HD Supply Earnings Top Estimates, Revenue Outlook a Little Soft

Industrial distributor HD Supply Holdings Inc. (NYSE: HD) reported first-quarter fiscal 2016 results before markets opened Tuesday. The company posted adjusted diluted earnings per share (EPS) of $0.51 and $1.78 billion in revenues. In the same period a year ago, the company reported adjusted EPS of $0.25 on revenue of $1.66 billion. First-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.47 and $1.84 billion in revenue.

On a GAAP basis, the first-quarter net loss came in at $0.07 per share, compared with EPS a year ago of $1.21. The 2016 first-quarter loss resulted from a $115 million payment for debt extinguishment. In the first quarter of 2015, the company received a tax benefit of $189 million as a result of IRS and state audit settlements.

The company guided 2016 sales growth of approximately 3% in excess of the estimated market growth. For the second quarter, HD Supply forecasts sales in a range of $2.00 billion to $2.05 billion and adjusted EPS in a range of $0.85 to $0.90.

Analysts have a full-year EPS estimate of $2.57 and sales at $7.83 billion. For the second quarter, analysts are looking for EPS of $0.84 and revenues of $2.12 billion.

Chairman and CEO Joe DeAngelo said:

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.

Shares closed up about 0.6% on Monday, at $34.92 in a 52-week range of $21.26 to $36.81. The stock was inactive in Tuesday’s premarket session. Thomson Reuters had a consensus analyst price target of $37.94 before results were announced.