How GMS (GMS) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a building products distributor like GMS Income Statement Overview makes money is essential for investors and anyone interested in the business of construction materials distribution. In this post, we break down GMS's quarterly income statement (Q3 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick GMS Overview

GMS operates as a leading distributor of specialty building products, including wallboard, ceilings, steel framing, and complementary construction materials. Revenue comes primarily from the sale and distribution of these products to commercial and residential construction contractors. The company’s business is organized around product categories and geographic regions, serving a broad base of customers across North America.

Revenue Breakdown

• Total Revenue (Q3 2025): $1.41B (−2.4% YoY)
  • [Wallboard, Ceilings, Steel Framing, Complementary Products]: Detailed segment breakdown not disclosed in this quarter, but historically wallboard and ceilings are the largest contributors.
  • Growth is powered by ongoing construction activity, though Q3 2025 saw a modest decline due to softer demand in some regions.

Gross Profit and Margins

• Gross Profit: $436.5M (30.9% gross margin)
  • Cost of Revenue: $977.8M (−1.9% YoY)
  • GMS maintains robust margins due to its scale, strong supplier relationships, and efficient distribution network.
• Most costs come from product procurement, warehousing, and logistics.

Operating Income and Expenses

• Operating Income: $81.2M (−17.4% YoY, 5.7% margin)
• Operating Expenses: $355.3M (+0.6% YoY)
  • R&D: Not separately disclosed; as a distributor, GMS’s R&D spend is minimal.
  • SG&A: $314.4M (−0.2% YoY, 22.2% of revenue) — includes personnel, facilities, and administrative costs to support sales and operations.
  • GMS continues to control costs while investing in operational efficiency and network expansion.

Net Income

• Pre-Tax Income: $61.1M (−21.9% YoY, 4.3% margin)
• Income Tax: $17.5M (28.7% effective tax rate)
• Net Income: $43.6M (−23.9% YoY, 3.1% net margin)
• GMS converts a moderate portion of sales into profit due to its efficient distribution model and focus on cost control, though margins are pressured by market softness and higher interest expense.

What Drives GMS's Money Machine?

• Product Distribution: Overwhelmingly the main revenue driver, with wallboard and ceilings historically accounting for the majority of sales.
• Scale and Network Efficiency: GMS leverages its extensive branch network to serve a wide customer base, driving volume and negotiating power.
• Strategic Investments: Ongoing investment in logistics technology and branch expansion to improve service and capture market share.
• Future Growth Areas: Expansion into complementary products and value-added services, though these segments are not yet major profit contributors.

Visualizing GMS's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially SG&A) taking the largest chunk.
• Even after significant costs, 3.1% of revenue drops to the bottom line.

Key Takeaways

• GMS's money comes overwhelmingly from the distribution of building products to construction contractors.
• High gross margins and moderate net margins illustrate the power of GMS’s scale-driven distribution model.
• Heavy investment in network efficiency and logistics, balanced by disciplined SG&A cost management.
• Ongoing growth is driven by construction activity, geographic expansion, and complementary product offerings.

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FAQ About GMS's Income Statement

1. What is the main source of GMS's revenue in 2025?

GMS generates over 90% of its revenue from the distribution of specialty building products, primarily wallboard, ceilings, and steel framing. Complementary products and services contribute the remainder.

2. How profitable is GMS in Q3 2025?

GMS reported net income of $43.6M in Q3 2025, with a net margin of approximately 3.1%, reflecting moderate profitability driven by efficient distribution and cost control, though pressured by softer demand and higher interest expense.

3. What are the largest expense categories for GMS?

The biggest expenses on GMS's income statement are cost of revenue (product procurement and logistics) and operating expenses, particularly Sales, General & Administrative (SG&A) costs. SG&A reached $314.4M in Q3 2025, as GMS prioritizes branch operations, personnel, and customer service.

4. Why does [segment/division] operate at a loss?

While segment-level losses are not separately disclosed for Q3 2025, divisions focused on newer complementary products or geographic expansion may operate at a loss due to upfront investment in market share and infrastructure, with the expectation of long-term growth.

5. How does GMS's effective tax rate compare to previous years?

GMS's effective tax rate in Q3 2025 was 28.7%, consistent with prior years. This moderate rate reflects the company’s U.S.-centric operations and limited international tax optimization.