GMS Inc. Posts Solid Q4 2025 Earnings Amid Challenging Market Conditions
GMS Inc., a leading building materials distributor in North America, reported solid earnings for its fourth quarter and full year fiscal 2025, despite facing continued macroeconomic challenges in the industry.
In a conference call to discuss the company's quarterly results, GMS President and Chief Executive Officer John Turner highlighted the resilience of the business, saying: "I'll begin by reviewing our full year and fourth quarter performance, which overall, despite a continued challenging macro backdrop, came in at the higher end of the expectations we provided in March."
According to the company's press release, GMS reported net sales of $5.5 billion for the full year, up marginally from the prior year, driven by positive contributions from recent acquisitions, including Kamco and Yvon Building Supply. Organic sales were down 5.4% on a same-day basis compared to the prior year.
For the fourth quarter, GMS reported net sales of $1.3 billion, with organic sales declining 8.3% per day. Net income was $26.1 million, and adjusted EBITDA was $109.8 million, coming in at the high end of the company's outlook.
"Our cash flow generation continues to demonstrate our operational discipline through this down cycle," Turner said. "We generated $196.8 million of cash from operating activities and $183.4 million or 167% of adjusted EBITDA of free cash flow during the quarter, which was the highest level of quarterly free cash flow conversion in our company's history."
One bright spot for GMS was its Ceilings and Complementary Products segment, which saw volume improvement during the quarter. Turner attributed this to the continued benefits of the addition of Kamco, combined with a strategic focus on Architectural Specialties projects.
In Wallboard, however, the implementation of manufacturer price increases came later than expected, resulting in only modest pricing actions in May. The company continues to work with customers to affect these increases and protect its margins.
Looking ahead, Turner said GMS is "focused on protecting our margins" as suppliers navigate tariff actions that could lead to further price increases. Despite the challenges, the company remains optimistic about its prospects for the coming year.
