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GMS Inc. GMS has inked a deal to acquire substantially all assets of Westside Building Material ("Westside") for $135 million in cash.
John C. Turner, president and CEO of GMS, said, "The acquisition of Westside reflects the continued execution of our growth strategy and brings together two leading organizations with shared cultures and entrepreneurial values.”
Headquartered in Anaheim, CA, Westside is one of the largest independent distributors of interior building products, and has been serving commercial as well as residential markets since 1935. Westside primarily operates in 10 locations; nine across California (Anaheim, Hesperia, Oakland, Chatsworth, Fresno, Lancaster, Santa Maria, San Diego and National City) and one in Las Vegas, NV. In 2020, Westside generated net revenues of approximately $200 million.
Acquisitions to Boost Presence
GMS has been improving performance and expanding footprint through strategic acquisitions over the past several years. The company previously acquired several other businesses and greenfield locations in California. GMS’ long-term strategy of growing through business expansion will solidify its geographic scale and product portfolio.
Post completion of the aforementioned acquisition, Westside will continue to operate under the "Westside" brand and will partner with seven existing GMS locations across California. The deal is expected to close within third calendar quarter of 2021, subject to customary closing conditions.
Earlier in February, the company acquired D.L. Building Materials, Inc. and established five greenfield locations as part of its business strategy. D.L. is a leading supplier of wallboard, acoustical ceilings, steel framing, insulation and related building products. It serves the Eastern Ontario and Western Quebec markets. With this buyout, GMS expanded presence to the sixth largest metropolitan area in Canada and the Canadian federal capitol city. Also, it marked its entry in Quebec to execute strategic expansion goals in Canada.
Shares of GMS have outperformed the industry and S&P 500 composite so far this year. The stock has gained 50.9% compared with the industry and S&P 500 composite’s growth of 25.9% and 12.5%, respectively, in the said period.
The company’s solid price performance is mainly driven by strong end-markets results backed by improvement in new housing starts, R&R activity as well as commercial construction. Also, its market-leading position, particularly in the distribution of interior building products, adds to the positives.
GMS — which shares space with Fastenal Company FAST, Lumber Liquidators Holdings, Inc. LL and Beacon Roofing Supply, Inc. BECN in the Zacks Building Products - Retail industry — carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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