- Earnings call transcript Q2 2023

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Operator

Greetings and welcome to the GMS Second Quarter 2023 Earnings 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. I would now like to turn the conference over to your host, Carey Phelps, Vice President of Investor Relations for GMS. begin. may you you, Thank

Carey Phelps

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

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

on Management’s call X, and remarks contain your statements to Slide of Private in answers to Turning Act today’s forward-looking prepared may Reform Securities questions Litigation XXXX. as the defined

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

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

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

John Turner

of along elevated you, family quarter, construction Good starts demand, of solid levels in home quarter income, adjusted as delivered single With pricing joining thank today. for the we priorities. and completions and fiscal the favorable strategic strong year-over-year for commercial and net growth environment, EBITDA execution with sales, for our again multifamily eclipsed Thank record activity, you continued us residential Carey. a second we our net as morning

after doing XX.X% operating last million, grew significantly shifting was were XX X, basis and second up highlights and adjusted improved of income discipline, we market time Volumes start our points deliver Wallboard Net We million. manage environment sales as to $XXX.X with Slide as again so for EBITDA continued cash to ago, year-over-year basis second gross the to the mix inflationary SG&A results. with And comparisons profit were XX.X% growth of sales pleased grew and cost product EBITDA The are our inflationary and finally, XX.X% Wallboard of adjusted of at with quarter by well. our compared to XX.X% fiscal up improve adjusted commercial to since our a teams $XXX.X combined us each. in pricing year with flow. pricing. of improved some quarter points positive enabled XX volume with here net SG&A product percentages to as only XXXX, margin a Looking XX.X% QX growth continued pandemic the XX.X%

advancing highlight this quarter service, to continued together our success. our in team's drive priorities delivering strategic this of these Our helped Slide customer progress initiatives. On strategic commitment outstanding with the we execution X,

our in core products. share expanding First,

provide availability and our Although to to ensure work chain exceptional pockets the teams throughout our remain, challenges diligently customers. of for service product continued to quarter supply

category. the that product a low this business digits to outpaced remain quarter, whole. service Ceilings delivered grow leveraging growth volume our industry with As the XX% continue success as will to as the scale availability which organic we and seeing a our year-over-year and Wallboard us also we we confident than result, of delivered in We sales growth We're organic in core commitment customer organic help of we the more believe for as volume single dollar XX.X% exceptional for forward. growth move

our products, we to complimentary expand offerings, profitably customers. to our and our value enhancing growing Second, continued diversify our thereby

total quarter. XX.X% growth including from quarter, subcategories and particular, EIFS prices for and the the organically. Product product continued larger fasteners, both tools Complimentary of focus grew the collectively by During and we and and XX.X% In that Complimentary a to sales higher grew some for benefit volumes higher us, our our of XX.X% stucco lines insulation in are and

a acquisitions accretive through platform remains our and opportunities priority. greenfield expanding top Third,

subsequent year, nine AMES far and five fiscal our store So opened yards of end quarter, this to including opened greenfield those second locations. the we've that

strong. Our acquisitions remains potential pipeline of

We our continue added opportunities product pursue to to territory strategically assortment and provide service and to customers. our our service us best-in-class to expand actively broaden value help

across our initiatives Finally, our both to simple leverage do is employ technology fourth it scale Included best business to ways that to we improved practices are as broad strategic a focus our the to This improve organization and service. making these productivity us. within experience, and is drive enhance with and priority continue cost and profitability. customer

As a the the of us percentage with grew online each interacting month result, customers quarter. during

our providing Future to practices. more and for fleet people, perspective With efficiency, improve, and the customers. fuel idle Scott on our Overall, productive as over pleased greater team's to efficiencies, and provide upgrades easier I to of it safe loading, service our productivity our our now has making to At deliver of reduce to Scott? are Building for staging improve drive tools time, picking, and profitability. execution. our results. helped I'll teams, efficiency Yard more turn automation with it we our that, and is the with heart promote improved am as us passion relationships very well Additionally, our business work our

