Noah Merkousko's questions to GMS Inc (GMS) leadership • Q1 2025
Question
Noah Merkousko of Robert W. Baird & Co. inquired about the gross margin outlook for the remainder of the fiscal year, given the Q2 guide is below the previous 32% target. He also asked about SG&A dynamics, specifically the impact of steel price deflation and whether a mix shift to residential was providing any cost relief.
Answer
CEO John Turner explained that the lower gross margin outlook is primarily due to a slower-than-expected realization of wallboard price increases, a process hampered by volume headwinds. He affirmed that GMS is a '32-plus percent gross margin company' in the long run. Regarding SG&A, Turner confirmed that steel price deflation is masking the cost benefits from any mix shift. He also noted that the company is implementing a $25 million cost reduction program to address the challenging volume environment.