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EX-99.1 - EX-99.1 - HD Supply Holdings, Inc. | a16-6332_1ex99d1.htm |
8-K - 8-K - HD Supply Holdings, Inc. | a16-6332_18k.htm |
Exhibit 99.2
2015 Fourth-Quarter and Fiscal Year Performance March 15, 2016 Financial Results and Company Highlights
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 based on managements beliefs and assumptions and information currently available to management and 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 in this press release is not a guarantee of future results, and that actual results may differ materially from those made in or suggested by the forward-looking information contained in this press release. 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 Risk factors in our annual report on Form 10-K, for the fiscal year ended February 1, 2015 and to the Form 10-K for the fiscal year ended January 31, 2016 expected to be filed within approximately one week and those described from time to time in our, and HD Supply, Inc.s, other filings with the U.S. Securities and Exchange Commission, which can be found at the SECs website www.sec.gov. Any forward-looking information presented herein is made only as of the date of this press release, 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 financial results that are determined in accordance with accounting principles generally accepted in the United States of America (GAAP) with non-GAAP measurements, including Adjusted EBITDA, Adjusted net income (loss) and Adjusted net income (loss) per share and Free Cash Flow. 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.
FY15 Execution Highlights Strategic and Disciplined Execution 1 Operating Leverage is defined as Adjusted EBITDA growth divided by total Net sales growth 2 Management estimate; market estimate is management estimate of the growth of our markets based on multiple quantitative and qualitative inputs Note: VPY denotes Versus Prior Year +6% Sales Growth Versus Prior Year (VPY) +13% Adjusted EBITDA Growth VPY 2.2x Operating Leverage1 +93% Adjusted Net Income per Diluted Share Growth VPY +300 to +400 Basis Points Versus Market Growth Estimate2 +70 Basis Points Gross Margin Improvement VPY $336M Free Cash Flow +91% VPY 4.6x Net Debt/Adjusted EBITDA ~1.5x Reduction VPY
Q415 Execution Highlights Strategic and Disciplined Execution 1 Operating Leverage is defined as Adjusted EBITDA growth divided by total Net sales growth 2 Management estimate; market estimate is management estimate of the growth of our markets based on multiple quantitative and qualitative inputs Note: VPY denotes Versus Prior Year +7% Sales Growth Versus Prior Year (VPY) +8% Adjusted EBITDA Growth VPY 1.1x Operating Leverage1 $0.27 Adjusted Net Income per Diluted Share +$0.24 increase VPY +300 to +400 Basis Points Versus Market Growth Estimate2 +50 Basis Points Gross Margin Improvement VPY Reversal of Valuation Allowance on Net Deferred Tax Assets
FY15 Execution Examples +100 Customer Facing Associates 55% e-Commerce Penetration, +5 Pts VPY 15% Proprietary Brand Penetration, +1 Pt VPY 13% Property Improvement Penetration, +1 Pt VPY Aligned Senior Leadership Controllable Execution +130 Customer Facing Associates +80% National Account Growth VPY ~420 Sales and Ops. Associates Trained (15% of Waterworks Associates) 10% Reduction in Reportable Injuries Customer-centric IT Enhancements +70 Customer Facing Associates 74% of Branches Double-Digit Adj. EBITDA %, +12 Pts VPY +15% Sales VPY in Top Performing Region Career Development and Training Programs +7% Sales VPY in Canada1 Sale of Power Solutions Enhanced Capital Structure Debt and Interest Rate Reduction Moodys and S&P Credit Upgrades Planned HD Supply Leadership Development Center 1 Constant Currency Basis
