GMS Inc.

Greetings and welcome to the GMS second quarter 2023 earnings call. At this time, all participants are in a listen-only mode. A 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 conference over to your host, Carrie Phelps, Vice President Investor Relations for GMS. Thank you. You may begin.

Thank you, Melissa. Good morning, and thank you for joining us for the GMS Earnings Conference Call for the second 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 investor 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 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 statements 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 report. 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 second quarter of fiscal 2023 relate to the quarter ended October 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. JT?

Thank you, Carrie. Good morning, and thank you for joining us today. With elevated single-family home construction activity, as completions eclipsed starts for the quarter, along with strong multifamily residential demand, year-over-year growth in commercial, and a favorable pricing environment, we again delivered record levels of net sales, net income, and adjusted EBITDA for our fiscal second quarter, as we continued the solid execution of our strategic priorities. Looking at slide three, With comparisons to Q2 of fiscal 2022, here are some highlights of our second quarter results. We grew net sales 24.4%, with 24.9% gross profit growth, as our teams continued to manage a shifting market mix and inflationary product pricing. Volumes in wallboard were up 11.6%, and we were again pleased to deliver positive year-over-year commercial wallboard volume growth for only the second time since the start of the pandemic after doing so last quarter as well. 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 50 basis points each. Net income improved 38.7% to $103.2 million, and adjusted EBITDA grew 30.7% to $195.5 million. And finally, adjusted EBITDA margin of 13.7% was up 70 basis points as compared with a year ago, with significantly improved cash flow. Our team's commitment to delivering outstanding customer service, together with the continued execution of our strategic priorities, helped drive this success. On slide four, we highlight our progress this quarter in advancing these strategic initiatives. expanding share in our core products. Although pockets of supply chain challenges remain, our teams continue to work diligently throughout the quarter to ensure product availability and to provide exceptional service for our customers. As a result, we delivered year-over-year organic wallboard volume growth of more than 11% for the quarter, which we believe outpaced the industry as a whole. We are also seeing success in ceilings. as we delivered organic volume growth in the low single digits with organic sales dollar growth of 13.6% for this category. We remain confident that leveraging our scale and our commitment to exceptional customer service and product availability will help us continue to grow the core business as we move forward. Second, growing our complimentary products. We continue to diversify and profitably expand our offerings, thereby enhancing our value to our customers. During the quarter, we continued to benefit from both higher prices and volumes and grew our complementary product sales by 26.5% in total and 17.8% organically. In particular, some of our larger complementary subcategories that are a higher focus of growth for us, including tools and fasteners, the Stucco and EAPS product lines, and insulation, collectively grew 33.4% for the quarter. Third. Expanding our platform through accretive acquisitions and greenfield opportunities remains a top priority. So far this fiscal year, including those that open subsequent to the end of our second quarter, we've opened five greenfield yards and nine Ames store locations. Our pipeline of potential acquisitions remains strong. We continue to actively pursue opportunities to strategically 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. Included within these initiatives are ways to enhance the customer experience, making it simple to do business with us. As a result, The percentage of customers interacting with us online grew each month during the quarter. Additionally, we are making it easier and more productive for our teams, providing automation tools to improve picking, loading, and staging efficiencies, as well as fleet upgrades to reduce idle time, improve fuel efficiency, and promote safe work practices. Building our yard of the future to drive greater efficiency and productivity has helped us deliver improved profitability. Overall, I am very pleased with our team's execution. At the heart of our business is our people, our passion for service, and our relationships with our customers. With that, I'll now turn it over to Scott to provide more perspective on our results. Scott?