UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 8-K

 


 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): September 5, 2018

 

Commission File
Number

 

Exact name of Registrant as specified in its
charter, Address of principal executive offices
and Telephone number

 

State of
incorporation

 

I.R.S. Employer
Identification
Number

001-35979

 

HD SUPPLY HOLDINGS, INC.

3400 Cumberland Boulevard
Atlanta, Georgia 30339
(770) 852-9000

 

Delaware

 

26-0486780

 

 

 

 

 

 

 

333-159809

 

HD SUPPLY, INC.

3400 Cumberland Boulevard
Atlanta, Georgia 30339
(770) 852-9000

 

Delaware

 

75-2007383

 

Not Applicable

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 

 

 



 

Item 2.02. Results of Operations and Financial Condition.

 

On September 5, 2018, HD Supply Holdings, Inc. (the “Company” or “HD Supply”), HD Supply, Inc.’s parent company, issued a press release, filed as Exhibit 99.1 and incorporated herein by reference, announcing the Company’s financial results for the three months ended July 29, 2018 and certain other information.

 

The information contained in Item 7.01 concerning the presentation to HD Supply investors is hereby incorporated into this Item 2.02 by reference.

 

In accordance with General Instruction B.2 of Form 8-K, the information in this Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as shall be expressly set forth by specific reference in such a filing.

 

Item 7.01.  Regulation FD Disclosure.

 

The slide presentation attached hereto as Exhibit 99.2, and incorporated herein by reference, will be presented to certain investors of HD Supply on September 5, 2018 and may be used by HD Supply in various other presentations to investors.

 

In accordance with General Instruction B.2 of Form 8-K, the information in this Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.2 attached hereto, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as shall be expressly set forth by specific reference in such a filing.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit No.

 

Description of Exhibit

 

 

 

99.1

 

Press Release “HD Supply Holdings, Inc. Announces Fiscal 2018 Second-Quarter Results, Raises Full-Year Guidance” dated September 5, 2018.

 

 

 

99.2

 

HD Supply presentation to investors.

 

2



 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: September 5, 2018

HD Supply Holdings, Inc.

 

 

 

By:

/s/ Dan S. McDevitt

 

 

Dan S. McDevitt

 

 

General Counsel and Corporate Secretary

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: September 5, 2018

HD Supply, Inc.

 

 

 

By:

/s/ Dan S. McDevitt

 

 

Dan S. McDevitt

 

 

General Counsel and Corporate Secretary

 

3


Exhibit 99.1

 

 

Investor Contact:

Charlotte McLaughlin

HD Supply Investor Relations

770-852-9100

InvestorRelations@hdsupply.com

 

Media Contact:

Quiana Pinckney

HD Supply Public Relations

770-852-9057

Quiana.Pinckney@hdsupply.com

 

HD Supply Holdings, Inc. Announces Fiscal 2018 Second-Quarter Results,

Raises Full-Year Guidance

 

ATLANTA, GA — September 5th, 2018 — HD Supply Holdings, Inc. (NASDAQ: HDS), one of the largest industrial distributors in North America, today reported Net sales of $1.6 billion for the second quarter of fiscal 2018 ended July 29, 2018, an increase of $248 million, or 18.3 percent, as compared to the second quarter of fiscal 2017.  Organic sales growth for the second quarter of fiscal 2018 was 10.1 percent, as compared to the second quarter of fiscal 2017.

 

“I am proud of the team’s performance in the second quarter. We continued to deliver impressive sales growth and benefit from the investments that we have made in the business over the last 18 months,” stated Joe DeAngelo, Chairman and CEO of HD Supply.

 

Gross profit increased $83 million, or 15.4 percent, to $622 million for the second quarter of fiscal 2018, as compared to $539 million for the second quarter of fiscal 2017. Gross profit was 38.9 percent of Net sales for the second quarter of fiscal 2018, down approximately 100 basis points from 39.9 percent for the second quarter of fiscal 2017.

 

Operating income increased $31 million, or 17.2 percent, to $211 million for the second quarter of fiscal 2018, as compared to $180 million for the second quarter of fiscal 2017. Operating income was 13.2 percent of Net sales for the second quarter of fiscal 2018, down approximately 10 basis points from 13.3 percent for the second quarter of fiscal 2017.

 

Income from continuing operations increased $49 million, or 60.5 percent, to $130 million for the second quarter of fiscal 2018, as compared to $81 million for the second quarter of fiscal 2017.

 

Net income decreased $311 million, or 70.4 percent, to $131 million for the second quarter of fiscal 2018, as compared to $442 million for the second quarter of fiscal 2017. Net income in the second quarter of fiscal 2017 included $361 million of Income from discontinued operations, net of tax.

 

Adjusted EBITDA increased $38 million, or 18.3 percent, to $246 million for the second quarter of fiscal 2018, as compared to $208 million for the second quarter of fiscal 2017. Adjusted EBITDA was 15.4 percent of Net sales for the second quarter of fiscal 2018, flat as compared to the second quarter of fiscal 2017.

 

Adjusted net income increased $55 million, or 43.3 percent, to $182 million for the second quarter of fiscal 2018, as compared to $127 million for the second quarter of fiscal 2017.  Adjusted net income per diluted share was $0.99 in the second quarter of fiscal 2018, as compared to $0.64 in the second quarter of fiscal 2017.

