Mr. Robert Sawyer reports

RONA ANNOUNCES AN INCREASE OF 275% IN ADJUSTED NET INCOME PER SHARE AND 6.0% IN RETAIL SAME-STORE SALES IN THE FOURTH QUARTER

Rona Inc. has released the results for its continuing operations for the 13- and 52-week periods ended Dec. 28, 2014.

Fourth quarter highlights

• Growth of 275 per cent in adjusted basic and diluted net income per share to 15 cents, compared with four cents in 2013;
• Increase of 6.0 per cent in same-store sales of the retail segment;
• Increase of 45.3 per cent in adjusted earnings before interest, taxes, depreciation and amortization to $52.5-million, compared with fiscal 2013, and adjusted EBITDA margin up by 160 basis points;
• Adjusted net income up by $12.7-million to $17.3-million in 2014, compared with $4.6-million in 2013.

Fiscal 2014 highlights

• Increase of $33.5-million in adjusted net income and of 70.7 per cent in adjusted basic and diluted net income per share, which rose to 70 cents compared with 41 cents in 2013;
• Increase of 1.1 per cent in same-store sales of the retail segment;
• Increase of 27.2 per cent in adjusted EBITDA to $235.4-million, compared with fiscal 2013, and adjusted EBITDA margin up by 140 basis points;
• Solid financial situation with a ratio of net debt to EBITDA of 0.72 times;
• Repurchase of more than 7.3 million common shares in the normal course of business during the year, for a cash consideration of $94.2-million.

"Rona recorded a solid performance in the fourth quarter of 2014, with 6.0-per-cent same-store sales growth in the retail segment. This is the second quarter in a row where we've reported positive same-store sales. These results reflect the efforts to reposition Reno-Depot in Quebec and TOTEM in Alberta, and the improvement of our merchandising programs across the country. The focus on in-store execution has increased both the average basket and the number of transactions. This performance has been achieved in a difficult economic environment in Quebec and the Atlantic provinces, and in a competitive environment in all regions," said Robert Sawyer, president and chief executive officer of Rona.

"In fiscal 2014, Rona achieved positive growth in organic sales, which for the first time since 2006 are up 1.2 per cent, including 1.1 per cent in the retail segment. In addition, the adjusted basic and diluted net income per share is up more than 70 per cent. Rona is showing a marked improvement in profitability due to the combined impact of organic growth and the decrease in selling, general and administrative expenses. In short, the numbers show that Rona has achieved the major turnaround we embarked on in June, 2013, and is making good progress towards meeting the needs of its target customers."

"For 2015, our priorities are to expand the network in a disciplined manner and increase the return on capital invested. The expansion will be targeted so that we can take advantage of business opportunities in specific markets. Rona also intends to further maximize the leverage from its organic growth stimulation initiatives, while maintaining strict control over operating costs. With this, and the use of free cash flows to repurchase common shares, the enhanced profitability will increase the return to our shareholders," said Dominique Boies, executive vice-president and chief financial officer.

              FINANCIAL HIGHLIGHTS FROM CONTINUING OPERATIONS 
                       (In millions, except per share) 
                                              
                                      Quarter ended       Fiscal year ended 
                                 Dec. 28,   Dec. 29,     Dec. 28,   Dec. 29, 
                                    2014       2013         2014       2013 

Revenues                        $  971.3   $  941.1     $4,096.4   $4,192.2 
EBITDA                              31.9       30.0        211.7       79.2 
Adjusted EBITDA                     52.5       36.1        235.4      185.1 
Net income (loss)                                                           
attributable to                                                            
participating shares                 1.7       (1.1)        65.2      (45.9)
Per share -- basic and                                                       
diluted                             0.02      (0.01)        0.55      (0.38)
Adjusted net income                                                         
attributable to                                                            
participating shares                17.3        4.6         83.4       49.9 
Adjusted per share -- basic                                                  
and diluted                         0.15       0.04         0.70       0.41

Fourth quarter results

For the 13-week period ended Dec. 28, 2014, consolidated revenues from continuing operations amounted to $971.3-million, up 3.2 per cent from $941.1-million for the 13-week period ended Dec. 29, 2013. Excluding the impact of the closures of underperforming stores, the network's same-store sales grew 6.5 per cent, with 6.0 per cent in the retail and 9.3 per cent in the distribution segments. This solid performance reflects the sustained improvement in Reno-Depot stores since their repositioning, strong growth in most parts of the country, and steady progress in installation services and merchandising strategies across the network.

Adjusted EBITDA from continuing operations amounted to $52.5-million, or 5.4 per cent of revenues, compared with $36.1-million, or 3.8 per cent of revenues, a year earlier. This strong performance reflects the respective increases of $5.7-million and $4.7-million in Rona's organic retail and distribution operations, as well as net savings of $5.4-million from the closure of underperforming stores. In the retail segment, the adjusted EBITDA margin increased by 150 basis points to 5.8 per cent; in the distribution segment it increased by 160 basis points to 4.2 per cent.

The adjusted net income from continuing operations attributable to participating shares was $17.3-million, or 15 cents basic and diluted per share, compared with $4.6-million, or four cents basic and diluted per share, a year earlier.

