GMS - Earnings call transcript Q4 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings. Welcome to the GMS Fourth Quarter and Full Year Fiscal 2022 Earnings Conference Call. At this time, all participants will be in listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. turn Relations. over I’ll Vice Carey time, Investor President, this the to conference Phelps, At may you Carey, begin.

Carey Phelps

call quarter Rob. and Vice you I and for conference Chief for you, am Chief joining the Thank Good John and us Financial the morning, joined today Executive GMS Officer. Turner, fiscal Officer; full President year and and by thank for XXXX. fourth President earnings Deakin, Scott

this the press PowerPoint release issued in we of morning, section posted accompany www.gms.com. to this slides have our to addition call at Investors the In website

two. remarks of the Act Slide contain Private your to forward-looking On answers may Reform Litigation XXXX. Turning today's call, prepared questions in Securities and management's statements defined as to

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

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

Turner. the to I'll we request the and follow-up. one question-and-answer that call John begin you J.T.? that, of session once in time, yourself the kindly the to With interest question one over limit turn of Finally, call, we

John Turner

income, sales, end record April, Good remarkable of quarter Carey. the fourth year. net XXXX, thank today. both for capped-off achieving fiscal and adjusted us levels of EBITDA an and we you, the At joining net all and morning, you fiscal for the all-around full Thank

success amid provide inflation ongoing levels performance. help demand navigating this constraints, team's elevated to service of commitment drive and customer supply setting and record chain high in residential Our strong our

XXX.X%, categories, more grew and double-digit was Net with through Looking sales fourth at our margin our XX% higher as into volume points across with going net our three year products. results. XX% We each organic gross major product growth, basis than We and of gains complementary growth just income XX% quarter four while sales pricing improved increases of EBITDA details XXX with outstanding of our adjusted an to recorded more from continued and passing job ago. grew a wallboard, ceilings over up in Slide XX% product XX.X%, EBITDA portfolio. in profit adjusted do teams

our As chain quarter, particularly free brought expected, with which as flow greenfield opening store. and three of And we improvements, locations cash new supply in was significantly the year during ago. inventory expand improved million, compared six EBITDA of finally, continue adjusted platform, down steel, XXX% saw a of we adjusted XX% to EBITDA, AMEs we and drove $XXX.X new

the compared through Turning of grew principally profits next for prices just year. gross over to and highlights. full year, net XXXX, fiscal the pass sales Both four on Slide year our as XX% the and increasing to throughout prior

discipline more with to enabled inflationary year-over-year positive growth categories, The point XX% than a For volumes. ago. us with as increases our continued of with adjusted of our operating improvement revenue four we improve cost each our environment in combined SG&A achieved of pricing SG&A product and compared a margin by basis represents XXX adjusted points XXX sales each. year EBITDA percentages year Full basis XX.X%

numerous through enabled position liquidity drive growth acquisitions during openings greenfield Our strong and year. sheet balance to and us the to continue

Moving four our primary to strategic priorities. This fiscal five. advancing highlights our in progress XXXX Slide

share core products. First, our in expanding

XXXX to We periods year. XXXX, diligently recorded ceilings categories our growth the levels in product for through year-over-year And both continuing throughout volume of despite commercial customer supply. growth organic roughly availability worked teams maintain each softness Our revenue service exceptional of fiscal of product tight in wallboard demand. and for we four recorded of XX% ensure fiscal and for relative even

to come secure a rely As we markets our scale forward. have in to benefits they will we our share customers which us help the we continue need, to move expect the leader serve, the products gain as upon provides,

our growing complementary Second, products.

our expand and to profitably value our our to customers. continue We offer thereby enhancing diversify

we products result higher of complementary and a of During full both experienced growth as with quarter, net volumes. in fiscal XXXX, increases each XX% double-digit year price year-over-year sales growth

Our diligently growth teams working in are category. to drive

For regions, dedicated and as such tools we in example, and specialists envelope added drive in to roofing and help certain Canada. in have products certain locations sales exterior fasteners,

product to this growing incentives our we addition, compensation better goal In with revamping are align category. some of

result as delivered a As our teams complementary nearly product within platform revenue for expansion line our initiatives, activities, product these well strategic every our segment. of growth as double-digit

