Earnings call transcript Q3 2023

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Operator

Greetings, and welcome to the GMS Third Quarter 2023 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Carey Phelp, Vice President, Investor Relations for GMS. Thank you.

You may begin.

Carey Phelps

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

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

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

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

company the the obligation periodic in statements with related assumes any XX-K including forward-looking reports. As detailed Listeners the statements future. - update contained no in company's company's in our current a reminder, forward-looking The represent to in other statements encouraged these and company forward-looking the discussions management's the more section filings to are to Risk review Factors SEC, expectations. estimates the and

Today's references reconciliations XX, these slides. the measures discussion non-GAAP provided of presentation January XXXX. fiscal the and are release the third on that XXXX of this in of press call Please ended non-GAAP quarter definitions The note also presentation includes to quarter measures. a and certain for relate

we of and begin we request question time, interest once the you Finally, kindly the limit the question-and-answer of to in that session follow-up. one one yourself call,

turn will over JT? With John the to call that, Turner. I

John Turner

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

prior in building levels once half Strong results our the consistent fiscal residential on solid the We with are to continuing report single-family this realized volume again prior year-over-year well this demand, the in quarter. pleased quarter multifamily and Steel year. the of first progress helped at offset products, to expectations, our comparison in of in market year declines as as a momentum volumes regional difficult sales complementary Wallboard in commercial growth financial Framing

quarter Looking of in at Slide while third successfully team our market Wallboard, the continuing in working dynamics Complementary through shift XXXX, managed fiscal and mix. Product, Ceilings X. With comparisons a notable end to inflationary

we increase billion gross sales to profit $X.XX For to in X% the X.X% a $XXX.X with net grew million. quarter,

began Our up continue an year. the growth strong, to demands Wallboard continuing each volumes in with addressing fiscal multifamily categories, do our X.X%, volume of with positive teams the customer up job this excellent sustaining year-over-year and that Wallboard commercial early nearly and volumes stay commercial to XX% of U.S. Wallboard

pricing, Also tile we were significant were quarter steel ceiling year challenged impacted XX.X% dislocation of and helped in strength these geographic Wallboard decline customer The for remodel during construction decline have offset quarter, volumes. in reported chain quiet to a remained volumes both resulting period single-family when a product new volumes Office in this the against in our in which ago gains their reduced backlogs most and categories line. a builders regions. in the as this were supply U.S. during tough experienced a comparable

to million. And X.X% and million million. free million Net X.X% than finally, income improved EBITDA to to improved grew flow $XX.X adjusted $XXX.X cash our $XX more $XXX.X

strategic customer priorities continued execution flex results. the of the our and to drive as delivering helped to demands all commitment these our ability team's needed to Our service meet of our outstanding of categories, four

our progress in this our initiatives. highlight advancing strategic quarter we X, Slide On

disruptions. despite hard to our teams our as While of worked their the volumes to space, the in are have grow exceptional single-family contracting regions our through share weather significant deliver or maintain products service backlogs, worked customers and our in bulk core most

the we overall full continues product categories, share the disruptions correct in calendar Framing from share we Likewise, that calendar successfully Framing Wallboard industry chain indicates office grew indicates data for to that the released primarily Steel our each segment at also Steel decline, softening recently market our driven although data demand, grew for Looking and by of supply during our core year industry XXXX. XXXX.

our and alliance grid while tile been business, key quarter. our has lack by work, acoustical we nicely tenant manufacturing sales where architectural office impacted looking our partners, investments at and been this new Finally, ceilings, of ceiling specialty improvement Ceilings the negatively grew making of in have with

and service help success core the products product complementary that continue have will confident to our appeal part inorganic remain us grow also expansions cases, and, scale Growing to to and many served consistently delivering time, been lines. in our over EBITDA leveraging commitment We as last Both product important products an of over our has best-in-class our to availability few boost years. customers have enhanced our adjacent and our a organic margins. of the these our complementary