Scott Deakin

good JT morning. you, Thank and

volume. Adjusting daily with out sales than selling XX.X%. sales XX% additional $XXX.X way for basis grew Single sales market and to the X.X% in end XX% Organically net ago. day, and both in a year-over-year, day with increase XX% Looking sales adjusting increase over of up of translation. more a sales per with increase lead at up sales mix to on up year-over-year XX%, day after sales unfavorable for mix XX.X% and XX% price XX% net a Organically improvement and price increase organic on XX.X% increase and XX.X% Wallboard sales volume. billion From and volume. one a in basis, increasing of Wallboard to acquisitions XX.X% of sales price year-over-year, comprised increased mix Slide than year-over-year year a in a X, XX.X% impact in Wallboard or while quarter. $X.X XX.X% the in sales per show increased of to net increased exchange were X.X% foreign the and including a continued growth a a greater an XX.X% up multi-family. sales commercial comprised family perspective, organic continued in U.S. to XX% comprised were residential rose quarter XX.X% And increase second million

increased this seen to this see Commercial single our in mid-single-digit for our year-over-year, year fiscal pleased of should terms quarter, in of last the year compared sequentially remain with family, again segment Permitting, as least We were per family. ago. gains with for in beyond. longer volumes strong cycles and In has and same in single through the family growth quoting likely the commercial performance continued volume, build and and as improve. a of Wallboard starts, single at day realized with period remained customer price we've to the demonstrating And resilience average backlog volume in active demand price, multi-family activity as starts. residential remainder XX% expansion in eight the quarters, of terms Meanwhile, achieved past we multi-family even a slowdown wallboard outpaced Wallboard

and square while are ended For was $XXX X.X% the average, only quarter's ago. the with than XX.X% November Conversely, slightly $XXX MSF up year increases of thousand in a flattened market. per Wallboard further. October's new announced realized as the higher price quarter compared being manufacturer price per was the feet, October, sequentially average

and in period Ceilings a XX.X% benefit X.X% Regardless, is mixed over price is sequential day timing base X% predict year-over-year grew Wallboard can't comprised price quarters. sequential increases possible we of degree will forward, increase and last price or these and some our and per increased far, day a XX.X% continue and and expectation quarter our in fully year. a market Reflected for of in X.X% sales or declines to a year, of flatten fiscal realized tile were in the we volume. of in elasticity volume. basis, price per XX.X% price So nevertheless X.X% second through a the near-term million, organic increase sales inflation the that to mix, same On Organic quarter. while the the future mix, expansion up on mix a was expect going thus with our with XX.X% of Ceilings from Ceilings, current volume. the grid outlook end in in and given least the healthy X.X% of basis, pricing $XXX.X XX.X% of rate increase for sales at XX.X% and of numbers

framing and a steel in was a or offset on quarter by of mix increased day price year X.X% sales than the basis, benefited prior decline quarter, less million where Second $XXX.X X% volume. versus per largely X.X% X.X%

that of dislocation volume. excuse a me, which price up X% in offset also inflation featured the framing increase mix per lower decrease drove sales steel Moreover, remain X.X% On 'XX, in partially decline this structures, rise in fiscal steel framing of call same increase for were a organically activities and quarter with a and office steel stick-built in offset similar a short-term comprised basis by sales seen and volume. second day X% price while both in X.X% for less market, framing, muted. remodel were availability a in of X.X% based day in increase Organic large trends new in XXXX shipments. of in a stronger comprised by activity mix we've Our typically X.X%

for framing start of roughly to August the at discussed with prices quarter, second last we prices sequentially As below had begun steel July's X% products the quarter level. decline

