GMS - Earnings call transcript Q4 2021

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Operator

Greetings. Welcome to GMS fourth quarter fiscal 2021 earnings conference call and webcast. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require Operator assistance during the conference, please press star, zero from your telephone keypad. is conference this note being recorded. Please time, Leslie Kratcoski this I’ll now to over conference the with turn At Investor Relations. Leslie, you begin. may now

Leslie Kratcoski

Good year of you thank XXXX. GMS for morning us fiscal fourth Rob. the full the call earnings for and quarter for conference Thanks joining and

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

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

XXXX the session question filings Factors question forward-looking more and estimates forward-looking with one you year of non-GAAP to periodic company presentation on reconciliations year Please note quarter the are this fourth the answer follow-up. yourself current that begin we in these to the discussion XX, one and reminder, of the including limit we April and discussions time, the a the also and request kindly ended Once XXXX. measures. provided includes and update that call, quarter call in forward-looking management’s the of in relate of release represent no and interest definition to these reports. fiscal assumes Listeners and company’s section statements references statements and the measures review press detailed presentation other Today’s slides. to The The the future. a to any in statements XX-K to SEC, obligation related encouraged the expectations. non-GAAP the certain contained are in company’s As Risk

President succeeding upon JT. the Vice recently this Executive and JT? my Turner, Relations, summer. is With Financial and Chief Officer; of turn Chief Scott Joining me the President company we welcomed to Carey and John to over Phelps, that, Officer; I’ll Deakin, are Investor me today who retirement call

John Turner

Leslie. member in She consistent like our years you particular we years, investment minute and had recognize of throughout across several joined also that a our you our we is the and you team recognize calm were She been instrumental GMS relationships and joining that function Good the ahead take with a of led contributions the Thank the in IR today. has of community. Leslie Leslie our outstanding source and years. dignity, I Leslie. for been IR last capability and has key has a the been development has us. I’d execution over Thank to thank made advanced and professionalism, year. the all when morning us and she light think class spectrum to pandemic leadership to last and strength goals of has of where this strategic our

am IR All wishes welcome retirement. our of team. in our to you into Carey I excited role GMS now well and

our and capable to found with space so lucky very are a community. investment familiar We our have professional

evidenced net and finish Starting operating EBITDA. net then some share During I’ll sales, of start thoughts this XXXX, will over and strong of record taking turn closing I’ll a review fiscal income morning’s before call, to results. then our by cover we our a your with financial levels it Slide Scott, who to questions. X, delivered as highlights on adjusted

adjusted dynamics, constraints deliver even complementary focus soft to and landscape. capitalized the opportunities to results remains team we demand market conditions, face continued entire products supply these solid created on row a us net while as robust a favorable generated tailwinds a and for continues strong to we The dynamic a on successfully what fourth operating quarter the ensuring sales, SG&A execution, that very execution sharp leverage enabled continued for in benefits quarter, to discipline by Through in and maintained that of a Our commercial residential customer the in cost us inflation. as XX% effectively in disciplined navigate focus Despite the to operating improve and growth we including of market our SG&A XX.X% continued organically. market. percentage increase sales differentiate

adjusted loan increased positive XXX rose EBITDA EBITDA re-pricing X.X%. free a adjusted approximately generated cash with XX% result, margin maintained a adjusted financial flow quarter. the further enhanced strong flexibility during We senior points offering and which to of As term XX.X% EBITDA basis and of was and notes

strong position greenfield both Building to was focused drive DL the meaningfully of Materials acquisition openings in enabled sheet for Our four us and U.S. and our with and acquisitions, which via our greenfield Canada the continue during in quarter. fourth balance liquidity growth demonstrated

distributors. after also addition, entered into Westside brand specialty quarter, nation’s and This the business while well purchase our strategic, to agreement us Las one of California Building the enhance will In a definitive the exceptionally entry the product largest independent fourth conclusion in highly affording we footprint provide greatly strong another into market. managed offering of interiors Material, Vegas

