GMS Inc.

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. The question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. Please note, this conference is being recorded. At this time, I'll turn the conference over to Carrie Phelps, Vice President of Investor Relations. Carrie, you may begin.

Thank you, Rob. Good morning, and thank you for joining us for the GMS Earnings Conference call for the fourth quarter and full year fiscal 2022. I am joined today by John Turner, President and Chief Executive Officer, and Scott Deacon, Vice President and Chief Financial Officer. In addition to the press release issued this morning, we have posted PowerPoint slides to accompany this call in the Investors section of our website at www.gms.com. Turning to slide two. On today's call, management's prepared remarks and answers to your questions may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements address matters that are subject to risk and uncertainty, many of which are beyond our control and may cause actual results to differ from those discussed today. As a reminder, forward-looking statements represent management's current estimates and expectations. The company assumes no obligation to update any forward-looking statement in the future. Listeners are encouraged to review the more detailed discussions related to these forward-looking statements contained in the company's filings with the SEC, including the risk factors section in the company's 10-K and other periodic reports. Today's presentation also includes a discussion of certain non-GAAP measures. The definitions and reconciliations of these non-GAAP measures are provided in the press release and presentation slides. Please note the references on this call to the fourth quarter of fiscal 2022 relate to the quarter ended April 30th, 2022. Finally, once we begin the question and answer session of the call, in the interest of time, we kindly request that you limit yourself to one question and one follow-up. With that, I'll turn the call over to John Turner. JT?

Thank you, Carrie. Good morning, and thank you all for joining us today. At the end of April, we capped off an all-around remarkable fiscal 2022, achieving record levels of net sales, net income, and adjusted EBITDA for both the fourth quarter and the full fiscal year. Our team's ongoing success in navigating elevated inflation and supply chain constraints amid strong residential demand and our commitment to provide high levels of customer service helped drive this record-setting performance. Looking at slide three, and going into more details of our fourth quarter results. We grew net sales 38% with just over 40% gross profit growth as our teams continued to do an outstanding job passing through higher pricing across our product portfolio. We recorded more than 20% sales growth with double-digit organic increases in each of our four major product categories with volume gains in wallboard, ceilings, and complementary products. Net income improved 126.7%, while adjusted EBITDA grew 69.1%. And adjusted EBITDA margin of 12% was up 220 basis points from a year ago. As expected, as we saw supply chain improvements, particularly in steel, we brought down inventory and drove significantly improved free cash flow of $191.6 million which was 124% of adjusted EBITDA, compared with 80% of adjusted EBITDA a year ago. And finally, during the quarter, we continued to expand our platform, opening six new Greenfield locations and three new AIMS stores. Turning next to slide four and our full-year highlights. Both net sales and gross profits grew just over 40% for fiscal 2022 as compared to the prior year, principally on the pass-through of increasing prices throughout the year. For each of our four product categories, we achieved more than 25% revenue growth, with positive year-over-year increases in volumes. The inflationary pricing environment, combined with our continued operating cost discipline, enabled us to improve our SG&A and adjusted SG&A percentages of sales by 260 basis points each. full year adjusted EBITDA margin of 12.2% represents a 250 basis point improvement as compared with a year ago. Our strong balance sheet and liquidity position enabled us to continue to drive growth through numerous greenfield openings and acquisitions during the year. Moving to slide five, this highlights our fiscal 2022 progress in advancing our four primary strategic priorities. First, expanding share in our core products. Our teams worked diligently throughout fiscal 2022 to maintain exceptional levels of customer service and ensure product availability, even through periods of tight supply. We recorded year-over-year volume growth in each of our four product categories for fiscal 2022, despite continuing relative softness in commercial demand. And we recorded organic revenue growth of roughly 20% for both wallboard and ceilings for the year. As a leader in the markets we serve, our customers have come to rely upon the benefits our scale provides to secure the products they need, which we expect will continue to help us gain share as we move forward. Second, growing our complementary products. We continue to diversify and profitably expand our offerings, thereby enhancing our value to our customers. During fiscal 2022, we experienced double-digit year-over-year growth in complementary products each quarter, with full-year net sales growth of 28% as a result of both price increases and higher volumes. Our teams are diligently working to drive growth in this category. For example, in certain regions, we have added specialists and dedicated locations to help drive sales in certain products such as tools and fasteners, exterior envelope, and roofing in Canada. In addition, we are revamping some compensation incentives to better align with our goal of growing this product category. As a result of these initiatives, as well as our strategic platform expansion activities, our teams deliver double-digit revenue growth for nearly every product line within our complementary product segment. Third, expanding our platform through accretive acquisitions and greenfield opportunities For the full year, we invested approximately $350 million to purchase five specialty products distributors, most notably Westside Building Material, one of the largest independent distributors of interior building products in the U.S. with locations in California and Nevada, and Ames Taping Tools, the leading provider of automatic taping and finishing tools and related products to the professional drywall finishing contractor. Ames, in particular, was an important and margin accretive addition to our complimentary product offerings. Also, during fiscal 2022, we opened 13 GMS greenfield yards, in some cases expanding our service territory, while in others, we enhanced our product assortment within an existing GMS market. And since its purchase, we opened five new AIM stores during fiscal 2022, plus five more after the end of April. Finally, Our fourth strategic priority is to drive improved productivity and profitability. We are continuing to leverage our scale and employee technology and best practices to ensure that we deliver a best-in-class customer experience. Providing our customers with the ability to easily transact with us, implement automated orders, check delivery status, and receive proof of delivery notifications and photos all make us a more valuable partner. Moreover, Internal initiatives that the customers don't necessarily see, but certainly enjoy the results of, are helping to drive further operational efficiencies. For example, we are equipping our yard workers with automation tools to improve picking, loading, and staging efficiencies, thereby improving delivery turnaround and customer wait times. We've implemented important fleet upgrades to reduce idle time, increase fuel efficiency, and promote safe work practices. and we are arming our sales teams with tools to easily access customer and product data to enhance execution and the overall customer experience. In short, we are building the GMS yard of the future to improve efficiency, productivity, and profitability while delivering greater value to our customers and stakeholders. As we kick off fiscal 2023, despite some uncertainties in the broader economy, which I will discuss later in this call, We have a solid backlog of residential demand, providing confidence in our near-term outlook. And while we do expect some longer-term softening in residential, we remain committed to the successful execution of our strategic priorities. With that, I'll now turn it over to Scott to provide more perspective on our results. Scott?