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HD Supply announces fiscal Q3 results

Reports 9 percent net sales and 17 percent adjusted EBITDA growth over 2013.

  • Net Sales increased 9 percent to $2,488 million
  • Operating Income improved 26 percent to $202 million
  • Adjusted EBITDA increased 17 percent to $265 million
  • Adjusted Net Income per diluted share increased 41 percent to $0.55 (Net Income per diluted share of $0.30)

HD Supply Holdings, Inc. today reported Net sales for the third quarter of fiscal 2014 ended November 2, 2014 of $2.5 billion, an increase of $215 million, or 9 percent, as compared to the third quarter of fiscal 2013.

The third quarter performance represents the eighteenth consecutive quarter of year-over-year average daily sales growth. The company believes its sales performance represents growth of approximately 600 basis points in excess of its market growth estimate.

“I was very pleased with our strong performance this quarter,” stated Joe DeAngelo, CEO of HD Supply. “We remain focused on controllable execution to deliver profitable growth in excess of our market growth estimate.”

Gross profit increased $64 million, or 10 percent, to $726 million for the third quarter of fiscal 2014 compared to $662 million for the third quarter of fiscal 2013.

Gross profit was 29.2 percent of Net sales for the third quarter of fiscal 2014, up approximately 10 basis points from 29.1 percent of Net sales for the third quarter of fiscal 2013.

Gross profit improvement was driven by execution of the company’s category management initiatives, partially offset by the competitive environment and mix of products and services.

Operating income increased $42 million, or 26 percent, to $202 million for the third quarter of fiscal 2014 compared to $160 million for the third quarter of fiscal 2013. Operating income as a percentage of Net sales increased approximately 110 basis points during the third quarter of fiscal 2014 as compared to the third quarter of fiscal 2013. The improvement was primarily driven by higher Net sales and Gross profit, partially offset by higher operating expenses.

Adjusted EBITDA increased $39 million, or 17 percent, to $265 million for the third quarter of fiscal 2014 compared to $226 million for the third quarter of fiscal 2013. Each reportable segment reported an increase in Adjusted EBITDA reflecting the continued focus on initiatives execution to drive growth in excess of its estimate of market growth.

Adjusted EBITDA as a percentage of Net sales increased approximately 80 basis points to 11 percent in the third quarter of fiscal 2014 as compared to 10 percent in the third quarter of fiscal 2013.

Net income increased $9 million to $60 million for the third quarter of fiscal 2014 as compared to a Net income of $51 million in the third quarter of fiscal 2013. The improvement in Net income is attributable to higher operating income in the third quarter of fiscal 2014 as compared to the third quarter of fiscal 2013. Net income per diluted share was $0.30 in the third quarter of fiscal 2014, as compared to $0.26 in the third quarter of fiscal 2013.
Adjusted net income increased $35 million to $111 million for the third quarter of fiscal 2014 as compared to an Adjusted net income of $76 million in the third quarter of fiscal 2013. The increase in Adjusted net income is attributable to sales growth and the leverage of fixed costs through sales volume increases. Adjusted net income per diluted share was $0.55 in the third quarter of fiscal 2014, as compared to an Adjusted net income per diluted share of $0.39 in the third quarter of fiscal 2013.
Business Unit Performance
Facilities Maintenance
Net sales increased $50 million, or 8 percent, to $660 million in the third quarter of fiscal 2014 as compared to $610 million in the third quarter of fiscal 2013. Adjusted EBITDA increased $20 million, or 17 percent, to $139 million during the third quarter of fiscal 2014 as compared to $119 million in the third quarter of fiscal 2013. Adjusted EBITDA as a percentage of Net sales increased approximately 160 basis points in the third quarter of fiscal 2014 as compared to the third quarter of fiscal 2013.
Waterworks
Net sales increased $62 million, or 10 percent, to $695 million in the third quarter of fiscal 2014 as compared to $633 million in the third quarter of fiscal 2013. Adjusted EBITDA increased $9 million, or 16 percent, to $64 million during the third quarter of fiscal 2014 as compared to $55 million in the third quarter of fiscal 2013. Adjusted EBITDA as a percentage of Net sales increased approximately 50 basis points in the third quarter of fiscal 2014 as compared to the third quarter of fiscal 2013.
Power Solutions
Net sales increased $30 million, or 6 percent, to $502 million in the third quarter of fiscal 2014, as compared to $472 million in the third quarter of fiscal 2013. Adjusted EBITDA increased $2 million, or 10 percent, to $23 million during the third quarter of fiscal 2014 as compared to $21 million in the third quarter of fiscal 2013. Adjusted EBITDA as a percentage of Net sales increased approximately 20 basis points in the third quarter of fiscal 2014 as compared to the third quarter of fiscal 2013.
Construction & Industrial - White Cap
Net sales increased $59 million, or 17 percent, to $411 million in the third quarter of fiscal 2014 as compared to $352 million in the third quarter of fiscal 2013. Adjusted EBITDA increased $8 million, or 30 percent, to $35 million during the third quarter of fiscal 2014 as compared to $27 million in the third quarter of fiscal 2013. Adjusted EBITDA as a percentage of Net sales increased approximately 80 basis points during the third quarter of fiscal 2014 as compared to the third quarter of fiscal 2013.
Year-to-Date Results
Net sales for the first nine months of fiscal 2014 increased $538 million, or 8 percent, to $7.1 billion, as compared to $6.6 billion the first nine months of fiscal 2013. Gross profit for the first nine months of fiscal 2014 increased by $167 million, or 9 percent, to $2.1 billion compared to $1.9 billion for the first nine months of fiscal 2013. Gross profit for the first nine months of fiscal 2014 was 29.3 percent of Net sales versus 29.2 percent of Net sales for the first nine months of fiscal 2013.

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