As framing prices roughly September ago. to fallen another where since. price from in as the price fell average ago. year earlier the steel October year tremendous there, quarter prices compared rise steel fiscal our in however, fell equal ending up while Overall, framing nearly have further year, with the sequentially, for quarter for steel was quarterly the X.X% expected X% was a framing the October second in products a given X%

comprised year-over-year expectation month a Products nearly as bit XX% difficult our we category of mostly as from sequentially Sales steel mix, which for rose in day again, we've sales price per benefited quarter, to category. on the our this for improved Complimentary months. day XX.X% XX.X% the were as on predict, Complimentary but as total the as low coming likely the XX.X% were through per current increase up with our enter with from moderately up single the prices acquisitions moderating the of across is net of end a positive to Products well. a XX% Organically well of increased digits basis. decline or sales contributions year, Although, basis and each $XXX.X fiscal pricing sales in million, spring from volume

sales increased points market $XXX.X in our and diligent with from to through of on slightly our throughout demand, steel framing profit inflation, project to with year of better year-over-year million a quarter, focused incremental up product steel of than Products margins, remained commercial second continued of due our environment strong margins profit as inventory quoting the margin residential and pass in turning amid gross prices Gross compared to our principally Complimentary increased were acquisitions. which improved management as basis year-over-year during the XX.X% gross ago, XX quarter. successful profit strength XX.X% gross expected declining Now teams and in the

a EBITDA see at execution, As around slowdown single we as we and operate towards or be believe have near-term business level for of we shared, demand to margin mix a profitability the cost even as managed gross this XX% previously well, of account reasonable we toward while family expectation traditionally and an ahead. to in

these the or recent XX.X%. fuel net $XX Slide a product incentive points for for million improved dollars resultant and operating adjusted quarter. million with labor, as representing to SG&A All increases the case activity sales as in percentage increased robust Adjusted the outpaced XX XX.X% incremental this in inflation XX performance a Turning costs quarter, both quarter has the basis and an improved EBITDA to second revenues strong quarter, been the of and in ago margin and year in EBITDA Therefore, X, particularly Regardless, gross given as compensation. of adjusted to basis $XXX.X compared improved quarters, as price have for profit to items XX.X%. year-over-year such XX.X% points margins pressures.

Now, structure million credit and the support and turning end, providing of Slide continued balance our capital At revolving is X, execution for cash our million quarter our available we of had strategic on $XXX.X foundation hand facilities. of to under and the priorities liquidity $XXX.X sheet.

Our net debt end of times, to X.X adjusted year a ago. the EBITDA at down improved the leverage from quarter X.X times

flows. for quarter $X During fiscal significantly operating was million $XXX.X second Capital cash million million the $XX.X for to million a $X.X fiscal Cash Supply with recorded the our prior flow cash activities the we chain use second year moderated. constraints $XX.X second of levels quarter expenditures provided a quarter, million the period compared ago. year compared was quarter. million have of of use quarter year. by Free our compared in same a last improved $XX.X of during with for

fiscal relative For at the an of full to fiscal year considered, for approximately strength to year on All fiscal $XX cash marked XXXX, those comparable the of our XXXX we of expect second adjusted XXXX of half in XX% flow generate capital free continue approximately be expect of of expenditures fiscal expectation to year. we roughly EBITDA to million. full

our a activity to turn before Finally, JT. back the note share repurchase on I call

share shares our common we the year to million authorization, quarter. $X.X stock $XXX,XXX $XX.X shares of of of during quarter, XXX,XXX for upsized As during approximately compared part repurchased repurchased for million the previously announced prior purchase

As authorization of million the end of remaining. XXX.X of October, we had repurchase

to on as markets that, our investing call share third With our conditions favorable outlook in the Going and back pass our leveraging to paying I'll for provide forward, arrive. we JT will strategy, initiatives continue four-pillar broader to repurchases strategic balancing with end down market perspective allocation our the align capital opportunistically our to they debt nw for some quarter. and

John Turner

Thank you, Scott.

