Q3 2021 GMS Inc Earnings Call
Greetings and welcome to the G. M S third quarter fiscal 'twenty 'twenty, one and earnings conference call and webcast. At this time all participants are in a listen only mode and <unk>.
Question and answer session will follow the formal presentation.
If anyone should require operator assistance during todays conference. Please press star zero from your telephone keypad.
Please note this conference is being recorded.
I'll now turn the conference over to Leslie Gradkowski, Vice President Investor Relations Leslie you May now begin.
Thanks, Rob Good morning, and thank you for joining us for the Gms earnings conference call for the third quarter of fiscal 2021, and I'm joined today by John Turner, President and Chief Executive Officer, Scott became Vice President and Chief Financial Officer. In addition to the press release issued this morning, we have posted presentation slides to accompany that.
Call and the investors section of our website at Gmail Dot com.
On today's call management's prepared remarks and answers to your questions may contain forward looking statements as defined in the private Securities Litigation Reform Act of 1995 forward looking statements address matters that are subject to risks and uncertainties many of which are beyond our control and may cause actual results to differ from those discussed.
Today.
As a reminder, forward looking statements represent managements current estimates and expectations. The company assumes no obligation to update any forward looking statements and the future listeners are encouraged to review the more detailed discussions related to these forward looking statements contained in the company's filings with the SEC, including the risk factors section and the company.
And 10-K and other periodic reports.
Today's presentation also includes a discussion of certain non-GAAP measures the definitions and reconciliations of these non-GAAP measures are provided in the press release and presentation slides.
Please note that references on this call to the third quarter of fiscal 2021 relate to the quarter ended January 31 2021.
And finally once we begin the question and answer session of the call and the interest of time, we kindly request that you limit yourself to one question and one follow up with that I'll turn the call over to John Turner J D.
Thank you Leslie.
Good morning, and thank you for joining us today.
All of us at Gms and hope everyone. Joining this call as well as your families and colleagues are remaining safe and well and.
And that we may be getting closer to getting the COVID-19 pandemic behind us.
I'll start with a review of our operating highlights and then turn it over to Scott, who will cover our financial results.
I'll then share some closing thoughts before taking your questions.
If you start on slide three.
Outstanding execution, and the quarter by our entire team coupled with further strengthening and residential markets enabled us again to deliver results that exceeded our previous expectations.
The overall operating environment can be described as nothing short of dynamic, including a stark contrast between a very strong residential market and continued softness and the commercial market as well as significant activity on the pricing front and tightening availability of several product categories.
Our team continues to seize the opportunities and address the challenges this landscape and delivering an increase and net sales on a per day basis and the quarter.
As anticipated our gross margin of 32, 4% was lower than the quarter record of 33, 3% last year, but was in line with our prior expectation and consistent with that realized and the first half of the fiscal year.
Continued alignment of our cost structure to current demand and enabled us to improve SG&A and adjusted SG&A as a percentage of sales for the third quarter and our ROE, while ensuring that we maintain the customer focus and that continues to differentiate us and the market.
As a result, we realized an adjusted EBITDA margin of eight 3%, which reflects a 10 basis point improvement over the prior year, despite lower sales and we.
We generated positive free cash flow and our balance sheet and liquidity position provide us with strong financial flexibility, enabling us to continue our focus drive for growth via both Greenfields and M&A.
On the health and safety front, and we maintain enhanced operating protocols aimed at reducing the spread of COVID-19, and the health and safety of our employees business partners and communities remains our top priority.
And at the same time, we continue to realize benefits from the ongoing commitment to our strategic priorities.
This is evidenced by our ability to generate higher volume and wallboard through further penetration of residential end markets increased sales of complementary other products and our execution of several platform expansion transactions during and just following the third quarter.
Considering the market undercurrent, which we continue to navigate we performed very well and the third quarter.
Congratulations and thanks go out to the entire Gms team, who made these results possible remaining engaged focused and proactive as we come together and support of our customers and each other.
At the same time, we offer our gratitude for the continued partnership we share with both our customers and suppliers.
