GMS Gears Up for Secondary Offering

Print Email

GMS Inc. (NYSE: GMS) recently filed an amended S-1 form with the U.S. Securities and Exchange Commission (SEC) for a secondary offering. No pricing details were given in the filing, but the company plans to offer 5.0 million shares with an overallotment option of 750,000 shares. At the most recent closing price $32.87, the entire offering is valued up to $189.0 million.

The underwriters for the offering are Barclays, RBC Capital Markets, Credit Suisse, Raymond James, Baird and Stephens.

This is the leading North American distributor of wallboard and suspended ceilings systems. Its product offerings are designed to provide a comprehensive solution for its core customer, the interior contractor who installs these products in commercial and residential buildings.

Since its founding in 1971, it has grown its business from a single location to over 200 branches across 42 states through a combination of both organic growth and acquisitions. Over time, the company has increased its market share in the distribution of wallboard and ceilings, which management currently estimates is 15% for wallboard, based on volume produced in the United States and Canada, and 17% for ceilings, based on sales dollars in North America.

In the filing, GMS detailed its finances as follows:

For fiscal 2016, we generated $1.9 billion in net sales, $12.6 million of net income and $138.2 million of Adjusted EBITDA. … Net sales and Adjusted EBITDA grew 18.3% and 30.6%, respectively, in fiscal 2016 as compared to fiscal 2015. From the beginning of fiscal 2013 through fiscal 2016, net sales and Adjusted EBITDA grew at a compound annual growth rate, or CAGR, of 17.0% and 43.7%, respectively.

The company will not receive any proceeds from the offering; instead the selling stockholders will receive all the proceeds.

Shares of GMS closed most recently at $32.87, with a consensus analyst price target of $37.17 and in a 52-week trading range of $19.28 to $36.99.