GMS (GMS) Q1 2026 earnings summary

Executive summary

• Net sales for the quarter ended July 31, 2025, were $1,414.3 million, down 2.4% year-over-year, mainly due to softening market conditions and pricing pressure in steel framing, partially offset by acquisitions and resilient pricing in other products; results were in line with expectations.

• Net income was $43.6 million, a 23.9% decrease from the prior year, driven by lower gross margin, negative price/cost dynamics, and $5.5 million in one-time merger-related transaction costs.

• Adjusted EBITDA was $135.5 million, down 7.1% year-over-year, with margin contracting to 9.6% from 10.1%.

• The company completed one acquisition and opened one new greenfield location during the quarter.

Financial highlights

• Gross profit was $436.5 million, down 3.3% year-over-year, with gross margin declining to 30.9% from 31.2% due to lower vendor incentive income and reduced volumes.

• Operating income was $81.2 million, compared to $98.4 million in the prior year.

• Adjusted net income was $68.0 million, down from $77.6 million year-over-year.

• Free cash flow was negative $39.4 million, compared to negative $31.9 million last year.

• Cash and cash equivalents at quarter-end were $39.9 million, down from $55.6 million at the start of the quarter.

Outlook and guidance

• The pending merger with The Home Depot is expected to close in the second half of 2025, subject to customary conditions.

• Management expects to maintain adequate liquidity and capital resources to support operations, growth, and share repurchases for at least the next twelve months.

• Net sales and adjusted EBITDA results were consistent with management expectations for the quarter.