Market Overview

GMS Reports Results for Fourth Quarter and Fiscal 2018

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- Net Sales of $635.8 Million for the Quarter -

- Adjusted EBITDA of $50.1 Million for the Quarter -

- Completed Acquisition of WSB Titan Subsequent to Quarter End -

GMS Inc. (NYSE:GMS), a leading North American distributor of wallboard
and suspended ceilings systems, today reported financial results for the
fiscal fourth quarter and fiscal year ended April 30, 2018.

Revenues for the fiscal fourth quarter ended April 30, 2018 increased
3.4% to a record $635.8 million from $615.0 million for the fiscal
fourth quarter ended April 30, 2017. Net income declined to $9.9
million, or $0.24 per diluted share, compared to $14.3 million, or $0.34
per diluted share. The decrease in net income is attributable to $3.0
million in pre-tax transaction costs and $5.1 million in pre-tax
mark-to-market currency adjustments during the fourth quarter of fiscal
2018, both related to the acquisition of WSB Titan ("Titan"). In
addition, the fourth quarter of fiscal 2017 included $1.2 million of
non-recurring other income. Adjusted EBITDA decreased 3.9% for the
fiscal fourth quarter to $50.1 million from adjusted EBITDA of $52.1
million from the fourth quarter of fiscal 2017.

Mike Callahan, President and CEO of GMS, stated, "We delivered a solid
fourth quarter capping off a successful fiscal 2018. Subsequent to
quarter end, we completed the acquisition of Titan, which strengthens
GMS's position as the market leader in wallboard distribution in North
America and provides an additional platform with multiple levers to
drive profitable growth. We were also pleased to deliver record sales
for a third consecutive year and achieve our target of gross margin in
excess of 32.5% for fiscal 2018."

Mr. Callahan continued, "Looking ahead to fiscal 2019, the markets that
we operate in remain healthy and we are encouraged that May sales
increased 7% over last year as we finally started to experience
favorable weather trends. We also initiated a strategic cost reduction
plan in May of this year to improve our operational efficiency and
demonstrate our strong commitment to expanding our margins, while
continuing to invest in the areas of our business that we believe will
provide the best return for our shareholders, business partners, and
employees. Excluding one-time, pre-tax severance related charges in the
range of $4.1 to $4.6 million that we expect to record in the first
quarter of fiscal 2019, we anticipate that the actions we have taken
will generate payroll related and other cost savings of approximately
$20.0 million on an annual basis. We will also continue to focus on
successfully integrating Titan and look forward to implementing best
practices across the combined organization to further expand total
company margins over time. I am excited about the overall strength of
our business and confident in our ability to deliver another year of
record sales and Adjusted EBITDA in fiscal 2019."

Fourth Quarter 2018 Results

Net sales for the fourth quarter of fiscal 2018 ended April 30, 2018
were $635.8 million, compared to $615.0 million for the fourth quarter
of fiscal 2017 ended April 30, 2017.

  • Wallboard sales of $280.0 million decreased 0.8% compared to the
    fourth quarter of fiscal 2017, with wallboard unit volume decline of
    3.1% to 878 million square feet offset by pricing improvement of 2.4%.
    Wallboard volume decline was partially driven by adverse weather
    conditions as well as continued challenging competitive dynamics.
  • Ceilings sales of $95.6 million rose 9.3% compared to the fourth
    quarter of fiscal 2017, mainly due to greater commercial activity,
    pricing improvement and the positive impact of acquisitions.
  • Steel framing sales of $107.0 million grew 6.8% compared to the fourth
    quarter of fiscal 2017, mainly driven by pricing improvement.
  • Other product sales of $153.2 million were up 5.6% compared to the
    fourth quarter of fiscal 2017, as a result of strategic initiatives,
    pricing improvement and the positive impact of acquisitions.

Gross profit of $205.8 million grew 2.4% compared to $201.0 million in
the fourth quarter of fiscal 2017, mainly attributable to higher pricing
and increased sales. Gross margin decreased by approximately 30 basis
points to 32.4% compared to 32.7% in the fourth quarter of fiscal 2017
largely due to product mix.

Net income of $9.9 million, or $0.24 per diluted share, decreased by
30.5% or $4.4 million compared to $14.3 million, or $0.34 per diluted
share, in the fourth quarter of fiscal 2017. Adjusted net income of
$23.5 million, or $0.56 per diluted share, decreased $2.4 million,
compared to $25.9 million, or $0.62 per diluted share, in the fourth
quarter of fiscal 2017.