With that I'll now turn it over to Scott and to provide more perspective on our financial results for Q3 Scott.
Scott, Thanks, J T and good morning, everyone.
Looking at slide four net sales of $751 $2 million were down one 3% year over year as continued COVID-19 market pressures and commercial construction were largely offset by higher sales to residential construction.
Adjusting for the one less selling day year over year daily net sales were up 3%.
This is the first quarter of positive per day sales growth since the onset of the pandemic.
Organically net sales and daily net sales were down just one 9% and 3% respectively.
The team's continued ability to reposition and realign resources to capture demand where does the strongest allowed us to again exceed our previous sales expectations.
Wallboard sales of $311 $1 million decreased 1% or one 4% on an organic basis due to a modest decline in price and mix, partially offset by slightly higher volume.
On a per day basis, Oliver wallboard sales increased 6% driven by two 1% higher volume and strong residential volume more than offset lower commercial activity.
And in light of our response to recent supplier pricing actions realized wallboard price was up sequentially from the second quarter as well as for the month of January up on a year over year basis.
Yes.
Ceiling sales of $101 $9 million decreased nine 6% year over year virtually the same on an organic basis, driven by lower volume and mix, partially offset by higher price.
Daily net sales of ceilings were down eight 1% year over year.
Steel framing sales of $104 million decreased 12, 5% year over year again, similar on an organic basis due principally to a decline in volume and to a lesser extent price and mix combined.
On a per day basis net sales of steel framing declined 11, 1%.
Reflecting the upward movement and commodity steel prices or steel pricing was like wallboard up sequentially from the second quarter as well as on a year over year basis for the month of January.
Consistent with the first half of fiscal 2021 year over year sales declines, we're seeing principally and ceilings and steel product categories tied primarily to commercial construction.
Our commercial business exhibited a low double digit year over year decline, which was similar to what we experienced and the second quarter.
Our complementary other product sales of $234 $2 million increased eight 7% up seven 5% on organic basis year over year due to our execution of growth initiatives to increase other product sales positive contributions from acquisitions and strong pricing and <unk>.
Certain product categories, including roofing installation and lumber.
Strength in our Canadian business for which other products comprises a larger portion of sales also contributed to this growth.
Daily net sales of other products were up an impressive 10, 5%.
Gross profit of $243 $3 million decreased 4% compared to other third quarter of fiscal 2020.
And as expected on a relatively difficult year over year comparison gross margin of 32, 4% declined 90 basis points, principally due to unfavorable mix from the commercial segment and price cost dynamics related to timing around the implementation of price actions.
Turning to slide five.
Adjusted SG&A expense as a percentage of net sales of 24, 2% improved 100 basis points year over year.
Approximately 120 basis points of that benefit was realized from continued disciplined cost containment and productivity initiatives as well as favorable business mix towards single family residential with respect to operating costs.
This was partially offset by 20 basis points associated with the previously mentioned deflationary price and other.
From a mix impact seen with certain other companies' products.
As a result third quarter adjusted EBITDA of $62 $6 million was essentially flat compared to a year ago, Despite a $10.2 million decrease and sales for the quarter adjusted.
Adjusted EBITDA margin of eight 3% improved 10 basis points year over year and represented a modest 1% decremental adjusted EBITA margin.
Turning to slide six.
We generated a free cash flow of $38 $4 million or 61% of adjusted EBITDA in the third quarter.
And this was lower year over year, principally due to some proactive and inventory build in advance of manufacturer price increases and <unk>.
To ensure product availability for our customers and maybe anticipation of certain areas of tightening supply.
Despite these actions we generated healthy free cash flow and expect to continue to do so.
Capital expenditures of $6 million were consistent with last year, and we maintain our estimate for cash capital expenditures and fiscal 2021 of approximately $25 million.
As of January 31, 2021, we had cash on hand of $156 million and $407 million of available liquidity under our revolving credit facilities.
During the third quarter, we reduced our net debt by $34 $3 million and net debt leverage was two nine times down from three times at the end of the second quarter of fiscal 2021 and down from the three three times as of the end of the third quarter of fiscal 2020.
