HD Supply Holdings, Inc. (NASDAQ:HDS) Q2 2019 Earnings Conference Call - Final Transcript

Sep 10, 2019 • 08:00 am ET

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HD Supply Holdings, Inc. (NASDAQ:HDS) Q2 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and welcome to the HD Supply's Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to Charlotte McLaughlin, Head of Investor Relations. You may begin.

Executive
Charlotte McLaughlin

Thank you, Sonia. Good morning, ladies and gentlemen, and welcome to the HD Supply Holdings' 2019 second quarter earnings call.

As a reminder, some of our comments today may be forward-looking statements based on management's beliefs and assumptions, and information currently available to management at this time. These beliefs are subject to known and unknown risks and uncertainties, many of which may be beyond our control, including those detailed in our periodic SEC filings. Please note that the Company's actual results may differ materially from those anticipated and we undertake no obligation to update these statements.

Reconciliations of certain non-GAAP financial metrics with their corresponding GAAP measures are available at the end of our slide presentation, and in our 2019 second quarter earnings release, which is available on our IR website at www.hdsupply.com.

Joe DeAngelo, our CEO, will lead today's call, while Evan Levitt, our CFO, will provide additional color on our recent financial performance and then our expectations for the remainder of 2019. There will be an opportunity for Q&A. For those participating, please limit your remarks to one question and one follow-up if necessary. Thank you for your continued interest in HD Supply.

And with that, I will turn the call over to Joe DeAngelo.

Executive
Joseph J. DeAngelo

Well, thank you, Charlotte. Good morning, everyone. Thank you for joining us today for our second quarter 2019 earnings call. As always, it is my privilege to share our Company's results with you on behalf of the over 11,500 HD Supply associates, who work hard every day as one team, driving customer success and value creation.

Turning to Page 3, although we navigated a difficult environment, the team and I were disappointed with our performance in the second quarter of fiscal 2019. We delivered 1.5% sales growth and saw adjusted EBITDA decline 1% in the period. Despite this, we generated net income per diluted share growth of 11%, and adjusted net income per diluted share growth of 9%, and we continue to generate strong free cash flow of $562 million on a trailing 12-month basis.

We put this cash to work by executing on our capital allocation strategy, opportunistically repurchasing our shares and acquiring Presto Maintenance Supply subsequent to the end of the quarter. Presto Maintenance Supply is a Houston metro area distributor of MRO products to the multi-family industry. I want to take this opportunity to welcome the new associates from Presto into the HD Supply family. We are excited for you to join the team.

I want to start today's call by providing an update on our new Facilities Maintenance Atlanta distribution