Investor Update September / October 2017

Transcription

1 Investor Update September / October 2017

2 [Beacon logo] Forward Looking Statements and Non-GAAP Measures This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including, but not limited to, those set forth in the "Risk Factors" section of the Company's latest Form 10-K as well as the Company s subsequent filings with the U.S. Securities and Exchange Commission ( SEC ). In addition, the forward-looking statements included in this presentation represent the Company's views as of the date of this presentation and these views could change. However, while the Company may elect to update these forward-looking statements at some point, the Company specifically disclaims any obligation to do so, other than as required by federal securities laws. These forward-looking statements should not be relied upon as representing the Company's views as of any date subsequent to the date of this presentation. This presentation includes EBITDA, Adjusted EBITDA, combined Adjusted EBITDA, combined net sales, combined net income and net debt of Beacon and EBITDA and Adjusted EBITDA of Allied, which are measures not presented in accordance with generally accepted accounting principles ( GAAP ). Beacon defines EBITDA as net income plus income tax expense, interest expense, net and depreciation and amortization. Beacon defines Adjusted EBITDA as EBITDA plus non-recurring acquisition costs and stock-based compensation. Beacon defines net debt as total debt less cash and cash equivalents. Allied defines EBITDA as net income plus income tax expense, interest expense, net and depreciation and amortization. Allied defines Adjusted EBITDA as EBITDA plus adjustments for certain one-time costs incurred by Allied. Combined Adjusted EBITDA is defined as combined net income plus combined interest expense (net of interest income), combined income taxes, combined depreciation and amortization expense, adjustments to contingent consideration, stock-based compensation, non-recurring acquisition costs, fiscal year 2017 year-to-date acquisition run-rate adjustments, other adjustments for certain one-time costs incurred by Allied and $110 million in anticipated annual run-rate synergies from the Allied acquisition. EBITDA is a measure commonly used in the distribution industry, and we present EBITDA, Adjusted EBITDA and combined Adjusted EBITDA to enhance your understanding of our operating performance. An Adjusted EBITDA-based metric is used in Beacon s financing covenants and we and Allied use EBITDA, Adjusted EBITDA and combined Adjusted EBITDA as internal performance measurements and as two criteria for evaluating our performance relative to that of our peers. We and Allied believe that the presentation of EBITDA, Adjusted EBITDA and combined Adjusted EBITDA provide investors and analysts with a measure of operating results unaffected by differences in capital structures, capital investment cycles and ages of related assets among otherwise comparable companies. Further, we and Allied believe that EBITDA, Adjusted EBITDA and combined Adjusted EBITDA are useful measures because they improve comparability of results of operations, since purchase accounting used for acquisitions can render depreciation and amortization non-comparable between periods. We present net debt to enhance your understanding of our financial position. While we believe these are useful measures for investors, non-gaap measures should not be considered in isolation or as a substitute for any items calculated in accordance with GAAP. In addition, this presentation includes projections regarding the expected accretive impact of the proposed transaction to Adjusted EPS, based on internal forecasts of Adjusted EPS, which forecasts are non-gaap financial measures and are derived by excluding transaction related expenses and incremental deal-related intangibles amortization. These accretion projections also should not be considered a substitute for GAAP measures. The determination of the amounts that are excluded in making the accretion calculations are a matter of management judgment. 2

3 A Compelling Acquisition An acquisition of Allied is well-aligned with Beacon s strategic priorities. Enhances footprint and improves scale, positioning the combined company among industry leaders with 593 (1) branches and LTM 6/30/17 combined net sales of approximately $7 billion of which over 70% is repair & remodel Roofing remains the company's core focus driving ~70% of the combined net sales Creates a powerful and diverse building materials distribution platform with multiple avenues for growth Entry into adjacent interior products, a market structured similarly to roofing Projected $110 million in annual run-rate synergies, creating significant shareholder value Expected to be dilutive to GAAP EPS in year one, immediately accretive to Adjusted EPS (2) Expected to be accretive to GAAP EPS by year two ~$675 million of combined LTM 6/30/17 Adjusted EBITDA (3) Strengthens ability to capitalize on the recovery in the housing and construction markets (1) As of announcement on 8/24/17. (2) Excludes transaction related expenses and incremental deal-related intangibles amortization. (3) Includes $110mm of annual run-rate synergies and adjustments for, among other things, fiscal 2017 run-rate acquisitions. See reconciliation of net income to combined Adjusted EBITDA after cost savings on slide 25. 3

