GMS Inc. (NYSE:GMS) Q2 2019 Earnings Conference Call Transcript
Dec 04, 2018 • 08:30 am ET
Greetings, and welcome to the GMS Second Quarter 2019 Earnings Call. (Operator Instructions) As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host, Leslie Kratcoski, IR. Thank you. You may begin.
Thanks, Michelle, and good morning, everyone, for joining us this morning for GMS' earnings conference call for the second quarter of fiscal 2019, ended October 31, 2018. I'm joined today by Mike Callahan, President and CEO; and Doug Goforth, CFO. In addition to the press release issued this morning, we have posted presentation slides to accompany this call in the Investors section of our website at gms.com.
(Forward-Looking Cautionary Statements)
Note that references on this call to second quarter and fiscal 2019 relate to the quarter ended October 31, 2018, and the fiscal year ended April 30, 2019, respectively.
With that, I'll now turn the call over to Mike Callahan. Mike?
Good morning, and thank you for joining us today. We will begin today's call with a review of our operating highlights, and then, Doug will cover our financial results in more detail. We will then open up the line for your questions.
Turning to Slide 3, we reported a strong fiscal second quarter highlighted by 8.7% of organic sales growth across our portfolio, a testament to the strength and balance of our product offering. We generated 3.7% growth in organic wallboard revenue. I'm also pleased to share that we shipped over 1 billion feet of wallboard during the quarter for the first time in the history of our company. We also saw continued strength in our ceiling sales, which increased 10% organically during the quarter, as well as strong organic sales of steel framing, which grew approximately 22% quarterly year-over-year.
From a profitability standpoint, we generated a 60% year-over-year increase in adjusted EBITDA to a record $87.1 million for the second fiscal quarter. This improvement was driven by the contribution of a full quarter of Titan results, increased operating leverage, including benefits from the cost savings initiatives undertaken earlier this year, continued pricing improvement and favorable lease accounting changes.
Let me touch on a few of these items in more detail. While there has been a slowdown in residential housing starts in Canada, Titan continues to be very accretive to our consolidated operating results and the integration is progressing well, as we continue to work closely with key suppliers to generate purchasing synergies and take advantage of our scale and the power of our North American platform. With respect to purchasing synergies, while the process has taken a little longer than we expected, we believe that we are on track to exceed our original $10 million estimate for fiscal 2020, and we continue to look for even more synergies with our cross border suppliers and through other non-purchasing initiatives.
We have also made significant progress on our previously announced cost reduction initiatives as demonstrated through the 200 basis points of operating leverage achieved during the fiscal second quarter, which excludes the impact