Distributors

HD Supply Earnings Up, Raises Guidance

HD Supply Earnings Up, Raises Guidance

ATLANTA — HD Supply Holdings, Inc. today reported Net sales of $1.6 billion for the second quarter of fiscal 2018 ended July 29, 2018, an increase of $248 million, or 18.3 percent, as compared to the second quarter of fiscal 2017. Organic sales growth for the second quarter of fiscal 2018 was 10.1 percent, as compared to the second quarter of fiscal 2017.

“I am proud of the team’s performance in the second quarter. We continued to deliver impressive sales growth and benefit from the investments that we have made in the business over the last 18 months,” stated Joe DeAngelo, Chairman and CEO of HD Supply.

Gross profit increased $83 million, or 15.4 percent, to $622 million for the second quarter of fiscal 2018, as compared to $539 million for the second quarter of fiscal 2017. Gross profit was 38.9 percent of Net sales for the second quarter of fiscal 2018, down approximately 100 basis points from 39.9 percent for the second quarter of fiscal 2017.

Operating income increased $31 million, or 17.2 percent, to $211 million for the second quarter of fiscal 2018, as compared to $180 million for the second quarter of fiscal 2017. Operating income was 13.2 percent of Net sales for the second quarter of fiscal 2018, down approximately 10 basis points from 13.3 percent for the second quarter of fiscal 2017.

Income from continuing operations increased $49 million, or 60.5 percent, to $130 million for the second quarter of fiscal 2018, as compared to $81 million for the second quarter of fiscal 2017.

Net income decreased $311 million, or 70.4 percent, to $131 million for the second quarter of fiscal 2018, as compared to $442 million for the second quarter of fiscal 2017. Net income in the second quarter of fiscal 2017 included $361 million of Income from discontinued operations, net of tax.

Adjusted EBITDA increased $38 million, or 18.3 percent, to $246 million for the second quarter of fiscal 2018, as compared to $208 million for the second quarter of fiscal 2017. Adjusted EBITDA was 15.4 percent of Net sales for the second quarter of fiscal 2018, flat as compared to the second quarter of fiscal 2017.

Adjusted net income increased $55 million, or 43.3 percent, to $182 million for the second quarter of fiscal 2018, as compared to $127 million for the second quarter of fiscal 2017. Adjusted net income per diluted share was $0.99 in the second quarter of fiscal 2018, as compared to $0.64 in the second quarter of fiscal 2017.

As of July 29, 2018, HD Supply’s combined liquidity of $1,061 million was comprised of $228 million in cash and cash equivalents and $833 million of additional available borrowings (excluding $134 million of borrowings on available cash balances) under HD Supply, Inc.’s senior asset-based lending facility, based on qualifying inventory and receivables.

Business Unit Performance

Facilities Maintenance

Net sales increased $51 million, or 6.6 percent, to $820 million in the second quarter of fiscal 2018, as compared to $769 million for the second quarter of fiscal 2017. Adjusted EBITDA increased $5 million, or 3.4 percent, to $150 million for the second quarter of fiscal 2018, as compared to $145 million for the second quarter of fiscal 2017. Adjusted EBITDA was 18.3 percent of Net sales for the second quarter of fiscal 2018, down approximately 60 basis points from 18.9 percent for the second quarter of fiscal 2017.

Construction & Industrial

Net sales increased $197 million, or 33.7 percent, to $781 million in the second quarter of fiscal 2018, as compared to $584 million for the second quarter of fiscal 2017. Organic sales growth was approximately 14.7 percent in the second quarter of fiscal 2018 as compared to the second quarter of fiscal 2017. Adjusted EBITDA increased $33 million, or 52.4 percent, to $96 million for the second quarter of fiscal 2018, as compared to $63 million for the second quarter of fiscal 2017. Adjusted EBITDA was 12.3 percent of Net sales for the second quarter of fiscal 2018, up approximately 150 basis points from 10.8 percent for the second quarter of fiscal 2017.

Second-Quarter Monthly Sales Performance

Net sales for May, June and July of fiscal 2018 were $488 million, $486 million and $626 million, respectively. There were 20 selling days in May, 19 selling days in June and 24 selling days in July in both 2018 and 2017. Average year-over-year daily sales growth for May, June and July was 18.7 percent, 18.7 percent and 17.8 percent, respectively. On an organic basis, average year-over-year daily sales growth for May, June and July was 10.6 percent, 10.4 percent and 9.7 percent, respectively.

Preliminary August Sales Results

Preliminary Net sales in August 2018 were approximately $513 million, which represents year-over-year average daily sales growth of approximately 17.7 percent (10.2 percent on an organic basis). Preliminary August year-over-year average daily sales growth by business segment was approximately 6.0 percent for Facilities Maintenance and approximately 33.1 percent (15.7 percent on an organic basis) for Construction & Industrial. There were 20 selling days in both August 2018 and August 2017.

Third-Quarter and Full Year 2018 Outlook

For the third quarter of fiscal 2018, Net sales are anticipated to be in the range of $1,560 million and $1,610 million, Adjusted EBITDA1 in the range of $239 million and $249 million and Adjusted net income per diluted share1 in the range of $0.95 and $1.00. Adjusted net income per diluted share range assumes a fully diluted weighted average share count of approximately 184 million. At the mid-point of the ranges, our third-quarter 2018 Net sales and Adjusted EBITDA translate into approximately 16 percent growth and 14 percent growth, respectively, versus prior year. On an organic basis at the mid-point of the range, our third-quarter 2018 Net sales represents approximately 8 percent growth.

For the full year fiscal 2018, Net sales are anticipated to be in the range of $5,900 million and $6,000 million, Adjusted EBITDA1 in the range of $845 million and $870 million and Adjusted net income per diluted share1 in the range of $3.22 and $3.35. Adjusted net income per diluted share range assumes a fully diluted weighted average share count of approximately 184 million.

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