Executive Summary

Q4 FY2025 revenue was $1.33B (-5.6% y/y); diluted EPS was $0.67 (vs $1.39 y/y); Adjusted EBITDA was $109.8M (8.2% margin) as gross profit declined on lower vendor incentive income and steel price deflation .
Results landed at the high end of management’s Q3 guide: Adjusted EBITDA delivered $109.8M vs $100–$110M guided, gross margin ~31.2% as guided; net sales decline was better than “down high-single-digits” outlook at -5.6% y/y .
Product mix: Ceilings grew 6.4% and Complementary was essentially flat; Wallboard (-10.1%) and Steel Framing (-14.2%) were pressured by end-market softness and steel deflation .
Cash generation remained a standout: Q4 FCF was $183.4M and operating cash flow $196.8M; net debt leverage was 2.4x; the company realized another $25M of structural cost reductions in Q4 (total $55M annualized in FY2025) .
Potential stock catalyst: following results, QXO proposed an unsolicited $95.20/share all-cash acquisition; GMS confirmed receipt and said the Board will review the proposal .

What Went Well and What Went Wrong

What Went Well

Cost actions ramped: another ~$25M annualized cost-out in Q4 (total ~$55M in FY2025) with SG&A dollars down y/y despite acquisitions; management emphasized technology and process investments enabling savings . Quote: “Leveraging investments in technology and efficiency optimization, the Company implemented an additional estimated $25 million in annualized cost reductions” .
Mix resilience in Ceilings and Complementary: Ceilings +6.4% y/y with favorable architectural specialties mix; Complementary nearly flat (-0.2%) and continued long-run share focus . Quote: “achieved volume growth for the quarter in Ceilings and Complementary Products, with resilient or expanded pricing in all major product categories except for Steel Framing” .
Strong cash generation and liquidity: Q4 CFO $196.8M and FCF $183.4M; ~$631M revolver availability; balance sheet has no near-term maturities . Quote: “post-Covid record level of free cash flow conversion of Adjusted EBITDA recorded for the quarter” .

What Went Wrong

End-market softness: Net sales -5.6% y/y and organic -9.7% on lower activity; single-family, multifamily and commercial all pressured; steel deflation reduced Q4 net sales by ~$22M .
Margin compression: Gross margin fell 70 bps to 31.2% on lower vendor incentives and steel deflation; Adjusted EBITDA margin down 220 bps to 8.2% .
Profitability decline and leverage: Net income fell 53.7% to $26.1M (EPS $0.67) and leverage rose to 2.4x vs 1.7x y/y on lower EBITDA (though sequential net debt reduced) .

Financial Results

Consolidated metrics (oldest → newest)

Metric	Q4 2024	Q3 2025	Q4 2025
Net Sales ($USD Millions)	$1,413.0	$1,260.7	$1,333.8
Net Income ($USD Millions)	$56.4	$(21.4)	$26.1
Diluted EPS ($)	$1.39	$(0.55)	$0.67
Gross Profit ($USD Millions)	$451.2	$393.1	$416.2
Gross Profit Margin (%)	—	31.2%	31.2%
Adjusted Net Income ($USD Millions)	$81.6	$36.2	$50.2
Adjusted Diluted EPS ($)	$2.01	$0.92	$1.29
Adjusted EBITDA ($USD Millions)	$146.6	$93.0	$109.8
Adjusted EBITDA Margin (%)	10.4%	7.4%	8.2%
Cash from Operations ($USD Millions)	$204.2	$94.1	$196.8
Free Cash Flow ($USD Millions)	$186.7	$83.1	$183.4

Notes: Q4 2025 gross margin down 70 bps y/y to 31.2% (company disclosure); prior-year exact % not stated .