Third, greenfield platform opportunities. expanding our through accretive and acquisitions

territory others complementary an our during fiscal important product Nevada. particular finishing of fiscal leading products invested to For GMS five the the million U.S. its assortment and And more taping opened Material, Taping market. interior new locations five our AMEs while our stores within AMEs automatic to building five purchase accretive of we in cases plus product yards during full enhanced Building XX to an tools provider we and Westside existing approximately AMEs specialty offering. contractor. of was XXXX, since April. Tools, drywall in largest Also opened one most the notably addition And we and we expanding greenfield California the $XXX independent some finishing with XXXX, in end GMS products the purchase, margin professional of service the products in and year, after distributors, distributors in related

drive is and to priority strategic fourth improved profitability. our productivity Finally,

check and practices leverage a deliver automated that we and experience, delivery We with best-in-class employee orders, our ensure providing transact to continuing ability proof to photos, customer the status valuable enjoy customers helping operational to with are all internal customers us, receive initiatives scale further of notifications Moreover, that of our us best a to the the certainly drive but partner. technology results and efficiencies. and implement see, easily more are don't necessarily make delivery

greater we are we practices. turnaround are fleet idle implemented example, efficiency enhance to tools automation For experience. to time, In We've efficiency, customer picking, arming yard with tools delivery upgrades product we thereby the to times. improving future fuel to and yard staging customer customers important reduce teams our And safe equipping profitability, our overall while improve efficiencies, stakeholders. to wait sales are with execution and and workers to access and easily and work the our short, increase GMS building customer loading the and value delivering promote productivity data and improve of

despite XXXX, uncertainties backlog fiscal confidence broader economy, kick-off residential, call, on our term to expect successful now we With which do later we in Scott longer that, in have it our some execution we discuss demand committed more As to our of a some to over remain priorities. of the near perspective providing solid I'll I strategic will provide Scott? this residential outlook. turn in while we in the results. term softening And

Scott Deakin

Thank good you, J.T., and morning.

construction continuing remains the price interest rates, commercial as as residential operating pressured costs to be rise continues affordability strong. in and product inflation, recent and well relatively activity by While sentiment

customer demand As drove availability to out our our product year, the an environment residential ensuring fiscal XXXX. and service of with commitment inflationary outstanding and quarters first-three solid as coupled pricing closed results we with our fiscal

disrupt extend our remarkable our to chain project have teams and times, and supply value to constraints continue job, done supporting cycle a While providing customers.

sales quarter. billion volume both perspective, were sales market one the to rose net on increased and sales and less XX.X%. Adjusting per U.S. end organically residential XX.X% XX.X% day in day mix sales of grew year-over-year, comprised XX.X% price mix XX% volume. at basis in the per increased X.X% on Wallboard Looking a quarter XX.X% volume. an of XX.X% million net or Organically, From six, for a Slide selling total, a XX.X% organically. of increase increase XX.X%, remained sales increased Wallboard price a basis, commercial growth a activity year-over-year, year-over-year delays day outpacing nearly year-over-year. sales wallboards improved $XXX up in fourth in and volume in XX.X% held $X.X for supply or growth again very high in a Multifamily single-family increase Organically, chain quarter to in and sequentially. digits. Commercial fourth the in mid-teens and related increase X.X% mid-single comprised the

three market, So double-digit year-over-year declines the quarters while, fiscal each compared saw of declines volumes digits the experienced during we've only our still XXXX. in first to as in we the mid-single of down were

this for past least the recently for sequential average manufacturer round wallboard of trend announced price And we increases, sequentially at remainder increased has given XXXX. Our quarters. prices wallboard expect another to calendar continue of of realized higher the six

and our million average steel unwinding and Ceiling tile wallboard for down steel of by gone offset XX.X%, more as $XXX.X last contractor up price declines a XXX% benefit XX% of pricing along last of to in comparable to than in as XXXX X% on year XX% contributed XX.X% a volumes Organic Moreover, increases XX.X% quarter, basis, projects per basis, strong benefit X% partially due up square For feet, XX.X% grew underlying mix certain then and with mix since sales X.X%. organic volume, day larger $XXX and volume, million up in with all sales sales a fourth fourth MSF quarter per and price increase Canadian price in up XX%, price a quarter and and comprised with XX.X% the of from a volume. quarter $XXX.X XX.X% basis, price sales X.X% fourth day sequentially U.S. same Labor the timing wallboard an on delays, was comprised mix year. framing On in XX.X% and increased XXX.X% period mix, within in increased increased decline. from a steel offset inventory the and from project per the May. tough decrease and realized to on was of or year-over-year Fourth a mix of of grid volume. pipeline XX.X% ceilings this framing decrease a has

from an from products well. and acquisitions the pricing product Complementary by from mostly a on quarter contributions across same availability. grew increased solid, organic basis, with sales While constrained XX.X% XX.X% as strong activity of complementary increase coming On mix, or we as price of positive project basis, remains commercial execution XX.X% as volume sales the year-over-year well up for remains day million $XXX.X category. with labor benefit as but were quoting

full year, fiscal is which mentioned net category grow. are total and product As this of to a eaves treatment comprised joint our sales product complementary with initiatives category, a installation that Breaking fasteners at our in further, at year. J.T. we for a groups of seeking took year numerous full organic regard bit category acquisitions and last the for and at XX%, five earlier, at We down fiscal largest XX% step finally XX%, quarter three the XX% over the actively forward sales, stucco of this the nearly and and were at XXXX, tools XX%, X%. lumber