 

1



 

As of July 29, 2018, HD Supply’s combined liquidity of $1,061 million was comprised of $228 million in cash and cash equivalents and $833 million of additional available borrowings (excluding $134 million of borrowings on available cash balances) under HD Supply, Inc.’s senior asset-based lending facility, based on qualifying inventory and receivables.

 

Business Unit Performance

 

Facilities Maintenance

 

Net sales increased $51 million, or 6.6 percent, to $820 million in the second quarter of fiscal 2018, as compared to $769 million for the second quarter of fiscal 2017.  Adjusted EBITDA increased $5 million, or 3.4 percent, to $150 million for the second quarter of fiscal 2018, as compared to $145 million for the second quarter of fiscal 2017.  Adjusted EBITDA was 18.3 percent of Net sales for the second quarter of fiscal 2018, down approximately 60 basis points from 18.9 percent for the second quarter of fiscal 2017.

 

Construction & Industrial

 

Net sales increased $197 million, or 33.7 percent, to $781 million in the second quarter of fiscal 2018, as compared to $584 million for the second quarter of fiscal 2017.  Organic sales growth was approximately 14.7 percent in the second quarter of fiscal 2018 as compared to the second quarter of fiscal 2017. Adjusted EBITDA increased $33 million, or 52.4 percent, to $96 million for the second quarter of fiscal 2018, as compared to $63 million for the second quarter of fiscal 2017.  Adjusted EBITDA was 12.3 percent of Net sales for the second quarter of fiscal 2018, up approximately 150 basis points from 10.8 percent for the second quarter of fiscal 2017.

 

Second-Quarter Monthly Sales Performance

 

Net sales for May, June and July of fiscal 2018 were $488 million, $486 million and $626 million, respectively.  There were 20 selling days in May, 19 selling days in June and 24 selling days in July in both 2018 and 2017.  Average year-over-year daily sales growth for May, June and July was 18.7 percent, 18.7 percent and 17.8 percent, respectively. On an organic basis, average year-over-year daily sales growth for May, June and July was 10.6 percent, 10.4 percent and 9.7 percent, respectively.

 

Preliminary August Sales Results

 

Preliminary Net sales in August 2018 were approximately $513 million, which represents year-over-year average daily sales growth of approximately 17.7 percent (10.2 percent on an organic basis).  Preliminary August year-over-year average daily sales growth by business segment was approximately 6.0 percent for Facilities Maintenance and approximately 33.1 percent (15.7 percent on an organic basis) for Construction & Industrial.  There were 20 selling days in both August 2018 and August 2017.

 

Third-Quarter and Full Year 2018 Outlook

 

For the third quarter of fiscal 2018, Net sales are anticipated to be in the range of $1,560 million and $1,610 million, Adjusted EBITDA(1) in the range of $239 million and $249 million and Adjusted net income per diluted share(1) in the range of $0.95 and $1.00.  Adjusted net income per diluted share range assumes a fully diluted weighted average share count of approximately 184 million.  At the mid-point of the ranges, our third-quarter 2018 Net sales and Adjusted EBITDA translate into approximately 16 percent growth and 14 percent growth, respectively, versus prior year.  On an organic basis at the mid-point of the range, our third-quarter 2018 Net sales represents approximately 8 percent growth.

 

For the full year fiscal 2018, Net sales are anticipated to be in the range of $5,900 million and $6,000 million, Adjusted EBITDA(1) in the range of $845 million and $870 million and Adjusted net income per diluted share(1) in the

 


(1)  No reconciliation of the forecasted range for Adjusted EBITDA to Net income or Income from Continuing Operations and Adjusted net income per diluted share to Net income per diluted share or Income from Continuing Operations per diluted share for the third quarter of fiscal 2018 or the full year fiscal 2018 is included in this press release because we are unable to quantify certain amounts that would be required to be included in the GAAP measure without unreasonable efforts. In addition, the company believes such reconciliations would imply a degree of precision that would be confusing or misleading to investors.

 

2



 

range of $3.22 and $3.35.  Adjusted net income per diluted share range assumes a fully diluted weighted average share count of approximately 184 million.

 

Fiscal 2018 Second-Quarter Conference Call

 

As previously announced, HD Supply will hold a conference call on Wednesday, September 5th, 2018 at 8:00 a.m. (Eastern Time) to discuss its second-quarter results.  The conference call and presentation materials can be accessed via webcast by logging on from the Investor Relations section of the company’s Web site at hdsupply.com. The online replay will remain available for a limited time following the call.

 

Non-GAAP Financial Measures

 

HD Supply supplements its reporting of Net income with non-GAAP measurements, including Adjusted EBITDA, Adjusted net income and Adjusted net income per diluted 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 and Adjusted net income per diluted share referred to in this press release is included below under “Reconciliation of Non-GAAP Measures.”

 

About HD Supply

 

HD Supply (www.hdsupply.com) is one of the largest industrial distributors in North America. The company provides a broad range of products and value-add services to approximately 500,000 customers with leadership positions in the maintenance, repair and operations and specialty construction sectors. Through approximately 270 branches and 44 distribution centers in the U.S. and Canada, the company’s approximately 11,000 associates provide localized, customer-driven services including jobsite delivery, will call or direct-ship options, diversified logistics and innovative solutions that contribute to its customers’ success.

 

Forward-Looking Statements and Preliminary Results

 

This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on management’s 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 January 28, 2018, filed on March 13, 2018 and those described from time to time in our, and HD Supply, Inc.’s, other filings with the U.S. Securities and Exchange Commission (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 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.

