GMS Inc.

Greetings. Welcome to GMS second quarter 2024 earnings conference call. This time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone today should require operator assistance during the conference, please press star zero from your telephone keypad. As a note, this call 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 second quarter of fiscal 2024. I am joined today by John Turner, President and Chief Executive Officer, and Scott Deacon, Senior 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. 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 factor 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 second quarter of fiscal 2024 relate to the quarter ended October 31, 2023. 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, whose discussion will be starting on slide three. JT?

Thank you, Carrie, and thank you all for joining us today. We are pleased to report another solid quarter, which exceeded our stated expectations for net sales, net income, and adjusted EBITDA. Continued demand in commercial and multifamily construction drove volume increases in ceilings, steel framing, and complementary products. all of which helped to offset a more challenging steel pricing environment and relative softness in single-family residential demand. Despite the single-family market, Wallboard experienced only a slight overall volume decline, which was offset by continued resilient pricing. For the quarter, net sales were $1.4 billion, net income was $81 million, and adjusted EBITDA totaled $168 million. Cash flow improved again this quarter, as we recorded cash from operations of $118 million and free cash flow of $102 million, up 10% and 6%, respectively, from the prior quarter. Net debt leverage improved to 1.5 times from 1.6 times a year ago. Our well-balanced portfolio of products and end markets, combined with our team's expertise and the company's scale, continues to provide us with the ability to flex our operations as dynamics in our end markets change. In the near term, multifamily activity is expected to continue at or near current levels as backlog is worked through over the next few quarters. Commercial is also expected to continue at its current pace into the spring, and we are optimistic about the sequentially improved levels of activity we've seen in single-family demand, as the recent easing of mortgage rates, limited supply of existing homes for sale, and favorable demographics seem to be setting up promising conditions for this end market, particularly as we look out into fiscal 2025. Our teams have done a remarkable job so far this fiscal year, under challenging circumstances, to continue the focus on our strategic pillars, which are highlighted on slide four. First, we have continued to grow in our core products, with higher wallboard sales as a percentage of gypsum-associated shipments versus the prior year. reflecting at least in part our strength in serving the nation's largest home builders as they too gain share and as they report a more positive outlook. We've also increased share in steel framing, according to the Steel Framing Industry Association data, and we've continued to gain share in ceilings, as evidenced by manufacturing partner disclosures and channel checks. Second, our team continues to put great focus on growing our complementary products category, which made up 30% of our sales for the quarter and delivered its 14th consecutive quarter of year-over-year growth. We are placing particular emphasis on tools and fasteners, heaps and stucco, and insulation, which collectively continue to grow faster than the overall category during the quarter. Third, expansion through M&A and Greenfield openings continues to be one of our key levers of growth. During the quarter, we acquired AMW Construction Supply, a highly respected distributor of tools and fasteners and other complementary products in the Phoenix, Arizona market. And we also opened two new Greenfield locations. Post-COVID, we have acquired 14 companies, representing a total of 30 distribution centers and 91 AIM stores, with estimated annual revenues at the time of deal closings of nearly $600 million. And we've also opened 26 Greenfield locations. we continue to have a promising pipeline of opportunities and an appetite to expand our footprint in key markets where we are under-penetrated, while we also broaden our service territories and product offerings in existing markets. Finally, we're successfully driving improved productivity and profitability throughout the business, reducing complexity costs and becoming more efficient and effective operators with enhanced tools and data to facilitate better decision-making and offerings that provide an overall enhanced customer experience. The benefits of these efforts are evident in the levels of SG&A we recorded this quarter, which Scott will detail during his remarks. Before turning the call over, I want to thank our team for maintaining our high level of performance and commitment to delivering outstanding customer service during the quarter. We have demonstrated our flexibility and expertise in supporting all of our end markets and believe that we are well positioned as demand dynamics progress in the coming quarters. With that, I will turn the call over to Scott.