$X.X in fiscal year. XX $XXX.X increase margin at EBITDA. to adjusted point we record billion, and also full income, for sales, to net for in X, a year we basis X.X% sales EBITDA X.X% million, adjusted realized Slide adjusted increased generated EBITDA year-over-year XXXX, improvement year-over-year Net X.X% net a Looking the and to the

with improvement free out the team communities who of public our fiscal and a At of I’d share the XXXX to time, like five adherence thanks our and us generation circumstances lowest have and and end of of focused GMS enabled came we ongoing realize entire engaged, We fiscal teammates contributed at cost a to as since the us our at each sales. to our flow onset to offering like possible, COVID-XX our year. the point they level this liquidity and faced this to our remaining made challenges disciplined roughly presented ago. a to own entrusting leverage challenges throughout customers, basis percentage throughout for for the COVID-XX Our EBITDA adjusted numerous partnership of net of XX% other. past by the results to I initial year X.X suppliers, business adjusted together as congratulations support as my their their the debt extend all in pandemic My would navigating proactive who years period. unprecedented both their for customers same and overcame suppliers gratitude to our go cash times, the met in alignment the appreciation of to SG&A XXX our structure in our year substantial exited

more our With express on results ongoing that, thanks also now confidence over Scott Scott? for our turn We their QX. for shareholders to financial to provide and to I’ll our perspective support. it

Scott Deakin

Thanks good JT, and morning.

presenting fiscal Before XXXX. quarter XXXX and comparisons detailed far includes impacted our year periods the our arguably uncertainty, results, drastically difficult resulting pandemic. during These and April COVID-XX to fourth us and months most note in ranging the to shutdowns prior featured I’ll the comparisons results that of the March widespread for

our drove by clearly quarter that While impact our and was communicated outstanding rates, to our it execution and had team fourth year-over-year our commitment previously growth favorable these outperformance. customers were their in our dynamics a the considered on outlook

up prior $XXX.X an gains end acquisition Slide From pricing volume in provided low million, end have continued market were and higher up These were pricing categories, year favorable digits double noted, quarter. exceeding from the XX.X% to weakness during volume showed perspective, significant sales Building DL product for the both from U.S. COVID-related perspective, at mid-single example, for digits outlook net to and, the resulted due sluggish digits while earnings looking Materials and across the sales, strong Specifically price, double the fourth year. markets, sales last residential X, collectively call. on of volume our QX quarter considerable to residential COVID-XX be as weakness commercial increased related higher and strength in a which of

Excluding net XX.X%. favorable foreign organic million sales translation, and $XX.X currency of acquisition-related $XX.X million increased in revenue

year quarter same respectively. more net period XX.X% a in sales up in sales As were there basis fourth was XXXX the one a the and fiscal net per-day and selling of on day organic ago, than XX.X%

commodity wallboard sales for the quarters, in product several XX.X% products, of to translation excluded a sequentially both demand million, volumes volume quarter higher light supplier up up which to Gross sequentially quarter to in increase of price price sales the currency month the were X.X%, of third and Ceiling from back organic the profit in fiscal Wallboard an price X.X% the of products, result increased and volume mix. organic a XX.X% increases coincided quarter in of of to higher sales we been the of impact upward price as in in our $XXX.X with XX.X% and component categories, sequential up important due a and of mix. XXXX. increased increase our X.X% our product of fourth $XXX.X year-over-year. XX.X%, up of increase fourth wallboard a growth quarter, where the our movement sales of past the prices, other execution volume of $XXX refer with over on that In strengthen combined of per year-over-year. of from thousand higher that or products up On strategic As square to $XXX.X has X.X% strong formally Steel improvement to in also million pricing organic the larger recent were quarter I’ll increased business, Sales pricing sales. X% sales the foreign comprised as price average complementary basis, segments, each complementary an of and higher complementary and X.X% month price which a of our segment were of pricing result mix. are multiple of basis increased from steel Canadian and we and notably actions October. each Reflecting actions product million X.X% proportion $XXX.X compared volumes organic response realized realized year-over-year basis, most pricing average on performance, the of mix quarter XX.X% or in sales first growth ended third X% the increased which increasing second were net XX.X% providing. as comprises increased quarter. framing an On higher it’s supplier X.X% and series from organic on initiatives sales a I $XXX.X to for the with X.X% XX.X% we million million basis note product an review XX.X% the all steel and rates note mix. feet due

