HD Supply Holdings Inc (HDS) Q1 2019 Earnings Call Transcript

HDS earnings call for the period ending May 5, 2019.

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HD Supply Holdings Inc (NASDAQ:HDS)
Q1 2019 Earnings Call
Jun 11, 2019, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to the HD Supply First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, there will be a question-and-answer session and instructions will follow at that time.

(Operator Instructions) As a reminder, this conference call is being recorded.

I'd now like to turn the conference over to Charlotte McLaughlin, Investor Relations. Ma'am you may begin.

Charlotte McLaughlin -- Investor Relations

Thank you, Shannon. Good morning, ladies and gentlemen, and welcome to the HD Supply Holdings' 2019 First 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 First 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 our expectations for the remainder 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 now turn the call over to Joe DeAngelo.

Joseph J. DeAngelo -- Chairman of the Board and Chief Executive Officer

Well, thank you, Charlotte. Good morning, everyone. Thank you for joining us today for our first quarter 2019 earnings call. As always, it's my privilege to share our Company's results with you on behalf of the over 11,000 HD Supply associates who work hard every day as one team driving customer success and value creation.

Turning to Page 3, the team delivered a strong performance in the first quarter after particularly weak February. We delivered exactly what we predicted when we communicated to markets back in March. Sales and earnings performance were in line with our expectations.

We delivered 7% sales growth for the first quarter of fiscal 2019, 6% sales growth on an organic basis and a 7% adjusted EBITDA growth in the period, while continuing to generate strong free cash flow of $540 million on a trailing 12 month basis.

During the period, we faced several external events that were beyond our control, February brought significant weather disruptions, particularly to our Construction & Industrial business. As many in our industry have pointed out, this was the second wettest February on record, and as a result, much of the construction activity in California and the Pacific Northwest came to a halt.

We work diligently with our customers to ensure that we provided them with the support needed to get them back to work, but we continue to see projects pushed out as many of our customers face a shortage of skilled labor required to recover from weather delays. In the non-residential construction market, which comprises the majority of our Construction business, we continue to see strength across our priority districts with our Northeast, Central and Southeast regions performing particularly well.

As others have previously noted, while the pipeline of projects continues to remain strong, we are hearing increased customer concern around shortages of skilled labor. Our main numbers were weaker than expected, primarily due to unfavorable weather in certain markets and whether catch up becoming more challenging in other markets as a result of skilled labor constraints.

The residential construction market continues to underperform with weaker year-to-date activity than one year ago. As a reminder, residential construction comprises about 25% of our Construction & Industrial business. Overall, we've not changed our expectations for the construction market for the year, we are seeing some choppiness.

In early May, the US administration announced a further increase in Section 301 tariffs from 10% the 25% on Chinese imports, and we'll talk more about the financial impact shortly. Although we are still in the very early days of the market absorption of these costs, we continue to believe that we have the best talent in place to navigate this disruption.

Our category management team will continue to execute on our plans previously in place to negotiate lower prices on Chinese products by taking advantage of the strength in the US dollar and incentives provided by the Chinese government to the manufacturing base.

As a reminder, HD Supply does not have any permanent investment, joint ventures or buying offices in China. Additionally, as part of our continuous global supply chain enhancement, we are always evaluating the best locations in which to source a product. We believe this elevated tariff environment is manageable where we can maintain our gross margin dollars and overall profitability, although holding gross margin rates for the year may prove difficult. We will continue to monitor the environment closely. We'll take swift actions as it become necessary.

As part of our continued effort to improve our capabilities, in May 2019, we opened our new I million square foot Atlanta Distribution Center. The facility will serve the Southeast region and is expected to support future growth. Despite having a rigorous transition plan in place, the Facilities Maintenance team experienced vendor systems issues, which in certain instances, created delays in the fulfillment of customer orders.

Throughout the course of the transition, our teams have communicated with our customers to ensure that they are aware of their order status and have worked to remedy the situation. We believe that this disruption impacted Facilities Maintenance May sales around 300 basis point to 400 basis points. Our next day delivery service is returning to normal.

Taken together, and in light of ongoing uncertainties around trade and skilled labor availability, we are lowering our full year guidance. Evan will discuss in more depth later on in this call, but in summary, it's been a challenging start to the year. We are focused on helping our customers' succeed throughout our selling season. I'll provide some closing comments following Q&A.

We'll now turn the call over to Evan who will provide an update on the key areas of investor interest.

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

Thank you, Joe, and good morning everyone. On Page 4, we highlight areas of recent investor focus. First is the Section 301 tariffs on Chinese imports. The increase in Section 301 tariffs from 10% to 25% was imposed on Chinese imports shipped on or after May 10th, 2019. We have yet to see a substantial impact from the increase in Section 301 tariffs, as it takes some time for these costs to work their way through the supply chain. As a result, we are in the very early stages of any potential impact.

As we did with previous tariffs, we began working to offset the increased cost through vendor negotiations and productivity as soon as the tariffs were announced, although there was a shorter period between announcement and implementation than in previous roll-out. As a reminder, around three quarters of our Facilities Maintenance proprietary brands are sourced from China with somewhat less than 50% of those products included in the section 301 tariffs.

This accounts for less than 4% of total Company cost of goods sold. As market conditions allow, we intend to pass on the unavoidable cost increase from the rise in tariffs through price increase but may be unable to pass along enough of a price increase to maintain prior year gross margin rates. The anticipated impact will be that we are in the same or slightly more gross margin dollars than prior year for each unit sold and our overall profitability is maintained, but there may be some gross margin rate compression on an annualized basis.

As for Mexico, it looks like the Mexican tariffs have been suspended for now. However, it's been a question on investors' mind, and we can share that we have limited direct exposure to imports from Mexico.

Next is weather, as we highlighted on the March earnings call, February 2019 saw significant parts of the country experience unusually harsh winter weather, including considerable rain throughout California and cold and wintry weather with snow and ice in areas such as the Pacific Northwest, the Midwest and the Northeast.

