Executive Summary

Q2 FY2025 delivered $1.47B net sales (+3.5% YoY) with diluted EPS of $1.35 (vs. $1.97 YoY) as gross margin contracted 90 bps to 31.4% on softer end-market demand, steel deflation, unrealized vendor incentives, and hurricane-related disruptions; Adjusted EBITDA was $152.2M (10.3% margin) .
Steel price deflation (~~$18M sales headwind) and Hurricanes Helene/Milton (~~$20M sales and ~$6M adjusted EBITDA headwind) were notable drags; management cited pockets of strength in data centers, education, healthcare, and CHIPS/IRA-backed projects .
Liquidity remained solid: cash $83.9M, available revolver liquidity $458.6M; net debt leverage increased to 2.3x on M&A and buybacks; Board renewed share repurchase authorization up to $250M (replacing the prior program) .
Q3 FY2025 outlook: gross margin 31.5%–31.7% and Adjusted EBITDA $113–$118M; expected mix: Wallboard organic volumes down mid- to high-single-digits (price/mix up slightly), Ceilings volumes up high-single-digits, Steel volumes down low-single-digits with price/mix down low- to mid-single-digits, Complementary up ~10% .
Wall Street consensus from S&P Global for Q2 FY2025 was not available for GMS (mapping unavailable); therefore, beats/misses vs. estimates cannot be assessed (S&P Global consensus unavailable).

What Went Well and What Went Wrong

What Went Well
- Pricing resilience and sequential progress: like-for-like Wallboard prices improved sequentially; average realized Wallboard price reached $481 per 1,000 sq. ft.; Ceilings price/mix up 5.5% with organic sales +1.6% YoY .
- Strategic momentum: R.S. Elliott acquisition (EIFS/stucco in FL), one new greenfield in Q2 and two more post-quarter; share repurchase program renewed to $250M, signaling confidence .
- Cost actions tracking better: $30M annualized cost savings program (up from $25M initially), with roughly half run-rate captured in Q2; expected full capture by Q3 .
What Went Wrong
- End-market softness and weather: multi-family and commercial weakened; hurricanes closed >40 locations at least one day and reduced Q2 sales by ~$20M and adjusted EBITDA by ~$6M .
- Steel deflation and incentives: YoY steel deflation reduced sales by ~$18M; unrealized manufacturer purchasing incentives and higher accident claims pressured margins/SG&A leverage .
- Margin compression: gross margin fell 90 bps YoY to 31.4% on price/cost dynamics in Wallboard, mix shift to single-family, unrealized incentives, and one-time operational impacts; adjusted EBITDA margin declined to 10.3% from 11.8% .

Financial Results

Headline metrics (YoY and sequential trend)

Metric	Q2 FY2024	Q1 FY2025	Q2 FY2025
Net Sales ($USD Billions)	$1.421	$1.448	$1.471
Gross Margin (%)	32.3%	31.2%	31.4%
Net Income ($USD Millions)	$81.0	$57.2	$53.5
Diluted EPS ($)	$1.97	$1.42	$1.35
Adjusted Net Income ($USD Millions)	$98.4	$77.6 (new presentation)	$80.1
Adjusted Diluted EPS ($)	$2.40	$1.93 (new presentation)	$2.02
Adjusted EBITDA ($USD Millions)	$167.6	$145.9	$152.2
Adjusted EBITDA Margin (%)	11.8%	10.1%	10.3%
Cash from Operations ($USD Millions)	$118.1	$(22.9)	$115.6
Free Cash Flow ($USD Millions)	$102.1	$(31.9)	$101.5
Net Debt Leverage (x)	1.5x	2.1x	2.3x

Product category net sales (YoY)

Product	Q2 FY2024 ($USD Millions)	Q2 FY2025 ($USD Millions)	YoY Change
Wallboard	$585.2	$582.1	(0.5%)
Ceilings	$175.3	$204.4	+16.6%
Steel Framing	$232.1	$217.4	(6.3%)
Complementary Products	$428.3	$466.8	+9.0%
Total	$1,420.9	$1,470.7	+3.5%