Our balance sheet remains healthy and our liquidity position affords us ample resources to continue pursuit of our strategic growth priorities.
With that and I'll, let me turn the call back over to J T. Before we open the lines for questions.
Scott.
While we remain laser focused tactically and the current environment, we continue to execute on our long term strategic growth priorities.
Our third quarter progress on these foreign interest can be seen in many ways.
First expanding share and core products, particularly in geographies, where we are underpenetrated. Our focus here is notably evidenced over the last few quarters by our increasing penetration and residential construction and geographies, where we have historically been underrepresented. This enabled us to generate higher wallboard volumes year over year overcoming continued soft.
<unk> and commercial construction.
Next to diversify and profitably expand our product offering we are focused on growing select other product opportunities outside of our core products.
Our multiple initiatives and both the United States and Canada are bearing fruit as evidenced by higher year over year growth and this category for the third quarter and a row, despite variability across our end markets.
Third we're developing our platform through accretive acquisitions, and greenfield opportunities, while maintaining balanced progress and debt reduction.
During the third quarter, we opened a new greenfield location, and Waco, Texas and stepping strongly into the fourth quarter on February one we closed on the acquisition of DL building supplies, Inc. Providing entrance to the important Ottawa Gatineau market in Canada. We complemented this with further U S expansion launching a new location and the growing Atlantic City New.
<unk> market as well as three new locations and Metro Memphis, Tennessee, complementing our already strong position and Nashville.
These moves enabled us to and extend our geographic presence to four new and attractive markets at the same time with the strength of our free cash flow, we reduced our net debt by over $34 million.
And finally, so that we deliver a best in class customer experience as well as drive productivity and further profit improvement, we are leveraging our scale and employing technology and best practices across the business.
Deployment of our e-commerce platform progresses with key adoption metrics by our customers continuing to increase.
In addition, we are deploying data management and digital visualization dashboards initially focused on the sales teams further leveraging our business intelligence capabilities to provide enhanced real time insights as we focus on further driving growth and profitability.
Before making some closing remarks, a few thoughts about our fourth quarter.
In the near term, we expect a continued bifurcation and residential and commercial market conditions continued strength in residential construction is well documented with a multitude of strong housing data and forecast, particularly around single family.
Commercial construction remains challenged with external forecast, calling for a wide range of low to high single digit declines and calendar 2021.
However, we are encouraged by the advancements being made and addressing COVID-19, and particularly with respect to vaccine deployment and believe that those will ultimately enable resumption of growth and commercial demand.
For our fourth quarter ended April 30, we currently expect to generate a low double digit year over year increase and reported sales.
And at last year's fourth quarter was significantly impacted by COVID-19 related shutdowns in March and April.
This estimate assumes and market conditions similar to those experienced in the third quarter.
In terms of profitability, we anticipate a continuation of unfavorable mix and price cost dynamics experienced and the third quarter.
Resulting in an expected year over year gross margin decline in the fourth quarter similar to that realized and the third quarter.
As a result, and coupled with continued SG&A leverage we expect to generate and incremental adjusted EBITDA margin within the range of 10% to 20% for the fourth quarter of fiscal 2021.
And turning to slide eight.
In closing Gms is well positioned now and for the long term.
As the North American market leader and the distribution of specialty interior construction products, we enjoy significant scale advantages employee a differentiated service model and embrace and entrepreneurial culture.
All three combined are enabling us to successfully execute for our customers and shareholders, while keeping the health and safety of our many contributing stakeholders is our top priority.
At the same time, our strong free cash flow generation balance sheet and liquidity provide not only near term advantages, but enable us to effectively pursue our strategic priorities to capitalize on long term growth opportunities.
Finally, as we conclude with slide nine.
Calendar 2021 marks the 15th anniversary of the founding of Gms and we're excited to be celebrating this important milestone and.
I am confident that our focus on our strategic priorities, coupled with our team's capabilities and ongoing commitment to our tradition of delivering world class service to our customers will enable us to generate value for our shareholders well into the future.
