Forward-Looking Statements and Preliminary Results
This presentation 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 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. 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, without limitation, our ability to obtain the required regulatory approvals for the sale of Construction
Industrial business, our ability to satisfy the other closing conditions related to the sale transaction, our ability to consummate the sale transaction on the anticipated timing, if at all, the impact of the coronavirus disease 2019 outbreak ("COVID-19") on the maintenance, repair and operations and specialty construction sectors, in general, and the financial position and operating results of our company, in particular, which cannot be predicted and could change rapidly and those "Risk factors" in our annual report on Form 10-K, for the fiscal year ended February 2, 2020, filed on March 17, 2020 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 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 August 2020 Net sales 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 presented herein. Additional information regarding Adjusted EBITDA, Adjusted net income, Adjusted net income per diluted share, Net debt, and Free cash flow referred to in this presentation is included at the end of this presentation under "Capital Structure Overview" and "Reconciliation of Non-GAAP Measures."
4% Net Sales Decline VPY
6% Operating Income Decline VPY
3% Net Income Decline VPY
2% Adjusted EBITDA1 Decline VPY
+3% Net Income per Diluted Share VPY
$645M LTM Free Cash Flow2
Liquidity of $995M3; $198M increase from May 3, 2020
Sale of Construction and Industrial
$2.5 Billion After Tax and Transaction Costs
Use of Proceed: Share Repurchases; Debt Repayment; M&A Strategy; Ongoing Capex Investment at 2 Percent of Sales
Significant Improvement in Facilities Maintenance Performance
Successful Navigation of Durable Goods Shortages and Shipping Delays
See appendix slides 16 and 17 for a reconciliation of Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per Diluted Share to Net Income 2 Free Cash Flow is defined as LTM Operating Cash Flow $730M, Less Capital Expenditures $85M 3 As of August 2, 2020, our combined liquidity of approximately $995 million was comprised of $71 million in cash and cash equivalents and $924 million of additional available borrowings (excluding $86 million of borrowings on available cash balances) under our Senior ABL Facility, based on qualifying inventory and receivables
Note: "VPY" denotes Versus Prior Year, "LTM" denotes Last Twelve Months
Solid Improvement and Share Gains Through Q2'20
Facilities Maintenance: COVID-19 Impact
No Disruption to Distribution Centers; Successful Continuance of Working from Home Plan; Maintain Infection Controls in all Locations
Customer Focus on Safe Reopening and Operating of their Living Space Properties
Gross Margin Headwinds to Business include:
Increased Demand for Safety and Infection Control
Sales Mix Skewed Towards Big Ticket Items
Slower Recovery in Traditional MRO
Hospitality Market Remains Significantly Impacted but Improving; Decline in Revenue per Available Room of Approximately 60 percent1 in Q2'20
Healthcare Market Occupancy Rate Decline VPY2 in Q2'20
Data from STR: "Total U.S. hotel performance for Q2;20 2020"
2 Data from NIC: Q2'20 Assisted Living Occupancy Rates Down 390 Basis Points VPY; Independent Living Occupancy Rates Down 270 Basis Points VPY
Health and Safety of Our Associates Remains a Priority
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HD Supply Holdings Inc. published this content on 09 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 09 September 2020 10:14:02 UTC