HD Supply Posts 2Q Results, Nears Close Of Plumbing/HVAC Sale

ATLANTA -- HD Supply recently reported net sales for the fiscal 2011 second quarter ended July 31, 2011 of $2.2 billion, an increase of $195 million, or 10.0 percent, as compared to the second quarter of fiscal 2010. Gross profit for the second quarter of fiscal 2011 increased by $57 million, or 10.

ATLANTA -- HD Supply recently reported net sales for the fiscal 2011 second quarter ended July 31, 2011 of $2.2 billion, an increase of $195 million, or 10.0 percent, as compared to the second quarter of fiscal 2010. Gross profit for the second quarter of fiscal 2011 increased by $57 million, or 10.5 percent, to $601 million compared to $544 million for the second quarter of fiscal 2010. Gross profit for the second quarter of fiscal 2011 was 27.9 percent of net sales versus 27.7 percent of net sales for the second quarter of fiscal 2010.

Operating income for the second quarter of fiscal 2011 was $73 million, an improvement of $46 million compared to operating income of $27 million for the second quarter of fiscal 2010. The improvement in operating income reflects the 10.0 percent sales growth and a 110 basis point decline in selling, general and administrative expenses as percent of sales despite inflationary pressure, including medical costs, fuel costs and a resumption of the company's 401(k) match.

Liquidity at the end of the second quarter of fiscal 2011 was $1.2 billion.

Loss from continuing operations before income taxes was $86 million in the second quarter of fiscal 2011, an improvement of $41 million as compared to the second quarter of fiscal 2010. Loss from continuing operations for the second quarter of fiscal 2011 was $101 million,compared to a loss from continuing operations of $115 million for thesecond quarter of fiscal 2010.

Joe DeAngelo, CEO of HD Supply, stated, "The second quarter results marked the company's fifth consecutive quarter of sales growth and each of our business sectors Infrastructure & Energy, Specialty Construction and Maintenance, Repair & Improvement reported year-over-year sales growth for the quarter. During the second quarter, sales initiatives, continued focus on margin expansion and cost control resulted in the highest quarterly operating income since the second quarter of fiscal 2008."

DeAngelo continued, "Our consistently improving performance is the result of HD Supply associates' unparalleled industry expertise and superior customer service. Furthermore, our strong liquidity, innovative solutions and expansive geographic reach have us well positioned to deliver exceptional results."

In addition, in late August the company entered into a definitive agreement to sell all of the issued and outstanding equity interests in its Plumbing/HVAC business to Hajoca Corporation. The transaction is expected to close in September 2011 upon the satisfaction of customary closing conditions, including obtaining requisite government approvals. Upon the closing of the transaction, the company anticipates recording a modest gain and expects to utilize the funds from the transaction for growth initiatives. The results of the Plumbing/HVAC operations will be reflected as discontinued operations beginning in the third quarter of fiscal 2011.

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