GMS (GMS) 3 Dec 202021 Q2 Earnings call transcript

Company Profile

Participants

Leslie Kratcoski	Vice President, Investor Relations
John Turner	President and Chief Executive Officer
Scott Deakin	Vice President and Chief Financial Officer
Mike Dahl	RBC Capital Markets
Kevin Hocevar	Northcoast Research
David Manthey	Baird
Keith Hughes	Truist Securities
Matthew Bouley	Barclays
Steven Ramsey	Thompson Research Group
Trey Grooms	Stephens Inc.
Sam Darkatsh	Raymond James

Call transcript

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Operator

Greetings and welcome to the GMS Inc.

Second Quarter Fiscal 2021 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] As a reminder, this conference is being recorded. to conference like host, to now Ms. would turn over this your I President Investor Kratcoski, of Leslie Vice Relations. ahead. go Please

Leslie Kratcoski

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

section press posted this answers to contain the prepared release our Investors presentation in Reform in defined to addition morning, management’s have statements Private issued forward-looking gms.com. In we to at Securities Act to 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

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

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

John Turner

us for Good you, you Leslie. thank and today. Thank joining morning

solid over well. safe and your some I’ll our All results. call, this will our I’ll and review of and strong team questions. us construction, on respectively by X% basis X, while as a execution of closing throughout residential year-over-year to remains exceeding per day as it results, are hope Starting our in GMS at a colleagues achieve period, well environment to before start respect commercial our realized outstanding operating cover highlights, organic and second Scott particularly share the on expectations. sales thoughts us families market quarter your benefits enabled and in challenging taking a net with overall turn Slide with who the from we progressively previous Net X.X% the to then operating everyone joining financial sales Canada. improving declined then environment

of gross last XX.X% As margin of the quarter was second record year. XX% lower anticipated, our than

on demand serving indicating of points improve supply Controlled of our continued continued XX relentless structure sales sequentially sides increased to it and on us our both a competitive as basis focus environment. amid SG&A business our of ensuring However, to and alignment the demand adjusted discipline enabled current the a customers. while SG&A percentage cost tight

position our call. result, margin outlook the XX% provide EBITDA quarter provided the XX.X% a exceptional flexibility. a and our As in range flow consecutive with sheet marked financial on tough balance adjusted within and with adjusted free us of first second EBITDA decremental generated market of very quarter positive cash exceeding We liquidity

time, we in spread are out we to thanks health operating, quarter. in and employees, at of environment go enhanced perform priority. business to partners the top well continue GMS reducing public and maintain entire of results other. proactive our our operating very safety of the the who remaining and customers guidelines the and as in On same My and together compliance teams offer each requirements, communities these the Considering support At focused possible we engaged, made remains we second come which and gratitude the now the provide our suppliers. for congratulations we on I’ll financial turn more in safety health our over to it continued both with our second and COVID-XX and recommendations results health perspective front, and Scott? to Scott aimed partnership we protocols with customers that, our quarter. With for share the the

Scott Deakin

morning. JT. Thanks, Good

mix in partially virtually million as mix. were Slide X, in and On Steel less framing the Overall, quarter. steel, again commercial organic higher remains construction, to by ceilings X.X% same driven were sales sales declines X.X% lower challenged by $XXX.X offset X.X% organic year-over-year, a organically other relative and ceilings COVID-XX year-over-year hand day daily sales declines in were up which quarterly the sales net U.S. selling same basis, at one Looking Residential per net during teams to year, sales wallboard with sales X% year-over-year decreased a demand volumes greater us year-over-year XX%. net pressures both Daily volume, X.X%. sales On on strong, shift X%. due $XXX.X driven categories declined or day continued declining wallboard. of basis, continue was very in down and $XXX.X and Wallboard net to an all-time respectively decreased Canada. volumes an an and decline to the price to X% weighting and more sales sales X.X% down product primarily net about down totaled day organic per allowed the sales the net does down million were million, in activity partially offset our quarter last market on a than of With a the last sales net declined sequentially. the and of price. down Year-over-year in declined tied Ceiling basis, record higher year-over-year, previous only XX.X%, by X%. $XXX.X X% roughly where exceed were pronounced to reposition capture a principally due expectations. of Price to resources marginally, realign to basis, the by of on second million X.X% residential sales decreased organic strongest year-over-year.

