Distributors

HD Supply Announces Fiscal 2015 First-Quarter Results

ATLANTA — HD Supply Holdings, Inc. (NASDAQ: HDS) today reported Net sales of $2.2 billion for the first quarter of fiscal 2015 ended May 3, 2015, an increase of $127 million, or 6 percent, as compared to the first quarter of fiscal 2014. The company believes its sales performance represents growth of approximately 300 to 400 basis points in excess of its market growth estimate.

“I am very pleased with our solid first quarter performance. We delivered 6 percent sales growth, 14 percent Adjusted EBITDA growth and 94% Adjusted EPS growth,” stated Joe DeAngelo, CEO of HD Supply. “Despite adverse weather and a challenging environment, we remained focused on controllable execution to deliver profitable growth in excess of our market growth estimates while keeping our teams safe.”

Gross profit increased $46 million, or 8 percent, to $649 million for the first quarter of fiscal 2015 compared to $603 million for the first quarter of fiscal 2014. Gross profit was 29.2 percent of Net sales for the first quarter of fiscal 2015, up approximately 40 basis points from 28.8 percent of Net sales for the first quarter of fiscal 2014. The improvement in gross margin as a percentage of Net sales was primarily driven by category management initiatives and favorable product and services mix.

Operating income increased $51 million, or 44 percent, to $167 million for the first quarter of fiscal 2015 compared to $116 million for the first quarter of fiscal 2014. Operating income as a percentage of Net sales increased approximately 200 basis points during the first quarter of fiscal 2015 as compared to the first quarter of fiscal 2014. The improvement in operating income as a percentage of Net sales is a result of gross margin expansion, cost productivity initiatives and the Company’s ability to leverage fixed costs.

Adjusted EBITDA increased $25 million, or 14 percent, to $208 million for the first quarter of fiscal 2015 compared to $183 million for the first quarter of fiscal 2014. Adjusted EBITDA as a percentage of Net sales increased approximately 70 basis points to 9.4 percent in the first quarter of fiscal 2015 as compared to 8.7 percent in the first quarter of fiscal 2014. The increase in Adjusted EBITDA reflects the continued execution of initiatives to drive growth in excess of estimated market growth.

Net income for first quarter of fiscal 2015 was $242 million, as compared to a Net loss of $12 million for first-quarter of fiscal 2014. Net income per diluted share was $1.21 in the first quarter of fiscal 2015, as compared to a net loss per diluted share of $0.06 in the first quarter of fiscal 2014. First quarter fiscal 2015 Net income benefited from the final settlement of an IRS audit that effectively closed tax years 2007 and 2008, resulting in a $189 million non-cash tax credit. Excluding the impact of the IRS settlement, Net income improved $65 million during the first quarter of fiscal 2015 compared to the first quarter of fiscal 2014.

Adjusted net income increased $32 million to $66 million for the first quarter of fiscal 2015 as compared to an Adjusted net income of $34 million for the first-quarter of fiscal 2014. Adjusted net income per diluted share was $0.33 in the first quarter of fiscal 2015, as compared to $0.17 in the first quarter of fiscal 2014. The increase in Adjusted net income is primarily attributable to sales growth, gross margin expansion, the leverage of fixed costs and a reduction in interest expense.

As of May 3, 2015, HD Supply’s combined liquidity of approximately $1,215 million was comprised of $155 million in Cash and cash equivalents and $1,060 million of additional available borrowings under our Senior ABL Facility, based on qualifying inventory and receivables.

Business Unit Performance

Power Solutions
Net sales increased $38 million, or 8 percent, to $499 million in the first quarter of fiscal 2015 as compared to $461 million in the first quarter of fiscal 2014. Adjusted EBITDA increased $3 million, or 17 percent, to $21 million during the first quarter of fiscal 2015 as compared to $18 million in the first quarter of fiscal 2014. Adjusted EBITDA as a percentage of Net sales increased approximately 30 basis points in the first quarter of fiscal 2015 as compared to the first quarter of fiscal 2014.

Construction & Industrial – White Cap
Net sales increased $44 million, or 13 percent, to $388 million in the first quarter of fiscal 2015 as compared to $344 million in the first quarter of fiscal 2014. Adjusted EBITDA increased $10 million, or 45 percent, to $32 million during the first quarter of fiscal 2015 as compared to $22 million in the first quarter of fiscal 2014. Adjusted EBITDA as a percentage of Net sales increased approximately 180 basis points in the first quarter of fiscal 2015 as compared to the first quarter of fiscal 2014.

 

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