16 Execution Imperatives Invest in Five (5) Growth Plays to Deliver Growth in Excess of Market 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 Generate Cash Accelerate Debt Reduction Disciplined People, Thought and Action
Topics of Recent Investor Interest Focused on Controllable Execution Topic Consideration Financial Leverage Capital Structure Optionality End Markets Scenario Planning Cash Flow Characteristics Oil and Gas Flint, Michigan Weather 4.6x Net Debt / Adjusted EBITDA 1.5x VPY $1B 11.5% Unsecured Notes in Focus FM: 60% of HDS FY15 Adjusted EBITDA Relevant Experience and Execution Levers ~$2B FCF 07 10 and Enhanced Business Mix Consistent with 15 Expectations No Incremental Near-term Demand Opportunity Marginal Benefit in Q415
Q415 Financial Results $1,543M $1,648M +7% Gross Profit Gross Margin % Operating Income Adj. EBITDA % Op. Income % $507M $551M 32.9% 33.4% $155M $167M $120M $130M 10.0% 10.1% 7.9% +9% +50 BPs +10 BPs +8% ($ in millions, except per share data) $7M $55M +8% Net Sales 1 See appendix slides 27 and 28 for a reconciliation of Adjusted EBITDA and Adjusted Net Income (Loss) to Net Income (Loss) 2 Management estimate; market estimate is management estimate of the growth of our markets based on multiple quantitative and qualitative inputs 3 Operating Leverage is defined as Adjusted EBITDA growth divided by total Net sales growth Note: VPY denotes Versus Prior Year Q414 Adj. EBITDA1 VPY Adj. Net Income1 7.8% +10 BPs Q415 $0.03 $0.27 +$0.24 Per Diluted Share +$105M nm 300 to 400 Basis Points in Excess of Market Growth Estimate2 +50 Basis Points Gross Margin Improvement VPY +8% Adjusted EBITDA Growth VPY 1.1x Operating Leverage3 Focused on Controllable Execution
Q415 and FY15 Segment Results Q415 FY15 $606M $2,690M Q415 FY15 $533M $2,510M Q415 FY15 $399M $1,733M +8% +7% Adj. EBITDA $102M $529M Sales Growth % Growth (2%) +8% Op. Leverage nm 1.1x +3% +3% $41M $222M +14% +12% 4.2x 3.6x +12% +10% $30M $160M +50% +38% 4.1x 3.6x Net Sales ($ in millions) Broad Based Strength
Valuation Allowance and Taxes Momentum Valuation Allowance Reversed ~$1B Valuation Allowance on Deferred Tax Assets Reversal Determined Based on Recent Performance and Future Earnings Projections More Likely than Not to Realize the Majority of Deferred Tax Assets $930M Net Tax Benefit in Q415 Reflects Usage of Portion of Net Operating Loss Carryforward Associated with Income Taxes Payable for 2015 Tax Considerations ~$2B Gross Federal Net Operating Loss Carryforward as of FYE15 ~$800M Tax-Affected Federal and State NOLs1 Cash Taxes $16M in FY152 $15M to $25M in FY16 GAAP Tax Rate Expected to Normalize at ~39% in FY16 1 In 2014, we experienced an ownership change as defined in Section 382 of the Internal Revenue Code of 1985, as amended. For a discussion of the risk of a change of control on our tax net operating losses, see the risk factor entitled Our NOL carryforwards could be limited if we experience an ownership change as defined in the Internal Revenue Code in our Form 10-K for the fiscal year ended February 1, 2015 2 Excludes the impact of any discrete events