profit of segment. the sales. XX principally expected Gross mix points to X.X%. second product other due sales and as million positive pricing of our up growth of compared the basis increased lower execution X.X% due basis sales to on X.X% complementary XX.X%, strategic acquisitions, well an or the products initiatives, challenging XXXX, decreased primarily contributions growth organic Canada. as Daily margin declined year-over-year commercial Our particularly $XXX.X million due of X.X%, were organic from in to in to favorable fiscal other $XXX.X as Gross again of dynamics, quarter of net

measures price expense Turning sales unfavorable SG&A with basis a to X, XX of a cost result from operating XX notably a the adjusted the net points headwind despite basis with Slide current towards single-family respect products, points continuing with certain percent steel realized impacts the to of mix align well company’s direct of improved wallboard. costs. demand business to deflationary as residential of point as the Approximately environment, and as mix and structure improvement XX-basis was as XX.X% favorable

XX an quarter All million midpoint adjusted EBITDA $XX.X EBITDA of margin the quarter a in of range declined basis and decline with the EBITDA a generated the decremental only million points $XX.X EBITDA XX% pleased call. considered, our record second we As outlook to second execution again were XX% a margin year despite in the Adjusted of year-over-year our represented on a margin, just compared in to quarter, market-related sales. XX% first of adjusted XX% provided excess of ago. adjusted XX.X% result,

second X, Slide generated flows of driven by to price in year-over-year increases the flow related $XX.X we of due of Turning with XX% million lower in of manufacturer and free This opportunistic timing build in to working changes quarter. or was incentive adjusted certain inventory programs. net purchasing cash associated EBITDA cash advance capital,

to We environment flow continue expenditures million for our so fiscal year-over-year. of the free this Nevertheless, capital were half $X.X Capital generate second XXXX $XX estimate expect this cash cash maintain expenditures approximately in million. year. $X.X in million do in of to we of healthy down and

on of cash million October credit As we liquidity revolving and $XXX.X our of $XXX.X hand under facilities. of million XXXX, XX, available had

net of X.X leverage the net as During at to quarter debt of quarter of the fiscal second XXXX of times equal the quarter, the XXXX. first fiscal by end the debt that quarter, end $XX as of the was we reduced end of our X.X and second the from times the million and down of

of an upgrade remains sheet capital balance debt healthy, we ratings our pleased in overall from of Our October. as receive and Moody’s structure, to indication of the were an stability our

our until not the is a debt majority As reminder, XXXX. large of due

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

John Turner

Scott. Thanks,

architectural expanding priorities, growth segments are particularly monitor Slide we progress and we follows: both our our increasing focus where construction on data. to underrepresented compared residential market in past our geographies Also, demand have fiber our the we are we in underpenetrated. developments, where X, evidenced we capture strategic been ceilings, share and available mineral this has enabled in is geographies to to while historically strong Turning carefully specialties believe remain our sales core address the share market four products, to as us first, of the and as are by and In to obtaining effectively year in levels QX committed over more penetration end-market. we market initiatives continue in in

one select expand on region’s the other expanding to early the offerings, Canada in a of Success we waterproofing higher for in is offering year-over-year opportunities the profitably Next, to our and this success despite U.S. front example demand. growing growth product in and both outside row response our of from in diversify this products. products second on are in of stems category focused in customer multiple initiatives core difficult One product resulting its market. quarter

capabilities platform. to we in extend best practices through our While are this initiative are early sharing and regions innings, across other to leveraging beginning of we

very growth a residential of well end-market key new priorities Third, significant on balanced platforms working time, serving positive account increasing turning estimates. are which Greenfield robust as previous the and current will balanced the projecting Ultimately, management more almost environment. and we is best scale strong progress meaningful this in best-in-class geographic And to attractive Oregon believe performance only $XX with reduced we strategies continued data, and and And practices. advantages, ahead, quarter improvement, same of customer technology acquisition depend recent technology from We coupled e-commerce in growth guide Greenfield homebuilders. as Near-term opportunities, in and with in with the developments for declines activations acquisition equips commercial same are are broader favorable with maintaining developing our although strategic business million. and execution but metrics are our documented debt reduction. are debt net our Slide in a housing remains pipeline. robust look near-term scale potential. addressing progresses finally, operations. and platform including in experience, while online portfolios, in customer productivity more second long-term challenged, enhance with through by product Commercial actual quoting, on of expected well a than order across employing these as COVID-XX growth our while Hillsboro, deliver At with opened so still leveraging further these actively finally, of all and trajectory payments we to we n strength and our impacts drive the that our we adoption construction economy. not At a forecast we’ve X, largely accretive commentary time, the construction location Deployment our the profit long-term

