DB Pitch Competition Deck vF

HD Supply Strategic AlternativesDiscussion Materials | October 2nd, 2015

Confidential Information

2Confidential Information

Our TeamGeorge A. Koulouris

Robert J. Liu

Stephanie L. Piazzola

Dazu Shi

Indiana University, Kelley School of Business, 2017 Major(s): Finance & Entrepreneurship and Corporate

Innovation Investment Banking Workshop, 2017

Indiana University, Kelley School of Business and College of Arts & Science, 2017

Major(s): Finance, Accounting & Mathematics Investment Banking Workshop, 2017

Indiana University, Kelley School of Business, 2017 Major(s): Finance Investment Banking Workshop, 2017

Indiana University, Kelley School of Business, 2017 Major(s): Finance Investment Banking Workshop, 2017


Table of Contents

I. Executive SummaryII. Macroeconomic Outlook & Industry AnalysisIII. HD Supply PositioningIV. JDL Acquisition Strategic ConsiderationsV. Additional Strategic Alternatives VI. JDL Financial Analysis

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Executive Summary



Executive SummaryRebounding residential markets and divesture of HD Supply Power Solutions (“Power Solutions”) have well positioned HD Supply to expand:

− HD Supply’s sale of Power Solutions to Anixter Inc. is expected to generate $800 million in net proceeds to materially reduce its debt burden.

− On July 24, 2015, HD Supply announced a public offering of common stock which resulted in the exit of all remaining financial sponsors of their ownership stake in the company.

− Low interest rates have companies racing to establish themselves to take advantage of the potential growth opportunities using cheap financing.

HD Supply’s five growth play strategy drives the company to find profitable growth in excess of market growth with clear number one positions in markets that HD Supply operates in:

− Sell more to existing customers− Introduce new products and services− Expand distribution channels− Acquire new customers− Enter new geographies

John Deere Landscapes (“JDL”) core competencies aligns with that of HD Supply:− JDL operates in a highly fragmented market in the North America and Canada regions.− JDL is a clear market leader in the landscape distribution sector and resonates with HD Supply’s

goal of being number one in each of its verticals.− JDL closely follows similar end markets as HD Supply within the U.S. construction market.

Deutsche Bank’s suggested valuation range for an acquisition of JDL is 9.5x – 10.0x EV/EBITDA.

HD Supply is positioned for growth post-divestiture

Management strategy is

aligned with growth

initiatives

JDL is an attractive

acquisition to add to HD Supply’s portfolio

Macroeconomic Outlook & Industry Analysis



Macroeconomic OverviewDomestic Economic Environment

• With 2015 coming to an end, economic outlook for the U.S. is positive overall:• The housing industry shows strong signs of

recovery while still driving more growth.• Discretionary spending is projected to

increase resulting in greater purchasing power moving forward.

• Interest rates are low resulting in easy money financing

• Low cost of oil will reduce inputs costs and drive profitability.

• Emerging markets outside the US provide unrest as global events have created volatility although home improvement spending is projected to be better in 2016.

International Events & Industry Impact

• China brings unrest to US investors from increases in volatility due to inflated markets.

• Social tensions in the Middle East has created a flood of refuges into Europe causing unrest.

• Fed withheld raising short-term interest rates drawing question to the US economic strength.

• ECB raises quantitative easing looking to calm the effects of the Greece crisis.

• Caterpillar cuts down, based off a convergence of challenging marketplace conditions in key regions and industry sectors.

• OPEC has yet to reach an agreement, Saudi Arabia continues to pump, driving down oil.

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E 2016F

1569 1603 1705 1848 1956 20681801

1355906

554 587 609 781 925 1003 1098 1301

Historical and projected U.S. total housing starts (in thousands)

2014 - 2016 CAGR 13.9%

Long-term median (1959- 2014): 1,473


Construction Industry Overview – Key Trends

Increasing Number of Divestitures

Entering New Geographies

Focusing on Primary End Markets

Restructuring

Weather

• Emerging markets have companies racing to establish themselves to take advantage of the potential growth opportunities

• Losses from foreign exchange had continued to be a factor in the decision

• Enables focused deployment of resources and talent on most impactful value creation and growth activities

• Enhances financial profile with simplified business mix

• It has been almost a decade since the last rate hike, keeping debt cheap

• Companies have recovered and have been looking to refinance their debt to take advantage of the low rates, locking in before the Fed’s next move

• Has an effect on a cyclical industry that requires sunshine, especially in recent years where fall has come early and winter has stayed late

• Already created an issue in 2015, due to plants opening late in the season

• Enables continuous improvement via established market penetration, and allocation of resources towards a more focused consumer

• Eliminates expansion costs due to already established asset base

HD Supply Positioning



HD Supply - Corporate Strategy & Equity Performance

Industry projections expected continuous growth

Recent global events may contribute to decrease in industry demandDivestiture of Power Solutions Business

• Sale of HD Supply Power Solutions Business Unit for ~$825M in Cash:• Plan to use sale proceeds to repay

debt• Evolved shareholder base with exit of

remaining financial sponsors• Enhances financial profile with more

focused business mix• Accelerates continued enhancement of

capital structure and exposure to attractive markets

• Allows for continuous improvement by evolution of talent alignment and functional support areas

• Improves ability to exceed growth estimates

Invest in Growth Plays

1. Sell More to Existing Customers (i.e., Share Wallet)2. Introduce New Products and Services3. Expand the Channels to Reach Our Customers (e.g.,

Internet, Catalog, Mobility)4. Acquire New Customers5. Enter New Geographies (i.e., Open New Locations)

Investment Thesis

• HDS is an attractive play on a bounce back in construction, with MRO exposed FM business providing non-cyclical hedging.

