HD Supply Holdings 1Q Results Exceed Expectations, Provides Upbeat 2Q Earnings Guidance

HD Supply Holdings, Inc. HDS announced a loss for the first quarter compared to profit last year. However, on an adjusted basis, net income more than doubled and topped the Street analysts' expectations driven by 7 percent increase in net sales. The company also offered upbeat earnings guidance for the second quarter. HD Supply Holdings suffered a net loss of $14 million or a loss of $0.07 a share in the first quarter compared to net income of $242 million or $1.21 a share in the year-ago quarter. Excluding special items, it would have earned $103 million or $0.51 a share, which was more than double from $51 million or $0.25 a share in the previous year quarter. Street analysts estimated the company to report $0.47 a share. Its net sales grew 7 percent to $1.78 billion or $1.84 billion including Interior Solutions. This was in line with the Street analysts' predictions. HD Supply Chairman and CEO, Joe DeAngelo, commented, "I am extremely pleased with the team's performance in the first-quarter of 2016. We delivered 7 percent net sales growth, 14 percent Adjusted EBITDA growth and 104 percent Adjusted Net Income per Diluted Share growth despite a challenging uncontrollable environment. We focused on what we could control and delivered solid profitable growth, operating leverage and free cash flow." Going forward, the company expects adjusted earnings to be between $0.85 and $0.90 a share for the second quarter, which was higher than the Street analysts' expectations of $0.84 a share. Similarly, the company sees net sales of $2.0 - $2.05 billion, which fell short of the analysts' expectations of $2.12 billion. HD Supply also affirmed its expectations of 300 basis points in excess of market and 1.5x to 2.0x operating leverage for fiscal year 2016. Adjusted for Interior Solutions reflected as discontinued operations, the company expects it could provide further specifics on its end market, the second quarter 2016 outlook, and the fiscal year 2016 outlook during the first quarter fiscal 2016 earnings conference call. Shares of the company traded 0.63 percent higher on Monday.