further has developing been single challenging to of our demand activity Slide starts, slowdown the in for and products our half year, a commercial in us That results. we deliver well our while some also market, in in as family the residential months. strength strong despite X, the products coming family for outstanding in single first multi-family, and continued the through expect said, building Turning as we macro recovery expect the environment continued housing decline demand permits materialize and fiscal to which helped new has

roughly and business accordingly up single which third our preparing Wallboard overall are in half We family business, about our makes our revenues. and of a of

demand We will pressure. feel

decline of uncertain. slowdown. However, of specific believe weather expected in the duration backlog we we this process extent are remains timing, work positioned well our this is and and to Moreover,

product flex are efficiency expanded our balance confident in to of we each productivity the offerings to whose have enhancing of yards currently split We years, performance terms residential up have Products of customers, With portion requires. commercial. better of across a costs, have our we growing the our the be between based ability And demands benefit that a to Complimentary improvements and in driven execution, us and the all as of our estimate we G&A, incentive activity will at business our be including segment, compensation large to Also, the made other XX% we've making able business successfully we roughly operators. our and and made and recent revenues serve in to variable customer commercial revenues meet segment. flex better the

categories. front, pricing moderating across inflation the all is On

to and likely will its follow continue We grid ceiling deflationary suit. expect framing trend steel

in margin backdrop we as pace which XX% expect still Complimentary ago, continue sales driven. last with slow, also determination increases margin approach year's we ceiling Slide for but inflation consistent percentage discussed, on should XX.X%. we and net total quarter, to commitment With fiscal expect our expect to Gross demonstrated with our pricing growth our favorability of third year price by adjusted organic solid the and around be long-term year-over-year As I EBITDA expect of our our in third pleased Wallboard for deliver highlighted level this Products. quarter most mid-single-digit and with during Scott Wallboard, tiles as to we X, range, the deliver the results. am team and a trend to of and as

well Over our Operator, the family deliver the are single strategic confident that objectives for multi-family and of today. will please we questions. for to us service capability line customers our joining to are to our positions breadth demonstrated value shareholders. us against execute commercial, long-term scale, product continuing Thank offerings and open you and our

Operator

Instructions] David your Please proceed question comes [Operator Manthey first with with question. of you. Our line from Thank the Baird.

David Manthey

hi. everyone. Yes, Good morning questions here. quick Three

Second, do what what Wallboard First talk of via then sales and U.S. percentage a have presence finally, the revenues online you are if in and of customers could come you channels? multi-family, off, what MSAs percentage And of multi-family? you today? about to overall Thanks. GMS mix

John Turner

of Sure. the perspective, the really outside balance in top MSAs From an MSA are of York of also state Utah. all the in City, the of country New we and

provinces, fairly Outside the in other we're that, all than of major U.S. New in in we Canada, Canada, the and the we're so So of Montreal really balanced. Utah. top And We're not all in City. the MSAs in well not in York are MSAs the state in Eastern

And the that our Online Wallboard our think mix and is our sales question? we of overall of sales? XX% XX% then, was David. third multi-family sales So about about what

David Manthey

coming are your of and, What percentage percentage revenues, your percentage what use of and of Right. via what maybe online? channels revenues online customers your sorry,

John Turner

good. some color on that. but usage So perspective, pretty from perspective small, I'll a you pretty a give from revenue

is, it's a So BXB it process.

improve e-commerce in began the So journey service. specifically to we

customers lot own automated to orders happens large from tend send get an we we to activity them orders, is, so perspective. our in place systems And a what those but and us, of their get once

I'll the give and system month-to-month. an over XXX online, XX% of of signed use with you consistently those customers, XX% So example. customers those our up Of us are top XX%

signed we us that our gave our any us our So Of have XX% about that And months. good number XX% customers have has we with system. account basis. using our those about done XX and a signed base up, any use open with of of customers a total of customer has pretty on largest of customers you our number sales last I customer an in the last of regular customers XX% us, that that's up,

it's broad very customers. base So of a

they So about we customers they up. fully every as shipment of XX% month. orders, well us again, pricing, base capability. picture now check they our availability, very and talked they about signed check XX% of use as they delivery do? check And what we've the have They primarily, that activity broad do past in XX% to those of customers consistently And inventory check

delivery So labor. that ready after check that there they're pictures ensure to dispatch our they to and the on products site are