 

Estimates for Net sales, Adjusted EBITDA and Adjusted net income per diluted share are preliminary estimates and are subject to risks and uncertainties, including, among others, changes in connection with quarter-end and year-end adjustments. Any variation between HD Supply’s actual results and the preliminary financial data set forth above may be material.

 

3



 

HD SUPPLY HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

Amounts in millions, except share and per share data, Unaudited

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

July 29,
2018

 

July 30,
2017

 

July 29,
2018

 

July 30,
2017

 

Net Sales

 

$

1,600

 

$

1,352

 

$

2,989

 

$

2,568

 

Cost of sales

 

978

 

813

 

1,815

 

1,545

 

Gross Profit

 

622

 

539

 

1,174

 

1,023

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

384

 

338

 

756

 

672

 

Depreciation and amortization

 

25

 

21

 

47

 

42

 

Restructuring

 

2

 

 

9

 

 

Total operating expenses

 

411

 

359

 

812

 

714

 

Operating Income

 

211

 

180

 

362

 

309

 

Interest expense

 

35

 

49

 

69

 

98

 

Interest (income)

 

 

 

(1

)

 

Loss on extinguishment & modification of debt

 

 

 

 

3

 

Income from Continuing Operations Before Provision for Income Taxes

 

176

 

131

 

294

 

208

 

Provision for income taxes

 

46

 

50

 

75

 

69

 

Income from Continuing Operations

 

130

 

81

 

219

 

139

 

Income from discontinued operations, net of tax

 

1

 

361

 

1

 

388

 

Net Income

 

$

131

 

$

442

 

$

220

 

$

527

 

Other comprehensive income (loss) — foreign currency translation adjustment

 

1

 

(3

)

2

 

(2

)

Total Comprehensive Income

 

$

132

 

$

439

 

$

222

 

$

525

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Common Shares Outstanding (thousands)

 

 

 

 

 

 

 

 

 

Basic

 

182,992

 

197,752

 

183,659

 

199,230

 

Diluted

 

183,822

 

198,954

 

184,456

 

201,010

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings Per Share(1):

 

 

 

 

 

 

 

 

 

Income from Continuing Operations

 

$

0.71

 

$

0.41

 

$

1.19

 

$

0.70

 

Income from Discontinued Operations

 

$

0.01

 

$

1.83

 

$

0.01

 

$

1.95

 

Net Income

 

$

0.72

 

$

2.24

 

$

1.20

 

$

2.65

 

Diluted Earnings Per Share(1):

 

 

 

 

 

 

 

 

 

Income from Continuing Operations

 

$

0.71

 

$

0.41

 

$

1.19

 

$

0.69

 

Income from Discontinued Operations

 

$

0.01

 

$

1.81

 

$

0.01

 

$

1.93

 

Net Income

 

$

0.71

 

$

2.22

 

$

1.19

 

$

2.62

 

 


(1) May not foot due to rounding.

 

4



 

HD SUPPLY HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

Amounts in millions, except per share data, Unaudited

 

 

 

July 29,
2018

 

January 28, 
2018

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

228

 

$

558

 

Receivables, less allowance for doubtful accounts of $17 and $12

 

843

 

612

 

Inventories

 

813

 

674

 

Other current assets

 

45

 

31

 

Total current assets

 

1,929

 

1,875

 

Property and equipment, net

 

345

 

325

 

Goodwill

 

1,992

 

1,807

 

Intangible assets, net

 

203

 

91

 

Deferred tax asset

 

119

 

205

 

Other assets

 

18

 

15

 

Total assets

 

$

4,606

 

$

4,318

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

488

 

$

377

 

Accrued compensation and benefits

 

104

 

95

 

Current installments of long-term debt

 

11

 

11

 

Other current liabilities

 

247

 

138

 

Total current liabilities

 

850

 

621

 

Long-term debt, excluding current installments

 

2,087

 

2,090

 

Other liabilities

 

61

 

141

 

Total liabilities

 

2,998

 

2,852

 

Stockholders’ equity:

 

 

 

 

 

Common stock, par value $0.01; 1 billion shares authorized; 183.8 million and 185.7 million shares issued and outstanding at July 29, 2018, and January 28, 2018, respectively

 

2

 

2

 

Paid-in capital

 

4,047

 

4,029

 

Accumulated deficit

 

(1,745

)

(1,966

)

Accumulated other comprehensive loss

 

(15

)

(17

)

Treasury stock, at cost, 20.8 and 18.2 million shares at July 29, 2018 and January 28, 2018, respectively

 

(681

)

(582

)

Total stockholders’ equity

 

1,608

 

1,466

 

Total liabilities and stockholders’ equity

 

$

4,606

 

$

4,318

 

 

5



 

HD SUPPLY HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Amounts in millions, Unaudited

 

 

 

Six Months Ended

 

 

 

July 29,
2018

 

July 30,
2017

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

Net income

 

$

220

 

$

527

 

Reconciliation of net income to net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

51

 

50

 

Provision for uncollectibles

 

6

 

4

 

Non-cash interest expense

 

11

 

6

 

Payment of discounts upon extinguishment of debt

 

 

(4

)

Loss on extinguishment of debt

 

 

3

 

Stock-based compensation expense

 

12

 

12

 

Deferred income taxes

 

70

 

(223

)

Other

 

(1

)

 

Changes in assets and liabilities, net of the effects of acquisitions & dispositions:

 

 

 

 

 

(Increase) decrease in receivables

 

