GMS Inc.

Greetings and welcome to the GMS first quarter 2023 earnings conference call. At this time, all participants are in a 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 on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to Kerry Phelps, Vice President of Investor Relations. Thank you. You may begin.

Thanks, Daryl. Good morning, and thank you for joining us for the GMS Earnings Conference call for the first quarter of fiscal 2023. 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 risks and uncertainties, 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 that references on this call to the first quarter of fiscal 2023 relate to the quarter ended July 31st, 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. JP?

Thank you, Carrie. Good morning, and thank you all for joining us today. The momentum we built during fiscal 2022 has continued into our fiscal first quarter of 2023. We again delivered record levels of net sales, net income, and adjusted EBITDA for the quarter, and continued the solid execution of our strategic priorities. Market demand for our products during the quarter remained elevated. and our yards and storefronts are busy. Looking at slide three with comparisons to Q1 of fiscal 2022, here are some highlights of our first quarter results. We grew net sales 30.5% with 29.4% gross profit growth as our teams continued to work diligently to pass through inflationary product pricing. We recorded more than 20% sales growth and double digit organic sales increases in each of our four major product categories. Volumes in wallboard improved nearly 9%, while ceilings and complementary products volumes were up low single digits. The inflationary product pricing environment, combined with our continued operating cost discipline, enabled us to improve our SG&A and adjusted SG&A percentages of sales by 80 and 100 basis points, respectively. Net income improved 46.2%, while adjusted EBITDA grew 36.6%. And finally, adjusted EBITDA margin of 12.9% was up 60 basis points as compared with a year ago. Product price inflation, active residential construction, and an improving commercial backdrop coupled with our team's commitment to delivering outstanding service drove these solid results. Amid this near-term performance, we also continue to execute on our four primary strategic priorities. Slide four highlights our progress this quarter in advancing these initiatives. First, expanding share in our core products, our teams again work diligently throughout the quarter to maintain exceptional levels of customer service and ensure product availability, despite continuing supply chain challenges. Notably, This led to year-over-year volume growth in wallboard and ceilings, with organic revenue growth of nearly 18% in ceilings and over 30% each for both wallboard and steel framing. We are confident that leveraging our scale and our commitment to exceptional customer service will help us continue to grow the core business 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 the first quarter, benefiting from both higher prices and volumes, we grew our complementary product sales by 25% in total and 11% organically. In particular, we are focused on growing some of our larger complementary subcategories, including tools and fasteners, the Stucco and EAPS product lines, insulation, and joint treatment, which collectively grew 35% for the quarter. Third, expanding our platform through accretive acquisitions and greenfield opportunities. During the quarter, we purchased construction supply of Southwest Florida, a leading local distributor of various stucco and waterproofing products, principally serving the Sarasota market, with broader outreach to Tampa and Fort Myers. In addition, we opened two new greenfield yard locations and six Ames stores during the quarter. our pipeline of potential acquisition targets remains strong. And we continue to actively pursue opportunities to broaden our product assortment and expand our service territory to help us provide added value and best-in-class service to our customers. Finally, our fourth strategic priority is to drive improved productivity and profitability. This is a broad focus across our organization as we continue to leverage our scale and employ technology and best practices that improve both cost and service. For example, by the end of this calendar year, we expect to complete the upgrade of all of our U.S. locations to the most advanced version of our ERP system, thereby fully setting the foundation for our other yard of the future technology initiatives, programs which are expected to drive further improvements in inventory management, warehouse operations, e-commerce capability, and back office efficiency, all with the aim to make us a better business partner for our customers and and to help us deliver improved profitability. Overall, I am very pleased with our team's drive this quarter to produce both solid results and move our strategic initiatives forward. With that, I'll now turn it over to Scott to provide more perspective on our results. Scott?