Operator, we're now ready to open the call for questions.
Thank you.
At this time, we'll be conducting a question and answer session.
And thanks to ask a question today. Please press star one on your telephone keypad and a confirmation tone will indicate your line is and the question queue he'd.
You mean fresh start to if he would like to remove your question from the queue from.
And for participants that are using speaker equipment and may be necessary to pick up your handset before pressing the star keys.
And the interest of time and to allow as many as possible and ask a question. Please limit yourself to one question and one follow up.
One moment, please while we poll for questions.
Okay.
Our first question today is coming from the line of Matthew Bouley with Barclays. Please proceed with your question.
Hey, good morning, Thanks for taking the questions.
I wanted to ask about the platform expansion.
Just given your you opened several new Greenfields there.
At the end of the quarter and into the new quarter is there anything we should read into that into in terms of and how youre thinking about M&A versus greenfields going forward or are you sort of thinking about delevering the balance sheet more or is that really just a timing issue what kind of drove the decision to do so many greenfield Sir Thank you Hey, good morning, yes.
And Matthew so the reality of some of those Greenfields, where those were existing businesses and the past that had struggled and and as we mentioned in prior calls we had had the opportunity to look at certain markets, where there had been struggling competition and so while these were not.
Actual purchases eight weeks classified them as Greenfields and many cases. These were previously existing businesses. So we will be up and running much faster in those four markets than we would have been.
The historical Greenfield So there's no real change and focus we still have six to eight new Greenfield slated for our for our next calendar year, we may have one or two more and the next quarter.
I think that there is still a balance between acquisition and Greenfield no real change and the strategy. We just took advantage of some opportunity here to add some really nice markets very quickly.
Okay understood.
Second one on the margin side, you discussed in the quarter and some of the price cost dynamics on the gross margin side.
And impacting.
You know obviously, there's more price increases we've heard you know sort of coming through the Pike you know, perhaps this month's and wallboard I think I heard you say that you know this expectation.
Some of these impacts should continue and that's my question is is there any reason that adds more price increases come down the line that the headwind you're currently seeing and the gross margin should get any larger than it already is or as you guys kind of catch up on pricing.
And this kind of level of gross margin, where we're at today should be relatively consistent just any kind of puts and takes and how to think about that going forward. Thank you.
Yes, I mean I think.
You summarized it nicely and that as we continue to catch the price increases there's a there's a lag period obviously between implementation.
This increases and what we actually pay for goods and then what we can what we can actually charge for those goods.
And being Gms and being prudent and also being a customer friendly company. There are times, when we need to help our customers pushed pricing into the market as well and in many cases, it's more difficult for them than it is for us and certainly more difficult for our customer base than it is to the manufacturing base to take price increases.
So they tend to take a little while to get through the pipeline and that's where we are right. Now I think we just mentioned that we expect the fourth quarter to look a lot like the third quarter from a year over year decline perspective.
On a percentage basis so.
We were thinking the same kind of degree of increase and we're getting price and we mentioned that also and both steel and and wallboard. So it's just how much can we get through with what's coming back up into the pipeline. So the next big wallboard increase Thats been announced.
And April but a lot of the other product categories. As you know are just continually trying to increase price at the moment Youll steel is kind of on a monthly increase basis installation continues to be inflationary lumber continues to be inflationary, although it seems to be topping out potentially roofing little bit inflationary. So I think that we will.
Basically do what we said we would do and our view of this quarter is going to look a lot like last quarter.
From a year over year perspective.
And I would just add Matt if you look back across a couple of quarters before that you've got a deflationary environment, where pricing actions were being put in place.
And I think as we've talked about in prior calls those weren't necessarily taking hold but in this environment.
Completely different context, it takes a little while to turn that ship and we believe it's headed back towards a more inflationary direction at least and short term.
Got it thanks, Scott, Thanks, J T and good luck and Q4.
Thank you I appreciate it.
Our next question comes from the line of Noah <unk> with Stephens. Please proceed with your questions.