(183

)

(258

)

(Increase) decrease in inventories

 

(104

)

(141

)

(Increase) decrease in other current assets

 

(5

)

 

Increase (decrease) in accounts payable and accrued liabilities

 

108

 

212

 

Increase (decrease) in other long-term liabilities

 

1

 

1

 

Net cash provided by operating activities

 

186

 

189

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Capital expenditures

 

(47

)

(43

)

Proceeds from sales of property and equipment

 

 

2

 

Payments for businesses acquired, net of cash acquired

 

(362

)

 

Net cash provided by (used in) investing activities

 

(409

)

(41

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Proceeds from issuance of common stock under employee benefit plans

 

6

 

29

 

Purchase of treasury shares

 

(93

)

(414

)

Tax withholdings on stock-based awards

 

(6

)

 

Repayments of long-term debt

 

(5

)

(103

)

Borrowings on long-term revolver debt

 

10

 

599

 

Repayments on long-term revolver debt

 

(16

)

(261

)

Debt issuance and modification costs

 

 

(6

)

Other financing activities

 

(3

)

 

Net cash provided by (used in) financing activities

 

(107

)

(156

)

Effect of exchange rates on cash and cash equivalents

 

 

 

Increase (decrease) in cash and cash equivalents

 

$

(330

)

$

(8

)

Cash and cash equivalents at beginning of period

 

558

 

75

 

Cash and cash equivalents at end of period

 

$

228

 

$

67

 

 

6



 

HD SUPPLY HOLDINGS, INC.

SEGMENT REPORTING

Amounts in millions, Unaudited

 

 

 

Facilities
Maintenance

 

Construction
& Industrial

 

Eliminations

 

Total
Continuing
Operations

 

Three Months Ended July 29, 2018

 

 

 

 

 

 

 

 

 

Net sales

 

$

820

 

$

781

 

$

(1

)

$

1,600

 

Adjusted EBITDA

 

150

 

96

 

 

246

 

Depreciation(1) & Software Amortization

 

9

 

12

 

 

21

 

Other Intangible Amortization

 

2

 

4

 

 

6

 

Three Months Ended July 30, 2017

 

 

 

 

 

 

 

 

 

Net sales

 

$

769

 

$

584

 

$

(1

)

$

1,352

 

Adjusted EBITDA

 

145

 

63

 

 

208

 

Depreciation(1) & Software Amortization

 

8

 

11

 

 

19

 

Other Intangible Amortization

 

3

 

 

 

3

 

Six Months Ended July 29, 2018

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,543

 

$

1,447

 

$

(1

)

$

2,989

 

Adjusted EBITDA

 

273

 

163

 

 

436

 

Depreciation(1) & Software Amortization

 

18

 

22

 

 

40

 

Other Intangible Amortization

 

4

 

7

 

 

11

 

Six Months Ended July 30, 2017

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,451

 

$

1,120

 

$

(3

)

$

2,568

 

Adjusted EBITDA

 

253

 

112

 

 

365

 

Depreciation(1) & Software Amortization

 

17

 

21

 

 

38

 

Other Intangible Amortization

 

5

 

1

 

 

6

 

 


(1)         Depreciation includes amounts recorded within Cost of sales in the Consolidated Statements of Operations.

 

Reconciliation of Non-GAAP Measures

 

Adjusted EBITDA and Adjusted net income are not recognized terms under GAAP and do not purport to be alternatives to Net income as a measure of operating performance. We present Adjusted EBITDA and Adjusted net income because each is a primary measure used by management to evaluate operating performance. In addition, we present Adjusted net income to measure our overall profitability as we believe it is an important measure of our performance. We believe the presentation of Adjusted EBITDA and Adjusted net income enhances investors’ overall understanding of the financial performance of our business.

 

Adjusted EBITDA is based on “Consolidated EBITDA,” a measure which is defined in our senior credit facilities and used in calculating financial ratios in several material debt covenants. Adjusted EBITDA is defined as Net income less Income from discontinued operations, net of tax, plus (i) Interest expense and Interest income, net, (ii) Provision for income taxes, (iii) depreciation and amortization and further adjusted to exclude loss on extinguishment of debt, non-cash items and certain other adjustments to Consolidated Net Income permitted in calculating Consolidated EBITDA under our senior credit facilities.

 

Adjusted net income is defined as Net income less Income from discontinued operations, net of tax, further adjusted for loss on extinguishment of debt, certain non-cash, non-recurring or unusual items, net of tax.

 

We compensate for the limitations of using non-GAAP financial measures by using them to supplement GAAP results to provide a more complete understanding of the factors and trends affecting the business than GAAP

 

7



 

results alone. Because not all companies use identical calculations, our presentation of Adjusted EBITDA and Adjusted net income may not be comparable to other similarly titled measures of other companies.

 

Adjusted EBITDA and Adjusted net income have limitations as analytical tools and should not be considered in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are:

 

·                       Adjusted EBITDA and Adjusted net income do not reflect changes in, or cash requirements for, our working capital needs;

·                       Adjusted EBITDA does not reflect our interest expense, or the requirements necessary to service interest or principal payments on our debt;

·                       Adjusted EBITDA does not reflect our income tax expenses or the cash requirements to pay our taxes;

·                       Adjusted EBITDA and Adjusted net income do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; and although depreciation and amortization charges are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements.

