Gms Group Co., Ltd. · TSE:544A
Gms — Investor Presentation (March 2017)
34 slides from Gms's investor presentation, Mar 22, 2017
Slide 1: Safe Harbor and Basis of Presentation
Safe Harbor and Basis of Presentation Forward-Looking Statement Safe Harbor - This presentation includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All of these forward-looking statements are based on estimates and assumptions made by our
Slide 2: GMS at a Glance
GMS at a Glance ($ in millions, April FYE) #1 North American specialty distributor Other 23% of interior construction products (1) $2,231 Steel Framing 16% Balanced mix of commercial and residential construction and of new construction and R&R $1,162 Critical link between suppliers and highly fragme
Slide 3: National Platform With Local Presence And Independent Brands
National Platform With Local Presence And Independent Brands GMS has an integrated national platform, but operates through over 50 local brands that are highly regarded in their markets Branch managers are empowered and incentivized to run operations like entrepreneurs within parameters of the overa
Slide 4: Product Overview
Product Overview Primarily consists of complementary interior construction products, including joint compound, finishing materials, tools and fasteners, safety products and EIFS (exterior insulation and finishing system) #1 Market Position Suspended ceiling systems primarily comprised of mineral fib
Slide 5: A One-Stop-Shop for the Interior Contractor
A One-Stop-Shop for the Interior Contractor GMS Serves as a Critical Link Between Suppliers and a Highly Fragmented Customer Base - Specialty wallboard distributors lead the wallboard distribution channel with ~65% - Specialty distributors account for ~90% of ceilings distribution channel Steel Fram
Slide 6: Highly Attractive Industry Structure
Highly Attractive Industry Structure Number of U.S. suppliers declined from 12 in late 1990s to 7 today The top 4 represent ~76% of the market (1) Highly consolidated supplier base(2) Average price increase of ~3% annually since 2007 (3) GMS maintains a strong, long-standing relationship with the su
Slide 7: Leading Specialty Distributor Poised for Continued Growth
Leading Specialty Distributor Poised for Continued Growth Market Leader with Significant Scale Advantages – #1 North American Distributor of Wallboard and Ceilings Differentiated Service Model Drives Market Leadership and Strong Gross Margins Multiple Levers to Drive Above-Market Growth – Market Sha
Slide 8: Market Leader with Scale Advantages
Market Leader with Scale Advantages More than 200 branches across 42 states #1 position in wallboard and ceilings with approximately ~14% and ~16% market share, respectively National scale and leading market positions drive: - - - Purchasing advantage over smaller competitors Access to market leadin
Slide 9: Differentiated Service Model Drives Market Leadership
Differentiated Service Model Drives Market Leadership reaching the end customer support, expertise, and sourcing entiated Weight And Delivery Requirements ce Model execution technology and equipment 10 Logistics Execution is Critical Given Reputation for best-in-class delivery Strong processes, sequ
Slide 10: Best-in-Class Delivery Execution Drives Margin
Best-in-Class Delivery Execution Drives Margin Distributing wallboard requires a high degree of logistics and service expertise due to: - Product characteristics: High weight to value ratio, easily damaged and cannot be left outside - Delivery requirements: Typically delivered with special equipment
Slide 11: Strong, Improving Gross Margin Profile
Strong, Improving Gross Margin Profile $2,231 $1,353 FY-12 FY-13 FY-14 FY-15 FY-16 LTM Q3 17 Net Sales Gross Margin $308 $306 $304 $289 $253 $219 leverage on rising sales FY-12 FY-13 FY-14 FY-15 FY-16 LTM Q3 17 Wallboard Price/MSF Gross Margin (1) Gross margin represents the total gross margin of th
Slide 12: Multiple Levers to Drive Growth
Multiple Levers to Drive Growth Continued Market Share Gains Greenfield Branch Openings Capitalize on “Other Products” Category Growth Opportunities $194 Strategic Acquisition Opportunities in Highly Fragmented Market Expanding in New and Existing Markets to Enhance Strategic Capabilities FY-12 FY-1
Slide 13: Strong History of Market Share Gains
Strong History of Market Share Gains Significant Competitive Advantages: GMS Wallboard Market Share Scale and leading market positions drive competitive advantage Breadth of product availability and access to leading brands and latest product innovations Highly trained workforce delivering different
Slide 14: Attractive Acquirer with Significant Consolidation Opportunity
Attractive Acquirer with Significant Consolidation Opportunity Acquisition Quarter Rationale Industry Structure: Large, highly fragmented industry comprised of ~400 competitors Similar business operations enable efficient integration Limited number of scaled players One branch with LTM sales of $11.
