On March 2, Tucker, Georgia-based building products distributor Gypsum Management & Supply Inc. (GMS) reported its financial results for its 2023 fiscal third quarter that spanned Nov. 1, 2022 through Jan. 31, 2023.

The company reported fiscal 2023 third-quarter net sales of $1.2 billion, a 7% increase over the same quarter in fiscal 2022. Organic net sales increased 6.4% in 3Q, according to the report.

GMS’s 3Q sales growth of 7% decelerated significantly from the fiscal year’s first two quarters: GMS posted 24.4% growth year-over-year in 2Q and 30.5% growth in 1Q. Meanwhile, organic growth of 6.4% was down from 22.2% in 2Q and 24.1% in 1Q. The deceleration can be attributed to “both the early stages of a slowdown in single-family construction as well as difficult weather conditions during the quarter,” GMS President and CEO John Turner Jr. said in the report.

In 3Q, GMS saw a 19.9% increase in multi-family construction and 5.6% commercial wallboard volume growth, which helped partially offset single-family volume declines of 10.6%, according to the report. Net income for the quarter was $64.8 billion, or $1.53 per diluted share, up 5.5% year-over-year.

Gross profit of $402.2 million increased 9.4% year-over-year primarily due to the “continued successful pass through of product inflation, improving commercial wallboard sales, growth in the sales of complementary products and incremental gross profit from acquisitions,” according to the report.

Year-over-year 3Q sales changes by product category included:

• Wallboard sales of $500.7 million increased 20.6% (up 21.2% on an organic basis).
• Ceilings sales of $146.8 million increased 4.9% (up 5.2% on an organic basis).
• Steel Framing sales of $234.5 million decreased 17.1% (down 16.8% on an organic basis).
• Complementary Product sales of $352.6 million increased 11.7% (up 8.2% on an organic basis).

GMS ranked No. 8 on MDM’s Top Building Materials/Construction Distributors list in 2022.

“As we look to close out fiscal 2023 at the end of April, it appears single-family demand will continue to soften while multi-family and commercial activity should improve seasonally with continuing year-over-year growth,” Turner said in the report. “During this period, we expect to see year-over-year pricing in wallboard, ceilings and complementary products remain resilient. Similar to this quarter however, pricing and volumes in Steel Framing will likely remain challenged.

“Given these end market dynamics, subsequent to the end of the quarter, the company implemented cost reduction initiatives to better align our operations with the current demand outlook. As phased in, these initiatives are expected to reduce fixed SG&A expenses by approximately $15 million on an annualized basis. Approximately $2.5 million in one-time execution costs related to these reductions will be recorded during our fiscal fourth quarter.”