HD Supply Holdings, Inc. (NASDAQ: HDS), one of the largest
industrial distributors in North America, today reported Net sales
of $1.6 billion for the second quarter of fiscal 2020 ended August
2, 2020, a decrease of $72 million, or 4.4 percent, as compared to
the second quarter of fiscal 2019.
“Our highest priority remains the health and safety of our
associates and our customers as we continue to support the
operations and re-opening of living spaces, job-sites and work
places,” stated Joe DeAngelo, Chairman and CEO of HD Supply. “Our
financial strength and steadily improving results reflect the
strength of our team and their dedication to safely delivering
best-in-class service.”
Gross profit decreased $37 million, or 5.8 percent, to $596
million for the second quarter of fiscal 2020, as compared to $633
million for the second quarter of fiscal 2019. Gross profit was
38.4 percent of Net sales for the second quarter of fiscal 2020, a
decrease of approximately 60 basis points from 39.0 percent for the
second quarter of fiscal 2019.
Operating income decreased $13 million, or 6.2 percent, to $198
million for the second quarter of fiscal 2020, as compared to $211
million for the second quarter of fiscal 2019. Operating income was
12.8 percent of Net sales for the second quarter of fiscal 2020,
down approximately 20 basis points from 13.0 percent for the second
quarter of fiscal 2019.
Net income decreased $4 million, or 3.0 percent, to $131 million
for the second quarter of fiscal 2020, as compared to $135 million
for the second quarter of fiscal 2019.
Net income per diluted share increased $0.02, or 2.5 percent, to
$0.81 for the second quarter of fiscal 2020, as compared to $0.79
for the second quarter of fiscal 2019.
Adjusted EBITDA decreased $6 million, or 2.5 percent, to $238
million for the second quarter of fiscal 2020, as compared to $244
million for the second quarter of fiscal 2019. Adjusted EBITDA was
15.3 percent of Net sales for the second quarter of fiscal 2020, an
increase of approximately 30 basis points from 15.0 percent for the
second quarter of fiscal 2019.
Adjusted net income decreased $1 million, or 0.7 percent, to
$134 million for the second quarter of fiscal 2020, as compared to
$135 million for the second quarter of fiscal 2019. Adjusted
net income per diluted share increased $0.04, or 5.1 percent, to
$0.83 for the second quarter of fiscal 2020, as compared to $0.79
for the second quarter of fiscal 2019.
As of August 2, 2020, our combined liquidity of $995 million was
comprised of $71 million in cash and cash equivalents and $924
million of additional available borrowings (excluding $86 million
of permitted borrowings on available cash balances) under HD
Supply, Inc.'s senior asset-based lending facility, based on
qualifying inventory and receivables. Our combined liquidity as of
August 2, 2020 increased by $198 million from the end of
first-quarter fiscal 2020 and by $367 million from the end of
fiscal year 2019.
Business Unit Performance
Facilities Maintenance
Net sales decreased $69 million, or 8.3 percent, to $761 million
for the second quarter of fiscal 2020, as compared to $830 million
for the second quarter of fiscal 2019. Adjusted EBITDA
decreased $17 million, or 11.4 percent, to $132 million for the
second quarter of fiscal 2020, as compared to $149 million for the
second quarter of fiscal 2019. Adjusted EBITDA was 17.3
percent of Net sales for the second quarter of fiscal 2020, a
decrease of approximately 70 basis points from 18.0 percent for the
second quarter of fiscal 2019.
Construction & Industrial
Net sales decreased $2 million, or 0.3 percent, to $793 million
for the second quarter of fiscal 2020, as compared to $795 million
for the second quarter of fiscal 2019. Adjusted EBITDA increased
$11 million, or 11.6 percent, to $106 million for the second
quarter of fiscal 2020, as compared to $95 million for the second
quarter of fiscal 2019. Adjusted EBITDA was 13.4 percent of
Net sales for the second quarter of fiscal 2020, an increase of
approximately 150 basis points from 11.9 percent for the second
quarter of fiscal 2019.
Second-Quarter Monthly Sales Performance
Net sales for May, June and July of fiscal 2020 were $431
million, $495 million and $626 million, respectively. There
were 19 selling days in May, 20 selling days in June and 24 selling
days in July of fiscal 2020 and fiscal 2019. Average
year-over-year daily sales changes for May, June and July of fiscal
2020 as compared to fiscal 2019 were a decrease of 7.3 percent, a
decrease of 4.8 percent and a decrease of 2.0 percent,
respectively.