Capital Structure and Free Cash Flow $4.0B Net Debt at the End of Q415 4.6x Net Debt to Adjusted EBITDA Ratio 1.5x Versus FY14 $336M Free Cash Flow1 in FY15, +91% VPY $25M Capital Expenditures in Q415 $86M FY15 1.2% of Sales in FY15 1.3% 1.4% of Sales in FY16 Evolution to SG&A Expense Versus Capex $4.0B Net Debt FYE15 Debt Balances Net Debt Less Cash Total Gross Debt Facility Maturity Interest Rate2 Sec. ABL 6/28/18 n/a Sec. 1st Lien Notes 12/15/21 5.25% 12/15/17 Unsec. Sr. Notes 7/15/20 11.5% 10/15/16 Unsec. Sr. Notes 7/15/20 7.5% 10/15/16 Soft Call Date3 1 GAAP free cash flow from operating activities less capital expenditures 2 Represents the stated rate of interest, without including the effect of discounts or premiums 3 Subject to applicable redemption price terms 4 Represents the unamortized portion of discounts and deferred financing costs ($ in millions, unless otherwise noted) Sec. Term Loan 8/13/21 3.75% now Less Discount4 Less Deferred Debt Costs4 Total Gross Debt $4,042 (269) $4,373 Balance $ 1,250 1,000 1,275 848 (11) (51) $4,311
Q415 Monthly Organic Average Daily Sales (%) +7% Q415 Average Daily Sales Growth +9% Preliminary February Average Daily Sales Growth 1 Adjusted for Acquisitions and Divestitures Note: VPY denotes Versus Prior Year 6.3% (0.9%) 8.6% 8.8% Feb. 9.5% 6.4% 12.2% 12.2% 15 Selling Days 24 20 19 7.8% 17.4% Facilities Maintenance Waterworks Construction & Industrial (Preliminary) 6.0% 11.4% 4.1% 7.4% 3.9% 10.4% 18 8.5% 4.7% Nov. Dec. Jan. Prior Year $608M $520M $506M HD Supply Net Sales $534M 8.3% 9.2% 14 Selling Days 24 20 19 18 Q415 2.9% 3.3% 13.4% $478M 7.3% 12.3% 13.4% $583M 7.0% 9.1% 11.8% $456M 7.5% 7.4% 15.0% $504M HD Supply Average Daily Sales Growth VPY1 16 Selling Days 23 20 20 18 Current Year
+14% +9% +8% +5% Q116 Guidance 7% and 12% Sales and Adjusted EBITDA Growth, Respectively at Midpoint of Guidance Ranges $1,860M $1,810M $188M $1,722M $215M $205M VPY Q115 Q116 Q115 Q116 Q116 Net Sales Adj. EBITDA Adj. Net Income Per Diluted Share1 VPY 1 Q116 Adjusted Net Income per Share range assumes a fully diluted weighted average share count of 201 million Note: VPY denotes Versus Prior Year $0.50 $0.45 VPY ($ in millions, except per share amounts) $0.25 . . . . Q115 +102% +82% Midpoint $1,835M +7% $210M +12% $0.48 +92%
FY16 End Market Preliminary Outlook ~3% End Market Growth for FY16 (Approximate End Market Exposure1) Residential Construction Water Infrastructure Living Space MRO Primary End Market Non- Residential Construction ~3% FY16 End Market Estimates1 1% to 2% Current View as of Mar. 16 Mid-Single Digit Low Single Digits to Low Single Digits 1 Management estimate; market estimate is management estimate of the growth of our end markets based on multiple quantitative and qualitative inputs Mid-Single Digit DC-Based Branch-Based
FY16 Operating Leverage Framework 1.5x to 2.0x FY16 Operating Leverage Target; 9% to 12% Implied FY16 Adjusted EBITDA Growth HDS Market Growth1 Illustrative ~3% + Above Market Growth2 ~300 BPs = End Market Growth Controllable Execution Annual Net Sales Growth1,2 Illustrative Adj. EBITDA Growth Adjusted EBITDA Growth 12% HDS Market Growth 9% 6% 2.0x 1.5x Operating Leverage Target2,3 1 Management estimate; market estimate is management estimate of the growth of our markets based on multiple quantitative and qualitative inputs 2 Long-term average growth target based on management estimates and projections 3 Operating Leverage is defined as Adjusted EBITDA growth divided by Total Net sales growth; target based on management estimates and projections. Note: These objectives are forward-looking, are subject to significant business, economic, regulatory and competitive uncertainties and contingencies, many of which are beyond the control of the Company and its management, and are based upon assumptions with respect to future decisions, which are subject to change. Actual results will vary and those variations may be material. For discussion of some of the important factors that could cause these variations, please consult the Risk Factors section of our Form 10-K for the fiscal year ended February 1, 2015. Nothing in this presentation should be regarded as a representation by any person that these objectives will be achieved and the Company undertakes no duty to update its objectives. Above Market Growth