• Above-market growth is sustainable and expectations are heightened, as evidence by HDS’ premium multiple and street estimates.


HDS Corporate Strategy: Five Growth Plays

Goals to expand its Internet, Catalog, and Mobility presence

Sell More to Existing Customers

HD Supply has the ability to expand its product offerings by acquiring or merging with companies within the industry who specialize in different products

Respond to shifting consumer desires for a “one-stop shop”

Increased channel offerings will lead to greater market share and penetration

New products will also help acquire new customers

Share of Wallet High level of

customer loyalty because of strong brand value

Introduce New Products and Services

Expand the Channels to Reach our Customers

Acquire New Customers Predominantly

located in the United States

Open new locations

Can accomplish this through an acquisition/merger

Enter New Geographies

“We continue to invest in our five growth plays to drive profitable growth in excess of market growth, with our goal to exceed market growth by 300 basis points. We prioritize our large leadership businesses with clear number one

positions and deploy talent and capital to further extend their differentiated positions in attractive, highly fragmented North American markets.” Joseph DeAngelo

JDL Acquisition Strategic Considerations



JDL Company Overview• The largest and only national wholesale distributor of

landscape supplies in the United States with a growing presence in Canada.

• JDL’s geographic reach includes 471 branch locations in 44 states and 5 provinces.

• One-stop shop with a broad product offering of over 90,000 SKUs including irrigation supplies, fertilizer and control products, landscape accessories, nursery goods, hardscapes, and outdoor lighting.

• JDL provides consultative services which consist of irrigation network design, commercial project planning, generation of sales and leads, and marketing services and product support.

Business Description M&A Activity

Investment Thesis Sales Profile By Segment (FY 2014)

• JDL is a clear market leader in an attractive industry: they have the number one or two local market position in more than 80% of the geographic markets where they operate.

• Strong and scalable platform for driving growth: National scale and geographic footprint make JDL an attractive partner for customers and suppliers.

• Proven ability to identify, execute, and integrate acquisitions: leading player in the consolidation of the fragmented industry for wholesale distribution of landscape supplies.

• Position to benefit from the ongoing recovery in the residential and commercial construction markets and to continue to benefit from stable growth of maintenance products.

Residential

Commercial

Recreational & Other

Proprietary market-leading brands:

2014 Acquisitions:

2015 Acquisitions:


JDL Acquisition Analysis

JDL is the largest and only national wholesale distributor of landscape supplies in the United States and aligns with HD Supply’s current position as a leader in all of their verticals.

End markets include maintenance, new construction, and repair & upgrade, which correspond to HD Supply’s end markets.

JDL is a highly concentrated niche player in a fragmented market, which resonates with HD Supply’s operations in similarly fragmented market.

Operational Rationale

Strategic Rationale

Financial Rationale

Acquire new customers and expand geographical footprint by offering products in a different but complementary industry.

Anticipate trends and align operations to acquire full possible value.

Provide economies of scope by offering a wider variety of products to contractors.

Customers further rationalize their vendor supply chains for scale efficiencies and productivity benefits.

Potential for high revenue and cost synergies realized due to economies of scale and economies of scope.

Expected synergies from increased product line and accelerated expansion of distribution network. Purchase price discipline is key.

FY 14

Q2 - Inc

luding P

ower

Solutio

ns

FY 15

Q2 - Excl

uding

Power

Solutio

ns

FY 15

Q2 - Inc

luding

John D

eere L

andsc

apes

$645 $756 $756

$621 $697 $697

$430 $537 $537

$693 $226

Facilities Maintenance Waterworks White CapJohn Deere Landscapes Power Solutions

Sales by Segment

Additional Strategic Alternatives



Selected M&A Opportunities

Lake Forest, ILEV: $17,972.3

Net Debt/EBITDA: 0.2x

Grand Rapids, MIEV: $1,161.2


Peabody, MAEV: $1,469.8


• Provides capital, management, and administrative resources to subsidiaries that supply wood, wood composites, and other products.

• Would offer a wide range of products, as well a larger operational management chain.

• 52 Week Low–High: 40.70 – 64.96 | EBITDA: $148.73 | P/E: 18.05

• Distributor of residential and non-residential roofing materials as well as building materials, including sliding, windows and specialty lumber products an waterproofing systems.