Product category breakdown (Q4, y/y)

Product	Q4 2024 Net Sales ($m)	Q4 2025 Net Sales ($m)	YoY %
Wallboard	$586.0	$526.6	(10.1%)
Ceilings	$188.9	$201.0	6.4%
Steel Framing	$220.5	$189.2	(14.2%)
Complementary Products	$417.6	$416.9	(0.2%)
Total	$1,413.0	$1,333.7	(5.6%)

KPIs and balance sheet

KPI	Q4 2024	Q4 2025
Net Debt / Pro Forma Adjusted EBITDA (x)	1.7x	2.4x
Cash and Cash Equivalents ($m)	$166.1	$55.6
Liquidity (Revolver availability) ($m)	—	$631.3
Share Repurchases (Quarter)	174,555 shrs; $16.0m	348,599 shrs; $26.4m; avg $75.60
Cost Reductions (Annualized run-rate)	—	+$25m in Q4; total ~$55m in FY2025

Guidance Changes

Metric	Period	Previous Guidance	Current/Actual	Change
Net Sales (y/y)	Q4 FY2025	Down high-single-digits	(5.6%)	Better than guided
Gross Margin (%)	Q4 FY2025	~31.2%	31.2%	In line
Adjusted EBITDA ($m)	Q4 FY2025	$100–$110	$109.8	High end of range
Adjusted EBITDA ($m)	Q1 FY2026	N/A	$132–$137; margin 9.5%–9.8%; net sales down low–mid single digits; GM ~31.2%	New

Earnings Call Themes & Trends (Q2 → Q3 → Q4)

Topic	Q2 FY2025 (Dec 5)	Q3 FY2025 (Mar 6)	Q4 FY2025 (Jun 18)	Trend
Macro/Interest rates, demand	Hurricanes impacted Q2; multifamily and commercial soft; single-family flat; expected choppiness into CY2025	Demand deteriorated from Dec; weather and holiday impact ~$20m; outlook bottoming in Q4/Q1	“Nearing the bottom of this cycle,” expecting recovery into 1H CY2026, with pent-up demand	Stabilizing at trough
Steel pricing/tariffs	Steel deflation headwind; slight sequential stabilization; potential increases ahead	Expect steel inflation post-Q4 but timing uncertain; assume flat near term	Tariffs led to supplier increases; assume flat near term given weak consumption in auto/structural/appliances	Floor forming; upside later
Wallboard pricing	Like-for-like improving, lag to pass increases; capacity tightness supportive	Price resilience; vendor incentives lower; guide for stable pricing mix	Modest regional increases in May; like-for-like up ~1% q/q; success TBD	Resilient; gradual pass-through
Ceilings/Architectural specialties	Organic Ceilings +1.6% on price/mix; projects like data centers/healthcare supportive	Ceilings mix strong; some large projects; continued focus on architectural specialties	Ceilings +6.4% y/y; price/mix tailwind; ongoing focus	Positive mix tailwind
End-market color (SF/MF/Comm)	SF roughly flat; MF and commercial weaker; Canada policy support noted	MF declined sharply; office/retail weak; data centers, education, healthcare resilient; bottom over next 1–2 qtrs	SF expected flat to slightly up in FQ1; MF declines persist near term; data center backlog well into 2026	SF stabilizing; MF/Comm lag
Cost reduction/efficiency	~$30M annualized savings program underway	Added $20M, bringing run-rate to $50M; further SG&A work	Added another $25M in Q4; total $55M; ongoing subsidiary consolidation through CY2025	Increasing structural efficiency
Technology/AI	—	—	Investing in e-comm/portal; AI for automating order entry; data standardization via ERP	Digital enablement accelerating
Canada	Rate cuts and pro-development policies supporting permits	—	—	Canada supportive vs U.S.

