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HD Supply Holdings Inc (NASDAQ:HDS)
Q4 2019 Earnings Call
Mar 17, 2020, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by and welcome to the HD Supply Fourth Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Charlotte McLaughlin. Please go ahead, ma'am.

Charlotte McLaughlin -- Investor Relations

Thank you, Josh. Good morning, ladies and gentlemen. And welcome to the HD Supply Holdings 2019 fourth quarter and full year earnings call. As a reminder, some of our comments today may be forward-looking statements based on management's beliefs and assumptions and information may 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 fourth quarter and full-year earnings release, which is available on our IR website at www.hdsupply.com. Joe DeAngelo, our CEO, will lead today's call with Brad Paulsen, President of Facilities Maintenance providing further color around the current business initiatives. Evan Levitt, our CFO, will provide additional information on our recent financial performance. 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 would like to turn the call over to Joe DeAngelo.

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

Well, thank you. Charlotte. Good morning, everyone. Thank you for joining us today for our fourth quarter and full-year 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. I'll begin by addressing the current coronavirus outbreak. We sympathize with those around the world directly impacted by this extreme event. We are focused on doing everything we can to keep our associates and their families safe, while providing the assistance our customers need during this difficult period. We have put in place a robust action plan informed by World Health Organization guidelines, the CDC in Atlanta and local and state authorities. And we are regularly updating our communications to associates to ensure that they have all of the relevant information to stay healthy. Our cross-functional response team has implemented and improved various infection controls and our facilities, including increased cleanings of distribution centers and vehicles, additional hand sanitizer stations and heightened precautions for our drivers and customer-facing employees.

Our communications outreach and Internet sites keeps our associates updated with news as it happened, including future actions that we may need to take to keep our associates. We have business continuity plans in place to minimize any disruption to day-to-day business, which includes allowing many associates to work from home and giving associates who may need to self-quarantine, the resources to do so safely without fear of being unlocked. We restricted non-essential business travel and have asked our associates to take the necessary precautions when they do travel. Managers across the organization are receiving toolkits. And we are advising all of our customers to reach out to their designated HD Supply contact for updates.

The current situation has overshadowed our solid finish to 2019 and strong start to 2020 as detailed on Page 4. Adjusted for the impact of fiscal 2018's 53rd week, in the fourth quarter of fiscal 2019, we delivered 3.2% year-over-year sales growth; Facilities Maintenance delivered sales growth of 2.8%; and Construction & Industrial delivered sales growth of 3.8%. During full-year fiscal 2019, we generated $571 million of free cash flow, an increase of 22% over full-year fiscal 2018.

Our performance continued to improve in February, our first month of fiscal 2020 delivering year-over-year average daily sales growth of 8.8%. Facilities Maintenance delivered average daily sales growth of 4.1% and Construction & Industrial delivered average daily sales growth of 14.2%. Although this represents just one month, we are excited about our strong start to 2020 and look forward to executing our growth strategies. We will focus on execution in 2020 to support our customers' needs with best-in-class service.

On March 12, our Board of Directors authorized an additional $500 million share repurchase program. Through the end of fiscal 2019, we have completed three previously issued share repurchase programs of $500 million repurchasing a total 42.2 million shares, reducing our outstanding share count by 21% since the first quarter of 2017. We will continue to opportunistically repurchase shares in the open market pursuant to our 10b5-1 plan.

Our teams have also continued to work toward the separation of our two business units, making good progress on talent alignment and information system requirements. We remain on schedule and expect that our Construction & Industrial business subject to market conditions will become an independent public company in mid-fiscal 2020 through a tax-free distribution to shareholders. I'm pleased to see both of our businesses generating momentum as we get closer to our separation where each business can solely focus on the respective customers and markets.

I will provide some closing comments following Q&A. I will now turn the call over to Brad Paulsen who will provide an update on our Facilities Maintenance business.

Bradley Paulsen -- President of HD Supply Facilities Maintenance

Thank you, Joe, and good morning. I would like to begin by thanking our nearly 6,000 associates for the service and value they provide to our customers each day. I want to also echo Joe's comments and reiterate the HD Supply is taking every necessary precaution to ensure the risk to our customers and HD Supply team has minimized. While we have yet to see any material disruption to our business, our teams are working tirelessly to ensure we are well positioned to support and service our customers' needs during this challenging time. With over 75% of our sales executed over digital platforms, our technical teams are focused on maintaining 100% website, app and support system availability to allow our customers to execute their orders any place, anytime regardless of property level visit restrictions.

Our supply chain leadership team has developed contingency plans to allow for continued customer deliveries; in the event, one of our local market DCs is impacted by a material outbreak of the coronavirus. Along with this, our local delivery teams are working with our customers to customize delivery and drop-off procedures to best fit our customers' needs. And finally, our category management, global sourcing and supply chain teams have partnered with our supplier community and currently expect minimal disruption to product availability for our proprietary brand products sourced from China. We will, however, experienced short- term supply issues for select hand sanitizer, cleaning chemicals, safety gloves and protective mask items due to the unprecedented spike in demand experienced in recent weeks. Overall, I'm very proud of our team's planning and preparedness, and I'm confident we will deliver the service our customers will require to successfully manage their properties in the current environment.

Of the four sales verticals we support, the hospitality vertical is the most likely to see its normal demand negatively impacted by the reduction in hotel and motel occupancy due to the coronavirus. Our team is working closely with our hospitality customers to support their immediate product and service needs, but we do anticipate a drop in property level demand at some point in the first quarter. We are not yet able to quantify the potential financial impact, but do expect this to persist and so more normal occupancy levels return.

Turning now to our recent performance. I'm very encouraged by the progress made in the fourth quarter of 2019. We continued to take share from our competitors and now look forward to executing our 2020 growth initiatives. I would -- excuse me, I would now -- I would like to now provide commentary on key focus areas for our team.