Preliminary August Sales Results
Preliminary Net sales in August 2020 were approximately $518
million, which represents a year-over-year average daily decline of
approximately 0.7 percent. Preliminary August year-over-year
average daily Net sales change by business segment was 1.1 percent
growth in Facilities Maintenance and 2.5 percent decline in
Construction & Industrial. There were 20 selling days in
both August 2020 and August 2019.
Construction & Industrial Sale
Transaction
On August 10, 2020, HD Supply entered into a definitive
agreement to sell its Construction & Industrial business to an
affiliate of Clayton, Dubilier & Rice for a purchase price
of $2.9 billion payable in cash at closing. Net proceeds
from the sale are expected to be approximately $2.5
billion after taxes and transaction costs. The transaction is
expected to close in October 2020, subject to customary
regulatory approvals.
2020 Outlook
The company will not be providing a third quarter 2020 or fiscal
full year 2020 outlook in light of the ongoing coronavirus disease
(“COVID-19”) outbreak. A further discussion relating to the ongoing
impact of COVID-19 will take place on our fiscal 2020
second-quarter conference call.
Fiscal 2020 Second-Quarter Conference Call
As previously announced, HD Supply will hold a conference call
on Wednesday, September 9th, 2020 at 8:00 a.m. (Eastern Time) to
discuss its fiscal 2020 second-quarter results. The
conference call and presentation materials can be accessed via
webcast by logging on from the Investor Relations section of the
company's Web site at hdsupply.com. The online replay will remain
available for a limited time following the call.
Non-GAAP Financial Measures
HD Supply supplements its reporting of Net income with non-GAAP
measurements, including Adjusted EBITDA, Adjusted net income, and
Adjusted net income per diluted share. This supplemental
information should not be considered in isolation or as a
substitute for the GAAP measurements. Additional information
regarding Adjusted EBITDA, Adjusted net income, and Adjusted net
income per diluted share referred to in this press release is
included below under “Reconciliation of Non-GAAP Measures.”
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
customers with leadership positions in the maintenance, repair and
operations and specialty construction sectors. Through
approximately 270 branches and 44 distribution centers in the U.S.
and Canada, the company's more than 11,000 associates provide
localized, customer-tailored products, services and expertise.
Forward-Looking Statements and Preliminary
Results
This press release includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements are based on management's beliefs and assumptions and
information currently available to management and are subject to
known and unknown risks and uncertainties, many of which may be
beyond our control. We caution you that the forward-looking
information presented in this press release is not a guarantee of
future results, and that actual results may differ materially from
those made in or suggested by the forward-looking information
contained in this press release. Forward-looking statements
generally can be identified by the use of forward-looking
terminology such as "may," "plan," "seek," "comfortable with,"
"will," "expect," "intend," "estimate," "anticipate," "believe" or
"continue" or the negative thereof or variations thereon or similar
terminology. A number of important factors could cause actual
events to differ materially from those contained in or implied by
the forward-looking statements, including, without limitation, our
ability to obtain the required regulatory approvals for the sale of
Construction & Industrial business, our ability to satisfy the
other closing conditions related to the sale transaction, our
ability consummate the sale transaction on the anticipated timing,
if at all the impact of the coronavirus disease 2019 outbreak
(“COVID-19”) on the maintenance, repair and operations and
specialty construction sectors, in general, and the financial
position and operating results of our company, in particular, which
cannot be predicted and could change rapidly and those "Risk
factors" in our annual report on Form 10-K, for the fiscal year
ended February 2, 2020, filed on March 17, 2020 and those described
from time to time in our, and HD Supply, Inc.'s, other filings with
the U.S. Securities and Exchange Commission (the “SEC”), which can
be found at the SEC's website www.sec.gov. Any forward-looking
information presented herein is made only as of the date of this
press release, and we do not undertake any obligation to update or
revise any forward-looking information to reflect changes in
assumptions, the occurrence of unanticipated events, or
otherwise.
August 2020 estimates for Net sales are preliminary estimates
and are subject to risks and uncertainties, including, among
others, changes in connection with quarter-end adjustments. Any
variation between HD Supply’s actual results and the preliminary
financial data set forth above may be material.