the residential for as XX.X% gross quarter XXXX, comprised the expected, to unfavorable of fourth As year declined year from a product XX.X% a mix. and to total to comprised mix within a as wallboard due of segment our margin sales greater wallboard ago, of a percentage our percentage fiscal ago primarily compared lower

we this quarter. In saw experienced lag addition, prices wallboard passing associated rising we the with through as typical rapidly

points fourth adjusted line higher to quarter an basis a continued XX% XXX disciplined prior XX.X%, productivity favorable pricing the a SG&A result higher with containment to quarter, EBITDA of year represented cost increased percent margin from in of and Turning of XX%, The is the previously improvement and $XX.X In XX% basis net range. of XXX points realized Approximately adjusted adjusted points Slide X, the expense outlook basis XXX lines. which were EBITDA of XX.X% across was initiatives. provided end summary, incremental from of benefit basis improved broadly million to points This was X.X%. from year-over-year. EBITDA leverage remaining improved product margin our of XXX sales as adjusted operationally

manufacturer in cash This million the due quarter. X, Turning or a expected an unusually to well from liquidity increasing to this in to was significant efforts to EBITDA of the as adjusted high as prior decrease constraints. quarter our inventory increases at advance year ensure fourth the fiscal generated XXXX response Slide of COVID-XX amid build company’s pandemic, we customers the flow free end in preserve principally price XX% quarter fourth in proactive for year’s product $XX.X availability supply to and of of

and of XX% indicated, full objective flow fiscal $XX Capital approximately in million JT full XX% generating of range cash maintain for at EBITDA. free cash free cycle and we adjusted XXXX XXXX year expenditures and for in flow through As million our $XX the fiscal EBITDA, XX% the of to a fourth respectively. the came quarter of year totaled adjusted

to million expenditures capital to expect of million $XX range cash a currently fall we forward, in in Looking $XX XXXX. fiscal

of strong times cash times at end the reduction X.X the X.X the year third to free the flow as net quarter. of to Our the leverage of end from our contributed fiscal of debt

cash April of growth facilities, hand priorities. had we available us for our strategic on credit an As ongoing pursuit revolving million million of our and ample XX, $XXX the additional of affording resources under $XXX.X

maturity these plus Moving a portion for a of transactions, annual term Proceeds of secured out of our year million point our the for were lock fixed rate and $XXX.X capacity X used loan a potential April to XXXX. further term This XX Simultaneously, basis use a anticipate giving in coupon. debt outstanding weighted issued XX, incurring million amended loan to review take flexible attractive issuance structure. on issuance term facility secured had In we optimize I’d few of to X.X%, strong The to to our Slide freed up moments more million $XXX loan to to ladders facility future. borrowings during average enabled which, additional remaining capital fiscal the we of X/Xths transactions April, X, this under rate reduce structure years, a provides we the senior notes unsecured to improvement. transaction After to unsecured approximately like debt debt a quarter LIBOR term balanced the already we representing fourth undertook effect our XXXX. us to eight-year maturity, bearing of also to in repay $XX notes as outstanding. interest in interest lengthening expense senior eight it our

With for As a expected presentation on a and be modeling the XXXX before and anticipate cash final call JT fiscal normalized to XX% the based in we line note, questions. we over for the turn our XX% income to mix. of I’ll business rate range adjusted in consideration calculation income tax net of open for back that, to

John Turner

Scott. Thank you

remained our tactical fiscal priorities in to platform XXXX growing expanding necessarily COVID-XX If nonetheless was of turn offering, while committed our challenges focused to improved relentlessly Slide the the our expansion, productivity of growth you’d products, on complementary overcoming core products X, execution and strategic and we in share unprecedented pandemic, profitability.

on progress several these is initiatives Our evident fiscal XXXX four on fronts.

network pandemic well less in residential those us the securing in expanding construction. exposure, wallboard arrangements offset in First, existing where while to several which and generate particularly resources several underpenetrated, we to prior volumes in to increase year-over-year we markets we strengthening redeploy higher in an ceilings, additional core where share our actions provided In underway products, and enabled geographies to in commercial XXXX, were fiscal geographies are distribution had continued specifically others. softness arrangements penetration the our bolstered throughout traditionally new in construction

levels the continue the to architectural in both our such, by As available believe we evidenced and expand we sales segments mineral specialty of share fiber data. compared as market, market to

growing select are our products. Next, focused on and complementary we outside of product core expand product diversify offering, profitably to opportunities