First is our customer experience. We continue to tailor our customer experience to the needs of our core customer, the Living Space Maintenance Professional. In 2019, we implemented over 40 enhancements to our online ordering and website experience, while also launching our third generation mobile app. These updates and tools are perfect example of our focus on providing solutions that simplify the daily tasks for the Maintenance Professional. We have also significantly improved our marketing execution and customer connectivity as we work to develop a more personalized relationship with our property level customers. This will allow us to deliver the most relevant solutions and offers needed by the respective properties. Finally, we continue to expand our online product assortment, which is now nearly 100,000 SKUs to augment our stock SKU offering to ensure we provide our customers the broadest range of professional products needed to execute daily repair and/or replace tasks.

Second is order fulfillment. Service dependability continues to be our customers' number one need. Our distribution network of over 40 DCs and 1,000 drivers continued to execute our next day delivery value proposition at a high level. We plan to continue investing in our supply chain both in talent and technology in order to provide a fulfillment experience that meets the evolving needs of our customer. I'm equally excited about this team's efforts to execute our peak season readiness plans. The teams are on schedule, and I do expect each of our DCs to be well positioned operationally to support our customers' needs during the upcoming peak selling season.

Third is national accounts. As the only national distributor solely focused on the Living Space Maintenance Professional, we are confident we have a differentiated value proposition for our national account customers. We remain focused on working closely with this customer to drive property level purchasing compliance, while also expanding the penetration of our value-added services such as property improvement and unit delivery and installation. Our hard work is paying off, and we are pleased with the improvements made in our sales growth and customer feedback from this critical customer segment. We expect this improved execution plus our plans to aggressively pursue new national account customers in 2020 to be a key driver to this year's sales growth.

Finally, M&A will be a top priority for our team in 2020. We see great value in expanding our presence in core geographies and increasing our available product and service offering. We continue to develop and monitor a robust pipeline of opportunities and expect to be active in the coming year. Thank you for your time and continued support.

I will now hand the call over to Evan.

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

Thank you, Brad, and good morning. I'd like to start by turning to Page 6 and share that we are making good progress on the separation of our businesses into two separate stand-alone public companies. We are on track to complete the separation through a tax-free distribution of the Construction & Industrial business to our shareholders in mid-fiscal 2020 subject to market conditions. Our teams are hard at work ensuring that both businesses are aligned with talent and information technology infrastructure to support our current operations and expected future growth. We continue to believe that a 2 to 3 times net debt-to-adjusted EBITDA leverage range is appropriate for both companies, with the Construction & Industrial business likely on the lower end of that range, whereas the Facilities Maintenance business can support a leverage ratio at the higher end of the 2 to 3 times range. This level of leverage, along with the cash flow profile of each business, will provide both companies with the ability to pursue a bolt-on or tuck-in M&A strategy.

We previously outlined our expectations for incremental stand-alone costs of approximately 50 basis points to 100 basis points of sales for each business, in line with historical comparably sized separation transactions. As we continue to work on our separation, we can refine our original estimate of incremental stand-alone costs to now be an estimated 50 basis points to 80 basis points for Construction & Industrial and an estimated 30 basis points to 60 basis points for Facilities Maintenance.

Bow before we review the fourth quarter results on Page 7, I'd like to remind you that the fourth quarter of fiscal 2018 contains an extra week as compared to the fourth quarter of fiscal 2019. Fiscal 2018 contains a 53rd week, which occurs every four or five years. You can find further information on the impact of the extra week in the appendix of our year-end earnings presentation. Net sales decreased $61 million or 4.2% to $1.385 billion in the fourth quarter of fiscal 2019 as compared to $1.446 billion in the fourth quarter of fiscal 2018. As I just shared, 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% as compared to the fourth quarter of fiscal 2018.

Gross profit decreased $27 million or 4.7% 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% of net sales for the fourth quarter of fiscal 2019, down approximately 20 basis points from 39.6% in the fourth quarter of fiscal 2018. Adjusted EBITDA decreased $8 million or 4.3% to $179 million in the fourth quarter of fiscal 2019 as compared to $187 million in the fourth quarter of fiscal 2018. Adjusted EBITDA was 12.9% 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% in the fourth quarter of fiscal 2019 as compared to the fourth quarter of fiscal 2018.

Turning to Page 8, I will review the full-year fiscal 2019 performance. Net sales grew to $6.1 billion, an increase of $99 million or 1.6% as compared to the full year of fiscal 2018. Organic sales growth on a 52-week basis for the full year of fiscal 2019 was 3% as compared to the full year of fiscal 2018. Gross profit increased $28 million or 1.2% to $2.403 billion in the full year of fiscal 2019 as compared to $2.375 billion in fiscal 2018. Gross profit was 39.1% of net sales in the full year of fiscal 2019, a decrease of approximately 20 basis points from 39.3% in the full year of fiscal 2018. Adjusted EBITDA increased $2 million or 0.2% to $873 million in fiscal 2019 as compared to $871 million in fiscal 2018. Adjusted EBITDA was 14.2% of net sales in fiscal 2019, a decrease of 20 basis points from 14.4% in fiscal 2018. On a 52-week basis, adjusted EBITDA growth was 1.7% in fiscal 2019 as compared to fiscal 2018.

On Page 9, I'll discuss the specific performance of our individual business units. Net sales for our Facilities Maintenance business were $702 million during the fourth quarter of 2019 as compared to $736 million for the fourth quarter of fiscal 2018. Sales growth on a comparable 13-week basis for the fourth quarter of fiscal 2019 was 2.8%. Adjusted EBITDA decreased $10 million or 8.1% to $114 million for the fourth quarter of fiscal 2019 as compared to $124 million for the fourth quarter of fiscal 2018. The additional week contributed approximately $10 million to adjusted EBITDA during the fourth quarter of fiscal 2018. Adjusted EBITDA was 16.2% of net sales for the fourth quarter of fiscal 2019, down approximately 60 basis points from 16.8% for the fourth quarter of fiscal 2018. As expected, Facilities Maintenance gross margins declined 50 basis points against a difficult year-over-year comparison from the fourth quarter of 2018.

