Exhibit 99.1
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August 3, 2015 Lender Presentation |
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Disclaimers Forward-Looking Statements This presentation includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that the forward-looking information presented herein is not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking information contained in this presentation. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “plan,” “seek,” “comfortable with,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” or the negative thereof or variations thereon or similar terminology. A number of important factors could cause actual events to differ materially from those contained in or implied by the forward-looking statements, including those factors discussed in our filings with the U.S. Securities & Exchange Commission (the “SEC”), including our annual report on Form 10-K, for the fiscal year ended February 1, 2015 and those described from time to time in our other filings with the SEC, which can be found at the SEC’s website www.sec.gov. Any forward-looking information presented herein is made only as of the date of this presentation, and we do not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise. Non-GAAP Financial Measures HD Supply supplements its reporting net income (loss) with non-GAAP measurements, including Adjusted EBITDA, Adjusted net income (loss) and Adjusted net income (loss) per share. This supplemental information should not be considered in isolation or as a substitute for the GAAP measurements. Additional information regarding Adjusted EBITDA, Adjusted net income (loss) and Adjusted net income (loss) per share referred to in this presentation is included at the end of this presentation under “Reconciliation of Non-GAAP Measures.” |
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Agenda 1. Transaction Overview Bank of America Merrill Lynch 3. Financial Update Evan Levitt Senior Vice President and Chief Financial Officer 2. Business Update Joseph J. DeAngelo Chairman and Chief Executive Officer |
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On July 15, 2015, HD Supply, Inc. (“HDS” or the “Company”) announced it had entered into a definitive agreement to sell its Power Solutions business unit to Anixter Inc.: Power Solutions business valued at $825M, or 10.1x LTM Q1’15 Adj. EBITDA of $82M Purchase consideration will be payable in cash at closing Use of proceeds is to redeem HDS’ 11% Senior Secured 2nd Lien Notes via make-whole call redemption upon closing of the asset sale Pro forma for the divestiture, HDS LTM Q1’15 Net Sales and Adj. EBTIDA were $7,059M and $797M, respectively The transaction is expected to close in Q3’15 Prior to the asset sale closing, HDS is also seeking to execute a new $850M Term Loan B Facility to refinance its existing Term Loan B The debt redemption and refinancing transaction will allow the Company to de-lever its balance sheet, reduce its interest burden and overall cost of capital, and extend its maturity profile Pro forma, total leverage is expected to go from 6.1x to 5.8x The Company continues to experience significant operating momentum in all its business lines and end-markets—excluding the Power Solutions business, HDS expects Q2’15 year-over-year Net Sales and Adj. EBITDA growth of 6% and 12%, respectively (using the midpoint of the guidance range) 1 Assumes make-whole call premium of 111.000 based on settlement date of 10/1/15 ($ in millions) x Sources of Funds Uses of Funds New Term Loan B $850 Refinance Existing Term Loan B $959 Net Proceeds from Asset Sale 800 Repay Existing 2nd Lien Notes 675 Cash from Balance Sheet 68 Make-whole Call Premium1 74 Estimated Fees & Expenses 10 Total Sources $1,718 Total Uses $1,718 Transaction Overview Extended Maturity with Similar Terms and Asset Sale Covenant Flexibility |