expect which the from quarter, improved slightly fiscal quarter. will X.X% a we currently third day or be our on the decline, realized to in year-over-year per generate sales For basis X.X% second a

of the also last there one versus QX selling in less was day case year. QX, As year in is this

in lower In terms to in the the which half gross realized the last of anticipate we will in third that margin be of QX XX.X% profitability, than this quarter be first to year. generated year, similar of fiscal

the within XXXX. result, a to decremental XX% of margin fiscal expect a generate to As of quarter adjusted for XX% range the third currently we EBITDA

our controlling what conclude, focus we As remains we can. on

We call strategic business value have our ensure to the to taken actions I take shareholders. execute for continue confident generate to and now and on demand. in that to to the continue our remains plans optimize ability necessary challenges am to intend our well and teams’ align our Operator, GMS with leverage to to are positioned for we ready our address questions. open operations opportunities,

Operator

Markets. Our with first Mike [Operator question the Instructions] line comes from of RBC Dahl Capital

You may proceed question. with your

Mike Dahl

third get of progressed and Wanted commentary will questions. quarter quarter resi you sales And of Thanks. segments, help start on us the be could commercial that taking what you can yes, trends give looking we think year-on-year to some just your commercial in if for on November. part question, of for by then, Thanks monthly of us resi through your sense second I some a my just think versus but at out trends break helpful perspective Hi. and oriented kind non-resi second maybe the it on you could your versus did basis? overall out

Scott Deakin

I’ll And first part low. November basis positive part. through second can and the the question course follow-up the that improved. take progressively the every a over year-over-year your can month JT quarter of into were of the extend on Trends quarter I on

the for months, really last year-over-year we’ve So been month. improving every four

John Turner

and months is think fairly about is as completely to to decline go while we shift residential that feels rates Commercial, that the has and yet. previously, six rate seen forward, flattening, that announcements. to however, like coming is we month pass that it the three from previous continued each in also and to talked we of haven’t significant we decline are And as at starts beginning REIT strengthening is I

our did will getting XX than the the net-net so, you simply were a in that strengthen commercial, you third is little of of number residential I quarter. XX kind commercial second think lot idea the get And the quarter of slightly and we worse. than to second our bit reality we being continuing residential of quarter that And not to the better better give in the in

Mike Dahl

Okay. Thanks. That’s helpful.

probably in to The just so second this wallboard, of focus distribution’s a for thinking allocating shift follow-up do guess backdrop is terms strong the as on across capturing clearly residential. a there and past specifically, industry you residential than the question seeing efforts residential to I on demand is more are the and clearly in a

competitive major pricing going So, this may have and terms thinking standpoint, seen competitive around the go enough you be to of any from in dynamics but you are kind of a how shifts forward? about

John Turner

you hearing good started we’ve months more competitors, news it, of than the talking we but shift that some talk the and Well, recognize our XX of some to about for and dramatic is are one gain for been residential. we a before position in that probably but tired from me us pillars the pandemic also balanced is, categories those in well before share is well strategic have reality opportunity core this market our and getting we

to a think those year residential, for there So, of competitors I discussions are bigger we have a solitary little right. start only of happening head are able And in business few builders, having during with major when is those aren’t There bit than builders. single times that the and day sure. our discussions you the secure with some every you

effort. and a Now with day-by-day the that’s business, the builders smaller sure controlled contractor

– is ability the we to scale of our upon suppliers being the we largest entire event of that product those ability contractors the service in the other to there The builders think the handle just and space. I is, have ability an the we that thing do the mix to the in for the and have from have have most inventory market the and/or have in inventory to player every we the part the is get we ability advantage also all based

competitors the lot most don’t. So, issue board think board price I that in of maybe All an market. the we said, is and advantages out commoditized is some of offer a being there residential our that

reasonable make any operating about excellence just the providing money. our that of capable we is side, with price are can on We

can be. where to be we we need think very I competitive So,

environment think getting some will into competitive again, is and an pricing that other space. us our even where there hand, of benefits the maybe we inflationary that than balance are On – we more the