Canada bearing positive fiscal growth by negative quarters row pandemic. year-over-year four as in fruit, of in segment year-over-year XXXX in this despite the XX.X% a multiple and with COVID-XX impacts evidenced growth initiatives the Our U.S. the are both in

Third, through accretive and expanding opportunities in reduction. we balanced are platform progress greenfield while our acquisitions debt maintaining

XXXX, During in opened locations the we U.S. six greenfield fiscal new

market in reduced first time, location debt by free flow, Quebec. over the moves to the the of DL our $XX in with presence us net markets, acquired and the Building also cash XXXX. extend our of new in providing enabled our to including At geographic Materials million fiscal Canada. million, strength Ottawa-Gatineau entrance $XX to for attractive Province our important we approximately We These four same

to market, combination May definitive building exciting and for of continued metro and This Las when our into distributors presence largest a expansion $XXX in multiple the entry platform one agreement million. signing is XX Building purchase expands in in the interior Vegas to California announced enhances we Westside of into momentum the products expected the through Material, month. locations areas Our independent of which next marks close U.S., our

productivity to fiscal business payments, accounts, with delivery, ecommerce customer XXXX of field profit of insight in continuing significant proof hands driving we putting further of in intelligence We our a the into growth capabilities deliver further employing customer scale our deployment and real practices. technology ensure online and subsidiaries in best-in-class platform in actionable, progress made are of drive leaders. our most deployment and Finally, improvement, that our to best and while experience we our is leveraging and data the time of

and in are profitability. Finally, our improvement adjusted driving to testament our point XXX EBITDA improvement basis basis successfully in adjusted margin SG&A a point XX

thoughts making similar growth of We be expect benefits few currently my net to to offset of quarter about approximately comparison a expect Before pricing outlook. generate a sales. year-over-year sales closing realized fourth we as to what quarter, by difficult in year-over-year more we our first remarks, the on XX%, largely higher

In continuation in of profitability, expect cost particularly wallboard. terms of dynamics, pressured price we a

similar realizing and, As gross the of margin realized an to EBITDA range a adjusted quarter with XX.X% incremental the anticipate the leverage, we result, margin fourth currently to in XX% a in SG&A XX%. coupled

commercial further early the on as indications continued encouraging pressures the becomes later Looking believe and of nonetheless, timing of quarters a remains residential in we and fiscal uncertain, improvement strength in fundamental are more constraints construction forecast; difficult out our of inflationary results well support construction, trajectory for to in but there those as while in is effect XXXX, emerging. supply

the in is closing, positioned GMS well Slide to long XX, for Turning term.

three in All and combined us As liquidity distribution this the I opportunities construction time, differentiated we us generate shareholders the positions cash so in flow all call entrepreneurial drive execute for to now to specialty confident embrace what model, make enables well the attractive. the environment, open employ successfully a North are advantages the only products, very stakeholders. business free balance ready sheet enjoy to growth a strong questions. remains our At business and but provide term for generation, team’s are strategy of pursue of advantages, am for scale our same service our we our our term dynamic us significant culture. to continued to future. interior leader operating market the value near an that execute long the that American not and enabling into Rob,

Operator

from Hughes coming is today Keith proceed your question with first Please Our instructions] the Truist questions. of line Securities. [Operator with

Keith Hughes

a couple questions. Thank you,

demand some discussing, the when of on in signs, your you activity will First on and the up you’re shipments? the of commentary think do show positive commercial that meaningful do actually shift in a bid think--some you when

John Turner

Keith, still into the projects, XXXX. out are Well, larger calendar probably

to the fiscal their index of two-thirds improving, fiscal But in to out think other necessarily remodel fill kick QX perspective, might market, year, the exact I green as market, in and the space seeing our up with ABI some from some ’XX. starts with the then later so seeing be that see business a our starting you’re We’re know, and are in just momentum remodels, here larger remodel see in our participants look you other activity still in and hearing we probably our and but in think their so shoots that we projects Dodge we’re maybe participants pipelines they’re from the numbers back that not came year. of Dodge is

Keith Hughes

Okay.

that, all, the first for to the the if Westside too or meaningful? quarter, acquisition is add at late expectation revenue acquisition, your be Regarding that the much going how to quarter, be to July will

John Turner

giving so here put for numbers We’re for quarter. is any we’re the in not--we Westside, you didn’t what ex-Westside yet

Keith Hughes

go sorry, question--I’m Final Okay. ahead?