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Pro Forma Capitalization Overview Capitalization Coupon / Rate Maturity 5/3/2015 Adj. As Adj. Cash & Cash Equivalents $155 (68) $87 ABL Revolver ($1,500) L + 150 bps 6/28/18 $215 215 Term Loan B1 L + 300 bps 6/28/18 959 (959) -- New Term Loan B TBD 6 years -- 850 850 Senior Secured 1st Lien Notes 5.250% 12/15/21 1,250 $1,250 Total First Lien Debt $2,424 $2,315 Total Secured Debt $3,099 $2,315 Senior Notes due 2020 11.500% 7/15/20 1,000 1,000 Senior Notes due 2020 7.500% 7/15/20 1,275 1,275 Total Debt $5,374 $4,590 Market Value of Equity (as of 7/31/15) $7,142 $7,142 Total Capitalization $12,516 $11,732 Operating Statistics LTM Adj. EBITDA $879 (82) $797 Annual Cash Interest Payments 402 (76) 326 Capital Expenditures 115 115 Credit Statistics First Lien Debt / Adj. EBITDA 2.8x 2.9x Secured Debt / Adj. EBITDA 3.5x 2.9x Total Debt / Adj. EBITDA 6.1x 5.8x Net Debt / Adj. EBITDA 5.9x 5.6x Adj. EBITDA / Annual Cash Interest Payments 2.2x 2.4x (Adj. EBITDA - CapEx) / Annual Cash Interest Payments 1.9x 2.1x Senior Secured 2nd Lien Notes 11.000% 4/15/20 675 (675) -- ($ in millions) 1 Exclusive of $13M Unamortized Discount Pro Forma Metrics Improve Post Transaction |
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Extended Maturity with Similar Terms and Asset Sale Covenant Flexibility Term Loan B Summary Terms Borrower: HD Supply, Inc. Guarantors: Substantially all existing and future direct and indirect wholly-owned U.S. restricted subsidiaries of the Borrower (Same as existing) Security: First priority interest in substantially all assets and stock, other than the ABL Priority Collateral, and second priority interest in the ABL Priority Collateral (Same as existing) Principal Amount: $850 million Maturity: 6 years (2021) Amortization: 1.0% per annum Optional Prepayments: 101 ‘soft call’ protection for 6 months; pre-payable at par thereafter Financial Covenant: None (same as existing) Asset Sale Covenant: Ability to direct proceeds of the Asset Sale and a separate $500 million basket of non-reinvested asset sale proceeds for prepayment, repayment or repurchase of any indebtedness (other than subordinated debt)1 1 Current Term Loan B Credit Agreement allows up to $150 million of asset sale proceeds be used to de-lever in any order of seniority |
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Transaction Timeline Date Event August 3rd Lender Call (1:00pm ET) Dial-In Domestic: (800) 399-3872 International: (706) 679-6788 Passcode: 95771081 August 6th Commitments Due Week of August 10th Close and Fund Sun Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat 1 2 3 4 1 5 6 7 8 9 10 11 2 3 4 5 6 7 8 12 13 14 15 16 17 18 9 10 11 12 13 14 15 19 20 21 22 23 24 25 16 17 18 19 20 21 22 26 27 28 29 30 31 23 24 25 26 27 28 29 30 31 Bank Holiday Key Date July 2015 August 2015 Targeting Close and Fund Week of August 10th |
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Agenda 1. Transaction Overview Bank of America Merrill Lynch 3. Financial Update Evan Levitt Senior Vice President and Chief Financial Officer 2. Business Update Joseph J. DeAngelo Chairman and Chief Executive Officer |
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Company Overview (Ex. Power Solutions) Leading Industrial Distributor Specializing in MRO, Infrastructure and Construction $7.1 Billion of LTM Q1’15 Net Sales; $797 Million of LTM Q1’15 Adjusted EBITDA (11% of Net Sales) Leading Industrial Distributor With #1 Positions1 in Large, Fragmented Markets Specialized Business Units Providing Diversity in Products, Customers, and Vendor Relationships ~800,000 SKUs ~500,000 Customers Scale, National Presence and Local Market Expertise Drive Competitive Advantage ~540 Locations, 48 U.S. States and 6 Canadian Provinces2 Combination of Distribution Center and Branch-Based Operating Models Talent with Deep, Relevant Experience Driving Speed and Precision National Footprint Net Sales by End Market3 Maintenance, Repair and Operations 36% Residential Construction 18% Non-Residential Construction 25% Infrastructure and Other 21% $6.9B 1 Management Estimates Based on Market Data and Industry Knowledge 2 As of Fiscal 2014 3 For 2014; Excludes Canada |