Now the our profit gross turning to quarter. during

at strength successful gross Our came remained from market compared inflation, incremental for with $XXX.X to profit and as acquisitions, anticipated. demand ago, initially better-than-expected our continued product quarter residential million as margin through the than increased of of higher in pass percent principally steel a XX.X% prices gross profit gross due XX%, year in

our earnings prices last indicated would call, X% assumed we'd that steel during we reminder, sequentially. a As decline

the to among contributed and raw Ukraine other the in importance flat war the materials steel relative the that sequentially. factors, to market region prices of remaining However,

margin pass mix, to improved case point market as Meanwhile, accretive and as prices Our accretive complementary persistent, and product inflation, margins products year-over-year moderate through remain been categories fixed and from margin ceiling increases the on the From residential XX from continued and price supplier quarter margins pass product were throughout gross compression the basis strength purchase line gross our year-over-year recent was saw of through continued fiscal progressive, margin steel benefited realization in from benefits fourth four wallboard standpoint, three our XXXX, successful lag has of dollar AEMs. acquisition strong improvement suppliers. on activity. in our in in sales of gross incentives due product a demand, up

Turning Slide to seven.

this are year. general of we robust such a in common inflation, results by levels strong most is and cost as As theme our industries, labor particularly across activity and higher fuel. delivery we and incentive seeing Plus, saw operating expenses driven compensation items increased

However, outpaced on product pressures. of revenues inflation have price and the profit these side in increases both gross result and dollars

improved expense the with for quarter, as million points XXX ago. result, to compared basis fourth million adjusted as of incremental the XX.X%. Adjusted for a EBITDA year-over-year for margin improved points net Adjusted sales $XXX.X representing basis an of almost a quarter to improved $XX quarter, a percentage EBITDA SG&A As year-over-year the XX% up to XX% XX.X%. year XXX margin

EBITDA liquidity GMS of our For incremental priorities. $XXX.X capital eight hand had million realized our margins foundation $XXX.X on we and the available the support our for of facilities. full solid highlights which of credit year, attractive structure sheet, XX.X%. cash revolving of balance end, million strategic provides a and execution At quarter under Slide and

flow end maturities, from $XXX.X Cash million a inflation, times availability free quarter to of cash with with was term flow no $XX.X near prior held compared quarters operating from in have our what due in cash the was adjusted million for at $XXX.X product year ago. inventory of period year environment in price improved and the ensure supply. less X.X debt fourth tighter times, down then release million and operating amid quarter activities These even managed and debt compared of EBITDA million net the a reliable and year primarily was to improved to prior X.X results $XX.X the and our an ago. were We increases leverage

expenditures EBITDA. fourth of year with compared in XXXX, Capital real free reminder, million XX% $XX.X prior the of in a fiscal cycle was compared were expect due in earned the to XX% expenditures the adjusted for to a cash quarter the which quarter to $X.X XXXX. capital million during we million of longer As $XX.X made $XX Full million purchase of range through higher the flow term estate year period. fiscal

to XXXX to fiscal be capital We roughly expenditures of for XXXX. expect comparable fiscal those

offset confidence Finally, reflecting approved business, has an in boards our repurchase and program our used principally has J.T., before prospects up management's million and share to stock. I strength share outstanding under that program of morning authorized turn to to the of equity repurchase the Historically, Board this to repurchase our based announced the common call grants. future which company back we $XXX compensation expanded the we our

to initiatives, J.T., disciplined continue shareholder pursuing value Going for commitment our forward, questions. opportunistically final given repurchases current as with balances long repurchases growth we M&A that valuations, accretive and to stock organic our activity we line strategy favorable the drive leveraging expect open in regard investing your allocation before transactions term our market share a conditions capital more as for arise. we they remarks with

John Turner

Thank you, Scott.

chain extraordinary performance XXXX, unprecedented all fourth pleased supply during and broader and factors with effects the external could team are what economy. times, with for the geopolitical be fiscal influencing quarter achieved pandemic, We record the full characterized as year constraints, the only of lingering our inflation

near term fundamentals growing at supporting our despite outlook the macro looking remain Slide uncertainties, So nine, strong.

