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HD Supply Grows Sales 9.8%

Wed, 09/05/2012 - 9:45am
HD Supply

HD Supply, Inc. Announces Fiscal 2012 Second-Quarter Results; Reports Ninth Consecutive Quarter of Year-over-Year Revenue Growth

Atlanta, GA - HD Supply, Inc. reported net sales for the fiscal 2012 second quarter ended July 29, 2012 of $2.1 billion, an increase of $184 million, or 9.8 percent, as compared to the second quarter of fiscal 2011. Gross profit for the second quarter of fiscal 2012 increased by $61 million, or 11.4 percent, to $594 million compared to $533 million for the second quarter of fiscal 2011. Gross profit for the second quarter of fiscal 2012 was 28.8 percent of net sales compared to 28.4 percent of net sales for the second quarter of fiscal 2011.

Business and Financial Highlights

  • June 2012 acquisition of Peachtree Business Products LLC. Headquartered in Marietta, Georgia, Peachtree Business Products specializes in customizable business and property marketing supplies, serving residential and commercial property managers, medical facilities, schools and universities, churches and funeral homes. Peachtree Business Products LLC is operated as part of the Facilities Maintenance business.
  • August 2012 issuance of $300 million Add-on 8 ⅛% First Priority Notes due 2019 at a premium of 107.5%. The net proceeds were applied to reduce outstanding borrowings under the company’s revolving ABL facility, increasing liquidity to approximately $950 million following the Add-on issuance.
  • Net sales and Adjusted EBITDA growth in all four of the company’s core businesses: Facilities Maintenance, Waterworks, Power Solutions (formerly Utilities/Electrical), and White Cap.

Operating income for the second quarter of fiscal 2012 was $103 million, an improvement of $37 million compared to operating income of $66 million for the second quarter of fiscal 2011. The improvement in operating income reflects sales growth of 9.8 percent and an approximately 110 basis point decline in operating expenses as a percent of net sales. Loss from continuing operations for the second quarter of fiscal 2012 was $56 million, an improvement of $45 million as compared to the second quarter of fiscal 2011.

“Over the last two years, we’ve experienced substantive net sales and Adjusted EBITDA growth, and that trend has continued into the first half of fiscal 2012,” stated Joe DeAngelo, CEO of HD Supply. “We’ve created new, sustainable revenue opportunities with existing and new customers that have become key drivers for our continued growth.”

Mr. DeAngelo added, “We’re excited with the recent purchase of Peachtree Business Products, a niche, bolt-on acquisition that brings even further scale and product depth for our Facilities Maintenance business. As we seek to grow our business in both organic and inorganic ways, our focus remains relentless on deepening our customers’ experience and relationships.”

Adjusted EBITDA for the second quarter of fiscal 2012 increased 23.9 percent to $192 million from $155 million in the second quarter of fiscal 2011. Adjusted EBITDA for the second quarter of fiscal 2012 increased to 9.3 percent of net sales versus 8.3 percent of net sales for the second quarter of fiscal 2011. The increase in the Adjusted EBITDA rate reflects our continued focus on operating efficiency and the leveraging of fixed costs through sales volume increases. The company presents Adjusted EBITDA to provide additional information to evaluate its operating performance and its ability to service its debt. Reconciliations of GAAP measures to non-GAAP Adjusted EBITDA are included at the end of this press release.

Year-to-Date Results

Net sales for the first half of fiscal 2012 of $3.9 billion, increased $412 million, or 11.8 percent, as compared to the first half of fiscal 2011. Gross profit for the first half of fiscal 2012 increased by $124 million, or 12.5 percent, to $1.1 billion compared to $1.0 billion for the first half of fiscal 2011. Gross profit for the first half of fiscal 2012 was 28.7 percent of net sales versus 28.5 percent of net sales for the first half of fiscal 2011.

Operating income for the first half of fiscal 2012 was $146 million, an improvement of $72 million compared to operating income of $74 million for the first half of fiscal 2011. The improvement in operating income reflects sales growth of 11.8 percent and an approximately 140 basis point decline in operating expenses as a percent of net sales.

Loss from continuing operations for the first half of fiscal 2012 was $432 million, which included a $220 million loss on extinguishment of debt. Excluding the loss on extinguishment of debt, the loss from continuing operations for the first half of fiscal 2012 improved $65 million as compared to the first half of fiscal 2011.

Adjusted EBITDA for the first half of fiscal 2012 increased 29.5 percent to $325 million from $251 million in the first half of fiscal 2011. Adjusted EBITDA for the first half of fiscal 2012 increased to 8.3 percent of net sales versus 7.2 percent of net sales for the first half of fiscal 2011.

About HD Supply

HD Supply ( www.hdsupply.com ) is one of the largest industrial distribution companies in North America. Through a diverse portfolio of industry-leading businesses and more than 80 years of experience, the company provides a broad range of products and services to approximately 440,000 professional customers in the infrastructure and energy, maintenance, repair and improvement, and specialty construction markets. With approximately 630 locations across 46 states and nine Canadian provinces, the company’s 14,000 associates provide localized, customer-driven services including jobsite delivery, will call or direct-ship options, diversified logistics and innovative solutions that contribute to its customers’ success.

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