HD SUPPLY HOLDINGS, INC.CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Amounts in millions, except share and per share data,
Unaudited
|
Three Months Ended |
|
Six Months Ended |
|
August 2,2020 |
|
August 4,2019 |
|
August 2,2020 |
|
August 4,2019 |
Net Sales |
$ |
1,552 |
|
|
$ |
1,624 |
|
|
$ |
2,947 |
|
|
$ |
3,117 |
|
Cost of sales |
|
956 |
|
|
|
991 |
|
|
|
1,801 |
|
|
|
1,899 |
|
Gross Profit |
|
596 |
|
|
|
633 |
|
|
|
1,146 |
|
|
|
1,218 |
|
Operating expenses: |
|
|
|
|
|
|
|
Selling, general and administrative |
|
366 |
|
|
|
396 |
|
|
|
762 |
|
|
|
788 |
|
Depreciation and amortization |
|
28 |
|
|
|
26 |
|
|
|
55 |
|
|
|
51 |
|
Restructuring and separation |
|
4 |
|
|
|
— |
|
|
|
10 |
|
|
|
(2 |
) |
Total operating expenses |
|
398 |
|
|
|
422 |
|
|
|
827 |
|
|
|
837 |
|
Operating Income |
|
198 |
|
|
|
211 |
|
|
|
319 |
|
|
|
381 |
|
Interest expense |
|
24 |
|
|
|
28 |
|
|
|
49 |
|
|
|
56 |
|
Income Before Provision for Income Taxes |
|
174 |
|
|
|
183 |
|
|
|
270 |
|
|
|
325 |
|
Provision for income
taxes |
|
43 |
|
|
|
48 |
|
|
|
67 |
|
|
|
83 |
|
Net Income |
$ |
131 |
|
|
$ |
135 |
|
|
$ |
203 |
|
|
$ |
242 |
|
Other comprehensive income
(loss): |
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Unrealized gain (loss) on cash flow hedge, net of tax of $(1), $5,
$5, and $7 |
|
2 |
|
|
|
(16 |
) |
|
|
(14 |
) |
|
|
(21 |
) |
Total Comprehensive Income |
$ |
132 |
|
|
$ |
119 |
|
|
$ |
189 |
|
|
$ |
221 |
|
|
|
|
|
|
|
|
|
Weighted Average
Common Shares Outstanding (thousands) |
|
|
|
|
|
|
|
Basic |
|
160,925 |
|
|
|
169,546 |
|
|
|
160,877 |
|
|
|
169,773 |
|
Diluted |
|
161,282 |
|
|
|
170,057 |
|
|
|
161,220 |
|
|
|
170,386 |
|
|
|
|
|
|
|
|
|
Earnings Per
Share: |
|
|
|
|
|
|
|
Basic earnings per share |
$ |
0.81 |
|
|
$ |
0.80 |
|
|
$ |
1.26 |
|
|
$ |
1.43 |
|
Diluted earnings per share |
$ |
0.81 |
|
|
$ |
0.79 |
|
|
$ |
1.26 |
|
|
$ |
1.42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HD SUPPLY HOLDINGS, INC.CONSOLIDATED
BALANCE SHEETSAmounts in millions, except per
share data, Unaudited
|
August 2,2020 |
|
February 2,2020 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
71 |
|
|
$ |
34 |
|
Receivables, less allowance for credit losses of $22 and $19 |
|
795 |
|
|
|
754 |
|
Inventories |
|
796 |
|
|
|
771 |
|
Other current assets |
|
84 |
|
|
|
104 |
|
Total current assets |
|
1,746 |
|
|
|
1,663 |
|
Property and equipment,
net |
|
375 |
|
|
|
391 |
|
Operating lease right-of-use
assets |
|
459 |
|
|
|
480 |
|
Goodwill |
|
1,991 |
|
|
|
1,991 |
|
Intangible assets, net |
|
163 |
|
|
|
175 |
|
Deferred tax asset |
|
2 |
|
|
|
2 |
|
Other assets |
|
15 |
|
|
|
13 |
|
Total assets |
$ |
4,751 |
|
|
$ |
4,715 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
493 |
|
|
$ |
414 |
|
Accrued compensation and benefits |
|
55 |
|
|
|
71 |
|
Current installments of long-term debt |
|
11 |
|
|
|
11 |
|
Current lease liabilities |
|
123 |
|
|
|
110 |
|
Other current liabilities |
|
238 |
|
|
|
208 |
|
Total current liabilities |
|
920 |
|
|
|
814 |
|
Long-term debt, excluding
current installments |
|
1,772 |
|
|
|
2,035 |
|
Deferred tax liabilities |
|
36 |
|
|
|
33 |
|
Long-term lease
liabilities |
|
352 |
|
|
|
383 |
|
Other liabilities |
|
121 |
|
|
|
98 |
|
Total liabilities |
|
3,201 |
|
|
|
3,363 |
|
Stockholders’
equity: |
|
