The Home Depot Announces Second Quarter Results; Updates Fiscal Year 2010 Guidance

The Home Depot Announces Second Quarter Results; Updates Fiscal Year 2010 Guidance



SHARE THIS ARTICLE

    ATLANTA, Aug. 17
/PRNewswire-HISPANIC PR WIRE/ — The Home Depot(R), the worlds largest home
improvement retailer, today reported second quarter of fiscal 2010 net earnings
of $1.2 billion, or $0.72 per diluted share, compared with net earnings of $1.1
billion, or $0.66 per diluted share, in the same period of fiscal 2009. 

 

    (Logo:  photos.prnewswire.com/prnh/20030502/HOMEDEPOTLOGO
)

    (Logo:  newscom.com/cgi-bin/prnh/20030502/HOMEDEPOTLOGO
)

 

    Sales for the second
quarter totaled $19.4 billion, 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.

 

    “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 Frank Blake, 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.”

 

    Updated Fiscal 2010
Guidance

    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 $1.90 for the year. This earnings per share guidance includes
the benefit of the Companys year-to-date share repurchases, but excludes the
impact of future share repurchases.

 

    The Home Depot will
conduct a conference call today at 9 a.m. ET 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.

 

    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 United States (including the
Commonwealth of Puerto Rico, the territory of the U.S. Virgin Islands and the
territory of Guam), 179 stores in Canada, 80 stores in Mexico and 9 stores in
China.  The Company employs more than
300,000 associates. The Home Depots stock is traded on the New York Stock
Exchange (NYSE: HD) and is included in the Dow Jones industrial average and
Standard & Poors 500 index.

 

    To provide clarity,
internally and externally, about the Companys 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 Companys 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 Companys 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.

 

    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 January 31, 2010, and in Part II, Item 1A, “Risk Factors”
and elsewhere in our Quarterly Report on Form 10-Q for the fiscal quarter ended
May 2, 1010.

 

    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.

 

 

 

                   
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)

 

 

                                      
 
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

 

   
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)

                                   
—–        —–

 

     
OPERATING INCOME              2,049        1,833        11.8

 

   
Interest and Other
(Income)

    
Expense:

     
Interest and
Investment

    
  
Income                          (3)          (6)      (50.0)

     
Interest Expense                151          167        (9.6)

 

     
Other                                                   

                                     
         

 
       
Interest and Other, net      148          161        (8.1)

                                     
         

 

   
EARNINGS BEFORE
PROVISION

    
FOR INCOME TAXES               1,901        1,672        13.7

 

   
Provision for Income
Taxes        709          556        27.5

                                     
         

 

 

     
NET EARNINGS                 $1,192       $1,116        6.8%

                                  

======       ======

 

   
Weighted Average Common

    
Shares                         1,653       
1,683       (1.8)%

 

   
BASIC EARNINGS PER
SHARE        $0.72        $0.66        9.1

 

   
Diluted Weighted
Average

    
Common Shares                  1,663        1,691       (1.7)%

 

   
DILUTED EARNINGS PER
SHARE      $0.72        $0.66        9.1

 

 

   
SELECTED
HIGHLIGHTS  

  

———————–        
Three Months 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)%

 

 

                                   
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

 

   
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        

                                   
—–       —–

 

     
OPERATING INCOME              3,354       2,813      19.2

 

   
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

                                     
        

 

   
EARNINGS BEFORE

    
PROVISION FOR INCOME

    
TAXES                          3,017       2,477      21.8

 

   
Provision for Income

    
Taxes                          1,100         847      29.9

                                   
—–        

 

     
NET EARNINGS                 $1,917      $1,630      17.6%

                                  

======      ======

 

  
 
Weighted Average

    
Common Shares                  1,666       1,684      (1.1)%

 

   
BASIC EARNINGS PER

    
SHARE                          $1.15       $0.97      18.6

 

   
Diluted Weighted

    
Average Common
Shares          1,676       1,690      (0.8)%

 

   
DILUTED EARNINGS PER

    
SHARE                          $1.14       $0.96      18.8

 

 

   
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)%

 

   
(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

 

 

 

                   
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)

 

 

