- **Record Cash Flow**: Q4 free cash flow of $183.4M (167% of EBITDA), highest in company history. Full-year free cash flow conversion 67%. 
- **Cost Efficiency**: $55M annualized cost savings (including $25M in Q4), reducing SG&A by 130bps. 
- **Market Recovery Signals**: Single-family Wallboard volumes expected flat to up in Q1; data center backlog supports complementary products. 
- **Resilient Pricing**: Wallboard price/mix up 1% QoQ; ceilings price/mix up 6.8% YoY. 
- **Debt Management**: Net debt reduced 10% to within 1.5-2.5x EBITDA target range. 


**【CEO Summary Section】**
- **Full Year Performance**: Net sales of $5.5 billion, up marginally YoY, driven by acquisitions. Organic sales declined 5.4% on a same-day basis. Adjusted EBITDA was $500.9 million, with free cash flow of $336.1 million (67% of EBITDA). Fourth-quarter net sales were $1.3 billion, with organic sales down 8.3% per day. Free cash flow hit a record $183.4 million (167% of EBITDA). 
- **Strategic Initiatives**: $55 million in annualized cost savings (including $25M in Q4). Debt reduced by 10% to within target range of 1.5-2.5x EBITDA. Share repurchases totaled $164.1 million for the year. 
- **Market Outlook**: Cautiously optimistic on nearing the bottom of the cycle. Single-family Wallboard volumes expected to be flat to up slightly in Q1. Multifamily and commercial demand remains soft but may stabilize by early 2026. Data center backlog supports complementary products growth. 

**【CFO Financial Commentary】**
- **Q4 Results**: Net income of $26.1 million ($0.67 EPS) vs. $56.4 million ($1.39 EPS) YoY. Adjusted EBITDA of $109.8 million (8.2% margin) vs. $146.6 million (10.4% margin) YoY. 
- **Product Performance**: 
  - **Wallboard**: Sales $526.6M (-10.1% YoY), volumes down 12.1%, but price/mix up 1%. 
  - **Ceilings**: Sales $201M (+6.4% YoY), volumes up 1.4%, price/mix up 6.8%. 
  - **Steel Framing**: Sales $189.2M (-14.2% YoY), volumes down 2.6%, price/mix down 10.2%. 
  - **Complementary Products**: Sales $416.9M (flat YoY), 20th consecutive quarter of per-day growth. 
- **Cost Management**: SG&A expenses down $0.4M YoY, driven by $55M in cost savings. Free cash flow conversion of 167% highlights operational discipline. 
- **Guidance**: Q1 2026 EBITDA expected $132-137M (9.5-9.8% margin). Full-year capex $40-45M. 

**【Q&A Highlights】**
- **Single-Family Share Gain**: Driven by regional focus, builder partnerships, and acquisitions (e.g., R.S. Elliott). Q1 volumes expected flat to up slightly. 
- **Cost Savings Permanence**: 50% of cuts likely permanent; $25M Q4 savings to fully materialize in Q1. 
- **Tariffs & Trade Policy**: Minimal direct impact; primary risk is demand weakness. 
- **Market Recovery**: Single-family recovery tied to interest rates; multifamily starts may bottom in 2025. Commercial activity linked to public sector projects. 
- **Pricing Dynamics**: Wallboard price resilience due to capacity constraints; steel framing pricing uncertain but expected stable. 
- **Complementary Products Growth**: Targeting 2x core product growth; tools/fasteners, insulation, and EIFS/stucco key focus areas. 
- **Liquidity**: $631.3M available under revolver; disciplined cap allocation to debt reduction and M&A. 


GMS Inc. (GMS) Q4 2025 Earnings Call Transcript

- **Q3 Results**: Flat revenue ($1.3B) vs. YoY, organic sales down 6.7%. Gross margin 31.2% (-180bps YoY).
- **Cost Savings**: $50M annualized cost reductions, $83.1M free cash flow (89% of EBITDA).
- **Key Trends**: Wallboard multifamily down 31%, ceilings architectural specialties up 11%, steel framing volumes down 11.6%.
- **Q4 Outlook**: Organic sales -10-12%, EBITDA $100-110M, 8% margin.
- **Strategic Focus**: Complementary products growth (+5.3%), M&A in EIFS/stucco, 60-65% free cash flow conversion.
- **Leverage**: 2.4x net debt, targeting 1.5-2.5x for M&A.

**【CEO Summary Section】**
- Q3 net sales of $1.3 billion, flat year-over-year, with organic sales down 6.7% due to macro challenges. 
- Gross margin of 31.2% declined 180bps YoY, driven by weak demand and cost pressures.
- Implementing $20M in additional annualized cost reductions, bringing total to $50M.
- Free cash flow of $83.1M (89% of EBITDA), highest Q3 level since COVID.
- Expect Q4 organic sales down low double digits, gross margin ~31.2%, EBITDA $100-110M.

**【CFO Financial Commentary】**
- GAAP net loss of $21.4M vs. $51.9M YoY, due to $42.5M goodwill impairment.
- Adjusted EBITDA of $93M (-27.3% YoY), margin 7.4% vs. 10.2%.
- Cash on hand $59M, liquidity $469.7M, net debt leverage 2.4x.
- Free cash flow expected 60-65% of EBITDA for FY25.
- Capital expenditures $45-50M for FY25.

**【Key Market Insights】**
- Wallboard: Organic volumes down 7.4%, multifamily down 31.4%, commercial down 9.4%.
- Ceilings: Strong architectural specialties mix (+11.1% price/mix), driven by data centers and healthcare.
- Steel framing: Volumes down 11.6%, pricing deflation 6% YoY.
- Complementary products: 19th consecutive quarter of growth (+5.3% YoY).

**【Q&A Highlights】**
- Steel pricing: Expect post-Q4 inflation due to tariffs, but no meaningful impact in Q4.
- Cost reductions: $30M fully realized, $20M to mature in Q1 FY26.
- Commercial outlook: Down 20% YoY in Q4, driven by office and retail weakness.
- M&A: Focus on EIFS/stucco/insulation, targeting 1.5-2.5x leverage.
- EBITDA margin: 9%+ in FY25, long-term 10%+ with leaner operations.

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