4 Transaction Summary Purchase Price Synergies Financial Impact $2.625 billion assuming cash-free, debt-free balance sheet at closing 8.7x Adjusted EBITDA, including projected run-rate synergies (1) $110 million projected run-rate annual pre-tax synergies through branch consolidation, procurement and overhead efficiencies ~$50 million of costs to achieve synergies, predominantly incurred in the first twelve months Expected to be immediately accretive to Adjusted EPS (2), dilutive to GAAP EPS in year one and accretive to GAAP EPS by year two Accelerated amortization of intangibles expected to have ~$75 million impact in the first full year Strong combined free cash flow generation expected to drive rapid deleveraging Debt Financing $2.2 billion of incremental fully-committed debt financing (3), anticipated to be allocated between: ~$380 million in drawings against an upsized $1.3 billion 5-year ABL ~$530 million of incremental Term Loan B ~$1.3 billion in new senior unsecured notes CD&R Equity Investment Timing and Closing Conditions CD&R has committed to provide up to $498 million in Perpetual Convertible Preferred Equity Beacon intends to reduce CD&R s commitment to $400 million through proceeds from the proposed offering Strong historical relationship via RSG to continue with additional Board representation post-close Customary regulatory approvals and closing conditions Targeted to close on January 2 nd, 2018 (1) Allied LTM 6/30/2017 EBITDA. Includes $110mm of projected run-rate synergies. (2) Excludes transaction related expenses and incremental deal-related intangibles amortization. (3) Excludes $450mm of outstanding borrowings under existing ABL and $440mm of outstanding borrowings under existing Term Loan B, which will be refinanced by new fully-underwritten $970mm Term Loan B. Financing plans are indicative and subject to market conditions at the time of financing. 4

5 Beacon Update

6 Beacon Continues its Consistent, Long-Term Performance A leader in key metropolitan areas in the United States & Canada 385 branches across 48 U.S. states and six Canadian provinces (1) Serving nearly 67,000 customers with a broad product offering up to 46,000 SKU s End market demand largely driven by repair and remodel expenditures Strong long-term historical financial performance (2) Historical sales CAGR = 17% Historical adjusted EBITDA CAGR = 18% Historical operating margin averages 5.0% - 6.0% ($ in billions) $0.7 $1.7 Revenue $2.0 $4.1 $ Combined LTM 6/30 Adj. EBITDA Balanced, sustainable approach to growth through acquisitions and greenfield / organic growth ($ in millions) $675 On October 1, 2015 acquired 85-branch Roofing Supply Group (RSG) for $1.1 billion Completed an average of ~4 bolt-on acquisitions per year since 2012 (20 total), or 43 acquisitions since the IPO Opened ~6 greenfields on average over the last five years, or 78 in total since 2004 IPO (1) As of announcement on 8/24/17. (2) Since IPO, CAGRs through FY (3) Includes $110 million of run-rate cost savings. See appendix for reconciliation of Adjusted EBITDA. $49 $129 $168 $ Combined LTM 6/30 6

