GMS Inc. reported QQ1 2026 results that showcased revenue resilience amid a largely stable demand environment for construction materials, underpinned by cost discipline and a favorable product mix. Revenue came in at $1.4143 billion, flat versus the prior year on a YoY basis but up 12.2% sequentially, reflecting seasonality and modest mix shifts. Gross profit rose to $436.5 million for a gross margin of 30.9%, up from the year-ago period, signaling some margin restoration as price realization and productivity efforts took hold. However, net income declined by 22.8% year over year to $43.6 million, with EPS of $1.14, as higher interest expense and a few non-operating items offset a portion of operating leverage.
From a cash flow perspective, currency of record remained tight: operating cash flow was negative by $30.9 million and free cash flow was negative by $39.4 million, driven primarily by working capital movements (notably a $119.8 million cash outflow from working capital). The balance sheet remains solid but leveraged: total assets $3.84 billion, total debt $1.66 billion with net debt around $1.62 billion, and a current ratio of roughly 2.1x suggesting adequate near-term liquidity. Net debt to adjusted EBITDA (annualized) sits in the mid-3x range, indicating modest deleveraging headroom but a need to monitor cash conversion as the year progresses.
Overall, GMS exhibits a cautious but constructive setup for 2026: the business benefits from a stable demand backdrop and improving gross margins, yet the near-term cash generation and leverage trajectory will be the principal performance drivers to watch as the company navigates a cyclical Industrials environment and continued profitability leverage at modest scale.