and complementary value subcategories, practices our net tools we we of prices grew quarter. quarter, Comprising to organically. continue intend the our the our our thereby product including both while We driving both further continue to and our offerings X.X% to focusing complementary stucco product and and several marketing to the sales, across for and the EIFS lines XX.X% enhancing total XX.X% customers. fasteners, by and our In expansion our nearly sales purchasing the of expand XX% in growing benefit on volumes best collectively insulation, regions, during particular, which larger are from higher of

that accretive Greenfield we is through employing to acquisition opportunities. growth avenue drive Another and are

specializing York metro is our fasteners pleased into surrounding we which were The distribution & area that geographies. offerings products. a other represents tools expand the related entries and our acquisition City York and very many make fastener intend During of market. acquisition the construction quarter, intend platform and our tools locations, to and This New in tools we broadly, we a expand set and product areas, added more from Bolt margin-accretive across to first fasteners New of and Tanner in the to of Nut, four

opened opening focused Greenfield steps ceilings In Greenfields our with we've quarter, in addition, during took the City this York a yard fiscal in six New Greenfield Including these we another new year. now further the platform and of Virginia. additions, to Chester, expand

And also against the the as AMES of store business thereby finally, our continue margin-accretive execute well. we locations, quarter, growing more business growth three opening this during to strategy

candidates nature we we industry, pursuing. the Looking fragmented opportunity the widening still we of to acquisition active remaining pursuit service ample space ahead, have our pipeline our white products, and given fill remain, are and opportunities of in complementary gaps an of that and believe

broad discussed and the our both do make future and our activities, to with cost customers of finally, to past, continue across we and leverage scale In access our to business we the yard practices providing wherein I've online that easier for with them And best technology improve a us. organization, employ are focus it our for service.

tools in benefit. and time-saving point, more we yards out yards wait plan turnaround these operators with this of in are our roll times. automation our our At to and addition, to all efficiencies, have the the operators equipping automation rolled improve improving to tools our delivery and out of customer U.S. In picking, yard loading to than this thereby scale to we XX% staging have larger that

complexity continues, costs are drive we also to And so always work while out our more business. this broadly in looking

of back-of-house process complexity, of the of an product internal organizational multiple recently also restructuring consolidating For example, while enabling data completed divisions, our and standardization and throughout. one across functionality subsidiaries, we customer reducing thereby

our priorities reduces serves for by the as project and a divisions. in demonstrated of a am work commitment I foundation drive results Completion market. we and region model in our with again this other strategic this cost very solid as hard team as dynamic improvement as execute profit for well Overall, a pleased to

that, on results. now to over With more Scott? provide it our to I'll turn Scott perspective

Scott Deakin

Thank good you, JT, and morning.

the we've Organically, pricing out sales end $X.XX in way lead XX.X%, both unfavorable market perspective, continued sales up rose growth billion net exchange including year-over-year in sales residential translation. and impact for XX.X% growth to Wallboard, From X, of Slide with multifamily acquisitions quarter. the adjusting by X.X% X% and seen single-family. than at U.S. in Looking a the foreign the more dollars XX.X% to increased resilient after

year-over-year, improved again prices. ago. same over and quarter a steel however, growth year this steel ceilings as slightly the dollar as volume in for Moreover, Wallboard only period reflecting well Commercial commercial, was falling up volumes Sales declines

of year-over-year, also XX.X% slight increase in in comprised price XX.X%, a entirely increase million sales increased almost XX.X% Wallboard and X.X% mix $XXX.X price with grew of quarter comprised Wallboard and a volume. benefits. sales of Organically, third mix

materials heavily Declining single-family offsetting commercial. affected demand in most volume despite reduction this strength the for and multifamily driving construction segment, product

continue higher residential gains and remained XX.X% multifamily Wallboard specifically, nearly growth XX% has volumes. mix far X.X% toward volume, of and shift the Wallboard in outpace U.S. resilient a pricing has commercial commercial single-family. decline the to in from of benefited terms In

year down our only realized $XXX as price the ago. second XX.X% $X was with compared for MSF, up quarter average per quarter a fiscal Our and from