Scott Deakin

within to about. month the we talking the talked to going about were sales acquisition, talked about XX% already a accretive that in we size that just of of that maybe was I add, release we

Keith Hughes

accounts Okay. year-over-year. Then bit a receivable was good the up

If you there. that, what’s about could talk on going

Scott Deakin

seeing it’s really been just the so tamed, as good, we it’s of It’ dynamics cycle has to to increases facing. just been tempered we’re have being the concerned been. the be the expense demand related think about. bad really business just anything the on trend think of there. any I revenue really overall don’t It’s and as side. I it’s of really up Collections debt we’re what haven’t seen that really much

Keith Hughes

Okay, thank you.

Scott Deakin

going look across all it, overall percent etc. capital receivable, range accounts XX%-ish trends. the operating just as in our been working to is sales, same if you that to inventory, of at with still payable, overall add consistent that we’ve accounts at, we’re netting prior I’m a so

Keith Hughes

Okay, thank you.

John Turner

Thanks Keith.

Operator

your question next of from Our Markets. questions. is with Mike Dahl RBC with Capital the line Please proceed

Chris

Hi, taking Thanks Mike. this questions. is our on for Chris for

John Turner

Sure.

Chris

be pressure whether wondering Just some your touching quarter, the margin the obviously how be could expecting gross additional around costs residential to for SG&A pressures the it keep higher year, through moving additional give enough offset on maybe year. if us year, to of this you mix whether moving I but next on price this provide margins and able or an was and this some that the outlook evolved would pieces, color thoughts you

John Turner

question margins help I move this last our mean would Your higher [indiscernible]-- think gross year? was, you SG&A

Chris

EBITDA--

John Turner

Yes, margins. EBITDA

Chris

margins, yes. EBITDA

John Turner

think we’re there was Our forward. continue pressures to a fantastic team to is labor some and moving than year, expensive out to job I positioned it more that has do fuel expect from inflationary cost we are job, and and the a - a things prior our perspective perspective. well obviously all There’s whole heavily we’ve our year team through productivity as great be that in really guys But being said, technologies better a help invested up very from to doing productive, other tighten done us well. is

well continue side. do to the will on I we cost think

month I from don’t inflation down out year. think interesting back fact beyond think half we’re environments with towards doing maybe perspective two the for doing, I quarter that a is the steel would back settle ago, the talk reason what margin with that steel we it’s or and this some of originally gross the dealing much a

our job is that, going up is quarter, pace this and the end moment, not - chasing back a fully the so is that’s in I up wallboard, catch But that be talk just really--you at said from implemented a so and industry sequentially increase like on the another we us and In I the up bottom continuing to so that doing is to term chase objective. over into the stated XX% think average. announced margin bit, we’re to just the with settles I that’s EBITDA and expect and nice manufacturers, making up hear the is keep if maybe hearing to think we’re things that’s sequentially mean, issue quarter. time, the increases improvements on case. we’ve to long of really to closer we’re an objective price on June, continue The so our that number Now, a breach nicely everyone we that in down pricing side, think long gross little here that it’s basis, aligned we enough term and that I last

Chris

behind what’s and helpful. that’s being the by on terms you building next driven of commercial your and there sales versus growth? blocks it, in volume us could guide Then the the with Got quarter, price assumption for XX%, residential way help any what’s

Scott Deakin

in two-thirds Similar that to is from which and portion come volume the it and just FX, as of blocks volume, order magnitude to mix. rough in then magnitude building of the and say of orders what of price influence going is mix, of probably of probably to drivers. last is and in combined pretty XX% of remaining and a this we that quarter, heavy the I’d ballpark on going an you’re basis see price saw

Chris

that. for thanks [Indiscernible]

Operator

Thank you.

