HD Supply announces fiscal 2014 full-year and Q4 results
HD Supply White Cap ends 2014 with sales of $1.5 billion, up 15 percent from 2013.
Summary, Fourth-Quarter Results
- Net Sales increased 7 percent to $2,005 million
- Operating Income improved 78 percent to $130 million
- Adjusted EBITDA increased 17 percent to $172 million
- Adjusted Net Income per diluted share increased $0.13 to $0.11 (Net Loss per diluted share of $0.48)
Summary, Fiscal 2014 Results
- Net Sales increased 8 percent to $8,882 million
- Operating Income improved 31 percent to $618 million
- Adjusted EBITDA increased 16 percent to $854 million
- Adjusted Net Income per diluted share increased $0.81 to $1.26 (Net Income per diluted share of $0.02)
HD Supply Holdings, Inc. (NASDAQ: HDS), one of the largest industrial distributors in North America, has reported Net sales of $9.0 billion for the full-year fiscal 2014 ended February 1, 2015, an increase of $654 million, or 8 percent, as compared to fiscal 2013. The company believes its sales performance represents growth of approximately 400 basis points in excess of its market growth estimate.
“I am very pleased with our solid 2014 performance. We delivered 8 percent sales growth and 16 percent Adjusted EBITDA growth,” stated Joe DeAngelo, CEO of HD Supply. “Despite a challenging and uncertain market environment, we remain focused on controllable execution to deliver profitable growth in excess of our markets.”
On January 12, 2015, the company completed the sale of substantially all of the assets of its Hardware Solutions business to The Home Depot and received cash proceeds of approximately $198 million, net of transaction costs.
As a result of the sale, the company recorded an $8 million pre-tax gain in fiscal 2014. In accordance with Accounting Standard Codification 205-20, Discontinued Operations, the results of Hardware Solutions are classified as discontinued operations for all periods presented.
Gross profit increased $200 million, or 8 percent, to $2,558 million for the full-year fiscal 2014 compared to $2,358 million for the full-year fiscal 2013. Gross profit was 28.8 percent of Net sales for the full-year fiscal 2014, up approximately 10 basis points from 28.7 percent of Net sales for the full-year fiscal 2013 The improvement in gross margin was primarily driven by category management initiatives, partially offset by the competitive environment, and mix of products and services.
Operating income increased $146 million, or 31 percent, to $618 million for the full-year fiscal 2014 compared to $472 million for the full-year fiscal 2013.
Operating income as a percentage of Net sales increased approximately 130 basis points during the full-year fiscal 2014 as compared to the full-year fiscal 2013. The improvement was primarily driven by the leverage of fixed costs through sales volume increases, disciplined cost control and a reduction of amortization expense on certain acquisition-related intangible assets.
Adjusted EBITDA increased $120 million, or 16 percent, to $854 million for the full-year fiscal 2014 compared to $734 million for the full-year fiscal 2013. The increase in Adjusted EBITDA reflects the continued focus on initiatives execution to drive growth in excess of the company's estimate of market growth and the leverage of fixed costs through sales volume increases.
Adjusted EBITDA as a percentage of Net sales increased approximately 70 basis points to 10 percent in the full-year fiscal 2014 as compared to 9 percent in the full-year fiscal 2013.
Net income for full-year fiscal 2014 was $3 million, which included a $108 million loss on extinguishment and modification of debt and a $7 million restructuring charge. Net loss for full-year fiscal 2013 was $218 million, which included an $87 million loss on extinguishment and modification of debt and a $12 million restructuring charge. Net income per diluted share was $0.02 in the full-year of fiscal 2014, as compared to a net loss per diluted share of $1.31 in the full-year fiscal 2013.
Adjusted net income increased $174 million to $251 million for the full-year fiscal 2014 as compared to an Adjusted net income of $77 million for the full-year fiscal 2013. The increase in Adjusted net income is primarily attributable to sales growth, the leverage of fixed costs through sales volume increases, and a reduction in interest expense. Adjusted net income per diluted share was $1.26 in the full-year fiscal 2014, as compared to $0.45 in the full-year fiscal 2013.
As of February 1, 2015, HD Supply’s combined liquidity of approximately $1,248 million was comprised of $85 million in cash and cash equivalents and $1,163 million of additional available borrowings under HD Supply, Inc.’s senior asset-backed lending facility, based on qualifying inventory and receivables.
Fourth-Quarter 2014 Results
Net Sales increased $134 million, or 7 percent, to $2,005 million for the fourth quarter of fiscal 2014 as compared to the fourth quarter of fiscal 2013.
Net sales for November, December and January of fiscal 2014 were $648 million, $587 million and $770 million, respectively. There were 18 selling days in November, 19 selling days in December and 24 selling days in January. Average year-over-year daily sales growth for November, December and January were 6.3 percent, 5.9 percent and 8.8 percent, respectively.
Gross profit increased $43 million, or 8 percent, to $577 million for the fourth quarter of fiscal 2014, compared to $534 million for the fourth quarter of fiscal 2013. Gross profit was 28.8 percent of Net sales for the fourth quarter of fiscal 2014, up approximately 30 basis points from 28.5 percent of Net sales for the fourth quarter of fiscal 2013.
Operating income increased $57 million, or 78 percent, to $130 million for the fourth quarter of fiscal 2014, compared to $73 million for the fourth quarter of fiscal 2013. Operating income as a percentage of Net sales increased approximately 260 basis points during the fourth quarter of fiscal 2014, as compared to the fourth quarter of fiscal 2013.
