GMS 2025 Q4 Earnings Misses Targets as Net Income Falls 53.7%

GMS Inc. (GMS) reported its fiscal 2025 Q4 earnings on June 18th, 2025. The company fell short of revenue expectations, recording $1.33 billion compared to analyst predictions. Despite the shortfall, GMS provided a bullish outlook for fiscal 2026, expecting a rebound driven by pent-up housing demand. Guidance suggests a decline in net sales and organic volumes for the upcoming quarter, while adjusted EBITDA is anticipated to be between $132 million and $137 million.

Revenue

The total revenue of GMS decreased by 5.6% to $1.33 billion in 2025 Q4, down from $1.41 billion in 2024 Q4.

Earnings/Net Income

GMS's EPS declined 51.8% to $0.68 in 2025 Q4 from $1.42 in 2024 Q4. Meanwhile, the company's net income declined to $26.09 million in 2025 Q4, down 53.7% from $56.39 million reported in 2024 Q4. The earnings performance indicates a challenging quarter for the company.

Price Action

The stock price of GMS has edged down 2.96% during the latest trading day, has climbed 4.15% during the most recent full trading week, and has climbed 5.03% month-to-date.

Post-Earnings Price Action Review

The strategy of buying GMS when revenues miss and holding for 30 days yielded strong results, with a 276.19% return and a CAGR of 30.53%. Despite experiencing a maximum drawdown of -41.72%, the strategy demonstrated good risk-adjusted returns, underscored by a Sharpe ratio of 0.78. This indicates that while the investment carries significant volatility, the returns have compensated for the risk. Investors observing this strategy might find value in capitalizing on temporary dips in GMS's stock price, showcasing the potential for lucrative returns in the 30-day post-earnings period.

CEO Commentary

John C. Turner, President and CEO, highlighted the company's performance amid a challenging macroeconomic backdrop, noting that net sales reached $5.5 billion, boosted by recent acquisitions, despite a 5.4% decline in organic sales. He emphasized the importance of operational discipline in cash flow generation, reporting a record high free cash flow conversion during the quarter. Turner expressed cautious optimism about nearing the bottom of the cycle, citing pent-up demand for housing as a potential growth driver. He reaffirmed the strategic focus on customer service, cost reduction, and operational efficiency to capitalize on future growth opportunities.

Guidance

GMS expects net sales for the first fiscal quarter to decline low to mid-single digits, with organic volumes projected to be down mid- to high single digits. The adjusted EBITDA is anticipated to range between $132 million and $137 million, with margins around 9.5% to 9.8%. Capital expenditures for fiscal 2026 are forecasted to be between $40 million and $45 million, while cash flow generation is expected to remain strong at 60% to 65% of adjusted EBITDA for the full year.

Additional News

Recently, GMS Inc. has been the subject of a significant acquisition offer from QXO, Inc., proposing to acquire all outstanding shares for $95.20 per share in cash. This offer follows GMS's better-than-expected quarterly earnings report and reflects QXO's aggressive consolidation strategy within the building materials sector. Additionally, GMS has completed strategic acquisitions and implemented $25 million in annualized cost reductions to bolster its operational efficiency. Furthermore, GMS's strategic capital allocation included executing $164.1 million in stock repurchases, emphasizing its commitment to enhancing shareholder value.