The Home Depot Announces First Quarter Results; Updates Fiscal Year 2010
Guidance
</pre>
<p><span class="xn-location">ATLANTA</span>, <span class="xn-chron">May 18</span> /CNW/ -- The Home Depot®, the world's largest home improvement retailer, today reported first quarter of fiscal 2010 net earnings of <span class="xn-money">$725 million</span>, or <span class="xn-money">$0.43</span> per diluted share, compared with net earnings of <span class="xn-money">$514 million</span>, or <span class="xn-money">$0.30</span> per diluted share, in the same period of fiscal 2009.</p>
<pre>
(Logo: http://www.newscom.com/cgi-bin/prnh/20030502/HOMEDEPOTLOGO )
</pre>
<p>Sales for the first quarter totaled <span class="xn-money">$16.9 billion</span>, a 4.3 percent increase from the first quarter of fiscal 2009. Comparable store sales for the first quarter were positive 4.8 percent, and comp sales for U.S. stores were positive 3.3 percent. On an adjusted basis, which excludes the impact of sales related to the closing of the Company's EXPO businesses in the first quarter of fiscal 2009, sales increased 5.7 percent.</p>
<p/>
<p>First quarter of fiscal 2010 results reflect a net impact to earnings of <span class="xn-money">$33 million</span> related to the extension of the Company's guarantee of a third-party senior secured loan. In the first quarter of fiscal 2009, the Company's reported results included a net impact to earnings of <span class="xn-money">$73 million</span> related to the closing of its EXPO businesses. On an adjusted basis, the Company reported first quarter of fiscal 2010 net earnings of <span class="xn-money">$758 million</span>, or <span class="xn-money">$0.45</span> per diluted share, compared with adjusted net earnings of <span class="xn-money">$587 million</span>, or <span class="xn-money">$0.35</span> per diluted share, in the same period of fiscal 2009.</p>
<p/>
<p>"Our solid start to the year was driven by great performance in seasonal categories and strong growth in customer transactions," said <span class="xn-person">Frank Blake</span>, chairman & CEO. "I want to thank our associates for their hard work and dedication, as our customer service scores also showed marked year over year improvement. It is their efforts that enabled us to deliver these results."</p>
<pre>
Updated Fiscal 2010 Guidance
</pre>
<p>Based on its year-to-date performance, the Company updated its fiscal 2010 guidance and now expects sales to be up approximately 3.5 percent for the year. The Company expects diluted earnings per share from continuing operations as reported to increase by approximately 21 percent to <span class="xn-money">$1.88</span> for the year.</p>
<p/>
<p>The Home Depot will conduct a conference call today at <span class="xn-chron">9 a.m. ET</span> to discuss information included in this news release and related matters. The conference call will be available in its entirety through a webcast and replay at earnings.homedepot.com.</p>
<p/>
<p>At the end of the first quarter, the Company operated a total of 2,244 retail stores, which included 1,976 The Home Depot stores in the <span class="xn-location">United States</span> (including the Commonwealth of <span class="xn-location">Puerto Rico</span>, the territory of the <span class="xn-location">U.S. Virgin Islands</span> and the territory of <span class="xn-location">Guam</span>), 179 stores in <span class="xn-location">Canada</span>, 79 stores in <span class="xn-location">Mexico</span> and 10 stores in <span class="xn-location">China</span>. The Company employs more than 300,000 associates. The Home Depot's stock is traded on the New York Stock Exchange (NYSE: HD) and is included in the Dow Jones industrial average and Standard & Poor's 500 index.</p>
<p/>
<p>To provide clarity, internally and externally, about the Company's operating performance for the recently completed fiscal quarter, the Company supplemented its reporting with non-GAAP financial measures to reflect the impact of the store rationalization charges, business rationalization charges, related restructuring charges and the charge related to the extension of the Company's guarantee of a third-party senior secured loan. The Company believes that these non-GAAP financial measures better enable management and investors to understand and analyze the Company's performance by providing them with meaningful information relevant to events of unusual nature or frequency. However, this supplemental information should not be considered in isolation or as a substitute for the related GAAP measures. A reconciliation of the non-GAAP financial measures to the corresponding GAAP measures can be found in the attached press release and at earnings.homedepot.com.</p>
<p/>
