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Changed Risks for GMS INC (GMS)

Cybersecurity breaches could harm our business

Our current indebtedness, degree of leverage and any future indebtedness we may incur, may adversely affect our cash flow, limit our operational and financing flexibility and negatively impact our business and our ability to make payments on our indebtedness and declare dividends and make other distributions

Some provisions of our charter documents and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our stockholders, and may prevent attempts by our stockholders to replace or remove our current management

Risks Relating to Our Liquidity and Capital Resources

Risks Relating to Ownership of Our Common Stock

Our operations are subject to various hazards that may cause personal injury or property damage and increase our operating costs, and which may exceed the coverage of our insurance

Number of

Location

Our Canadian operations could have a material adverse effect on us

The market price of our common stock may be highly volatile

The commercial and residential construction markets are seasonal

We may be unable to effectively manage our inventory and working capital as our sales volume increases or the prices of the products we distribute fluctuate, which could have a material adverse effect on our business, financial condition and operating results

Because we are a holding company with no operations of our own, we are financially dependent on receiving distributions from our subsidiaries and we could be harmed if such distributions could not be made in the future

An impairment of goodwill could have a material adverse effect on our financial condition and results of operations

We occupy many of our facilities under long-term non-cancellable leases, and we may be unable to renew our leases at the end of their terms

Our sales are in part dependent upon the commercial new construction market and the commercial R&R market

A disruption of our IT systems could adversely impact our business and operations

We may be unable to successfully implement our growth strategy, which includes pursuing strategic acquisitions and opening new branches

Product shortages, loss of key suppliers or failure to develop relationships with qualified suppliers, and our dependence on third-party suppliers and manufacturers could affect our financial health

We may have future capital needs that require us to incur additional debt and may be unable to obtain additional financing on acceptable terms, if at all

Federal, state, local and other regulations could impose substantial costs and restrictions on our operations that would reduce our net income

Higher health care costs and labor costs could adversely affect our business

The requirements of being a public company, including compliance with the reporting requirements of the Exchange Act and the requirements of the Sarbanes-Oxley Act and the New York Stock Exchange, may strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner

The majority of our net sales are credit sales that are made primarily to customers whose ability to pay is dependent, in part, upon the economic strength of the industry and geographic areas in which they operate, and the failure to collect or timely collect monies owed from customers could adversely affect our financial condition

Any significant fuel cost increases or shortages in the supply of fuel could disrupt our ability to distribute products to our customers, which could adversely affect our results of operations

Natural or man-made disruptions to our facilities may adversely affect our business and operations

Sales of a substantial number of shares of our common stock in the public market could cause our stock price to fall

The agreements that govern our indebtedness contain various financial covenants that could limit our ability to engage in activities that may be in our best long-term interests

The loss of any of our significant customers or a reduction in the quantity of products they purchase could affect our financial health

Failure to attract and retain key employees could have a significant adverse effect on our business

Our second amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us

Branches

We may have exposure to greater than anticipated tax liabilities and we may be limited in the use of our net operating losses in the future

Anti-terrorism measures and other disruptions to the transportation network could impact our distribution system and our operations

The following risk factors may be important to understanding any statement in this Annual Report on Form 10-K or elsewhere Our business, financial condition and operating results can be affected by a number of factors, whether currently known or unknown, including but not limited to those described below Any one or more of such factors could directly or indirectly cause our actual results of operations and financial condition to vary materially from past or anticipated future results of operations and financial condition Any of these factors, in whole or in part, could materially and adversely affect our business, financial condition, results of operations and stock price

Our business is affected by general business, financial market and economic conditions, which could adversely affect our results of operations

Our sales are also in part dependent upon the residential new construction market and home R&R activity

The trend toward consolidation in our industry may negatively impact our business

We are exposed to product liability, warranty, casualty, construction defect, contract, tort, employment and other claims and legal proceedings related to our business, the products we distribute, the services we provide and services provided for us by third parties

Our industry and the markets in which we operate are highly fragmented and competitive, and increased competitive pressure may adversely affect our results

Despite our current level of indebtedness, we may still be able to incur substantially more debt

AEA may influence major corporate decisions or their interests may conflict with the interests of other holders of our common stock

Risks Related to our Business and Industry

We may be unable to fully realize expected benefits from our recent acquisition of Titan

We are subject to significant pricing pressures

Compliance with environmental, health and safety laws and regulations could be expensive Failure to comply with environmental, health and safety laws and regulations could subject us to significant liability

If we experience material weaknesses in the future or otherwise fail to maintain an effective system of internal controls in the future, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our common stock

Total

We may be subject to securities litigation, which is expensive and could divert management attention

We do not intend to pay dividends on our common stock in the foreseeable future

We may not be able to expand into new geographic markets, which may impact our ability to grow our business