So generation, order revenue actual a we in still it's receipt from and going but of an on activity have lot e-commerce, fairly small.

not Although Again on good our that north considering numbers accounts through monthly large our are going e-commerce to our way. very system. million basis $XX is now a is up receivable to pay customers of coming

customers large automation to to own are use pay in us. Our their going their systems

the there. we, we've David. pretty on going traction we good about feel got So

David Manthey

jt. Thanks it. Got

John Turner

Absolutely. you. Thank

Operator

Thank you.

your line comes question. Inc. Grooms from proceed Please with Trey of Our next with question Stephens

Trey Grooms

for my everyone. question. in job taking morning good the quarter. Thanks Nice Hey,

John Turner

Thanks, Trey. morning, Trey. Good

Scott Deakin

morning. Good

Trey Grooms

the So it on was commercial commercial, if quarter think in row. I for, so we could sales up a second touch

improving landscape an near-term. mentioned commercial for the You

speak on commercial you on you the term, well? are what First weakness you as of how and visibility to and the should hold for about demand and in there that potential thinking to more side relatively do slowing you off, medium of that bracing continue seeing side have up kind forward, kind or well, where a the could you kind commercial are of maybe strength are if looking relative

John Turner

are time. going think I below a I If people after the VABI No, worried that already starting, we're to that the of give month mean just are XX, right? one more little headlines being

right? our we think And in remain coming the that's still medium is to is feel driver going as just Office And, market relatively commercial is digits volume. well not like framing steel I there low single of office, the term right Trey. the the decline big and flat now back. drag in

everything the kind just in the continuing that's So is showing just component. the I balance one space The but for have of or that flat office commercial the elephant to Education's is fine. almost positives is we're been recovery but positive, it trends else mean, more room the of waiting one, real do up. office hospitality's is been still either the recently, just other flattish, on. some really,

Scott Deakin

and we're contractors so checks tell with be basically as to internal our as would flat larger our pipeline And quarter course well two. over slightly going of checks commercial internal us up or to the our external the next that

Trey Grooms

it. Got

super as perfect. been well, you long Okay, That's guys as helpful. very have And for last, then the over guys. I've acquisitive you known

part than acquisition then and you in take leverage years of leverage I've And a did there? how thinking Canadian a guys very right kind well? you of And guess with as see thinking you also M&A your the kind residential some you as the that are I to seen what's the pointing your that horizon, especially backdrop is, this you, you. M&A? the how deal right on there? about guess are so are How appetite I on we But slowing side, the of question strategy are is of, or on, you appetite foot nice approaching the ago. place for you to Do you appropriate up current now the kind just take or the do of do gas how with off the feel continue Thank now. few what's kind like about it's as higher some you it

John Turner

valuation. bring objective that really has for acquisition. new the better we'd the or to just at been is than then And current where new internally not acquire start than I'll And our the synergies other company valuation our Well, today the we to M&A. appetite always or our changed enjoy has Nothing like be. it with to

that's side still the headwind. to got inflated. board. a So And the of little been the then six on course, appear of nine to bit seller's next bit a expectations risk Valuation across a months out be in you

hard the kind any it's growth. with to of of pay upside So anticipation in

little would things be. normally So being the cautious over expect we have some All and we that appetite. said, and would than a with to all of three in conversations that continue of the course them. have more things with risk pipeline make kind Today great of to are relationships our couple huge. constantly although quarters, having happen And we next us the have don’t not strategically, think Nothing right? I of pipeline sellers

did midterm, So just going we’re this quarter. we do in to last the what

going generate of bunch a We’re cash. to

We’re to and debt, the down continue going going that continue little we we’re have of use in to a to stock bit repurchases. to authorization pay

Scott Deakin

to Trey, about leverage, your at point Yes. we’re X.X down now.

done, three As below something to get get did that did the we level that quickly you it combined willingness we’d to with the down very expectation a we strategic to Titan go the companies, importance that. and able above cash flows be of that able to acquisition, on be noted, did of based showed we we but the of when only

would we that and smaller as able something be types like down benefits, could and the relatively had be So we’ve we itself presented medium that been to quickly, we And and thought leverage of definitely the those do as we pursuing strategic opportunities bring continue that. if well to clear ones. always that will larger it

Trey Grooms

questions Okay, Good the and for thanks the again color. luck. taking all

John Turner

Thanks, Trey.