• Has a focus in the construction industry and provides a variety of products focused on one segment of the market.

• 52 Week Low–High: 23.04 – 37.10 | EBITDA: $134.71 | P/E: 28.84

• Operates as a distributor of maintenance, repair, and operating products.

• Would greatly expand HD Supply’s product line and services through local branches, catalogs, and internet channels.

• Will support HD Supply’s Facility Maintenance business, capturing more of HD Supply’s primary end market.

• 52 Week Low–High: 194.42 – 261.57 | EBITDA: $1,641.25| P/E: 18.01


Strategic Analysis of Acquisition Opportunities

Highest

Lowest

Strategic Fit

Lowest HighestAbility to Finance Acquisition / Execute

Activity

Maintain Status Quo

JDL Financial Analysis



Leveraged Buyout

Precedent Transactions

Discounted Cash Flows

Comparable Companies

$400.0 $450.0 $500.0 $550.0 $600.0 $650.0

Valuation SummaryEV: $508.3

EV/EBITDA: 9.5x

Implied EV/EBITDA of

9.0x-11.0x


8.0x-9.5x


9.5x-11.5x


9.5x-10.5x

$481.6 $588.6

$508.3 $561.8

$481.6 $615.3

$428.0 $508.3

Derived form the four main valuation techniques, an EBITDA multiple between 9.5x – 10.0x is recommended.

Using the FY ‘15 EBITDA of $53.5, the Enterprise Value range is calculated to be between $508.3 - $535.1.

This valuation range is wrapped towards the lower end of the first three valuation metrics. Deutsche Bank believes the market valuation methods overvalue peers due to the favorable environment of the US economic recovery, which may or may not persist into future years. It is important that HDS does not overpay in the event of an acquisition.

EV: $535.1EV/EBITDA: 10.0x


Tier 1: Selected based on similar business operations, product offerings, end customers, and financial size.

Tier 2: Selected conglomerates with product mixes that encompass one or multiple parts of the wholesale industry.

John Deere Landscapes Comparable Companies Analysis ($'s in millions, as of 9/28/15)

Current % of Enterprise Value /Share 52 Equity Enterprise 2015E 2016E LTM Gross LTM EBITDA LTM EBIT Total Debt / EBITDA / Dividend

Company Price Week High Value Value EBITDA EBITDA Revenue Margin EBITDA Margin EBIT Margin EBITDA Interest Yield

Public ComparablesTier-1 PeersStock Building Supp Holdings, Inc. 17.73$ 70.4% 464.3$ 544.1$ 12.2x 8.2x 1,319.0$ 23.3% 33.0$ 2.7% 19.0$ 1.6% 2.4x 13.1x 0.0%MSC Industrial Direct Co., Inc. 62.19 70.4% 3,837.7 4,273.1 9.3x 8.4x 2,910.0 45.4% 453.0 15.2% 385.0 12.9% 1.0x 73.7x 2.6%WESCO International, Inc. 49.46 56.9% 2,153.9 3,463.7 7.1x 6.3x 7,807.0 19.3% 501.0 6.4% 435.0 5.6% 3.0x 6.3x 0.0%W.W. Grainger, Inc. 213.77 81.7% 14,103.5 14,768.0 9.9x 9.5x 10,035.0 42.9% 1,577.0 16.4% 1,355.0 14.1% 0.9x 159.5x 2.2%Beacon Roofing Supply, Inc. 34.17 92.1% 1,698.7 1,970.6 12.2x 12.4x 2,454.0 23.1% 135.0 5.5% 101.0 4.1% 2.1x 13.0x 0.0%Builders FirstSource, Inc. 13.93 83.5% 1,512.4 1,881.1 8.2x 4.1x 1,664.0 22.6% 61.0 4.1% 48.0 3.4% 5.9x 2.2x 0.0%Universal Forest Products, Inc. 59.46 91.5% 1,197.1 1,330.3 8.2x 7.5x 2,805.0 12.6% 167.5 5.3% 129.5 3.9% 1.0x 32.0x 1.3%Watsco, Inc. 123.69 93.5% 4,366.9 5,046.6 12.6x 11.2x 4,044.0 24.0% 348.0 8.5% 329.0 8.0% 1.3x 57.6x 2.3%

Mean 80.0% 10.0x 8.5x $4,129.8 26.7% $409.4 8.0% $350.2 6.7% 2.2x 44.7x 1.0%Median 82.6% 9.6x 8.3x 2,857.5 23.2% 257.8 6.0% 229.3 4.8% 1.7x 22.5x 0.7%High 93.5% 12.6x 12.4x 10,035.0 45.4% 1,577.0 16.4% 1,355.0 14.1% 5.9x 159.5x 2.6%Low 56.9% 7.1x 4.1x 1,319.0 12.6% 33.0 2.7% 19.0 1.6% 0.9x 2.2x 0.0%