Hi, Thanks for taking my questions.
So first I just wanted to ask how are the lead times with your suppliers right now we've been hearing that there had been some shortages for wallboard and some markets just given the strength and housing and.
Have you guys seen any of that.
We have.
As the largest player in this space, we tend to be and a better inventory position as we mentioned we used our balance sheet intelligently during the quarter to continue to bring inventory and to service our customers.
And we don't have acute problems, but we're certainly in some markets.
At a level that a little lower than we'd like to be.
And the weather didn't help here this last month and Texas in particular with.
Several of the wallboard manufacturers, having to be shut down and the late tax issues coming out of Houston for some of the other products as well as natural gas problems for.
Mexican wallboard producer they pull their gas out of Texas. So they had some problems too. So I think that's just going to exacerbate things for a few weeks.
But we're getting the wallboard, we need for the most part.
We are not running out on a regular basis across multiple locations or anything like that steel is as very extended lead time right now and steel is out anywhere from eight to 12 weeks and we've taken that into accounts again, we brought inventory up to.
To account for that lead time.
I think that's just going to be more of a difficult environment to operate in and as contractors are going to have to be prepared to provide 12 weeks of lead time on special order steel.
And that's a reflection of the inventory of the manufacturers not being available, but raw material. It's just taking them a long time to get rolled steel.
Everything else is that right.
Everything else is OK spotty hand to mouth installation is tight I think you've heard all the roofing guys talked about roofing being tight tight but it's not acute at this point.
Got you.
And then a quick follow up here.
The other products growth and the quarter was pretty impressive.
And just your thoughts going forward. There I know this is a strategic focus for you guys, but.
Should we continue to expect this kind of magnitude and then and then maybe you guys talked about seeing inflation and installation and lumber and some of those other products. So is it is can you kind of breakout the growth there between volume and price.
I mean, we because of the complexity of the product category, we don't have it as easily as we would with wallboard and steel or ceilings, but.
Just from a gut check perspective, there is certainly a good percentage of that growth is price and I wouldn't chalk up more than half of it to price for sure.
As we continued to drive good volumes, we're having a lot of success and Canada, and we're having a lot of success.
And in the U S and installation and lumber in particular.
<unk>.
We have a business called tool source warehouse.
Underneath.
Don't talk about it a lot it's a fantastic supply business, it's doing very well.
And so I feel like we will continue to have good success and other products will they be 10% on it and take the basis going forward.
And I don't think we expect that but we do expect good single digit growth and that in that category moving forward.
Great that's helpful and I'll leave it there.
Thank you and me.
Thank you. Our next question is from the line of Dave Manthey with Baird. Please proceed with your question.
Hi, good morning, everyone.
Just to clarify and the.
Gross margin guidance, where you're talking about a similar decline year over year, you're talking about the debt.
And the dollars being down a similar percentage year over year Youre not talking about percentage of sales being down the same amount are you.
More specifically, we're talking about gross margin. So Dave if you look at Q3 of this year versus last year, we were down about 90 basis points that order of magnitude on a gross margin basis and is in the ballpark of what we're talking about for Q4 and as well.
Okay.
Could you talk a little bit about.
The drivers there it.
It seems like you've been pretty steady and a 32, 4% to 32 six range and that would imply sort of a 60 basis point drop off sequentially.
Could you talk about what the drivers are that are leading to that kind of outcome.
Yes, it's two things the commercial mix versus the residential mix of residential mix is much stronger right. So we automatically get a little bit of a.
Downside impact to our gross margins with residential products versus commercial products and then the price cost dynamics. We just we just talked about and that's just pushing that through so as long as we're chasing price increases, which again, we're anticipating a continued inflationary environment during the quarter similar to what we just experienced it now if that was to change and then maybe gross margins would be.
A little bit better, but we do anticipate chasing across our other product category as well as potentially wallboard and steel in particular, we do anticipate chasing these prices up eventually that stabilizes.
And we kind of return to what we would expect to be the long term solid good average that we expect to get out of our gross margins and then in the meantime, continuing to keep our cost and check and being sure that debt. We were doing that prudently. So we can continue to deliver a nice bottom line I.
