The Home Depot Announces Second Quarter Results; Updates Fiscal Year 2010
Guidance
</pre> <p><span class="xn-location">ATLANTA</span>, <span class="xn-chron">Aug. 17</span> /CNW/ -- The Home Depot®, the world's largest home improvement retailer, today reported second quarter of fiscal 2010 net earnings of <span class="xn-money">$1.2 billion</span>, or <span class="xn-money">$0.72</span> per diluted share, compared with net earnings of <span class="xn-money">$1.1 billion</span>, or <span class="xn-money">$0.66</span> per diluted share, in the same period of fiscal 2009.</p> <pre> (Logo: http://photos.prnewswire.com/prnh/20030502/HOMEDEPOTLOGO ) (Logo: http://www.newscom.com/cgi-bin/prnh/20030502/HOMEDEPOTLOGO ) </pre> <p>Sales for the second quarter totaled <span class="xn-money">$19.4 billion</span>, a 1.8 percent increase from the second quarter of fiscal 2009. Comparable store sales for the second quarter of fiscal 2010 were positive 1.7 percent, and comp sales for U.S. stores were positive 1.0 percent.</p> <p/> <p>"Our second quarter sales reflect the third consecutive quarter of positive same store sales. We delivered solid results as we continue to build momentum with our merchandising transformation, supply chain enhancements and customer service initiatives," said <span class="xn-person">Frank Blake</span>, chairman & CEO. "I want to thank our associates for their hard work and dedication, and I am proud to announce 97 percent of our stores qualified for success sharing, our bonus plan for hourly associates, for the first half of fiscal 2010."</p> <pre> Updated Fiscal 2010 Guidance </pre> <p>Based on its year-to-date performance and expectations for the remainder of the fiscal year, the Company updated its fiscal 2010 guidance and now expects sales to be up approximately 2.6 percent for the year. The Company expects diluted earnings per share from continuing operations as reported to increase by approximately 22.6 percent to <span class="xn-money">$1.90</span> for the year. This earnings per share guidance includes the benefit of the Company's year-to-date share repurchases, but excludes the impact of future share repurchases.</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 second 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>, 80 stores in <span class="xn-location">Mexico</span> and 9 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 recently completed fiscal periods, 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.</p> <p/> <p>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 attached to this 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>, and in Part II, Item 1A, "Risk Factors" and elsewhere in our Quarterly Report on Form 10-Q for the fiscal quarter ended <span class="xn-chron">May 2, 1010</span>.</p> <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> <p/> <p> </p> <p> </p> <pre> THE HOME DEPOT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS FOR THE THREE MONTHS AND SIX MONTHS ENDED AUGUST 1, 2010 AND AUGUST 2, 2009 (Unaudited) (Amounts in Millions Except Per Share Data and as Otherwise Noted) </pre> <p> </p> <pre> Three Months Ended % Increase 8-1-10 8-2-09 (Decrease) ------ ------ ---------- NET SALES $19,410 $19,071 1.8% Cost of Sales 12,828 12,683 1.1 ------ ------ GROSS PROFIT 6,582 6,388 3.0 </pre> <p> </p> <pre> Operating Expenses: Selling, General and Administrative 4,127 4,121 0.1 Depreciation and Amortization 406 434 (6.5) --- --- Total Operating Expenses 4,533 4,555 (0.5) ----- ----- </pre> <p> </p> <p> OPERATING INCOME 2,049 1,833 11.8</p> <p> </p> <pre> Interest and Other (Income) Expense: Interest and Investment Income (3) (6) (50.0) Interest Expense 151 167 (9.6) </pre> <p> </p> <pre> Other - - - --- --- Interest and Other, net 148 161 (8.1) --- --- </pre> <p> </p> <pre> EARNINGS BEFORE PROVISION FOR INCOME TAXES 1,901 1,672 13.7 </pre> <p> </p> <pre> Provision for Income Taxes 709 556 27.5 --- --- </pre> <p> </p> <p> </p> <pre> NET EARNINGS $1,192 $1,116 6.8% ====== ====== </pre> <p> </p> <p> </p> <p> </p> <pre> Weighted Average Common Shares 1,653 1,683 (1.8)% </pre> <p> </p> <p>BASIC EARNINGS