Adjusted EBITDA of $50.1 million decreased 3.9% compared to $52.1
million in the fourth quarter of fiscal 2017. Adjusted EBITDA margin was
7.9% as a percentage of net sales, down 60 basis points compared to the
fourth quarter of fiscal 2017, impacted by the approximately 30 basis
point decrease in gross margin and approximately 30 basis point increase
in SG&A expense driven primarily by higher logistics costs.

Fiscal Year 2018 Results

Net sales for the fiscal year ended April 30, 2018 increased 8.3% to a
record $2.51 billion, compared to $2.32 billion for the fiscal year
ended April 30, 2017, with growth across all product categories.

Gross profit of $818.6 million in fiscal 2018 increased 7.9%, compared
to $758.6 million in fiscal 2017. Gross margin of 32.6% decreased by 10
basis points, compared to 32.7% in the prior year, primarily due to
lower margins in the first quarter of fiscal 2018.

Net income of $63.0 million in fiscal 2018, or $1.49 per diluted share,
grew $14.1 million or 28.8%, compared to $48.9 million, or $1.19 per
diluted share, in fiscal 2017. Adjusted net income of $84.7 million, or
$2.01 per diluted share, increased $2.4 million, compared to $82.3
million, or $2.00 per diluted share, in the prior year.

Adjusted EBITDA grew 5.9% to a record $199.3 million in fiscal 2018,
compared to $188.2 million in fiscal 2017. Adjusted EBITDA margin was
7.9% as a percentage of net sales in fiscal 2018, down slightly from
8.1% in fiscal 2017, primarily the result of a slight decrease in gross
margin and a slight increase in SG&A.

Capital Resources

As of April 30, 2018, GMS had cash of $36.4 million and total debt of
$595.9 million, compared to cash of $14.6 million and total debt of
$594.9 million as of April 30, 2017.

Subsequent to the end of fiscal 2018, on June 1, 2018, the Company
amended its First Lien Credit Agreement with new borrowings consisting
of an approximately $997 million term loan facility due in 2025.
Borrowings under the new term loan bear interest at a floating rate
based on LIBOR, with a 0% floor, plus 2.75%, representing a 25 basis
point improvement compared to the previous term loan's interest rate.
Net proceeds from the new term loan were used to repay the Company's
previous first lien term loan of approximately $572 million and to
finance the acquisition of Titan.

Titan Update

GMS completed its acquisition of Titan on June 1, 2018. Titan's
unaudited results, including the impact of foreign currency exchange for
the twelve months ended April 30, 2018, included net sales and Adjusted
EBITDA of $478.4 million (C$612.1 million) and $68.4 million (C$87.5
million), respectively. This represents an increase of 17.4% in net
sales and a 17.8% increase in Adjusted EBITDA compared to the twelve
months ended April 30, 2017. Based on an average monthly exchange rate
of 0.7816 and excluding purchasing synergies, Titan is expected to
contribute between $68.0 million and $72.0 million to Adjusted EBITDA
for the eleven months ending April 30, 2019.

The Company expects to record additional transaction related charges of
$11.0 to $11.5 million in the first quarter of fiscal 2019, including an
additional $5.7 million of mark-to-market currency adjustments. In
addition, subject to finalization of the Titan purchase price
allocation, inventory will be increased by an estimated $4.8 million
(assuming an exchange rate of .7721 on June 1, 2018) to reflect its
estimated fair value for purchase accounting purposes. Cost of sales in
the first quarter of fiscal 2019 will be increased by this amount as it
will include the impact of this increase as the related inventory is
sold.

Lease Accounting

As previously announced, in order to take advantage of the Tax Act's
accelerated depreciation provisions, facilitate the implementation of
the new lease accounting standard which we will adopt in fiscal 2020,
and improve the comparability of our financial statements with our
publicly traded peers, effective May 1, 2018 we began financing the
purchase of new commercial vehicles under capital leases and converted
the majority of our legacy equipment operating leases into capital
leases. We anticipate that this will reduce our SG&A expense and
increase our Adjusted EBITDA by approximately $21.0 to $24.0 million per
year beginning June 1, 2018. The conversion of our existing leases is
also expected to increase the property and equipment and debt balances
by approximately $75.0 million as of the first quarter of fiscal 2019.