Operator

Thank you.

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

Michael Dahl

my Hi, thanks taking for questions.

and thinking obviously a resi you you’re as about your starts see piece business, the I’m sure permits, trend. you the see builder kinds of when just order the follow-up, As the

into or coming funnel builders the phase of of but what couple into quantifying over construction little under kind pre-Wallboard data, kind this still have of will go what’s are So installation pushed the looking impact out other that you little percentage things than a actually homes a at that, the going deliveries. anything be know at funnel is smaller their you just a or like bit more granular gauge more of of of helps I way year-end, looking on as you quite Do when the at next would of year-end say that maybe or materially you kind could you quarters? you’re visibility detail great. more slowdown if what’s

John Turner

mean we have macro data that all do. Yes, the I you

have pipeline so backlog or level. a full the we calculated And of an on divisional level MSA

We have by that data team, us our that’s available internally checks rely provided we big doing work. with our but also own to but mostly are some our that on with customers services, outside

And so view have that. we do a of pretty good

Now generally residential. terms in they’re to in of months, operating to month speaking, our big two customers, months next three the

of So thinking their is six, out really us exact they’re anecdotally not giving numbers four, give us kind happening. five and but they what do

that. do we have So

moment, able West we a bit is basis, we’re the It’s Coast I’ll certain call of, interesting at the have in to division-by-division a have what the et you starting through to particularly land into on been cetera, backlog as deliver that Florida. et fairly the an cetera. markets lots, Southeast were example. that. little there The bifurcation in experience So disruptions. They’re chain supply developers an less get quickly as it, the have example, We eating because

product having still availability there. You’re issues

about issues, closings. buyers And that you’re spec for builders fact still hearing are that the the the some land now also start land the slowing as homes. there are And talking out are some all longer. you’ve development the times that well. But interested down issues in are builders cycle got want bills quick so there They

into that whatever of at reflect expectation a the activity, are we in lot of to builders you’re So sales year. least seeing next are their seeing strategy

we break bunch a usually incorporated we of far, So and in the a and it. pretty incorporated and ways always good have it outlook, a been frankly, out into but so the view, well long-winded answer, it’s at internally quite outlook, into it’s good we’ve pretty

Although I would more it’s complicated. you, getting tell

Michael Dahl

Yes.

guide helpful. but be say we’re there’ll detail. going terms in the as But follow-up. you’ve this, when moving some growth XXs of of part of demand XQ you the materialize. single-family a that’s second slowdown pieces thinking digits, will When certainly, timing to a mid-single articulated my And little more the also total but from Okay, question of about maybe unknown,

for on down third expect business in of do in quarter? pricing is terms helpful very you expectation that single-family the side, resi the So sequential within those sequential the the October volume ceiling and And in the trends continue then that -- guidance? color expect, on year-on-year is what steel. your grid some you’re third quarter mean you trends expecting the does and your declines the If that year-on-year as declines

John Turner

growth would still tell to so pricing strong Ceilings, Wallboard that digits a a Ceilings. we season possibly have double revenue year Wallboard, a had third in slight volume quarter very really total year-over-year last on winter growth strong very, perspective. basis, a from last you in but still revenue in in really we’re expecting Wallboard year, I high

peak in this it’s the down steel we’re think So that I low just already reality little year-over-year; that January is we’ve have but single a steel well, high probably are December, the pricing probably you but steel the comp now been going made you point steel. steel the of anyway. point as we I pricing year. earlier all, And to should the mostly November, as high trends was to know same But it Commentary the already prices digits. last of on lapping based experiencing in

in down I XX% probably XX-ish don’t that, know, range to that’s be so to going plus. And

all that so and Complementary guide. you that you revenue mid-single-digit together with get mix And

Carey Phelps

Mike?

