GMS (GMS) Q2 2025 earnings summary

Executive summary

• Net sales for Q2 FY2025 were $1.47 billion, up 3.5% year-over-year, driven by acquisitions and volume growth in ceilings, steel framing, and complementary products, but offset by hurricane impacts and soft market conditions; organic sales declined 4.6%.

• Net income fell 33.9% year-over-year to $53.5 million, with a net income margin of 3.6%.

• Adjusted EBITDA was $152.2 million, down from $167.6 million, with margin at 10.3% versus 11.8% last year.

• Gross margin was 31.4%, down 90 basis points year-over-year, mainly due to mix shift and price/cost dynamics in wallboard.

• Hurricanes Helene and Milton negatively impacted net sales by $20 million and adjusted EBITDA by $6 million, with over 40 locations closed for at least one day.

Financial highlights

• Wallboard sales were $582.1 million, down 0.5% year-over-year, with a 1.6% volume decline and 1.1% price/mix increase; organic sales down 5.2%.

• Ceilings sales grew 16.6% year-over-year to $204.4 million, with organic sales up 1.6%.

• Steel framing sales were down 6.3% to $217.4 million, with organic sales down 14%.

• Complementary product sales grew 9% year-over-year to $466.8 million, marking the 18th consecutive quarter of growth.

• SG&A expenses rose to $324.2 million, up from $300.9 million, mainly due to acquisitions, severance, and restructuring costs.

• Adjusted EBITDA margin was 10.3%, down from 11.8% a year ago.

Outlook and guidance

• Q3 FY2025 organic wallboard volumes expected down mid to high single digits; total wallboard volumes including acquisitions down low to mid single digits.

• Wallboard price and mix expected to be up slightly year-over-year; ceilings volumes up high single digits, steel framing volumes down low single digits.

• Complementary products net sales expected to grow around 10% year-over-year.

• Q3 net sales expected up low single digits year-over-year, with organic sales down low to mid single digits; gross margin for Q3 expected at 31.5%-31.7%; adjusted EBITDA expected between $113 million-$118 million, with margin around 9%.

• Free cash flow for FY2025 expected at 60%-65% of adjusted EBITDA; capex for the year projected at $45-$50 million.