The weather lasted into the early part of March and our Construction & Industrial business was particularly impacted. The team spent much of March and April, helping our customers recover from the slow start to the year. We did incur additional expenses, ensuring our facilities and associates were available to support our customers with extended hours.

Despite a return to a more normal weather pattern by the end of the first quarter, we subsequently saw a return to colder wetter weather in May, particularly in the Northeast and the West. We also saw flooding throughout the Midwest. This late start to spring impacted our May HVAC sales in Facilities Maintenance, which were weaker than expected and wet and cool weather also continued to delay the recovery in our Construction & Industrial business.

The construction end markets; non-residential construction markets continue to be productive with many existing large multi-billion dollar multi-year projects continuing and several large new projects, either in the planning stage or recently announced. As Joe shared, while the pipeline of projects remained strong, we have seen an increase in skilled labor shortages that has resulted in some projects progressing slower than our customers would like. Although a smaller part of our business, we continue to see the pace of residential construction growth slowing. As Joe said, residential construction comprises about 25% of the Construction & Industrial business and is focused on the West Coast and Southeast portions of the United States.

Capital allocation; since the fourth quarter 2018, we have reduced our financial leverage from 2.6 times to 2.4 times net debt-to-adjusted EBITDA, well within our 2 times to 3 times targeted range. We continue to generate substantial free cash flow and remain committed to allocating capital toward the highest return investments. Those investments include organic investments in our business, selective M&A opportunities and returning cash to shareholders, currently through our share repurchase program. We have significant flexibility around our capital structure and intend to take full advantage of any market disruptions that may occur.

Turning to Page 5, before I get to the results, I'd like to begin by reminding everyone that we've adopted the new accounting standard for leases under the cumulative adjustment transition method, which resulted in a new right-of-use asset and a new lease obligation on our balance sheet. This adoption had no meaningful impact on our statement of operations or cash flows.

Now, I will review our first quarter results. In terms of highlights, we delivered sales of $1.5 billion, an increase of $104 million or 7.5% over the first quarter of 2018. Our organic sales in that period increased 5.8% over the first quarter of 2018. Our gross margin rate of 39.2% was down 50 basis points from the first quarter of 2018. I will discuss our gross margin breakdown shortly. Adjusted EBITDA for the first quarter of 2019 was $203 million, up $13 million or 6.8%.

On page 6, I'll discuss the specific performance of our individual business units in more detail. Net sales for our Facilities Maintenance business were $772 million during the first quarter of 2019, up $49 million or 6.8% from the first quarter of 2018. We estimate that the MRO market grew approximately 2% in the first quarter of 2019.

Facilities Maintenance gross margins declined 50 basis points from the first quarter of 2018. Strong first quarter performance in appliances and HVAC which are both higher ticket, lower margin categories, created a mix headwind to gross margin. As a reminder, we were also faced with a difficult comparison against the first quarter of 2018, where we saw our gross margins expand by 110 basis points year-over-year as a result of a late-breaking spring that negatively impacted HVAC sales, leading to a favorable first quarter 2018 product mix.

We have previously indicated that the Facilities Maintenance gross margin rate would be flattish to slightly up for the full year of 2019. As we shared, we now expect to hold gross margin dollars, but may see some rate compression as we work through the impact of the increase in Section 301 tariffs from 10% to 25%. Facilities Maintenance adjusted EBITDA for the first quarter of 2019 was $134 million, an increase of $11 million or 8.9% from the first quarter of 2018.

Net sales for our Construction & Industrial business were $721 million during the first quarter of 2019, up $55 million or 8.3%. On an organic basis, our Construction & Industrial business grew 4.7% with the overall market growth, approximately 3% for the quarter.

We estimate that first quarter 2019 whether unfavorably impacted sales by approximately $18 million or 300 basis points. Construction & Industrial gross margins decreased approximately 40 basis points. The rebar margins drove 30 basis points of this decline while the mix associated with the acquisition of A.H. Harris contributed an additional 10 basis points to this decline.

March 2019 marks the one-year anniversary of the A.H. Harris acquisition and that business is substantially integrated into the Construction & Industrial business. The rebar market continues to stabilize and we expect the unfavorable gross margin impact to lessen in the second quarter of 2019.

Excluding A.H. Harris and rebar impacts, the gross margin rate at Construction & Industrial was essentially flat as the team continues to focus on category management initiatives. Construction & Industrial's adjusted EBITDA for the first quarter of 2019 was $69 million, up $2 million or 3%. We estimate that first quarter 2019 whether unfavorably impacted Construction & Industrial's EDITDA by around $4 million.

Turning to Page 7; in the last 12 months, we generated $540 million of free cash flow. We expect full year 2019 cash flow generation of around $525 million to $550 million, inclusive of an increase in cash taxes later in the year as we exhaust our net operating loss carry forwards and become a regular tax payer.

We invested $26 million in capital expenditures in the first quarter of 2019, in line with our ongoing annual capital expenditures of approximately 2% of annual sales. In the first quarter of 2019, we paid cash taxes of approximately $4 million. We expect to pay around $7 million of cash taxes in the second quarter of 2019, while we continue to benefit from our federal net operating loss carry-forwards. We currently expect the net operating loss carry forwards and other federal income tax credits to be fully utilized mid-year, at which time we will become a regular federal income tax payer.

Our current forecast estimate income tax payments of approximately $60 million to $70 million during fiscal year 2019. Again, fiscal year 2020 will be the first year in which we are a regular tax payer for the full year. We expect our ongoing GAAP tax rate will be approximately 26%. During the first quarter of 2019, we repurchased 170,000 shares of common stock for a total of $7 million at an average price of $42.24. We had approximately $367 million remaining under our most recent authorization at the end of the first quarter of 2019.

Including the completion of our two previous $500 million share repurchase authorizations, we've reduced our outstanding share count by over 16% since the beginning of 2017. We will continue to opportunistically repurchase shares. As of the end of the first quarter of 2019, our net debt-to-adjusted EBITDA leverage was 2.4 times, comfortably within our targeted range of 2 times to 3 times.