Please is with from Bouley Barclays. of line Our with proceed your Matthew questions. the question next

Matthew Bouley

extent the To you you the across finding your got like on that Thank Hey, and are along, is lag. the wallboard, bit big builders good about the I here you. widespread to clearly passing morning. in Can specifically own effectively? you’re builders of the pricing sounds power, price Congrats are basket residential although Thanks passing the purchasing for pretty results. are just because in question. price building and and a their receptivity sufficient manufacturer guess of price materials, facing I ask it leverage a to of there’s trying challenges increases smaller

John Turner

we I it say we like that of Well we’re price that Sufficient, out, believe how once be used mean, sufficient. We’d that about that to faster, achieve gross types again would it’s the settle the to. I that? in increases still will margins

having On I also that never our mix our that mix so nice absolute of a pricing, be impact the sequentially trailing is you’re margins, all we’re is improvement the it negative market, price blended showing in to year it and other think of upon continuing still so what sequential and the remember sufficient board, prior based quarter. of showing hand, this as it’s inflates, residential pricing really into we’re so the in

with question we to I have or business our essence the be but ability them to that, this the seeing partners in happening months, have the enough it months, to good answer and have in pricing, also their we’re that able and being the calls, customers. their we’re So call, the last is, month to the weather have so happen, also on all--you - have it good the know, be to pricing to I is partners They know, with we’re and they plan is before customers. it’s individual that pass I’ve certainly strong that’s respect, leading two in think plan in. fortunately our increases we mentioned to it you we mentioned other to along, of several are six in pace ability three a

Matthew Bouley

really that’s No, JT. it. Got helpful,

some seeing or any one would calendar Thank this commercial, just benefit be put just that later year, elaborate to green ability these the in better Second that, specifically in some margin what extent the the impact like? recovery. manifest to side, into numbers versus volumes commercial from shoots is commercial margin you. at what to you’re just Obviously do better the of headwind ’XX, getting with looks on on mix resi gross I’m what the

Scott Deakin

try for you I gave going of generally that dynamics guide the Obviously commercial, first the on the being dynamics and that think this were based roughly it. some quarter balance improvement to--as we We see on as the talk resi we’d starts consistent talking generalities. commercial come we down of about some market, some that margins, between indication general so the were we indicator residential as we leading we towards might it those because seeing. EBITDA we into speak Generally about commercial as on to versus in point, operating being were better quarter. to starts to to back, serving be

you’ll margin JT of first quarter about, not side costs to generalities, offset but the be the facing. Given and but those the dynamics go to later a I likely little on we’re EBITDA gross the year, you solid some timing bit of are start still in operating number overall. talked improvement those impact, that’s significant are to a that get by know higher to a as see positive

Matthew Bouley

No, it. JT. Scott and thanks Thanks helpful. that’s Got

John Turner

Thanks.

Operator

next Please from Research. Hocevar the is with Kevin Our of with line proceed your question Northcoast questions.

Kevin Hocevar

about Yes, trying from continue Obviously everybody. wondering you us seems leverage that that these more of benefiting to I color other if points on how Hey, seeing cost of--XXX SG&A some even flow think XXX wallboard, quarter, leverage XXX you basis keep to comment, this pricing through. operational pricing, momentum, does so on can about to evolves. better, XXX called the due due basis to this think that’s give SG&A all here year. basis just containment to guys pricing if think, kind XXX as like of Nice get to kind Wondering and favorable so points it leverage, side could how potential out, you things another good that morning. have points points pricing of basis steel, I’m

Scott Deakin

drivers operational you we’ve way got see pricing it’s seeing quarter. that XXX more relative to if you’ll but is our volume last of see best a relative of tougher on first to--if factor side of first I XXX, different, sort on The that, we’ll of of this leverage about in you of quarter, so the you growth, in quarter-over-quarter talked little terms discipline a the on operating pricing magnitude bit an basis, into on the if little a impact, compare do we’re the the drop got a JT through focus we’ve tight expenses. Generally take order drop-through that what bit basis, what in higher still think quarter, in it on impact

pretty increase increases to seeing fuel, insurance But some have what seeing as come into positive like. expected, salary costs, seeing in some, generally, back the in people so on operational expenses keeping operating some some compensation on the types going the quarter the expenses should workforce of be on strong revenue favorability side, on well. the discipline from price and effect in side, things the our as and things, costs, they and leveraging that a things tight first we’re seeing into the--that as we’re still we’re side those we’re support We’re then like