For the full year of fiscal 2019, our Facilities Maintenance gross margin rate declined approximately 30 basis points from the full year of fiscal 2018. The decline throughout the year was reflective of the additional tariffs imposed on Chinese imported products. Net sales increased $41 million or 1.3% to $3.130 billion in the full year of fiscal 2019 as compared to $3.089 billion for the full year of fiscal 2018. Sales growth on a comparable 52-week basis for fiscal 2019 was 3.1% as compared to fiscal 2018. Adjusted EBITDA was flat at $546 million for the full year of fiscal 2019 as compared to the full year of fiscal 2018. The 53rd week in fiscal 2018 contributed approximately $10 million to adjusted EBITDA. Adjusted EBITDA was 17.4% of net sales for the full year of fiscal 2019, down approximately 30 basis points from 17.7% for the full year of fiscal 2018.

Moving to the Construction & Industrial business. Net sales for our Construction & Industrial business were $685 million during the fourth quarter of 2019 as compared to $711 million for the fourth quarter of fiscal 2018. Sales growth on a comparable 13-week basis in the fourth quarter of fiscal 2019 was 3.8%. Adjusted EBITDA increased to $2 million or 3.2% to $65 million for the fourth quarter of fiscal 2019 as compared to $63 million for the fourth quarter of fiscal 2018. The additional week in the fourth quarter of fiscal 2018 contributed approximately $3 million to adjusted EBITDA. Adjusted EBITDA was 9.5% of net sales in the fourth quarter of fiscal 2019, up approximately 60 basis points from 8.9% for the fourth quarter of fiscal 2018. During the fourth quarter of fiscal 2019, Construction & Industrial's gross margins improved approximately 10 basis points as compared to the fourth quarter of fiscal 2018.

During the full year of fiscal 2019, Construction & Industrial's gross margin declined approximately 10 basis points as compared to fiscal 2018. Net sales increased $58 million or 2% to $3.019 billion in the full year of fiscal 2019 as compared to $2.961 billion for the full year of fiscal 2018. Organic sales growth on a comparable 52-week basis for the full year of fiscal 2019 was 2.9% as compared to the full year of fiscal 2018. Adjusted EBITDA increased $2 million or 0.6% to $327 million for the full year of fiscal 2019 as compared to $325 million for the full year of fiscal 2018. The 53rd week in fiscal 2018 contributed approximately $3 million to adjusted EBITDA. Adjusted EBITDA was 10.8% of net sales for the full year of fiscal 2019, down approximately 20 basis points from 11% for the full year of fiscal 2018.

Turning to Page 10. In the last 12 months, we generated $571 million of free cash flow. Inclusive of federal income tax payments made subsequent to the full utilization of our federal net operating loss carryforwards and other federal tax credits, we invested $17 million in capital expenditures in the fourth quarter of $2019 and $106 million for the full year of fiscal 2019. During the full-year fiscal 2019, we paid cash taxes of approximately $53 million, including federal Canadian and US state taxes, $18 million of which was paid in the fourth quarter of fiscal 2019.

During the fourth quarter of fiscal 2019, we completed our third $500 million share repurchase authorization. We acquired 1.5 million shares of our common stock during the fourth quarter for a total of $59 million at an average price of $39.71 per share. During the full year of fiscal 2019, we acquired 9.6 million shares of our common stock for a total of $375 million at an average price of $38.87 per share. As Joe indicated, we will continue to opportunistically repurchase shares in the open market pursuant to the March 2020 repurchase program authorized by our Board of Directors. At the end of fiscal 2019, our net debt-to-adjusted EBITDA leverage was 2.4 times, conservatively within our targeted range of 2 to 3 times. We have no near-term debt maturities and maintain liquidity in excess of $600 million.

On Page 11, we provide fourth quarter 2019 monthly sales trend performance as well as the 2018 comparable. In November of 2019, we delivered sales of $436 million, an increase in average daily sales of approximately 2.5% versus November of 2018. In December 2019, we delivered sales of $403 million, a decrease in average daily sales of approximately 6.8% versus December of 2018. In January 2020, we delivered sales of $546 million, an increase in average daily sales of approximately 12.7% versus January 2019. There were 18 selling days in November, 19 selling days in December and 24 selling days in January of fiscal 2019, compared to 18 selling days in November, 20 selling days in December and 28 selling days in January of fiscal 2018. Both December and January sales growth were impacted by a shift in our fiscal calendar whereby Christmas fell in January during fiscal 2018 and in December during fiscal 2019. The combined December, January sales growth in 2019 over 2018 was approximately 4%.

February 2020, which ended on March 1, was the first month of our fiscal first quarter 2020, and we have provided our preliminary sales results. We will not provide information on February results beyond sales. Preliminary net sales in February 2020 were approximately $460 million, which represents year-over-year average daily sales growth of approximately 8.8%. Preliminary February year-over-year average daily sales growth by business segment was 4.1% for Facilities Maintenance and 14.2% for Construction & Industrial. There were 20 selling days in both February 2020 and February 2019.

We are pleased with the strong start to fiscal 2020 from both of our businesses. Our Facilities Maintenance business saw positive year-over-year growth in each of its four main sales verticals, multifamily, hospitality, healthcare and institutional. Our Construction & Industrial business continues to recover nicely, posting double-digit growth for the month of February supported by expanding construction activity across several large projects and geographies. The month of February saw a fair amount of rain across the country. The weather was actually favorable when compared to February of 2019 contributing to our strong performance. Our favorable year-over-year sales trends have continued into the first two weeks of March.

We remain committed to a long-term mid-single-digit sales growth target both on a combined basis and by individual company. However, due to the uncertainty created by the coronavirus and its disruption on economic activity, we will not be providing 2020 guidance at this time. To date, we have not seen a reduction in demand within our Facilities Maintenance end-markets, including hospitality. But given the severity of the crisis, this can change quickly. Just this week, we are beginning to see construction job sites in certain locations temporarily shut down as cities around the country intentionally curb non-essential commercial activity. Our number one priority is to help our associates and their families as needed and to maintain business readiness, so that we can continue to provide our customers with the critical products and services needed to maintain their facilities, care for their residents and operate and maintain safe job sites and work environments.

Thank you for your continued interest in HD Supply, and I'd now like to turn the call over to Josh for questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from Keith Hughes with SunTrust. You may proceed with your question.

