HD Supply Holdings (HDS) Tops Q4 EPS by 9c; No Q1 or FY20 Guidance Due to COVID-19 Outbreak

HD Supply Holdings (NASDAQ: HDS) reported Q4 EPS of $0.64, $0.09 better than the analyst estimate of $0.55. Revenue for the quarter came in at $1.39 billion versus the consensus estimate of $1.38 billion.

Fourth-Quarter 2019 Results

• Net sales decreased $61 million, or 4.2 percent, to $1,385 million in the fourth quarter of fiscal 2019, as compared to $1,446 million in the fourth quarter of fiscal 2018. The fourth quarter of fiscal 2019 consisted of 13 weeks, as compared to 14 weeks during the fourth quarter of fiscal 2018. Sales growth, on a 13-week basis, in the fourth quarter of fiscal 2019 was 3.2 percent, as compared to the fourth quarter of fiscal 2018.
• Gross profit decreased $27 million, or 4.7 percent, to $545 million for the fourth quarter of fiscal 2019, as compared to $572 million for the fourth quarter of fiscal 2018. Gross profit was 39.4 percent of Net sales for the fourth quarter of fiscal 2019, down approximately 20 basis points from 39.6 percent for the fourth quarter of fiscal 2018.
• Operating income decreased $12 million, or 8.1 percent, to $137 million for the fourth quarter of fiscal 2019, as compared to $149 million for the fourth quarter of fiscal 2018. Operating income was 9.9 percent of Net sales for the fourth quarter of fiscal 2019, down approximately 40 basis points from 10.3 percent for the fourth quarter of fiscal 2018.
• Net income decreased $14 million, or 15.2 percent, to $78 million for the fourth quarter of fiscal 2019, as compared to $92 million for the fourth quarter of fiscal 2018. Net income in the fourth quarter of fiscal 2018 included $2 million of Income from discontinued operations, net of tax.
• Net income per diluted share decreased $0.04, or 7.7 percent, to $0.48 in the fourth quarter of fiscal 2019, as compared to $0.52 in the fourth quarter of fiscal 2018.
• Adjusted EBITDA decreased $8 million, or 4.3 percent, to $179 million for the fourth quarter of fiscal 2019, as compared to $187 million for the fourth quarter of fiscal 2018. Adjusted EBITDA was 12.9 percent of Net sales for the fourth quarter of fiscal 2019, flat as compared to the fourth quarter of fiscal 2018. On a 13-week basis, Adjusted EBITDA growth was 2.9 percent in the fourth quarter of fiscal 2019, as compared to the fourth quarter of fiscal 2018.
• Adjusted net income decreased $19 million, or 15.4 percent, to $104 million for the fourth quarter of fiscal 2019, as compared to $123 million for the fourth quarter of fiscal 2018. Adjusted net income per diluted share decreased -$0.06, or 8.6 percent, to $0.64 in the fourth quarter of fiscal 2019, as compared to $0.70 in the fourth quarter of fiscal 2018.
• As of February 2, 2020, HD Supply’s combined liquidity of $628 million was comprised of $34 million in cash and cash equivalents and $594 million of additional available borrowings (excluding $4 million of borrowings on available cash balances) under HD Supply, Inc.'s senior asset-based lending facility, based on qualifying inventory and receivables.

"Despite ending 2019 with a solid performance, we enter 2020 with the COVID-19 virus top of mind," stated Joe DeAngelo, Chairman and CEO of HD Supply. "We are committed to helping our customers succeed in these challenging times by doing everything we can to keep our HD Supply family healthy and focused."

2020 Outlook

The company will not be providing a first quarter 2020 or fiscal full year 2020 outlook in light of the ongoing coronavirus disease 2019 (“COVID-19”) outbreak. A further discussion relating to the potential impact of COVID-19 will take place on our fiscal 2019 fourth-quarter conference call.

For earnings history and earnings-related data on HD Supply Holdings (HDS) click here.

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