Kevin Hocevar

place. there product then just are is I and know been the it extended the any months? on--all Okay, supply several has being over as just How as lead times availability, it’s has seen in tight been constrained, that--is last improvements or product for

John Turner

I get into our Wallboard is guess a to about way I get it’s the the then to customers. the to actually steel, it we kinds bit we it that frees and products, a through summer, disruptions, our would little of in think say all the little seeing been. fall. has Well where get products this the support move that entire really as leaders need series I we hopefully you’re up going supply chain the as space in worse be right, of and certainly weather that think I throughout storm able

I to you others way in that balance mean sheet good we advantages, demonstrate use pretty customers When us what to by a these and You’re available scale to what to would worse a customers would also expect. allows that they in we’re to about times that our that’s doing the are our for job, think that, product anything talk so your to think I it us leverage that we’re and have - seeing experiencing I expect experiencing, be use and that way. a

to up, is lot go a see through getting other steel don’t going times extend at to just extend, the and don’t getting continue a steel, to maybe So it the I are going lead to is continue least price than it the continue to worse lot better, while summer. I going just to see and

Kevin Hocevar

you. it. Thank got Okay,

John Turner

Thanks. Thanks Kevin.

Operator

Grooms Stephens. Thank you. is with the next The questions. with Please Trey from of question your line coming proceed

Trey Grooms

Hey, good morning. Thanks everybody.

John Turner

Hi Trey.

Trey Grooms

quarters is I’m through standpoint sorry thinking around you’re fair on talked implementing wallboard that clarity that so the next if the I pricing? increase you more kind wallboard it over for missed couple you something nicely. was I could of pricing Scott, the think give this this of any--or about gave you’re from April the standpoint pricing quarters $XXX, catch but did sequentially assume couple from on to now, specifically, you you one see could us me number quarter and is you guys guess give up these I next on the as us there front? was there us pricing, it a for maybe a the it’s wallboard up of and mean, from that little of First June I on that us a similar how work we about, end - a continue

Scott Deakin

into the about the you I can progression the quarter the to talked over the ended the the We and of continuing I but of we’ve seen tell progressively to at actions marketplace answer we into increases past be it think average market May of in for question so future are working anything and and, don’t think can the trends $XXX, quarter you at and of premature supply quarters, dynamics, we’ll course number. general $XXX we side know will of further how this probably - you resolve it, those just up those continue shake it, prior the give so quarter there. those continued quarter all JT’s lines same that around dynamics out the frankly, to into I and, all continue. there, the acceptance the driving It’s expect along exactly given from the to see June, from that

Trey Grooms

has Okay, category clearly a but of seeing the this focus complementary, yours, I I within specific of you’re complementary? that where gains talk share market strength, big guess about there fair been mean, on Then enough. outperforming there. you Can

John Turner

course been business as the the buying to business, tools it’s a push in still not for pieces very believe so in lumber experienced here not the still that commercial choice focused particular, is course, what for and packages, continue the in only of in business, we is or commercial Well, Canada and down, of hands, that U.S. massive to growth total it’s something on but, the it fire-treated screws while try us, larger be we’ve even lumber all our we’ve Canada us to unit Lumber, U.S., into nice we’ve and been very that finishing Canada, we’ve in in contractors lumber by and been in the not, we into go buying and focus Roofing the hard smaller strong the sell. very, to very high as we can’t residential contractors areas we the in insulation. supply one and last I sell, insulation, much are continue things team in a in we anything. guess well over lumber We’ve to but more that’s tools we that’s fasteners accessories insulation. get gone the frankly. in good then supply continue number to tool and of That’s like of pricing on have and tradesmen’s had quite the--to of news although up our Insulation, that on can than as build accessories, great year. do roofing well, the in doing performance better in the our constrained

of is you very so those categories that the as just I doing primary drivers. well, All would give

