GMS Inc., a distributor of specialty building materials, reported a sharp drop in profit for its fourth fiscal quarter and full year as construction demand cooled and steel prices remained weak.
But as the company faced broad-based softness across both residential and commercial markets, executives expressed confidence in early signs of recovery and outlined cost-cutting efforts to weather the downturn.
Revenue for the quarter ending April 30 fell 5.6% year over year to $1.33 billion from $1.41billion in the prior year. Net income plunged to $26.1 million from $56.4 million in the same period a year earlier.
“We delivered solid results even as we continued to face pressure across the business,” CEO John C. Turner, Jr. told analysts based on a transcript from SeekingAlpha.com. “Sales were slightly better than forecast, and our cash flow remained strong.”
One area of relative strength was ceiling products, buoyed by GMS’s acquisition of Kamco Supply Corp. of New England in November 2023. Kamco, a regional supplier of ceilings, drywall, and related goods, helped GMS strengthen its presence in the Northeast. “Kamco contributed positively to our ceiling sales, which were one of the few bright spots this quarter,” Turner said.
Wallboard sales fell due to delayed price increases, while steel framing volumes remained weak amid soft pricings. Despite notices of future steel price hikes, GMS said tariffs had minimal impact since most of its steel products are sourced domestically.
For the full fiscal year, GMS reported flat revenue of $5.51 billion, up just 0.2% from the prior year.
Net income fell 58% to $115.5 million, down from $276.1 million in fiscal 2024.
High interest rates and tighter lending, especially from regional banks, continue to delay construction activity, GMS said. Industry wallboard volumes fell 10% year over year in the first calendar quarter of 2025, according to data from the Gypsum Association.
“These factors are causing homebuyers to retreat to the sidelines, multifamily and commercial developers to pause or delay starts, and banks to lend less overall,” Turner said.
Still, he pointed to a structural housing shortage in North America as a long-term driver. “There is a clear and fundamental need for housing in the U.S. and Canada,” he told analysts.
Looking ahead, GMS expects to modestly outperform seasonal norms, projecting flat to slightly positive wallboard volumes in the current quarter.
In the multifamily sector, Turner said activity may be stabilizing. “The number of new starts has possibly bottomed and recently begun to increase,” he noted, adding that a more sustained rebound could take hold in 2026.
Commercial construction remains mixed. Office-related demand continues to lag, but institutional segments such as healthcare, education, and data centers are seeing steadier momentum. “Our data center backlog extends well into 2026,” Turner said. “These projects use both our core and complementary products and often involve higher-end specifications.”
To offset weaker demand, GMS implemented $55 million in annualized cost savings during fiscal 2025, including $25 million in the fourth quarter—above its initial $20 million target.
Turner reaffirmed the company’s long-term growth strategy, which focuses on increasing share in core categories like wallboard and ceilings, expanding complementary product offerings, pursuing acquisitions, and driving operational efficiencies.
“We’ve aligned our cost structure to today’s market,” Turner said. “When conditions improve, we’ll be ready to grow efficiently and create long-term value.”
Don’t miss any content from Distribution Strategy Group. Join our list.
