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NEW YORK -GMS Inc. (NYSE:GMS), a leading North American specialty building products distributor, reported mixed third quarter fiscal 2025 results on Thursday, with earnings beating estimates but revenue coming in slightly below expectations as the company navigated a challenging market environment.
The company’s stock fell 4.99% in premarket trading following the earnings release.
The company reported adjusted earnings per share of $0.92, surpassing the analyst consensus estimate of $0.91. However, revenue of $1.26 billion narrowly missed expectations of $1.31 billion.
GMS maintained relatively flat revenue compared to the prior year period, with total net sales increasing 0.2% to $1.26 billion. Organic net sales declined 6.7% due to softer demand across residential and commercial markets.
"Our results in the quarter reflect the impact of soft end market demand and steel pricing, both of which deteriorated meaningfully during the last half of the quarter, ultimately driving both lower than expected sales and gross margin compression," said John C. Turner, Jr., President and CEO of GMS.
The company saw pricing resilience in its Wallboard and Ceilings segments, which helped offset some of the volume declines. Ceilings sales increased 16% year-over-year to $180.7 million, while Wallboard sales decreased 3.6% to $501.7 million.
GMS is implementing additional cost reduction measures expected to generate $20 million in annualized savings, bringing total annualized cost reductions to $50 million since the start of the fiscal year.
GMS maintained a solid balance sheet with net debt leverage of 2.4 times at quarter-end.
Looking ahead, management expects pricing resilience in Wallboard and Ceilings to continue in the fourth quarter, while broader construction market conditions remain challenged.
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