Featured Company News – HD Supply Announces Sale of Waterworks Business Unit

Research Desk Line-up: Park-Ohio Post Earnings Coverage

LONDON, UK / ACCESSWIRE / June 8, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for HD Supply Holdings, Inc. (NASDAQ: HDS). The Company announced on June 06, 2017, that it has entered into a definitive agreement to sell its Waterworks business unit, the country’s largest distributor of water, sewer, storm, and fire protection products, to Clayton, Dubilier & Rice for a purchase price of $2.5 billion in cash. The transaction is expected to close in the Q3 FY17 and is subject to customary closing conditions. For immediate access to our complimentary reports, including today’s coverage, register for free now at:

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Discover more of our free reports coverage from other companies within the Industrial Equipment Wholesale industry. Pro-TD has currently selected Park-Ohio Holdings Corp. (NASDAQ: PKOH) for due-diligence and potential coverage as the Company announced on May 08, 2017, its financial results for Q1 2017. Tune in to our site to register for a free membership, and be among the early birds that get our report on Park-Ohio when we publish it.

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Details of the Agreement

HD Supply Waterworks operates over 240 locations with more than 2,700 associates. The Company leverages comprehensive technology and supply chain integration to drive efficient and accurate order fulfillment. According to its Q1 FY17 results reported on June 06, 2017, the Company reported net sales of $682 million, a 0.7% surge from the Q1 FY16. Adjusted EBITDA declined by $17 million, or 12.7%, in Q1 FY17 versus $134 million for Q1 FY16.

The Company has viewed this sale after a detailed evaluation and expects the agreement with Clayton, Dubilier & Rice to be in the best interests of Waterworks associates and HD Supply’s stockholders. According to the Company, this strategic transaction will further simplify and focus HD Supply on generating the highest value creation opportunities and accelerating debt reduction plans, while creating additional cash to enable next generation of growth investments and innovation, along with cash being returned to HD Supply’s stockholders.

Q1 FY17 results

HD Supply reported its Q1 FY17 results for the three-month period ended April 30, 2017. The Company reported net sales of $1.9 billion for Q1 FY17, which was 5.2% greater than the net sales for Q1 FY16. HD Supply reported net gross profit of $631 million for Q1 FY17, which was 3.6% greater than the $609 million profit for Q1 FY16. In Q1 FY17, gross profit was 33.7% of net sales, declining about 50 basis points from 34.2% of net sales for Q1 FY16.

HD Supply reported net operating income of $176 million in Q1 FY17, declining $2 million, or 1.1% from $178 million operating income for Q1 FY16. In Q1 FY17, the operating income was 9.4% of net sales, declining about 60 basis points from 10.0% for Q1 FY16. Net income for the Company advanced by $99 million in Q1 FY17, resulting in a net profit of $85 million versus $14 million loss in Q1 FY16. HD Supply reported net income per diluted share of $0.42 in Q1 FY17, which was $0.49 greater than the $0.07 loss reported in Q1 FY16. Net loss in Q1 FY16 included a $115 million pre-tax loss incurred owing to the extinguishment of outstanding debt.

Share Repurchase Program Authorization

Recently, on June 03, 2017, HD Supply’s Board of Directors authorized the Company to enter into a share repurchase program for the repurchase of up to an aggregate amount of $500 million of its common stock. The Company will conduct repurchases under the program in an open market and through broker negotiated purchases. The share repurchases will be funded from Company’s available cash balances. The Company had 202,659,525 shares of common stock outstanding as of June 02, 2017.

As of April 30, 2017, HP Supply reported combined liquidity of about $742 million which was comprised of $70 million in cash and cash equivalents and $672 million of additionally available borrowings under HD Supply’s senior asset-backed lending facility, which is further based on qualifying inventory and receivables.

Last Close Stock Review

On Wednesday, June 07, 2017, HD Supply’s stock closed the trading session at $32.81, declining 3.59% from its previous closing price of $34.03. A total volume of 13.59 million shares were exchanged during the session, which was above the 3-month average volume of 2.47 million shares. Shares of the Company have a PE ratio of 32.55 and currently have a market cap of $6.57 billion.

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