 

Adjusted EBITDA

 

The following table presents a reconciliation of Net income and Income from Continuing Operations, the most directly comparable financial measures under GAAP, to Adjusted EBITDA for the periods presented (amounts in millions):

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

July 29, 2018

 

July 30, 2017

 

July 29, 2018

 

July 30, 2017

 

Net income

 

$

131

 

$

442

 

$

220

 

$

527

 

Less income from discontinued operations, net of tax

 

1

 

361

 

1

 

388

 

Income from continuing operations

 

130

 

81

 

219

 

139

 

Interest expense, net

 

35

 

49

 

68

 

98

 

Provision for income taxes

 

46

 

50

 

75

 

69

 

Depreciation and amortization (1)

 

27

 

22

 

51

 

44

 

Loss on extinguishment of debt (2)

 

 

 

 

3

 

Restructuring charges (3)

 

2

 

 

9

 

 

Stock-based compensation

 

6

 

6

 

12

 

12

 

Acquisition and integration costs (4)

 

1

 

 

3

 

 

Other

 

(1

)

 

(1

)

 

Adjusted EBITDA

 

$

246

 

$

208

 

$

436

 

$

365

 

 


(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 write-off of unamortized deferred financing costs, original issue discount and other assets or liabilities associated with such debt.

 

(3)         Represents the costs related to exiting the Company’s previous corporate headquarters and the costs incurred for strategic alignment of our workforce. These costs include severance, relocation costs and other related costs.

 

(4)         Represents the costs incurred in the acquisition and integration of A.H. Harris Construction Supplies.

 

8



 

Adjusted Net Income

 

The following table presents a reconciliation of Net income and Income from Continuing Operations, the most directly comparable financial measures under U.S. GAAP, to Adjusted net income for the periods presented (amounts in millions):

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

July 29, 2018

 

July 30, 2017

 

July 29, 2018

 

July 30, 2017

 

Net income

 

$

131

 

$

442

 

$

220

 

$

527

 

Less income from discontinued operations, net of tax

 

1

 

361

 

1

 

388

 

Income from continuing operations

 

130

 

81

 

219

 

139

 

Plus: Provision for income taxes

 

46

 

50

 

75

 

69

 

Less: Cash income taxes

 

(3

)

(7

)

(5

)

(10

)

Plus: Amortization of acquisition-related intangible assets (other than software)

 

6

 

3

 

11

 

6

 

Plus: Loss on extinguishment of debt (1)

 

 

 

 

3

 

Plus: Restructuring charges (2)

 

2

 

 

9

 

 

Plus: Acquisition and integration costs (3)

 

1

 

 

3

 

 

Adjusted Net Income

 

$

182

 

$

127

 

$

312

 

$

207

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average common shares outstanding

 

183,822

 

198,954

 

184,456

 

201,010

 

Adjusted net income per share — diluted

 

$

0.99

 

$

0.64

 

$

1.69

 

$

1.03

 

 


(1)         Represents the loss on extinguishment of debt including the write-off of unamortized deferred financing costs, original issue discount and other assets or liabilities associated with such debt.

 

(2)         Represents the costs related to exiting the Company’s previous corporate headquarters and the costs incurred for strategic alignment of our workforce. These costs include severance, relocation costs and other related costs.

 

(3)         Represents the costs incurred in the acquisition and integration of A.H. Harris Construction Supplies.

 

No reconciliation of the forecasted range for Adjusted EBITDA to Net income and Adjusted net income per diluted share to Net income per diluted share for the third quarter of fiscal 2018 or full year fiscal 2018 is included in this press release because we are unable to quantify certain amounts that would be required to be included in the GAAP measure without unreasonable efforts. In addition, the company believes such reconciliations would imply a degree of precision that would be confusing or misleading to investors.

 

9


Exhibit 99.2

FINANCIAL RESULTS AND COMPANY OVERVIEW 2018 Second-Quarter Performance September 5th, 2018

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Disclaimer Forward-Looking Statements and Preliminary Results 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 management’s 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 presentation 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 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 “Risk factors” in our annual report on Form 10-K, for the fiscal year ended January 28, 2018, filed on March 13, 2018 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 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. Estimates for Net sales, Adjusted EBITDA and Adjusted net income per diluted share are preliminary estimates and are subject to risks and uncertainties, including, among others, changes in connection with quarter-end adjustments. Any variation between HD Supply’s actual results and the preliminary financial data set forth herein may be material. 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, Adjusted net income per diluted share, Net debt 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, Adjusted net income per diluted share and Net Debt referred to in this presentation is included at the end of this presentation under “Capital Structure Overview and Reconciliation of Non-GAAP Measures.”

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Q2’18 Execution Highlights Focused on Controllable Execution 1 Q2’17 Net Income includes $361M of Income from Discontinued Operations 2 See appendix slides 20 and 21 for a reconciliation of Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per Diluted Share to Net Income and Income from Continuing Operations 3 Free Cash Flow is defined as LTM Operating Cash Flow of $499M, Less Capital Expenditures of $98M (including Cash Flow from Discontinued Operations) Note: “VPY” denotes Versus Prior Year, “LTM” denotes Last Twelve Months +18% Net Sales Growth Versus Prior Year (“VPY”) +10% Organic Sales Growth VPY +17% Operating Income Growth VPY +60% Income from Continuing Operations VPY 70% Net Income Decline VPY1 +18% Adjusted EBITDA2 Growth VPY +55% Adjusted Net Income per Diluted Share2 Growth VPY $401M LTM Free Cash Flow3

