HD Supply Holdings Seeks Fresh Record After Beating Estimates (HDS)

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Last Update: 05-Sep-18 08:47 ET

HD Supply Holdings (HDS) held a pre-market gain of 2.1% and looked to extend to a fresh record after the company reported better than expected quarterly results.

The industrial distributor reported above-consensus second quarter earnings of $0.99/share on an 18.3% year/year jump in revenue to $1.60 bln, which was also ahead of expectations. Organic sales increased 10.1% year/year.

Gross margin weakened by 100 basis points to 38.9%.

The company reported that average daily sales grew 18.7% year/year in May, 18.7% in June, and 17.8% in July. Organic average daily sales growth in May hit 10.6%, 10.4% in June, and 9.7% in July.

HD Supply Holdings reported that preliminary average daily August sales increased 17.7% year/year while growing 10.2% on an Organic basis. Facilities maintenance sales grew 6.0% while Construction & Industrial sales jumped 33.1%.

Looking at the segment breakdown, Facilities Maintenance net sales grew 6.6% to $820 mln during the second quarter. Adjusted EBITDA increased 3.4% to $150 mln, making up 18.3% of net sales, down from 18.9% of sales one year ago.

Construction & Industrial net sales jumped 33.7% to $781 mln. Organic sales increased 14.7% year/year while adjusted EBITDA grew 52.4% to $96 mln. Adjusted EBITDA made up 12.3% of net sales, up from 10.8% one year ago.

Looking ahead, HD Supply Holdings expects third quarter earnings between $0.95/share and $1.00/share on revenue between $1.56 bln and $1.61 bln. For the full year, the company expects to generate earnings between $3.22/share and $3.35/share, up from previous guidance for earnings between $3.11/share and $3.27/share. Revenue is expected between $5.90 bln and $6.00 bln, up from previous guidance for sales between $5.82 bln and $5.94 bln.