|
|
Common stock, par value $0.01;
1 billion shares authorized; 162.0 million and 161.4 million shares
issued and outstanding at August 2, 2020, and February 2, 2020,
respectively |
|
2 |
|
|
|
2 |
|
Paid-in capital |
|
4,110 |
|
|
|
4,097 |
|
Accumulated deficit |
|
(919 |
) |
|
|
(1,122 |
) |
Accumulated other
comprehensive loss |
|
(66 |
) |
|
|
(52 |
) |
Treasury stock, at cost, 44.2
million and 44.1 million shares at August 2, 2020 and February 2,
2020, respectively |
|
(1,577 |
) |
|
|
(1,573 |
) |
Total stockholders’ equity |
|
1,550 |
|
|
|
1,352 |
|
Total liabilities and stockholders’ equity |
$ |
4,751 |
|
|
$ |
4,715 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HD SUPPLY HOLDINGS, INC.CONSOLIDATED
STATEMENTS OF CASH FLOWSAmounts in millions,
Unaudited
|
Six Months Ended |
|
August 2,2020 |
|
August 4,2019 |
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
Net income |
$ |
203 |
|
|
$ |
242 |
|
Reconciliation of net income
to net cash provided by operating activities: |
|
|
|
Depreciation and amortization |
|
59 |
|
|
|
54 |
|
Provision for credit losses |
|
10 |
|
|
|
5 |
|
Non-cash interest expense |
|
3 |
|
|
|
3 |
|
Stock‑based compensation expense |
|
12 |
|
|
|
12 |
|
Deferred income taxes |
|
— |
|
|
|
75 |
|
Other |
|
1 |
|
|
|
1 |
|
Changes in assets and liabilities, net of the effects of
acquisitions & dispositions: |
|
|
|
(Increase) decrease in receivables |
|
(51 |
) |
|
|
(133 |
) |
(Increase) decrease in inventories |
|
(25 |
) |
|
|
(56 |
) |
(Increase) decrease in other current assets |
|
7 |
|
|
|
(2 |
) |
Increase (decrease) in accounts payable and accrued
liabilities |
|
104 |
|
|
|
85 |
|
Increase (decrease) in other long-term liabilities |
|
16 |
|
|
|
— |
|
Net cash provided by operating activities |
|
339 |
|
|
|
286 |
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
Capital expenditures |
|
(33 |
) |
|
|
(54 |
) |
Proceeds from sales of
property and equipment |
|
— |
|
|
|
2 |
|
Payments for businesses
acquired, net of cash acquired |
|
— |
|
|
|
3 |
|
Net cash provided by (used in) investing activities |
|
(33 |
) |
|
|
(49 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
Purchase of treasury
shares |
|
(3 |
) |
|
|
(78 |
) |
Repayments of long-term
debt |
|
(5 |
) |
|
|
(5 |
) |
Repayments of financing
liabilities |
|
— |
|
|
|
(88 |
) |
Borrowings on long-term
revolver debt |
|
409 |
|
|
|
578 |
|
Repayments on long-term
revolver debt |
|
(669 |
) |
|
|
(642 |
) |
Proceeds from issuance of
common stock under employee benefit plans |
|
3 |
|
|
|
7 |
|
Tax withholdings on
stock-based awards |
|
(4 |
) |
|
|
(5 |
) |
Other financing
activities |
|
— |
|
|
|
(1 |
) |
Net cash provided by (used in) financing activities |
|
(269 |
) |
|
|
(234 |
) |
Effect of exchange rates on
cash and cash equivalents |
|
— |
|
|
|
— |
|
Increase (decrease) in cash
and cash equivalents |
$ |
37 |
|
|
$ |
3 |
|
Cash and cash equivalents at
beginning of period |
|
34 |
|
|
|
38 |
|
Cash and cash equivalents at
end of period |
$ |
71 |
|
|
$ |
41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HD SUPPLY HOLDINGS, INC.SEGMENT
REPORTINGAmounts in millions,
Unaudited
|
FacilitiesMaintenance |
|
Construction& Industrial |
|
Eliminations |
|
TotalOperations |
Three Months Ended August
2, 2020 |
|
|
|
|
|
|
|
Net sales |
$ |
761 |
|
|
$ |
