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HD Supply to Dispose of its Litemor Lighting Group

HD Supply says it will dispose of its Litemor Lighting Group, which is the largest commercial electrical distributor in Canada with ten branches throughout Canada and more than $80 million in sales. Litemor is part of the HD Supply Canada Group.

Joe DeAngelo, CEO of HD Supply, said the company made the decision in the last quarter of 2013. The announcement was made as HD Supply released its very strong fourth quarter and yearly earnings results.

“As a result of our decision, Litemor is being reflected in our results as a discontinued operation for all periods,” said Evan Levitt, HD Supply’s senior vice president and chief financial officer.

“Strategically, we’ll redirect our execution and investment focus in Canada towards HD Supply’s remaining Canadian business, Brafasco,” he said.

Brafasco is a growing industrial MRO distributor specializing in fasteners, power tools and safety products operating approximately 45 branches across seven provinces in Canada.

“We will combine Brafasco with our HD Supply White Cap team to enhance the business given the similarity of product expertise and ability to translate best practices across both businesses,” he said according to a transcript of the call as provided by www.seekingalpha.com.

Three years ago HD Supply Canada sold SESCO/QUESCO to Sonepar SA. HD Supply had originally bought the company in 2006. SESCO/QUESCO provides customers with a complete line of electrical products. While focused mostly on commercial, residential and institutional markets, SESCO/QUESCO had been continually growing its industrial and OEM business.

Meanwhile, HD Supply is optimistic about its construction outlook for 2014. White Cap, the construction segment of HD Supply, had a strong fourth quarter and 2013 with its sales increasing 11% and adjusted EBITDA grew by 100% compared to 2012.

Revenue for White Cap business was $295 million during the fourth quarter, up $29 million. For fiscal 2013, revenue for White Cap was $1.3 billion, up $136 million or 12%.

The Atlanta-based company expects the residential construction market to grow in the mid-teens while there will be a low single-digit increase in the non-residential construction market. It also expects a stable MRO market with growth of one to two percent.

HD Supply pointed to several growth “pocket” areas that are encouraging for its construction business.

For example, in Orlando, Fla there has been a surge in non-residential construction, DeAngelo said, including $400 million in large projects, new stadium renovations and continuing hospitality construction activity across resort properties.

Similar non-residential activity in Denver, Boston, Miami and Houston are also encouraging. Signs of residential recovery continue to emerge for HD Supply’s business as poockets of strength have been seen in Texas, Florida, South Carolina and more recently specific Pacific Northwest markets which have historically been sluggish. The company says it has targeted 15 large priority districts to take advantage of emerging construction strength. It estimates that these 15 markets alone represent a sales opportunity of an incremental $1 billion.

Revenue in the Facilities Maintenance business grew more than 7%, while Waterworks was up 3%. Power Solutions rose almost 6% for the quarter.

During the fourth quarter, HD Supply said it had eliminated nearly 160 positions in its Power Solutions Business, global support center and other businesses, consolidated six of White Cap’s branches into three, relocated its Facilities Maintenance distribution center prior to its lease termination, and liquidated inventory for products that Power Solutions will no longer carry. HD Supply Power Solutions offers a services and solutions for the Public Power, Investor-owned Utilities, Construction and Industrial markets.

HD Supply has also announced that it has opened a 25,000 square-foot combined facility for its Waterworks and White Cap business.in Manchester, N.H. The company said the new location would allow HD Supply to better serve its customers in the Northeast.

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