ATLANTA, Ga. — HD Supply Holdings, Inc. (NASDAQ: HDS), one of the largest industrial distributors in North America, reported Tuesday net sales for the second quarter of fiscal 2014 ended August 3, 2014 of $2.4 billion, an increase of $210 million, or 9 percent, as compared to the second quarter of fiscal 2013. The second quarter performance represents the 17th 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 am very pleased with our execution in the second quarter,” stated Joe DeAngelo, CEO of HD Supply. “We delivered strong organic sales and earnings growth and remain cautiously optimistic about what seems to be improving end markets."
Gross profit increased $65 million, or 10 percent, to $722 million for the second quarter of fiscal 2014 compared to $657 million for the second quarter of fiscal 2013. Gross profit was 29.5 percent of Net sales for the second quarter of fiscal 2014, up approximately 10 basis points from 29.4 percent of Net sales for the second 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 $34 million, or 22 percent, to $186 million for the second quarter of fiscal 2014 compared to $152 million for the second quarter of fiscal 2013. Operating income as a percentage of Net sales increased approximately 80 basis points during the second quarter of fiscal 2014 as compared to the second quarter of fiscal 2013. The improvement was primarily driven by a reduction in Selling, general and administrative expenses as a percentage of Net sales and improvements in gross margins.
Adjusted EBITDA increased $39 million, or 18 percent, to $258 million for the second quarter of fiscal 2014 compared to $219 million for the second quarter of fiscal 2013. Each reportable segments reported anincrease in Adjusted EBITDA reflecting the continued focus on initiatives execution to drive growth in excess of our estimate of market growth. Adjusted EBITDA as a percentage of Net sales increased approximately 70 basis points to 11 percent in the second quarter of fiscal 2014 as compared to 10 percent in the second quarter of fiscal 2013.2
Net income increased $120 million to $48 million for the second quarter of fiscal 2014 as compared to a Net loss of $72 million in the second quarter of fiscal 2013. The improvement in Net income is attributable to higher operating income and lower interest expense in the second quarter of fiscal 2014 as compared to the second quarter of fiscal 2013. In addition, the second quarter of fiscal 2013 included a loss on extinguishment of debt.Net income per diluted share was $0.24 in the second quarter of fiscal 2014, as compared to a Net loss per diluted share of $0.47 in the second quarter of fiscal 2013.
Adjusted net income increased $65 million to $102 million for the second quarter of fiscal 2014 as compared to an Adjusted net income of $37 million in the second quarter of fiscal 2013. The increase in Adjusted net income is attributable to sales growth, improving gross margins, and a reduction in interest expense. Adjusted net income per diluted share was $0.51 in the second quarter of fiscal 2014, as compared to an Adjusted net income of per diluted share $0.23 in the second quarter of fiscal 2013.
HD Supply is one of the largest industrial distributors in North America. The company provides a broad range of products and value-add services to approximately 500,000 customers with leadership positions in maintenance, repair and operations, infrastructure and power and specialty construction sectors.
