How did GMS perform in Q4 2024 compared to forecasts?

GMS Inc. faced challenges in Q4 2024 as evidenced by lower-than-expected net income and revenue compared to the previous year, despite a slight increase in net sales.

1. **Net Income and Revenue Performance**:
- GMS reported net income of $53.5 million for Q2 2025, which is a decrease from the $80.96 million reported in the same period the previous year.
- The net sales for the quarter were $1,470.8 million, reflecting a 3.5% increase year-over-year, primarily driven by contributions from recent acquisitions and resilient pricing in certain product categories.
- However, when comparing Q2 2024 to Q2 2023, net income decreased by 33.9%, and organic sales fell by 4.6% due to hurricanes and softening demand, especially in multifamily and commercial markets.

|code|Ticker|Name|Date|Total Revenue|Net Income|market_code|
|---|---|---|---|---|---|---|
|GMS|GMS.N|GMS|2024 Q1|1.4096E9|8.683E7|169|
|GMS|GMS.N|GMS|2024 Q2|1.42093E9|8.0957E7|169|
|GMS|GMS.N|GMS|2024 Q3|1.258348E9|5.1905E7|169|
|GMS|GMS.N|GMS|2024 Q4|1.413029E9|5.6387E7|169|

|code|Ticker|Name|Date|Net Income YoY|Total Revenue YoY|market_code|
|---|---|---|---|---|---|---|
|GMS|GMS.N|GMS|2024 Q1|-2.9507097351067397|3.681136373499231|169|
|GMS|GMS.N|GMS|2024 Q2|-21.51755159811154|-0.7022465039668646|169|
|GMS|GMS.N|GMS|2024 Q3|-19.868776534156694|1.922052003129713|169|
|GMS|GMS.N|GMS|2024 Q4|-25.40711441535592|8.352644195009287|169|

2. **Gross Profit and Margin**:
- Gross profit for the quarter was $461.1 million, indicating a slight increase of 0.5% compared to the previous year.
- The gross margin decreased by 90 basis points year-over-year to 31.4%, primarily due to cost-price dynamics and a shift in demand from commercial to single-family deliveries.
3. **Operating Expenses and Profitability**:
- Selling, general, and administrative expenses increased to $324.225 million, primarily due to incremental expenses from acquisitions and severance costs related to cost reduction initiatives.
- Adjusted EBITDA decreased by 9.2% year-over-year to $152.2 million, with an EBITDA margin of 10.3% compared to 11.8% a year ago.
4. **Cash Flow and Financial Position**:
- Cash provided by operating activities was $92,662,000, while cash used in investing activities was $233,189,000, largely due to acquisitions.
- The company maintained a strong balance sheet with $83.9 million in cash and $458.6 million of available liquidity under revolving credit facilities.

In conclusion, while GMS experienced a slight increase in net sales and gross profit, the decrease in net income and gross margin, along with increased operating expenses, indicates a challenging operating environment in Q4 2024. The company's strategic initiatives, such as acquisitions and expanding its platform, have shown resilience in navigating these challenges.