HD Supply — No. 4 on Industrial Distribution's 2017 Big 50 List — on Tuesday reported its fiscal results for its 2017 fourth quarter and full year, which ended Jan. 28.
The figures showed continued strong growth for the company, led by a 9.0 percent increase in year-over-year (YoY) Q4 sales to $1.18 billion, outpacing growth of 7.5 percent, 5.4 percent and 5.2 percent in Q3, Q2 and Q1 of 2017, respectively. For the full-year, HD Supply's 2017 sales of $5.1 billion increased 6.3 percent over 2016.
That full-year sales figure doesn't include the performance of HD Supply's recently divested Waterworks segment, as that transaction was completed Aug. 1. HD Supply Waterworks sold Waterworks for $2.5 billion to private investment firm Clayton, Dubilier & Rice, which rebranded the segment as Core & Main. That sale resulted in a net windfall of $732 million in HD Supply's year-end fiscal report, comprising the vast majority of the company's $774 overall total 2017 profit.
The company's 2017 gross profit of $2.03 billion increased 5.6 percent over 2016 and was 39.7 percent of net sales, down approximately 20 basis points. Operating profit of $608 million increased 7.6 percent and was 11.9 percent of net sales, up approximately 20 basis points. Adjusted EBITDA increased 7.5 percent to $731 million, while adjusted total profit of $447 million increased 48.0 percent.
"I am proud of the team’s performance in 2017. We built momentum throughout the year and ended 2017 in a position of strength," stated Joe DeAngelo, Chairman and CEO of HD Supply. "Much of our success is driven by our hourly associates who work hard every day providing exceptional service to our customers. I am therefore pleased to announce that we are providing our hourly associates with a bonus of up to $1,000 to share in the benefits of the recently enacted tax reform."
HD Supply took a net loss of $9 million in Q4 due to a $72 million charge related to the Tax Cuts and Jobs Act. Q4 gross profit increased 8.6 percent YoY to $468 million and was 39.6 percent of net sales, down 10 basis points; Q4 operating profit increased 14.7 percent to $117 million and was 9.9 percent of net sales, up 50 basis points; adjusted EBItDA increased 24.6 percent to $152 million; and adjusted total Q4 profit of $91 million increased $44 million YoY.
By business segment:
- Facilities Maintenance full-year 2017 sales of $2.85 billion increased 3.1 percent from 2016, with adjusted EBITDA up 3.5 percent to $499 million. Q4 sales of 642 million increased 3.5 percent YoY, with adjusted EBITDA up 15.9 percent.
- Construction & Industrial full-year 2017 sales of $2.28 billion increased 10.5 percent from 2016, with adjusted EBITDA up 17.2 percent to $232 million. Q4 sales of $542 million increased 16.3 percent, with adjusted EBITDA soaring 47.1 percent. Those figures include HD Supply's $380 million acquisition of A.H. Harris, a specialty construction distributor serving the Northeast, Mid- and South-Atlantic regions. That deal closed March 5.
By month in Q4:
- November sales were $372 million, with average daily sales up 9.8 percent YoY.
- December sales were $390 million, with average daily sales up 10.9 percent YoY.
- January sales were $421 million, with average daily sales up 6.8 percent YoY.
Preliminary February sales were $391 million, with average daily sales up 11.7 percent YoY. Average daily sales growth at Facilities & Maintenance was approximately 7.1 percent YoY, and 17.3 percent at Construction & Industrial.
HD Supply is anticipating full-year 2018 sales growth of 2 to 3 percent, and Q1 sales to be between $1.325 billion and $1.375 billion, or approximately 11 to 14 percent growth YoY. The A.H. Harris acquisition is conbributed approximately $50 million in sales to Q1 2018.