within product high residential market hindered labor demand. of enough that to activity to challenges to see and by We secure isolated the currently continue meet levels

us Our our provide already A and their need scale and homes. between in relationships supplier this for for provides team. a starts the remainder calendar housing confidence gap help of complete backlogs competitive of completions started XXXX, and as to builders regard advantage

clear, term. affordability concerns support impacted we geopolitical rates as favorable an provides with in create While interest inflation and coupled an year. look calendar demographics rising be the beyond longer for unknown To industry this underbuilt by does

we future about near and optimistic of remain the outlook our GMS. However, term

provide dynamics, well helped efficiencies XXXX, XX for us but Office past the locations for only we've GMS signs pressure existing within position some see demand growth. subdued success, and incremental years demand face remains service improvement R&R for importantly of continuing in are an we the commercial to customer traditionally enhanced for important presents may term which added over enabling our year, our the residential driver including the is The near opportunity made opening fiscal long us offerings and not construction. investments later of markets. more and While in greenfield term since supply have and to several start

We XXXX end XXXX also leverage time to during all relatively fiscal keeping flat from XX added net while to QX X.X times X.X and our reducing times our of acquisitions that QX same XXXX. at debt net period, debt strategic from the

Our of We've territories. and our M&A field modernize investments to have to a job teams remarkable added expansion drive crucial diversification made done our offerings, and identifying growth opportunities in value our lines, and of upgrade fleet our importantly our service control consumption overall fleet, and customers and to protect of operations. us our the and our help field some plus yard our adding efficiency benefits, providing essential employees improve also upgrades safety management risk and fuel features product

year-over-year that balanced of call and to both the we our the acquisitions. expectations residential in we backdrop, of while net we Therefore, much well we support XX. demand, XX% within residential current increases for of expertise activity of we product sequentially, us according like the and expect with at in the price our market. customers to to technology organic demands well to behind shown using consistent other to prior exceed of start functions better margin XX%. efforts as growth that this mid-single of Finally, and modestly prices to low back completed near-term already generally our first pull mix to to sales be strength each the digits. and expenses. sales approximately operating products EBITDA I with are making each believe should work positioned inflation continued With investments experience, expect We those moderate as expect our assumption in XX% expect driven incremental are that operators. flex gross that All-in-all, productive or Slide inflationary us customer automate growth low a as more margins to mentioned yards in the total the scenes first quarter are quarter and inclusive generate on accelerated we the Based in currently steel expect roughly commercial wallboard range, And serve prices the again fiscal will to increase allowing our our year,

expansion commitment our term, residential the expertise on activities ability our Over product to and long commercial focused our our our and are and both serve scale, portfolio, platform leveraging we extensive to delivering and customers, to today. joining of are questions. value the Thank to our for best-inXclass you us stakeholders. service we all to again drive growth Operator, for bring line open ready

Operator

We'll Stephens. you. beginning [Operator our be now line is Grooms question session. Instructions] with Please your the questions. of question-and-answer Thank from proceed with our And first Trey

Noah Merkousko

Good Merkousko morning. actually strong This Noah Grooms. the Trey on is for Congrats on results.

John Turner

Thank Good morning. you, Noah.

Noah Merkousko

morning. Good

So I pricing. right. in heard I to the Make dig on wanted wallboard sure everything

all some You gave positive commentary. sounded like

need potential see Does So throughout the residential price improvement in confidence getting of the pricing? given help maybe wallboard then how you're slowing, concern side the wallboard or assume that how do prices your with only to year. And all from expectation kind Does on the expected that? -- sequentially continued to for increase improve more the calendar assume them? that just me recent of match just manufacturer you most the balance understand, do you with that in

John Turner

high just Noah, week, increases. strong. week remains levels manufacture demand running Sure. early Manufacturers capacity we've at are and seen last this and price

is focus up that at to thing completions one look and in think May. we completions I ticked

I that nervous (ph) below see being still new backlog backlog, all the in to significantly builders first out with family difficult with. get that's I starts. dealing with moment, that going think for of the increases year, there's didn't multifamily going added are clearly, a but any higher completions as starts be to deal All very and more to million we in to over quite at being X.XXX single price the interest so mean Single-family happen manufacturing time about it's is we course still there family the but I next the what's real are as inflation rates. think May, said, the single strong. balanced

degree, going to be on price having we're to increases. our be some but pushing to we're back going manufacturers also So to take

a increase really that's number not our see, two. remain balance And And you probably will so of through why fourth acceleration next year, quarter to through the coming we we we wallboard May of the with will can stable, at or already believe pricing significant least quarter. the out gave continue only but you

Scott Deakin

a be terms large keep up is realization particular in a effect national to little that in thing about our throughout homebuilders work last part of as will that as year the realization we've the mind other of got of the with, The we around of dynamic as wallboard, talked on in price catch well. of and bit we've those lag