Mike Dahl

Okay. Thanks, JT, Scott. Good luck quarter. in the

John Turner

you. Thank

Scott Deakin

you. Thank

Operator

from comes with Hocevar question of next Our Northcoast Kevin line the Research.

may proceed question. with your You

Kevin Hocevar

Hey, everybody. good morning

John Turner

Kevin. Hey

Kevin Hocevar

you curious, early if January know, secondly, price and one last that you that on decrease price hold? timeframe? November, are is if increased, have if accept that On manufacturers comment over I able is to anybody the increase expectations seeing follow if so that there the of late point, October, seen after to mid a the in you you your And think else can another curious so market wallboard

John Turner

right are I the in the what or of any say the of of execution middle kind we increases going is from and Well, to hold would hold phase October piece. what’s not

prices does the some supply are for it’s make picture sense pricing better in think better said such certainly demand better shape the before, up but We as have could relatively are that are believing quite frankly. it chain. in we that market, They for everybody near-term. that not I it way – be yet, And the to prices may entire

calm prevail hopefully, and some so, heads to maybe of fruition. that comes And

on the of hearing far know. one that’s increases don’t come and I think how top to product how many of into in I As building the the stick of are to the all other, as and of is and space going much going seeing price market, middle

I up. think quarter next two even and that in into think, and one should until But this probably be those some degree into really, January, we get won’t to six, maybe to between you of well the we would really October early and know to right see game again, there what’s really shaping that’s now.

Kevin Hocevar

business And a has prices in things and past unique gone is side moved and commodity then, softer bit. Okay. steel of steel the obviously, the really quite up up kind have that the months, the few of

steel timing since prices there well-known, impact? So, steel weakened demand have the And the sort those impact of impact through? inflation, of that it we’ve could with to does Or gross there pricing prices curious, push seen? easy through Just hit does any a you a of type does the to on that as try the Is pass how are increases or through the from your curious there rising markets, to thoughts ability business a Is to environment? the steel be push timing impact impact that with prices. regardless on your just it’s that of any have typically the is that there? maybe margin so kind

John Turner

saw here, are Steel we what see internally to what to squeeze speaking, kind going Well, it sequentially, is increases quote buying, generally in slight we fairly we there. pricing, are dramatic, our didn’t very, we quick. going of are we the we call which buy to but is right, alluding out your very

our are day-to-day prefer negotiations on rising certainly puts But rise on that significant don’t is are commodity down the you still some if are think, market I’d looking work think There try But price. are would are see We then escalators the in gross on in longer no we those we that’s a and really the buying price the prices, and our then, can big And pay raise going to to which I front. to there. question. to to the But to that And we it’s got a other double-digits, we rising out stock certain. be going and I more, that’s projects, is extra we price, back really demand, forth margins, when with it’s there right. then, close of have we pressure in correct, lot is ship if them. you projects, at time it sure price we’ve you negotiation. longer There Stock environment put steel projects. steel right.

is think the are business and pretty our in discipline the good I margins I think good. gross

best service the pricing are perspective. by in the the space We a from being earning

Scott Deakin

fragmented too. a it’s supply add, just base I’ll very

sure and them very and we that relationships the make So, tightly. all working manage are localized got with we of tight to our are with suppliers purchasers

Kevin Hocevar

very Thank much. Great. Okay. you

Operator

of Manthey Our next with the question line from comes Baird. David

You question. may with your proceed

David Manthey

Thank you. everyone. Good morning

capacity maybe something Hope than demand. wondering pricing positive JT, that me are noted And production approach, the approach versus perspective, with demand current XX% pricing going am been wallboard just type of I from achieve this able Let you capacity again, this recently from to like good higher another the angle, has a to gap? is morning. wallboard historical company question you

John Turner

it as has really tightens when has So, been tight as I’ve about capacity and if I’ve course, time is is demand of This back increasing, history, in months/ been I there pricing XX seen think in successful here you of periods gone which and, up. go

be to of it. kind I don’t I we are So, just any don’t expect different. it at think

point. this – are we at inflection year We maybe actual won’t that, now, inflection we is Right maybe like an it the we point next until but get sure not into feels for one. know

to the right. I demand, think have we confirm

residential going to think time, period the be in we continue starts to else. to good rate on still. to a and growing, the everything have obvious based going is mean, we because grow for I to very not commercial it’s is confirm the I ABI know currently that’s of