Conference Call and Webcast

GMS will host a conference call and webcast to discuss its results for
the fourth quarter and full fiscal year ended April 30, 2018 at 10:00
a.m. Eastern Time on June 28, 2018. Investors who wish to participate in
the call should dial 800-289-0571 (domestic) or 323-794-2597
(international) at least 5 minutes prior to the start of the call. The
live webcast will be available on the Investors section of the Company's
website at www.gms.com.
There will be a slide presentation of the results available on that
page of the website as well. Replays of the call will be available
through July 28, 2018 and can be accessed at 844-512-2921 (domestic) or
412-317-6671 (international) and entering the pass code 6223894.

About GMS Inc.

Founded in 1971, GMS operates a network of more than 240 distribution
centers across the United States and Canada. GMS's extensive product
offering of wallboard, suspended ceilings systems, or ceilings, and
complementary construction products is designed to provide a
comprehensive one-stop-shop for our core customer, the interior
contractor who installs these products in commercial and residential
buildings.

Use of Non-GAAP Financial Measures

GMS reports its financial results in accordance with GAAP. However, it
presents Adjusted net income, Adjusted EBITDA and Adjusted EBITDA
margin, which are not recognized financial measures under GAAP. GMS
believes that Adjusted net income, Adjusted EBITDA and Adjusted EBITDA
margin assist investors and analysts in comparing its operating
performance across reporting periods on a consistent basis by excluding
items that the Company does not believe are indicative of its core
operating performance. The Company's management believes Adjusted net
income, Adjusted EBITDA and Adjusted EBITDA margin are helpful in
highlighting trends in its operating results, while other measures can
differ significantly depending on long-term strategic decisions
regarding capital structure, the tax jurisdictions in which the Company
operates and capital investments. In addition, the Company utilizes
Adjusted EBITDA in certain calculations under its senior secured asset
based revolving credit facility and its senior secured first lien term
loan facility.

You are encouraged to evaluate each adjustment and the reasons GMS
considers it appropriate for supplemental analysis. In addition, in
evaluating Adjusted net income and Adjusted EBITDA, you should be aware
that in the future, the Company may incur expenses similar to the
adjustments in the presentation of Adjusted net income and Adjusted
EBITDA. The Company's presentation of Adjusted net income and Adjusted
EBITDA should not be construed as an inference that its future results
will be unaffected by unusual or non-recurring items. In addition,
Adjusted net income and Adjusted EBITDA may not be comparable to
similarly titled measures used by other companies in GMS's industry or
across different industries. Financial information related to Titan's
performance in periods prior to the acquisition included in this release
were provided by Titan and are unaudited.

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 the Company's 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. In particular,
statements about the markets in which GMS and Titan operates, including
the potential for growth in the commercial, residential and repair and
remodeling, or R&R, markets, statements about its expectations, beliefs,
plans, strategies, objectives, prospects, assumptions or future events
or performance, statements related to net sales, gross profit, gross
margins and capital expenditures, as well as non-GAAP financial measures
such as Adjusted EBITDA, Adjusted net income and base business growth,
statements regarding the impact of the recent tax legislation and
anticipated changes related to lease accounting, including the expected
impact on the fiscal 2019 effective tax rate, SG&A and Adjusted EBITDA,
and statements regarding potential acquisitions and future greenfield
locations, demand trends and future SG&A savings contained in this press
release are forward-looking statements. In addition, statements relating
to the Titan acquisition, including its expected contribution to the
Company's Adjusted EBITDA for the eleven months ending April 30, 2019,
are forward-looking statements. The Company has based these
forward-looking statements on its current expectations, assumptions,
estimates and projections. While the Company believes 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 its
control. Forward-looking statements involve risks and uncertainties,
including, but not limited to, economic, competitive, governmental and
technological factors outside of the Company's control, that may cause
its business, strategy or actual results to differ materially from the
forward-looking statements. These risks and uncertainties may include,
among other things: changes in the prices, supply, and/or demand for
products which GMS distributes; general economic and business conditions
in the United States and Canada; the activities of competitors; changes
in significant operating expenses; changes in the availability of
capital and interest rates; adverse weather patterns or conditions; acts
of cyber intrusion; variations in the performance of the financial
markets, including the credit markets; the possibility that the expected
synergies and cost savings and final impacts from the Titan acquisition
will not be realized, or will not be realized within the expected time
period; the risk that the GMS and Titan businesses will not be
integrated successfully; disruption from the transaction making it more
difficult to maintain business and operational relationships and to
accomplish other GMS objectives; the risk of customer attrition; and
other factors described in the "Risk Factors" section in the Company's
Annual Report on Form 10-K for the fiscal year ended April 30, 2018, and
in its other periodic reports filed with the SEC. In addition, the
statements in this release are made as of June 28, 2018. The Company
undertakes 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. These forward-looking statements
should not be relied upon as representing the Company's views as of any
date subsequent to June 28, 2018.