Adjusted EBITDA increased $25 million, or 17 percent, to $172 million for the fourth quarter of fiscal 2014, compared to $147 million for the fourth quarter of fiscal 2013. Adjusted EBITDA as a percentage of Net sales increased approximately 70 basis points to 9 percent in the fourth quarter of fiscal 2014, as compared to 8 percent in the fourth quarter of fiscal 2013.
Net loss for the fourth quarter of fiscal 2014 was $93 million, which included a $106 million loss on extinguishment and modification of debt. Net loss for the fourth quarter of fiscal 2013 was $66 million, which included a $12 million restructuring charge. Net loss per diluted share was $0.48 in the fourth quarter of fiscal 2014, as compared to $0.34 in the fourth quarter of fiscal 2013.
Adjusted net income increased to $23 million for the fourth quarter of fiscal 2014, as compared to Adjusted net loss of $4 million for the fourth quarter of fiscal 2013. The increase in Adjusted net income is attributable to sales growth, the leverage of fixed costs through sales volume increases, and the reduction in depreciation and amortization expense. Adjusted net income per diluted share was $0.11 in the fourth quarter of fiscal 2014, as compared to Adjusted net loss per diluted share of $0.02 in the fourth quarter of fiscal 2013.
Business Unit Performance
Facilities Maintenance
Full-Year Results
Net sales increased $179 million, or 8 percent, to $2.5 billion in the full-year fiscal 2014, as compared to $2.3 billion for the full-year fiscal 2013. Adjusted EBITDA increased $57 million, or 13 percent, to $491 million for the full-year fiscal 2014 as compared to $434 million for the full-year fiscal 2013. Adjusted EBITDA as a percentage of Net sales increased approximately 100 basis points for the full-year of fiscal 2014, as compared to the full-year fiscal 2013.
Fourth-Quarter Results
Net sales increased $38 million, or 7 percent, to $560 million in the fourth quarter of fiscal 2014 as compared to $522 million in the fourth quarter of fiscal 2013. Adjusted EBITDA increased $14 million, or 16 percent, to $104 million during the fourth quarter of fiscal 2014 as compared to $90 million in the fourth quarter of fiscal 2013. Adjusted EBITDA as a percentage of Net sales increased approximately 140 basis points in the fourth quarter of fiscal 2014 as compared to the fourth quarter of fiscal 2013.
Waterworks
Full-Year Results
Net sales increased $200 million, or 9 percent, to $2.4 billion in the full-year of fiscal 2014 as compared to $2.2 billion in the full-year of fiscal 2013. Adjusted EBITDA increased $25 million, or 14 percent, to $198 million during the full-year of fiscal 2014 as compared to $173 million in the full-year of fiscal 2013. Adjusted EBITDA as a percentage of Net sales increased approximately 40 basis points in the full-year of fiscal 2014 as compared to the full-year of fiscal 2013.
Fourth-Quarter Results
Net sales increased $46 million, or 10 percent, to $516 million in the fourth quarter of fiscal 2014 as compared to $470 million in the fourth quarter of fiscal 2013. Adjusted EBITDA increased $6 million, or 20 percent, to $36 million during the fourth quarter of fiscal 2014 as compared to $30 million in the fourth quarter of fiscal 2013. Adjusted EBITDA as a percentage of Net sales increased approximately 60 basis points in the fourth quarter of fiscal 2014 as compared to the fourth quarter of fiscal 2013.
Power Solutions
Full-Year Results
Net sales increased $70 million, or 4 percent, to $1.9 billion in the full-year of fiscal 2014 as compared to $1.8 billion in the full-year of fiscal 2013. Adjusted EBITDA increased $3 million, or 4 percent, to $79 million during the full-year of fiscal 2014 as compared to $76 million in the full-year of fiscal 2013. Adjusted EBITDA as a percentage of Net sales in the full-year of fiscal 2014 was comparable to the full-year of fiscal 2013.
Fourth-Quarter Results
Net sales increased $9 million, or 2 percent, to $462 million in the fourth quarter of fiscal 2014 as compared to $453 million in the fourth quarter of fiscal 2013. Net sales in fiscal 2014 were negatively impacted by $5 million of unfavorable Canadian exchange rate changes. Adjusted EBITDA decreased $2 million, or 11 percent, to $17 million during the fourth quarter of fiscal 2014 as compared to $19 million in the fourth quarter of fiscal 2013. Adjusted EBITDA as a percentage of Net sales decreased approximately 50 basis points in the fourth quarter of fiscal 2014 as compared to the fourth quarter of fiscal 2013.
Construction & Industrial - White Cap
Full-Year Results
Net sales increased $188 million, or 15 percent, to $1.5 billion in the full-year of fiscal 2014 as compared to $1.3 billion in the full-year of fiscal 2013. Adjusted EBITDA increased $32 million, or 41 percent, to $111 million during the full-year of fiscal 2014 as compared to $79 million in the full-year of fiscal 2013. Adjusted EBITDA as a percentage of Net sales increased approximately 140 basis points in the full-year of fiscal 2014 as compared to the full-year of fiscal 2013.
Fourth-Quarter Results
Net sales increased $42 million, or 14 percent, to $337 million in the fourth quarter of fiscal 2014 as compared to $295 million in the fourth quarter of fiscal 2013. Adjusted EBITDA increased $7 million, or 50 percent, to $21 million during the fourth quarter of fiscal 2014 as compared to $14 million in the fourth quarter of fiscal 2013. Adjusted EBITDA as a percentage of Net sales increased approximately 150 basis points in the fourth quarter of fiscal 2014 as compared to the fourth quarter of fiscal 2013.
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