PER SHARE <span class="xn-money">$0.72</span> <span class="xn-money">$0.66</span> 9.1</p> <p> </p> <pre> Diluted Weighted Average Common Shares 1,663 1,691 (1.7)% </pre> <p> </p> <p>DILUTED EARNINGS PER SHARE <span class="xn-money">$0.72</span> <span class="xn-money">$0.66</span> 9.1</p> <p> </p> <p> </p> <p> </p> <p> </p> <pre> Three Months SELECTED HIGHLIGHTS Ended % Increase ----------------------- 8-1-10 8-2-09 (Decrease) ------ ------ ---------- Number of Customer Transactions 369 362 1.9% Average Ticket (actual) $52.30 $52.25 0.1 Weighted Average Weekly Sales per Operating Store (in thousands) $662 $650 1.8 Square Footage at End of Period 235 235 - Capital Expenditures $240 $181 32.6 Depreciation and Amortization (1) $428 $458 (6.6)% </pre> <p> </p> <p> </p> <pre> % Six Months Ended Increase 8-1-10 8-2-09 (Decrease) ------ ------ ---------- NET SALES $36,273 $35,246 2.9% Cost of Sales 23,897 23,408 2.1 ------ ------ GROSS PROFIT 12,376 11,838 4.5 </pre> <p> </p> <pre> Operating Expenses: Selling, General and Administrative 8,205 8,163 0.5 Depreciation and Amortization 817 862 (5.2) --- --- Total Operating Expenses 9,022 9,025 - ----- ----- </pre> <p> </p> <p> OPERATING INCOME 3,354 2,813 19.2</p> <p> </p> <pre> Interest and Other (Income) Expense: Interest and Investment Income (7) (11) (36.4) Interest Expense 293 347 (15.6) Other 51 - N/M --- --- Interest and Other, net 337 336 0.3 --- --- </pre> <p> </p> <pre> EARNINGS BEFORE PROVISION FOR INCOME TAXES 3,017 2,477 21.8 </pre> <p> </p> <pre> Provision for Income Taxes 1,100 847 29.9 ----- --- </pre> <p> </p> <pre> NET EARNINGS $1,917 $1,630 17.6% ====== ====== </pre> <p> </p> <p> </p> <pre> Weighted Average Common Shares 1,666 1,684 (1.1)% </pre> <p> </p> <pre> BASIC EARNINGS PER SHARE $1.15 $0.97 18.6 </pre> <p> </p> <pre> Diluted Weighted Average Common Shares 1,676 1,690 (0.8)% </pre> <p> </p> <pre> DILUTED EARNINGS PER SHARE $1.14 $0.96 18.8 </pre> <p> </p> <p> </p> <p> </p> <p> </p> <pre> % SELECTED HIGHLIGHTS Six Months Ended Increase ------------------- 8-1-10 8-2-09 (Decrease) ------ ------ ---------- Number of Customer Transactions 692 672 3.0% Average Ticket (actual) $52.41 $52.45 (0.1) Weighted Average Weekly Sales per Operating Store (in thousands) $621 $600 3.5 Square Footage at End of Period 235 235 - Capital Expenditures $407 $353 15.3 Depreciation and Amortization (1) $866 $911 (4.9)% </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. N/M - Not Meaningful </pre> <p> </p> <p> </p> <pre> THE HOME DEPOT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS ITEMS EXCLUDING CERTAIN ADJUSTMENTS (NON-GAAP) FOR THE THREE MONTHS AND SIX MONTHS ENDED AUGUST 1, 2010 AND AUGUST 2, 2009 (Unaudited) (Amounts in Millions Except Per Share Data) </pre> <p> </p> <p> </p> <pre> Three Months Ended 8-1-10 ------------------------- As Actuals Adjustment Adjusted (Non- ------- ---------- GAAP) ------ </pre> <p> </p> <p> Net Sales <span class="xn-money">$19,410</span> $- <span class="xn-money">$19,410</span></p> <p> </p> <p> Gross Profit 6,582 - 6,582</p> <p> </p> <p> Total Operating Expenses 4,533 - 4,533</p> <p> </p> <p> Operating Income 2,049 - 2,049</p> <p> </p> <p> Interest and Other, net 148 - 148</p> <p> </p> <p> Net Earnings <span class="xn-money">$1,192</span> $- <span class="xn-money">$1,192</span></p> <p> </p> <pre> Diluted Earnings Per Share $0.72 $- $0.72 </pre> <p> </p> <p> </p> <pre> Three Months Ended 8-2-09 ------------------------- As Actuals Adjustments(2) Adjusted (Non- ------- ------------- GAAP) ------ </pre> <p> </p> <p> Net Sales <span class="xn-money">$19,071</span> $- <span class="xn-money">$19,071</span></p> <p> </p> <p> Gross Profit 6,388 (1) 6,389</p> <p> </p> <p> Total Operating Expenses 4,555 19 4,536</p> <p> </p> <p> Operating Income 1,833 (20) 1,853</p> <p> </p> <p> Interest and Other, net 161 - 161</p> <p> </p> <p> Net Earnings <span class="xn-money">$1,116</span> $(11) <span class="xn-money">$1,127</span></p> <p> </p> <pre> Diluted Earnings Per Share $0.66 $(0.01) $0.67 </pre> <p> </p> <p> </p> <pre> Six Months Ended 8-1-10 ----------------------- As Actuals Adjustment(1) Adjusted (Non- ------- ------------ GAAP) ------ </pre> <p> </p> <p> Net Sales <span class="xn-money">$36,273</span> $- <span class="xn-money">$36,273</span></p> <p> </p> <p> Gross Profit 12,376 - 12,376</p> <p> </p> <p> Total Operating Expenses 9,022 - 9,022</p> <p> </p> <p> Operating Income 3,354 - 3,354</p> <p> </p> <p> Interest and Other, net 337 51 286</p> <p> </p> <p> Net Earnings <span class="xn-money">$1,917</span> $(33) <span class="xn-money">$1,950</span></p> <p> </p> <pre> Diluted Earnings Per Share $1.14 $(0.02) $1.16 </pre> <p> </p> <p> </p> <pre> Six Months Ended 8-2-09 ----------------------- As Actuals Adjustments(2) Adjusted (Non- ------- ------------- GAAP) ------ </pre> <p> </p> <p> Net Sales <span class="xn-money">$35,246</span> <span class="xn-money">$221</span> <span class="xn-money">$35,025</span></p> <p> </p> <p> Gross Profit 11,838 28 11,810</p> <p> </p> <p> Total Operating Expenses 9,025 165 8,860</p> <p> </p> <p> Operating Income 2,813 (137) 2,950</p> <p> </p> <p> Interest and Other, net 336 - 336</p> <p> </p> <p> Net Earnings <span class="xn-money">$1,630</span> $(84) <span class="xn-money">$1,714</span></p> <p> </p> <pre> Diluted Earnings Per Share $0.96 $(0.05) $1.01 </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. </pre> <p> </p> <pre> (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 AUGUST 1, 2010, AUGUST 2, 2009 AND JANUARY 31, 2010 (Unaudited) (Amounts in Millions) </pre> <p> </p> <p> </p> <pre> 8-1-10 8-2-09 1-31-10 ------ ------ ------- </pre> <p> </p> <pre> ASSETS Cash and Cash Equivalents $2,395 $3,107 $1,421 Receivables, net 1,218 1,225 964 Merchandise Inventories 10,759 10,797 10,188 Other Current Assets 1,385 1,434 1,327 Total Current Assets 15,757 16,563 13,900 ------ ------ ------ </pre> <p> </p> <pre> Property and Equipment, net 25,190 25,851 25,550 Goodwill 1,187 1,168 1,171 Other Assets 401 416 256 TOTAL ASSETS $42,535 $43,998 $40,877 ======= ======= ======= </pre> <p> </p> <pre> LIABILITIES AND STOCKHOLDERS' EQUITY Accounts Payable $5,919 $6,018 $4,863 Accrued Salaries and Related Expenses 1,226 1,159 1,263 Current Installments of Long-Term Debt 2,022 1,769 1,020 Other Current Liabilities 3,572 3,617 3,217 Total Current Liabilities 12,739 12,563 10,363 ------ ------ ------ </pre> <p> </p> <pre> Long-Term Debt 7,727 9,661 8,662 Other Long-Term Liabilities 2,624 2,605 2,459 Total Liabilities 23,090 24,829 21,484 ------ ------ ------ </pre> <p> </p> <pre> Total Stockholders' Equity 19,445 19,169 19,393 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $42,535 $43,998 $40,877 ======= ======= ======= </pre> <p> </p> <p> </p> <pre> THE HOME DEPOT, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED AUGUST 1, 2010 AND AUGUST 2, 2009 (Unaudited) (Amounts in Millions) </pre> <p> </p> <p> </p> <p> </p> <p> </p> <pre> Six Months Ended 8-1-10 8-2-09 ------ ------ CASH FLOWS FROM OPERATING ACTIVITIES: Net Earnings $1,917 $1,630 Reconciliation of Net Earnings to Net Cash Provided by Operating Activities: Depreciation and Amortization 866 911 Stock-Based Compensation Expense 112 109 Changes in Working Capital and Other 468 678 Net Cash Provided by Operating Activities 3,363 3,328 ----- ----- </pre> <p> </p> <pre> CASH FLOWS FROM INVESTING ACTIVITIES: Capital Expenditures (407) (353) Other 44 139 Net Cash Used in Investing Activities (363) (214) ---- ---- </pre> <p> </p> <pre> CASH FLOWS FROM FINANCING ACTIVITIES: Repurchases of Common Stock (1,209) - Cash Dividends Paid to Stockholders (793) (762) Other (28) 233 Net Cash Used in Financing Activities (2,030) (529) ------ ---- </pre> <p> </p> <p>Increase in Cash and Cash Equivalents 970 2,585</p> <p> </p> <pre> Effect of Exchange Rate Changes on Cash and Cash Equivalents 4 3 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 $2,395 $3,107 ====== ======
For further information: Financial Community, Diane Dayhoff, Vice President of Investor Relations, +1-770-384-2666, [email protected], or News Media, Ron DeFeo, Senior Director of Corporate Communications, +1-770-384-3179, [email protected] Web Site: http://www.homedepot.com
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