 

GMS Inc.

Condensed Consolidated Statements of Operations (Unaudited)

Three Months Ended April 30, 2018 and 2017 and Year Ended April
30, 2018 and 2017

(in thousands, except per share data)

 

  Three Months Ended   Year Ended
April 30, April 30,
2018   2017   2018   2017
Net sales $ 635,800 $ 614,977 $ 2,511,469 $ 2,319,146
Cost of sales (exclusive of depreciation and amortization shown
separately below)
  430,008     413,942     1,692,893     1,560,575  
Gross profit   205,792     201,035     818,576     758,571  
Operating expenses:
Selling, general and administrative 161,645 152,962 633,877 585,078
Depreciation and amortization   15,982     17,761     65,530     69,240  
Total operating expenses   177,627     170,723     699,407     654,318  
Operating income 28,165 30,312 119,169 104,253
Other (expense) income:
Interest expense (8,107 ) (7,198 ) (31,395 ) (29,360 )
Change in fair value of financial instruments (5,415 ) (141 ) (6,125 ) (382 )
Write-off of debt discount and deferred financing fees (74 ) (7,103 )
Other income, net   604     1,721     2,279     4,132  
Total other expense, net   (12,918 )   (5,618 )   (35,315 )   (32,713 )
Income before taxes 15,247 24,694 83,854 71,540
Provision for income taxes   5,328     10,422     20,883     22,654  
Net income $ 9,919   $ 14,272   $ 62,971   $ 48,886  
Weighted average common shares outstanding:
Basic 41,048 40,956 41,015 40,260
Diluted 42,151 41,759 42,163 41,070
Net income per share:
Basic $ 0.24   $ 0.35   $ 1.54   $ 1.21  
Diluted $ 0.24   $ 0.34   $ 1.49   $ 1.19  
 

GMS Inc.

Condensed Consolidated Balance Sheets (Unaudited)

April 30, 2018 and 2017

(in thousands, except per share data)

 
  April 30,   April 30,
2018 2017
Assets
Current assets:
Cash and cash equivalents $ 36,437 $ 14,561
Trade accounts and notes receivable, net of allowances of $9,633 and
$9,851, respectively
346,450 328,988
Inventories, net 239,223 200,234
Prepaid expenses and other current assets   11,726   11,403  
Total current assets   633,836   555,186  
Property and equipment, net of accumulated depreciation of $85,761
and $71,409, respectively
163,582 154,465
Goodwill 427,645 423,644
Intangible assets, net 222,682 252,293
Other assets   6,766   7,677  
Total assets $ 1,454,511 $ 1,393,265  
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 116,168 $ 102,688
Accrued compensation and employee benefits 56,323 58,393
Other accrued expenses and current liabilities 45,146 37,891
Current portion of long-term debt   16,284   11,530  
Total current liabilities   233,921   210,502  
Non-current liabilities:
Long-term debt, less current portion 579,602 583,390
Deferred income taxes, net 10,742 26,820
Other liabilities 35,088 35,371
Liabilities to noncontrolling interest holders, less current portion   15,707   22,576  
Total liabilities   875,060   878,659  
Commitments and contingencies
Stockholders' equity:
Common stock, par value $0.01 per share, 500,000 shares authorized;
41,069 and 40,971 shares issued and outstanding as of April 30, 2018
and 2017, respectively
411 410
Preferred stock, par value $0.01 per share, 50,000 shares
authorized; 0 shares issued and outstanding as of April 30, 2018 and
2017
Additional paid-in capital 489,007 488,459
Retained earnings 89,592 26,621
Accumulated other comprehensive income (loss)   441   (884 )
Total stockholders' equity   579,451   514,606  
Total liabilities and stockholders' equity $ 1,454,511 $ 1,393,265  
 