793 |
|
|
$ |
(2 |
) |
|
$ |
1,552 |
|
Adjusted EBITDA |
|
132 |
|
|
|
106 |
|
|
|
— |
|
|
|
238 |
|
Depreciation(1) & Software
Amortization |
|
12 |
|
|
|
12 |
|
|
|
— |
|
|
|
24 |
|
Other Intangible
Amortization |
|
3 |
|
|
|
3 |
|
|
|
— |
|
|
|
6 |
|
|
|
|
|
|
|
|
|
Three Months Ended August 4, 2019 |
|
|
|
|
|
|
|
Net sales |
$ |
830 |
|
|
$ |
795 |
|
|
$ |
(1 |
) |
|
$ |
1,624 |
|
Adjusted EBITDA |
|
149 |
|
|
|
95 |
|
|
|
— |
|
|
|
244 |
|
Depreciation(1) & Software
Amortization |
|
11 |
|
|
|
10 |
|
|
|
— |
|
|
|
21 |
|
Other Intangible
Amortization |
|
2 |
|
|
|
4 |
|
|
|
— |
|
|
|
6 |
|
|
|
|
|
|
|
|
|
Six Months Ended August 2, 2020 |
|
|
|
|
|
|
|
Net sales |
$ |
1,443 |
|
|
$ |
1,506 |
|
|
$ |
(2 |
) |
|
$ |
2,947 |
|
Adjusted EBITDA |
|
230 |
|
|
|
171 |
|
|
|
— |
|
|
|
401 |
|
Depreciation(1) & Software
Amortization |
|
25 |
|
|
|
22 |
|
|
|
— |
|
|
|
47 |
|
Other Intangible
Amortization |
|
5 |
|
|
|
7 |
|
|
|
— |
|
|
|
12 |
|
|
|
|
|
|
|
|
|
Six Months Ended August 4, 2019 |
|
|
|
|
|
|
|
Net sales |
$ |
1,602 |
|
|
$ |
1,516 |
|
|
$ |
(1 |
) |
|
$ |
3,117 |
|
Adjusted EBITDA |
|
283 |
|
|
|
164 |
|
|
|
— |
|
|
|
447 |
|
Depreciation(1) & Software
Amortization |
|
21 |
|
|
|
21 |
|
|
|
— |
|
|
|
42 |
|
Other Intangible
Amortization |
|
4 |
|
|
|
8 |
|
|
|
— |
|
|
|
12 |
|
|
|
|
|
|
|
|
|
(1) Depreciation includes
amounts recorded within Cost of sales in the Consolidated
Statements of Operations.
Reconciliation of Non-GAAP Measures
Adjusted EBITDA and Adjusted net income are not recognized terms
under GAAP and do not purport to be alternatives to Net income as a
measure of operating performance. We present Adjusted EBITDA and
Adjusted net income because each is a primary measure used by
management to evaluate operating performance. In addition, we
present Adjusted net income to measure our overall profitability as
we believe it is an important measure of our performance. We
believe the presentation of Adjusted EBITDA and Adjusted net income
enhances investors' overall understanding of the financial
performance of our business.
Adjusted EBITDA is based on "Consolidated EBITDA," a measure
which is defined in our senior credit facilities and used in
calculating financial ratios in several material debt covenants.
Adjusted EBITDA is defined as Net income less Income from
discontinued operations, net of tax, plus (i) Interest expense and
Interest income, net, (ii) Provision for income taxes, (iii)
Depreciation and amortization and further adjusted to exclude loss
on extinguishment of debt, non-cash items and certain other
adjustments to Consolidated Net Income permitted in calculating
Consolidated EBITDA under our senior credit facilities.
Adjusted net income is defined as Net income less Income from
discontinued operations, net of tax, further adjusted for loss on
extinguishment of debt, certain non-cash, non-recurring or unusual
items, net of tax.
We compensate for the limitations of using non-GAAP financial
measures by using them to supplement GAAP results to provide a more
complete understanding of the factors and trends affecting the
business than GAAP results alone. Because not all companies use
identical calculations, our presentation of Adjusted EBITDA and
Adjusted net income may not be comparable to other similarly titled
measures of other companies.