Selected KPIs and capital allocation

KPI	Q2 FY2024	Q2 FY2025
Avg. realized Wallboard price ($/1,000 sq ft)	—	$481
Cash ($USD Millions)	$76.5	$83.9
Total Debt ($USD Millions)	$1,076.1	$1,481.4
Available Liquidity ($USD Millions)	—	$458.6
Shares Repurchased (shares / $USD Millions)	—	593,168 / $52.3

Notes: YoY and sequential comparisons reflect underlying drivers including $~18M steel deflation impact to sales and $~20M hurricane impact to sales; hurricanes also reduced adjusted EBITDA by ~$6M .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Gross Margin	Q3 FY2025	Not provided	~31.5%–31.7%	New
Adjusted EBITDA ($M)	Q3 FY2025	Not provided	$113–$118	New
Wallboard (organic volume)	Q3 FY2025	Not provided	Down mid- to high-single-digits; total vols incl. M&A down low- to mid-single-digits	New
Wallboard price/mix	Q3 FY2025	Not provided	Up slightly YoY	New
Ceilings	Q3 FY2025	Not provided	Volumes up high-single-digits; price/mix mid-single-digit improvement	New
Steel Framing	Q3 FY2025	Not provided	Volumes down low-single-digits; price/mix down low- to mid-single-digits	New
Complementary Products	Q3 FY2025	Not provided	Net sales up ~10% YoY (M&A-driven)	New
Free Cash Flow as % of Adj. EBITDA	FY2025	~60% (historical indication)	~60%–65%	Raised vs. historical norm
Capital Expenditures ($M)	FY2025	Not provided	~$45–$50	New
Tax (normalized cash tax rate)	Ongoing	~26%	~26%	Maintained

No explicit revenue, OpEx, OI&E, dividend guidance was provided.

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 FY2024 and Q1 FY2025)	Current Period (Q2 FY2025)	Trend
Wallboard pricing	Q4: Lag to realize manufacturer increases; benefits expected later summer . Q1: Prices realized sequentially but mix to single-family flattened averages .	Like-for-like pricing up slightly; average realized $481/1,000 sq ft; expect renewed manufacturer increases in 1H CY2025 .	Sequential improvement; still mix headwind.
Steel pricing	Q4: Deflation a key headwind . Q1: ~$40M sales headwind from steel deflation .	~$18M sales headwind; slight sequential stabilization; typical seasonal dip expected in Q3 .	Stabilizing from bottom near term.
Demand/macro	Q4: Anticipated decline in multi-family/commercial; single-family improving . Q1: Softer activity across end-markets .	Multi-family and commercial softened; hurricanes disrupted activity; pockets of strength in data centers, education, healthcare, CHIPS/IRA .	Near-term weak; selective strength.
Cost actions	Q1: Initiated $25M annualized savings .	Savings tracking to ~$30M annualized; ~half realized in Q2; rest expected by Q3 .	Acceleration; execution ongoing.
M&A/platform expansion	Q4: Acquired Kamco; announced Yvon . Q1: Closed Yvon; acquired R.S. Elliott .	R.S. Elliott completed; 1 greenfield in Q2 and 2 more post-quarter .	Active/consolidating.
Tariffs/steel	—	Tariffs on steel seen as likely net positive for distribution; GMS sources framing domestically; indirect impact via cold-rolled steel .	Potential tailwind if tariffs persist.
Weather	—	Hurricanes Helene/Milton materially impacted a large region and operations .	Transitory headwind.