FY16 Free Cash Flow Framework Building Free Cash Flow Momentum Illustrative Annual Net Sales Growth1, 2 Illustrative Adj. EBITDA Growth Adjusted EBITDA Growth 12% HDS Market Growth 9% 6% 2.0x 1.5x Operating Leverage Target2,3 Above Market Growth 1 Management estimate; market estimate is management estimate of the growth of our markets based on multiple quantitative and qualitative inputs 2 Long-term average growth target based on management estimates and projections. 3 Operating Leverage is defined as Adjusted EBITDA growth divided by Total Net sales growth; target based on management estimates and projections. Note: These objectives are forward-looking, are subject to significant business, economic, regulatory and competitive uncertainties and contingencies, many of which are beyond the control of the Company and its management, and are based upon assumptions with respect to future decisions, which are subject to change. Actual results will vary and those variations may be material. For discussion of some of the important factors that could cause these variations, please consult the Risk Factors section of our Form 10-K for the fiscal year ended February 1, 2015. Nothing in this presentation should be regarded as a representation by any person that these objectives will be achieved and the Company undertakes no duty to update its objectives. FY16 Adjusted EBITDA: Less: Change in NWC Capex ~$425M - $475M 1.3% - 1.4% of Annual Net Sales ~15% of Annual Net Sales Growth Cash Interest ~$325M Cash Taxes $15M - $25M Free Cash Flow (i.e. Cash Flow from Operating Activities Capex)
HD Supply Outlook Summary Focused on Controllable Execution Q116 FY16 +7% Net Sales Growth VPY at Midpoint of Range +12% Adjusted EBITDA Growth VPY at Midpoint of Range +92% Adjusted Net Income per Diluted Share Increase VPY at Midpoint of Range 201M Diluted Share Count ~3% End Market Growth Estimate1 ~300 Basis Points of Growth in Excess of Market Estimate2 1.5x to 2.0x Operating Leverage3 Range Illustrative 1 Management estimate; market estimate is management estimate of the growth of our markets based on multiple quantitative and qualitative inputs 2 Long-term average growth target based on management estimates and projections. 3 Operating Leverage is defined as Adjusted EBITDA growth divided by Total Net sales growth; target based on management estimates and projections. Note: These objectives are forward-looking, are subject to significant business, economic, regulatory and competitive uncertainties and contingencies, many of which are beyond the control of the Company and its management, and are based upon assumptions with respect to future decisions, which are subject to change. Actual results will vary and those variations may be material. For discussion of some of the important factors that could cause these variations, please consult the Risk Factors section of our Form 10-K for the fiscal year ended February 1, 2015. Nothing in this presentation should be regarded as a representation by any person that these objectives will be achieved and the Company undertakes no duty to update its objectives.