$XXX in Additionally, for MSF than sales offset up third from the mix average price the X.X% per January. with higher the were of a QX compared and volume. a million Ceiling X.X% we year quarter of for ended quarter as as ago X.X% $XXX.X benefit a with price a decrease

with price and supporting architectural in included specialties a large toward and projects tenant X.X% sales Organic mix. activity, decrease primarily by acoustical remains shift and a improvement X.X% ceilings in higher grew as offset facilities, medical muted. of partially work office education X.X%, volume and dynamics Volume

XX% prior and and year and XX.X% quarter, sales down volume. volumes drove X.X%. fiscal of with inflation Framing third This increase both short-term quarter down constrained availability with in versus price the Steel Third product quarter decreased mix where XXXX, $XXX.X of a compares and price the million

significant activities mentioned remodel, both some office we limited as addition, despite this relatively customer quiet. remains new business In previous for calls, large most conversion of one which categories the on is and for

active. has multiuse lower-rise, While been stick-framed construction more

comprised XX.X%, mix a sales in of Framing in X.X% decrease Steel XX.X% and decline and volume. Organic price a declined in

Steel since a price second for the XXXX, been since have fiscal for Framing this average first And quarter's each below sequentially the year time period of prices ago. same expected, quarter July. fell As month declining products the

Complementary as mostly from moderately product improved organically, pricing from with across were from sales increased X.X% volume of up with this but price and were mix, category. well. $XXX.X well contributions year-over-year as XX.X% increase we benefited in up category as acquisitions Sales coming the the positive as million

of As insulation. XX.X%. to products quarter growth sales collectively These EIFS and on tools third and referenced with growth earlier, category higher delivered fasteners, than broader the stucco focus due and sales our

our the Now profit quarter. turning to gross during

products of a product pass-through profit $XXX.X profit growth in inflation, complementary gross Wallboard with continued to from million commercial year sales, X.X% gross improved as due increased ago, Our principally incremental successful acquisitions. and of compared

heavily Gross XX.X% in relative execution as Wallboard well strong management weighted on Steel products with XX increased Framing, margins in benefited and incentives. A margins on year-over-year also focused quarter. commercial year-end more quoting our teams gross negotiated towards as in and as shift complementary inventory margin margins remain that basis project the points of better-than-expected diligent was mix volume volumes

partially were gains expenses, higher operating these These complexity other This are applications. given to highlights offset however, the Slide by and covered X. on OpEx serve logistical higher in cost and

the negatively and equipment our impacted demand, also In during our volumes as we market unfavorable in continue operational between to addition service and by maintenance honor to wage conditions, fuel to mix normal shift commitment operating our efficiency best-in-class and to the which for costs single-family expenses and higher weather were impacted customers. labor commercial provide quarter end inflation, both

$XX.X to adjusted For XX.X% diluted $X.XX a million net increased per income XX.X% compared was or consider as of with net diluted share ago. the year of $XX.X sales compared I'll share. income or percentage SG&A $X.XX to per quarter, X.X% net million a as

Growth outpaced income end million net the January for a in as repurchases the XXXX. a result $XXX.X earnings of per of since completed in quarter share share

million for repurchased During compared repurchased with the year the XX,XXX during we for prior $X.X shares approximately quarter. $XX.X XXX,XXX quarter, million shares

year-to-date, an have been Fiscal average of X.X $XX.XX. million repurchased price at shares

the authorization our As million quarter, of $XXX third repurchase we of of had end fiscal remaining.

to it Adjusted of XX.X% improved million for P&L, X.X% compared the quarter quarter XXXX. to the the EBITDA fiscal margin or Finally, EBITDA million. with $XXX.X adjusted relates for was third as $X.X XX.X%

and on X. flow which metrics, are Now shifting balance cash shown our to sheet Slide

constraints during cash third of flow activities $XX.X our we operating moderated. During supply million year significantly a million compared by with fiscal chain was again the as $XXX.X recorded levels Cash quarter, quarter ago. provided improved

with compared third for compared prior $XX year. Free year the cash same period quarter quarter the quarter. $XX.X expenditures of last million flow the million for was $XXX.X million million to the for in Capital $XX.X