So, every to what economy. to are winter around and spring were the to we these have know is, of we the throughout demand continue month going offset as numbers residential, is great kind don’t the continue starts into going and stimulus

guess, what the demand from against is So, that side XX%, together capacity I to comes filled. is where there still, be But environment in left unknown. all if up an I would a XX% that picture call

I sense whole think should makes up. go it there where are enough industry that tight to the you getting just

David Manthey

And that. here, given as a I gross for going plus on contribution give as recovery margin one, steel faster. to the two it contribution and and years could in bias either things the that of second recovery? relates recovery. margins am downward sort to question, margin? slight us and the in is you see Again, margins a we and thoughts ceilings I gross a about a Any probably perspective there you thinking Thank longer guess, model Okay. looking at moving the term during pieces a the

John Turner

Yes.

you in the do I not the I we may me gross us confident bit team, growth add in tell what not we lower little are question. I phase, the recovery. may margin and disciplined cost nature or of expect off stages of that a cost to a are growing that on of script recovery, would our early Let the can know flip base, don’t in right. a that until But the the

for should beginning of we sure. some phases recovery get So, any leveraging in the

Now, on happens any gross what you do Scott, really margin perspective? I know. side, don’t the have

Scott Deakin

a past just history. at think at, I I if past quarters pretty look series history, good look you of the the in it’s

differential kind from of over Our doesn’t quarter-to-quarter that all gross period move much. margin that

the So, as really demand in are business regardless are as we is we cycle. with trying and maintain supply spread aligning of making to that the tightly sure possible

XX% in just JT’s we’ll point is kind of as terms cost That structure that. try continue taking EBITDA incremental to kind to will margin maintain to kind said, do sort of guess, our the make of guide well. and side we we’ll what on to operational guide rates. to with of as gross continue XX% of the I decremental upside the So, continue businesses we’ll sure that house too based to that the we on try EBITDA And we’ll the how And align as margins do manage well. to we of

give we with this market. guidance best this point and with we the as in you dynamics the mix at that’s So, deal deal can cycle we as

David Manthey

the Okay. That’s Thanks for helpful. color.

Operator

the Our Truist next Keith Hughes line question of Securities. with comes from

proceed may with your You question.

Keith Hughes

you. Thank

increases coming inflation the discussed the your on customers? pressure of the kind coming two, gross or through to of Now given for wallboard from is wallboard, that or coming quarter quarter you anticipate at that lag you do the as you looking next potentially some quarter, touch for margin

John Turner

a There There bit there mix we’ve that little gross well. also a looking residential obviously, on the we it, little deliver a premium. this, in a mean, bit in margin trying are following bit bit lag, is has of do in – with operating lower shift the week service about margins I between there the always talking to residential our we that, gross think dynamic that continue tracking the similar margin, position And right pure and single being out again, and a as every little in are but bit talked like space a the in acutely, past is a of it, to and earn at it, exceptional I about There commercial. that. the there decent is we little the the mix. to of times side, little a board operators lead But the are in lag of is it

Scott Deakin

QX add just please talk and that last year again, were when a few particularly – I’ll strong. in we pressure, keep mind QX about

look to if a so, do you QX similar year. basis going and but of expecting be in tighter prior sequential and we that would on market, that’s QX did we the so really we not versus a QX at tougher And QX although recognize are because much pretty they what compare in versus a really factor into it’s

Keith Hughes

And that are largest products this particularly rank tough Okay. you growth you what segment? switching sell to a environment, really the products, other nice quarters. last the had point in couple Can in this kind of order at

John Turner

Canada. largest, we - that residential insulation also good the a commercial pretty of but with have what I would share the – business insulation for market in a the primarily Canada, is in Insulation nice call business

to us anything signs then, but me lumber, like stucco your have where in a but and/or not is on is focus traditional and trusses talk continuing or and buy, that. so, that brand waterproofing for we’ve into the south, moved tools the be lumber. stucco can there and is treatment down lumber get the lumber that exterior related heard that construction, one infancy, you successful its our you’ve customers we is I with EIFS major products focus do us. EIFS, some like category. at across And commercial and our wallboard, which of we have So I is at down are more Predominantly time of and you packages of direction. will more fasteners through over is we but insulation lumber the kind and you and good used get important something joint in that, into that up to Most used Things but insulation, it’s think the well. with After end and those product lumber about into our is think becoming number be envelope are things business new, as more, fire-treated

Keith Hughes

Canada change in quarter? the the did do how average And versus revenue

Scott Deakin

source us. of strength was a Canada for

we’ve got a X.X% think X%. in to is the I this and footnotes and within relative about the Canada roughly Q. of up down U.S. but

Keith Hughes

Thank Okay. you.