Q&A We Supply the Products and Services to Build Your City and Keep it Running
Concluding Remarks Solid FY15 Performance +6% Sales Growth VPY +13% Adjusted EBITDA Growth VPY +93% Adjusted Net Income per Diluted Share Growth VPY Focused on Controllable Execution Despite Uncontrollable Environment Disciplined People, Thought and Action as One Team Hard Work Get Better and Faster with Focused Execution Controllable Execution Note: VPY Denotes Versus Prior Year
Appendix
Illustrative Adjusted EPS Calculation Adjusted EBITDA Adjusted Net Income per Diluted Share Illustrative Adjusted EPS Calculation Adjusted Net Income = = Diluted Shares Outstanding2 ÷ Illustrative TBD TBD TBD ~201M FY16 $167M $0.27 $55M ~201M Q415 ($ in millions, except per share data) ~201 Q116 TBD TBD TBD ~201 Q416 Estimates ~201 Q216 TBD TBD TBD ~201 Q316 Depreciation and Amortization1 ( - ) ($28M) (~30) ($110M $120M) (~30) Amortization of Acquired Intangibles ( + ) ~$15M $4M ~4 ~4 ~3 ~4 Interest Expense (GAAP) ( - ) ($83M) ~($325M) Cash Income Taxes ( - ) ($15M $25M) ($2M) Stock-based Compensation ( - ) ($2M) (~81) (~81) (~5) (~5) 1 Includes Amounts Recorded Within Cost of Sales 2 Weighted Average Diluted Shares Outstanding Based on Management Estimates Note: These objectives are forward-looking, are subject to significant business, economic, regulatory and competitive uncertainties and contingencies, many of which are beyond the control of the Company and its management, and are based upon assumptions with respect to future decisions, which are subject to change. Actual results will vary and those variations may be material. For discussion of some of the important factors that could cause these variations, please consult the Risk Factors section of our Form 10-K for the year ended February 1, 2015. Nothing in this presentation should be regarded as a representation by any person that these objectives will be achieved and the Company undertakes no duty to update its objectives. Actual (~5) (~5) (~5) (~5) (~$20M) TBD TBD (~30) (~30) (~82) (~82) TBD TBD TBD TBD (~5) (~5)
Monthly Net Sales ($) $520M Preliminary February 16 Sales FY15 Facil. Maint. Waterworks Const. & Ind. 16 Selling Days 15 Selling Days 14 Selling Days FY16 ($ in millions) HD Supply Net Sales $478M $529M $715M $580M $638M $788M $646M $605M $761M $534M $506M $608M $520M $181 $198 $256 $208 $234 $291 $237 $215 $264 $187 $184 $235 $198 $151 $172 $247 $204 $221 $277 $227 $211 $267 $182 $163 $188 $160 $115 $124 $168 $132 $146 $177 $146 $141 $185 $129 $123 $147 $129 20 20 25 20 19 24 20 19 25 18 20 23 20 20 20 25 19 20 24 20 19 25 18 19 24 20 20 20 25 19 20 24 20 19 25 18 19 24 20 (Preliminary) Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb.
Average Daily Sales Organic (VPY%) HD Supply Organic Average Daily Sales Growth VPY1 +7% Organic Average Daily Sales Growth in Q415 (VPY%) 1 Adjusted for Acquisitions, Divestitures, and Selling Days Note: VPY denotes Versus Prior Year Facil. Maint. Waterworks Const. & Ind. (Preliminary) Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. 4.7% 5.8% 5.7% 6.1% 5.1% 8.4% 5.9% 4.8% 4.8% 6.0% 11.4% 4.1% 16 Selling Days 15 Selling Days 14 Selling Days 20 20 25 20 19 24 20 19 25 18 20 23 20 20 20 25 19 20 24 20 19 25 18 19 24 20 20 20 25 19 20 24 20 19 25 18 19 24 20 8.8% 2.9% 7.7% 4.7% 7.1% 7.0% 6.6% 9.1% 9.0% 7.3% 7.4% 12.2% 6.3% 9.5% 3.3% 2.4% 4.5% 3.6% 1.0% 10.9% 2.5% -0.1% 1.5% 3.9% 7.8% -0.9% 6.4% 13.4% 9.7% 11.9% 9.1% 10.2% 10.3% 8.3% 8.9% 8.3% 10.4% 17.4% 8.6% 12.2% FY15 FY16