Our capital allocation strategy remains the same. We will opportunistically deploy capital to the most attractive return opportunities available. These include organic investments in the business, selective bolt-on or tuck-in acquisitions and return of cash to shareholders currently through our existing share repurchase authorization.

On Page 8, we provide first quarter 2019 monthly sales trend performance as well as the 2018 comparable. In February 2019, we delivered sales of $423 million, an increase in average daily sales of approximately 8.1% versus February 2018. Organic sales growth in the same period was 2.2%. In March 2019, we delivered sales of $460 million, an increase in average daily sales of approximately 8.8% versus March 2018. Organic sales growth in the same period was 8.6%.

In April 2019, we delivered sales of $610 million, an increase in average daily sales of approximately 6.1% versus April 2018. There were no inorganic sales in April. In both years, there were 20 selling days in February and March and 25 selling days in April. Now we experienced a calendar shift in fiscal 2019 due to the 53rd week reported in fiscal 2018. This calendar shift resulted in two first of the calendar months included in our fiscal April 2019.

This is significant because many of our Facilities Maintenance customers work off of a maintenance budget that resets on the 1st of each calendar month and therefore sales during the first few days of a calendar month are particularly strong. We believe the calendar shift benefited our Facilities Maintenance businesses April sales by approximately 170 basis points and our total Company April sales by approximately 90 basis points. This benefit reversed in fiscal May where we do not benefit from a first of the calendar month.

May of 2019, the first month of our fiscal second quarter 2019 ended Sunday, June 2nd and we have provided our preliminary sales results. We will not provide information on May results beyond sales. May sales were approximately $464 million, which represents average daily sales growth of approximately 0.2% versus 2018.

Average sales growth versus prior year by business was approximately 2.8% for Construction & Industrial and approximately minus 2.4% for Facilities Maintenance. Facilities Maintenance May sales were unfavorably impacted by approximately 300 basis points to 400 basis points from the order fulfillment delays in our Atlanta Distribution Center, 300 basis points to 400 basis points by a weak HVAC sales month in May due to unusually cool weather and a difficult comparison with May of 2018, and by 170 basis points from the calendar shift caused by 2018's 53rd-week.

On Page 9, we reiterate our end market outlook for 2019. We believe the MRO market will continue to grow approximately 1% to 2%. We view the non-residential construction end market estimate as up low-to-mid single-digits and the residential construction markets will remain flat or grow approximately low-single digits. These specific end market estimates imply an approximate 2% to 3% end market growth estimate for HD Supply's markets in 2019.

Turning to Page 10, I want to first draw your attention to our enhanced guidance disclosure. As we have previously indicated, we expect to become a full cash tax payer in the second half of 2019, and as such, our GAAP performance metrics are becoming more comparable to our peers. In order to aid in this transition, we will be providing additional guidance for net income and net income per diluted share. You will find reconciliations between our GAAP and our non-GAAP metrics in the appendix of the presentation and the press release.

We begin by updating our full-year fiscal 2019 guidance, which has been revised to take into account a weaker than expected May and an increasingly unpredictable tariff environment. We now believe net sales will be in the range of $6.250 billion to $6.350 billion. This translates to a 6% growth at the midpoint, adjusted for the impact of the 53rd-week in fiscal 2018.

We expect adjusted EBITDA to be in the range of $890 million to $930 million. This reflects a 6% growth rate at the midpoint, adjusted for the impact of the 53rd week in fiscal 2018. We expect full year 2019 net income per diluted share, calculated in accordance with GAAP, to be in the range of $2.77 and $2.95. We also expect full year 2019 adjusted net income per diluted share to be in the range of $3.52 and $3.70.

Our net income per diluted share range and our adjusted net income per diluted share range assumes a fully diluted weighted average share count of 171 million and do not contemplate additional share repurchases. For the second quarter of fiscal 2019, we anticipate sales to be in the range of $1.620 billion and $1.670 billion; adjusted EBITDA to be in the range of $240 million and $255 million; net income per diluted share, calculated in accordance with GAAP, to be in the range of $0.77 and $0.83; and adjusted net income per diluted share to be in the range of $1.04 and $1.12. Our net income per diluted share range and our adjusted net income per diluted share range assume a weighted average diluted share count of 171 million and do not contemplate additional share repurchases.

In summary, we believe that we delivered solid performance in the first quarter of 2019. We consider ourselves well positioned to deal with the current demands of an unpredictable environment and we remain focused on delivering our full-year numbers. Thank you for your continued interest in HD Supply.

And I -- now I like to turn the call back over to Shannon up for questions.


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Questions and Answers:

Operator

Thank you. (Operator Instructions) Our first question comes from Deane Dray with RBC Capital Markets. Your line is open.

Deane Dray -- RBC Capital Markets -- Analyst

Thank you. Good morning everyone.

Joseph J. DeAngelo -- Chairman of the Board and Chief Executive Officer

Morning, Dean.

Deane Dray -- RBC Capital Markets -- Analyst

Hey, I'm not sure you're going to be able to comment, but at least we can address it right up front, is there any color you can provide regarding the news of the SEC subpoena on Facilities Maintenance?

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

Yeah, like you indicated Dean, there is not a lot we can say about that beyond what we included in our disclosure. It is related to our Facilities Maintenance business, including the items that were included in the shareholder derivative suit.

Deane Dray -- RBC Capital Markets -- Analyst

Got it. All right, and then, with regard to the guidance cut, could you give us and can you calibrate how much was of you -- of the impact from May that you've carried in to 2019? And then tariffs, because your earlier discussion of tariffs, it said it's still early we're still working through this, but now you're blaming tariffs on part of your guidance cut. So obviously you're baking some impact in and if you could calibrate that, that would be helpful too. Thanks.

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

Yes. So Dean, the big change or impact that we currently see from tariffs is the potential for a compression in gross margin rate from the tariffs. We do still fully -- we still do expect to pass on all of the unavoidable cost increases through price to the extent that the market allows, that would enable us to maintain profitability but would impact gross margin rate.