I think we would agree with you David if you look at that number relative to <unk>.
Trend certainly, it's a tick lower but we continue to guide towards more adjusted EBITDA is the best indication of the profitability for the business because well service a little bit of decline and gross margin were making up for that and our operating costs and and.
And certainly you see that and the kinds of Decrementals were talking about from the fourth quarter and that you saw on the third.
Third quarter as well.
Right and.
Brings me to the next question, which is.
Without giving specific guidance when you think about fiscal 'twenty, two and where those lines intersect do you think you can get back to a somewhat normal contribution margin there or could it be.
Could it be actually better.
In fiscal 'twenty two than than usual.
I guess, that's going to depend on the inflationary environment on the product side right now I don't think 'twenty two we're going to see a lot of inflation on the cost side of the business I think we've got debt identified and a tremendous amount of work.
Work and focus on that part of the business by all of our team.
So if if the inflationary environment on the cost side of what we're buying was to level off and then could we be better than our previous 10 to 15, we were kind of delivering from an incremental perspective on sales.
We could be a little bit better for a period of time.
And that but at the moment.
We're viewing next quarter out and given that 10 to 20 range.
Got it okay. Thank you very much.
Thank you.
Our next question is from the line of Steven Ramsey with Thompson Research Group. Please proceed with your question.
Hey, Good morning, maybe just start with you you mentioned weather and Texas impact disrupting.
Apply chain.
Can you maybe talk to if there is.
Some level of meaningful incremental demand coming from.
Damage there in the coming quarters.
I think there'll be some but again.
And the that demand a lot of that is residential remodel type demand and we're not we don't do it as big a business, particularly in Texas and residential Remodels, we might and other and other parts of the country, but I'm not sure. It's nothing like the Houston floods right. I mean, the damage was done and everybody's got some wallboard that has to be replaced and their homes, but it's not an entire homes and.
Higher levels of homes entire warehouses et cetera, so it's not going to be a and event like we saw down there a few years ago with the hurricane for sure.
Okay and.
And then I wanted to.
Think about the expansion and Memphis.
<unk> Bill Msas, you discussed which is a three hour difference.
Between them since that's my neck of the woods and I'm curious to think about.
How are you. This is maybe a framework for expanding your network when theres meaningful distance between two msas.
How you can do greenfields and acquisitions and how how to distant MSA from complement each other.
Expand is this something.
And you think is a more.
Meaningful push for you guys going forward.
Well I mean this is right in line and we were not in Memphis at all it was one of the major Msas and we were not in previously so we've talked about white space, we would've considered Memphis White space Atlantic City was also white space.
And for Us.
So we have that advantage, but when we mentioned Nashville, and we talk about Memphis theirs, and and also it back down to Jackson.
Mississippi, There is some customer crossover for sure and so customers that we do business with and Nashville did not have the opportunity to do business with us and Memphis, and we think we have a differentiated service model and we continue to drive that entrepreneurial culture, and I think customers enjoy that and like to buy from us as a result.
And being available to them and Memphis is important.
But the reality of the strategic net play here is that we just weren't in Memphis and now we are so there's not a tremendous amount of lets say logistics coordination between Nashville, and Memphis. It can be done and we certainly have delivered and the Memphis and the box for great customers that needed this too, but I think the bigger the bigger news here.
Or is we're in a new MSA that we were not in before and a meaningful way and we've and we've assumed some locations and some people that are really really good and our space that existed previously and the previous supplier and that market debt for generations had a wonderful brand name and just got into trouble and we've been able to we've been able to get up to speed pretty quickly.
So feel great about the Memphis expansion.
Great. Thanks.
Thank you.
Our next question is from the line of Mike Dahl with RBC capital markets. Please proceed with your question.
Good morning, Thanks for taking my questions sure Mike.
Wanted to ask first about non res and.
And kind of laid out.
What are the ranges that are being put out there about some.