                                     
Three Months Ended 8-1-10

                         
            
————————-

                                                                  

As

                             

Actuals          Adjustment       Adjusted

                                                                 

(Non-

  
                           
——-          ———-         GAAP)

                                                                

——

 

    
Net Sales                  $19,410           $-            $19,410

 

    
Gross Profit                 6,582                         
6,582

 

    
Total Operating
Expenses     4,533                          4,533

 

    
Operating Income             2,049                         
2,049

 

    
Interest and Other,
net        148                           
148

 

    
Net Earnings                $1,192           $-             $1,192

 

    
Diluted Earnings Per

     
Share                       $0.72           $-              $0.72

 

 

                                    
Three Months Ended 8-2-09

                        
            
————————-

                                                                  

As

                             

Actuals        
Adjustments(2)    Adjusted

                                                                 

(Non-

  
                           
——-         ————-       GAAP)

                                                                

——

 

    
Net Sales                  $19,071            $-           $19,071

 

    
Gross Profit                 6,388            (1)           
6,389

 

    
Total Operating
Expenses     4,555            19             4,536

 

    
Operating Income             1,833           (20)           
1,853

 

    
Interest and Other,
net        161                           
161

 

    
Net Earnings                $1,116          $(11)           $1,127

 

    
Diluted Earnings Per

     
Share                       $0.66        $(0.01)            $0.67

 

 

 

                                      
Six Months Ended 8-1-10

                       
               
———————–

                                                                 

As

                             

Actuals        
Adjustment(1)    Adjusted

                                                                

(Non-

    
                         
——-          ————      GAAP)

                                                               

——

   

    
Net Sales                  $36,273            $-          $36,273

   

    
Gross Profit                12,376                        12,376

   

    
Total Operating
Expenses     9,022                         9,022

   

    
Operating Income             3,354                        
3,354

   

    
Interest and Other,
net        337            51            
 
286

   

    
Net Earnings                $1,917          $(33)          $1,950

   

    
Diluted Earnings Per

     
Share                       $1.14        $(0.02)           $1.16

   

 

                                     
Six Months Ended 8-2-09

    
                                 ———————–

                                                                 

As

                             

Actuals        
Adjustments(2)   Adjusted

                                                         
       (Non-

                             

——-        
————-      GAAP)

                                                               

——

   

    
Net Sales                  $35,246          $221          $35,025

   

    
Gross Profit                11,838           
28           11,810

   

    
Total Operating
Expenses     9,025           165            8,860

   

    
Operating Income             2,813          (137)          
2,950

   

    
Interest and Other,
net        336                           336

   

    
Net Earnings                $1,630          $(84)          $1,714

   

    
Diluted Earnings Per

     
Share                       $0.96        $(0.05)           $1.01

 

   
(1) Adjustment is
comprised of a charge related to the extension of the Companys 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.

 

 

 

                     
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)

 

 

                                             
8-1-10   8-2-09  
1-31-10

                                             
——   ——  
——-

 

    
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

                                               
——   ——  
——

 

      
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

                                           
   ======= 
=======  =======

 

    
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

                                 
              
——   ——  
——

 

      
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

                                               
——   ——  
——

 

      
Total Stockholders
Equity               19,445   19,169  
19,393

         
TOTAL LIABILITIES
AND STOCKHOLDERS

          
EQUITY                              $42,535  $43,998 
$40,877

                                              
=======  ======= 
=======

 

 

 

                  
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)

 

 

                                                        
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

                                                       
—–         —–

 

   
CASH FLOWS FROM
INVESTING ACTIVITIES:

   
Capital
Expenditures                            
    
(407)         (353)

   
Other                                                 
44           139

        
Net Cash Used in
Investing Activities          
(363)         (214)

                                                        
—-          —-

 

 
  
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)

                                                      
——          —-

 

   
Increase in Cash and
Cash Equivalents                
970         2,585

 

   
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

                 
                                      —–          

 

   
Cash and Cash
Equivalents at the End of the

    
Period                                           
$2,395        $3,107

                                                      
======        ======

 

SOURCE  The Home Depot

The Home Depot Announces Second Quarter Results; Updates Fiscal Year 2010 Guidance