Industrial maintenance and construction supply company HD Supply Holdings (HDS 42.66, +1.22, +2.9%) trades to better than 12-month highs in reaction to this morning’s first quarter earnings and sales beat and strong guidance.
At the base level HDS is a distributor of products. The company also provides value-add services with a focus on maintenance, repair, and operations, and specialty construction sectors. The company operates out of 270 branches and 44 distribution centers in the U.S. and Canada, and distributes popular brands like BOSCH, Milwaukee, DeWALT, 3M, and RIDGID.
Turning to the first quarter print, HD Supply reported better than expected earnings of $0.70 per share on slower than expected revenue declines of 25.8% compared to last year to $1.39 bln. Gross profit was 39.7% of Net sales for the first quarter, down about 10 basis points from 39.8% last year.
Net sales for February, March, and April of fiscal 2018 were $391 mln, $423 mln and $575 mln, respectively. There were 20 selling days in February, 20 selling days in March and 25 selling days in April in both 2018 and 2017. Average year/year daily sales growth for February, March and April was 11.7%, 12.0%, and 17.7%, respectively. On an organic basis, average year/year daily sales growth for February, March and April was 11.7%, 7.5%, and 10.3%, respectively.
Preliminary Net sales in May 2018 were about $488 mln, which represents year/year average daily sales growth of about 18.7% (10.6% on an organic basis). Preliminary May year/year average daily sales growth by business segment was about 6.3% for Facilities Maintenance and around 34.5% (16.0% on an organic basis) for Construction & Industrial. There were 20 selling days in both May 2018 and May 2017.
For Q2, HD Supply sees net sales in the range of $1.535-1.595 bln where the midpoint beat Street views. Adjusted EBITDA is expected between $235-245 mln and Adjusted net income per diluted share in the range of $0.92-0.97, the midpoint of which also came ahead of Street views.
For the full year fiscal 2018, net sales are anticipated to be in the range of $5.820-5.940 bln, up from the prior expectation of $5.76-5.91 bln. Adjusted EBITDA is anticipated in the range of $832-862 mln and Adjusted net income per diluted share in the range of $3.11-3.27, up from the prior outlook of $2.99-3.21.