TLDR
- GMS Inc. reported Q4 net sales of $1.3 billion with solid free cash flow.
- Achieved $183.4 million in quarterly free cash flow, 167% of adjusted EBITDA.
- Reduced net debt by over 10%, leverage ratio at 2.4 times adjusted EBITDA.
- Received unsolicited $95.20/share acquisition offer from QXO, Inc.
- Board reviewing offer; shareholders advised no action required for now.
GMS Inc. (NYSE: GMS) stock surged 10.61% to close at $81.01, and soared another 17.27% to $95.00 in after-hours trading on June 18, 2025.
The positive movement follows a strong fiscal Q4 earnings report and an unsolicited $95.20 per share acquisition offer from QXO, Inc. The company reported full-year net sales of $5.5 billion, slightly above last year, with organic sales at $5.2 billion, down 5.4% on a same-day basis.
Earnings Date and Financial Highlights
GMS posted quarterly net sales of $1.3 billion and an adjusted EBITDA of $109.8 million. Net income for Q4 came in at $26.1 million, despite economic headwinds. The company recorded $196.8 million in cash from operating activities during Q4, with an exceptional free cash flow conversion of $183.4 million, representing 167% of adjusted EBITDA.
GMS Inc., $GMS, Q4-25. Results:
📊 Adj. EPS: $1.29 🟢
💰 Revenue: $1.33B 🟢
📈 Net Income: $26.1M
🔎 Strong cash flow despite end market softness; growth in Ceilings and Complementary Products offset by Steel and Wallboard declines. pic.twitter.com/FpVsYS3ViL— EarningsTime (@Earnings_Time) June 18, 2025
Annual performance reflected similar resilience, with adjusted EBITDA of $500.9 million and a free cash flow of $336.1 million, or 67% of adjusted EBITDA. A notable achievement was the reduction of net debt by more than 10% during the quarter, bringing its leverage ratio down to 2.4 times adjusted EBITDA.
Strategic Initiatives and Operational Efficiency
GMS attributed improved financials to its $55 million cost savings initiative during fiscal 2025. The firm also benefited from volume improvements in Ceilings and Complementary Products, especially within Architectural Specialties projects. However, organic sales saw an 8.3% per day decline in Q4 due to persistent macroeconomic challenges. Wallboard sales fell 10.1% year-over-year, with single-family volumes in the U.S. down 1.9% per day.
Unsolicited Acquisition Offer from QXO, Inc.
A significant development was GMS’s confirmation of receiving an unsolicited acquisition proposal from QXO, Inc., offering $95.20 per share in cash for all outstanding GMS shares. The Board of Directors, with counsel from independent legal and financial advisors, is carefully reviewing the proposal. Shareholders have been advised not to take any action until the review concludes.
Market Sentiment and Analyst Views
Analyst estimates place the average one-year price target at $87.47, implying a potential upside from the closing price but a downside from the after-hours price. GuruFocus’ GF Value suggests a fair value of $77.64, signaling caution at the current elevated levels. The consensus rating from brokerage firms stands at 2.4, or “Outperform.”
Outlook
While economic uncertainty persists, GMS’s strategic cost management, debt reduction, and focus on profitable product lines like Ceilings provide a strong foundation. The pending acquisition proposal from QXO adds an element of intrigue, potentially driving near-term stock price volatility as shareholders await the Board’s decision.
