GMS to Acquire Yvon Building Supply and Affiliates

Rhea-AI Summary

GMS (NYSE: GMS), a prominent North American distributor of specialty building products, announced an agreement to acquire Yvon Building Supply and its affiliates for up to CAD$196.5 million. The acquisition includes Yvon Insulation , Yvon Insulation Windsor, Laminated Glass Technologies, and Right Fit Foam Insulation. Expected to close in July 2024, the deal remains subject to regulatory approvals and customary conditions.

Yvon, a trusted supplier in Ontario with seven locations, generated over CAD$190 million in net revenues for the year ending February 29, 2024. The acquisition aims to enhance GMS's service and product offerings in southern Ontario, particularly in the fast-growing Greater Toronto Area. GMS will fund the transaction through cash on hand and borrowings under its revolving credit facility. Post-acquisition, the Yvon businesses will retain their brand names and current leadership.

Positive

• GMS expands its market presence in southern Ontario, including Greater Toronto.
• Acquisition of Yvon Building Supply and affiliates for up to CAD$196.5 million.
• Yvon's net revenues exceeded CAD$190 million for the year ending February 29, 2024.
• Enhanced product and service offerings, including the Complementary Products category.
• Yvon's existing leadership and brand names will be retained post-acquisition.

Negative

• The transaction is subject to regulatory approvals and other customary closing conditions.
• Potential financial strain due to funding the acquisition through cash and borrowings.
• Integration risks associated with merging Yvon's operations into GMS.

Insights

Financial Analyst

The acquisition of Yvon by GMS for up to CAD$196.5 million is a strategic move to expand GMS's footprint in the Ontario market. Yvon's annual revenue exceeding CAD$190 million indicates a strong business with a solid customer base. GMS funding the acquisition through cash on hand and revolving credit suggests a robust liquidity position, minimizing the immediate financial strain.

From a financial perspective, this acquisition could lead to economies of scale and increased market share. However, integration challenges and potential cultural clashes should be monitored. In the short term, investors might see an increase in debt levels due to the borrowing under the credit facility, but long-term prospects appear positive if synergies are realized as expected.

Market Research Analyst

Expanding into Ontario, especially the fast-growing Greater Toronto Area, allows GMS to tap into a burgeoning market. The move to integrate Yvon's product offerings with GMS's existing portfolio aligns with industry trends of consolidation to offer comprehensive product lines and services. Maintaining Yvon's brand and leadership could ensure a smoother transition and retention of existing customers.

In the context of the construction and building supplies industry, such acquisitions are pivotal for growth, given the competitive landscape. The Greater Toronto Area's construction boom provides a fertile ground for GMS to grow its market share. Nonetheless, the success of this acquisition will hinge on effective integration and customer retention strategies.

Transaction to Expand GMS’s Service and Product Offerings in Ontario, Canada

TUCKER, Ga.--(BUSINESS WIRE)-- GMS Inc. (NYSE: GMS), a leading North American specialty building products distributor, today announced that it has entered into an agreement to acquire Yvon Building Supply, Inc., Yvon Insulation Corporation, Yvon Insulation Windsor, Laminated Glass Technologies, Inc., and Right Fit Foam Insulation Ltd. (collectively “Yvon” or the “Company”) for an aggregate purchase price of up to CAD$196.5 million (subject to certain conditions and customary adjustments). This transaction is expected to close in July 2024 and is subject to regulatory approvals and other customary closing conditions.

For over 10 years, Yvon has provided high-quality building supplies and has been a trusted partner to customers throughout Greater Toronto and Ontario. With seven locations across Ontario, Yvon provides drywall, insulation, steel, ceilings and other complementary products and related services, including installed insulation. For the twelve months ended February 29, 2024, Yvon generated net revenues in excess of CAD$190 million.

John C. Turner, Jr., President and Chief Executive Officer of GMS, said, “We are excited about this opportunity to expand our presence in southern Ontario and look forward to welcoming the Yvon team of highly respected and knowledgeable building products professionals to GMS. Reflecting the continued execution of our growth strategy, we look forward to this transaction expanding our product and service offerings, including further expanding our Complementary Products category, in the fast-growing Greater Toronto Area and throughout southern Ontario.”

Tom Scott, President of Yvon, added, “This acquisition is an exciting next chapter for the Yvon team. With shared values and a strong commitment to delivering outstanding customer service, joining with an industry leader like GMS represents an exciting growth opportunity for the combined business and an opportunity to better serve our customers with expanded service and product offerings.”

Transaction Details, Leadership and Closing

GMS expects to fund this transaction with cash on hand and borrowings under its established revolving credit facility.

Following the close of the transaction, the newly acquired businesses are expected to continue to operate under their existing brand names and under the leadership of current Yvon President, Mr. Scott. In addition, Yvon will partner with GMS Canada’s Watson and Blair brands in the local market.

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 the United States and Canada. The Company’s unique operating model combines the benefits of a national platform and strategy with a local go-to-market focus, enabling GMS to generate significant economies of scale while maintaining high levels of customer service.

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/20240514551518/en/

Carey Phelps

Vice President, Investor Relations

Phone: 770-723-3369

Email: ir@gms.com

Source: GMS Inc.

FAQ

What is the acquisition amount for Yvon Building Supply by GMS?

GMS is acquiring Yvon Building Supply and affiliates for up to CAD$196.5 million.

When is the GMS and Yvon acquisition expected to close?

The acquisition is expected to close in July 2024, subject to regulatory approvals and customary conditions.

What were Yvon Building Supply's net revenues for the year ending February 29, 2024?

Yvon Building Supply generated net revenues in excess of CAD$190 million for the year ending February 29, 2024.

How will GMS fund the acquisition of Yvon Building Supply?

GMS plans to fund the acquisition using cash on hand and borrowings under its revolving credit facility.

Will Yvon Building Supply retain its brand names after the acquisition by GMS?

Yes, Yvon Building Supply and its affiliates will continue to operate under their existing brand names post-acquisition.