Tier-2 PeersFastenal Company 36.71$ 75.8% 10,652.0$ 10,860.8$ 11.8x 11.0x 3,858.0$ 50.6% 909.0$ 23.5% 832.0$ 21.5% 0.4x 518.4x 3.1%Installed Building Products, Inc. 26.25 87.6% 823.4 919.5 12.1x 8.7x 575.0 27.0% 44.1 10.0% 34.5 6.0% 1.8x 17.3x 0.0%HUBER+SUHNER AG 41.96 73.4% 847.7 714.8 7.9x 6.9x 738.0 34.5% 104.0 11.6% 72.0 7.2% 0.0x 4.5x 3.4%Granite Construction Inc. 30.42 77.8% 1,197.9 1,289.7 7.2x 5.7x 2,299.0 10.9% 134.0 5.0% 67.0 2.1% 2.4x 8.4x 1.7%Anixter International Inc. 59.11 65.7% 1,948.8 2,683.3 7.9x 7.4x 6,201.0 22.4% 337.0 5.9% 294.0 5.2% 2.6x 6.8x 0.0%Pool Co. 72.76 98.5% 3,123.7 3,582.8 15.8x 14.0x 2,294.0 28.9% 219.0 9.5% 202.0 8.8% 2.3x 30.2x 1.4%Wolseley plc 64.15 93.3% 16,646.7 18,518.1 12.1x 10.6x 13,051.0 27.5% 956.0 6.9% 541.0 5.7% 1.7x 30.1x 2.0%

Mean 81.7% 10.7x 9.2x $4,145.1 28.9% $386.2 10.4% $291.8 8.1% 1.6x 88.0x 1.7%Median 77.8% 11.8x 8.7x 2,299.0 27.5% 219.0 9.5% 202.0 6.0% 1.8x 17.3x 1.7%High 98.5% 15.8x 14.0x 13,051.0 50.6% 956.0 23.5% 832.0 21.5% 2.6x 518.4x 3.4%Low 65.7% 7.2x 5.7x 575.0 10.9% 44.1 5.0% 34.5 2.1% 0.0x 4.5x 0.0%

ValuationJDL 2015 EBITDA 53.5$ Tier 1 Mean EBITDA Multiple 9.0x - 11.0xEnterprise Value 481.6$ - 588.6$


Tailwinds in the US housing and debt markets pushed up valuations during the recovery years of 2013-2014. Recent global volatility may have contributed to

decreasing valuations in 2015. Furthermore, most transactions have been financed purely with debt due to the low interest rate environment.

John Deere LandscapesPrecedent Transactions Analysis ($'s in millions, as of 9/28/15)

Percent Percent Enterprise Announced Date Target Acquirer Debt Stock Value TEV TEV / Revenue TEV / EBITDA

04/ 13/ 15 ProBuild Holdings Builders FirstSource 100 - $1,630.0 $1,820.0 0.4x 9.6x

03/ 27/ 15 PrimeSource Building Products Platinum Equity - - - 835.0 0.6x 7.9x

02/ 12/ 15 Anixter Int'l OEM Supply Fasteners American Industrial Partners 100 - 380.0 380.0 0.4x 7.4x

05/ 19/ 14 The Hillman Group CCMP Capital 100 - 1,475.0 1,475.0 2.1x 11.7x

08/ 26/ 13 E&R W.W. Grainger - - - 116.0 0.6x 10.0x

02/ 28/ 13 SRS Distribution Berkshire Partners - - - 645.0 1.0x 11.6x

02/ 22/ 13 Barnes Distribution North America MSC Industrial Direct 100 - 548.8 450.0 1.5x 8.8x

09/ 07/ 12 Interline Brands GS Capital and P2 Capital 100 - 1,031.1 1,052.0 0.8x 9.5x

07/ 12/ 11 Garden Ridge AEA 100 - 1,430.0 700.0 1.0x 8.5x

12/ 16/ 10 TVC Counications WESCO - - 246.5 247.0 0.8x 8.8x

Mean $772.0 0.9x 9.4xMedian 672.5 0.8x 9.2xHigh 1,820.0 2.1x 11.7xLow 116.0 0.4x 7.4x

ValuationJDL 2015 EBITDA 53.5$ Tier 1 Mean EBITDA Multiple 9.5x - 11.5xEnterprise Value 508.3$ - 615.3$


WACC Calculation Terminal Value using Exit Multiple MethodCost of DebtTotal Debt 24.65%Cost of Debt 4.74%Tax Rate 40.00%After-tax Cost of Debt 2.84%Cost of Equity Enterprise Value Using Exit Multiple Total Equity 75.3%Risk-free Rate 2.08%Market Risk Premium 5.67%Levered Beta 1.46 Cost of Equity 10.35%

WACC 8.50%

Enterprise Value WACC CalculationExit Multiple

9.50x 9.75x 10.00x 10.25x 10.50x7.50% $511.9 $522.3 $532.8 $543.3 $553.88.00% 499.4 509.6 519.8 530.0 540.28.50% 487.3 497.2 507.1 517.0 527.09.00% 475.6 485.2 494.8 504.5 514.19.50% 464.2 473.6 482.9 492.3 501.7

