Post Earnings Coverage as HD Supply’s Quarterly Revenue Gained 3.2%; Adjusted EPS Soared 63%

Upcoming AWS Coverage on Fastenal

LONDON, UK / ACCESSWIRE / March 27, 2017 / Active Wall St. announces its post-earnings coverage on HD Supply Holdings, Inc. (NASDAQ: HDS). The Company announced its financial results for its fourth quarter and fiscal year 2016 on March 10, 2017. One of the largest industrial distributors in North America met markets earnings and sales expectations. Register with us now for your free membership at:

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One of HD Supply Holdings’ competitors within the Industrial Equipment Wholesale space, Fastenal Co. (NASDAQ: FAST), is estimated to report earnings on April 11, 2017. AWS will be initiating a research report on Fastenal following the release of its next earnings results.

Today, AWS is promoting its earnings coverage on HDS; touching on FAST. Get our free coverage by signing up to:

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Earnings Reviewed

For the quarter ended January 29, 2017, HD Supply’s net sales increased 3.2% to $1.63 billion compared to $1.58 billion for Q4 FY15. The Company’s revenue numbers met analysts’ consensus. For FY16, HD Supply’s net sales increased 4.4% to $7.4 billion.

HD Supply’s gross profit increased 4.9% to $560 million for Q4 FY16 compared to $534 million for Q4 FY15. The Company’s gross profit was 34.3% of net sales for the reported quarter, up approximately 60 basis points from 33.7% of net sales for the prior year’s same period.

For Q4 FY16, HD Supply’s operating income increased 10.7% to $145 million compared to $131 million for Q4 FY15. Operating income as a percentage of net sales was 8.9% for Q4 FY16, up approximately 60 basis points from 8.3% from the prior year’s comparable period.

HD Supply’s net income came in at $52 million, or $0.26 per share, for Q4 FY16 compared to $871 million, or $4.33 per diluted share, for Q4 FY15. Net income for Q4 FY15 included a $1.01 billion tax benefit resulting from the reversal of the deferred tax asset valuation allowance. On an adjusted basis, the Company’s adjusted net income increased to $90 million or $0.44 per share for Q4 FY16 compared to $55 million, or $0.27 per share, for Q4 FY15. The Company’s earnings numbers met Wall Street’s estimates of $0.44 per share.

For FY16, HD Supply’s net income dropped to $196 million, or $0.97, compared to net income of $1.47 billion, or $7.31 per share, for FY15. Net income for full-year fiscal 2015 included a $1,007 million tax benefit resulting from the reversal of the deferred tax asset valuation allowance, a $189 million non-cash tax credit from the settlement of an IRS audit, and a $186 million pre-tax gain on the sale of the Power Solutions business unit.

On an adjusted basis, HD Supply reported net income of $532 million, or $2.63 per diluted share, for FY16 compared to adjusted net income of $351 million or $1.74 in FY15.

Segment Results

During Q4 FY16, HD Supply’s Facilities Maintenance’ net sales increased 2.3% to $620 million compared to $606 million for Q4 FY15. The segment’s adjusted EBITDA decreased 3.9% to $98 million for the reported quarter compared to $102 million for the prior year’s same period. HD Supply’s adjusted EBITDA as a percentage of net sales were 15.8% for Q4 FY16, down approximately 100 basis points from 16.8% for Q4 FY15.

HD Supply’s Waterworks’ net sales increased 3.4% to $551 million in Q4 FY16 compared to $533 million for Q4 FY15. The segment’s adjusted EBITDA grew 2.4%, to $42 million for Q4 FY16 compared to $41 million for Q4 FY15. Adjusted EBITDA as a percentage of net sales was 7.6% for the reported quarter, down approximately 10 basis points from 7.7% for the year ago same period.

For Q4 FY16, HD Supply’s Construction & Industrial segment’s net sales increased 4.3% to $466 million compared to $447 million for Q4 FY15. The segment’s adjusted EBITDA increased gained 17.6% to $40 million for the reported quarter compared to $34 million for the prior year’s comparable period. The segment’s adjusted EBITDA as a percentage of net sales were 8.6% for Q4 FY16, up approximately 100 basis points from 7.6% for Q4 FY15.

Capital Structure Activities

On January 26, 2017, HD Supply used cash flow from operations to repay $200 million aggregate principal of the Company’s Term B-1 Loans. As a result, the Company incurred a $5 million loss on extinguishment of debt, which includes write-offs of $2 million and $3 millions of unamortized original issue discount and unamortized deferred financing costs, respectively. As of January 29, 2017, HD Supply’s combined liquidity of approximately $729 million was comprised of $75 million in cash and cash equivalents and $654 million of additional available borrowings (excluding $26 million of borrowings on available cash balances) under the Company’s senior asset-backed lending facility, based on qualifying inventory and receivables.

Outlook

For FY17, HD Supply is forecasting end-market growth of approximately 2%-3%. The Company estimates 300 basis points of sales growth in excess of the estimated market growth and operating leverage in the range of 1.5 to 2.0 times for FY17.

For Q1 FY17, HD Supply is projecting net sales to be in the range of $1.84 billion to $1.89 billion, adjusted EBITDA in the range of $205 million to $220 million, and adjusted net income per diluted share in the range of $0.60 to $0.68.

Stock Performance

At the closing bell, on Friday, March 24, 2017, HD Supply Holdings’ stock slightly fell 0.27%, ending the trading session at $40.33. A total volume of 1.05 million shares were traded at the end of the day. In the last six months and previous twelve months, shares of the Company have advanced 29.51% and 25.80%, respectively. Shares of the company have a PE ratio of 40.01 and have a market cap of $8.16 billion.

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