Atlanta, GA - HD Supply, Inc. reported net sales for the fourth quarter of fiscal 2012 of $2.0 billion, an increase of $342 million, or 20.7 percent, as compared to the fourth quarter of fiscal 2011. HD Supply’s fiscal year is a 52- or 53-week period ending on the Sunday nearest to January 31. Fiscal 2012, ending on February 3, 2013, included 53 weeks and fiscal 2011, ending on January 29, 2012, included 52 weeks. Excluding the impact of the 53 rd week in the fourth quarter of fiscal 2012, net sales increased $194 million, or 11.7 percent, as compared to the fourth quarter of fiscal 2011.
Gross profit for the fourth quarter of fiscal 2012 increased by $101 million, or 20.8 percent, to $587 million compared to $486 million for the fourth quarter of fiscal 2011. On a 52-week basis, gross profit in the fourth quarter of fiscal 2012 increased by $59 million, or 12.1 percent, as compared to the fourth quarter of fiscal 2011. Gross profit as a percentage of net sales for the fourth quarter of fiscal 2012 remained flat at 29.4 percent as compared to the fourth quarter of fiscal 2011.
Fourth-Quarter Business and Financial Highlights
Operating income in the fourth quarter of fiscal 2012 was a loss of $89 million, impacted by a $152 million non-cash, goodwill and other intangible asset impairment charge recorded as a result of the amendment to the Crown Bolt strategic purchase agreement with The Home Depot. On a 52-week basis, operating income excluding the impairment charge for the fourth quarter of fiscal 2012 increased by $33 million to $49 million, as compared to $16 million in the fourth quarter of fiscal 2011. The improvement reflects our sales growth, gross profit improvements, and control over the growth in operating expenses. Net loss for the fourth quarter of fiscal 2012 was $713 million, impacted negatively by the $152 million impairment charge, $113 million net of tax, and a $489 million loss on extinguishment of debt recorded in the fourth quarter of fiscal 2012. Net loss excluding the impairment charge, net of tax, and losses on extinguishment of debt for the fourth quarter of fiscal 2012 was $111 million as compared to a loss of $173 million in the fourth quarter of fiscal 2011.
“In fiscal 2012 we had two strategic objectives, which were to continue to grow our business and strengthen our capital position,” stated Joe DeAngelo, CEO of HD Supply. “With growth across all of our industry leading business units and the successful refinancing of our debt, we achieved these two important milestones. Our relentless focus on our customers, deep and expanding product mix and the tremendous efforts of our associates were the critical drivers for our success.”
Adjusted EBITDA for the fourth quarter of fiscal 2012 increased 51.0 percent to $154 million from $102 million in the fourth quarter of fiscal 2011. On a 52-week basis, Adjusted EBITDA for the fourth quarter of fiscal 2012 increased 37.3 percent as compared to the fourth quarter of fiscal 2011. Adjusted EBITDA for the fourth quarter of fiscal 2012 increased to 7.7 percent of net sales versus 6.2 percent of net sales for the fourth 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.
Full-Year Results
Net sales for fiscal 2012 of $8.0 billion, increased $1.0 billion, or 14.3 percent, as compared to fiscal 2011. On a 52-week basis, net sales for fiscal 2012 increased $859 million, or 12.2 percent, as compared to fiscal 2011. Gross profit for fiscal 2012 increased by $306 million, or 15.2 percent, to $2.3 billion compared to $2.0 billion for fiscal 2011. On a 52-week basis, Gross profit for fiscal 2012 increased $264 million, or 13.1 percent, as compared to fiscal 2011. Gross profit for fiscal 2012 was 28.9 percent of net sales versus a gross profit of 28.7 percent of net sales for fiscal 2011.
Operating income in fiscal 2012 was $171 million, impacted negatively by the $152 million non-cash, goodwill and other intangible asset impairment charge. On a 52-week basis, operating income excluding the impairment charge in fiscal 2012 increased by $154 million to $309 million compared to $155 million in fiscal 2011. The improvement reflects sales growth of 12.2 percent, on a 52-week basis, and a decline in operating expenses, excluding the impairment charge, as a percent of net sales.
Net loss for fiscal 2012 was $1,179 million, negatively impacted by the $152 million impairment charge and $709 million losses on extinguishment of debt. Net loss excluding the impairment charge, net of tax, and losses on extinguishment of debt for fiscal 2012 was $357 million as compared to a loss of $543 million in fiscal 2011.
Adjusted EBITDA for fiscal 2012 increased 34.4 percent to $683 million, as compared to $508 million in fiscal 2011. On a 52-week basis, Adjusted EBITDA for fiscal 2012 increased 31.7 percent as compared to fiscal 2011. Adjusted EBITDA for fiscal 2012 increased to 8.5 percent of net sales versus 7.2 percent of net sales for fiscal 2011.
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HD Supply files for IPO
By Jack Keough, Contributing Editor
HD Supply Holdings, Inc., the indirect parent of HD Supply, Inc., today announced that it has filed a registration statement with the U.S. Securities and Exchange Commission relating to a proposed initial public offering (“IPO”) of its common stock. The company expects to use the proceeds from the proposed offering to repay, redeem, repurchase or otherwise acquire or retire certain outstanding indebtedness of HD Supply, Inc., and for general corporate purposes.
BofA Merrill Lynch, Barclays, J.P. Morgan Securities LLC, and Credit Suisse Securities (USA) LLC are lead book-running managers for the offering. Additional book-running managers are Citigroup, Deutsche Bank Securities, Goldman, Sachs & Co., Morgan Stanley, UBS Investment Bank, and Wells Fargo Securities. The offering of common stock will be made only by means of a prospectus.
Six years ago, HD Supply was bought for $8.5B by three private-equity firms, including Carlyle from Home Depot, which retained a 12.5% stake.
The company provides a broad range of products and value-add services to approximately 500,000 professional customers with leadership positions in maintenance, repair and operations, infrastructure and power and specialty construction sectors. With more than 600 locations across 46 states and nine Canadian provinces, the company’s approximately 15,000 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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About HD Supply
HD Supply ( www.hdsupply.com ) 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 professional customers with leadership positions in maintenance, repair and operations, infrastructure and power and specialty construction sectors. With more than 600 locations across 46 states and nine Canadian provinces, the company’s approximately 15,000 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.