WA

CC

Enterprise ValuePerpetuity Growth Rate

3.00% 3.25% 3.50% 3.75% 4.00%7.50% $591.2 $620.2 $652.9 $690.0 $732.48.00% 531.7 554.7 580.1 608.6 640.68.50% 483.2 501.7 522.0 544.4 569.49.00% 442.8 457.9 474.5 492.6 512.59.50% 408.7 421.3 434.9 449.8 465.9

WA

CC

John Deere LandscapesDiscounted Cash Flow Analysis($ in millions)

Historical Period CAGR Projection Period CAGR2012A 2013A 2014A ('12 - '14) 2015E 2016E 2017E 2018E 2019E ('15 - '19)

Total Revenue 1,062.0$ 1,072.7$ 1,176.6$ 5.3% 1,259.0$ 1,334.5$ 1,401.2$ 1,464.3$ 1,522.9$ 3.9%% Growth NM 1.0% 9.7% 7.0% 6.0% 5.0% 4.5% 4.0%

COGS excluding D&A 744.6 783.0 865.5 931.6 987.5 1,036.9 1,083.6 1,126.9 Gross Profit 317.4$ 289.7$ 311.1$ (1.0%) 327.3$ 347.0$ 364.3$ 380.7$ 395.9$ 3.9%Gross Margin 29.9% 27.0% 26.4% 26.0% 26.0% 26.0% 26.0% 26.0%

SG&A 281.4 235.6 269.0 277.0 293.6 308.3 322.1 335.0 Other Income 5.0 3.6 3.1 3.1 3.3 3.5 3.7 3.8 EBITDA 41.0$ 57.7$ 45.2$ 5.0% 53.5$ 56.7$ 59.6$ 62.2$ 64.7$ 3.9%% Margin 3.9% 5.4% 3.8% 4.3% 4.3% 4.3% 4.3% 4.3% Perpetuity Growth Rate

Depreciation & Amortization 11.0 10.2 20.3 22.0 23.4 24.5 25.6 26.6 EBIT 30.0$ 47.5$ 24.9$ (8.9%) 31.5$ 33.4$ 35.0$ 36.6$ 38.1$ 3.9%% Margin 2.8% 4.4% 2.1% 2.5% 2.5% 2.5% 2.5% 2.5%

Taxes (21.0) 23.9 14.4 12.6 13.3 14.0 14.6 15.2 NOPAT 51.0$ 23.6$ 10.5$ (54.6%) 18.9$ 20.0$ 21.0$ 22.0$ 22.8$ 3.9%Plus: Depreciation & Amortization 11.0 10.2 20.3 22.0 23.4 24.5 25.6 26.6 Less: Capital Expenditure 5.2 3.2 4.3 6.3 6.7 7.0 7.3 7.6 Less: Inc./ (Dec.) in Net Working Capital 14.1 24.2 (4.4) 9.2 9.7 10.2 10.7 11.1 FCF 42.7$ 6.4$ 30.9$ 25.5$ 27.0$ 28.3$ 29.6$ 30.8$ Present Value of FCF 23.5$ 22.9$ 22.2$ 21.4$ 20.5$

Implied Perpetuity Growth Rate Enterprise Value Using Perpetuity Growth RateTerminal Year FCF 30.8$ WACC 8.50%Terminal Value 647.2$ Implied Growth Rate 3.38%

Implied EV/EBITDAEnterprise Value 507.1$ 2019 EBITDA 64.7$ Implied EV/ EBITDA 7.8x

Terminal Value using Perpetuity Growth RateTerminal Year FCF 30.8$ WACC 8.50%Perpetuity Growth Rate 2.50%Terminal Value 525.8$ Present Value 335.7$ Implied Exit Multiple 8.1xEnterprise Value Using Perpetuity Growth RateEnterprise Value 450.7$

Terminal Value using Exit Multiple Method2019 EBITDA 64.7$ Exit Multiple 10.0xTerminal Value 647.2$ Discount Rate 8.50%Present Value 396.7$

Enterprise Value Using Exit Multiple Enterprise Value 507.1$

2014 spike in revenue growth was a result of the spin off from CD&R and additional financial sponsors, revenue growth was decayed at an

accelerated rate in order to reflect this. The DCF generated a valuation range of 9.5x – 10.5x EV/EBITDA.