7 RSG Acquisition Has Been A Tremendous Success Provided significant growth and diversification Added 85 branches to Beacon s portfolio Strengthened presence in the hurricane-prone Southeast and South Central and provided access to the Northwest markets Fully integrated ahead of schedule Fully integrated RSG locations into its single ERP system Customer tracking metrics were consolidated to ensure customer continuity and enhance the transition Exceeded synergy targets Expect to achieve $55 million in run-rate synergies ahead of schedule, above the originally estimated $50 million Continued momentum in financial performance Adjusted EBITDA growth: 40.6% Reduction in leverage: 0.9x Increase in share price: 63% (3) Note: $ in millions. (1) Defined as Adj. EBITDA as % of net sales. (2) Defined as Net Debt / Adj. EBITDA. See appendix for reconciliation of Net Debt. (3) Increase in share price between July 24, 2015 (prior to RSG announcement) and September 13, Adjusted EBITDA Growth $359 $255 At Close LTM 6/30/17 Est. Run-Rate Synergies $55 $50 At Close 9/30/17 Est. Margin Improvement (1) 8.4% 6.9% At Close LTM 6/30/17 Reduction in Net Leverage (2) 4.3x 3.4x At Close LTM 6/30/17 7

8 Allied Company Overview

9 Overview of Allied Building Products Business Overview Allied Building Products is a leading North American distributor of roofing, siding, wallboard, ceiling systems and other building products Operates through two product categories: Exterior (60% of 2016 sales) and Interior (40% of 2016 sales) Repair & remodel accounts for ~60% of sales National network of 208 branches serves as critical link between vendors and over 50,000 customers Founded by the Feury family in 1950, acquired by CRH in 1996 Key Financials ($ in millions) LTM 6/30/17 Net Sales $2,366 $2,475 $2,560 $2,579 (1) Adjusted EBITDA $149 $169 $187 $193 % Margin (2) 6.3% 6.8% 7.3% 7.5% 2016 Revenue by Geography 2016 Revenue by Product Diversified and Loyal Customer Base Southeast 15% Hawaii 6% Northwest 5% Southwest 17% Residential Roofing Exterior 29% Interior 20% Wallboard Top 5 Customers: 6% Top 10 Customers: 9% Top 25 Customers: 12% Northeast 35% 12% 10% (1) See appendix for reconciliation of Adjusted EBITDA. (2) Defined as Adjusted EBITDA as % of net sales. Midwest South Central Non-Residential Roofing 19% 12% Complementary Products 12% 8% Ceilings Other Interiors 88% All Others 9

10 Two Distinct, Leading Product Categories Exterior Products A leading distributor of commercial and residential roofing products, waterproofing, and siding LTM 6/30/2017 Key Financial Metrics: Revenue: $1,585mm Repair & remodel accounts for ~75% of sales Interior Products A leading distributor of interior building materials, including gypsum wallboard and acoustical ceiling tile LTM 6/30/2017 Key Financial Metrics: Revenue: $994mm Repair & remodel accounts for ~35-40% of sales Strengthens Core Roofing Platform Exciting New Avenue For Growth Solidifies Beacon as one of the leaders in exterior building products distribution Increases scale in key metropolitan areas Enhances presence in previously underserved areas ~60% ~40% Similarly fragmented, but well-structured business Sizeable bolt-on M&A opportunities available to expand footprint Attractive interior complementary products business Opportunity for Savings Drive efficiencies through procurement Optimize internal distribution network Leverage best practices across combined business Many Similarities to Exterior Products Similar value chain to roofing distribution Products delivered to job site with specialized equipment Opportunities for distributors to add value Importance of local footprint driving consolidation Partnerships with vendors 10

11 Key Investment Highlights

12 Key Investment Highlights 1 Transformational Combination of Two Leading Building Materials Distributors 2 Improved Scale and Positioning in Fragmented Exterior Products Distribution 3 Enhanced Geographic Footprint in Attractive Areas Where Beacon is Underrepresented 4 Diversification into Adjacent Interior Products Distribution Opens New Avenues for Growth 5 Significant Value Creation Through Projected Cost Synergies 6 Management Team s Proven Track Record of Integrating Acquisitions and Delivering Results 7 Robust Free Cash Flow Generation Supports Deleveraging and Earnings Growth 8 Continued Tailwind from Uptick in Demand in Key End Markets 12