million. For now expect be $XX full expenditures $XX million to capital we year XXXX, to fiscal approximately

hand of liquidity end position substantial the liquidity $XXX.X on At million the had of of we million under cash revolving quarter, credit and $XXX.X our facilities. available with

available agreement, credit extending we December our XXXX. there ABL a by As thereunder revolving amended - in commitments maturity and reminder, and late $XXX million increasing $XXX expanded the to December, to its million

we ABL to Canadian terms connection we new this have dollars of also now the to borrow terminated up with the million, amendment, of Canadian credit the and in $XXX the therefore, completion agreement. ability facility, our ABL Under

monitor adjusted down EBITDA in from We of our the structure. debt year net XX, other to capital our maturities was At continue upcoming a X.Xx, X.Xx facilities January ago. leverage

full expect substantial fiscal end with flow to EBITDA. generate expect adjusted cash to year approximately of We for the XXXX liquidity year XX% and free of

Going forward, align allocation as they arise. favorable and our with in we strategy, leveraging will our continue initiatives repurchases our market X-pillar share opportunistically for investing to conditions to and debt capital paying strategic down balancing

quarter. on pass now broader With some that, and to outlook fourth provide for our perspective end to our the back markets I'll the call JT

John Turner

Scott. you, Thank

to Turning X. Slide

we to decline in permits reflecting and start construction that our of year. narrowing the final the and activity was the of expected, across are starts begin in single-family slowdown we of our most demand beginning as markets, fiscal a of year, at see place the As backlog quarter fiscal

light single-family higher forward, trend Going concerns. interest term, affordability this rates is pause take in in of the to as near continue expected homebuyers a and demand

however, during homebuilders from recent regarding their activity improved levels XXXX. sequentially encouraged commentary positive by so far We are, the calendar

Nevertheless, our cautious outlook remain near-term we assumptions. in

structural confident will the the we drive need over construction. are sizable improve time, housing increase housing, in that with and along demographics need an favorable However, to affordability for

third to we improved quarter, efforts outlook the to steps costs, a productivity, and line structure to addition As areas in fiscal of cost variable near-term specifically, redundancy. discretionary to in actions took end of our flexing the our fixed with result we to cost subsequent and drive improve address our took of

a back In XXX our phased workforce we approximately expenses fourth roughly of These will And in, basis. adjusted actions purposes positions. costs. EBITDA onetime steps, in calculating quarter. non-GAAP for be these our by will association for million $X.X charge an severance expected as annualized and on operating with These million fiscal record reduced added $XX of to implementation onetime quarter other the for are by lower the

each construction. on for using and let large historically fiscal there outlook outlook me and that, numbers of quarter, With remains is despite our end proxy, which for projects of with as X. the moderating Wallboard fourth Slide Starting our a elevated backlog provide in our somewhat, highlighted Stats our remain markets multifamily under

continue more XXXX. times, trends quarter, expected than build single-digit longer demand their Given its to through at volume growth stable for our year-over-year is outpace continue other we in with year mid-calendar volume fourth end expect quarter. fiscal with markets XX% multifamily also expected to our trends fourth to Commercial positive with the growth least relatively continuing

in single-family expected declining finally, robust fiscal of compared likely volumes are the very And teens quarter high deteriorate XXXX. fourth to further, to a as

prices While fourth slight price inflation fiscal pricing, in are flattish for quarter. the purposes, forward, we complementary market Wallboard high ceilings in predict can't teen or we inflation products timing for planning fully our degree currently of year-over-year mid- to elasticity projecting in going and

while for for pricing to underlying and our decline many initiated In bottomed material appears steel the XX% a to to year-over-year prices Steel current increases, of noting our quarter. to in expectation XX% the decline to price sequentially the each raw have month low net fourth have for range suppliers mid-single-digit is continue Framing,

the fiscal period. sales be single our low to total prior raw thereafter, point compared the and digits then steel, with to bottom declines product flat consistent as net steel in the some believe we market. with year growth in at outsized should offset We expected categories, quarter balance materials other currently our for by slightly, our those of prices major underlying With fourth increase of expect down