The guidance for the second quarter and the full year include our best thinking on all the parts that we discussed earlier; a week May, the Distribution Center software issue that we're working through and returning to normal, and uncertainty related to tariffs, but the profitability from that, again, assuming that we can pass on the unavoidable price increase should be intact.

Deane Dray -- RBC Capital Markets -- Analyst

Got it. And just as a follow-up, and first a comment on the non-res push outs because of labor shortages, we've been hearing this from multiple sources, so you are not the first to be saying it that it is an issue and it's industrywide and certainly understand how you're citing it as impacting your business. Though with regard to weather and our -- I asked this question last quarter, but now we're also dealing with the HVAC side of this and this is not -- this does happen in the spring, you know this, we've been through this before. But can you just remind us how the recovery process, assuming weather normalizes on the HVAC side, is any of that demand lost or is this really just a catch-up on the HVAC side, what's your experience been there. Thanks.

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

Yes. So, Dean, would do ordinarily see a spike in demand particularly market-by-market when the weather heats up for the first time of the year. That has not happened in all markets across the country. So to the extent that that occurs, we will catch up that portion of the HVAC sales. However, as a general theme, the hotter the summer, the hotter the season the better the HVAC season; the cooler the season, the weaker the season. So in being able to forecast the weather over the upcoming summer months, we are off to a cooler start for the spring and just getting into the summer season now than we had last year.

Deane Dray -- RBC Capital Markets -- Analyst

Got it, thank you.

Operator

Thank you. Our next question comes from Julian Mitchell with Barclays. Your line is open.

Jason Makishi -- Barclays Bank PLC -- Analyst

Hi guys, this is Jason Makishi on for Julian.

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

Hi Jason.

Jason Makishi -- Barclays Bank PLC -- Analyst

Maybe just started off with the Facilities Maintenance May numbers, you gave a lot of helpful detail as to how to think about the various headwinds that affected the business. I was just wondering, out of those three aspects, it appears as if the sort of vendor software is the one that has the most risk to carry on into the June quarter. I was just wondering, out of that 300 basis points and 400 basis points impact that you saw in May, what is the possibility that some of that sort of -- that sort of headwind could also carry on into June and perhaps July.

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

So, our guidance does anticipate that that impact improves over time. So we are, as Joe said, we are in the process of returning our net day run rate to normal. But we will -- we won't see that consistently for a period of time before we conclude that that is fully corrected and then it's the recovery process of bringing the customers back on -- onboard. So, we do have expectation that slowly improves through the quarter.

Jason Makishi -- Barclays Bank PLC -- Analyst

Understood. And then maybe a little bit on just -- taking a step back on the top-line. I would imagine that sort of the tariff impact uncertainty that you guys are talking about, in response to Dean's question as well as your prepared remarks, has something to do with sort of the topline uncertainty related to tariffs, trade wars, et cetera. I was just wondering because you did keep your end market guidance, how much of that is sort of baked into top line uncertainty, whether this stayed away as the contingency in that estimate or whether there were some sort of offset in demand dynamics that you saw in the quarter?

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

It certainly -- it certainly increases the uncertainty because we don't know yet how the market is going to react. Our expectation and what's included in the guide is that, as I've said, we can pass along all of the cost increase through price and so it does not impact profitability, but it certainly does increase uncertainty.

Jason Makishi -- Barclays Bank PLC -- Analyst

Understood. And then, if I could just have one last quick one around the C&I business. Maybe just talk about dynamics around that plus 2.8% number that you saw in May and what could possibly improve or maybe you can decelerate heading into June and July?

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

Yeah. So weather, while not nearly as bad as we saw early in the first quarter was not conducive across the country. We did see still quite a bit of rain, flooding in the central part of the country. And then the labor shortages are delaying the recovery from that slow start to the year. So we're hearing from many customers that they would do more, either bid on more projects or accelerate the pace of their existing projects, if they have the additional labor. So that is -- that is slowing us down, but we do expect that 2.8% sales growth rate to pick up as we go through the year as the weather normalizes and as folks get back on track on their schedule.

Jason Makishi -- Barclays Bank PLC -- Analyst

Understood, thank you very much.

Operator

Thank you. Our next question comes from Evelyn Chow with Goldman Sachs. Your line is open.

Evelyn Chow -- Goldman Sachs -- Analyst

Good morning, guys.

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

Good morning.

Evelyn Chow -- Goldman Sachs -- Analyst

Maybe let's just start on C&I. I know rebar was a significant portion of the gross margin and EBITDA margin pressure in 1Q. Sounds like maybe that's beginning to alleviate in 2Q. I guess as growth also recoupled and starts to potentially improve off of that 2.8% May sales. What are -- is it reasonable to expect that at least EBITDA margin should expand in this business in 2Q?

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

We'll see Evelyn. Certainly that would be our goal. However, with the start to May at a 2.8% growth rate, that makes it difficult. But as you said, we do get a little bit of a benefit from a decreasing headwind of rebar margins. We've now anniversaried the A. H. Harris acquisition. So certainly there will be less, I'll call a systemic gross margin pressure. As far as expanding EBITDA margins in the second quarter, the second quarter is off to a tough start at 2.8% for the Construction & Industrial business, but we do expect that to improve.

Evelyn Chow -- Goldman Sachs -- Analyst

Great. And then just returning to FM, don't want to focus too much on just one month's results, but thank you for quantifying the 300 basis points to 400 basis points impact from the software issues in May. I guess when I think about that. I don't know how much the other buckets contributed to May's results, but I guess what that implies is, you're not really necessarily seeing outgrowth versus the market in this business even adjusted for the software issues. So maybe Joe or Evan you could address, I guess what you're seeing as it relates to outgrowth and how you think about that for the rest of the year?

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

Yes, so the software issue, we quantify is at 300 basis points to 400 basis points. For the month of May, we quantified HVAC as a headwind of 300 basis points to 400 basis points. HVAC during this time of the year is a very large category for us. And so it can shift quite a bit year-over-year depending on weather and the prior-year comp. And then the calendar shift simply from the 53rd-week last year cost us about 170 basis points.

