About one month after announcing the pending $2.9 billion sale of its Construction & Industrial – White Cap business unit, HD Supply reported its 2020 second quarter financial results on Wednesday, also including preliminary August results.
The figures showed continuous solid gains for the company’s sales — though still in the red — as year-over-year (YoY) declines that bottomed out at -22.6 percent in April improved to -7.3 percent in May; -4.8 percent in June; -2.0 percent in July; and preliminary figures show August was down just 0.7 percent.
Overall, HD Supply had Q2 total sales of $1.55 billion, down 4.4 percent YoY and up from $1.40 billion in Q1. The Atlanta-based distributor’s Q2 gross profit of 5.8 percent ($596 million) was 38.4 percent of net sales, compared to 39.4 percent in Q1. Q2 operating profit of $198 million was down 6.2 percent YoY and 12.8 percent of net sales, compared to $121 million and 8.7 percent of net sales in Q1. The company’s total Q2 net profit was $4 million, down 3 percent YoY and down from $72 million in Q1.
"Our highest priority remains the health and safety of our associates and our customers as we continue to support the operations and re-opening of living spaces, job-sites and work places,” stated Joe DeAngelo, HD Supply chairman and CEO. "Our financial strength and steadily improving results reflect the strength of our team and their dedication to safely delivering best-in-class service."
By business unit in Q2 and August:
- Facilities Maintenance (FM) Q2 sales of $761 million were down 8.3 percent YoY, compared to an 11.7 percent decline in Q1. Sales were down 13.4 percent in May; down 9.0 percent in June; down 4.4 percent in July and were up 1.1 percent in August.
- The company noted significant improvement in the FM business during Q2, including successful navigation of durable goods shortages and shipping delays.
- HD Supply said gross margin headwinds include increased demand for safety and infection control and that sales mix was skewed towards big ticket items, while traditional MRO mix saw slower recovery.
- Multifamily (~60 percent of FM sales) saw a 2.1 percent YoY August sales gain, while hospitality (~18 percent of FM sales) was down 13.9 percent; healthcare (~7 percent) was up 3.4 percent; and institutional (~8 percent) was up 14.3 percent. Those figures compare with 0.1 percent, -26.1 percent, -4.0 percent and 6.2 percent in July, respectively. Overall, the numbers illustrated improvement in each FM vertical throughout Q2 and August.
- Construction & Industrial Q2 sales of $793 million dipped 0.3 percent YoY, compared to a 1.1 percent decline in Q1. Sales were down 1.4 percent in May; down 0.4 percent in June; up 0.4 percent in July and down 2.5 percent in August.
Construction & Industrial Sale
HD Supply said Wednesday that the sale of its Construction & Industrial business to private firm Clayton, Dubliier & Rice is ecpected to close by the end of October, subject to approvals. CD&R’s purchase price was $2.9 billion, and HD Supply expects to see $2.5 billion in proceeds after taxes and transaction costs. The company said it plans to use those proceeds for share repurchases, debt repayment, M&A strategy; and ongoing capital expenditures investment at 2 percent of sales.
Following the sale, HD Supply said it plans to re-launch the HD Supply Story later in 2020.