13 1 Transformational Combination of Two Leading Platforms Both Beacon and Allied have undergone significant transformations from small, family-owned building product distributors to the industry leading, nationally recognized companies that they are today Founded in Charlestown, MA in 1928 Initial Public Offering in 2004; Sales of ~$650 million Transformational acquisition of RSG in 2015 Combined Beacon by the Numbers 150 years of combined tttttttoperating history $7 billion in sales (1) ~$675 million in Adj. EBITDA (1) Acquired by CRH in 1996; Sales of ~$429 million Expanded into interior building products distribution in total locations (2) 8,500 employees Established in Jersey City, NJ in 1950 by the Feury family (1) LTM 6/30/2017. Adj. EBITDA includes $110mm of annual run-rate synergies and adjustments, among other things, fiscal 2017 run-rate acquisitions. See reconciliation of net income to combined Adjusted EBITDA after cost savings on slide 25. (2) As of announcement on 8/24/17. 13

14 2 Improved Scale in Fragmented Exterior Products Distribution Continued Growth in Exterior Products Sales Solidifies Beacon as a Leading Player Combined exterior products sales of $5.8 billion $3.4 $4.2 $5.8 $1.6 Repair & Remodel accounts for approximately 75 80% of combined exterior sales Enhances ability to serve customers and suppliers Roofing Category Remains Fragmented (1) $2.3 $1.1 $4.2 $4.2 ~20% $2.3 Other ~49% Beacon Beacon + RSG Beacon Beacon + Allied ~24% ~7% Competitor A Note: Beacon / RSG sales are based on FY 2014 and Beacon / Allied sales are based on LTM 6/30/2017 $ in billions. Source: Company filings. Competitor B 14

15 3 Enhanced Geographic Footprint Strengthens Beacon s nationwide distribution network in underserved and attractive regions Combined Branch Detail 385 Locations 208 Locations Allied Region Beacon Exterior Interior Northwest Southwest Total Combined Locations: 593 South Central Midwest Northeast Beacon Allied Exterior Allied Interior Southeast Hawaii Unique, High Volume Business Strengthening Position in Key Geographies Canada (1) Total Source: Company website and presentations. (1) As of announcement on 8/24/17. 15

16 4 Increases Diversification Across Products and Geographies Revenue by Product FYE 2016 Combined Complementary Products 15% 32% 53% Residential Roofing Interior Products 40% 29% Residential Roofing Complementary Products Interior Products 14% 15% 44% Residential Roofing Non-Residential Roofing 12% Complementary Products 19% Non-Residential Roofing Revenue by Geography 27% Non-Residential Roofing Combined Sales Over 70% Roofing FYE 2016 Combined Southeast Canada Northwest Hawaii Northwest Hawaii Northwest Southwest Southwest Canada 4% 2% 6% 5% 2% 3% Southwest 4% 11% Southeast Southeast 13% 15% 17% 23% 20% 27% South Central 10% South Central 20% South Central 26% 35% Northeast 7% Northeast Midwest Note: Beacon s fiscal year end is September 30. Allied s fiscal year end is December % Midwest Northeast 29% 9% Midwest 16

17 4 And Opens New Avenues for Growth in Adjacent Interior Distribution Parallels Interior Products Roofing End Markets Serves the single-family, multi-family and commercial markets Both new construction and repair and remodel Non-Resi Resi Non-Resi Resi Repair & remodel accounts for ~75% of Exterior sales and ~35-40% of Interior sales Market Dynamic Top 4 distributors hold ~45% of wallboard sales with meaningful room for further consolidation Wallboard demand is significantly below peak Wallboard Company A Company B Company C Other + Company A Company B Other Consolidated supplier base Suppliers Wallboard manufacturers have reduced capacity since 2007 >90% of Wallboard Supply >80% of Roofing Supply Equipment / Facilities Large warehouse facilities located in densely populated MSAs Specialized equipment to transport high volumes of products Avg. Facility sqft Exterior: ~34,200 sqft Interior: ~35,200 sqft Source: Company presentations, USG, GMS and management estimates. 17