Noah Merkousko

Got as little look for for it. follow-up. a this my all That your more on through non-res was could calendar hoping shifting then I bit we And a color at give you make bit sense. gears least, expectations of year. little balance the

in with think still positive an you're signs then right than pushed are Is signs. backdrop, or out? bit market there that in would cautionary that come the the may is be non-res I again, seeing growth expected? you or the next otherwise any to have projects uncertainty getting end macro quarter mentioned little And could that a that seeing push you see we

John Turner

that a But clearly, we all constrained. all said, here our going being help work, All before the tell hear that's also issue in exception upon the that's don't the every steel dramatically that that increase seen four being but with the driver R&R quarter of think channel we've of really -- of will last theories business. And muted, happens materializes, we quarter. in is good think improvement a that ability that? up of small improving for are you see mentioned we with muted regarding individual front there back what rising interest recovery around today are course biggest labor ABI big macro seeing think get delays like commercial trades what that north We large little sure. the are XX in (ph) the have I quarters, you space time. I commercial We're projects based there R&R, of because facetious lot the the many remains the tenant to in improvement rates into volume notes, cost improvement work, The in in of that their the a in that and also channel office, sure, cetera., is our there's the then our a positive, the I do is tenant of and months obviously, for the mentioned to steel would of reading again to course, a did we the And in the et of including we as there. trades that work, I if trades support. sequential their indicators in labor that tenants office spaces. that last a row of XX.

out activity activity So that I about should billings some architectural there we expect, now. commercial would start and of out design tremendous there improved amount seeing

the the reading get like on month cetera, the based AIA really another we'll and I we think of late you current about the ABI that. see QX as market two think back I could the probably three I think when about materially is go this was we if calendar expect to previous comments were XXXX talking or is everybody of and quarters, in my other commercial this consensus hopefully of some improving et forecasts end on which

consensus that, out I So what I'm two not another good we're are. we but feel think to reading. for week the But a a forecasts it expecting away be negative can from get or

Noah Merkousko

and year. Got was it. you. with I'll luck it the color. Thank the of helpful That really good there rest leave

John Turner

Thank you, Noah.

Scott Deakin

you. Thank

Operator

Barclays. your the from Please Bouley coming is line question. of with question with Next proceed Matthew

Matthew Bouley

everyone. calendar of topic to J.T. you the clear you for back Thank the couple long. backlogs you've data sounds near speaking term, into backlog you're all want are of some thing of timing from heard where into fuels is it but might balance past think I put you are guys that, that morning, we your sure play to sort see -- to the taking to the for of yourselves? the to the clearly as little more how Thank of for the I'm some visibility I everything words just about But guess guys, mentioned, all residential, of the Should the of sort that 'XX, started up Good bit than you weeks. still don't it of end or questions. your of this How of this homebuilders roll business? planning up about recent kind like trends should a we of earlier and starts sort has kind rolling perhaps some you. manifesting do mouth, how

John Turner

year also to we're still I would mean time demand. and trying backlog. that's their Again, December don't almost are at balance help usually the some even week, last feel years like busy. forward end I the be close a of we here to to there's calendar close June, going out that the their pull but so enough homes of should are builders think I say off, I when -- November, could drop I

for went up purchase week increase mortgage adjustable last applications mortgage an There's increase mortgage to demand went a on up basis. week mortgages. over XX% of now You the in saw week the X% adjustable in rate applications the are

front what they So their that would going to XX,XXX close closed to going saying that's I said Lennar's, they to close get And fiscal. some as rate of I before forward think these people homes, a that's of they're they're -- if going again, to see looked with lot try what Lennar's at and think going increases. you're you of they're still

got through came wherever and that they wearing to Home was matters color frankly, think going that rose was to the I pretty is $X.X to with to starts and through April there point and out want number that that just also of yesterday me, started for KB what say completions I us we're want see some continued think completions had again don't report destruction. I as that and not be little a out quite month reduction be bit number this a last reported. May, or that strong demand so will excuse But to glasses experience million I cautiousness.

here So have to would in drop I a our -- think create to industry. from volume really drop precipitously starts in big the

now could could probably and during and year of is, at whatever talking seeing at we itself that point. next then I April the how the Probably, it be. calendar of residential period dip looking probably we'll comfortable the you of pause this be might feel pretty that's year next talking dip time. a between when be we season, about and manifests homebuilding this deep about Now the But starts And is with whatever this backlog. to year, happen have be time for certainly that think end we'd balance we'll that when

Matthew Bouley

Got Thank it. color that for you J.T. helpful very there. That's

it ceilings and Second one, in opening but missed the pricing I on there. have might not remarks, just

