Distributors

HD Supply Sales Climb, Offers Strong Outlook

HD Supply Sales Climb, Offers Strong Outlook


ATLANTA, Ga. — HD Supply Holdings, Inc. reported Net sales of $7 billion for the full-year fiscal 2015 ended January 31, 2016, an increase of $418 million, or 6.0 percent, as compared to fiscal 2014. The company believes its sales
performance represents growth of approximately 300 – 400 basis points in excess of its market growth estimate.

“I am extremely pleased with the team’s performance in fiscal 2015. We delivered 6 percent net sales growth, 13
percent Adjusted EBITDA growth and Adjusted Net Income per Diluted Share of $1.74, despite a challenging and
uncontrollable environment,” stated Joe DeAngelo, Chairman and CEO of HD Supply. “We focused on what we
could control and delivered strong profitable growth in excess of market, operating leverage and cash flow.”
Gross profit increased $192 million, or 8.5 percent, to $2,456 million for the full-year fiscal 2015 as compared to
$2,264 million for the full-year fiscal 2014.

Gross profit was 33.2 percent of Net sales for the full-year fiscal 2015,
up approximately 70 basis points from 32.5 percent of Net sales for the full-year fiscal 2014. Despite a
challenging environment, the company saw improvement in Gross profit as a percentage of Net sales, driven by
category management initiatives and favorable product and services mix.
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Operating income increased $169 million, or 29.8 percent, to $736 million for the full-year fiscal 2015 as compared
to $567 million for the full-year fiscal 2014.

Operating income as a percentage of Net sales was 10.0 percent for the
full-year fiscal 2015, up approximately 190 basis points from 8.1 percent for the full-year fiscal 2014. The
improvement in operating income as a percentage of Net sales is a result of gross margin expansion, cost
productivity initiatives and a reduction of amortization expense on certain acquisition-related intangible assets.
Adjusted EBITDA increased $103 million, or 13.3 percent, to $878 million for the full-year fiscal 2015 as compared
to $775 million for the full-year fiscal 2014.

Adjusted EBITDA as a percentage of Net sales was 11.9 percent for the
full-year fiscal 2015, up approximately 80 basis points from 11.1 percent for the full-year fiscal 2014. The increase
in Adjusted EBITDA reflects the continued focus on initiative execution to drive growth in excess of estimates of
market growth, category management and cost discipline.

Net income increased $1,469 million, to $1,472 million for the full-year fiscal 2015 as compared to $3 million for
the full-year fiscal 2014. Net income for full-year fiscal 2015 included a $1,007 million tax benefit resulting from
the reversal of our deferred tax asset valuation allowance and a $189 million non-cash tax credit from the
settlement of an IRS audit, a $186 million pre-tax gain on the sale of the Power Solutions business unit and $100
million loss on extinguishment and modification of debt. Net income per diluted share increased $7.29, to $7.31
for the full-year fiscal 2015 as compared to $0.02 for the full-year fiscal 2014.

Adjusted net income increased $172 million, or 96.1 percent, to $351 million for the full-year fiscal 2015 as
compared to $179 million for the full-year fiscal 2014. Adjusted net income per diluted share was $1.74 in the
full-year fiscal 2015, as compared to $0.90 in the full-year fiscal 2014. The increase in Adjusted net income is
primarily attributable to sales growth, gross margin expansion, the leverage of fixed costs through sales volume
increases, and a reduction in interest expense.

Fourth-Quarter 2015 Results

Net Sales increased $105 million, or 6.8 percent, to $1,648 million for the fourth quarter of fiscal 2015 as compared
to $1,543 million for the fourth quarter of fiscal 2014.

Gross profit increased $44 million, or 8.7 percent, to $551 million for the fourth quarter of fiscal 2015 as compared
to $507 million for the fourth quarter of fiscal 2014. Gross profit was 33.4 percent of Net sales for the fourth
quarter of fiscal 2015, up approximately 50 basis points from 32.9 percent of Net sales for the fourth quarter of
2014.

Operating income increased $10 million, or 8.3 percent, to $130 million for the fourth quarter of fiscal 2015 as
compared to $120 million for the fourth quarter of fiscal 2014. Operating income as a percentage of Net sales was
7.9 percent for the fourth quarter of fiscal 2015, up approximately 10 basis points from 7.8 percent for the fourth
quarter of fiscal 2014.

Adjusted EBITDA increased $12 million, or 7.7 percent, to $167 million for the fourth quarter of fiscal 2015 as
compared to $155 million for the fourth quarter of fiscal 2014. Adjusted EBITDA as a percentage of Net sales was
10.1 percent for the fourth quarter of fiscal 2015, up approximately 10 basis points from 10.0 percent for the
fourth quarter of fiscal 2014.

Net income increased $964 million to $871 million for the fourth quarter of fiscal 2015 as compared to a $93
million Net loss for the fourth quarter of fiscal 2014. Net income for the fourth quarter of fiscal 2015 included a
$1,007 million tax benefit resulting from the reversal of our deferred tax asset valuation allowance. Net income
per diluted share increased $4.81, to $4.33 for the fourth quarter of fiscal 2015 as compared to a $0.48 Net loss
per diluted share for the fourth quarter of fiscal 2014.

Adjusted net income increased $48 million to $55 million for the fourth quarter of fiscal 2015 as compared to $7
million for the fourth quarter of fiscal 2014. Adjusted net income per diluted share was $0.27 in the fourth
quarter of fiscal 2015, as compared to $0.03 in the fourth quarter of fiscal 2014.

As of January 31, 2016, HD Supply’s combined liquidity of approximately $1,311 million was comprised of $269
million in cash and cash equivalents and $1,042 million of additional available borrowings under HD Supply,
Inc.’s senior asset-backed lending facility, based on qualifying inventory and receivables.

 

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