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HD Supply Reports First Quarter 2018 Profit Surge

HD Supply Reports First Quarter 2018 Profit Surge

ATLANTA — HD Supply Holdings, Inc. today reported Net sales of $1.4 billion for the first quarter of fiscal 2018 ended April 29, 2018, an increase of $173 million, or 14.2 percent, as compared to the first quarter of fiscal 2017. Organic sales growth for the first quarter of fiscal 2018 was 9.9 percent, as compared to the first quarter of fiscal 2017.

“I am proud of the team’s performance in the first quarter. Despite difficult weather conditions in many regions, we delivered impressive sales growth of 14 percent,” stated Joe DeAngelo, Chairman and CEO of HD Supply (HDS). “We are seeing the return from our growth investments and I am excited for the team to continue building upon the strong start to 2018. I look forward to sharing more of our growth story on June 21st during our first Investor Day in Atlanta.”

Gross profit increased $68 million, or 14.0 percent, to $552 million for the first quarter of fiscal 2018, as compared to $484 million for the first quarter of fiscal 2017. Gross profit was 39.7 percent of Net sales for the first quarter of fiscal 2018, down approximately 10 basis points from 39.8 percent for the first quarter of fiscal 2017.

Operating income increased $22 million, or 17.1 percent, to $151 million for the first quarter of fiscal 2018, as compared to $129 million for the first quarter of fiscal 2017. Operating income was 10.9 percent of Net sales for the first quarter of fiscal 2018, up approximately 30 basis points from 10.6 percent for the first quarter of fiscal 2017.

Net income increased $4 million, or 4.7 percent, to $89 million for the first quarter of fiscal 2018, as compared to $85 million for the first quarter of fiscal 2017.

Adjusted EBITDA increased $33 million, or 21.0 percent, to $190 million for the first quarter of fiscal 2018, as compared to $157 million for the first quarter of fiscal 2017. Adjusted EBITDA was 13.7 percent of Net sales for the first quarter of fiscal 2018, up approximately 80 basis points from 12.9 percent for the first quarter of fiscal 2017.

Adjusted net income increased $50 million, or 62.5 percent, to $130 million for the first quarter of fiscal 2018 as compared to $80 million for the first quarter of fiscal 2017.  Adjusted net income per diluted share was $0.70 in the first quarter of fiscal 2018, as compared to $0.39 in the first quarter of fiscal 2017.

As of April 29, 2018, HD Supply’s combined liquidity of $880 million was comprised of $150 million in cash and cash equivalents and $730 million of additional available borrowings (excluding $174 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 $41 million, or 6.0 percent, to $723 million in the first quarter of fiscal 2018, as compared to $682 million for the first quarter of fiscal 2017.  Adjusted EBITDA increased $15 million, or 13.9 percent, to $123 million for the first quarter of fiscal 2018, as compared to $108 million for the first quarter of fiscal 2017.  Adjusted EBITDA was 17.0 percent of Net sales for the first quarter of fiscal 2018, up approximately 120 basis points from 15.8 percent for the first quarter of fiscal 2017.

Construction & Industrial

Net sales increased $130 million, or 24.3 percent, to $666 million in the first quarter of fiscal 2018, as compared to $536 million for the first quarter of fiscal 2017. Organic sales growth was approximately 14.4 percent in the first quarter of fiscal 2018 as compared to the first quarter of fiscal 2017. Adjusted EBITDA increased $18 million, or 36.7 percent, to $67 million for the first quarter of fiscal 2018, as compared to $49 million for the first quarter of fiscal 2017.  Adjusted EBITDA was 10.1 percent of Net sales for the first quarter of fiscal 2018, up approximately 100 basis points from 9.1 percent for the first quarter of fiscal 2017.

First-Quarter Monthly Sales Performance

Net sales for February, March and April of fiscal 2018 were $391 million, $423 million and $575 million, respectively.  There were 20 selling days in February, 20 selling days in March and 25 selling days in April in both 2018 and 2017.  Average year-over-year daily sales growth for February, March and April was 11.7 percent, 12.0 percent and 17.7 percent, respectively. On an organic basis, average year-over-year daily sales growth for February, March and April was 11.7 percent, 7.5 percent and 10.3 percent, respectively.

Preliminary May Sales Results

Preliminary Net sales in May 2018 were approximately $488 million, which represents year-over-year average daily sales growth of approximately 18.7 percent (10.6 percent on an organic basis).  Preliminary May year-over-year average daily sales growth by business segment was approximately 6.3 percent for Facilities Maintenance and approximately 34.5 percent (16.0 percent on an organic basis) for Construction & Industrial.  There were 20 selling days in both May 2018 and May 2017.

Second-Quarter and Full-Year 2018 Outlook

For the second quarter of fiscal 2018, Net sales are anticipated to be in the range of $1,535 million and $1,595 million, Adjusted EBITDA1 in the range of $235 million and $245 million and Adjusted net income per diluted share1 in the range of $0.92 and $0.97.  Adjusted net income per diluted share range assumes a fully diluted weighted average share count of approximately 185 million.  At the mid-point of the ranges, our second-quarter 2018 Net sales and Adjusted EBITDA translate into approximately 16 percent growth and 15 percent growth, respectively, versus prior year.  On an organic bases at the mid-point of the range, our second-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 $5,820 million and $5,940 million, Adjusted EBITDA1 in the range of $832 million and $862 million and Adjusted net income per diluted share1 in the range of $3.11 and $3.27.  Adjusted net income per diluted share range assumes a fully diluted weighted average share count of approximately 185 million.

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