one We're will day remain fiscal with year for with As for should around looking fiscal we a the less percentage XX%. of fourth quarter to And reminder, margin Gross as selling compared our solid to in of an have roughly a the longer-term date trend year what our EBITDA ago. consistent quarter a finally, fourth expect to has quarter. been we $XXX $XXX million and million GMS. adjusted for deliver forward close outstanding to between

fourth that success to our quarter drive enter the best-in-class helped all has We fiscal our same to service customers our commitment deliver year. with

wide to of demonstrated towards supplier demand us well multifamily partners types and as to positions product to shareholders, breadth our market our service end intend deliver execute against to our a and expect ability team. customer value each offerings Our to in scale, near-term We of our priorities and commercial. we continue to shift our strategic

you Thank us call Operator, the joining for questions. you for may today. open now

Operator

question from Inc. you. comes your Stephens Thank question. Please first Trey with Instructions] with the proceed Grooms line of [Operator Our

Trey Grooms

Hi, my good morning, for taking everyone. Thanks questions.

Wallboard quarter math JT, of guess to I pricing translates the you're right, mentioned or next if on think into I I'm And mid- So up of growth something to April year-over-year guide teens. you for the flat kind digits high that mid-single for quarter, looking sequentially. like like

that that - is much pricing there? with more how versus outlook, benefit a How of kind sequentially. up commercial much mid mix So like increasing mix of flat from that to actually of like-for-like from maybe

Scott Deakin

both. quarter as look where at on we the price offset kind bit mix. quarter an little third by you true of as the If a to we're progressed, little actually of indication had of starts the bit shift, actually seeing it of a But trend, gain decline in

our in majority the from one-thirds, coming is of view it So versus price. ballpark mix probably sort of the with of two-thirds

Trey Grooms

us think market thing. outlook it. that detail helpful. super your for all for remind Could of then end commercial Thank with and fuzzy of a segment here gave you the it then I you sort between the Wallboard us family you between multifamily - and know guys was gets single around kind the the thanks far little demand That of because Got okay. mix as kind that. multifamily. kind for And what when of for side, and also is res as about demand you

of for If unpack you could us. kind just maybe help that

John Turner

in XX% told single-family in business. total XX% commercial, to XX% residential we've the I is one-third there for talked in the past, XX% in - Yes. volume, the representing residential about multifamily - We mean volume. of revenue little - a we've about

question, the and So residential, answer to in revenue. is family. being Wallboard, But of multifamily that XX% single business multifamily, your roughly XX% the balance being of two-third commercial

Trey Grooms

you. luck. that. in JT, Thanks for and queue. Okay. pass on back it jump Thank I'll Good

John Turner

Trey. you, Thank

Operator

you. Thank

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

Keith Hughes

on to mid-single you're you. Thank digits demand, fourth guiding question the in nonresidential us the quarter. A

that, beyond see the the for rest you if could calendar construction you Looking what talk about And trends do year? of versus remodel. the

John Turner

Yes.

- So XX% new home that probably, viewing XX%. still we're maybe down XX% construction is to as

some high think as had XX%. people I as

I think about you January, the XX%. were XX% in frame, February people talk hearing to time

I kind view we're going regard taking a in So of think conservative that forward.

saw the reflecting certainly with move January, of that getting the Xs You XX-year mortgage in into low the buyers treasury low in rates February, right rate interest and That Xs. back. being down the the XX-year brought

of So two pretty reporting treasury and so I right? what of we'll moment, likely today, a XX-year four the , think at others. about a experience. we're course, weeks And wonderful But behind the future. of over sign that's talking you're quickly,

be reporting. which down very I starts as single-family I there see been out, think you, things pleasantly sitting in out surprised the be in tell that to that the in backlog, pipeline, to or a commercial came until three the unit particular, would going multifamily going of January four like numbers think starts backlog. was census it's another in much to in as I year, construction very as in it the And too yesterday, hundreds as year. I months the particularly And a last strong So strong it's of office, thousands flattish strong But month have to difficult out. bureau came

