The Home Depot Announces Fourth Quarter and Fiscal 2009 Results; Declares Dividend...

The Home Depot Announces Fourth Quarter and Fiscal 2009 Results; Declares Dividend Increase and Provides Fiscal 2010 Outlook



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The Home Depot Announces Fourth Quarter and Fiscal 2009 Results;<br /> Declares Dividend Increase and Provides Fiscal 2010 Outlook

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2010-02-23T02:53:00Z
2010-02-23T02:53:00Z
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PR Newswire
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ATLANTA, Feb. 23 /PRNewswire-HISPANIC PR WIRE/ — The Home Depot(R), the
world’s largest home improvement retailer, today reported sales for the fourth
quarter of fiscal 2009 of $14.6 billion, a 0.3 percent decrease from the fourth
quarter of fiscal 2008. Total company comparable store sales for the fourth
quarter grew 1.2 percent. Comparable store sales for U.S. stores were negative
1.1 percent.

 

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

 

   
Earnings per diluted share from continuing operations for the fourth
quarter were $0.18, compared to earnings per diluted share from continuing
operations of $0.00 in the fourth quarter of fiscal 2008.  Fourth quarter 2009 earnings per diluted
share from continuing operations reflect a $163 million pre-tax write-down of
the Company’s investment in HD Supply.

 

   
Excluding the write-down of the Company’s investment in HD Supply,
earnings from continuing operations were $402 million for the fourth quarter of
fiscal 2009, an increase of 22.9 percent from adjusted earnings from continuing
operations of $327 million in the fourth quarter of fiscal 2008.  On an adjusted basis, earnings per diluted
share from continuing operations were $0.24 for the fourth quarter of fiscal
2009, an increase of 26.3 percent from the same period in 2008.

 

   
Fiscal 2009 fourth quarter consolidated net earnings were $342 million,
or $0.20 per diluted share, compared with a net loss of $54 million, or a $0.03
loss per diluted share, for the same period in fiscal 2008. Consolidated net
earnings include $41 million of earnings from discontinued operations arising
from the Company’s working capital settlement agreement with HD Supply.

 

   
Fiscal 2009

   
Sales for fiscal 2009 were $66.2 billion, a decline of 7.2 percent from
fiscal 2008. Total company comparable store sales for the year declined 6.6
percent, and comps for U.S. stores were negative 6.2 percent for the year.

 

   
Earnings per diluted share from continuing operations in fiscal 2009
were $1.55, compared to $1.37 per diluted share from continuing operations in
fiscal 2008, an increase of 13.1 percent. Excluding strategic charges recorded
earlier in the year and the write-down of the Company’s investment in HD
Supply, adjusted earnings per diluted share from continuing operations for
fiscal 2009 were $1.66.  (Editors’ Note:  See attached chart for full explanation of
charges.)

 

  
 
For fiscal 2009, consolidated net earnings
per diluted share increased 17.2 percent to $1.57 on consolidated net earnings
of $2.7 billion, compared to consolidated earnings per diluted share of $1.34
on net earnings of $2.3 billion in fiscal 2008.

 

   
"Despite the tough economic environment, we were able to make solid
progress against our key initiatives in 2009," said Frank Blake, chairman
& CEO. "For the year, we grew U.S. share by more than 100 basis
points; we continued to restructure our distribution network, with our Rapid
Deployment Centers now serving more than 65 percent of our U.S. store base; and
we enhanced overall customer service as measured by third party surveys."

 

   
In the fourth quarter, the Company’s sales performance was driven by gains
in kitchen and bath, paint, flooring and plumbing as well as its international
businesses.

 

   
"In the face of a very tough selling environment, our associates
did an amazing job in 2009," said Blake. 
"Their hard work and dedication made these accomplishments
possible." 

 

   
Fourth Quarter Dividend Increase

   
The Company today announced that its board of directors declared a 5
percent increase in its quarterly cash dividend to 23.625 cents per share.
"For the first time since 2006, the board has increased the dividend, a
testament to our confidence in the Company’s strategic initiatives and our
commitment to returning capital to our shareholders," said Blake. "It
is our intent to increase our dividend every year. Our longer-term targeted
dividend payout ratio is 40 percent." The dividend is payable on March 25,
2010, to shareholders of record on the close of business on March 11, 2010.
This is the 92nd consecutive quarter the Company has paid a cash dividend.