18 5 Significant Value Creation Through Projected Cost Synergies Allied Synergy Opportunity Allied Acquisition 2x the Projected RSG Synergies Same team as with RSG, including external consultants, to evaluate the synergy opportunity Same approach, improved by benefit of experience in estimation and integration of RSG $110mm Branch Consolidation Procurement Overhead Efficiencies Run-rate synergies of $110 million expected to come from branch consolidation and procurement and overhead efficiencies 50% to be achieved within the first 12 months of closing $50 - $60 $110 Allied run-rate synergies conservatively represents 4.2% of Allied net sales vs. 5.5% of RSG net sales % Expected to be Achieved ~50% 90%+ 100% Note: $ in millions. Year 1 Run-rate 18

19 6 Proven Track Record of Integrating Acquisitions and Delivering Results Net Sales Contribution of Acquisitions Over Time $6,000 $5,000 $4,000 Delivered on synergies ahead of schedule Continued to grow the combined business Delevered back to ~3x within 2 years $3,000 $2,000 $1,000 $ Combined LTM 6/30/2017 Source: Company website and presentations. Note: $ in millions. 19

20 7 Significant Free Cash Flow Generation Conservative Structure, in Line with RSG Transaction Proven Ability to Delever Post Transaction RSG Allied ($ in millions) Cash & Equivalents Standalone 6/30 $33 Pro Forma 6/30 $33 4.3x Realized ~1x reduction in 24 months 4.6x Projected ~1.7x reduction in months Revolving Credit Facility $450 $593 Term Loan B $434 $ x Senior Notes $292 $1,559 ~2.9x $1.3 billion upsized ABL to provide significant liquidity ~$675 million of Combined Adj. EBITDA including synergies for LTM 6/30/17 1.5x $530 million incremental and $440 million existing Term Loan B $1.3 billion of new senior notes $400 million of preferred equity from CD&R $300 million of common equity issuance Note: Financing plans are indicative and subject to market conditions at the time of financing. Balance sheet amounts shown net of issuance costs. 3/31/2015 Pro Forma at RSG Close Current 6/30/2017 Combined 6/30/ Year Target 20

21 8 Continued Tailwind from Demand in Key End Markets New Housing Starts (Housing units in millions) CAGR: 7.1% 1.3 LT Avg.: 1.3 Remain ~15% below 20-year average of 1.3mm Modestly above long-term average trough of 1.0 million Recovery to date has been slow and steady E Non-Residential Construction Put in Place Strong single family growth driven by entry level demand Source: US Census, Fannie Mae, NAR and NAHB. Note: LT Avg. from $711 $713 CAGR: 3.2% $759 LT Avg.: $577 Current levels still lag historical peaks Increases in office spending and other non-residential segments to drive growth E Source: US Census, FMI. Note: Includes both public and private construction. Note: LT Avg. from Repair and Remodel Spend $277 $297 CAGR: 4.4% $324 LT Avg.: $211 Steady, stable growth in this cycle Big ticket comps at home centers accelerating Consumers have recovered equity in their homes Note: E $ in billions. Source: LIRA. Note: LT Avg. from

22 8 Dynamics of Roofing Market Provide Stability Through the Cycle U.S. Asphalt Shingle Market Drivers of Re-Roofing Demand (Millions of Squares) Major Storms Re-Roof Demand New Construction % 2% 3%3% 25% 40% '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 Source: ARMA, Owens Corning and management estimates Sources: 3M Roofing Accounts for ~70% of Beacon s Products Leaks Old Weather Damage Deteriorating Upgrade Appearance Other Re-roof demand remains approximately 12% below prior cycle averages (1) Age of housing stock has increased ~65% (2) since 1985 Re-roofing/repair represents ~80% of roofing demand 94% of U.S. re-roofing demand is non-discretionary Insulated from broader economic conditions (1) Prior cycle average represents (2) Age of homes has increased from 23 years to 38 years per Census Bureau. 22