Adjusted EBITDA and Adjusted net income have limitations as
analytical tools and should not be considered in isolation or as
substitutes for analyzing our results as reported under GAAP. Some
of these limitations are:
- Adjusted EBITDA and Adjusted net income do not reflect changes
in, or cash requirements for, our working capital needs;
- Adjusted EBITDA does not reflect our interest expense, or the
requirements necessary to service interest or principal payments on
our debt;
- Adjusted EBITDA does not reflect our income tax expenses or the
cash requirements to pay our taxes;
- Adjusted EBITDA and Adjusted net income do not reflect
historical cash expenditures or future requirements for capital
expenditures or contractual commitments; and
- although depreciation and amortization charges are non-cash
charges, the assets being depreciated and amortized will often have
to be replaced in the future, and Adjusted EBITDA does not reflect
any cash requirements for such replacements.
Adjusted EBITDA
The following table presents a reconciliation of Net income, the
most directly comparable financial measure under GAAP, to Adjusted
EBITDA for the periods presented (amounts in millions):
|
Three Months Ended |
|
Six Months Ended |
|
August 2,2020 |
|
August 4,2019 |
|
August 2,2020 |
|
August 4,2019 |
Net income |
$ |
131 |
|
|
$ |
135 |
|
|
$ |
203 |
|
|
$ |
242 |
|
Interest expense, net |
|
24 |
|
|
|
28 |
|
|
|
49 |
|
|
|
56 |
|
Provision for income taxes |
|
43 |
|
|
|
48 |
|
|
|
67 |
|
|
|
83 |
|
Depreciation and amortization (1) |
|
30 |
|
|
|
27 |
|
|
|
59 |
|
|
|
54 |
|
Restructuring and separation charges (2) |
|
4 |
|
|
|
— |
|
|
|
10 |
|
|
|
(2 |
) |
Stock-based compensation |
|
5 |
|
|
|
5 |
|
|
|
12 |
|
|
|
12 |
|
Acquisition and integration costs (3) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
Other |
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
Adjusted EBITDA |
$ |
238 |
|
|
$ |
244 |
|
|
$ |
401 |
|
|
$ |
447 |
|
(1) Depreciation and amortization includes amounts
recorded within Cost of sales in the Consolidated Statements of
Operations(2) Represents the costs related to separation
activities and personnel changes, primarily severance and other
employee-related costs, and costs related to deferring certain
projects during the separation preparations. For the six months
ended August 4, 2019, the Company recognized a favorable
termination of the lease for its former corporate
headquarters(3) Represents the costs incurred in the
acquisition and integration of business acquisitions, including
A.H. Harris Construction Supplies
Adjusted Net Income
The following table presents a reconciliation of Net income, the
most directly comparable financial measure under U.S. GAAP, to
Adjusted net income for the periods presented (amounts in
millions):
|
Three Months Ended |
|
Six Months Ended |
|
August 2,2020 |
|
August 4,2019 |
|
August 2,2020 |
|
August 4,2019 |
Net income |
$ |
131 |
|
|
$ |
135 |
|
|
$ |
203 |
|
|
$ |
242 |
|
Plus: Restructuring and separation charges (1) |
|
4 |
|
|
|
— |
|
|
|
10 |
|
|
|
(2 |
) |
Plus: Acquisition and integration costs (2) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
Plus: Tax benefit for adjustments (3) |
|
(1 |
) |
|
|
— |
|
|
|
(2 |
) |
|
|
— |
|
Adjusted Net Income |
$ |
134 |
|
|
$ |
135 |
|
|
$ |
211 |
|
|
$ |
241 |
|
|
|
|
|
|
|
|
|
Diluted weighted average common shares outstanding |
|
161,282 |
|
|
|
170,057 |
|
|
|
161,220 |
|
|
|
170,386 |
|
Adjusted net income per share – diluted |
$ |
0.83 |
|
|
$ |
0.79 |
|
|
$ |
1.31 |
|
|
$ |
1.41 |
|
(1) Represents the costs related to separation
activities and personnel changes, primarily severance and other
employee-related costs, and costs related to deferring certain
projects during the separation preparations. For the six months
ended August 4, 2019, the Company recognized a favorable
termination of the lease for its former corporate
headquarters(2) Represents the costs incurred in the
acquisition and integration of business acquisitions, including
A.H. Harris Construction Supplies(3) Adjustments to Net
income have been tax effected at the Company’s combined annual
federal and state tax rates of 25.8% for the three and six months
ended August 2, 2020 and 25.7% for the three and six months ended
August 4, 2019
Investor and Media
Contact:Charlotte McLaughlinHD Supply Investor
Relations770-852-9100InvestorRelations@hdsupply.comCharlotte.McLaughlin@hdsupply.com
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