Keith Hughes -- SunTrust Robinson Humphrey -- Analyst

Thank you. I guess my question is on the C&I business. I understand the job sites are starting to slow down, but it looks like that you refer to is really starting to pick up. Can you talk about there were certain areas or certain regions where you're seeing that business starting to come back?

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

So Keith, the strength through the month of February, really into the two -- first two weeks of March was broad based across the country. We saw a nice growth in the Northeast, in the California regions, broad-based across the country and across very significant large jobs that we saw come back. Just this week as you indicated, we have seen some closures, some slowdown in activity, announcements by cities such as Boston and in the Bay Area. We're continuing to monitor those to understand what that means for our business and our customers, and we stand ready to help our customers if anything they need, but certainly we are going to comply with all local, state and federal requirements to either curb activity to -- or to assist in the containment of the coronavirus.

Keith Hughes -- SunTrust Robinson Humphrey -- Analyst

Okay. And you referred to ramping up acquisition activity at the beginning of the call. Are you near term in a wait-and-see mode of how this works out before you can engage in transactions or do you feel comfortable enough on a deal to go ahead and complete it?

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

Yes. That certainly depends on the opportunity that's before us. Certainly, the level of uncertainty in the marketplace has placed, I'd say, a higher return hurdle on any acquisition right now, but we are actively in the market. We do have an active pipeline for both businesses for M&A activity, and we do -- we would like to complete M&A activity, whether it's now or after this crisis subsides.

Keith Hughes -- SunTrust Robinson Humphrey -- Analyst

Okay. Thank you.

Operator

Thank you. Our next question comes from David Manthey with Baird. You may proceed with your question.

David Manthey -- Robert W. Baird & Company, Inc. -- Analyst

Thank you. Good morning, guys. First off, I'm not sure if you said that John is on the call or not, but if someone could comment on, the 2020 non-res outlook did seem to brighten as we got later into 2019 and into the new year, but just recently -- I know these things tend to move slowly, have you seen any projects come off the boards for White Cap in the past few weeks here or are the low rates and the long-term nature of these projects expected to continue to drive good activity into late 2020 and into 2021?

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

Yes. So David, thanks for the question. And John is not on the call this morning. And you're right, we have seen some significant increase in construction activity across the country, particularly in the fourth quarter and into February and early March. The third-party data supports that as well when looking at the Census Bureau construction put in place numbers, the housing start numbers have all firmed up somewhat in the fourth quarter and into the first part of 2020. We were encouraged by that. As I said, a lot of large construction jobs under way. We have not seen any significant construction jobs pulled. We are just starting to see some slowdown or delayed as a result of some of the government actions taken to curb commercial activity, but these jobs haven't been canceled, they've been delayed.

David Manthey -- Robert W. Baird & Company, Inc. -- Analyst

Okay. Thanks, Evan. And then maybe for Brad, what percentage of FM revenues or hospitality today? And of that percentage, could you give us an estimate of what you think your business, how much of it is related to kind of usage-related break-fix business versus any planned maintenance or upgrades that are more periodic and plannable?

Bradley Paulsen -- President of HD Supply Facilities Maintenance

So hospitality today represents just under 20% of our business. When we look at -- what we support that vertical, where divided into two buckets, you've got the housekeeping side of hospitality, which is the consumable portion and then you have the traditional MRO. We're a lot less exposed on the housekeeping side. We've grown that fairly deliberately over the years. So generally, I would think it's about a 75/25 split between the two.

David Manthey -- Robert W. Baird & Company, Inc. -- Analyst

Okay. And just as a follow on to that, the maintenance portion, the MRO portion, that's still usage-driven or occupancy-driven for the most part, as opposed to some kind of a planned upgrade?

Bradley Paulsen -- President of HD Supply Facilities Maintenance

Oh, yes.

David Manthey -- Robert W. Baird & Company, Inc. -- Analyst

Okay. All right. Thanks very much guys.

Operator

Thank you. Our next question comes from Ryan Merkel with William Blair. You may proceed with your question.

Ryan Merkel -- William Blair & Company -- Analyst

Great. Thanks. So first off, I know you're not giving guidance, but many people think we're going to head into a recession in the next few quarters at least. Can you just help us conceptually think about how FM and C&I sales and margins might perform?

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

Yes. So, Ryan, first on the Facilities Maintenance, as Brad indicated, the hospitality vertical is likely our most exposed vertical or at-risk vertical in the current environment and in really any recession, it is more cyclical portion of our business. The multifamily and the -- or the healthcare verticals, we expect will hold up fairly well. This is a little bit of an unprecedented transaction -- or unprecedented situation that we're in right now. So we're monitoring and learning along with everybody else, but as folks are spending more time at home, home maintenance may become more important as kids are at home, home from school and certainly in the healthcare vertical as we've seen that strong demand and we stand ready to help our customers care for their residents that are some of the most vulnerable during this crisis in our senior care living centers. So we expect that business to hold up fairly well.

On the Construction & Industrial side, certainly be impacted by government actions on when we can work and when we can't. There is a lot of project activity occurring right now. Some of these are long-term projects, multiyear projects, difficult to turn off and walk away from, they can be delayed. So we have to see how that plays out. Certainly the team -- the leadership team for both businesses have been through a recession before and are prepared to take the actions necessary to navigate a recession to gain share through any recession and to take advantage of any M&A opportunities during a recession. Recession is often an area where we can gain share and grow our business in the subsequent recovery. So we are not -- certainly, we're not scared of a recession, but we're prepared for a recession, if one were to occur, although I'd say we're not ready to call a recession. Certainly, we think there'll be a bit of a pause here in certain economic activity as we get through this crisis, whether that leads to a recession or opposite.

Ryan Merkel -- William Blair & Company -- Analyst

Got it. That was very helpful, Evan. And then turning to FM, it looks like the sales growth trend line is starting to improve economy aside. Are you starting to see share gains in the FM business again? Is that the conclusion?

Bradley Paulsen -- President of HD Supply Facilities Maintenance

Yeah. So we feel like we took share throughout 2019. When we look at '20 -- the fourth quarter, definitely encouraged. And I put that in really two buckets. One is, we understand our markets and our customers continue to evolve, and we need to have a value proposition that's differentiated and compare that with incredible execution on a daily basis. When I look at the fourth quarter, really, really happy with the improvement that we saw in our sales and operations execution. And I think we've been pretty open sharing that we're going to pursue new customers, which we're also starting to see the benefits of that. So between improved execution and the acquisition of new customers, it's proven to be a nice recipe for growth.