Operator

you. Thank

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

Jeffrey Stevenson

quarter. and Hi, congrats thanks nice on today taking for my questions the

John Turner

Jeff. you, Thank

Jeffrey Stevenson

the of I the just growth? industry what talk drivers of So industry. And know kind primary you And strong to in during quarter? volumes how which that came trended saw ahead can guys above about as of were the Wallboard throughout the well wanted quarter, you volumes

John Turner

company and I a single-family. years, anticipated four reality the I doing it, we that that to three now we are we and success extreme fruition last the the going we’re times the of we’ve and big, came last and are, when on it peaking on post-COVID talked and not unfortunately, Well, were rates in is we years, now not hits to the in that inflation up, more focused here the said focused more from the many I the of that balance as really over being on the and it think into business over But go But driver before, us success that’s we’ve single-family builder the to of side. biggest to next the year. happen really course is is to whatever the efforts put think several peaking about going were

in The industry of probably other though more single-family, in we course, than is is. still commercial we’re the had were we’ve all -- to weighted of still the Wallboard success piece it, even

a And not the so mean for is not part multifamily -- well. massive strong the recovery experiencing a mid-single-digit growing but to as whatever at I a earlier, it’s XX% recovery we’re us the as just a that’s or of commercial the right, period. I help moment, mentioned commercial in low XX%. is it’s it’s huge, And business,

tailwind. a certainly that’s So

Jeffrey Stevenson

I appreciate delayed in so, commercial renovation business? given signs slowdown if That nonresidential then any that some discretionary a work there No, delayed projects. was believe this seen the right. of makes talk in there’s season, do business. And But And your you helpful. just your on sense. comments or Ceilings earnings Have canceled? Right, been very you during your of

John Turner

in see I I it just office see don’t happening. growing. any activity don’t

just office of we’re primarily in that I’m doing delayed, Hospitality not airports, we’re the to care they driver just is see to think things seeing I compete will discretionary Ceilings other still happening one yet. not to you’re to happening. from those about happens fine. perspective projects about remodel when talking building that strong, it is how and to -- is It’s projects happening. office; talked comes assuming that’s and that. be And types that’s We not. well. seeing neither going and so what or but is Main to owners have not occupancy huge decide what an of Health it. to just or have wait happen of a it’s commercial transportation still are those And Street But

Scott Deakin

XX I’d cycles, of reengineering et talked for, dynamics about activity, process. cetera. terms better part of of well, of quoting the commercial, some of on say rebidding entire accounted been the quotes for in as been inflation have kinds going commercial have ultimately, longer And extended months Jeff, the in as you factors really that’s

been of for about recent part things you’re talking months with not They’ve we’ve or a are of kinds XX dealing those better been So something dynamic. the so.

Jeffrey Stevenson

Great, thank you.

Operator

Thank you.

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

Steven Ramsey

of very seems Complementary other compared very strong with the to major be to side morning. Hi, relation being the to strong commercial, on and pricing good growth three to very rates, things, favorable start groups and mean, the I in driver. the Maybe

for to As a such driver much of side the will of a see being other sales? percentage complementary stronger we take core we up three total groups, the get pricing

John Turner

we’ve talked is inflation that reduce mix. last the approaching it plus, XX% Yes. complementary in past of about remove of think the I over and course the the if were mean, to you steel year business our I the

well. of inflation So been in in all a be the It’s and inflation it But continue Complementary the be Complementary. but overall long-haul, that focus in is categories, being larger Complementary business. of to our said, there definitely has should other been over as some than some percent a there’s will still there there less

Steven Ramsey

on the contributor? as Complementary then helpful. major margins. the Is And called with improving AMES? driver in You you you margins next in And do quarters? the more about quarter, gross a Okay, talk out several also margins talked you that a one that? it of to to see Can drivers up