Transaction AssumptionsEntry Multiple (EV/ EBITDA) 9.0xEBITDA (FY) 51.3Transaction Value $461.7

Less: Total Debt 190.1Less: Preferred Stock 0.0Less: Nonconrolling Inerest 0.0Plus: Cash and Cash Equivalents 22.1Equity Purchase Price $293.7Sources of Funds Amount PercentRevolver $50.0 0.0%Cash 22.1 4.5%Term Loan A 153.9 31.5%Term Loan B 102.6 21.0%Sponsor's Equity 209.8 43.0%Total Sources of Funds $488.5 100.0%

Uses of Funds Amount PercentEquity Purchase Price $293.7 60.1%Refinancing of Existing Debt 190.1 38.9%Financing Fees 4.6 0.9%Other Fees 0.0 0.0%Total Uses of Funds $488.5 100.0%

Leverage SettingsRevolver $50.0Minimum Cash Level $0.0Term Loan A / EBITDA 3.0xTerm Loan B / EBITDA 2.0xTotal Leverage 6.0x

Debt ScheduleProjection Period

Pro Forma Year 1 Year 2 Year 3 Year 4 Year 5Income Statement 2015 2016 2017 2018 2019 2020Revenue $1,176.6 $1,259.0 $1,334.5 $1,401.2 $1,464.3 $1,522.9EBITDA 51.3 54.9 58.2 61.1 63.8 66.4D&A 20.6 22.0 23.4 24.5 25.6 26.6EBIT $30.7 $32.9 $34.8 $36.6 $38.2 $39.8

Interest ExpenseForward LIBOR Curve 0.89% 1.40% 1.94% 2.00% 2.25%Revolver 0.0 0.0 0.0 0.0 0.0Commitment Fee on Unused Revolver 0.3 0.3 0.3 0.3 0.3Term Loan A 7.5 7.7 8.0 7.6 7.5Term Loan B 4.9 4.3 3.6 2.8 2.0

Cash Interest Expense $12.6 $12.2 $11.8 $10.7 $9.7Amortization of Deferred Financing Fees

Total Interest Expense $12.6 $12.2 $11.8 $10.7 $9.7

Earnings Before Taxes 20.3 22.6 24.7 27.5 30.1Income Tax Expense (40%) 8.1 9.1 9.9 11.0 12.0

Net Income $12.2 $13.6 $14.8 $16.5 $18.1

Cash Flow StatementPlus: Depreciation & Amortization 22.0 23.4 24.5 25.6 26.6Less: Increase/ (Decrease) in NWC 9.3 9.8 10.3 10.8 11.2Less: CapEx 6.3 6.7 7.0 7.3 7.6

Cash Flow Available for Debt Repayments $18.6 $20.5 $22.1 $24.1 $25.9Total Mandatory Repayments Min Cash (8.7) (8.7) (8.7) (8.7) (8.7)Cash from Revolver 0 0.0 0.0 0.0 0.0 0.0

Cash Available for Optional Debt Repayment $9.9 $11.7 $13.3 $15.3 $17.2

John Deere Landscapes Leveraged Buyout Analysis(Assumptions & Debt Schedule, $'s in millions)

The leveraged buyout initial transaction was structured using a 9.0x entry multiple, levered 6.0x with the Revolver & Term Loan A as a part of First Lien Bank Debt and Term Loan B the Second Lien Bank Debt. Cash available for optional debt repayment is used to pay off the Term Loan B first and

then Term Loan A.


Return AnalysisExit Year 2020Entry Multiple 9.0xExit Multiple 9.0xIRR 16.6%Cash Return 2.2x

John Deere Landscapes Leveraged Buyout Analysis(Returns Analysis, $'s in millions)

IRR - Assuming 2020 ExitExit Multiple

8.0x 8.5x 9.0x 9.5x 10.0x8.0x 19.5% 16.0% 13.0% 10.4% 8.1%8.5x 21.5% 17.9% 14.8% 12.2% 9.9%9.0x 23.4% 19.7% 16.6% 13.9% 11.6%9.5x 25.2% 21.4% 18.3% 15.5% 13.2%

10.0x 26.8% 23.0% 19.8% 17.1% 14.7%

IRR - Assuming 9.0x Entry MultipleExit Year

2018 2019 2020 2021 20228.0x 11.8% 12.8% 13.0% 12.9% 12.6%8.5x 15.6% 15.3% 14.8% 14.3% 13.8%9.0x 19.1% 17.7% 16.6% 15.7% 14.9%9.5x 22.4% 20.0% 18.3% 16.9% 15.9%

10.0x 25.6% 22.2% 19.8% 18.2% 16.9%

Pro Forma Year 1 Year 2 Year 3 Year 4 Year 5Cash Return 2015 2016 2017 2018 2019 2020Entry EBITDA Multiple 9.0xInitial Equity Investment $209.83EBITDA 54.9 58.2 61.1 63.8 66.4

Exit EBITDA Multiple 9.0xEnterprise Value at Exit $494.1 $523.7 $549.9 $574.6 $597.6

Less: Net DebtRevolver $0.0 $0.0 $0.0 $0.0 $0.0Term Loan A 146.2 138.5 130.8 123.1 115.4Term Loan B 91.7 78.9 64.5 48.2 30.0Total Debt $237.9 $217.4 $195.4 $171.3 $145.4

Less: Cash and Cash Equivalents 0.0 0.0 0.0 0.0 0.0Net Debt $237.9 $217.4 $195.4 $171.3 $145.4