Slide 15: Significant Opportunity to Further Expand the Platform
Significant Opportunity to Further Expand the Platform GMS has a demonstrated history of successful expansion through greenfields and acquisitions GMS has limited or no presence in just under 40% of the top 100 MSAs in the U.S. Significant opportunity for share gains in new and existing markets over
Slide 16: Large Specialty Distribution Market Opportunity
Large Specialty Distribution Market Opportunity North American market for distribution of wallboard, ceilings and complementary products generated $15 billion in net sales in the twelve months ended September, 2016 - $12 billion served through specialty distributors; $3 billion served by big boxes,
Slide 17: Significant Opportunity to Drive Earnings Growth
Significant Opportunity to Drive Earnings Growth Operating leverage on branch cost structure - Distribution network has historically supported significantly higher volumes per branch - Leads to operating leverage on the fixed costs at the branches (Wallboard volume in million square feet) 30 25 20 1
Slide 18: Capitalizing on Large and Diverse End Markets
Capitalizing on Large and Diverse End Markets Poised for Continued Growth (Billions square feet) (Seasonally Adj. starts in millions) 4.6% 1.4 1.3 3.6% 0.9 2015 2016 Long-Term Mean (1) 2015 2016 Long-Term Mean(1) 2015 2016 Long-Term Mean(2) (1) Since 1970. Private residential fixed investment as a p
Slide 19: Entrepreneurial Culture And Experienced Leadership
Entrepreneurial Culture And Experienced Leadership Driving Superior Execution Senior management averages over 25 years in the industry and over 20 years with GMS VPs of Operations across all seven geographic divisions have 30+ years of industry experience and have worked with GMS for 25+ years on av
Slide 20: Financial Highlights
Financial Highlights Proven track record of driving consistent above market growth and share gains Above-Market Growth Ability to deliver superior service and a comprehensive product suite Well positioned to capitalize on recovery in construction end markets Attractive End Market Dynamics Balanced e
Slide 21: Q3 2017 Highlights
Q3 2017 Highlights Net sales increased 33.8% to $562.5 million Base business net sales up 15.5% Wallboard unit volume grew 30.5% to 842 million square feet Above-Market Growth Net income significantly increased to $8.2 million Gross margin expanded 110 basis points to 33.0% Adjusted EBITDA grew 58.4
Slide 22: Profitable Sales Expansion in Fiscal Q3 2017
Profitable Sales Expansion in Fiscal Q3 2017 Base Business (1) ($ in millions) Fiscal Q3 YOY Adj. EBITDA ($ mm) $50 FY16 FY17 Growth Wallboard Volume (MSF) Wallboard Price ($/'000 Sq. Ft.) 646 305 842 303 30.5% (0.8%) 15.6% $40 $ $ $30 Net S ales $20 Wallboard Ceilings Steel Framing Other Products T
Slide 23: One-Stop-Shop Outsized Impact on Other Products Sales
One-Stop-Shop Outsized Impact on Other Products Sales Net Sales ($ mm) 150.0 $132.3 Steel Framing 100.0 Fasteners 50.0 Joint Compound Wallboard - Fiscal Q3 2016 Fiscal Q3 2017 Acquisitions Base Business 19.2% organic growth in net sales of Other Products, well in excess of 15.5% overall organic grow
Slide 24: Attractive Capital Structure
Attractive Capital Structure Leverage of 3.1x Net Debt / LTM Adj. EBITDA as of 1/31/17, continued improvement in credit metrics from 6.0x Net Debt / LTM Adj. EBITDA as of 4/30/14 and 4.3x as of 4/30/16 Substantial liquidity, with $10.6 million of cash on hand and an additional $214 million undrawn o
Slide 25: Appendix
Unsaved Document / 2/6/2014 / 22:45 Appendix
Slide 26: Summary Quarterly Financials
Summary Quarterly Financials Note: Fiscal year end April 30. 27 (In millions, except per share data)1Q162Q163Q164Q16 (Unaudited) Wallboard Volume (MSF)681700646816 Wallboard Price ($ / '000 Sq. Ft.)$ 310$ 306$ 305$ 305 Wallboard$ 211$ 214$ 197$ 249 Ceilings79756578 Steel framing67706678 Other produc
Slide 27: Quarterly Net Sales
Quarterly Net Sales ($ in millions) (Unaudited) Base Business (1) (2) Acquisitions (2) Total Net Sales Business Days (3) Net Sales by Business Day Base Business Branches (4) (5) Acquired Branches (5) Total Branches Note: Fiscal year end April 30. (1) When calculating our “base business” results, we
Slide 28: Quarterly Net Income to Adjusted EBITDA
Quarterly Net Income to Adjusted EBITDA Commentary A. Represents non-cash compensation expenses related to stock appreciation rights agreements B. Represents non-cash compensation expense related to changes in the fair values of noncontrolling interests C. Represents non-cash equity-based compensati
Slide 29: Net Income to Adjusted EBITDA
Net Income to Adjusted EBITDA Commentary ($ in 000s) (Unaudited) A. Represents compensation paid to certain executives who were majority owners prior to the AEA acquisition of GMS. Following the acquisition, these executives’ compensation agreements were amended and, going forward, GMS does not anti
Slide 30: LTM Net Income to Pro Forma Adjusted EBITDA
LTM Net Income to Pro Forma Adjusted EBITDA Commentary ( $ in 000s) (Unaudited) 3Q17 LTM 2016 2015 A. Represents non-cash compensation expenses related to stock appreciation rights agreements B. Represents non-cash compensation expense related to changes in the fair values of noncontrolling interest
Slide 31: Quarterly Cash Flows
Quarterly Cash Flows ($ in millions) (Unaudited) Historical 1Q16 2Q16 3Q16 4Q16 FY16 1Q17 2Q17 3Q17 Net income (loss) Non-cash changes Changes in primary working capital components: Trade accounts and notes receivable Inventories Accounts payable Cash provided by (used in) operating activities $3.0
Slide 32: SG&A Adjustments Table
SG&A Adjustments Table Commentary (Unaudited) ($ in millions) A. Represents non-cash compensation expenses related to stock appreciation rights agreements 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 SG&A - Reported Adjustments Stock appreciation rights expense (benefit) Redeemable noncontrolling interests Eq
Slide 33: www.gms.com
www.gms.com Unsaved Document / 2/6/2014 / 22:45
Slide 34: www.gms.com