Ryan Merkel -- William Blair & Company -- Analyst

And just one quick follow-up to that. Thanks for that answer. You mentioned technology. Can you just give us some metrics for the mobile app and the e-comm site, user growth, sales growth, average order sizes and it sounds like you're going to try to emphasize that the customers during this sort of unprecedented period. Is that right?

Bradley Paulsen -- President of HD Supply Facilities Maintenance

Absolutely. We try to focus our efforts on making the life of the Living Space Maintenance Professional easier, allow them to do their job in a faster manner with more accuracy. So we did roll out our third generation mobile app. It has been very well received. Actually, I looked at it yesterday, we're at 4.8 stars out of 5 and continue to roll out to all of our customers. I don't have all the information. Yes, we can certainly follow up with that, but has received -- has been received incredibly well by our customers.

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

And Ryan, also to emphasize, as Brad said, about 75% of our transactions are digital-based either through the website or the mobile app. And we do expect over time that the shift toward our mobile app -- application, but right now, the majority of those transactions occurred through the website.

Ryan Merkel -- William Blair & Company -- Analyst

Got it. All right. I'll pass it on. Thanks.

Operator

Thank you. Our next question comes from Deane Dray with RBC Capital Markets. You may proceed with your question.

Deane Dray -- RBC Capital Markets, LLC -- Analyst

Thank you. Good morning, everyone.

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

Good morning.

Bradley Paulsen -- President of HD Supply Facilities Maintenance

Good morning.

Deane Dray -- RBC Capital Markets, LLC -- Analyst

Hey, just really appreciate all the real-time updates here and then also, I just wanted to say that not giving guidance here is completely understandable. We were expecting you to say that this morning, and I think your competitors will be doing the same. And this is exactly the way the companies were responding in early stages of 2008. So, no surprise there. How about just talk through the supply chain comments from China? What the visibility has been? Was there a disruption and it's resumed or did you not see much of a reduction? And can you measure and maybe weeks, what kind of buffer supplies you have?

Bradley Paulsen -- President of HD Supply Facilities Maintenance

Sure. So from an FM perspective, obviously, working very closely with our manufacturing partners in China. And I would say, we were very pleased with the percent of our orders that were filled in February. We had very low expectations in those were exceeded, have also been really encouraged by the progress of the manufacturers has made as far as ramping up to 100% capacity. The delay, if you will, really varies by each individual manufacturer. To go with round numbers, I would say it would be anywhere from three to five weeks. And given the amount of inventory that we carry for import items, we don't feel like that's going to present any -- yeah, present any level of disruption to our supply for our customers.

Deane Dray -- RBC Capital Markets, LLC -- Analyst

Got it. And how meaningful is this disruption on the sanitary products, masks, gloves and so forth? Can you size for that because I mean, this is exactly the kind of products that your customers need right now?

Bradley Paulsen -- President of HD Supply Facilities Maintenance

Yes. So Ryan mentioned kind of near short-term supply issues. We continue to receive products from our suppliers and our manufacturer partners. We are in a situation, as we receive it, we sell it. I don't expect the demand is going to subside for the next few months. So I don't expect to get back to normal inventory position probably well into the second quarter. As far as scope and the opportunity to pre-coronavirus, I would say it would be almost immaterial. Obviously, that's ramped up a bit over the last few weeks. But again, we continue to sell that product as we receive it. Evan, I don't know if you want to add any additional color around the impact of the business there.

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

Yeah. So look our approach is to support our customers that need our products. So obviously, that product is in demand across the economy. We're going to focus on selling that product to our customers that we standby and want to help through this crisis. As Brad said, that product is still coming. The manufacturers have put us and all of their customers on an allotment. Our allotment is generally more than a full-year's worth of inventory. So we will be selling more of that product over the course of the year than we ordinarily would, but as Brad said, being able to stock it in a normal in-stock position within our distribution centers will take some time.

Deane Dray -- RBC Capital Markets, LLC -- Analyst

That allotment comment was really helpful. And then just last question from me, Evan, is there any expectation that in the first half, you'll be taking working capital down at all with the anticipation of reduced demand and what might the cash flow impact be -- the positive cash flow impact be?

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

Yes. So certainly, receivables, we always work hard to collect receivables as timely as we can. If business activity slows, the receivable balances naturally drop as we collect more than we're currently creating. On the inventory side, we will adjust inventories to match demand. Now, we'll be careful with that, because this is a cost -- an event-driven decline or slowdown, which could snap back very quickly and could snap back with pent-up demand that we will want to be able to take advantage of and support our customers when that demand hits. So we'll be monitoring it very closely, so that we can make our determination as we go is this short-term event driven, or is this a longer-term downturn.

Deane Dray -- RBC Capital Markets, LLC -- Analyst

That's very helpful. Thank you.

Operator

Thank you. [Operator Instructions] Our next question comes from Michael McGinn with Wells Fargo. You may proceed with your question.

Michael McGinn -- Wells Fargo Securities, LLC -- Analyst

Good morning, everybody. Great quarter.

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

Thanks. Good morning, Mike.

Michael McGinn -- Wells Fargo Securities, LLC -- Analyst

Good morning. I was wondering if we could walk through the stranded cost estimate, they came down materially for FM, the spin-related cost I'm referring to C&I still kind of in that range, but that was expected. Can you just talk through what's changed, what you guys have done in the last three months to prepare for this where those are coming down?

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

Yes. So most...

Michael McGinn -- Wells Fargo Securities, LLC -- Analyst

Just so, should those continue to decline or is this -- this is the best estimate going forward?

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

This is our best going forward, so when we originally stated the 50 basis points to 100 basis points of sales, we were just getting started in the separation of the businesses. We were looking at comparable transactions and that was really the basis of our 50 basis points to 100 basis points estimate. We're now much further along in identifying the organization structure of both businesses going forward, so the people needed to run each business individually as well as the IT infrastructure. I believe our costs are a little bit lower than other comparable companies because we have run the businesses fairly autonomously over the years.