23 Appendix

24 Reconciliation of Net Income to Adjusted EBITDA ($ in thousands) ($ in thousands) Year Ended September 30, Nine Months Ended June 30, LTM Ended June 30, 2017 (unaudited) (unaudited) Net income $89,917 $62,277 $53,846 $55,733 $42,525 $103,125 Interest expense, net 58,145 10,561 10,336 40,098 41,836 56,407 Income taxes 56,615 43,767 34,922 33,800 25,073 65,342 Depreciation and amortization 100,191 34,862 30,294 86,238 73, ,410 EBITDA $304,868 $151,467 $129,398 $215,869 $182,453 $338,284 Adjustments: Beacon Reconciliation Stock-based compensation $17,749 $9,936 $7,422 $11,227 $14,070 $14,906 Acquisition costs (a) 24,749 6, ,715 23,310 6,154 FY17 acquisitions run rate (b) ,319 Adjusted EBITDA $347,366 $168,381 $136,820 $231,811 $219,833 $371,663 Allied Reconciliation (a) Acquisition costs relate to the costs incurred by Beacon to integrate prior acquisitions, primarily the RSG Acquisition. (b) Adjustments made to annualize the partial year results for prior Beacon acquisitions made between September 30, 2016 and June 30, (c) Certain non-recurring costs incurred by Allied and corporate allocations from CRH plc. Year Ended December 31, Six Months Ended June 30, LTM Ended June 30, 2017 (unaudited) (unaudited) Net income $80,476 $70,469 $60,565 $30,071 $24,374 $86,173 Interest expense, net 7,993 13,815 19,546 1,776 4,803 4,966 Income taxes 52,507 47,006 39,965 19,944 15,829 56,622 Depreciation and amortization 34,301 32,189 29,389 16,003 17,403 32,901 EBITDA $175,277 $163,479 $149,465 $67,794 $62,409 $180,662 Other adjustments'(c) 11,552 5,186 NA NA NA 12,303 Adjusted EBITDA $186,829 $168,665 $149,465 $67,794 $62,409 $192,965 24

25 Reconciliation of Net Income to Adjusted EBITDA (Cont d) Combined Adjusted EBITDA Reconciliation for LTM Ended 6/30/2017 ($ in thousands) Run Rate Beacon Allied Synergies Combined Net income (loss) $103,125 $86, $189,298 Interest expense, net 56,407 4, ,373 Income taxes 65,342 56, ,964 Depreciation and amortization 113,410 32, ,311 EBITDA $338,284 $180, $518,946 Adjustments: Stock-based compensation $14, $14,906 Acquisition costs (a) 6, ,154 FY17 acquisitions run rate (b) 12, ,319 Other adjustments '(c) -- $12, ,303 Total adjustments $33,379 $12, $45,682 Adjusted EBITDA, before cost savings $371,663 $192, $564,628 Estimated cost savings (d) $110, ,000 Adjusted EBITDA, after cost savings $371,663 $192,965 $110,000 $674,628 (a) The costs incurred by Beacon to integrate prior fiscal year 2016 and 2017 acquisitions, primarily the RSG Acquisition. (b) Adjustments made to annualize the partial year results for prior Beacon acquisitions made between September 30, 2016 and June 30, (c) Other adjustments primarily relate to (i) CRH, plc corporate overhead allocations to Allied, (ii) a one-time gain on sale of Allied property, plant and equipment, (iii) the release of an excess inventory reserve and accrual for tax audit assessments related to prior periods and (iv) certain other non-recurring costs, including CRH, plc consulting, legal and other professional fees and expenses. (d) Represents Beacon management s estimated projected annual cost savings from the Allied Acquisition through branch consolidation, general and administrative cost reductions and procurement benefits totaling approximately $110 million, which are expected to be fully implemented beginning with the second year following consummation of the Allied Acquisition. During the first year following closing, we anticipate realizing approximately $50 million of the anticipated $110 million of annual cost savings. During the second year following closing, we anticipate realizing an additional $60 million. Excludes estimated one-time costs of approximately $50 million over the first two years required to achieve the anticipated annual savings. Anticipated branch consolidation cost savings relate to potential savings achieved through the planned consolidation of branch facilities in overlapping Beacon and Allied regions. Anticipated general and administrative cost savings relate to potential savings achieved through the planned consolidation of corporate support functions and planned consolidation of benefit plans and insurance policies. Anticipated procurement cost savings relate to potential savings achieved through optimized pricing and rebates with existing contractual relationships with suppliers. 25