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Pricing In-line with Market Topics of Recent Investor Interest Topic Consideration 3. Freight Costs Inflation Rising Freight Costs Focused on Shareholder Value Currently Minimal Impact on Sourcing from Tariffs Proprietary Brands Rebar Represents Approximately 5% of Total Sales Tariff Impact on Rebar Remains Strong 5. Non-residential End Market

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$1,352M $1,600M +18% Gross Profit Gross Margin % Operating Income Adj. EBITDA % Op. Income % $539M $622M 39.9% 38.9% $208M $246M $180M $211M 15.4% 15.4% 13.2% +15% -100 BPs - +18% ($ in millions, except per share data) $127M $182M +17% Net Sales 1 Q2’17 Net Income includes $361M of Income from Discontinued Operations 2 See appendix slides 20 and 21 for a reconciliation of Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per Diluted Share to Net Income and Income from Continuing Operations Q2’17 Adj. EBITDA2 VPY Adj. Net Income2 13.3% Q2’18 $0.64 $0.99 +55% Per Diluted Share2 +$248M +43% Net Income1 $442M $131M -70% $2.22 $0.71 -$1.51 Per Diluted Share1 +18.3% Net Sales Growth VPY Q2’18 Financial Results -10 BPs +10% +$137M organic

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Organic Growth in Both Business Units Q2’18 Segment Performance Q2’18 $820M $781M Adj. EBITDA $150M $96M Net Sales ($ in millions) Q2’17 $769M $584M $145M VPY +7% +3% VPY +34% +52% $63M Q2’18 Q2’17 +15% organic

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Q2’18 Taxes and Cash Flow Favorable Tax Asset with Significant Gross Federal Net Operating Loss (“NOL”) Carryforwards of Approximately $495M ~$161M Tax-affected Amount of Federal and State NOLs Cash Taxes $3M in Q2’18 $2-4M Estimated in Q3’18 $10-12M Estimated in FY’18 Effective Rate ~25% for Q2’18 Expected 25-26% for FY’18 $2.0B Net Debt1 at the End of Q2’18 2.4x Net Debt to Adj. EBITDA $401M Q2’18 LTM Free Cash Flow2 $28M of Capital Expenditures in Q2’18 Note: Contains forward-looking information; please see Disclaimer on slide 2 1 Reconciled on slide 16 “Net Debt” defined as Total Debt plus letter of credit and capital lease obligations, less cash and cash equivalents 2 Free Cash Flow is defined as LTM Operating Cash Flow of $499M, Less Capital Expenditures of $98M (including Cash Flow from Discontinued Operations) Taxes Cash Flow Capital Structure Execution

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+18.3% Q2’18 Average Daily Sales Growth Q2’18 Monthly Average Daily Sales (%) 6.1% 33.4% 17.7% Aug. 6.0% 33.1% 7.4% 33.3% Facilities Maintenance Construction & Industrial (Preliminary) 18.7% 18.7% 17.8% 6.3% 34.5% 6.9% 6.7% May Jun. Jul. Prior Year $626M $513M $486M HD Supply Net Sales $488M 3.4% 5.6% Q2’18 4.3% 9.8% $436M 3.7% 8.2% $532M 2.6% 4.5% $408M 5.2% 9.3% $412M HD Supply Average Daily Sales Growth VPY ’17 Selling Days 24 20 19 20 Current Year Note: Contains forward-looking information; please see Disclaimer on slide 2 24 20 19 20 ’18 Selling Days Q3’18 organic 10.4% organic 10.2% organic 9.7% ’16 Selling Days 24 20 19 20 organic 10.6%

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+16% +12% +18% +14% Q3’18 Guidance +16% Net Sales Growth VPY at Midpoint $1,610M $1,560M $214M $1,370M $249M $239M VPY Q3’17 Q3’18 Q3’17 Q3’18 Q3’18 Net Sales Adj. EBITDA Adj. Net Income Per Diluted Share1 VPY 1 Q3’18 Adjusted Net Income per Diluted Share range assumes a fully diluted weighted average share count of ~184 million Note: Contains forward-looking information; please see Disclaimer on slide 2. No reconciliation of the forecasted range for Adjusted EBITDA to Net income and Adjusted net income per diluted share to Net income per diluted share for the third quarter of fiscal 2018 is included in this presentation because we are unable to quantify certain amounts that would be required to be included in the GAAP measure without unreasonable efforts. In addition, the company believes such reconciliations would imply a degree of precision that would be confusing or misleading to investors. $1.00 $0.95 VPY ($ in millions, except per share amounts) $0.80 . . Q3’17 +25% +19% Midpoint $1,585M +16% $244M +14% $0.98 +23%

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FY’18 Guidance Strong Sales and Earnings Growth 1 End Market estimate of ~3% is the management estimate of the growth of our markets based on multiple quantitative and long-term average growth target based on management estimates and projections 2 Consolidated from March 5, 2018 3 Guidance Raised on June 5, 2018 and September 5, 2018 4 Operating Leverage is defined as Adjusted EBITDA Growth Divided by Total Net Sales Growth Note: Contains forward-looking information; please see Disclaimer on slide 2. No reconciliation of the forecasted range for Adjusted EBITDA to Net income for the full year fiscal 2018 is included in this presentation because we are unable to quantify certain amounts that would be required to be included in the GAAP measure without unreasonable efforts. In addition, the company believes such reconciliations would imply a degree of precision that would be confusing or misleading to investors. $5,121M FY’17 +300 BPs $360M $5,950M Core Business Growth1 A.H Harris2 53rd Week and Holiday Shift $75M FY’18 Net Sales ($ in millions) $731M FY’17 1.5x FY’17 Supply Chain Costs A.H Harris2 FY’18 FM Accelerated Investments FY’18 Adj. EBITDA $858M $7M $40M Midpoint Midpoint 53rd Week and Holiday Shift ($12M) Core Business Growth 1.5x Op. Lev4 $279M $62M $6,000M $5,900M $870M $845M $7M $115M Guidance Raised3 $23M Guidance Raised3