Average Daily Sales Organic1 (VPY%) +6% Organic Average Daily Sales Growth in FY15 1 Adjusted for Acquisitions, Divestitures, and Selling Days Note: VPY Denotes Versus Prior Year (VPY%) Selling Days Facil. Maintenance Waterworks Construction & Industrial HD Supply 11.2% 5.0% 15.2% 8.7% 253 65 9.3% -5.4% 6.3% 1.3% 63 8.6% 8.5% 12.1% 8.0% 64 13.5% 3.5% 18.3% 9.8% 61 13.8% 15.0% 24.8% 16.6% Facil. Maintenance Waterworks Construction & Industrial HD Supply Selling Days 12.3% 11.0% 16.9% 12.9% 258 13.7% 17.1% 22.1% 16.5% 65 11.4% 6.3% 18.8% 11.0% 63 14.5% 12.8% 14.4% 13.9% 64 10.1% 9.3% 13.2% 10.8% 66 Facil. Maintenance Waterworks HD Supply Selling Days 7.5% 8.2% 11.3% 9.3% 253 Construction & Industrial 9.6% 8.2% 15.7% 11.4% 65 9.4% 9.5% 9.1% 10.0% 63 64 3.9% 10.6% 10.3% 8.2% 6.9% 3.3% 10.3% 7.2% 61 Facil. Maintenance Waterworks HD Supply Selling Days 7.7% 5.4% 9.9% 7.4% 65 Construction & Industrial 7.5% 10.6% 15.3% 9.9% 63 8.2% 9.8% 15.7% 10.3% 64 7.3% 9.8% 13.4% 8.7% 61 7.7% 9.0% 13.7% 9.1% 253 FY Q1 Q2 Q3 Q4 Facil. Maintenance Waterworks HD Supply Selling Days 5.1% 3.4% 11.5% 5.5% 65 Construction & Industrial 2011 2012 2013 2014 2015 6.9% 5.6% 9.9% 6.7% 63 8.5% 1.4% 8.5% 5.1% 64 8.2% 3.3% 12.1% 6.8% 61 7.2% 3.4% 10.4% 6.0% 253
Operating Leverage1 2.2x Operating Leverage in FY15 (VPY) 1 Operating Leverage is Defined as Adjusted EBITDA Growth Divided by Adjusted Net Sales Growth (adjusted for the 53rd Week in fiscal 2012) Not Meaningful (nm) when Sales Growth is Negative and when Prior Period Adjusted EBITDA is Negative. Note: VPY Denotes Versus Prior Year 1.1x 2.8x nm 3.1x 1.3x 3.6x nm 2.2x 1.2x nm nm 13.3x 1.5x 1.3x nm 2.8x Facil. Maintenance Waterworks Construction & Industrial HD Supply 0.7x 2.5x 6.2x 2.2x 1.4x 1.7x 8.7x 2.6x 1.3x 1.8x nm 3.3x 1.3x 1.7x nm 2.6x 1.2x 2.9x 6.5x 2.4x Facil. Maintenance Waterworks Construction & Industrial HD Supply 1.6x 1.0x 4.6x 2.4x 2.7x 3.7x 7.7x 4.2x 1.6x 2.4x 3.5x 2.0x 1.4x 2.7x 4.2x 2.0x 1.3x 2.0x 3.8x 1.6x Facil. Maintenance Waterworks HD Supply Construction & Industrial HD Supply 1.6x 2.1x 1.9x 1.5x 1.2x 1.5x 5.4x 2.4x 1.5x 1.3x 1.9x 1.7x Facil. Maintenance Waterworks HD Supply Construction & Industrial 2.0x 1.7x 1.7x 1.7x 2.1x 2.0x 3.2x 2.3x 1.7x 1.6x 2.5x 2.0x FY Q1 Q2 Q3 Q4 2011 2012 2013 2014 2015 2.3x 2.9x 4.2x 2.4x Facil. Maintenance Waterworks HD Supply Construction & Industrial 1.8x 2.8x 2.9x 2.3x 0.8x 6.7x 4.0x 3.0x (0.2x) 4.2x 4.1x 1.1x 1.1x 3.6x 3.6x 2.2x
C&I Historical Performance (including Brafasco) Revised C&I to Include Brafasco ($ in millions) Selling Days Sales Adjusted EBITDA $1,062M $25M 253 65 $235M ($1M) 63 $277M $9M 64 $298M $15M 61 $252M $2M Selling Days 258 65 63 64 66 Selling Days 253 65 63 64 61 Selling Days 65 63 64 61 253 FY Q1 Q2 Q3 Q4 Selling Days 65 2011 20121 2013 2014 2015 63 64 61 253 Sales Adjusted EBITDA $1,266M $63M $287M $9M $329M $20M $341M $25M $309M $9M Sales Adjusted EBITDA $1,381M $86M $332M $15M $359M $27M $376M $30M $314M $14M Sales Adjusted EBITDA $1,570M $116M $365M $23M $414M $35M $435M $38M $356M $20M Sales Adjusted EBITDA $1,733M $160M $407M $34M $455M $45M $472M $51M $399M $30M 1 2012 includes $23M and $1M in Net Sales and Adjusted EBITDA, respectively, for the 53rd week