Each business has its own separate ERP. We do share a lot of back-office functions like a common HR and payroll system, a common data center and those were the costs that we really needed to get further along to determine what would be ongoing cost for each business. And so, we shared our best estimates as of today. I would make the assumption that those are the best estimates that will occur post separation as well that we will actually experience. And if that changes, we'll let you know when it does, but right now, that's the best estimate.

Michael McGinn -- Wells Fargo Securities, LLC -- Analyst

Okay. Fair enough. And moving to free cash flow or free cash flow uses, it sounds like you have several irons in the fire there with the new authorization still reaching for M&A, is this -- are you in a scenario now where your acquisition targets, the LTM looks better than the NTM and you have a more kind of incentivized seller? And then subsequently, do you have -- are you going to wait for the spends and maybe do a C&I transaction or is this all FM at this point?

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

Yeah. Look, depending on the opportunity, we could pursue an M&A transaction on either business. As far as the expectations of the sellers, it really varies seller-by-seller. Certainly, if LTM results are higher than the next 12 months, our expectation would be that we're paying a lower multiple on LTM, right? We're buying future earnings and cash flow stream and looking to realize synergies by combining them with our businesses. Sometimes, that aligns with seller expectations and sometimes, it doesn't. That often impacts whether a deal gets done or whether it doesn't. But we do have an active pipeline, and we're actively pursuing in both businesses.

Michael McGinn -- Wells Fargo Securities, LLC -- Analyst

Thanks for the time.

Operator

Thank you. Our next question comes from John Inch with Gordon Haskett. You may proceed with your question.

John Inch -- Gordon Haskett -- Analyst

Thank you. Good morning, everyone. Hey -- good morning guys. Evan, there was a big decline in capex in the fourth quarter sequentially and versus last year, was that timing related or is that somehow reflective of hunkered down mode? And does that have implications for the 2020 capex in terms of the trend?

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

The fourth quarter capex was just a matter of timing in terms of project activity that we have internally, but certainly no intent to hunker down. Now looking into 2020, we will reevaluate our investment and cash flow profile relative to current market conditions and what we expect and as that moves forward. And so, certainly, if we believe that this is a prolonged slowdown, we will look to potentially reduce some of our capex going forward.

John Inch -- Gordon Haskett -- Analyst

Yeah, that makes sense. Evan, I find it's kind of interesting that you guys are sort of talking up M&A here. Your leverage is already whatever mid-2 to 3 times, Are you willing to take that number higher or is this somewhat pre-emptive in anticipation that you think based on sort of market dislocation possible recession that there are just going to be more properties come available for sale and you just kind of -- you sort of signaling that you want to be ready for that? How would we interpret, particularly on the leverage front and for you already [Phonetic] out?

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

Yeah, certainly, we want to be opportunistic to the extent that there are assets available for sale at attractive pricing. That being said, your point on leverage and cash flow profile is an important one. So we are looking at our cash flow profile. Right now, our cash flow profile remains very good. We generated $571 million of free cash flow last year. We will continually reassess what that means for 2020 as conditions change on the ground. Right now, cash flow is good. Leverage is below our -- the midpoint of our target. And if we have an opportunity to take advantage of that and play offense, we will. If we again believe this is a prolonged slowdown, we will be a little more conservative in terms of cash flow usage and leverage, but that may also create additional opportunistic avenues for us to pursue M&A as others may be more inclined to sell.

John Inch -- Gordon Haskett -- Analyst

That's fair. Just lastly, one of the themes of C&I had been labor shortage in terms of sort of holding the business back and I guess now that if we sort of rolling into this period where there is going to be some mandated periods of closure, I know a lot of this labor sort of the foreign nationals. I wonder if this creates or sets up for a longer-term issue and so far, if those people are off work for weeks and then they leave the United States, won't be able to come back and then we find ourselves even in a bigger labor shortage down the road when business actually does trying to snap back. I don't know, what do you guys think?

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

Let's see how that plays out. Certainly, there could be foreign nationals that are in the construction markets today. On the opposite side, if there is a slowdown and some of these folks are furloughed for a period of time, they really may need to get back to work because they need to earn a wage rate to put food on the table for their families.

John Inch -- Gordon Haskett -- Analyst

That's it. Great. Thanks very much for the comments, guys.

Operator

Thank you. Our next question comes from Hamzah Mazari with Jefferies. You may proceed with your question.

Hamzah Mazari -- Jefferies LLC -- Analyst

Good morning. Just on the FM business, could you remind us how much visibility do you have into that business? Is it three months, six months? Just any thoughts there would be helpful.

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

Yes. So Hamzah, your question is how much visibility we have into the demand profile of our Facilities Maintenance business?

Hamzah Mazari -- Jefferies LLC -- Analyst

Yeah. Exactly. How much inventory are your customer carrying? How much visibility do you have into your volume growth within the FM business?

Bradley Paulsen -- President of HD Supply Facilities Maintenance

One of the best things about our business is it's pretty predictable. Obviously, we've got years of data, decades of data to support what to expect month-by-month, week-by-week. Our customers as they become more sophisticated around inventory carrying less and less, and in many cases, it's just in time. So we certainly view our role through this crisis as being essential to helping them put their properties in a well-maintained position. The only piece that is a little bit less predictable is obviously property improvement that's tied to capital investment from our customers, so is that decision changes on their side, but certainly impact us, but outside of the MRO business, a great part of our businesses is fairly predictable.

Hamzah Mazari -- Jefferies LLC -- Analyst

Okay. And just a follow-up question, is private label still a margin driver for you guys or has that just structurally changed because of tariffs and what have you? Thank you.

Bradley Paulsen -- President of HD Supply Facilities Maintenance

So our private brand products continue to drive margin benefit back to the business and our customers. Especially in 2019 going forward, we're going to continue to embrace that, because it's a high quality product that can get to the lower price. So I expect that to continue to grow as we move forward.

Hamzah Mazari -- Jefferies LLC -- Analyst

Thank you.

Operator

Thank you. Our next call comes from Julian Mitchell with Barclays. You may proceed with your question.