John Turner

don’t declining. We margin but would Complementary a margin driver. improving, don’t AMES see be reason see is we any the

Scott to thought. entire very our say, AMES right, at out, higher guides a But And leveled continues margins in company, wonderful business business. margin than would gross much include business at of Complementary margins, incremental great gross as yes, high operate our margin the called is now. let’s has off, we from part AMES acquisitions, always have a our So general,

the and I and EIFS what tools And at something talked fasteners, we some about, of XX.X% particularly the to say, plus mix up that XX% able is as products that sell we’re of versus in that neighborhood. stucco, or and whole were insulation

gaining of we’re in Complementary good well. a traction as Products mix So

Steven Ramsey

you. thank Excellent,

John Turner

Steven. Thanks,

Operator

Thank you.

from the Matthew with of your comes question. Barclays. morning Please Bouley line this proceed question with final Our

Elizabeth Langan

morning. Good

that you’re on could cost thinking a Elizabeth little Langan for of today. and how down see on for thinking SG&A plans relates talk as commercial. how to like and how maybe maybe we be Matt kind forward, and I was to continue should spending how still strength You about basket wondering about costs have bit your you you leverage thinking automation? productivity about going that come within that if within you’re about residential volumes But

Scott Deakin

COVID of of took So early our start of during lot we that the from to business. the do the And we out backwards there. really learning a work is I with of the you uncertainty was were -- we tight again. lot that managed very a manage. I think manage able would really were saw and days in incrementals I’ll very certainly cost quickly in kind terms that when focused And in actions pretty to business some of took decrementals there. the the a I'll there and results of able think how we actions way We to We

some the of the on. on Specifically one point area that and we’re we to the is skimp doing things that of around Art Future did your not automation

terms those We as spending. on as focus continue both investments, of CapEx to strategic in well

affect the that So that level this all full environment, what of in question environment if be this focused I your around higher got I circle things of of think fortunate and that downturn. you would saw actually we types to would a a we’ve right things can we're call now we’d see actionable we us types in on again. Bringing do marked

If at be that to the down. that move For compensation we’d shift relatively because example, incentive business all, high to is were able and bonus is doing well.

variable other have relatively of like labor, that this maintenance, busy, example, driven in those expenses in like types for flex with levels activity And business high. the environment of our really are quite would things like nicely. that fuel, truly also We contract are then being

a of of So before COVID we’d to I difficult during into affect. early But bit again. types days of that business on little think that we be the the much that be how would how the us a looking lot more we discipline got actions able you things showed at costs, in again, take do and back see those handled we manage very to

Elizabeth Langan

business where been building there? a there now, lot any the then enter? been That’s was point you’ll I wondering, Okay, also Complementary on area helpful. that those things a part and think to Is a you spots of your have has of where little of bit there want really that different is you side continue are following thank kind larger the you. And of up a a there’s eventually acquisitions. vertical you offerings kind within an expect And out maybe other of where business

Scott Deakin

near-term development that we building pipeline of on terms relationship the I in appreciate pricing strategically, thinking our is products of opportunities we’ve got both areas in thinking -- higher-than-average those things. That’s very activities focused widening something got aperture got focused, we’ve still of through, And growth some on through the working seen our we’re promising kinds that and of do, our particularly as while the and a of some areas. some dynamics much those three Complementary the a the of in very as there. where And EIFS, and driving really pipeline JT talking about. both those things lot our types We’ve fasteners, those very about on valuation going areas, we’ve core That’s tools all pipeline Complementary was we have much raising Yes. remains of as you of well dynamics kind that. been and activity, full, JT talking

see you’ll from Complementary as well going So forward. in as I the the core think us, activity both

Elizabeth Langan

Thank you.

Operator

participation. today. Thank our thank you session you. Ladies does and and concludes We conclude call and this our gentlemen, your interest for question-and-answer

disconnect now You your may lines.

GMS (GMS) 8 Dec 222023 Q2 Earnings call transcript