HD Supply 4Q16 Earnings Call Notes

Joe DeAngelo

Non-resi construction trending positive

” I think we have said this on the last call is we feel really good about the customers we are talking to. There is no customers that I have talked to in a non-res construction environment, it didn’t say, hey, we feel really good about the year and we are proceeding as we thought. So, I think its line with being a solid market out there. I think that’s the right description of it.”

Evan Levitt

39% taxpayer

“Thank you, Joe and good morning everyone. I will start with areas of recent investor focus on Page 7 and share with you our latest perspective on these topics. First, corporate tax reform, we continue to hear about the new administration’s focus on corporate tax reform and are encouraged by the potential outcome. As a reminder once our net operating loss carry-forwards are exhausted, we will be a tax payer at approximately 39% to 40% of free tax income, which includes the federal statutory rate of 35% plus a 4% to 5% net stake rate. As a predominantly domestic company any reduction in the federal statutory rate will directly improve our future after tax cash flows. Border tax, we are a North American company, have a little direct exposure to international economies. The limited exposure we have is a result of our proprietary brands which we manufacture predominantly in Asia with our strategic vendor partners.”

Construction remains mixed geographically

“The construction market, construction markets remain mix through geographically, but we remain optimistic on the forward outlook. We like others share the growing enthusiasm regarding the prospects of infrastructure investment. However, we expect to see certain large multi-year projects in which we have participated come to completion and create comparability considerations as new projects are breaking ground. For example, in Atlanta we had multi-year projects underway at the new Braves Stadium and the new Falcons Stadium. Both of which will be completed this spring. That said, we continued to see solid pockets of strength in most geographies including our Northern priority districts Denver and the Southeast. We have noticed pockets of unevenness in certain Gulf States Houston and California. Despite this, we expect solid activity trends to continue throughout 2017 in the majority of our markets. “