the and the our good installation and that news we we It products good, don't some which go the States. volumes things back residential United roofing

in seeing US. in we're don't and hopefully, this did So here job resurgences COVID-XX the the and general a pretty managing Canada that down nice situation see they

pretty in Canada. feel really about good up I how to upon going the structure feel It's our to we about our I dependent pipeline there as team our Canada. So just good well great in Canada. about in be economy I do. feel

Operator

will question-and-answer our session. the have reached end Leslie I over closing of to for back now We turn remarks. call the

Leslie Kratcoski

Thanks everyone us for joining today.

gms.com be interest And appreciate replay as available As GMS. Thanks. the usual, we will on a of call always, in shortly. your

John Turner

Thank you. Bye-bye.

Operator

does you. call. conclude This today's Thank

may time lines participation. and disconnect you your at your thank this You for

GMS (GMS) 25 Jun 202020 Q4 Earnings call transcript