Jason Makishi -- Barclays Capital, Inc. -- Analyst

Hi, it's Jason Makishi on for Julian. Maybe just a quick one around C&I, it sounds like just maybe less by region and more by type of projects and what's driving the demand strength. It all sounds like large project realization that maybe got pushed out from late last year into early this year, I guess, are these the types of projects that once they come off the board or once they start getting delayed and pushed out, they are a little bit slower to recover once any potential demand headwinds on a macro level subside or from your experience, do these types of projects sort of get pushed out and then the instant any sort of large headwinds subside, they come right back or is it a little bit slow to come off and slow to recover sort of dynamic?

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

Yeah, it's a good question. This crisis is a little different than what we've seen in the past. So we're a bit in uncharted territory here. Certainly, when the crisis subsides, many of our customers will want to get back to work quickly and catch up for lost time to the extent they can. That being said, if workers are -- were furloughed and let go, it may take some time for them to be rehired and to restaff those jobs. So I think there'll be an incentive to get back quickly and get those jobs completed because our customers don't get paid if they don't complete those jobs, but they've got to have the resources to do so. So, some of that will be dependent on how long the delay is and what some of the government requirements are to do with furloughed workers.

Jason Makishi -- Barclays Capital, Inc. -- Analyst

Got it. And then, maybe just transitioning a little bit to the FM business, making sure I have the messaging there clear. Clearly, some risk to the hospitality portion of the business a little bit less than 20% of sales, but potential for offsets in virtually every other end-markets last portion of the business, that reticence to give guidance is more just around the difficulty in sizing the magnitude of any sort of downturn in hospitality versus offsets in other pockets of the business, correct? Those are the sort of puts and takes for us.

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

Yeah, look, as I said, we're in a bit of uncharted territory here with this type of crisis. Certainly, we expect multifamily and healthcare to hold up better than hospitality in the current environment. Folks are spending more and more time at home and things are likely to get to be broken and torn up in homes as kids are home from school. At the same time, we don't know what the demand is going to look like for people who want maintenance professional in living space during this time. So we just have to play it out and see how it evolves. Certainly, when everybody gets back to business, business as normal, I do expect some pent-up demand and a snap-back. And we are fortunate that we are a living space provider and that's where folks are today. They are hunkering down in their living spaces. So we feel good about that, but we don't know exactly what that demand pattern is going to look like.

Jason Makishi -- Barclays Capital, Inc. -- Analyst

Understood. And then maybe just a quick one at the end on margins into 2020 to the extent that you can give context is what gross margin dynamics have historically looked like in these types of maybe temporary demand environments. What are the puts and takes around where could there be pockets for driving expansion/driving contraction?

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

Yes. So certainly within Facilities Maintenance, to the extent that, that hospitality flows, hospitality is generally lower margin vertical to the extent that property improvement or renovation flows, that's generally a lower-margin service offering. So to the extent the mix shifts more toward multifamily and healthcare, there is a higher margin profile. As far as Construction & Industrial, I expect the business to get more competitive as job sites slow down. Then when job sites open back up and there is a demand to catch up for lost time, folks will be looking for the best service provider to help them catch up and be less focused on the day-to-day price. So I think there is some -- certainly, there's financial risk going into this environment. Through the cycle, through the environment, I think there is opportunity as the strongest will survive and help their customers continue to perform. And we stand ready to support our customers and gain share and gain profitable business as we go through this historical period.

Jason Makishi -- Barclays Capital, Inc. -- Analyst

Great. Thank you very much.

Operator

Thank you. Our next question comes from Andrew Obin with Bank of America. You may proceed with your question.

Andrew Obin -- BofA Merrill Lynch -- Analyst

Good morning. Can you hear me?

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

Yeah, we can hear you, Andrew. Good morning.

Andrew Obin -- BofA Merrill Lynch -- Analyst

Hey, hi, just a question, I think the UK authorities just published their outlook for the coronavirus impacting labor force. I think they sort of expect that for the next several months, maybe 10% of the labor force will be out sort of sick on a permanent basis. So the question is, have you guys considered what are the staffing levels at which you can continue to run your operations efficiently without material hit to margin on inefficiencies?

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

Yeah, it's a good question. Certainly, that is a challenge for all businesses. If folks are out sick, how do you replace that portion of the labor force. Certainly over time, any contract labor that's available is utilized as well as augmenting with third-party services and those are all potentially more expensive than running your business with your own people. So our goal is to keep our people as healthy and safe as possible to keep them on the job site in our facilities as long as possible, while also allowing them to take the time off to self-isolate or to get well if they're sick. So it is a balance. And Andrew, you're right, that is a cost risk that all businesses are going to face, that there's going to be some additional incremental labor costs associated with illness and with the absenteeism.

Andrew Obin -- BofA Merrill Lynch -- Analyst

Okay. And then the second question, I know you guys have, I think, a $1 billion asset-backed facility. Have you guys tapped it over the weekend?

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

We have -- we regularly draw and repay on our revolving credit facility on a daily basis. We have not drawn down the entire facility as you may have heard others have. We are keeping a buffer of cash in our account more so than we used to, but we have not drawn down the entire facility. We've got good relationship with our banks. We stay in close touch with them, and we are confident at this point that the banks will be able to meet their commitments.

Andrew Obin -- BofA Merrill Lynch -- Analyst

Terrific. Thank you so much.

Operator

Thank you. Our next question comes from Nigel Coe with Wolfe Research. You may proceed with your question.

Nigel Coe -- Wolfe Research, LLC -- Analyst

Yeah, thanks. Good morning, and thanks for the question. So Evan, I think you just kind of answered my first question, which is about maybe fortifying the balance sheet a bit more than normal. We've touched on the topic of capital deployments more so around M&A, but obviously, your stock price is $28, you've been pretty aggressive in the past. Where is your mentality right now in terms of deploying capital versus fortifying the balance sheet and maybe just put them back here, while we go through this uncertainty?

