HD Supply Posts Profit In Q3, Cuts Full-year View; Promotes Evan Levitt To CFO

(RTTNews) - Industrial and construction distributor HD Supply Holdings, Inc. (HDS) Tuesday reported a profit for the third quarter compared to a loss last year, reflecting higher sales, improved margins, and lower interest expense. The company cut the upper end of its adjusted earnings per share outlook for fiscal year 2013, and lowered its revenue view.

HD Supply also announced that it has promoted Evan Levitt to chief financial officer, effective December 11, 2013, as Ron Domanico will be retiring, effective April 17, 2014. Levitt has served as vice president and corporate controller since 2007.

For the third quarter, the company posted net income of $51 million or $0.26 per share, compared with a loss of $50 million or $0.38 per share a year ago. Excluding items, adjusted earnings were $0.38 per share, while the company posted $0.07 per share in the prior-year quarter.

On average, 14 analysts polled by Thomson Reuters expected the company to report earnings per share of $0.36 the quarter. Analysts' estimates typically exclude one-time items.

Depreciation and amortization expenses declined to $61 million from $84 million in the preceding year. Interest expense was $118 million, lower than $165 million reported a year earlier.

Net sales for the quarter grew 7 percent to $2.30 billion from prior year's $2.15 billion. Analysts expected the company to generate revenues of $2.29 billion for the quarter. Organic sales grew 6 percent from last year.

In the Facilities Maintenance business unit, net sales increased 4 percent, and Waterworks sales were up 14 percent from last year. Sales from Power Solutions edged up 1 percent, while White Cap showed an improvement of 11 percent in net sales.

Preliminary net sales in November were $633 million, which represented 9.2 percent growth over the prior year, and the growth was 8.5 percent on an organic basis.

Joe DeAngelo, CEO of the company stated, "We delivered this performance despite continued sluggishness in non-residential, moderated growth in residential and increased uncertainty in our infrastructure markets. We continue our strategy of investing for growth while, at the same time, ensuring that our cost structure is appropriately aligned for uncertain markets."

For fiscal 2013, the company now expects adjusted earnings per share to be in the range of $0.52 to $0.58, compared to the earlier outlook of $0.52 to $0.64 per share.

Revenues are anticipated to be between $8.500 billion and $8.575 billion, lower than previous view of between $8.550 billion and $8.750 billion. Analysts expect the company to report earnings of $0.52 per share, on revenues of $8.61 billion.

HDS closed Monday's regular trading at $21.65 on the Nasdaq.