So adjusting for those items, May was beyond the consistent rate of about a 6% sales growth that we saw in February and March. April, you'll notice the sales growth for Facilities Maintenance actually kicked up a little bit. Again that, in April, we benefited from that calendar shift. So if you normalize April and May, you get about a 6% growth rate for each.

Evelyn Chow -- Goldman Sachs -- Analyst

Thanks Evan, perhaps I missed that earlier. And then last question from me. Property improvement services in fiscal 1Q, I think that was down a fair amount year-over-year. What are you seeing in that business? And is that sort of something that was planned or can you give any more color on that?

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

Yes, so that business is always going to be a little more uneven than the core MRO business because it is project-based. And we are anniversarying a very big property improvement year from last year, where we had a couple of customers do some very extensive renovations. And so, we do expect to see that business year-over-year under a little bit of pressure. Now, I will also point out that that business is a lower margin business. So from a profitability standpoint, it isn't as big a drag as the topline would indicate, and in fact that business, well we like that business, most importantly, because it's an additional service we can provide to the customer and gets us closer to the customer more so than the profitability of that business.

Evelyn Chow -- Goldman Sachs -- Analyst

All right, thank you guys.

Operator

Thank you. And our question comes from Ryan Merkel with William Blair. Your line is open.

Ryan Merkel -- William Blair -- Analyst

Hey, thanks. So, first of all, on 2Q FM guidance, should we be sort of assuming you're thinking about mid-single-digit growth in June and July?

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

Ryan, we're not going to provide monthly guidance for our businesses, but certainly, we are planning for to improve off of the minus 2% that we reported in the month of May.

Ryan Merkel -- William Blair -- Analyst

Okay. Yeah and I know there's a range around that. I was just trying to figure out if that's kind of reasonable based on what you know today. But that's helpful. Secondly, based on the new EBITDA guidance for 2019, it looks to me like you really haven't changed the second half expectation? Do I have this right, and I'm wondering why this is the case?

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

Yes, the second half hasn't changed meaningfully. The issues that we talked about on the call, the Distribution Center issues. We expect to work our way through and for those to lessen over the course of the year, certainly by the second half. And then whether, we do expect whether to normalize, we're not going to forecast a particularly good weather period or a bad weather period. We're going to forecast right down the middle. And then, we feel good about the markets. The construction markets remain strong, lot of activity. Our customers are, have a lot of work to do. They just need to get some weather so they can get out on to the job sites and build. And then, on the MRO side, the MRO business is a healthy business, it's a stable grower and so we feel good about the -- about the about the year in the back half.

Ryan Merkel -- William Blair -- Analyst

Alright. And then, just lastly, you mentioned that HVAC is a bigger part of the FM business, right, in the May month and then I guess maybe in spring? Roughly what percent is HAVC in May and how much were the sales down? It's a little surprising to me that it's impacting things by 300 basis points to 400 basis points, but maybe you can help us with some of the numbers.

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

Yeah. So, we don't disclose specifically the volume of each of our categories. But it is a top category, like the top two or three category this time of year. And in the month of May, it was down. It was down a healthy double-digit amount. So it was significant, an impact of 300 basis point to 400 basis points. Now in April; April, we actually had a good HVAC month and some of that, a comparison to 2018. In 2018, spring broke late, it broke in May. This year, we got some warmer weather in April, particularly in the south, but then it cools off in May. And so, we had a tougher comparison in May. And the Northern markets, the New York, Boston, Chicago, we still really haven't seen the heat hit in those markets that would stimulate HVAC sales.

Ryan Merkel -- William Blair -- Analyst

Yes. I can confirm that, Chicago has been very cool. All right, I'll pass it on. Thanks.

Joseph J. DeAngelo -- Chairman of the Board and Chief Executive Officer

Thanks Ryan.

Operator

Thank you. Our next question comes from Luke Junk with Baird. Your line is open.

Luke Junk -- Robert W. Baird & Company -- Anlayst

Good morning. Evan, just wondering, first, if you can help us understand where the FM software issue and the transition to the new Atlanta DC intersect? Is this a new vendor or process for you? And just wondering why you weren't able to backfill with the legacy facility during this transition?

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

Yeah. So, our new Distribution Center opened in early May. We've got some additional automated equipment in that facility that is run by some vendor software that automates the order process and then the picking within the facility itself. And so, we had some issues with that that software that is integrated with the conveyor equipment in the facility itself. We do have the ability to fall back to our old software and we've got that ready to go and we're able to manually work around the software issue. It does incur some additional labor cost to do so.

And so we're working with the vendor. We're looking at this, this manual workarounds as well as falling back to our old system in terms of, do what makes the most sense to, one; make sure we deliver on our customer promise. And then two; set ourselves up in the best way going forward to improve efficiencies through our distribution network.

Luke Junk -- Robert W. Baird & Company -- Anlayst

Okay, that's helpful. And then second, Joe a question for you. Just thinking of the portfolio here, so you had the one-year anniversary of the A. H. Harris acquisition during the quarter, which was really the first major addition in over a decade following a period where you sunk down from seven businesses to do -- to two. Sitting here a year later, what's gone as expected with A. H. Harris? What surprised you? And looking forward, how has it impacted your thinking about future M&A in terms of bigger deals versus smaller deals, C&I versus FM or any other considerations? Thanks for your thoughts.

Joseph J. DeAngelo -- Chairman of the Board and Chief Executive Officer

Yeah. Well certainly very, very pleased with the A.H. Harris acquisition. This is a 102-year old company, well established, had real estate positions that would have taken us years and years to establish. And I'd say from the start to where we are now, things have gone as planned and I couldn't be more excited about the quality of the A.H. Harris associates and what they bring.