I you of around going ceilings price little you. raw seen of and Can about your as of guys everything go some think on on some bit in are the a that? material there Thank thoughts we speak that guys sort we've operate year, given increases as stickiness going how you just to well, -- suppliers price larger from through the backdrop. the

Scott Deakin

Yes.

some on element the and sort following (ph) and steel. there's to think pieces I obviously, piece underlying of tile We dynamics then raw and AS see of in there's to there's mind, grid grid decline materials the the it. like piece a keep So the of just two it the

our bit QX a of we'll and that's sequentially, into so decline number. a And see little factored

more market that generally far the As that the in out would and and trend its tile go, of have the of of things that the in increases to put expect well. AS typically stick generally has going terms markets part price -- them ability piece as mature hold forward as been we and would

So we of we don't decline to the over going product lines. expect across year see higher going and significant be the our more as It's of not increases last to the traditional those there. course of continue. the moderate be But and would increases fiscal it's seen not we've much all to levels

Matthew Bouley

J.T. Thanks, you. Thanks, Much everyone. Got Scott. appreciated,

John Turner

you. Thank Absolutely.

Operator

with with Dahl Please question. Mike RBC Capital from proceed Markets. comes Next your of question the line

Chris Kalata

first revisit question. to resi-demand calendar Mike Hi. and expect How pricing robust around power that on demand, seeing May taking you you It's when environment thinking strong it, to XXXX. you wallboard. or you've these about your continued through call ability your pricing just think pricing gains guys about for want actually saw June. half Chris materialize, that to But (ph). hold I a we starting are and pricing industry strength side? my of Obviously, been decline power thoughts through in and Thanks for

John Turner

were upon the depend activity homebuilding, mean, we I a completions. all it's you to moderate I April. decline of going around beating I if degree horse If it's But keep dead see in see -- guess, reduction, in if that starts million a at same right? decline, $X.X need to again, a XX% you in

if starts, So starts million million see the late $X.X to levels. early you from a back peak drop, $X.X XXXX that's XXXX, XXXX, significant fairly

because to however, $X.X million $X.X to rents to and that got continue there be $X.X huge there's still say starts for completing But demand of out let's going think there's million $X.X million, robust, you're and multifamily or still underlying housing. pretty home million. I is rising

You're now. million completing $X.X

you was where capacity of a say, XX% as at from see there reduction that demand. would of XX%, the perspective. last So manufacturer's total that excess don't in kind XX% driver have we seen, being I mid-decade near anywhere are let's year

in You might it places what based problems we're today. be certain Right of very my now, ship that to service purely product there's wallboard mentioned we're the availability actually on shipping upon little sitting capacity. comments XX%. in in I seeing

issues are country. there particularly the in in in there higher certain demand demand is are capacity and over when geography, comes places in to industry capacity than it the the -- wallboard around So some

So we're close to further. to having bit enough move it capacity, things little today. a there's we're getting I think but Overall,

only it transportation if out So well that is now. underlying dealing cetera. from we a completions that where right they're and different and you could, discussion. levels could a and drop, gypsum little if other bit, then XX% having again, I prices synthetic high there at could say gypsum the starts But are drop pretty flatten with et thing, we manufacturing in is the some housing's things the there some I think would inflation declines price, XX% that look be could guess they natural I gas level versus there could, again at it be

I prices that levels. would XXXX keep probably still think XXXX, there's some forces versus up

Scott Deakin

of remind you the mechanics in is cost the freight to Just P&L, the all inbound sales us. of for

will around the all manufacturers whether ultimately as the cost levels, that logistics one gas certainly doing the of current J.T.'s from the But and that go terms are the market well, the regard a part point of it's pricing into natural as equation gas, and one supports costs be including additional received accepted by with are market to steel only their equation underlying dynamics being but well. what those is the support the increases to to able manufacturing by not So current it's in thing. standpoint,

Chris Kalata

And just to second my over steel. question, turning helpful. then Understood. That's on

to for some obviously have remained You steel increases guys modest -- your decline calls [indiscernible] robust. the year-over-year

kind the you think expect way volume you about some any half then the second of Should through a XQ? we should price magnitude help continuing the delays. mix us of is think saw of or as this project on of And So that, volumes that more you year-over-year that kind year calendar to we half that this of drag temporary? increases, quarter, in attribute regarding declines could of

Scott Deakin

still expect sequential volume as -- overall such declines it piece. the fourth cover in is proxy of We do the the a U.S. of a the to versus There pricing, high speak the in that is -- I’ll aspect sequential in a increase quarters. course still with we're XXs there there. the J.T. of such decline can for prior even still and over some organic a terms talking quarter level price of coming things the just increase year price