GMS Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

Year Ended April 30, 2018 and 2017

(in thousands)

 
  Year Ended April 30,
2018   2017
Cash flows from operating activities:
Net income $ 62,971 $ 48,886
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 65,530 69,240
Write-off and amortization of debt discount and debt issuance costs 2,851 9,793
Provision for losses on accounts and notes receivable (622 ) (122 )
Provision for obsolescence of inventory 106 425
Increase (decrease) in fair value of contingent consideration 195 (1,484 )
Equity-based compensation 5,745 3,142
Gain on sale and disposal of assets (509 ) (336 )
Change in fair value of financial instruments 6,125
Changes in assets and liabilities net of effects of acquisitions:
Trade accounts and notes receivable (11,752 ) (20,400 )
Inventories (34,774 ) (18,390 )
Prepaid expenses and other assets (4,441 ) (412 )
Accounts payable 11,365 (3,763 )
Accrued compensation and employee benefits (236 ) 4,440
Other accrued expenses and current liabilities 7,389 626
Deferred income taxes (16,224 ) (20,114 )
Liabilities to noncontrolling interest holders (3,704 ) 1,133
Income tax receivable / payable   (1,399 )   (5,956 )
Cash provided by operating activities   88,616     66,708  
Cash flows from investing activities:
Purchases of property and equipment (23,741 ) (11,083 )
Proceeds from sale of assets 2,865 3,995
Acquisition of businesses, net of cash acquired   (28,333 )   (150,428 )
Cash used in investing activities   (49,209 )   (157,516 )
Cash flows from financing activities:
Repayments on the revolving credit facility (617,230 ) (1,011,925 )
Borrowings from the revolving credit facility 513,878 1,013,365
Payments of principal on long-term debt (5,776 ) (4,584 )
Payments of principal on capital lease obligations (6,132 ) (5,208 )
Proceeds from issuance of common stock in initial public offering,
net of underwriting discounts
156,941
Repayment of term loan (160,000 )
Borrowings from term loan amendment 577,616 481,225
Repayment of term loan amendment (477,616 ) (381,225 )
Debt issuance costs (636 ) (2,637 )
Stock repurchases
Payments for taxes related to net share settlement of equity awards (1,441 )
Proceeds from exercises of stock options 477 345
Other financing activities   (671 )    
Cash (used in) provided by financing activities   (17,531 )   86,297  
Increase (decrease) in cash and cash equivalents 21,876 (4,511 )
Cash and cash equivalents, beginning of year   14,561     19,072  
Cash and cash equivalents, end of year $ 36,437   $ 14,561  
Supplemental cash flow disclosures:
Cash paid for income taxes $ 38,954 $ 49,163
Cash paid for interest 28,613 26,443
Supplemental schedule of noncash activities:
Assets acquired under capital lease $ 9,086 $ 9,410
Issuance of installment notes associated with equity-based
compensation liability awards
12,433 5,352
Increase in other liabilities due to transition guidance
(Decrease) increase in insurance claims payable and insurance
recoverable
(2,430 ) 1,876
 

GMS Inc.

Net Sales by Product Group (Unaudited)

Three Months Ended April 30, 2018 and 2017 and Year Ended April
30, 2018 and 2017

(dollars in thousands)

 
  Three Months Ended   Year Ended
April 30,   % of   April 30,   % of April 30,   % of   April 30,   % of
2018 Total   2017 Total 2018 Total 2017 Total
(dollars in thousands)
Wallboard $ 279,984 44.0 % $ 282,150 45.9 % $ 1,109,552 44.2 % $ 1,058,400 45.7 %
Ceilings 95,644 15.0 % 87,489 14.2 % 387,360 15.4 % 341,007 14.7 %
Steel framing 107,032 16.8 % 100,220 16.3 % 411,630 16.4 % 374,151 16.1 %
Other products   153,140 24.1 %   145,118 23.6 %   602,927 24.0 %   545,588 23.5 %
Total net sales $ 635,800 $ 614,977 $ 2,511,469 $ 2,319,146
 

GMS Inc.