<p>Certain statements contained herein constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements may relate to, among other things, the demand for our products and services, net sales growth, comparable store sales, state of the economy, state of the residential construction, housing and home improvement markets, state of the credit markets, including mortgages, home equity loans and consumer credit, commodity price inflation and deflation, implementation of store initiatives, continuation of reinvestment plans, net earnings performance, earnings per share, stock-based compensation expense, capital allocation and expenditures, liquidity, the effect of adopting certain accounting standards, return on invested capital, management of our purchasing or customer credit policies, the effect of accounting charges, the planned recapitalization of the Company, timing of the completion of the recapitalization, the ability to issue debt securities on terms and at rates acceptable to us, store openings and closures and financial outlook. Forward-looking statements are based on currently available information and our current assumptions, expectations and projections about future events. You are cautioned not to place undue reliance on our forward-looking statements. These statements are not guarantees of future performance and are subject to future events, risks and uncertainties - many of which are beyond our control or are currently unknown to us - as well as potentially inaccurate assumptions that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include but are not limited to those described in Item 1A, "Risk Factors," and elsewhere in our Annual Report on Form 10-K for our fiscal year ended <span class="xn-chron">January 31, 2010</span>.</p>
<p>Forward-looking statements speak only as of the date they are made, and we do not undertake to update these statements other than as required by law. You are advised, however, to review any further disclosures we make on related subjects in our periodic filings with the Securities and Exchange Commission.</p>
<pre>
</pre>
<p> </p>
<pre>
THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS ENDED MAY 2, 2010 AND MAY 3, 2009
(Unaudited)
(Amounts in Millions Except Per Share Data and as Otherwise Noted)
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
Three Months %
Ended Increase
------------
5-2-10 5-3-09 (Decrease)
------ ------ ----------
NET SALES $16,863 $16,175 4.3%
Cost of Sales 11,069 10,725 3.2
------ ------
GROSS PROFIT 5,794 5,450 6.3
</pre>
<p> </p>
<pre>
Operating Expenses:
Selling, General and Administrative 4,078 4,042 0.9
Depreciation and Amortization 411 428 (4.0)
--- ---
Total Operating Expenses 4,489 4,470 0.4
----- -----
</pre>
<p> </p>
<p> OPERATING INCOME 1,305 980 33.2</p>
<p> </p>
<pre>
Interest and Other (Income) Expense:
Interest and Investment Income (4) (5) (20.0)
Interest Expense 142 180 (21.1)
Other 51 - N/M
--- ---
Interest and Other, net 189 175 8.0
--- ---
</pre>
<p> </p>
<pre>
EARNINGS BEFORE PROVISION FOR INCOME
TAXES 1,116 805 38.6
</pre>
<p> </p>
<p>Provision for Income Taxes 391 291 34.4</p>
<p> </p>
<p> </p>
<pre>
NET EARNINGS $725 $514 41.1%
==== ====
</pre>
<p> </p>
<p>Weighted Average Common Shares 1,677 1,683 (0.4)%</p>
<p> </p>
<p>BASIC EARNINGS PER SHARE <span class="xn-money">$0.43</span> <span class="xn-money">$0.31</span> 38.7</p>
<p> </p>
<pre>
Diluted Weighted Average Common
Shares 1,688 1,689 (0.1)%
</pre>
<p> </p>
<pre>
DILUTED EARNINGS PER SHARE $0.43 $0.30 43.3
</pre>
<p> </p>
<p> </p>
<pre>
%
SELECTED HIGHLIGHTS Three Months Ended Increase
----------------------- ------------------
5-2-10 5-3-09 (Decrease)
------ ------ ----------
Number of Customer
Transactions 323 310 4.2%
------------------ --- ---
Average Ticket (actual) $52.54 $52.67 (0.2)
----------------------- ------ ------
Weighted Average Weekly
Sales
-----------------------
per Operating Store (in
thousands) $581 $552 5.3
----------------------- ---- ----
Square Footage at End of
Period 235 235 -
------------------------ --- ---
Capital Expenditures $167 $172 (2.9)
-------------------- ---- ----
Depreciation and
Amortization (1) $438 $453 (3.3)%
-------------------- ---- ----
</pre>
<p> </p>
<pre>
(1) Includes depreciation of distribution centers and tool rental
equipment included in Cost of Sales and amortization of deferred
financing costs included in Interest Expense
</pre>
<p> </p>
<pre>
N/M - Not Meaningful
</pre>
<p> </p>
<pre>
THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS ITEMS EXCLUDING CERTAIN
ADJUSTMENTS (NON-GAAP)
FOR THE THREE MONTHS ENDED MAY 2, 2010 AND MAY 3, 2009
(Unaudited)
(Amounts in Millions Except Per Share Data)
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
Three Months Ended 5-2-10
-------------------------
As
Adjusted
(Non-
Actuals Adjustment(1) GAAP)
------- ------------ ---------
</pre>
<p> </p>
<p> </p>
<pre>
Net Sales $16,863 $- $16,863
---------
</pre>
<p> </p>
<p> </p>
<pre>
Gross Profit 5,794 - 5,794
------------
</pre>
<p> </p>
<p> </p>
<pre>
Total Operating Expenses 4,489 - 4,489
------------------------
</pre>
<p> </p>
<p> </p>
<pre>
Operating Income 1,305 - 1,305
----------------
</pre>
<p> </p>
<p> </p>
<pre>
Interest and Other, net 189 51 138
-----------------------
</pre>
<p> </p>
<p> </p>
<pre>
Net Earnings $725 $(33) $758
------------
</pre>
<p> </p>
<p> </p>
<p> </p>
<p> </p>
<pre>
Diluted Earnings Per Share $0.43 $(0.02) $0.45
-------------------------- ----- ------ -----
</pre>
<p> </p>
<p> </p>
<p> </p>
<p> </p>
<pre>
Three Months Ended 5-3-09
-------------------------
As
Adjusted
(Non-
Actuals Adjustments(2) GAAP)
------- ------------- ---------
</pre>
<p> </p>
<p> </p>
<pre>
Net Sales $16,175 $221 $15,954
---------
</pre>
<p> </p>
<p> </p>
<pre>
Gross Profit 5,450 29 5,421
------------
</pre>
<p> </p>
<p> </p>
<pre>
Total Operating Expenses 4,470 146 4,324
------------------------
</pre>
<p> </p>
<p> </p>
<pre>
Operating Income 980 (117) 1,097
----------------
</pre>
<p> </p>
<p> </p>
<pre>
Interest and Other, net 175 - 175
-----------------------
</pre>
<p> </p>
<p> </p>
<pre>
Net Earnings $514 $(73) $587
------------
</pre>
<p> </p>
<p> </p>
<p> Diluted Earnings Per Share <span class="xn-money">$0.30</span> $(0.04) <span class="xn-money">$0.35</span></p>
<p> </p>
<pre>
Note: Certain amounts in Diluted Earnings Per Share may not foot due
to rounding.