Management Commentary

“Prices remained resilient across our major product lines… Partially offsetting this growth were soft multi-family activity and softening commercial shipments. Hurricane-related slowdowns also significantly impacted one of our largest and fastest-growing regions…” — John C. Turner, Jr., CEO .
“Gross margin for the quarter was 31.4%, up 20 bps sequentially… down 90 bps from a year ago… attributable to a mix shift… combined with price and cost dynamics in Wallboard…” — CEO .
“We estimate that Hurricane Helene and Milton negatively impacted our net sales… by approximately $20 million and adjusted EBITDA by approximately $6 million…” — CEO .
“Our team worked diligently… cost savings… now believe will achieve closer to $30 million of annualized cost savings… roughly half… in the second quarter and expect the remainder… in the third quarter.” — CEO .
“Following… Kamco, Yvon and R.S. Elliott… our net debt leverage was 2.3x… Free cash flow of $101.5 million… Board… renewed our share repurchase program… up to $250 million.” — CFO .

Q&A Highlights

Wallboard price-cost: management sees about “60 bps of gross margin with still price cost attributed to Wallboard,” with sequential improvement but constrained by weak demand and mix; any sustained volume growth would aid further price realization .
Steel and tariffs: steel prices “bouncing along the bottom”; tariffs would likely be supportive for distribution; GMS does not source framing internationally; broader rolled steel market affects indirectly .
End-market outlook: commercial and multi-family remain challenged until rate/lending backdrop improves; single-family roughly flat near term; data centers/healthcare/education better segments .
SG&A leverage: nearing neutral in next quarter with improvements expected beyond, contingent on volumes; cost savings north of $30M provide cushion through the bottoming phase .
Ceilings trajectory and M&A: Ceilings holding up better given project mix (data centers, healthcare, education) and strength of Kamco franchise; M&A pipeline remains active with leverage targeted around 1.5–2.5x and flexibility to balance buybacks and deals .

Estimates Context

S&P Global/Capital IQ consensus for Q2 FY2025 EPS and revenue was not retrievable due to a mapping issue for GMS; as such, we cannot provide a beats/misses assessment for this quarter (S&P Global consensus unavailable).

Key Takeaways for Investors

Q2 showed resilient pricing but weaker volumes and mix; transitory weather and incentive shortfalls compounded macro softness, compressing margins and EPS YoY .
The narrative shifts toward stabilization: steel appears to be bottoming sequentially; like-for-like Wallboard pricing improved; Ceilings remains a relative outperformer on favorable project mix .
Q3 guide implies seasonal/soft-quarter trough dynamics (GM ~31.5%–31.7%, Adj. EBITDA $113–$118M), setting up 2H CY2025 recovery optionality if rates ease and housing sentiment improves; monitor cadence of Wallboard price actions in 1H CY2025 .
Balance sheet/liquidity remain sound to fund consolidation and buybacks; renewed $250M authorization is an incremental floor under shares during cyclical softness .
Structural cost actions (now ~$30M run-rate, with further actions added in Q3) should support margins through the downcycle and provide operating leverage on recovery .
Watch data center/healthcare/education exposure and CHIPS/IRA-backed projects as offsets to weaker office/multi-family; hurricane impacts should fade but highlight regional exposure risks .
Without S&P consensus, trading setups hinge more on reading-through Q3 margin/EBITDA cadence and early signs of rate-driven single-family volume uplift and vendor pricing dynamics (rebates/incentives) .

References:  
- Q2 FY2025 8-K and press release: **[1600438_0001104659-24-125727_tm2430203d1_8k.htm:0]**, **[1600438_6ed5b06d0a47459ebb5dd503cb072d34_0]**  
- Q2 FY2025 earnings call transcript: **[1600438_GMS_3410947_0]**  
- Q1 FY2025 press release: **[1600438_fbae119d6b5c4469a66c59e1fecaaeca_0]**  
- Q3 FY2025 press release (trend): **[1600438_1e709c22cf72471884df8a871d1b65be_0]**  
- Q4 FY2024 press release (trend): **[1600438_06f45daf645241358966ff8c9a461b71_0]**

GMS Inc. (GMS)·Q2 2025 Earnings Summary