HD Supply Loss Widens, Outlook Weak; Stock Down - Update

(RTTNews) - Industrial and construction distributor HD Supply Holdings Inc. (HDS), Monday reported a wider loss for the second quarter, hurt by debt-related expenses that offset a 10 percent growth in sales spread over all key segments.

The company provided some weak sales outlook for 2013, dragging down its shares 9 percent in after-hours trading on the Nasdaq.

HD Supply, which went public in June, distributes electrical and lighting items, plumbing products, janitorial supplies, hardware, among others. The company is backed by Bain Capital, Carlyle Group and Clayton, Dubilier & Rice.

The Atlanta, Georgia-based company incurred a second-quarter net loss of $72 million or $0.47 per share, compared with a loss of $56 million or $0.43 per share last year.

Results for the quarter included a $46 million loss on the extinguishment and modification of debt.

Excluding items, adjusted earnings for the quarter were $36 million or $0.23 per share, compared with $3 million or $0.02 per share a year ago.

Net sales for the quarter climbed to $2.26 billion from $2.06 billion in the prior year.

Growth was seen across its key segments of Facilities Maintenance, Waterworks, and Power Solutions. This was despite limited non-residential and municipal end market growth as well as unusually cooler and wetter weather affecting outdoor construction sales, said CEO Joe DeAngelo.

Gross margin for the quarter improved to 29.3 percent from 28.8 percent a year ago.

For 2013, HD Supply expect adjusted earnings in the region of $0.52 to $0.64 per share and sales of $8.55 billion to $8.75 billion. Analysts polled by Thomson Reuters currently expect sales of $8.89 billion.

HD Supply went public in June after raising $957 million in an initial public offering, pricing 53.2 million shares at $18 each.

On Monday, the stock closed at $24.75, up $0.80 or 3.33%, on a volume of 2.2 million shares on the Nasdaq. In after hours, the stock dropped $2.25 or 9.08%.