HD Supply, the industrial and residential supply conglomerate whose operations include the Los Angeles region's HD Supply Repair & Remodel, reported today its net loss deepened by nearly a third in its fiscal second quarter and now is triple the loss for the first six months than what it posted for the previous fiscal year's opening half.
Net sales for the quarter ended Aug. 1 were basically unchanged, adding just $1 million to reach $1.974 billion, while cost of sales fell $3 million to hit $1.427 billion. That enabled gross profit to rise to $547 million from $543 million in fiscal 2009's second quarter.
Operating expenses also improved by $3 million, slipping to $521 million, and thus operating income for the three months ended Aug. 1 rose to $26 million from $19 million. But a $6 million rise in interest expense to $155 million pushed the company's net results into the red, producing a $115 million net loss this quarter vs. an $89 million loss one year earlier.
For fiscal 2010's first half, net sales dropped 2.8% to $3.79 billion and the cost of sales declined 3.6% to $2.74 billion, enabling a gross profit of $1.049 billion this fiscal half compared with $1.055 billion a year earlier. Operating income swung to a $5 million profit from a $6 million loss. Interest expense totaled $311 million this half vs. a year earlier $301 million, but this year there was only $1 million in other expenses and last year there was $202 million worth of other income. About $200 million of that fiscal 2009 "other" income was a pretax gtain resulting from the extinguishment of senior subordinated debt. In March, HD Supply entered into amendments to its $1.3 billion Cash Flow Credit Agreement and its $2.1 billion ABL (asset-based line) Credit Agreement. Those changes extended approximately $874 million of the Term Loan principal and $1.75 billion under the ABL Credit Agreement to April 1, 2014.
The result was a net loss of $317 million this half from $79 million a year ago. "Excluding the 2010 and 2009 charges for valuation allowances and the 2009 gain from the debt extinguishment, net loss of $200 million in the first six months of fiscal 2010 compares with a net loss of $197 million in the first six months of fiscal 2009," the company said.
HD Supply CEO Joe DeAngelo said the second half of this fiscal year is showing signs of economic and industry stabilitization. "We continue to invest in the critical growth areas for our business that will uniquely position HD Supply to grow faster than the markets as they recover," he said. "Over the past six months, we have enhanced our product mix, continued to improve our operational efficiencies and have made critical investments in our technology systems. In addition, our teams are intensely focused on maintaining and growing current customer relationships, and earning new business by providing outstanding service to our customers."
HD Supply provides materials About HD Supply distributes a broad range of products to customers in the infrastructure and energy, maintenance, repair and improvement and specialty construction markets. It has about 770 facilities nationwide, including its HD Supply Repair & Remodel stores in southern California.
Today's earnings report didn't break out sales by business line.