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Leading Industrial Distributor Specializing in MRO, Infrastructure and Construction Business Unit Overview (Ex. Power Solutions) Product Offering Customer Profile LTM Q1 ’15 Sales ($ in billions) (Adj. EBITDA%) Market Size1 “Maintenance, Repair and Operations” Maintenance Professional Fixing Problems in Apartment Units, Hotel/Motels, Healthcare and Senior Care Living Facilities, Institutions (Universities, Government Buildings), Industrial Facilities (Water Treatment Plants) $2.5B (20%) $51B 5% Share “Infrastructure” Professional Contractors Specializing in Underground Water and Wastewater System Configuration Performing Work on Behalf of Municipalities, Non-residential and Residential Builder/Developers Fire Protection Contractors $2.4B (8%) $11B 21% Share “Specialty Construction” Specialty Contractors Buying Product for Use in Non-residential and Residential New Construction $1.5B (8%) $21B 7% Share 1 Management estimates based on Market Data and Industry Knowledge; Market Size for 2014 Go-to-Market Channels DC-based Model (No Branch-based Sales) Outside and Inside Sales Representatives Catalog and Call Center Order Taking Online Ordering (~45% of Sales) – hdsupplysolutions.com Branch-based Sales (i.e. Nationally) Outside Sales Representatives Inside Sales Representatives Branch-based Sales (i.e., “Walk In” Sales, Nationally) Outside and Inside Sales Representatives Catalog Ordering Online Ordering (~1% of Sales) – whitecap.com Mobile Application (<1% of Sales) – “Speed Build” Plumbing, HVAC, Electrical, Lighting, Conduit, Wire, Appliances, Hardware, Janitorial/cleaning, Floor and window coverings, Millwork, Tools, Safety and signage, Paint and sundries Pipe, Valves, Hydrants, Fittings, Restraints, Automated Metering Systems, Backflow Devices, Fire protection Products, Storm Water Retention, Treatment Plant Service, Tools and Equipment, Wire and Conduit Fasteners and Fastening Systems, Building Materials, Tools, Jobsite Supplies, Safety, Equipment, Measuring/Marking, Hand Tools, Concrete Forming, Chemicals, Waterproofing, Pipes/Drains, and Wire |
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Power Solutions Divestiture Overview Simplify and Focus Business Mix to Accelerate Profitable Growth; Enhance Capital Structure with Debt Reduction Strategic Rationale Improves Ability to Profitably Grow in Excess of End Market Growth Estimates Enhances Financial Profile with Simplified Business Mix Accelerates Continued Enhancement of Capital Structure Continued Diverse Exposure to Attractive End Markets Enables Focused Deployment of Resources and Talent on Most Impactful Value Creation and Growth Activities Enables Continuous Improvement via Evolution of Talent Alignment and Functional Support Strategies Power Solutions Overview Leading provider of a diverse product and service offering serving investor owned utility, public power, construction and industrial markets Adj. EBITDA Net Sales ’10A ’11A ’12A ’13A ’14A LTM Q1 ’15 13% CAGR $49M $50 $72 $76 $79 $82M $1,462 $1,625 $1,787 $1,843 $1,913 $1,951 VPY%1 3.7% 11.1% 7.8% 5.3% 3.8% 5.9% Adj. EBITDA % 3.4% 3.1% 4.0% 4.1% 4.1% 4.2% ($ in millions) 1 Growth Rates Shown on a 52 Week Basis |