Some forecasters, but based on based on what you've been reporting it doesn't see and immediately clear that theres been any real inflection and maybe there's been some stabilization on your non res or commercial business I was hoping you could elaborate.
And what youre seeing or hearing from.
And what you're seeing on bidding activity.
Anything incremental on project delays or cancellation that would be.
And then as we think through that and commercial aside from just obviously youll come up against some easier comps, but just.
Curious to get some color on incremental changes or anything on green shoots and that sort of stuff.
Sure.
And from a cancellation perspective, I think most of whats going to be cancelled has been cancelled and and Thats what were hearing theres still some delays there is still some some people not comfortable getting started and I'm not sure what the environment might look like.
10, and 12 18 months from now.
And neither neither are we all that sure and obviously as you can tell by the when you talk about the AIA consensus when you have.
Really smart people one group of really smart people think commercial is going to be down 1% and another group of really smart people think commercial is going to be down 10%. They don't know either.
So I think that what we're seeing is relatively flat bidding activities kind of in line with the volume and where we are today and the big and the big gap for US at the moment is the tenant work and short term commercial remodel.
Just not happening.
And I still think that with a lie.
A light at the end of the tunnel that we know is not the proverbial train.
And when it comes to Covid that we should we should see some pickup and that in that environment, we should see some commercial remodel.
And maybe Texas will be an early indicator of that I don't know.
The market being opened up this week, we'll see how people how people are and how comfortable people are with the with that with that environment and their willingness to go back out and spend on services versus goods and I think that's just another indicator. We can all look at it right, we'll look at services consumption versus goods consumption as people.
Move back into into that debt.
That category that will drive a lot of commercial spending it.
And if overnight hotels were to fill up and and.
And office space was to fill up I think we see a lot of remodel activity kick in but again, everybody and Nobody's best guess Thats why and the fourth quarter, we expect conditions to remain very much like they were and the third.
Got it okay, that's helpful and that kind of segway from that.
My second question on which is really more specifically about fourth quarter right.
Revenue that guide for up low double digits. It seems.
And it seems fairly strong and your comps do get a little bit easier, but they didn't.
Drop off more meaningfully until I think your fiscal <unk>. So.
It's not a huge difference in income.
Comps it doesn't sound like there's inc.
A meaningful near term inflection and in the commercial side. So could you just give us the building blocks for how to get to that low double digits. I know there was a question earlier and then asked about price volume, yes, I thought that was.
Other.
Other products, but just any sense of kind of the inflationary aspect behind that versus volume and.
Would be great.
Yes, I mean, the one thing and that whole comment statement, you said that was not correct.
Is the April declines of last year were very significant because that was the first full month of complete shutdown for COVID-19.
So.
We gave.
<unk> a number last year, that's a pretty significant number somewhere around $60 million.
Volume and the quarter and dollars again it was a rough estimate based on everything that was going on that we lost as a direct result of Covid, we're not and now we're in an environment, where we're rolling over that and we're looking at our business conditions and the third quarter and how we performed organically and the third quarter and the reality is how we performed organically and <unk>.
Third quarter, plus the acquisition volume and we just acquired up in Canada, Great acquisition, and Canada by the way.
And really excited about that one that.
Inorganic volume and the quarter gets you to low low double digit growth for our business plus the inflationary dynamics that are part of the equation as well.
Okay.
Yes.
Thinking through like monthly cadence and ours.
Looking at kind of the overall quarter, but.
And it would it sounds like it might be something like low.
Single digit growth and fab March similar to what you're exiting.
And you exited <unk> and <unk>.
And you get back from the significant volume volume in April.
They're thinking through the month please yes.
Yes, that's exactly right and in February and technically going to be a little challenge, we've got to make it up because of the weather that we had across the country and February and particularly it's okay.
Got it got it okay. Thanks.
Thank you.
Thank you at this time, we've reached and the question and answer session and I will now turn the call back to Leslie correct Cascade for closing remarks.
As always thanks for joining us this morning, a replay of the call will be available shortly on Gms Dot com and we certainly appreciate your interest good day.
And Brian Thank you.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.