GMS (GMS) - Get Report went public this morning at $21 per share and immediately traded up over 6%. The wallboard and ceiling distributor's CEO Michael Callahan said the housing shortage in the country is creating a big demand for his products.
"In just about every major metro market that we serve there is a real shortage in housing and in many cases you hear about homes being listed and sold above the asking price. That is becoming much more routine," said Callahan.
Callahan said his business is 40% residential and 60% commercial so U.S. housing starts are a very important guidepost for him. U.S. housing starts rose more than expected in April as builders ramped up the construction of single and multi-family homes. Groundbreaking rose 6.6% in April to a seasonally adjusted annual pace of 1.17 million units, the Commerce Department reported last week. That was ahead of Wall Street's consensus forecast of a 1.13 million-unit pace.
Founded in 1971, GMS provides a comprehensive solution, or one-stop-shop, for all its customers for wallboard, ceilings and complementary products.
Callahan said contractors visit GMS' 185 branches across 41 states not just for the products they offer, but for their service as well. GMS has a decentralized structure and offers different delivery options than Home Depot (HD) - Get Report and Lowe's (LOW) - Get Report , he said.
"It's about getting the product not only to the job site, but to the locations where it is to be stocked," said Callahan. "If it is in the second floor of a building you put it in a space there, or in the case of a home you literally scatter it through the entire house. When the subcontractor gets to the job, they hang the product and they are done."
Barclay's and Credit Suisse acted as joint book-running managers for the offering.