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 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 (Q2 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 related construction materials. The company serves commercial and residential contractors across North America, supplying essential products for new construction and renovation projects. Revenue comes primarily from the sale and distribution of wallboard, ceilings, and steel framing, with additional income from complementary products and services. GMS’s business segments are typically organized by product category and geographic region, though the latest filing does not provide a detailed segment breakdown.

Revenue Breakdown

• Total Revenue (Q2 2025): $1.41B (–2.4% YoY)
  • Wallboard, ceilings, steel framing, and complementary products: $1.41B (100% of total; segment breakdown not disclosed in latest filing)
  • Growth is powered by ongoing demand in construction markets, though Q2 2025 saw a slight YoY decline due to market softness.

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, supplier relationships, and efficient distribution network.
• Most costs come from product acquisition (inventory purchases), logistics, and warehousing.

Operating Income and Expenses

• Operating Income: $81.2M (–17.4% YoY, 5.7% margin)
• Operating Expenses: $355.3M (+0.6% YoY)
  • R&D: Not disclosed (typical for distributors; minimal direct R&D)
  • SG&A: $314.4M (–0.2% YoY, 22.2% of revenue) — includes sales staff, administrative costs, marketing, and corporate overhead
  • GMS continues to control costs and invest in operational efficiency while expanding its distribution footprint.

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 scale and operational efficiency, though margins are pressured by market conditions and competitive pricing.

What Drives GMS's Money Machine?

• Wallboard and related building products: 100% of revenue (primary driver; segment breakdown not disclosed)
• SG&A efficiency: Operating expenses held nearly flat YoY, with SG&A at 22.2% of revenue, supporting profitability despite revenue softness.
• Strategic investments: Expansion of distribution centers and logistics capabilities to capture market share and improve service levels.
• Future growth areas: Geographic expansion and value-added services, though these are not yet significant 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 and competitive pressures, 3.1% of revenue drops to the bottom line.

Key Takeaways

• GMS's money comes overwhelmingly from distribution of building products (wallboard, ceilings, steel framing)
• High gross margins illustrate the power of GMS's scale and supplier relationships
• Heavy investment in distribution network and logistics, balanced by efficiency in operating costs
• Ongoing growth is driven by market demand, geographic expansion, and operational improvements

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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 100% of its revenue from the distribution of building products such as wallboard, ceilings, steel framing, and complementary construction materials. No other significant revenue segments were disclosed for Q2 2025.

2. How profitable is GMS in Q2 2025?

GMS reported net income of $43.6M in Q2 2025, with a net margin of approximately 3.1%, reflecting moderate profitability driven by scale and operational efficiency, though pressured by market softness and competitive pricing.

3. What are the largest expense categories for GMS?

The biggest expenses on GMS's income statement are cost of revenue (product acquisition, logistics, warehousing) and operating expenses, particularly Sales, General & Administrative (SG&A) costs. SG&A reached $314.4M in Q2 2025, representing 22.2% of revenue.

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

GMS does not disclose segment-level operating losses in the latest filing. However, divisions may operate at a loss due to aggressive investment in geographic expansion, logistics infrastructure, or competitive pricing strategies aimed at long-term market share growth—even if unprofitable today.

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

GMS's effective tax rate in Q2 2025 was 28.7%, higher than typical U.S. corporate averages. This moderate rate is primarily due to the company's taxable income mix and limited tax benefits from share-based compensation or international structuring.