John Turner

Keith. Thanks,

Operator

comes of the question Bouley from next Barclays. Our with Matthew line

question. with proceed may You your

Matthew Bouley

on Good for morning. taking the more One Thanks price. question. wallboard

You both? you the about of talked past or to that out a October relative signal or accepting ahead years? have of couple the view this Was increases. January And a the increase stronger year do building that manufacturer of about price the price of kind the pre-buy market does inventory price price that it

John Turner

Let a times. me don’t and tightness It’s much half we the business of really event to we’ve important. we in is is answer your both. of Also, sure inventory. inventory there And reality are first the it in our believers I the – so, two, the big make servicing the we turn is XX want But that got anywhere think inventory signals question.

going don’t buying are think is we now. down. So, price We

we go a and is then can we reality they buy little if sell good up, If they bit in it doesn’t are we up, now inventory. matter, the go our don’t So, do shape.

it other than to too Again, read wouldn’t much put out. of cash over I it’s smart think it, there. age little we a So, into bit just doesn’t

need if sell You don’t don’t back it have a situation into we cash very, where we turn inventory very to. and quickly that

we So, that, just are I improving. think

Matthew Bouley

it. Got Okay.

forward-looking it’s inflecting am JT your you talked specific of you want near-term? wondering of A, new don’t into words of you mouth. on of lower is Thank customers, about any indicators verticals if I sort stabilization levels. with your you kind own commercial I kind sort construction may one and put jobs, of are whether to signs back-end at there Second of signs think seeing those in that have that if or the regions the be in quoting life you. But

John Turner

out macro on the levels, across lower right, And Well, are but that and message board that of the makes that’s you all indicators quoting to the sense are it’s there. at stable. really

moving maybe reflects seems macro little pipeline, our the reflecting bottomed indicators, be The a the our new what construction pipeline up product is macro So, pipeline and are to indicators. think quoting bit. the new I

far problem are And a important lot for improvements be regions. expecting bid all big quotes we of or is us A now. those year from I As is in things is go, the The off really to better of people to in as emphasis now. is starting think projects tenant improvement. an do. big commercially regions improvement what today tenant all part Tenant are

the So tenant of that’s is biggest business negative lack the our in improvement.

Matthew Bouley

Okay. Got you. Thank it.

Operator

Steven Our comes Group. next from Research with the of Thompson line Ramsey question

with your proceed may You question.

Steven Ramsey

couple A things. Thanks. Great.

it’s can are And a can construction-related? new – that share you why share this You more or that guys ceilings as discuss shifting you like discussed effectively? if compete in share challenging gain, was And back gain improvement-related is of because on you feel accelerating that happening? able environment? And competitors is tenant do and to

John Turner

and Armstrong strong and coming across is gain have to which share market participate. our concerted one very, with from one The And ceilings. to in relationships player Yes. effort number in the two fortunate we the every be the we in ceilings USG, entire number very business distributor number are

And we the major that strategic that so, make to be pillar and growing make had made any we first us best everywhere. ago, effort products markets examples of because sense not our of commitment everywhere, to as again that part best put in core recognized needed being the XX they of it for did we months sense

do our working So right. best everywhere, I to not to the goal, going am that. we But yet. are we’ve say, that’s been

had their added acoustical the sales to is a The very, TI today, everywhere were and But really to don’t that line TI say in And capability fiber. ceilings success tiles, have would participate doors quite we new are and That those right. few don’t have the with the good a promise you where have business So, good of blind. mineral most of architectural in we our We’ve ceilings get we’ve in I there markets. space space. manufacturers where projects very down decided is bit we’ve And parts a ceiling specialties. access to added not engineering architectural of we I specialties. people, around beaten the the of line today that

really So, what’s think I happening. that’s

Steven Ramsey

pushing getting an we’ve into your that like And building product to there. what the is on sales normal that’s It I does single-family reasons? what and time for companies side who seems products the am support wallboard heard Is quarters? lag guess, beyond and timeframe. you. back increasing than switching time Got have home extend go then, that various seen shows I maybe revenue various is, lag better at times near-term demand upcoming the the single-family there in