Reconciliation of Net Income to Adjusted EBITDA (Unaudited)

Three Months Ended April 30, 2018 and 2017 and Year Ended April
30, 2018 and 2017

(in thousands)

 
  Three Months Ended Year Ended
April 30, April 30,
  2018 2017 2018 2017
 
Net income $ 9,919 $ 14,272 $ 62,971 $ 48,886
Interest expense 8,107 7,198 31,395 29,360
Write-off of debt discount and deferred financing fees 74 7,103
Interest income (84 ) (51 ) (177 ) (152 )
Provision for income taxes 5,328 10,422 20,883 22,654
Depreciation expense 6,054 6,170 24,075 25,565
Amortization expense   9,928     11,591     41,455     43,675  
EBITDA $ 39,252   $ 49,602   $ 180,676   $ 177,091  
Stock appreciation expense (a) 455 882 2,318 148
Redeemable noncontrolling interests(b) 498 457 1,868 3,536
Equity-based compensation(c) 418 553 1,695 2,534
Severance and other permitted costs(d) 256 (472 ) 581 (157 )
Transaction costs (acquisitions and other)(e)(f) 3,049 (798 ) 3,370 2,249
Loss (gain) on disposal of assets 139 (94 ) (509 ) (338 )
Management fee to related party(g) 188
Effects of fair value adjustments to inventory(h) 48 170 324 946
Change in fair value of financial instruments(i) 5,415 141 6,125 382
Secondary public offering costs(j) 1,385 1,525 1,385
Debt transaction costs(k)   527     265     1,285   265  
EBITDA add-backs   10,805     2,489     18,582     11,138  
Adjusted EBITDA $ 50,057   $ 52,091   $ 199,258   $ 188,229  
Adjusted EBITDA margin 7.9 % 8.5 % 7.9 % 8.1 %
   
(a)   Represents non-cash compensation expenses related to stock
appreciation rights agreements.
(b) Represents non-cash compensation expense related to changes in the
redemption values of noncontrolling interests.
(c) Represents non-cash equity-based compensation expense related to the
issuance of share-based awards.
(d) Represents severance expenses and other costs permitted in
calculations under the ABL Facility and the First Lien Facility.
(e) Represents one-time costs related to our IPO and acquisitions paid
to third party advisors.
(f) Includes $1.186 million in other income recorded in the fourth
quarter of fiscal 2017.
(g) Represents management fees paid by us to AEA. Following our IPO, AEA
no longer receives management fees from us.
(h) Represents the non-cash cost of sales impact of purchase accounting
adjustments to increase inventory to its estimated fair value.
(i) Represents the mark-to-market adjustments for derivative financial
instruments, including $5.1 million in pre-tax mark-to-market
currency adjustments during the fourth quarter of fiscal 2018.
(j) Represents one-time costs related to our secondary offering paid to
third party advisors.
(k) Represents expenses paid to third party advisors related to debt
refinancing activities.
 

GMS Inc.

Reconciliation of Income Before Taxes to Adjusted Net Income
(Unaudited)

Three Months Ended April 30, 2018 and 2017 and Year Ended April
30, 2018 and 2017

(in thousands, except per share data)

 
  Three Months Ended Year Ended
April 30, April 30,
2018   2017 2018   2017
Income before taxes $ 15,247 $ 24,694 $ 83,854 $ 71,540
EBITDA add-backs 10,805 2,489 18,582 11,138
Write-off of debt discount and deferred financing fees 74 7,103
Purchase accounting depreciation and amortization (1)   5,233   7,254   21,271   30,518
Adjusted pre-tax income 31,285 34,437 123,781 120,299
Adjusted income tax expense (2)   7,784   8,568   39,077   37,978
Adjusted net income $ 23,501 $ 25,869 $ 84,704 $ 82,321
Effective tax rate (2) 24.9 % 24.9 % 31.6 % 31.6 %
 
Weighted average shares outstanding:
Basic 41,048 40,956 41,015 40,260
Diluted 42,151 41,759 42,163 41,070
Adjusted net income per share:
Basic $ 0.57 $ 0.63 $ 2.07 $ 2.04
Diluted $ 0.56 $ 0.62 $ 2.01 $ 2.00
   
(1)   Depreciation and amortization from the increase in value of certain
long-term assets associated with the April 1, 2014 acquisition of
the predecessor company. The full year FY19 projected amount related
to GMS is $15.6 million. The full year FY19 projected amount related
to the Titan acquisition is expected to be between $46.0 and $50.0
million.
(2) Normalized cash tax rate determined based on our estimated taxes for
fiscal 2018 under the Tax Cuts and Jobs Act of 2017, excluding the
impact of purchase accounting and certain other deferred tax
accounts.

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