GMS to Acquire Kamco Supply Corporation
- Expanding presence in the largest metropolitan area in the United States
- Expected enhanced customer service capability and significant cross-selling opportunities
- Kamco recorded revenues of approximately $245 million for the 12 months ended June 30, 2023
- None.
Insights
The acquisition of Kamco by GMS Inc. represents a strategic expansion in the highly competitive specialty building products distribution market. With Kamco's reported revenues of approximately $245 million over the past 12 months, the deal could have a material impact on GMS's financial position and market share, particularly in the New York metropolitan area. Funding the transaction through cash and existing credit facilities suggests a stable financial strategy that avoids diluting existing shareholders' equity. The expectation of cross-selling opportunities and a broader product suite indicates potential revenue synergies, although integration risks and execution remain key factors to monitor post-acquisition.
The building materials distribution industry is characterized by the need for a strong regional presence and a diverse product portfolio to meet varied customer demands. GMS's acquisition of Kamco, a company with a robust foothold in the New York tri-state area, signals an aggressive move to capture market share in what is described as the 'largest remaining MSA' where GMS lacked significant presence. The continuation of the Kamco brand and leadership post-acquisition is a strategic decision likely aimed at preserving customer loyalty and leveraging existing relationships. The reference to leading brands in Kamco's suite, such as Armstrong and CertainTeed, underscores the strategic value of the acquisition in terms of product offering expansion.
From an economic perspective, this transaction can be seen as a response to the dynamics of the construction industry, which is often seen as a bellwether for economic activity. The investment in the Greater New York City area, a region with significant construction and renovation activity, could position GMS for growth in line with economic recovery and urban development trends. However, the performance of this acquisition will also be contingent on broader economic conditions, including interest rates, housing markets and commercial construction trends. The timing of the closure, set for the fourth quarter of fiscal 2024, allows for a period of market observation and adjustment to any economic shifts that may occur.
Transaction to Significantly Expand GMS’s Presence in the
Founded in 1939 by the Swerdlick family, and headquartered in
John C. Turner, Jr., President, and Chief Executive Officer of GMS, said, “Kamco is a long-established leader in the building materials industry with an experienced and successful team. They are known for exceptional service and have outstanding customer relationships and an impressive suite of products from numerous leading brands, including Armstrong, CertainTeed, National Gypsum, USG, Owens Corning and others. This acquisition represents a unique opportunity to advance GMS’s strategic priorities, including expanding share in our core product categories and continuing to develop our presence in the
Scott Little, President of Kamco said, “We share GMS’s vision of building long-term relationships and providing best-in-class customer service to our customers. As such, we believe that partnering with an industry leader whose values are well aligned with our own presents excellent opportunities for our employees and customers alike, and we look forward to driving continued success as part of GMS.”
Transaction Details, Leadership and Closing
GMS expects to fund this transaction with cash on hand and borrowings under the Company’s established revolving credit facility.
Following the close of the transaction, Kamco’s current President, Mr. Little and its senior leadership team, will continue to lead the business and the Company will continue to operate under the “Kamco” brand as it has for over 80 years.
GMS expects to capitalize on cross-selling opportunities with Kamco and GMS’s other operations in the region, including the recently acquired Tanner Bolt and Nut, Inc. business. Expanded Wallboard distribution and Complementary Products expansion present compelling opportunities for the company to better capitalize on potential growth in the market and provide an even higher level of service to customers.
The transaction is expected to close in the fourth quarter of GMS’s fiscal year 2024, subject to the satisfaction of customary closing conditions, including HSR approval. At such time, additional information will be made available concerning the transaction.
About GMS
Founded in 1971, GMS operates a network of over 300 distribution centers with extensive product offerings of Wallboard, Ceilings, Steel Framing and Complementary Products. In addition, GMS operates more than 100 tool sales, rental and service centers, providing a comprehensive selection of building products and solutions for its residential and commercial contractor customer base across
For more information about GMS, please visit www.gms.com.
Forward-Looking Statements and Information –
This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. You can generally identify forward-looking statements by our use of forward-looking terminology such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "potential," "predict," "seek," or "should," or the negative thereof or other variations thereon or comparable terminology. We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates, and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. The following important factors could cause the future results, to differ: the company’s growth strategy, changes in economic or industry conditions, competition, inflation and deflation, input costs, timing and integration of acquisitions, timing and implementation of price increases for the Company’s products, consumer markets, and other factors identified our filings with the SEC. We undertake no obligation to update any of the forward-looking statements made herein, whether as a result of new information, future events, changes in expectation or otherwise.
View source version on businesswire.com: https://www.businesswire.com/news/home/20231221872841/en/
Carey Phelps
Vice President, Investor Relations
Phone: 770-723-3369
Email: ir@gms.com
Source: GMS Inc.
FAQ
What is the latest acquisition announced by GMS Inc. (NYSE: GMS)?
When is the expected closing date for the acquisition of Kamco Supply Corporation by GMS Inc. (NYSE: GMS)?
What are the expected benefits of the acquisition for GMS Inc. (NYSE: GMS)?
What were Kamco's revenues for the 12 months ended June 30, 2023?
How does GMS Inc. (NYSE: GMS) plan to fund the acquisition of Kamco Supply Corporation?