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LTM Q1’15 Revised Financial Performance Accretive Transaction Enhanced Profitable Growth in Excess of Market ($ in millions, expect per share amounts) LTM Q1’15 Significant Improvement of HD Supply Financial Profile Power Solutions will be Reflected as a Discontinued Operation for all Periods Beginning in Q2’15 See Appendix for Additional Disclosure ~$800M of Net Sale Proceeds Transaction Accretive The Decrease in Adjusted EPS will be Fully Recovered through a Reduction in Interest Expense from the Expected Redemption of Senior Secured 2nd Lien Notes Gross Profit Net Sales1 % Net sales Adj. EBITDA Operating Income Adj. EPS, diluted2 % Net sales % Net sales YOY Growth Net Sales Adj. EBITDA Actuals $9,009 $2,604 28.9% $879 9.8% $669 7.4% $1.41 8.0% 16.0% Revised $7,059 $2,307 32.7% $797 11.3% $617 8.7% $1.05 8.6% 16.7% Change ($1,950) ($297) +380 BPs ($82) ($52) +130 BPs ($0.36) +60 BPs +70 BPs 1 Sales Revised for Intercompany Sales 2 Q1’15 Adjusted Net Income per Share range assumes a fully diluted weighted average share count of 201 million +150 BPs |
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Market Estimates and Execution Targets No Change to End Market Outlook or Long-term Controllable Execution Targets 1 Management estimates, including 50 – 150 basis point of potential negative impact from Oil and Gas 2 Long-term average growth target based on management estimates and aspirations 3 Operating Leverage is defined as Adjusted EBITDA growth divided by Total Net sales growth; target based on management estimates and projections. (Approximate End Market Exposure1) Residential Water Infrastructure MRO Primary End Market Flat to Up Low Single-digit Non- Residential ~3% to ~4% FY’15 End Markets +1% to +2% Previous View1 as of Jun. ’15 +1% to +2% Current View1 as of Jul. ’15 Mid to High Single-digit Mid Single-digit Mid Single-digit Mid to High Single-digit Flat to Up Low Single-digit ~3% to ~4% Revision None None None None None Reaffirm HD Supply Controllable Execution Targets: +300 Basis Points of Growth Above End Market Growth Estimates2 1.5x – 2.0x Operating Leverage3 |
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Controllable Execution Affirm +300 Basis Points Above Market Estimate Target 1 Long-term average growth target based on management estimates and projections +200 BPs to +500 BPs +300 BPs Long-term Growth Above Market Estimate Targets1 +200 BPs to +500 BPs +200 BPs to +500 BPs (BPs Above BU End Market Estimate) Sell More to Existing Customers (i.e., Share of Wallet) Introduce New Products and Services Expand the Channels to Reach Our Customers (e.g., Internet, Catalog, Mobility) Acquire New Customers Enter New Geographies (i.e., Open New Locations) Five Growth “Plays” |
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In-Focus Topics Focused on Controllable Execution Deflationary Environment Pricing & Op. Leverage End Markets Capital Structure Weather No Material Change in Deflationary Environment in Q1’15 Disciplined Inventory Management to Mitigate Impact of Depreciating Inventory No Material Change in Pricing Environment in Q1’15 1.5x to 2.0x Operating Leverage Target1 No Change in 2015 End Market Growth Estimate of ~3% to 4%2 Non-Residential – Continued Momentum; Residential – Prolonged Recovery; Water Infrastructure – Sluggish; MRO – Stable Foreign Exchange 1% Canadian Exposure3 20 Basis Points of Negative Currency Impact in Q1’15 Oil & Gas Impact No Current Broad-Based Impact Experienced Some Weakness with Select Products and Customers with Direct Oil & Gas Exposure in Q1’15 Oct. 2016 Call Dates for $2,275M of 7.5% ($1,275M) and 11.5% ($1,000M) Senior Unsecured Notes Continuously Evaluate Opportunities to Enhance Capital Structure ~100 Basis Points of Unfavorable Sales Impact due to Adverse Weather in Q1’15 Waterworks: ~300 Basis Points of Unfavorable Impact in Q1’15 Facilities Maintenance: ~70 Basis Points of Unfavorable Sales Impact in Q1’15 1 Operating Leverage is defined as Adjusted EBITDA growth divided by total Net sales growth 2 Market estimate is management estimate of the growth of our end markets based on multiple quantitative and qualitative inputs 3 Based on percentage of overall Net Sales 1 2 3 4 5 6 7 |