</pre>
<p> </p>
<pre>
(1) Adjustment is comprised of a charge related to the extension of
the Company's guarantee of a third-party senior secured loan.
(2) Adjustments are comprised of store rationalization charges
related to the closing of 15 stores and the removal of 50 stores
from our future growth pipeline, business rationalization charges
related to the exit of EXPO, THD Design Center, Yardbirds and HD
Bath businesses, as well as net sales, gross profit and operating
expenses of those exited businesses during the period from closing
announcement to actual closing, and charges related to restructuring
of support functions.
</pre>
<p> </p>
<pre>
THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF MAY 2, 2010, MAY 3, 2009 AND JANUARY 31, 2010
(Amounts in Millions)
</pre>
<p> </p>
<p> </p>
<pre>
5-2-10 5-3-09 1-31-10
------ ------ -------
(Unaudited) (Unaudited)
</pre>
<p> </p>
<pre>
ASSETS
Cash and Cash Equivalents $2,436 $2,214 $1,421
Short-Term Investments 6 6 6
Receivables, net 1,342 1,283 964
Merchandise Inventories 11,479 11,428 10,188
Other Current Assets 1,383 1,383 1,321
Total Current Assets 16,646 16,314 13,900
------ ------ ------
</pre>
<p> </p>
<pre>
Property and Equipment, net 25,404 25,894 25,550
Goodwill 1,192 1,134 1,171
Other Assets 377 425 256
TOTAL ASSETS $43,619 $43,767 $40,877
======= ======= =======
</pre>
<p> </p>
<pre>
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable $7,051 $6,901 $4,863
Accrued Salaries and Related Expenses 1,154 1,077 1,263
Current Installments of Long-Term Debt 2,021 1,768 1,020
Other Current Liabilities 3,751 3,802 3,217
Total Current Liabilities 13,977 13,548 10,363
------ ------ ------
</pre>
<p> </p>
<pre>
Long-Term Debt 7,676 9,667 8,662
Other Long-Term Liabilities 2,595 2,558 2,459
Total Liabilities 24,248 25,773 21,484
------ ------ ------
</pre>
<p> </p>
<pre>
Total Stockholders' Equity 19,371 17,994 19,393
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $43,619 $43,767 $40,877
======= ======= =======
</pre>
<p> </p>
<pre>
THE HOME DEPOT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MAY 2, 2010 AND MAY 3, 2009
(Unaudited)
(Amounts in Millions)
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
Three Months
Ended
5-2-10 5-3-09
------ ------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings $725 $514
Reconciliation of Net Earnings to Net Cash
Provided by Operating Activities:
Depreciation and Amortization 438 453
Stock-Based Compensation Expense 64 54
Changes in Working Capital and Other 812 706
Net Cash Provided by Operating Activities 2,039 1,727
----- -----
</pre>
<p> </p>
<pre>
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures (167) (172)
Other 27 89
Net Cash Used in Investing Activities (140) (83)
---- ---
</pre>
<p> </p>
<pre>
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchases of Common Stock (508) -
Cash Dividends Paid to Stockholders (399) (381)
Other 14 424
Net Cash (Used in) Provided by Financing
Activities (893) 43
---- ---
</pre>
<p> </p>
<p>Increase in Cash and Cash Equivalents 1,006 1,687</p>
<p> </p>
<pre>
Effect of Exchange Rate Changes on Cash and Cash
Equivalents 9 8
Cash and Cash Equivalents at the Beginning of
the Period 1,421 519
----- ---
</pre>
<p> </p>
<pre>
Cash and Cash Equivalents at the End of the
Period $2,436 $2,214
====== ======
For further information: Financial Community, Diane Dayhoff, Vice President of Investor Relations, +1-770-384-2666, [email protected], or News Media, Ron DeFeo, Director of Corporate Communications, +1-770-384-3179, [email protected] Web Site: http://www.homedepot.com
Share this article