 

   
2010 Financial Outlook (based on GAAP)

   
The Company gave the following guidance for fiscal 2010:

 

   
Fiscal 2010 Guidance (based on GAAP results):

   
— Sales growth: approximately 2.5 percent

   
— Comparable store sales growth: approximately 2.5 percent

   
— New stores: 6 net new

   
— Gross margin expansion: modest

   
— Expense leverage: modest

   
— Operating margin: approximately 8 percent

   
— Tax rate: approximately 37 percent

   
— EPS from continuing operations growth: approximately 15.5 percent to
$1.79

     
— Does not include the impact of share repurchases

   
— Capital expenditures: approximately $1.25 billion

   
— Depreciation and amortization expense: approximately $1.75 billion

   
— Cash flow from the business: approximately $5.4 billion

   
— Share repurchases: intend to use excess cash to repurchase shares

 

   
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 fourth 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, 79 stores in Mexico
and 10 stores in China.  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.

 

   
To provide clarity, internally and externally, about the Company’s
operating performance for the recently completed fiscal quarter and year, 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 investment impairment charges.  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.

 

   
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, impact of cannibalization, 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 February 1, 2009, and in Part II,
Item 1A, "Risk Factors" and elsewhere in our Quarterly Report on Form
10-Q for the fiscal quarter ended November 1, 2009.

 

   
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 YEARS ENDED JANUARY 31, 2010 AND FEBRUARY 1,
2009

                                   (Unaudited)

      

(Amounts in Millions Except Per Share Data and as Otherwise Noted)

 

                  Three Months                                             

                     
Ended       
% Increase      Years Ended     % Increase

                1-31-10   
2-1-09   (Decrease)   1-31-10  
2-1-09   (Decrease)

                ——– 
———  ——–    ——-  
——–  ——–

   

NET SALES    $14,569    $14,607   
(0.3)%    $66,176    $71,288   
(7.2)%

   

Cost of

    

Sales         9,556     9,647    
(0.9)      43,764     47,298   
(7.5)

                ——– 
———             
——-   ——–

     

GROSS

      

PROFIT      5,013     4,960      1.1       22,412     23,990   
(6.6)

   

Operating

    

Expenses:               

      

Selling,

       

General

       

and

       

Adminis

       

-trative   3,869     4,251    
(9.0)      15,902     17,846  
(10.9)

      

Depreciation

       

and

       

Amort-

       

ization      417       443    
(5.9)       1,707      1,785    (4.4)

                ——– 
———             
——-   ——–

        

Total

         

Operating

         

Expenses 4,286     4,694     (8.7)      17,609     19,631   (10.3)

                ——– 
———              ——-   ——–

     

OPERATING

      

INCOME        727       266   
173.3        4,803      4,359   
10.2

   

Interest and

    

Other

    

(Income)

    

Expense:               

     

Interest

      

and Investment

      

Income         (3)       (5)  
(40.0)         (18)       (18)     

     

Interest

      

Expense       161       139    
15.8          676        624     8.3

     

Other          163       163                  163        163      

                ——– 
———             
——-   ——–

        

Interest

         

and Other,

         

net        321       297      8.1          821        769     6.8

                ——– 
———             
——-   ——–

   

EARNINGS (LOSS)

    

FROM CONTINUING

    

OPERATIONS BEFORE

    

PROVISION (CREDIT)

    

FOR INCOME

    

TAXES           406       (31)     N/M        3,982      3,590   
10.9

   

Provision

    

(Credit)

    

for Income

    

Taxes           105       (29)     N/M        1,362      1,278     6.6

                ——– 
———             
——-   ——–

   

EARNINGS (LOSS)

    

FROM

    

CONTINUING                                                            

    

OPERATIONS      301        (2)     N/M        2,620      2,312    13.3

   

EARNINGS (LOSS)

    

FROM

    

DISCONTINUED                                                          

    

OPERATIONS,

    

NET OF TAX       41       (52)     N/M           41        (52)    N/M

     

NET

     

EARNINGS  ——–  ———              ——-  
——–

     

(LOSS)        $342      $(54)     N/M%      $2,661     $2,260   
17.7%

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

   

Weighted

    

Average

    

Common

    

Shares        1,679     1,681    
(0.1)%      1,683      1,682     0.1%

   

BASIC EARNINGS

    

PER SHARE

    

FROM                                                               

    

CONTINUING

    

OPERATIONS    $0.18        $-      N/M        $1.56      $1.37   
13.9

   

BASIC EARNINGS

    

(LOSS) PER

    

SHARE FROM                                                          

    

DISCONTINUED

    

OPERATIONS    $0.02    $(0.03)     N/M        $0.02     $(0.03)    N/M

   

BASIC EARNINGS

    

(LOSS) PER

    