Trey Grooms

JT again. Thanks the color, you. the congrats Look and to for thanks Leslie, congrats forward you and too. you Thank All right, and retirement, on Scott. Carey, to working with

Leslie Kratcoski

Trey. Thanks

Operator

you. Thank

question is questions. your with with proceed Please Baird. David of line the Our from Manthey next

David Manthey

not and Then demand that as could chance assumes of good everyone morning see and steel terms the be dynamic there’s great roll assumption of the where that demand ceiling and thinking the that and supply then demand trends six everyone. of could but and address help you’re for been wondering us and next some here, for JT, kind answered non-res outlook. you shortages? Anything I’m back supply thin, one any situations these dynamics about. are questions in are side, on the of outlook my we your to the is there maybe through mentioned there’s comes within that demand going in we demand just supply the what Hi, Most have of inventories that you over months, summer? categories you

John Turner

expect down still [indiscernible]. commercial in commercial--we I see mean, volume I

all, steel. know, at beginning perspective. with that. for couple was swing are to looking being those up expect as This forward, going but and times COVID, because the anyway, then you’re that lead probably extended quarters, the we continue and some steel coming quarter, the commercial a dramatically, get we recovery digits, zero improving probably volume low from think--you but low for don’t of rolling you to single I that’s still products to point If volume we’re are single over but a volume or to kind in COVID on two still as effect, digits, dramatically, comp we up mentioned, growth basis the prices the primarily go out on whole of definitely see after next what around see of a be and opportunity any decline up at harder

we and we’re let’s now, a to way it and to as we prepared bad say, we right gas we’re ceilings if spectacular, want Armstrong not USG mean, I explosion have not to an from far want be perspective. big a in go, able have position so on inventory As on in had be a ask the where demand, but perspective, you’ll it, because gas. an sell the they’re boy, from it’d if caught, customers’ and would we’re fulfill to be in our off we inventory inventory, needs

go as continue said, easier as it kept to they sales, through. of higher we’re and where focus sales, on to about supplier is and even the and best our on that years, little a make a them try Scott it As be we’ve right going customer distributor, base percent to over capital the so total to with working

now, imagine guys we’d get how trying to get so material difficult if it’s contractor is difficult to the imagine can be material, You us helping to for on the right it like them.

David Manthey

you. thank Okay,

that long in you dynamic these environment but glide look side? what mean, like? understand pressured for do commodities Second, price the right the when cost price to how gross margin you I stabilize about on up we’re dynamics, talk I in now, catch have the does the path to

John Turner

so than other than of wallboard, Well, margin, it’s we’re really to we’re as pretty everything okay gross wallboard, selling that we’re a everything than everywhere terrible, other if we less just on much selling are sales percentage and decompose you caught really it else. of up not our were wallboard’s all

the think I probably lot that’s you later, it’s those I in the to some have probably see backwards. resolve normalized I commodity on will other wallboard; come up that three QX commodity a see if a itself and near certainly $XXX to see tell that term. steel moves the a think is to is say. price the fair year gross just three aggressively, was four to we’re hand, in at reverse I’ve before, to on happen stop. When the any stop, the us commercial months, months Not be what way big let’s through, the situation around as of exiting side in four price push and get months at the I you’ll trajectory you’ll on of we to us lumber can’t residential increases right going month impetus back our three months until the see to the with amount but don’t said prices $XXX, into that I continue lumber time last the six market. at dramatically move range point more steel, increase, what’s steel into five closer to and now it margin but a think you As on side, Scott said six increases and months look to and - all kind $XXX, you’ll

David Manthey

right. all Yes,

thanks JT. Sounds good,

John Turner

Really you. Thank it. appreciate

Operator

Kratcoski Thank this the back turn for closing Leslie to call I’ll remarks. At time, you.

Leslie Kratcoski

available a replay day. A will joining Thanks lot, everyone us appreciate be always, interest and have today. good we your as on Thanks for GMS.com in a GMS. and shortly,

Operator

This Thank conference. conclude everyone. will you today’s

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

GMS (GMS) 24 Jun 212021 Q4 Earnings call transcript