Home improvement and contractor supplies retailer The Home Depot reported its third quarter financial results on Nov. 18, and its ensuing earnings call with analyst shared detail on recent and expected growth for recently acquired building materials suppliers SRS Distribution and Gypsum Management and Supply (GMS).

At SRS — which HD bought for $18 billion in mid-2024 as its largest ever acquisition — CEO Ted Decker said sales comps were essentially flat year-over-year despite weakness in the roofing market. He added that rather than growing at the mid-single digits as previously expected, SRS is likely to grow low-single digits for the full year given the softer demand backdrop.

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“With respect to SRS and its impact, SRS continues to perform extremely well,” Decker said in the call. “There is significant pressure in the roofing market. We know that shipments are down double digits from the absence of storm activity this year. SRS actually comp flat for Q3, and we think that they are taking a significant share.”

GMS — acquired in September for $5.5 billion — contributed about eight weeks of sales into HD’s Q3 for approximately $900 million of contributed sales. For the year, GMS is expected to contribute about $2 billion in incremental sales to HD.

“We know that GMS continues to take share. We continue to take shares in enterprise, and particularly in all of GMS’s categories. We feel great about that business going forward,” Decker added.

Combined — with GMS tucked into SRS — Decker said that SRS’ model is to grow via existing branches, new greenfields and tuck-in acquisitions and has been running at a pace of about 40 to 50 added branches per year since it was acquired by HD. Year-to-date, SRS has added 23 locations (GMS contributed four post-acquisition) and opened six stores. Decker acknowledged that SRS & GMS see greater seasonal swings than greater HD.

SRS & GMS are expected to exert a drag of about 55 combined basis points on gross margin year-over-year and a 35-point headwind on operating margin mix, but the company expects to leverage scale and cross-sell over time to improve performance. The company did not commit to a detailed timeline for margin recovery, but emphasized that synergy execution will be key.

HD’s Q3 Pro Performance

SRS and GMS helped further boost The Home Depot’s Pro offerings that emphasize cross-sell opportunities for contractors.

HD noted that PRO and DIY comps were both positive in Q3 and relatively in line with one another. Within Pro, strength was cited in categories of gypsy, insulation, siding and plumbing. On the flip side, large-discretionary renovation projects were softer, attributed to consumer uncertainty and housing turnover pressure, alongside the aforementioned weather weather-and storm-related demand. Decker emphasized that underlying demand for Pro business held fairly steady, but HD didn’t see the jump in demand it typically expects in Q3.

HD’s Overall Q3 Results

HD’s Q3 total sales of $41.4 billion increased 2.8% year-over-year. Gross margin remained flat at 33.4%; operating margin declined 60 bps; and net profit held steady at $3.6 billion.

Looking ahead, HD expects full year 2025 sales growth of about 3.0%, with comp sales to be ‘slightly positive’. The company expects to have opened 12 news stores for 2025; have gross margin of approximately 33.2%; and operating margin of 12.6%.

The Home Depot will host its annual investor conference on Dec. 9 at the New York Stock Exchange.