Equity Value At Exit $256.2 $306.3 $354.5 $403.3 $452.2

Cash Return 1.2x 1.5x 1.7x 1.9x 2.2x

IRR 2016 2017 2018 2019 2020Initial Equity Investment ($209.8) ($209.8) ($209.8) ($209.8) ($209.8)Equity Proceeds $256.2 - - - -

$306.3 - - -$354.5 - -

$403.3 -$452.2

IRR 22.1% 20.8% 19.1% 17.7% 16.6%

Assuming a 9.0x entry and exit multiple, the LBO is expected to generate a 16.6% IRR after a 5 year exit. It is the view of Deutsche Bank that it would be unlikely for a financial sponsor to pursue an LBO of JDL. The Comparable Companies Analysis generated a mean valuation of 10.0x EBITDA and would depress the IRR to 14.7%. JDL management would likely seek a higher premium and further reduce the IRR without increased leverage, a

particularly risky tactic due to the cyclicality of the business - especially as interest rates are projected to increase at the end of 2015.


Accretion / (Dilution) - $ ($0.24) $0.32 $0.18 $0.22 $1.43Accretion / (Dilution) - % -10.86% 14.09% 6.17% 6.13% 48.77%Accretive / Dilutive Dilutive Accretive Accretive Accretive Accretive

Included Pre-Tax Synergies $74.50 $79.05 $87.86 $90.24 $96.10Additional Synergies to Breakeven 72.2 (97.8) (56.7) (66.7) (438.9) Required Synergies to Breakeven $146.7 $0.0 $0.0 $0.0 $0.0

Financing Scenarios2015 2016 2017

N ew D ebt -$ -$ -$ A l l Stock - - - A l l D ebt 630.8 630.8 630.8 50% D ebt 315.41 315.41 315.41 N ew Shares 3.2 3.2 3.2 A l l Stock 3.2 3.2 3.2A l l D ebt 0.0 0.0 0.050% D ebt 1.6 1.6 1.6

H D Supply A cquisition of John D eere LandscapesA ccretion/D ilution M odel($'s in millions)

Projection Period2014A 2015E 2016E 2017E 2018E 2019E

Total Revenue 8,882.0$ 7,450.0$ 7,905.0$ 8,786.0$ 9,024.0$ 9,610.0$ % G rowth N M (19.2%) 5.8% 10.0% 2.6% 6.1%G ross Profi t 2,558.0$ 2,428.0$ 2,603.0$ 2,808.0$ 2,998.0$ 3,202.0$ G ross M argin 28.8% 32.6% 32.9% 32.0% 33.2% 33.3%SG& A 1,704.0 1,539.0 1,614.0 1,688.0 1,742.0 1,815.0 EBITD A 854.0$ 889.0$ 989.0$ 1,120.0$ 1,256.0$ 1,387.0$ % M argin 9.6% 11.9% 12.5% 12.7% 13.9% 14.4%D epreciation & A mortization 207.0 116.0 123.0 117.0 120.0 120.0 JD L EBIT 24.9 31.5 33.4 35.0 36.6 38.1 Synergies 74.5 79.1 87.9 90.2 96.1 Pro Forma EBIT 671.9$ 879.0$ 978.4$ 1,125.9$ 1,262.8$ 1,401.2$ Interest Expense 461.0$ 390.0$ 325.0$ 321.0$ 310.0$ 296.0$ Incremental In terest @ 6% N M -$ -$ -$ -$ -$ Pretax Income 210.9$ 489.0$ 653.4$ 804.9$ 952.8$ 1,105.2$ Income Tax 97.8 130.7 161.0 190.6 221.0 Pro Forma N et Income 210.9$ 391.2$ 522.7$ 643.9$ 762.3$ 884.1$ Standalone N et Income 3.0$ 432.0$ 451.0$ 597.0$ 707.0$ 585.0$ Fully D iluted Share 202.5 202.5 202.5 202.5 202.5 Standalone Shares 199.3 199.3 199.3 199.3 199.3 P ro Forma EPS 1.9 2.6 3.2 3.8 4.4 Standalone EPS 2.2 2.3 3.0 3.5 2.9

Transaction A ssumptionsP u rchase P rice $630.8EBIT D A M u ltip le 9.75xEBIT D A $64.7Fu l ly D i lu ted Shares O utstand ing 199.3In terest Exp ense 6.0%

Using an entry multiple of 9.75x EBITDA, the deal is projected to be accretive during the second fiscal year. However, it must be emphasized that the success of the deal is heavily dependent on

purchase price discipline - a significant premium could eliminate the financial benefits of the acquisition.