26 Reconciliation of Net Income to Free Cash Flow Beacon Reconciliation ($ in thousands) Year Ended September 30, Nine Months Ended June 30, LTM Ended June 30, (unaudited) (unaudited) Cash Flow Data (in thousands): Net cash provided by operating activities $120,648 $109,340 $55,497 $74,152 $74,359 $120,441 Capital Expenditure 26,315 20,802 37,239 31,882 21,553 36,644 Free Cash Flow $94,333 $88,538 $18,258 $42,270 $52,806 $83,797 26

27 Reconciliation of Net Debt ($ in thousands) As of June 30, 2017 (unaudited) Actual basis with respect to Beacon Roofing Supply, Inc. Pro Forma as adjusted giving effect to the Allied Transactions(1) Debt: U.S. ABL Facility(2) $437,285 $580,187 Canadian ABL Facility(2) 12,330 12,330 Term Loan B Facility(3) 434, ,000 Senior Notes due 2023(4) 292, ,008 New Senior Notes(5) -- 1,267,000 Equipment financing facilities(6) 37,674 38,446 Total debt $1,213,474 $3,147,971 Cash and cash equivalents $33,055 $33,055 Net Debt $1,180,419 $3,114,916 (1) The combined as adjusted balances gives effect to the Allied Transactions, the application of the net proceeds of this offering as set forth in Use of Proceeds in the prospectus supplement, and the repayment of approximately $200 million of borrowings under our existing U.S. ABL Facility. The existing ABL Facility has a maturity date of October 1, 2020 and had an effective interest rate of 3.28% as of June 30, (2) Reflects borrowings under our existing U.S. ABL Facility and existing Canadian ABL Facility. At the closing of the Allied Acquisition, we expect to increase the size of the existing ABL Facility (both the U.S. dollar and Canadian dollar tranches) from $700 million to $1.3 billion pursuant to the terms of the New ABL Facility. (3) Represents borrowings under our existing Term Loan B Facility. At the closing of the Allied Acquisition, we expect to refinance the existing Term Loan B Facility with a $970 million New Term Loan B Facility. (4) Represents the outstanding balance of the senior notes due 2023, net of debt issuance fees. (5) Represents the New Senior Notes we currently expect to issue in lieu of any borrowings under the Bridge Facility to finance the Allied Transactions. We expect to use any remaining net proceeds of the New Senior Notes (if issued) in excess of the amount needed to finance the Allied Transactions for general corporate purposes, including repayment of borrowings under our existing U.S. ABL Facility. If and to the extent we do not issue a sufficient amount of the expected New Senior Notes at or prior to the closing of the Allied Acquisition, we expect to borrow under the Bridge Facility in order to finance the Allied Transactions. After giving effect to this offering and the Convertible Preferred Stock Purchase and the intended use of net proceeds therefrom, we expect the aggregate commitments under the Bridge Facility to be reduced to $1.1 billion. (6) Represents outstanding obligations under our existing equipment financing facilities. Pro forma as adjusted column includes approximately $0.8 million of assumed Allied deferred acquisition consideration. 27