Management Commentary

Strategy and cycle positioning: “As we begin fiscal 2026, we are cautiously optimistic that we are nearing the bottom of this cycle and believe pent-up demand will materialize as the macro-environment improves” .
Pricing and cash conversion: “resilient or expanded pricing in all major product categories except for Steel Framing… post-Covid record level of free cash flow conversion of Adjusted EBITDA recorded for the quarter” .
End-market cadence and backlog: “data center backlog… extends well into 2026” and recovery expected towards 1H CY2026 with rate decreases .
Cost-out and simplification: “another $25 million in annualized cost savings in our fiscal fourth quarter… total of $55 million… subsidiary consolidation… driving reduced administrative costs, higher inventory turnover, lower DSO” .
Digital/AI: “AI applications… to automate order entry… up to almost 20% of our accounts receivable being collected online through our portal” .

Q&A Highlights

Steel pricing timing: Management expects potential inflation from tariffs and extended rolled-steel lead times but largely post-Q4; near-term assumption is flat .
Cycle bottom and volume outlook: Team believes late Q3 into Q4/FQ1 likely the bottom; sequential patterns normal but no big rebound yet; SF stabilization, MF/Comm lag .
Cost saves permanence: Roughly half structural, half volume-related; over a longer growth run, ~50% of costs stay out, 50% variable may return .
Subsidiary consolidation: Data standardization and organizational realignment to finish by end of CY2025, with ongoing operational benefits thereafter .
Single-family share: Management cited share gains with large builders and regional positioning as drivers of expected SF volume outperformance near term .

Estimates Context

We attempted to retrieve Wall Street consensus (S&P Global) for Q4 FY2025 EPS/revenue/EBITDA, but the data feed for this ticker was unavailable in our tool at this time. As a result, we cannot formally assess beats/misses versus S&P Global consensus for this quarter. If provided, we would anchor comparisons on S&P Global data (Values retrieved from S&P Global).
Note: An external party (QXO) asserted in its proposal letter that GMS had missed EBITDA/EBIT/EPS in four of the last five quarters, but this is the bidder’s claim and not a consensus record; we present it for context only .

Key Takeaways for Investors

Execution vs guide: Delivery at the high end on Q4 EBITDA with gross margin in line suggests cost controls are taking hold even as end-markets remain weak; watch for vendor incentives to recover with volume stabilization .
Mix matters: Ceilings and Complementary (architectural specialties, EIFS/stucco, tools/fasteners) are offsetting part of Core pressure; sustaining this mix is key to margin defense .
Steel a 2H swing factor: Tariffs and supply-chain lags set a pricing floor; a demand uptick in auto/structural could lift steel framing margins later in FY2026 .
Cash optionality: Strong FCF (Q4 $183M) and liquidity ($631M) enable ongoing debt reduction, selective M&A, and buybacks while weathering the downcycle .
Structural efficiency: The ~$55M run-rate savings and subsidiary consolidation (finish by end CY2025) should enhance operating leverage into the next upcycle .
Near-term setup: Q1 FY2026 guide implies sequential EBITDA step-up (9.5%–9.8% margin) even with net sales down y/y, hinging on cost actions and pricing resilience .
Corporate event path: The QXO unsolicited $95.20 cash proposal introduces strategic optionality; Board review underway—monitor developments for valuation/support dynamics .

Appendix: Additional Context and Disclosures

Q4 product line detail and per-day sales changes, plus organic vs reported, are provided in the company’s release; steel price deflation reduced Q4 net sales by an estimated $22M .
Liquidity and leverage: Cash $55.6M; revolver availability $631.3M; net debt/Pro Forma Adjusted EBITDA 2.4x at April 30, 2025 .
Q3 context: Non-cash goodwill impairment of $42.5M; weather and holiday impacts; Adjusted EBITDA $93.0M (7.4% margin) .

Sources: GMS Q4 FY2025 Form 8-K and press release ; GMS press release (Q4 FY2025) ; Q4 FY2025 earnings call transcript ; Q3 FY2025 materials and press release ; Q2 FY2025 call ; QXO proposal and GMS confirmation .

GMS Inc. (GMS)·Q4 2025 Earnings Summary