Also, very pleased with the introduction of the additional elements of our processes, particularly the in-store environment and the ability to have next day delivery and all the equipment to be able to do that very effectively. I think that's been a great marriage, great integration. So feel really good about that. I think if you look at the go forward; there isn't another A.H. Harris out there for C&I. So I mean, certainly as we go forward with C&I there'd be more Bolt-on acquisitions that would give us something specific in a priority markets that we were looking for.

And then if you look at the FM, certainly very much interested in having FM bolt-ons that would give us both either a geographic density, something that would be unique for us or more importantly, some category-specific strengths that we could roll out across the entire network. So I think active in both areas. We look at a ton of deals as we sort through and we really make sure that, most importantly, we have a cultural fit and something that we can extend across our network to be able to get value.

So you'll see smaller deals going forward, I guess, would be the short story on that. But very, very pleased with the team integration and certainly the A.H. Harris folks that I've had the opportunity to interact with are just terrific, so looking forward to a great future with them.

Luke Junk -- Robert W. Baird & Company -- Anlayst

Great, thanks for that, Joe.

Operator

Thank you. Our next question comes from Andrew Obin with Bank of America. Your line is open.

Andrew Obin -- Bank of America -- Anlayst

Yeah, good morning guys.

Joseph J. DeAngelo -- Chairman of the Board and Chief Executive Officer

Hey, Andrew.

Andrew Obin -- Bank of America -- Anlayst

Hey, just a question. How should we think about Facility Maintenance growth rate relative to multi-family vacancy rates that's been going up over the past several quarters? What's the connection?

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

Certainly, the multifamily business is, like we said, it's a pretty steady business 1% to 2%. We generate a significant amount of work as units turnover, which is why the summer months are the high season for Facilities Maintenance. So if units remain vacant, that's not good for Facilities Maintenance. If they're vacant temporarily and turning over, that is good.

Also keep in mind some of the trends of the additional stock that's in place, the number of -- the increase in the number of units over the years from new construction contributes to that vacancy rate as well. And then the other -- the other metric, important metric here is rents, average rents. Average rents were still going up about 3% year-over-year. It is -- has slowed down from where it was a few years ago. But that's important as well, because the more cash that our customers have from rents, the more they're willing to reinvest into their properties.

Andrew Obin -- Bank of America -- Anlayst

Got you. And just a follow-up question, just thinking about the business model for Facilities Maintenance and I do appreciate that a number of one-time events sort of coincided to drive the negative growth rate, but looking at my note, I think it is the first time that Facilities Maintenance has had negative growth rate since you guys gone public. So just, what have been the big changes in business model for Facilities Maintenance in the past half a decade that maybe we should think about the volatility of the business differently or it's truly really just, this confluence a one-time event? Thank you.

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

Yeah, so let's see, we tried to bridge the May results as best we could, so a couple of thoughts on that. First it's one month of activity. We always caution folks not to draw too many conclusions based on one month of activity, be it positive or negative. And then two, we did have a number of items that proved to be pretty significant headwinds in this particular month.

We've called out HVAC, called out the Distribution Center here in Atlanta and then the calendar shift. The calendar shift is -- it is nothing more than shifting sales between April and May. So we don't think there is anything fundamentally different about the market or about Facilities Maintenance business and our expectation is to grow that a minimum of 300 basis points, in excess of that 1% to 2% market, so it gives us that mid-single digit growth expectation.

Andrew Obin -- Bank of America -- Anlayst

So, as I thinking about business today versus five years ago, very similar business model, is that a fair statement?

Joseph J. DeAngelo -- Chairman of the Board and Chief Executive Officer

I think it's a fair statement. I think if you look at the investments that we put in recently, they were to contemporize that business model. So it's always been about delivering perfectly next day exactly what our customer's need, and so it's a great fit. I think the investments that we put in allowed us to move from a catalog-based business to much more digitally integrated business. And certainly we'd put in a lot of emphasis around how do we enable our sales people to be in front of the customer with the most relevant information for driving value for them and then take the load of transactions and have the machine do it. So it's a more highly digitized integrated business model, but all for the same objective. How do I make that? Make this professional every day to be able to go into an occupied unit where they have an appointment to get in there and get out after doing everything that was required.

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

And Andrew, five years ago, if we were in this dynamic environment of changing cost as a result of tariffs, would have been much more difficult for us to respond to, as Joe talked about, you know printed catalog versus the digital tools that we've got in front of our customers today and the pricing analytics that we put in place to ensure that we're still providing compelling value to the customer, but also being responsive to the changing -- the changes in input costs.

Andrew Obin -- Bank of America -- Anlayst

And not to put you guys in this spot, I'll squeeze one more in. I think Ferguson announced a buyback today post yesterday's share price action. What are your thoughts about ability to do sort of one-time buyback of some sorts here? Thanks.

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

Yes. So Andrew, we've got our ongoing share repurchase program. We've completed two $500 million share repurchase programs over the last couple of years. We've got $367 million left under our existing share repurchase program. We've been very consistent in sharing with folks that we are opportunistic buyers. So if the stock price trades down, we'll be more aggressive; when the stock is trading well, we're a little less aggressive. And so depending on the movement of the stock price, yeah, you may see us get more active.

Andrew Obin -- Bank of America -- Anlayst

Really appreciate your transparency guys. I think you did a great job explaining what happened. Thanks a lot.

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

Thank you.

Operator

Thank you. Our next question comes from Hamzah Mazari with Macquarie Capital. Your line is open.

Hamzah Mazari -- Macquarie Research -- Analyst

Hey, good morning. My question is basically, if you look back maybe it was two years ago, maybe it was a little over a year ago, we had an issue in FM around inventory management. I guess you expand the vendor software issue. Maybe if you could just talk about lessons learned from that prior issue and if this issue is consistent with what happened last time. Just any thoughts on execution risk going forward in FM broadly?

Joseph J. DeAngelo -- Chairman of the Board and Chief Executive Officer

Yeah, I would say Hamzah, the issue that we had several years ago was one when we were transitioning our headquarters location from Facilities Maintenance San Diego over to Atlanta. And so we had multiple personnel kind of puts in the [buttons] one-time and we ended up with an over rate of ordering that came into the selling season, and basically just physically clogged us up.