John Turner

strengthening talking after for of sequential started we alive, starts about that, fact come looked us, at the I Well, right. are if number those the residential sales six months we’ve you to been mean,

than stronger part are I of October. of we November were the course, any have process we home. a would that necessarily that those and data lead don’t extending. one of times just So, building But were are say we in in

So, sell it’s them get the drywall takes fact. the going the bit and products little and longer out, take a land a to longer order it to longer build pore the if the and we to that to longer into it to taking home. for lumber the That’s takes then preparedness, foundations other install

So, impact got the a well, they yes. you us. XX That’s at instead data homebuilders cycles to on houses see can if are and a talk build or of days, XXX day then, direct you to that

Scott Deakin

lumber which point today’s go on side, into we In least is being at seeing not supply other factor, have our certainly significant, this appliances a point. little home like are and heard that at a it’s we what of a evidence from extended price but products bit things

Steven Ramsey

you. Thank Great.

Operator

from comes line Trey the of question with Stephens. next Our Grooms

You may proceed with question. your

Trey Grooms

Hey, good my question. for morning. taking Thanks

John Turner

Hi, Trey.

Trey Grooms

JT. Hey,

lot side? time But you into that we on of about pricing think recently the ceilings your there as XXXX? talking suppliers. a still one, are increase go price ceilings and clearly one on about wallboard So, thinking How lot up time spend what I announced from big in we pricing air. of about a first was

next any just as pricing year around demand look the ceiling thoughts into we given the backdrop. So,

John Turner

fiber, other market the say mineral accept commodity prices. than potentially will I would the that probably everywhere the

the architectural be forward that a individual think part I specialties basis. is those of and on ceilings a continuing are will an It quoted going trend. larger

And side, be whatever pricing and mineral side. manufacturing two so, the think a just the continue continue more premium the bit will prices that’s the and the will end put I there to on to and commodity fiber ceilings think a into I it’s going bear space leaders struggle, the I more those higher little do to just more that think because is acoustical be players. on competitive and rise there

Trey Grooms

your some do don’t this weeds but know others the business, commodity what you into and I are we about? – of you of are you can give is with much, get And the kind of approximate can if ceilings the ceilings an Understood. talking acoustical us mix that versus more

John Turner

it. I here would don’t sitting all have right It don’t be me. speculation. have with I just it

Trey Grooms

Fair enough.

one So, little bit maybe level like, but I it’s looking sounds a XXXX, could it wrong, sounds commercial and higher sounds my the it like is It next but worse. am getting correct me bottoming. side here not into be like, if

but continue starting really clearly in further few we point to over quarters. so and standpoint, been continues case, look business to be revenue question from some that or little has good we where start to I are some growth the as we overall? you as this res what is my we experience if expect a next from your looking – see to are start do out, would that’s case, side And res the if that at a go growth and volume And at the benefits guys definitely

John Turner

tell just can talking are was we see and quarter time slightly all usually forecasting. one now November and this because still it’s would than give we a that right be that worse is to I October really we very commercial out, you you Again, difficult commercial about double-digits.

these Commercial strong how bottoming here, COVID. and we obviously about excited was that year, all I would not really know. right long am up super levels at against don’t last I stay So,

June, get it’s end is the good. quarter you still dower, I then first into as, able May, but maybe year, COVID, that next want start a hey, the commercial after the not into rolling months give April we at So, that’s be pretty, this I we next be and time. of mean, we those to view July, don’t But of to might

reflective not going little thankfully that our wallboard and Our a of I all of while steel And we fairly better a share otherwise have. we sales are commercial certainly where right. to gaining a a we are focused we ago XXXX. believe quite ago perform think on and late us focus be than would that quite But that I are share while residentially that, in that also ceilings, with we tailwind is on helping until is gaining