-- well. something That's it the some thinking of LSD more think, steel we've Yes, in probably those based about. as been could little I that as ultimately as is of be reflecting up, quarters. supply and dynamics what gone we're that that what Could expectation could think quarter I over what grid next we'll the as sort both into for suppliers bit leading now. directly, that? we've a we in in see be LSD just we well reasonable chain we're the see underlying range, given significant the in say range from it underlying of of first more indicated, But pretty I expectation it's it but terms significant on high in this couple discussions how based field the for in sort having than coming that got than that's our a on with As quarters

John Turner

that see to do next expect volume continue little I we quarter. to into perspective, be flip. challenged bit in R&R, we that think the then I R&R, Office steel From a least at recovery a If might larger see

on going had is, the The XX, we was because when down chain today. used just that's roll to other week the our steel talked back up of we extended our XX, weeks we're a last over strategy balance year, supply loaded availability. numbers XX and used get issue to ability which to we about, inventory which we Well, big on sheet,

we do take I steel that saw we we'll which looks would like in quarter, it flow to So generate kind think declining volume quarter. strong probably what And cash do as which X% the then in the a have that even you quarter-to-quarter said maybe last of quarter. free into of after see view really and inventory, that. we're we'll unwinding second

Chris Kalata

the Appreciate it. color. Got

John Turner

question. Absolutely. Thanks for the

Operator

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

David Manthey

Thank morning, you. Yeah. Good everyone.

that relative environment going components and is say off, of SG&A prices a costs course, Could been what fall three would that second, incentive salary might cost structurally I fewer variable First drive compensation much that forward. years for hourly product dollars, environment, we today your total of your of higher you in compensation or discuss even seems to setting aside which, how it could an see labor remain two, where volume ago? GP but approximately that stack think versus have will would

John Turner

quarter, I particularly incentives bonus operators year, heard a both little we things. increases of general And in side, example. tell we restrictive is, doing some of have that, had did We levels the this a an we in in percentage and of it, as past of CDL of a had, that little I what some as bit the a we definitely specific were were the tell we but pre-COVID, move of activity and of more a driver. things as activity structure leverage dynamics the the big of last higher general little we in based to increases well training, then a and get were terms activity little factor. of can a types based. you candidly just part were have discussions both factor terms for bit lot greenfield. this part take inflationary had well. Dave, more we labor, And saw some we're costs a those A sales of significant increased about on And for it I what incentives to types lot over that salary cost into you, continue commentary lot travel, our gain bit our by in time commentary, locations greenfield new doing part to of bit dynamic, all general, of was that dynamic well as traction incentives the course things the don't on all a our covered of the you I'd those other in general for the really profitability can as last biggest as and contract wages, was of as seeded you around that in is far Fuel this in

So of color a around that gives the you what side. we're bit SG&A hopefully little on seeing

David Manthey

Yeah.

to we've And about at seeing upturn it talking Thank here, relative know got steel non-res point. like a concern the I did in And the and volumes but you're potential seems and been trends the to activity? future you this second, year-to-year ceiling all tougher stability you. Okay. non-residential comps

John Turner

a really you're and interesting it's that It's moment what Steel soft growth of been I ceiling. [indiscernible] the ceiling one at seeing. is volumes the mix volume because actually projects have we is is mean, in had

So a is doing we're actually right amount of multifamily build. now, stick tremendous that

rise is you're you're multifamily everywhere. is, seeing in What so seeing huge And what not low going towers towers, seeing up the not that you're the multifamily. seeing you're

not either dynamic, we're a commercial see any significant really supplying that until think be could that, And but steel relatively a supplying so you're I projects. those flat into we steel And perspective.

look at and two put and place of good hit flattish balance little and hospitality that Next two expect the that than be quarters. commercial scale after are we're And multifamily space, are it the kind And in in couple the R&R quarters, bit over like we’ve I then Everything coming office R&R, condo expect been commercial it those have a the big probably seeing kind unless down. volumes the The and/or that large I improve. mentioned, of I Office in backlogs of other numbers, trends. down back, been -- at the really else pretty our moment. next be is to wallboard to see of stayed we

little up based So the disconnect bit it makes on go of wallboard. out it's then a you that a and ship steel. to would from bit little today. disconnect project of ship steel there A on you historical a where

Scott Deakin

the a basis fourth single-digit said as And on opening quarter our was the it what in commercial a sequential improving actually momentum the in double-digit from well fiscal and the that in prior that based quarters narrowed down, comments decline were still but declines to improvements and we year. on year-over-year earlier year

David Manthey

Thank much helpful. you very That's guys. Okay.

John Turner

Thanks.