This is a completely different issue, I mean we've been working for years on what the DC of the future is, and that with Atlanta and it highly integrated and certainly we missed some steps in that integration execution relative to the specific vendor software issues. So it's a very small, isolated portion, both in terms of geography and in terms of incidence.

So if you look at our recovery from this, it's demonstrating that consistency to promise, making sure we go back and do a full forensic review, make the appropriate process and organizational changes and then have a recovery back to our investment case. But this is a very isolated incident relative to a specific set of plans that we've been working on for several years and I would say the other one previously was a transition that is all one in every four years, so we won't have that again.

Hamzah Mazari -- Macquarie Research -- Analyst

Got it, very helpful. And then, just the follow-up question is just on tariffs and you talked about maintaining gross margin dollars. But I guess the question is, if your competitors do not raise pricing with the tariff increase, does that mean you still do or do you move with the market?

Joseph J. DeAngelo -- Chairman of the Board and Chief Executive Officer

We will move as the market allows. So I think the advantage of the investments that we've put in over the last several years is our pricing sophistication is very strong. And so we can see where everybody is pricing, we can price (ph) it and we can make sure that we're always delivering compelling value and we can do that in a specific SKU by SKU basis. So our intent is to make sure that we bring the best value to our customers on an ongoing basis and we have appropriate cost recovery where there is unavoidable cost.

But as Evan stated, we're working our tails off to make sure we have as little on avoidable cost that we need to pass as possible. So that's the process of always being the most compelling value in the market with a great service offering and great pricing associated with that service offering.

Hamzah Mazari -- Macquarie Research -- Analyst

Great, thank you very much.

Operator

Thank you. Our next question comes from John Inch with Gordon Haskett. Your line is open.

John Inch -- Gordon Haskett -- Analyst

Thank you. Good morning everybody.

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

Hey John.

John Inch -- Gordon Haskett -- Analyst

Good morning, guys. So we've mentioned weather probably a record number of times, and you know it is what it is. I think Evan, you even called this out, right, that last year we had cool weather in the first quarter and then better in the second quarter. So I'm curious on HVAC you called out the percentage point deficiencies just based on this, but how much of this was a function, do you think, of comparisons. So if you just kind of look at normal volumes versus expectations and then adjust for the difficult and easier comparisons. How much of the kind of first quarter/second quarter impact did that provide you think?

Joseph J. DeAngelo -- Chairman of the Board and Chief Executive Officer

Yes, good question. There is an impact on comparisons and an impact, not just top-line sales for HVAC but gross margin. As I shared, if you look at our gross margins from the first quarter last year, they expanded by 110 basis points. That was, in large part, because of weak HVAC sales, particularly in April which is traditionally the start of the HVAC season.

In May of -- in the second quarter of last year, our Facilities Maintenance gross margins dropped by 50 basis points that was in large part because of a strong HVAC period, particularly in May, when it did warm up. So there's no question there is impact year-over-year. I will say that on a year-to-date basis, at this point, this year has been cooler than last year, which as I've said to a previous question, the hotter the overall season, the better the HVAC season; the cooler the overall year, the weaker the HVAC season. So, no, I'm not here telling you that it's going to be a weak HVAC season yet. I don't know if the weather is going to hold. But to this point, it's been a little cooler.

John Inch -- Gordon Haskett -- Analyst

Right. So, just to be clear, though, does the second quarter guide assume sort of no change in this or are you assuming the weather gets better, because I know you had said you didn't want to give a specific number, right, on the core growth.

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

Yeah, we assume a normal summer. So we do assume it's going to get warm and we are going to get those HVAC sales in New York and Chicago and Boston.

John Inch -- Gordon Haskett -- Analyst

Alright, so that makes -- so in other words, if the weather continued at the rate that would -- that might be impactful to the negative, but that's not what you're assuming?

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

Yeah, absolutely, if we don't have the summer in the north, that would be -- that would be a negative for our business.

John Inch -- Gordon Haskett -- Analyst

Evan, this 53 week year issue, I mean I'll take it offline in terms of sort of the April-May impact. Does it have any other monthly impact for any of the other months for the rest of the year that you would call out?

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

The third quarter will be a little more challenging because of the way, again the first of the calendar month's break versus earlier in the year, not overly significant but could cost a 100 basis points, call it, for Facilities Maintenance.

John Inch -- Gordon Haskett -- Analyst

In the month of December, does it have any impact there? I sort of thought this was a year-end thing. But obviously that's not necessarily true, like a calendar year-end.

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

Yes, it's not necessarily a calendar year-end, because of that extra week in 2018; every month in 2019 now starts a week later than the comparable months from last year.

John Inch -- Gordon Haskett -- Analyst

Okay. Just lastly, if you take out the sort of verticals that HD Supply serves that are somewhat unique to you, multifamily, et cetera. Did your -- I mean, really a question in FM, did your FM business, do you believe or the markets have any kind of associated disruption or impact from the broader economy, because obviously the economies been -- certainly the industrial manufacturing economy has been softer, right. And I'm just wondering if you had seen any of that impact sequentially as the quarter progressed?

Joseph J. DeAngelo -- Chairman of the Board and Chief Executive Officer

I would say the one thing, John, as you look at this is -- so this is a comment on what occurred in May. But from past experience, anytime you have a period of uncertainty, typically what people are going to do is they're going to make sure they sit on their larger investments a little bit and they're going to make sure that they maximize the usage of the assets they have. So you will see future wise, if we have an extended period of uncertainty or softness, people will move more toward repair versus replace and so that will be a general trend. That doesn't have anything to do with kind of what we've dissected within May, but you can say that that will be an experience and people have more uncertainty. The big ticket items will be more repair than replace.

John Inch -- Gordon Haskett -- Analyst

Yeah, got it. Okay, thanks very much.

Operator

Thank you. Our next question comes from Patrick Baumann with JPMorgan. Your line is open.