I good our We commercial. conservative forecast, So a for little year. feel the about quite commercial might be in frankly,

Keith Hughes

trend. your going actually flat the What's seeing pricing. comps you some or on what's Are flavor specific in actually there? And Okay. that? something down? Is you the talk with on quarter of going a guidance Could price ceiling is for - break there such more

John Turner

in XX% the year prior we Well, were quarter. up

in very So year projects. increase we the had due some huge to prior a specific quarter

manufacturers So yes, include And in in issue there, also, our we comp - grid. people people pricing. include necessarily a other ceilings grid certain may oftentimes I don't include other have say don't the grid but we discussion.

steel, see see coming Keith, we grid we So of grids because down.

trend we being as long-term in resilient see still the tiles price. So

Keith Hughes

Thank Okay. you.

Operator

Thank you.

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

Steven Ramsey

start with kind driving on To Framing, that as what adjust even of in gain you on sticks is good and Hi, end share can and the underlying markets if more share share Steel this gain? morning. Wallboard

John Turner

Yes.

well activity, side, well I on some consolidation the as general, there. our think as continued the that the as gains customer our to activity, national just and service acquisition residential in account national the base space Greenfield continuing of committing account to gains as

the I key think for us. that's

to stronger this going period As begin commercial we're commercially, with. strengthens, strange all we heavier prior 'XX, we right? pandemic So - to back weighted in are steel the way to

know, one of out do all And stay our those the service those on and to week. making those of some and every getting a have to truck so mean, hold very, very also, you business, our we're hours very And it's we boom business focused projects. in effectively, that with projects. that on to aggressive commercial the and I in fleets pursuit so that of out of team we're day day our of I doing wherewithal, to we as important go gains. commercial we there and would share sure But history of to largest the the expect

Steven Ramsey

into Wallboard focused? staying deals complementary more is an New Okay. that then be there to then sets? acquisition And And pipeline and there is those a the purely that that or opening something and more broadly, focus. area product complementary your subs more And commercial acquisitive? York you helpful. Is products where see are complementary in That's adding of

John Turner

that that at we excited York there. and Tanner fasteners Wallboard to some would time, similar be business definitely when be answer really question. the and organically we'll other team experienced Nut, be to complementary is And team. New have that a acquired very in Yes remains certainly, with we City continue but that point in to & do inorganically We're markets. we'll in to how acquisitions Bolt grow and in good the really expect to tools seen, yes, in and piece Undoubtedly,

Steven Ramsey

Okay. Excellent. you. Thank

John Turner

Thanks Steven.

Operator

Thank you.

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

Jeffrey Stevenson

Hi, thanks for taking today. questions my

I First, up you And the you about you're how you could could called Wallboard if seeing if out elaborate single-family was when a results. trended wondered variances from slowing I wondering And regional a throughout quarter? volumes single-family perspective? John, talk show declines. on of demand started in just regional further to kind then,

John Turner

were really November mean frankly. worse, December into and on year-over-year and Sure. sequentially flat I February, single-family and basis then a volumes January quite relatively

So we're seeing single-family. that decline in

hand, other that got as through multifamily period. little that the stronger a stronger we a commercial in On through in period well little as

offset multifamily so decline that we the single the family. degree of seeing in commercial and far So are

part backlog the the remains From would into the pretty Southeast a the, the perspective, work the through regional really, the the up Northeast what the southern say. backlog, South, much country would call, I in of it's and balance Mid-Atlantic I of has the and

Jeffrey Stevenson

business. Okay. Very just And products on complementary then helpful. your

if concentration, it were should obviously, moving bit color environment? side. in could wondered Just that about you in on kind thinking a hold heavier strong single-family commercial just you're how give results I demand slowing you I on of had forward that inflation thinking you're categories you little very the quarter. and well mean, moving your about of But relatively any how core a overall, on forward. given business highlighted that more in your

John Turner

commercial. is really really as still the waiting is with weights to right? all of that little our that's of slows materials as is. the it tools et yes, business insulation XX% and cetera, residential part a commercial commercially, XX%, Yes. decent taping I But fasteners, almost well. where the mean That's volume category along offset maybe installation Wallboard a go that The Wallboard down,

Stucco EIFS, course, commercial there mostly of component a multifamily residential And and is and but for there, stucco. EIFS low-rise

taken. your think So I point well is

more weighted our are complementary We commercially category. in

Jeffrey Stevenson

Okay. Thank you.