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Agenda 1. Transaction Overview Bank of America Merrill Lynch 3. Financial Update Evan Levitt Senior Vice President and Chief Financial Officer 2. Business Update Joseph J. DeAngelo Chairman and Chief Executive Officer |
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Historical Financial Performance (Ex. Power Solutions) Strong Historical Adj. EBITDA Growth 26% Adj. EBITDA CAGR from ’10 to ’14 Driven by 100 BPs of Gross Margin Expansion from Category Management and Other Accretive Initiatives Invest in Growth Execute Five (5) Growth Plays Sell More to Existing Customers (i.e., Share of Wallet) Introduce New Products and Services Expand the Channels to Reach Our Customers (e.g., Internet, Catalog, Mobility) Acquire New Customers Enter New Geographies (i.e., Open New Locations) Deliver Operating Leverage Execute Category Management, Save as We Grow, Focus Resources on Highest Impact Growth Activities Generate Cash Accelerate Debt Reduction Enhance Business Mix and Evolve as a Public Company ($ in millions) 14.2% 11.0% VPY%1 n/a 9.4% ’10A ’11A ’12A ’13A ’14A Adj. EBITDA Margin % 10.3% 9.4% 7.9% 6.6% $306M $396 $553 $658 $775M 26% CAGR Gross Margin % 32.6% 32.1% 31.8% 31.5% Gross Margin $ $2,080 $1,881 $1,603 $1,450 9.1% 11.1% 32.5% $2,264 Adj. EBITDA (’10 - ’14) 1 FY’12 contained a 53rd week of operations, which accounted for an incremental $107M in Sales; Growth rates presented on a 52-Week Basis 2 Unlevered Pre-Tax Free Cash Flow Less Capital Expenditures (Net of PP&E Sales Proceeds) and Other Non-Operating Cash Payments; Not Restated Net Sales $6,387 $5,861 $5,038 $4,605 $6,970 Net Sales $8,228 $7,647 $6,661 $6,065 $8,882 Adj. EBITDA $734 $624 $447 $355 $854 Including Power Solutions Free Cash Flow2 $431 $351 $94 $658 $679 Cash Interest $527 $621 $356 $363 $456 V ’10 +450 BPs +100 BPs $814 $2,365 $2,817 $499 $21 $93 +$469M Adj. EBITDA Margin % 8.9% 8.2% 6.7% 5.9% 9.6% +370 BPs |
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Q1’15 $635M $122M 2.3x Q1’14 $604M $109M VPY +5% +12% Q1’15 Segment Performance (Ex. Power Solutions) Adj. EBITDA Operating Leverage1 Net Sales ($ in millions) Broad-Based Strength 1 Operating Leverage is defined as Adjusted EBITDA growth divided by total Net sales growth Note: “VPY” denotes Versus Prior Year $570M $45M 2.9x $551M $41M +3% VPY +10% Q1’15 Q1’14 $388M $32M 3.6x $344M VPY +13% +45% $22M Q1’15 Q1’14 |
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+15% +9% +8% +5% Consistent with Previous Q2’15 Outlook Adjusted for Expected Power Solutions Sale $2,021M $1,966M $224M $1,880M $257M $245M VPY Q2’14 Q2’15 Q2’14 Q2’15 Q2’15 Net Sales Adj. EBITDA Adj. Net Income Per Diluted Share1 VPY 1 Q2’15 Adjusted Net Income per Share range assumes a fully diluted weighted average share count of 201 million Note: “VPY” denotes Versus Prior Year $0.56 $0.50 VPY ($ in millions, except per share amounts) $0.35 . . . . Q2’14 +60% +43% Midpoint $1,994M +6% $251M +12% $0.53 +51% Q2’15 Guidance (Ex. Power Solutions) |
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Investment Themes Trusted Local Execution, Market and Product Knowledge, Customer Relationships Based on Reliability of Service, and Supplier Alignment Based on Performance #1 Positions with ~8% Share in Estimated ~$80 Billion Fragmented Market MRO, Infrastructure and Construction End Market Exposure with Sequential, Overlapping Growth Strategic High Return Growth Investments Which We Believe Will Deliver Growth in Excess of Estimated Market Growth Focused on Getting Better and Faster Through Team Work, Process Excellence and Trusted Relationships Leading Industrial Distributor Specializing in MRO, Infrastructure and Construction |
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Appendix |