Patrick Baumann -- JPMorgan -- Analyst

Hey guys, good morning. Thanks for taking my questions. Of the -- a few here, just of the $75 million lower revenues at the midpoint of your guidance, could you quantify like how much of that's weather versus stubbing your toe on some of these things at FM or versus kind of other?

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

Well, look the weather -- the weather impact, we quantified what we saw through May. And as we shared, we don't -- we don't assume unfavorable weather going forward. So that would just be what we've already seen in the month of May, and then the adjustment in the guide is the best thinking that we have around the recovery in our Atlanta Distribution Center, uncertainty around tariffs, and just the general trend that we're currently seeing.

Patrick Baumann -- JPMorgan -- Analyst

Okay. And what was the amount for weather in May that you said, I forget what that was?

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

Well, we said for HVAC it was 300 basis points to 400 basis points for Facilities Maintenance. And we said it was -- for Construction & Industrial in the first -- well in the first quarter, we said it was $18 million. We didn't call out the specific dollar drag in Construction & Industrial for May. There was a bit of a drag, but it wasn't -- it wasn't overly significant.

Patrick Baumann -- JPMorgan -- Analyst

Okay. And maybe on the second quarter, I mean it sounds like you expect FM to grow below the 3% company average, is that right? And I guess it kind of implies what you just said, some lingering issues, from May through the end of the quarter relative to that; you know the 6% underlying growth that you were seeing adjusted for those items.

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

Yes, for the quarter will certainly -- the quarter will certainly be impacted by the negative 2% from the month of May and then it'll -- we do expect it to slowly recover. But obviously starting the whole with a negative is a pretty tough start.

Patrick Baumann -- JPMorgan -- Analyst

Yeah, I mean, so, would you expect that business to grow below the 3% average for the Company in the second quarter?

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

Again, we don't provide monthly sales guidance by business. But we do expect that -- those sales results to slowly improve through the -- through the quarter into the back half of the year.

Patrick Baumann -- JPMorgan -- Analyst

Maybe said differently, what kind of headwind are you embedding there for this software issue at the DC? I mean, that's a different way to ask it. So 300 basis points to 400 basis points in May, what about for the entire quarter?

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

For June and July, it will be less than that, recovering toward normal over the course of the quarter into back half of the year.

Patrick Baumann -- JPMorgan -- Analyst

Got it. And maybe switching gears to C&I margins. So you called out some weather numbers, I think you said $18 million on revenue, $4 million on profit. If I make those adjustments, it's like a 9.9% EBITDA margin versus 10.1% last year. I think that's the math. Can you just discuss what drove the decline then, adjusted for weather, and kind of how to think about margins for the year, assuming normalized weather?

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

Yeah, we still did have the drag, the 30 basis points of drag from our rebar, which compresses gross margin rate. That will lessen in the second half or the back half of the year.

Patrick Baumann -- JPMorgan -- Analyst

Yeah. No, I understood. I mean last year, you had those issues and you're able to expand margins. I'm just curious if there's something that's different besides that?

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

No, it's just the sales volume and being able to leverage fixed costs.

Patrick Baumann -- JPMorgan -- Analyst

Okay. So it's a top line kind of volume dynamic, got it. Okay. Good, thanks guys.

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

Thank you.

Operator

Thank you. Our last question comes from Keith Hughes with SunTrust. Your line is open.

Keith Hughes -- SunTrust -- Analyst

Thank you. Just to finish off on the problems in Facilities Maintenance, you talked about some more manual process being used while you fix the software issue. Is that something you're going to see further, or may I ask it this way, when do you think you'll be able to switch over to the originally designed automated function?

Joseph J. DeAngelo -- Chairman of the Board and Chief Executive Officer

Yeah, I think it's a three-phase process for us. So, first and foremost, we have to have this demonstrated consistency to promise, which is -- we're in the zone of that now. Then, we're going to do a full forensic review, and make sure that we understand what needs to change process and organization rise and then we'll be on a path to recovery to the investment case. But right now we're not in a position to share specific date on that because I got to get the full forensic review done to be able to be predictive on that. But most important and singular thing we're working on is demonstrated consistency to promise. You know once we get that we'll be able to take the next few stages (ph) .

Keith Hughes -- SunTrust -- Analyst

Are you now back to shipping to FM customers kind of as expected with the workarounds you've been doing?

Joseph J. DeAngelo -- Chairman of the Board and Chief Executive Officer

Yes. We will be able to you -- know we need to see demonstrated performance, as I've said. And so for the next several days and weeks, we want to make sure that we have that completely lockdown and it's happening, but we believe we've turned a corner on that.

Keith Hughes -- SunTrust -- Analyst

Okay, thank you.

Operator

Thank you. This concludes the question-and-answer session. I would now like to turn the call back over to Joe DeAngelo for closing remarks.

Joseph J. DeAngelo -- Chairman of the Board and Chief Executive Officer

Well, thank you. During the first quarter, we delivered on our commitment, and our entire team is focused on delivering profitable growth through a very dynamic environment. Thank you for your continued support and interest in HD Supply.

Operator

Ladies and gentlemen, this concludes today's conference. Thanks for joining and have a wonderful day.

Duration: 65 minutes

Call participants:

Charlotte McLaughlin -- Investor Relations

Joseph J. DeAngelo -- Chairman of the Board and Chief Executive Officer

Evan J. Levitt -- Senior Vice President, Chief Financial Officer and Chief Administrative Officer

Deane Dray -- RBC Capital Markets -- Analyst

Jason Makishi -- Barclays Bank PLC -- Analyst

Evelyn Chow -- Goldman Sachs -- Analyst

Ryan Merkel -- William Blair -- Analyst

Luke Junk -- Robert W. Baird & Company -- Anlayst

Andrew Obin -- Bank of America -- Anlayst

Hamzah Mazari -- Macquarie Research -- Analyst

John Inch -- Gordon Haskett -- Analyst

Patrick Baumann -- JPMorgan -- Analyst

Keith Hughes -- SunTrust -- Analyst

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