John Turner

you. Thank

Operator

Thank you.

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

Ryan Frank

Ryan Mike. my is for This Frank Hi. questions. for on Thanks taking

just So little magnitude that you side, guess, the residential you're next kind surprised months? And thinking of especially really that? SG&A over volume that declines the you're about, the just about XX I talk can given guess multifamily cost that about how talking on outs. I relatively actually commercial offset I by of if am the Can and

John Turner

and little Yes. and the look guide, a G&A couple leveraging sure, if in far you stronger SG&A - quarter's basis, a for I of happened. mean right, when a while. continue year-over-year talking as lot be the A it's at on an that as on One, are this prices for going issue leverage. that's you're things to about steel to a headwind

difficult, rains then we very Coast, winter year. on rain West the than was harder quarter, the and cold weather, exceptionally a weather the had previous that particularly really this was unprecedented and But little

service So as continue that ability we the productive to to be our creates an issue around to business. try

getting You are deliveries they're one getting four in of can kind or weather, but today, that imagine, none. right, trucks

regard declines, the really And so we first it. lot well. SG&A we're that issues stop a quarter, this is as that the out actually with got as of doesn't until you've shipping in come And variability seeing also, those of

if looking, at this out, variable again, think seeing out. coming look in sequentially So you the that's you're that dollars why coming quarter, expenses quarter variability reflect you're increase I this in the

that inflation. term. reality it's you, I just is about I there's in much faces all higher same the of thing. the right? everybody our be, do wages And top will on tell Now not I can than we are mean that, mean they the to near used

we're Multifamily we delivering But while they're react into of fourth And volumes. still good. and going sequentially of builder richer business, at quarter and seeing about to those do space. the that are stay said, products And that a we're of as declines in multifamily think both very is all mix are and now, at a being reflect good. higher I what talking you teens expecting in high you're look us cost commercial

Ryan Frank

it. Got

Okay.

So on part follow cost to even bit guess continue seems like just It SG&A if mix, just up I because it a to higher is that. of of should to delever serve.

John Turner

that's right? - this in a Yes, in mean tough. steel pretty very hard decline That's got XX% price number, you I

we're And volume. down So slightly, a down while very we're low and percentage being year-over-year, still talking it. points on in about of it's delivering a couple - volumes

not So year-over-year for sure headwind difficult face the on a to basis.

Ryan Frank

the then I Got on M&A could touch just Helpful. if And it. pipeline.

owners at get You trying said trailing it of see that? looking multiples. in a they those deep. for asking front forward you and looking of Do slowdown of to types kind still at still remains results and Are pretty

If now. just privates about talk are right how you think you could feeling

John Turner

it's mean bit little of I both. a

reasonable But to that able I consideration the think that make we're heavily trading right people concerned in do to them. were think valuations are we're talking I on of weighted acquisitions. we that really are where are obviously, more I have now talking residential when side, balanced also than anybody about historically we're where and don't business. a who the people see panicking

the that against let's last, a bit unreasonable So say, say course get sweet cases. to year, starting in we're more expectations hope let's Because just the those I into spot. were results case. valuation the little certainly, a stays over of And a some inflated of

Ryan Frank

helpful. very you it on. Thank Okay. I'll pass

John Turner

you. Thank

Operator

Thank you.