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FY’15 YTD Results Adjusted for Power Solutions ($ in millions, except per share amounts) Net Sales Cost of sales Gross Profit Gross margin Operating expenses: Selling, general and administrative Depreciation and amortization Total operating expenses Operating Income Interest expense Income from Continuing Operations Before Provision (Benefit) for Income Taxes Provision (benefit) for income taxes Income from Continuing Operations Income from discontinued operations, net of tax Net Income Adjusted EBITDA Adjusted net income Diluted shares outstanding Adjusted net income per diluted share 2,221 1,572 649 29.2% 447 35 482 167 106 61 (181) 242 - 242 208 66 200.7 0.33 $ $ $ $ $ AS REPORTED Q1-15 REVISION FOR POWER SOLUTIONS (499) (424) (75) 410 bps (56) (7) (63) (12) - (12) (2) (10) 10 - (20) (16) - (0.08) $ $ $ $ Q1-15 1,722 1,148 574 33.3% 391 28 419 155 106 49 (183) 232 10 242 188 50 200.7 0.25 $ $ $ $ $ REVISED Q1-15 |
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Reconciliation of Non-GAAP Measures: Net Income to Adjusted EBITDA and Net Income to Adjusted Net Income ($ in millions, except per share amounts) 1 During the first quarter of fiscal 2015, the company recorded a reduction in unrecognized tax benefits as a result of IRS and state audit settlements. AS REPORTED REVISION FOR POWER SOLUTIONS REVISED Q1-15 Q1-15 Q1-15 Net income 242 $ - $ 242 $ Less Income from discontinued operations, net of tax - 10 10 Income (loss) from continuing operations 242 (10) 232 Interest expense 106 - 106 Provision (benefit) for income taxes1 (181) (2) (183) Depreciation & Amortization 36 (7) 29 Restructuring - - - Stock-based compensation 5 - 5 Other - (1) (1) Adjusted EBITDA 208 $ (20) $ 188 $ Net income 242 $ - $ 242 $ Less Income from discontinued operations, net of tax - 10 10 Income from continuing operations 242 (10) 232 Provision (benefit) for income taxes1 (181) (2) (183) Cash income taxes (3) - (3) Amortization of acquisition-related intangible assets (other than software) 8 (4) 4 Adjusted net income 66 $ (16) $ 50 $ |
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Reconciliation of Non-GAAP Measures: Net Income to Adjusted EBITDA and Net Income to Adjusted Net Income ($ in millions, except per share amounts) 1 Cash income taxes paid in third quarter 2014 exclude a $27 million payment for the settlement of the IRS's audit of the Company's U.S. federal income Tax returns filed for the tax years ended February 3, 2008 and February 1, 2009. Q2-14 Q3-14 Q4-14 Q1-15 LTM Q2-14 Q3-14 Q4-14 Q1-15 LTM Q2-14 Q3-14 Q4-14 Q1-15 LTM Net income (loss) 48 $ 60 $ (93) $ 242 $ 257 $ - $ - $ - $ - $ - $ 48 $ 60 $ (93) $ 242 $ 257 $ Less Income (loss) from discontinued operations, net of tax 6 6 3 - 15 11 14 6 10 41 17 20 9 10 56 Income (loss) from continuing operations 42 54 (96) 242 242 (11) (14) (6) (10) (41) 31 40 (102) 232 201 Interest expense 116 115 114 106 451 - - 1 - 1 116 115 115 106 452 Provision (benefit) for income taxes 19 30 6 (181) (126) (3) (2) (5) (2) (12) 16 28 1 (183) (138) Depreciation & Amortization 62 54 37 36 189 (7) (6) (7) (7) (27) 55 48 30 29 162 Restructuring 4 - - - 4 (1) - - - (1) 3 - - - 3 Stock-based compensation 4 3 5 5 17 - - - - - 4 3 5 5 17 Loss on extinguishment & modification of debt - - 106 106 - - - - - - 106 106 Costs related to Holdings' public offerings - 1 - 1 - - - - - 1 - 1 Other (1) (4) - - (5) - (1) - (1) (2) (1) (5) - (1) (7) Adjusted EBITDA 246 $ 253 $ 172 $ 208 $ 879 $ (22) $ (23) $ (17) $ (20) $ (82) $ 224 $ 230 $ 155 $ 188 $ 797 $ Net income (loss) 48 $ 60 $ (93) $ 242 $ 257 $ - $ - $ - $ - $ - $ 48 $ 60 $ (93) $ 242 $ 257 $ Less Income (loss) from discontinued operations, net of tax 6 6 3 - 15 11 14 6 10 41 17 20 9 10 56 Income (loss) from continuing operations 42 54 (96) 242 242 (11) (14) (6) (10) (41) 31 40 (102) 232 201 Provision (benefit) for income taxes 19 30 6 (181) (126) (3) (2) (5) (2) (12) 16 28 1 (183) (138) Cash income taxes1 (6) (3) (2) (3) (14) - - - - - (6) (3) (2) (3) (14) Amortization of acquisition-related intangible assets (other than software) 32 26 9 8 75 (5) (5) (5) (4) (19) 27 21 4 4 56 Loss on extinguishment & modification of debt - - 106 106 - - - - - - 106 106 Restructuring 4 - - 4 (1) - - (1) 3 - - 3 Costs related to Holdings' public offerings - 1 - 1 - - - - - 1 - 1 Other - (5) - (5) - - - - - (5) - (5) Adjusted net income 91 $ 103 $ 23 $ 66 $ 283 $ (20) $ (21) $ (16) $ (16) $ (73) $ 71 $ 82 $ 7 $ 50 $ 210 $ REVISION FOR POWER SOLUTIONS AS REPORTED REVISED - - - - - - - - - - - - - - - - - - |
