By Sabela Ojea

Shares of building-products distributor GMS declined after the company unexpectedly swung to a loss in its fiscal third quarter and reported lower-than-expected revenue in the period.

The stock retreated 9.8% to $71.01 in Thursday morning trading, and is on pace for its biggest one-day percentage decline since June 2022. Shares have fallen 22% in the past 12 months.

The Tucker, Ga. company posted a net loss for the three-months ended Jan. 31 of $21.4 million, or 55 cents per share, compared with a profit of $51.9 million, or $1.28 a share, for the same period a year earlier. Analysts polled by FactSet had forecast per-share earnings of 93 cents a share.

The company said that it booked a $42.5 million non-cash impairment charge to write off goodwill related to its Ames business, acquired in 2021. The impairment was mainly linked to a decrease in the expected future cash flows and an increase in the associated discount rate for the business, GMS said.

Stripping out one-time items, the company's earnings per share came in at 92 cents, below the $1.40 per share forecast by Wall Street.

Revenue rose 0.2% to $1.26 billion, falling short of analysts expectations of $1.29 billion, according to FactSet.

"Our results in the quarter reflect the impact of soft end market demand and steel pricing, both of which deteriorated meaningfully during the last half of the quarter," Chief Executive John Turner said.

Economic uncertainty, general affordability and tight lending conditions, together with adverse winter weather disruptions, contributed to reduced levels of activity in each of the company's end markets, Turner said

As a result, the GMS is further reducing its annual costs by $20 million, bringing its total annualized run rate of reductions to $50 million since the start of the fiscal year, Turner added.

Write to Sabela Ojea at sabela.ojea@wsj.com; @sabelaojeaguix

(END) Dow Jones Newswires

March 06, 2025 11:56 ET (16:56 GMT)

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