Scott Deakin

a to You financial lapping from get are good. which ceiling the side, going on natural some standpoint is

on the us we start point. are after exactly are to find we’ve Those won’t this give got that as year. going start declines moderate the the based forward in So see residential shapes to side, But so you are the then at to how some will be position that just and seeing that a should you to on year-over-year or as a starts pretty this out able pronounced quarter not we got indication. positive strength

John Turner

feeling better. feeling are I But are we we not think mean, I yet. good

Trey Grooms

just and the that one But one for it of question it last is you platform kind understand looking with the here where kind where point – the sitting The are into right dovetails appreciate I priorities, of your given tough in on are I given And expansion. we and cycle, we strategic color. that in uncertainty now. me, – Understood. the we from one, the out that

debt are improving. I down – guess, So, a mean, go come reduced bit you’ve around your your net you even that? could metrics into color I has leverage more little

where look the out are – at M&A. So, as we are then at balancing in into right given and we currently? we priorities, and but a in look of there, opportunities and you that Greenfield both go and are that? are little cycle this are you How now today little that bit detail the you about where outlook Especially, know it uncertain with we you more kind can reduction debt more cycle

John Turner

of got course, Yes, put back to and There people. hold six we when things on hard property. process got I mean, have we out right. the that them timeframe we them We COVID-XX looked Greenfields them anything And then at in can, put get so are pipeline the get It’s to get of it on in and to done, in we’ve speak that got little up is hire go in April back the you a because hold to or five course is and pull for and that, that, to Western if done. really of our But, But are going very, about excited of this super good ones we get five we year not half more there in one this of blooming got open fiscal that Oregon year closely so, thereafter. we it’s sure. very are time. some done, four, Greenfields the in that takes market. Portland to bit we’ve got a loaded which And will be

a two about good So, that together. the and they’ll The on have liquidity a we’ll have I and and exciting to good acquirer. in be agree multiple is be that unfortunately talk good balance all we you, think we front. kind today, we’ve coming just, players have sheet, talking things acquisition good for next should to news pipeline with are I a quarter got And we multiple we of any or people. good I some don’t pipeline and But you.

Trey Grooms

Thanks the it and Great. for all color. appreciate I good luck.

John Turner

appreciate you. it. Thank I

Scott Deakin

you. Thank

Operator

the from line Raymond of Darkatsh comes question James. Sam next with Our

may proceed with your question. You

Sam Darkatsh

are JT. you? How Good morning, morning, Good Scott.

John Turner

Sam. Good

Sam Darkatsh

respect in in noticed a couple while. of a don’t first in I I the minor, quarter stock quick want to housekeeping a a Just the little major capital questions that the but for bought time allocation, with you bit

the go time that of from or a the left stock have we the the into authorization should the you seasonal year. behind I last anything the when to to was that? half take there activity? you you Anything was the $XX reasoning early XXXX under six know cash around and think flow heavy the valuation about there as Is and are million so I price rationale time did was times. that

Scott Deakin

We telegraphed that share repurchase to last more with compensation than our offsetting in nothing that going Sam. doing equity It’s our programs. that, were we modest start quarterly a call associated

this over see you’ll buyback obviously equity the issuing those offset and stage, dilutive some But more are it’s than as programs We nothing limited of to of that. time us that. impact part really at engage in

Sam Darkatsh

the And think, little still hold Got you. couple free are of fiscal are for expectations the my extra year? question, next a bit cash quarters? Or Scott, Is last the between EBITDA. XX% to expectation inventories the that XX% I you then, flow looking of typical and throughout

Scott Deakin

that, XX but – about a of in right. think, good low it’s normalized is back as I out this on say, last a towards that capable more the probably year. where in the were, indicator. business is of of of pretty And EBITDA end the a range that XXs, to we to will So, be environment lower overall environment with down that come indicator But basis, that what versus in still then, back certainly this XX, we being closer it is good

Sam Darkatsh

well. gentlemen. Thank good. Stay you Very

John Turner

you. Thank

too. You

Operator

to Ladies reached Ms. of and Session. turn this comments. Kratcoski to have closing Question-And-Answer gentlemen, Leslie back the I over we like call for would end today’s

Leslie Kratcoski

and Thanks, always, everyone morning. of for GMS.com replay Good on call interest. and day. our shortly us A your for will transcript available you joining be we as thank this

Operator

This concludes today’s conference.

Thank participation. time. rest the your at this lines disconnect Enjoy your evening. your you of may for You

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