Post Earnings Coverage as HD Supply Delivers 4.1 Percent Growth

LONDON, UK / ACCESSWIRE / September 9, 2016 / Active Wall St. announces its post-earnings coverage on HD Supply Holdings, Inc. (NASDAQ: HDS). The company revealed posted its financial results for the second quarter fiscal 2016 (Q2 FY16) on September 07, 2016. The Atlanta, Georgia-based company reported a 4.1% y-o-y growth in its Q2 FY16; but HD Supply marginally missed the market expectations. Register with us now for your free membership at: http://www.activewallst.com/register/.

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Earnings Reviewed

For the three months ended on July 31, 2016, HD Supply reported net sales of $2.02 billion compared to $1.94 billion recorded at the end of Q2 FY15. The market had expected the company to report net sales of $2.03 billion. The company’s income from continuing operations was $102 million, or $0.51 per diluted share, which came in below the $104 million, or $0.52 per diluted share, recorded in Q2 FY15.

HD Supply’s Q2 FY16 net income declined to $98 million, or $0.49 per diluted share, from $109 million, or $0.54 per diluted share, in Q2 FY15; missing Wall Street’s net income expectation of $0.91 per diluted share. However, the company’s adjusted net income increased from $171 million, or $0.85 per diluted share, in Q2 FY16 from $114 million, or $0.56 per diluted share, recorded in Q2 FY15.

Joe DeAngelo, Chairman and CEO of HD Supply, said:

“We delivered solid growth, operating leverage and cash conversion in the quarter while simultaneously investing in long-term productivity and growth.”

Earnings Metrics

Spun off from The Home Depot, Inc. in 2007, HD Supply’s gross profit for the reported quarter stood at $680 million, or 33.7% of net sales, which was above $648 million, 33.5% of net sales recorded in the year ago period. HD Supply’s operating income increased to $237 million, or 11.8% of net sales, in Q2 FY16 from $223 million, or 11.5% of net sales, in Q2 FY15.

Furthermore, the company’s adjusted EBITDA improved to $273 million, or 13.5% of net sales, in Q2 FY16 from $257 million, or 13.3% of net sales, in Q2 FY15.

Business-Unit Numbers

The industrial distributor’s Facilities Maintenance business unit reported a 1.1% y-o-y increase in net sales during Q2 FY16 to $741 million from $733 million in Q2 FY15. However, the business unit’s adjusted EBITDA decreased to $151 million, or 20.4% of net sales, in Q2 FY16 from $156 million, or 21.3% of net sales, in the year-ago period.

Waterworks business unit’s net sales also improved to $733 million, in Q2 FY16 from $702 million in Q2 FY15. Furthermore, the business unit’s adjusted EBITDA increased to $70 million, or 9.5% of net sales, in Q2 FY16 from $66 million, or 9.4% of net sales, in the prior-year quarter.

In the reported period, Construction & Industrial business unit’s net sales stood at $489 million, versus $455 million in Q2 FY15. Additionally, adjusted EBITDA for the business unit came in at $60 million, or 12.3% of net sales, in Q2 FY16, compared to $45 million, or 9.9% of net sales, in Q2 FY15.

Cash Flow & Balance Sheet

As of July 31, 2016, HD Supply had cash and cash equivalents of $313 million compared to $269 million recorded as on January 31, 2016.

Outlook

For the ongoing third quarter fiscal 2016, HD Supply expects revenue be in the range of $1.99 billion and $2.04 billion with adjusted EBITDA in the range of $258 million and $268 million. The company’s management further anticipates adjusted net income per diluted share to be in the range of $0.77 and $0.82.

Furthermore, the company forecasts a flat to a 300 basis points sales growth in excess of market for full-year fiscal 2016.

Stock Performance

On Thursday, September 8, 2016, HD Supply Holdings’ shares are down 0.28%, finishing the day at $31.79. The stock recorded a total volume of 6.21 million shares, which was above the 3 months average volume of 1.87 million. For the last six months, the stock has gained 16.32%. Moreover, on a year to date basis, the stock gained 5.86%. Shares of the company have a PE ratio of 5.92.

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