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

Elizabeth Langan

Good morning.

the activity taking this on touching of into talking morning. seeing little digging the Would about questions. bit bit, Langan and the kind Elizabeth you're Thank kind you in how verticals specific of for have and trending? You a a commercial quoting you like what for mind is order little Matt

John Turner

on say, activity strong. but the Everybody more or showing strong is across life. still is some of say, would whole Order stronger, Even uptake, pretty commercially. of spectrum the over last activity, the commercial. of pretty it's really Quoting course Yes. is few improving I signs office is months let's getting the

seems But that showing be that which about to signs Now see of for even we'll to muted being a we've life. have talking time, been category, is some what directly. long

Scott Deakin

well. kind the those shipping seeing at of that census just good in and out a categories, that business quoting alignment activity, Just strength look to indicative that's pretty and there. the if our as add, of relative activity data we're you There's the pretty of et cetera, came

Elizabeth Langan

then to little Wallboard Perfect. over switching And you. Thank a Okay. kind of bit.

about a looking, exit bit where ticking in the quarter, like was we utilization? seeing a that be helpful if higher I am pricing you obviously, manufacturer talk think to chain. could Because the If - would you're little is - channel the I of supply how sense had

John Turner

synthetic gypsum Southeast, costs It's the issues the quite at in the a facing that more regionalized, than say, moment of natural and energy There's the material et you, different I South, in general, are moving I'll gypsum states changes lot parts country, But Northeast. cetera. Texas really manufacturers pretty the and in that slower raw some and between Mid-Atlantic general, in give direction. is would Mountain West minus of

So XXs, look, if you utilization look right? High low the numbers at the for good, XXs. total XXXX, probably still was pretty

Elizabeth Langan

very much. it. you Thank I appreciate

Operator

Thank you.

Please with Our proceed next your Quinn question with question. line of comes Fredrickson Baird. the from

Quinn Fredrickson

the year on of strength course you're remainder can touch year to you see the the wanted seeing of of get see calendar we your the just over growth? I the good still thinking backlogs, about that to pretty Or kind on morning. Based what that? it and multifamily comes after and good that outlook to multifamily comment middle Hi, are there. JT, just the the of is have

John Turner

it wait the look a see - much I'm of probably of the it look say quarter, and we'll just numbers, at little start But how the and August for now. in minimum, longer little of go at sure, before of we you you better bit we're if view to built this a to mean how numbers. right of get backlog July, year you at would of could able in seeing built. pure pure middle the year, you're kind gets difference rate the looking than kind middle each But to that. kind be going But gets I the quickly just XX% year-over-year any

mean, become comps the we If go course, as backlog. units completed, of the forward, right? XX% they. growth, difficult all more in thousands of if go it's those But further get starts of And hundreds I we with

Quinn Fredrickson

what on aside on and like. the got favorable Okay. you've going cost quarter. then of quarter mix out but a kind fourth in And I any look there, Wallboard expectations like price what price know setting just looked the for cost commentary Thanks.

John Turner

still shift residential side help. to and Yes. on mean - I the think slightly the we'll mix see but is pressure I that going

just call So let's it neutral.

Quinn Fredrickson

Okay. Thank guys. you,

John Turner

Absolutely.

Operator

you. Thank

from of this morning line Please proceed Our with Truist final the comes question Securities. Keith Hughes with question. your

Keith Hughes

Where One between market Thank do in terms division competitors? pretty a your in space you. and division you largest leaves think distributor. the Wallboard size The that transaction industry your last off of there couple yourself was two of getting sold of months, of share good a

John Turner

that... We felt

Keith Hughes

total. In

John Turner

In Wallboard, LBM market, U.S. we in divisions the were the of felt X% about roughly Keith, Wallboard. like

it picked ABC I think closes, it's up closed or Maybe with whenever has. don't yet. acquisition about So it that X%

consolidation, that XX%, business of with additional independents. some still the XX% probably smaller but leaves again, that's, So

Keith Hughes

So you that of do you post the could share of think XX% three have upwards trend?

John Turner

have centers home plenty there, Keith. - those home no, No, XX centers have in

XX%. of So XX XX, plus us XX, XX Maybe ,minus three XX%. have the

Keith Hughes

Thank you. Okay.

John Turner

Absolutely. Okay.

Operator

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

You lines. disconnect your may now

GMS (GMS) 2 Mar 232023 Q3 Earnings call transcript