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

Yeah. Well, certainly the equity markets have been damaged by the environment, and there's certainly maybe good opportunity in the equity markets, including our own stock, which we believe is very attractively priced. And we'll weigh that against other investment opportunities as well as ensuring good cash flow discipline in an uncertain environment. But I agree with you, certainly the -- where the -- our stock prices or the stock market is in general, there may be some opportunities out there.

Nigel Coe -- Wolfe Research, LLC -- Analyst

Okay. Great. And then just a couple of data points on both FM and C&I, but before that, can you just kind of double confirm that February had no material kind of benefits from pre-buy due to China supply chain shortages or maybe some pre-buy on the foundry [Phonetic] side, but on FM, what percentage of your sales is healthcare facilities? And on C&I, do you have a breakout on the non-resi side between public and private? Thanks.

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

So your question was what percentage of our revenues is healthcare-related for Facilities Maintenance?

Nigel Coe -- Wolfe Research, LLC -- Analyst

On the FM side?

Bradley Paulsen -- President of HD Supply Facilities Maintenance

So that would be less than 10%.

Nigel Coe -- Wolfe Research, LLC -- Analyst

Okay.

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

And then I'm sorry, what was your question on C&I?

Nigel Coe -- Wolfe Research, LLC -- Analyst

Yes, C&I, do you have a breakout on the non-resi, which is about 70% of C&I, do you have a breakout between public and private?

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

We don't. We participate in both and essentially that will vary based upon the activity that's in the marketplace. So right now we are on a lot of private or a lot of public jobs like road and bridge, airport infrastructure, a lot of that activity is occurring around the country. And then on the private side, a lot of activity around sports and entertainment data centers and distribution centers.

Nigel Coe -- Wolfe Research, LLC -- Analyst

Okay. Thanks.

Operator

Thank you. Our next question comes from Patrick Baumann JP Morgan. You may proceed with your question.

Patrick Baumann -- JP Morgan Securities LLC -- Analyst

Hi, good morning everyone. Thanks for taking my question. So just first, I understand you're not seeing it yet in construction, but obviously, the market is concerned about downturn. So just wanted to see if you could offer some framework for how you'd expect business to perform. If the economy goes into recession, which would presumably drive lower non-res demand, I guess what your game plan to deal with that kind of environment, if it comes in terms of costs, etc. Maybe it will be helpful if you could provide us a framework for thinking about the incremental margins. If -- I don't know if White Cap sales go down, say 10% to 20% or something like that, that will be helpful. Thanks.

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

Yes. We're always prepared for a downturn in the markets or a recession, and we do have levers that we pulled to take cost out of the business, whether that's branch consolidation, reduction in non-customer facing activities, elimination of discretionary spend and potentially a slowdown of some investment categories. If we look at a 10% to 20% reduction in construction activity or within C&I, certainly during that period of time, we expect to take share. So, we'd expect to perform better than the average company or in that space, or better than the overall construction industry. And when we do see that, you're right, you typically do see a more highly competitive environment as folks are scrambling, trying to win the fewer projects that are out there.

So we likely would see some margin deterioration, difficult to give you a specific percentage. Every recession is different; every downturn is different; every market is different. But looking at margin decrements of a couple of hundred basis points certainly aren't out of the question, and we try to mitigate that as best we can. And the key is to take share during that period of time, so that when you get the recovery, the recovery is usually a pretty nice bounce back, snap-back, so that you are in a good position to take additional share in the recovery, because many of smaller, lesser capitalized companies don't have the credit lines or the ability to invest in receivables and inventory coming out of a downturn to support customers' needs. So we focus on being able to take advantage of those environments. We do look at reducing cost. We typically do not exit markets, so we may consolidate branches, but we don't exit markets and that's our approach in a downturn. The team that's on the field today, John and his team are the same team that navigated the last recession and they navigated it well and came back very, very strong.

Patrick Baumann -- JP Morgan Securities LLC -- Analyst

Makes sense. Thanks for the color. And real quick one, maybe a follow-up on Nigel's question. I think he was asking this question, you mentioned sanitary products and maybe even safety products is being short in supply, I think it was in FM comment earlier, just curious if you could provide perspective on what percentage of the business that represents at FM and what kind of positive lift you've seen on sales from that stuff because we've heard from other distributors of some positive lift related to safety product-related sales early in the year.

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

Yes, certainly janitorial sanitation and safety products have grown well over the last month as a result of the coronavirus effect, jan/san is a big category for us. We don't specifically disclose the sales for our individual categories, but it's, I'll say, the top 10 category and it's grown on -- in an outsized basis over the last several weeks.

Bradley Paulsen -- President of HD Supply Facilities Maintenance

The other thing that I would add to that is, it includes significantly more items than what I mentioned as far as having short supply. It is the top category like Evan said. And when we think about this month's performance, certainly seeing the outperformance you mentioned, but prior of that -- again, it wasn't a material driver to our performance.

Patrick Baumann -- JP Morgan Securities LLC -- Analyst

Okay. Makes sense. Thanks a lot guys. Appreciate your time and good luck.

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

Thank you.

Bradley Paulsen -- President of HD Supply Facilities Maintenance

Thank you.

Operator

Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back over to Joe DeAngelo for any further remarks.

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

Well, thank you for your questions. Our teams are focused on keeping our people safe and helping our customers navigate the challenging environment. Thanks for your interest in HD Supply.

Operator

[Operator Closing Remarks]

Duration: 70 minutes

Call participants:

Charlotte McLaughlin -- Investor Relations

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

Bradley Paulsen -- President of HD Supply Facilities Maintenance

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

Keith Hughes -- SunTrust Robinson Humphrey -- Analyst

David Manthey -- Robert W. Baird & Company, Inc. -- Analyst

Ryan Merkel -- William Blair & Company -- Analyst

Deane Dray -- RBC Capital Markets, LLC -- Analyst

Michael McGinn -- Wells Fargo Securities, LLC -- Analyst

John Inch -- Gordon Haskett -- Analyst

Hamzah Mazari -- Jefferies LLC -- Analyst

Jason Makishi -- Barclays Capital, Inc. -- Analyst

Andrew Obin -- BofA Merrill Lynch -- Analyst

Nigel Coe -- Wolfe Research, LLC -- Analyst

Patrick Baumann -- JP Morgan Securities LLC -- Analyst

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