Reconciliation of Non-GAAP Measures: Net Income to Adjusted EBITDA ($ in millions) 1 Depreciation and amortization includes amounts recorded within Cost of sales in the Consolidated Statements of Operations. 2 During the three months and fiscal year ended January 31, 2016, the Company recorded a $1,007 million tax benefit for the release of substantially all of its deferred tax asset valuation allowance. During the fiscal year ended January 31, 2016, the Company recorded a reduction in unrecognized tax benefits as a result of IRS and state audit settlements. 3 Represents severance, relocation costs, and other costs incurred to strategically align the Companys workforce. 4 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 cost of debt modification. 5 Represents the costs expensed in connection with secondary offerings of the Companys common stock by certain of the Companys stockholders. Fiscal Year Ended Three Months Ended January 31, 2016 February 1, 2015 January 31, 2016 February 1, 2015 Net income (loss) $ 1,472 $ 3 $ 871 $ (93) Less income (loss) from discontinued operations, net of tax 146 45 (106) 9 Income (loss) from continuing operations 1,326 (42) 977 (102) Interest expense, net 394 462 83 115 Depreciation and amortization (1) 116 186 28 30 Provision (benefit) for income taxes (2) (1,085) 42 (930) 1 Stock - based compensation 16 17 2 5 Restructuring charges (3) 10 6 6 Loss on extinguishment & modification of debt (4) 100 108 106 Costs related to public offering (5) 1 2 Other (6) 1 Adjusted EBITDA $ 878 $ 775 $ 167 $ 155
Reconciliation of Non-GAAP Measures: Net Income to Adjusted Net Income ($ in millions, except share and per share amounts) 1 During the three months and fiscal year ended January 31, 2016, the Company recorded a $1,007 million tax benefit for the release of substantially all of its deferred tax asset valuation allowance. During the fiscal year ended January 31, 2016, the Company recorded a reduction in unrecognized tax benefits as a result of IRS and state audit settlements. 2 Represents severance, relocation costs, and other costs incurred to strategically align the Companys workforce. 3 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. 4 Represents the costs expensed in connection with secondary offerings of the Companys common stock by certain of the Companys stockholders Weighted average common shares outstanding (in thousands) Basic Diluted Adjusted Net Income Per Share - Basic Adjusted Net Income Per Share - Diluted Net income (loss) $ 1,472 $ 3 $ 871 $ (93) Less income (loss) from discontinued operations, net of tax 146 45 (106) 9 Income (loss) from continuing operations 1,326 (42) 977 (102) Provision (benefit) for income taxes (1) (1,085) 42 (930) 1 Cash paid for income taxes (16) (12) (2) (2) Amortization of acquisition - related intangible assets (other than software) 15 80 4 4 Restructuring charges (2) 10 6 6 Loss on extinguishment & modification of debt (3) 100 108 106 Costs related to public offering (4) 1 2 Other (5) Adjusted net income $ 351 $ 179 $ 55 $ 7 Fiscal Year Ended Three Months Ended January 31, 2016 February 1, 2015 January 31, 2016 February 1, 2015 197,011 193,962 198,276 194,429 201,308 199,842 201,156 200,294 $1.78 $0.92 $0.28 $0.04 $1.74 $0.90 $0.27 $0.03