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Approximately 3% End Market Growth for FY’18 FY’18 End Market Preliminary Outlook Residential Construction “Living Space” MRO Primary End Market Non-Residential Construction ~3% FY’18 End Market Estimates1 1% to 2% Current View as of September ’18  Mid-Single Digit 1 Management estimate; end market growth based on multiple quantitative and qualitative inputs Note: Contains forward looking information; please see Disclaimer on slide 2  Low Single Digits to Mid-Single Digit

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Current Outlook Summary HD Supply Current Outlook Summary +16% Net Sales VPY at Midpoint $1,560M to $1,610M Net Sales +14% Adj. EBITDA VPY at Midpoint $239M to $249M Adj. EBITDA +23% Adj. Net Income per Diluted Share VPY at Midpoint $0.95 to $1.00 Adj. Net Income per Diluted Share Assumes ~184M Diluted Share Count1 Note: Contains forward-looking information; please see Disclaimer on slide 2. No reconciliation of the forecasted range for Adjusted EBITDA to Net income and Adjusted net income per diluted share to Net income per diluted share for the third quarter of fiscal 2018 and full-year fiscal 2018 is included in this presentation because we are unable to quantify certain amounts that would be required to be included in the GAAP measure without unreasonable efforts. In addition, the company believes such reconciliations would imply a degree of precision that would be confusing or misleading to investors Q3’18 1 Assumes No Additional Share Repurchases 2 Management estimate; end market growth based on multiple quantitative and qualitative inputs FY’18 Approximately 3% End Market VPY2 +16% Net Sales VPY at Midpoint $5,900M to $6,000M Net Sales +17% Adj. EBITDA VPY at Midpoint $845M to $870M Adj. EBITDA +42% Adj. Net Income per Diluted Share VPY at Midpoint $3.22 to $3.35 Adj. Net Income per Diluted Share Assumes ~184M Diluted Share Count1

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Q&A Q&A

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Concluding Remarks One Team, Driving Customer Success and Value Creation Continual Operational Improvement +18% Net Sales Growth in Q2’18 VPY +18% Adjusted EBITDA1 Growth in Q2’18 VPY +55% Adjusted Net Income per Diluted Share1 Growth in Q2’18 VPY Continued Momentum into the Second Half of 2018 Team is Focused and Energized to Deliver 1 See appendix slides 20 and 21 for a reconciliation of Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per Diluted Share to Net Income and Income from Continuing Operations Note: “VPY” denotes Versus Prior Year.

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Q&A APPENDIX

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~$1.7B Net Debt Capital Structure Overview Q2’18 Debt Balances Senior ABL Facility Term B-3 Loans April 2016 Senior Unsecured Notes $49 1,000 4/5/22 8/13/21 Outstanding Debt3 Less: Cash and Cash Equivalents Net Debt $2,008 (228) $2,122 Balance Maturity 1 Represents the Stated Rate of Interest, Without Including the Effect of Discounts or Premiums 2 Subject to Applicable Redemption Price Terms 3 Excludes Unamortized Discounts of $5M and Unamortized Deferred Financing Costs of $19M ($ in millions) 3.07% 4.33% Interest Rate1 531 n/a Now Soft Call Date2 5.75% 4/15/24 4/15/19 Term B-4 Loans 10/17/23 4.58% 542 Now Plus: Letters of Credit 27 Plus: Capital Lease Obligation 87

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Illustrative Adjusted EPS Calculation Adjusted EBITDA Adjusted Net Income per Diluted Share Illustrative Adjusted EPS Calculation Adjusted Net Income = = Diluted Shares Outstanding ÷ TBD TBD TBD ~184M FY’18 ($ in millions, except per share data) $152M $0.49 $91M ~186M Q3’18 Estimates Q3’17 $214M $0.80 $149M ~187M Q4’17 Depreciation and Amortization1 ( – ) ($24M) (~$101M) Amortization of Acquired Intangibles ($22M) ( + ) ~$22M $3M $3M Interest Expense, Net (GAAP) ( – ) (~$140M) Cash Income Taxes2 ( – ) (~$11M) Stock-based Compensation ( – ) ($31M) ($35M) ($2M) ($4M) 1 Includes Amounts Recorded within Cost of Sales 2 Q3’17 excludes $13 million of taxes paid in relation to the sale of the Waterworks Business Unit Note: Contains forward looking information; please see Disclaimer on slide 2. No reconciliation of Adjusted EBITDA to Net income, Adjusted net Income to Net Income and Adjusted net income per diluted share to Net income per diluted share for the third quarter of fiscal 2018 and full year fiscal 2018 is included in this presentation because we are unable to quantify certain amounts that would be required to be included in the GAAP measure without unreasonable efforts. In addition, the company believes such reconciliations would imply a degree of precision that would be confusing or misleading to investors. Actual ($7M) ($7M) (~$24M) Illustrative TBD TBD TBD ~184M (~$25M) ~$5M (~$35M) (~$3M) (~$6M) Q1’18 $190M $0.70 $130M ~185M ($24M) $5M ($33M) ($2M) ($6M) Q2’18 $246M $0.99 $182M ~184M ($27M) $6M ($35M) ($3M) ($6M) Other ( + ) - - $1M - - $1M