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Reconciliation of Non-GAAP Measures: Net Income to Adjusted EBITDA, Revised for Power Solutions ($ in millions) Net income (loss) Less income (loss) from discontinued operations, net of tax Income (loss) from continuing operations Interest expense, net Provision for income taxes Depreciation and amortization1 Loss on extinguishment & modification of debt2 Restructuring charges3 Stock-based compensation Management fee & related expenses paid to Equity Sponsors4 Costs related to public offerings5 Other Adjusted EBITDA Fiscal year ended February 1, 2015 $ 3 45 (42) 462 42 186 108 6 17 - 2 (6) $ 775 February 2, 2014 $ (218) 34 (252) 528 44 207 87 6 16 2 20 - $ 658 February 3, 2013 $ (1,179) (34) (1,145) 658 26 284 709 - 16 5 - - $ 553 January 29, 2012 $ (543) 64 (607) 639 67 274 - - 20 5 - (2) $ 396 January 30, 2011 $ (619) 31 (650) 623 20 284 5 8 17 5 - (6) $ 306 1 Depreciation and amortization includes amounts recorded within Cost of sales in the Consolidated Statements of Operations. 2 Represents the loss on extinguishment of debt including the premium paid to repurchase or call the debt as well as the write-off of unamortized deferred financing costs and other assets or liabilities associated with such debt. Also includes the costs of debt modification. 3 Represents the costs incurred for workforce reductions and branch closure or consolidations. These costs include occupancy costs, severance, and other costs incurred to exit a location.. 4 The Company entered into consulting agreements with the Equity Sponsors whereby the Company paid the Equity Sponsors a $5 million annual aggregate management fee and related expenses. These consulting agreements were terminated in conjunction with Holdings’ initial public offering in the second quarter of fiscal 2013. 5 Represents the costs expensed in connection with the Company’s public offerings. All of the shares of common stock sold in fiscal 2014 public offerings were sold by certain of the Company’s stockholders. The Company did not receive any of the proceeds from the sale of such shares. Amount in fiscal 2013 represents the costs expensed in connection with the Company’s initial public offering, including approximately $18 million paid to the Equity Sponsors in the second quarter of fiscal 2013 for termination of the consulting agreements. See” Note 2, Public Offerings,” in the Notes to the Consolidated Financial Statements within Item 8. Financial Statements and Supplementary Data of our annual report on Form 10-K, for the fiscal year ended February 1, 2015 |
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Reconciliation of Non-GAAP Measures: Net Income to Adjusted EBITDA, Not Revised for Power Solutions ($ in millions) Net income (loss) Less income (loss) from discontinued operations, net of tax Income (loss) from continuing operations Interest expense, net Provision for income taxes Depreciation and amortization1 Loss on extinguishment & modification of debt2 Restructuring charges3 Stock-based compensation Management fee & related expenses paid to Equity Sponsors4 Costs related to public offerings5 Other Adjusted EBITDA 2015 $ 3 7 (4) 461 56 212 108 7 17 - 2 (5) $ 854 2014 $ (218) 3 (221) 528 58 232 87 12 16 2 20 - $ 734 2013 $ (1,179) (68) (1,111) 658 39 309 709 - 16 5 - (1) $ 624 2012 $ (543) 46 (589) 639 75 298 - - 20 5 - (1) $ 447 2011 $ (619) 15 (634) 623 28 308 5 8 17 5 - (5) $ 355 1 Depreciation and amortization includes amounts recorded within Cost of sales in the Consolidated Statements of Operations. 