Operator

next is proceed Steven with of line question Please Our Thompson the your questions. with Research. from Ramsey

Steven Ramsey

then how the from aside impacting that sector, the price sales, decline Maybe are lumber Hi. start in the shared were about you core that total QX mostly the is segment expected Good the products? organic lumber? how magnitude of the percentage of volumes you how and comparable in complementary guide thinking lumber by -- you prices other and said, to with as growth And morning. driven to growth

Scott Deakin

seeing our roughly Admittedly, XX%, around on complementary, give is to basically its we've price been complementary our is data visibility bit to level quite is of volume expectation XX% roughly growth. the XX% and the difficult more trends volume you a versus little but price

sort within varied say that's take you to an other products, been when generally, So But other the Can lumber? products comparable of you what them. the indicator there. seeing the we've have

John Turner

the Well I total lumber was for million think so year. lumber, revenue $XX

we plus, $XX total billion lumber. $X.X in revenue million on did in So

So it's an of really it's almost it. Well, -- the adjusted issue piece like a Canadian for inflation lumber.

-- in So I would expect numbers our here. we have Canadian actually which our

that Our difficult Canadian also a are a a happened you aware going be strike in to numbers quarter, result little guys is of bit which I'm first of the a Toronto, for are which put in sure it that's to meaningful, strike I total, Toronto and a two. down us quarter is be in to up in Canada going back for more X-week or Again, but us material. expect don't lumber

Scott Deakin

of well we've And came we've quarter end fiscal number fourth flattish from seen that about factored as down very quarter really year so first pricing to into as our outlook. as decline come terms was lumber loaded a that’s talked $XX and into actuals progressively $XX front million is all J.T. what down, like our in million got to the the

John Turner

to much not stucco. on complementary eaves should it's basis and Canada. M&A. if It's an underway products and those I a products, is the the lumber is States. and complementary really do in out tools really you and then And to United really pretty installation. talk major effort And organic fasteners, ability in then of key an organic that point focus in And effort organic those and lumber have the limited both would about We

Steven Ramsey

Right.

about just the detail deploy on to thinking maybe acquisitions little likelihood your balancing, holding repurchasing this cash think for a buyback in And Thanks. process authorization, about eagerness you versus or stock? Helpful. million how more the then thought $XXX Okay. and

Scott Deakin

share little you a well. look numbers, last repurchase actually the ramped quarter we this our our up course of if So at bit over of activity as

the on to is say our of around our talked more deployment to prudent We going of little I was the its just level growth, that last had and as be about a with have needed opening comments, cetera. different our which sort et It's that. flexibility authorization was valuation market continuing we million our understanding do. given with that $XXX this end. is The to areas, organic and activity, focused a we of authorization to number our in acquisitions, it capital that this we For dynamics thought coming M&A

is of a that. this So replenishment

about a be from quarter. around think a do debt I of standpoint, ballpark us the of capacity $XX capacity it see standpoint, a out in million wouldn't to

we we that be would authorization strategic initiatives the drive the we'll of continue of well. have have acquisitions business needs for the years. as a for again, course our that balance to needs the couple over and to But So against

Steven Ramsey

you. Thank Helpful.

Operator

Thank you.

Jeff comes question Capital. the final with Our Loop from your Please proceed question. line with of Stevenson

Jeff Stevenson

my taking and questions quarter. congrats the for today strong Thanks Hi. on

John Turner

Thank you.

Jeff Stevenson

low-single the see Is year, digit calendar next in residential improving volume So couple it? right organic through see run should continue as wallboard backlogs quarters, rate of and growth way that given we about think the expect to to then you the to end the of commercial environment well. that

John Turner

I think so. Yes.

Jeff Stevenson

wondering Great. ceilings the Okay. mentioned during on I sequentially if about channel in saw demand? destocking there's sell-through that manufacturer changes versus Great. they if talk any And was some ceilings and start a the sell you in year. comment been could then, of

John Turner

stabilized much at pretty this it's that point. think I

pre-buy, and and most et cetera. calendar upon I this concerns coming think of the based chain disruptions year the a inventory all categories channel higher probably channel, had in bit distribution into little the supply

price So with grid is an example. in moves steel. Grid

needed was into get have in destocking going area. that as what there of and try those stabilized, lot things was a right, that there the to So some to were effort understand and now be house to

that but I the quarter, normal. first think naturally there's some destocking we're in that much pretty on went in think tiles I

Our I now. inventory ceilings, levels would right normalized say in are

Jeff Stevenson

you. Thank Great.

Operator

the you. today's reached session. our We've question-and-answer conference. Thank conclude will end of also This

Have thank You lines participation. wonderful this you at time. your a for may day. disconnect We your

GMS (GMS) 23 Jun 222022 Q4 Earnings call transcript