Fiscal 2014 results

Consolidated revenues from continuing operations for fiscal 2014 amounted to $4,096.4-million, compared with $4,192.2-million in fiscal 2013. The 2.3-per-cent decrease reflects the closure of underperforming stores in the previous fiscal year. On a same-store basis, sales across the Rona network rose 1.2 per cent, with growth of 1.1 per cent in the retail segment and 1.7 per cent in the distribution segment. This improvement reflects the successful efforts to reposition Reno-Depot in Quebec and TOTEM in Alberta, as well as initiatives to stimulate sales through merchandising strategies.

Adjusted EBITDA from continuing operations grew 27.2 per cent to $235.4-million, or 5.8 per cent of revenues, compared with $185.1-million, or 4.4 per cent of revenues, in 2013. The solid increase of $50.3-million stems mainly from a contribution of $28.4-million from Rona's organic operations and $16.9-million from the closure of underperforming stores.

The adjusted net income from continuing operations attributable to participating shares for fiscal 2014 was $83.4-million, or 70 cents basic and diluted per share, compared with $49.9-million, or 41 cents basic and diluted per share, in 2013.

Solid financial situation

As at Dec. 28, 2014, Rona was in an excellent financial situation with net debt of $169.9-million. On that same date, the corporation had used only $65.2-million on its authorized credit facility of $700.0-million. Reflecting the higher profitability, the ratio of net debt to adjusted EBITDA for the past 12 months was 0.72 times at the close of fiscal 2014, compared with 0.90 times at the close of fiscal 2013. The ratio of net debt to total capital was stable at 0.09 times at Dec. 28, 2014.

In fiscal 2014, Rona repurchased 7.3 million common shares for a total cash consideration of $94.2-million. In November, 2014, the corporation renewed its normal course issuer bid, permitting it to purchase a maximum of 9.2 million common shares until Nov. 17, 2015. Since the renewal, and to date, the corporation has purchased 5.4 million common shares for a total of $72.7-million.

Dividend on preferred shares

At its meeting on Feb. 16, 2015, Rona's board of directors declared a quarterly dividend of 32.81 cents per share on cumulative five-year rate-reset Class A preferred shares, Series 6. The dividend will be paid on March 31, 2015, to shareholders of record on March 16, 2015.

Dividend on common shares

At its meeting on Feb. 16, 2015, Rona's board of directors declared a semi-annual dividend of seven cents per share on the corporation's common shares. The dividend will be paid on March 25, 2015, to shareholders of record on March 10, 2015.

Additional information

The management's discussion and analysis, consolidated financial statements, and related notes for fiscal year 2014 can be found in the investor relations section of the corporation's website and on SEDAR. The corporation's annual information form, along with other information about Rona, can also be found on the Rona website and SEDAR.

Conference call with the financial community

On Tuesday, Feb. 17, 2015, at 3 p.m. ET, Rona will hold a conference call for the financial community. To join the conference, please call 416-340-2216 or 1-866-223-7781. The call will be available on-line.

A replay will be available from 7 p.m. on Tuesday, Feb. 17, 2015, until Feb. 25, 2015. It can be heard by dialling 905-694-9451 or 1-800-408-3053 and entering the password 8118545 on the telephone keypad.

                                                                 
         CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                        (In thousands, except per share)

                                    Fourth quarter             Year to date
                                   2014       2013         2014        2013
Continuing operations
Revenues                      $ 971,259  $ 941,111  $ 4,096,355 $ 4,192,192
Earnings before interest,
taxes, depreciation,
amortization, impairment of
non-financial assets,
restructuring costs and
other charges                 $  52,491  $  36,124  $   235,373 $   162,088
Restructuring costs and
other charges                    20,640      6,132       23,697      82,879
Depreciation, amortization
and impairment of non-
financial assets                 22,679     23,374       91,042     113,850
Operating income (loss)           9,172      6,618      120,634     (34,641)
Finance costs                     3,343      4,615       16,238      14,000
Income (loss) before income
taxes                             5,829      2,003      104,396     (48,641)
Income tax expense
(recovery)                        1,143        523       27,509     (13,044)
Net income (loss) from
continuing operations             4,686      1,480       76,887     (35,597)
Discontinued operations
Net income (loss) from
discontinued operations           1,360     (2,412)       1,360    (117,417)
Net income (loss)             $   6,046  $    (932) $    78,247 $  (153,014)
Net income (loss)
attributable to
owners of Rona
Continuing operations         $   4,043  $   1,260  $    74,450 $   (36,614)
Discontinued operations           1,360     (2,412)       1,360    (117,417)
                                  5,403     (1,152)      75,810    (154,031)
Non-controlling interests           643        220        2,437       1,017
                              $   6,046  $    (932) $    78,247 $  (153,014)
Basic and diluted net income
(loss) per share
attributable to owners of
Rona
Continuing operations         $    0.02  $   (0.01) $      0.55 $     (0.38)
Discontinued operations            0.01      (0.02)        0.01       (0.96)
                              $    0.03  $   (0.03) $      0.56 $     (1.34)

We seek Safe Harbor.