2 Represents the loss on extinguishment of debt including the premium paid to repurchase or call the debt as well as the write-off of unamortized deferred financing costs and other assets or liabilities associated with such debt. Also includes the costs of debt modification. 3 Represents the costs incurred for workforce reductions and branch closure or consolidations. These costs include occupancy costs, severance, and other costs incurred to exit a location. In addition, the fiscal 2013 charges include $3 million of inventory liquidation charges recorded within Cost of sales in the Consolidated Statements of Operations. 4 The Company entered into consulting agreements with the Equity Sponsors whereby the Company paid the Equity Sponsors a $5 million annual aggregate management fee and related expenses. These consulting agreements were terminated in conjunction with Holdings’ initial public offering in the second quarter of fiscal 2013. 5 Represents the costs expensed in connection with the Company’s public offerings. All of the shares of common stock sold in fiscal 2014 public offerings were sold by certain of the Company’s stockholders. The Company did not receive any of the proceeds from the sale of such shares. Amount in fiscal 2013 represents the costs expensed in connection with the Company’s initial public offering, including approximately $18 million paid to the Equity Sponsors in the second quarter of fiscal 2013 for termination of the consulting agreements. See” Note 2, Public Offerings,” in the Notes to the Consolidated Financial Statements within Item 8. Financial Statements and Supplementary Data of our annual report on Form 10-K, for the fiscal year ended February 1, 2015 Fiscal year ended February 1, February 2, February 3, January 29, January 30, |
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Reconciliation of Non-GAAP Measures: Cash Flow from Operating Activities to Free Cash Flow ($ in millions) 1 Cash paid for income taxes in fiscal 2014, excludes a $27 million payment for the settlement of the IRS’s audit of the Company’s U.S. federal income tax returns filed for the tax years ended on February 3, 2008 and February 1, 2009. 2 The Company entered into consulting agreements with the Equity Sponsors whereby the Company paid the Equity Sponsors a $5 million annual aggregate management fee and related expenses. These consulting agreements were terminated in conjunction with Holdings’ initial public offering in the second quarter of fiscal 2013. 3 Represents the costs expensed in connection with the Company’s public offerings. All of the shares of common stock sold in fiscal 2014 public offerings were sold by certain of the Company’s stockholders. The Company did not receive any of the proceeds from the sale of such shares. Amount in fiscal 2013 represents the costs expensed in connection with the Company’s initial public offering, including approximately $18 million paid to the Equity Sponsors in the second quarter of fiscal 2013 for termination of the consulting agreements. See” Note 2, Public Offerings,” in the Notes to the Consolidated Financial Statements within Item 8. Financial Statements and Supplementary Data of our annual report on Form 10-K, for the fiscal year ended February 1, 2015 Fiscal year ended February 1, 2015 February 2, 2014 February 3, 2013 January 29, 2012 January 30, 2011 Cash flow from operating activities Cash interest paid Payment of PIK interest & discounts upon extinguishment of debt Cash paid (refunds received) for income taxes1 Free Cash Flow 551 $ 363 - (216) 658 $ (165) $ 356 - 5 94 $ (681) $ 621 502 1 Other 351 $ (367) $ 527 364 8 431 $ 295 $ 456 1 39 Capital expenditures Proceeds from sales of property and equipment Management fee & related expenses paid to Equity Sponsors2 (49) 4 5 (115) 4 5 (115) 17 5 (131) 8 2 (119) 5 - Costs related to public offerings3 - - - 20 2 679 $ - 4 1 - - |