A ccretion / D ilution (Year 3)% Stock C onsideration

0% 50% 100%8.75x 3.31% 4.84% 6.34%9.25x 3.05% 4.66% 6.26%9.75x 2.79% 4.49% 6.17%

10.25x 2.53% 4.32% 6.09%10.75x 2.27% 4.15% 6.00%EV

/EB

ITD

A


H D Supply - John D eere LandscapesD iscounted C ash Flow A nalysis w ith Synergies, H D S W A CC C alculation($ in millions)

Projection Period C A G R2014A 2015E 2016E 2017E 2018E 2019E ('15 - '19)

T otal R evenue 8,882.0$ 7,174.7$ 7,587.7$ 8,348.6$ 8,568.7$ 9,091.3$ 4.8%% G rowth (19.2% ) 5.8% 10.0% 2.6% 6.1%

C O G S exclud ing D & A 6,324.0 5,022.0 5,302.0 5,978.0 6,026.0 6,408.0 R evenue Synergies 35.9 56.9 83.5 85.7 90.9 G ross Profi t 2,558.0$ 2,188.6$ 2,342.6$ 2,454.0$ 2,628.4$ 2,774.2$ 4.9%

G ross M argin 28.8% 32.6% 32.9% 32.0% 33.2% 33.3%SG & A 1,704.0 1,578.4 1,669.3 1,836.7 1,885.1 2,000.1 C ost of O btain ing R evenue Synergies (71.7) (56.9) (41.7) (42.8) (45.5) C ost Synergies 53.8 64.5 79.3 90.0 95.5 EBITD A 854.0$ 735.7$ 794.7$ 738.4$ 876.1$ 915.0$ 4.5%

% M argin 9.6% 10.3% 10.5% 8.8% 10.2% 10.1% Perpetuity G rowth R ateD epreciation & A mortization 207.0 116.0 123.0 117.0 120.0 120.0 EBIT 647.0$ 619.7$ 671.7$ 621.4$ 756.1$ 795.0$ 5.1%

% M argin 7.3% 8.6% 8.9% 7.4% 8.8% 8.7%T axes 258.8 247.9 268.7 248.6 302.5 318.0 N O PA T 388.2$ 371.8$ 403.0$ 372.9$ 453.7$ 477.0$ 5.1%P lus: D epreciation & A mortiz ation 207.0 116.0 123.0 117.0 120.0 120.0 L ess: C apital Expenditure 44.4 35.9 37.9 41.7 42.8 45.5 L ess: Inc./ (D ec.) in N et W orking C apital 64.7 52.2 55.2 60.8 62.4 66.2 FC F 486.1$ 399.7$ 432.9$ 387.3$ 468.5$ 485.4$

Present V alue of FC F 374.9$ 380.8$ 319.6$ 362.6$ 352.3$

Enterprise V alue WA C C C alculationExit M ultiple

9.50x 9.75x 10.00x 10.25x 10.50x7.50% $7,379.5 $7,527.7 $7,676.0 $7,824.2 $7,972.48.00% 7,201.2 7,345.3 7,489.5 7,633.6 7,777.88.50% 7,028.2 7,168.5 7,308.7 7,448.9 7,589.19.00% 6,860.6 6,997.0 7,133.4 7,269.8 7,406.29.50% 6,697.9 6,830.6 6,963.3 7,096.0 7,228.8

WACC

Enterprise V aluePerpetuity G row th Rate

3.00% 3.25% 3.50% 3.75% 4.00%7.50% $9,275.0 $9,733.3 $10,248.7 $10,833.0 $11,500.78.00% 8,339.0 8,700.3 9,101.9 9,550.6 10,055.48.50% 7,574.4 7,865.5 8,185.7 8,539.6 8,932.99.00% 6,938.3 7,176.9 7,437.3 7,722.4 8,036.19.50% 6,401.0 6,599.6 6,814.7 7,048.5 7,303.5

WACC

WA C C C alculation Terminal V alue using Exit M ultiple M ethodC ost of D ebtTotal D ebt 57.50%C ost of D ebt 2.51%Tax R ate 11.30%A fter-tax C ost of D ebt 2.23%C ost of EquityTotal Equ ity 57.5%Risk-free Rate 2.08%M arket R isk P remium 5.67%L evered Beta 1.27 C ost of Equity 9.28%

W A C C 6.62%

Implied Perpetuity G row th RateTerminal Y ear FC F 485.4$ W A C C 6.62%Terminal V alue 8,692.5$ Implied Grow th R ate 0.80%

Implied EV /EBITD AEnterp rise V alue 7,708.5$ 2019 EBIT D A 915.0$ Implied EV / EBIT D A 8.4x

Terminal V alue using Exit M ultiple M ethod2019 EBITD A 915.0$ Exit M u ltip le 9.5xTerminal V alue 8,692.5$ D iscount Rate 6.62%P resen t V alue 5,918.3$

Enterprise V alue U sing Exit M ultiple Enterprise V alue 7,708.5$

Terminal V alue using Perpetuity G row th RateTerminal Y ear FC F 485.4$ W A C C 6.62%P erpetu ity G row th R ate 2.50%Terminal V alue 12,085.0$ P resent V alue 8,495.9$ Imp lied Exit M u ltip le 13.2xEnterprise V alue U sing Perpetuity G row th R ateEnterprise V alue 10,344.4$

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DB Pitch Competition Deck vF