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$513M Preliminary August Sales Monthly Net Sales ($) Facil. Maint. Const. & Ind. ’18 Selling Days ’17 Selling Days ($ in millions) HD Supply Net Sales (Preliminary) FY’17 $223 $283 $197 $208 $237 $212 $224 $287 $246 $249 $325 $263 $180 $249 $175 $182 $185 $179 $199 $288 $243 $237 $301 $250 $248 $188 20 19 25 18 20 281 20 20 25 20 19 24 20 20 19 25 18 20 23 20 20 25 20 19 24 20 Note: Contains forward-looking information; please see Disclaimer on slide 2 1 Contains an extra selling week as compared with other years. Fiscal 2018 contains 53 weeks FY’18 ’16 Selling Days 20 19 25 18 20 23 20 20 25 20 19 24 20 organic organic organic organic organic organic organic organic organic organic $436M $403M $531M $372M $390M $421M $391M $423M $575M $488M $486M $626M $513M $406M $539M $455M $451M $583M $480M Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug.

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+10.2% Organic Preliminary Average Daily Sales Growth in August Average Daily Sales – Organic1 (VPY%) HD Supply Organic Average Daily Sales Growth VPY1 (VPY%) 1 Adjusted for Acquisitions, Divestitures, and Selling Days 2 Contains an extra selling week as compared with other years. Fiscal 2018 contains 53 weeks Note: Contains forward-looking information; please see Disclaimer on slide 2 Facil. Maint. Const. & Ind. 1.3% 6.1% 4.3% 4.9% 2.2% 7.1% 5.9% 5.4% 6.3% 7.4% 6.1% 6.0% 4.3% 10.3% 14.5% 16.4% 18.6% 13.3% 17.3% 9.4% 16.3% 16.0% 14.0% 14.4% 15.7% 9.8% FY’17 FY’18 ’18 Selling Days ’17 Selling Days 20 19 25 18 20 282 20 20 25 20 19 24 20 20 19 25 18 20 23 20 20 25 20 19 24 20 ’16 Selling Days 20 19 25 18 20 23 20 20 25 20 19 24 20 (Preliminary) organic organic organic organic organic 6.7% 5.2% 10.0% 9.8% 10.9% 6.8% 11.7% 12.0% 17.7% 18.7% 18.7% 17.8% 17.7% 7.5% 10.3% 10.6% 10.4% 9.7% 10.2% Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug.

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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 Represents the loss on extinguishment of debt including the write-off of unamortized deferred financing costs, original issue discount, and other assets or liabilities associated with such debt. Also includes the cost of debt modification. 3 Represents the costs related to exiting the Company’s previous corporate headquarters and the costs incurred for strategic alignment of our workforce. These costs include severance, relocation costs and other related costs 4 Represents the costs incurred in the acquisition and integration of A.H. Harris Construction Supplies July 29, 2018 July 30, 2017 Net income $131 $ 442 Less income from discontinued operations, net of tax 1 361 Income from continuing operations 130 81 Interest expense, net 35 49 Provision for income taxes 50 Depreciation and amortization 1 27 22 Loss on extinguishment & modification of debt - Restructuring charges 2 2 - Stock-based compensation 3 6 6 Adjusted EBITDA $ 246 $ 208 46 - Three Months Ended July 29, 2018 July 30, 2017 $220 $ 527 1 388 219 139 68 98 69 51 44 - 9 - 12 12 $ 436 $ 365 75 3 Six Months Ended Acquisition and Integration Costs 1 - 3 - Other (1) - (1) - 4

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Reconciliation of Non-GAAP Measures: Net Income to Adjusted Net Income and Adjusted Net Income Per Share ($ in millions, except share and per share amounts) 1 Represents the loss on extinguishment of debt including the write-off of unamortized deferred financing costs, original issue discount, and other assets or liabilities associated with such debt. Also includes the cost of debt modification. 2 Represents the costs related to exiting the Company’s previous corporate headquarters and the costs incurred for strategic alignment of our workforce. These costs include severance, relocation costs and other related costs 3 Represents the costs incurred in the acquisition and integration of A.H. Harris Construction Supplies Weighted average common shares outstanding (in thousands) Basic Diluted Adjusted Net Income Per Share - Basic Adjusted Net Income Per Share - Diluted Net income $ 131 $ 442 Less income from discontinued operations, net of tax 361 Income from continuing operations 130 81 Provision for income taxes 46 50 Cash paid for income taxes (3) (7) Amortization of acquisition related intangible assets (other than - software) Restructuring charges2 - 2 Loss on extinguishment & modification of debt1 - Adjusted Net Income $ 182 $ 127 182,992 197,752 183,822 198,954 $0.99 $0.64 $0.99 $0.64 1 - 6 3 $ 220 $ 527 388 219 139 75 69 (5) (10) - 9 - $ 312 $ 207 183,659 199,230 184,456 201,010 $1.70 $1.04 $1.69 $1.03 1 3 11 6 July 29, 2018 July 30, 2017 Three Months Ended July 29, 2018 July 30, 2017 Six Months Ended Acquisition and Integration Costs3 - 1 - 3

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