SHARE         $0.20    $(0.03)     N/M        $1.58      $1.34   
17.9

   

Diluted Weighted

    

Average Common

    

Shares        1,691     1,686      0.3%       1,692      1,686     0.4%

   

DILUTED EARNINGS

    

PER SHARE FROM                          
        

    

CONTINUING

    

OPERATIONS    $0.18        $-      N/M        $1.55      $1.37   
13.1

   

DILUTED EARNINGS

    

(LOSS) PER

    

SHARE FROM                                                             

    

DISCONTINUED

    

OPERATIONS 
  
$0.02   
$(0.03)     N/M        $0.02     $(0.03)    N/M

   

DILUTED EARNINGS

    

(LOSS) PER

    

SHARE         $0.20    $(0.03)     N/M        $1.57      $1.34   
17.2

 

 

                                              

   

SELECTED  HIGHLIGHTS (1)

                  Three Months                                             

                     
Ended       
% Increase      Years Ended     % Increase

                1-31-10   
2-1-09   (Decrease)   1-31-10  
2-1-09   (Decrease)

                ——– 
———  ——–    ——-  
——–  ——–

 

   

Number of

    

Customer

    

Transactions    288     282        2.1%       1,274      1,272     0.2%

   

Average

    

Ticket

    

(actual)     $50.01  $50.87      
(1.7)      $51.76     $55.61   
(6.9)

   

Weighted

    

Average

    

Weekly

    

Sales per

    

Operating

    

Store

    

(in

    

thousands)     $494    $485        1.9         $563       $601   
(6.3)

   

Square Footage

    

at End of

    

Period          235     238       (1.3)         235        238   
(1.3)

   

Capital

    

Expenditures   $398    $436      
(8.7)        $966     $1,847  
(47.7)

   

Depreciation

    

and

    

Amort-

   

ization (2)     $442    $470      
(6.0)%     $1,806     $1,902   
(5.0)%

 

    
(1) Includes continuing operations
only.    

 

    

(2) 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 BALANCE SHEETS                 

              AS OF JANUARY 31, 2010 AND FEBRUARY 1, 2009         

                        
(Amounts in Millions)                    

                                                              

                                               
1-31-10     2-1-09

                                               
——-     ——

                                 
            
(Unaudited) (Audited)

                                                              

    

ASSETS                                                       

      

Cash and Short-Term Investments             $1,427     
$525

      

Receivables, net                               964       972

      

Merchandise Inventories                     10,188   
10,673

      

Other Current Assets                         1,321    
1,192

                                                   
—–     —–

     
    
Total Current Assets                     13,900    13,362

                                                  
——    ——

                                                                  

      

Property and Equipment, net                 25,550    26,234

      

Goodwill                                     1,171     1,134

      

Other Assets                                   256       434

                                                     
      

         

TOTAL ASSETS                   
        
$40,877   $41,164

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

                                                              

    

LIABILITIES AND STOCKHOLDERS’ EQUITY                         

      

Accounts Payable      
                     
$4,863    $4,822

      

Accrued Salaries and Related Expenses        1,263     1,129

      

Current Installments of Long-Term                          

       

Debt                                        1,020     1,767

      

Other Current Liabilities                    3,217    
3,435

                                                   
—–     —–

         

Total Current Liabilities               
10,363    11,153

                                                  
——    ——

                                                                  

      

Long-Term Debt                               8,662     9,667

      

Other Long-Term Liabilities                  2,459    
2,567

                                                 
  —–    
—–

         

Total Liabilities                       
21,484    23,387

                                                  
——    ——

                                                                  

      

Total Stockholders’ Equity                  19,393   
17,777

                                                  
——    ——

         

TOTAL LIABILITIES AND STOCKHOLDERS’                     

          

EQUITY                                
$40,877   $41,164

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

 

 

 

                     THE HOME DEPOT, INC. AND SUBSIDIARIES

         

CONSOLIDATED STATEMENTS OF EARNINGS ITEMS EXCLUDING CERTAIN  

    

ADJUSTMENTS (NON-GAAP) FOR THE THREE MONTHS AND YEARS ENDED JANUARY 31,

                         
2010 AND FEBRUARY 1, 2009 

                                
(Unaudited)

                 (Amounts in Millions Except Per Share Data)

 

 

                 Three Months Ended 1-31-10         Year Ended 1-31-10

                 ————————–  
——————————-

                                  
As                                 As

                       
Adjust- 
Adjusted               
Adjust-   Adjusted

               Actuals  
ment(1) (Non-GAAP)    Actuals    ments(2)
(Non-GAAP)

               ——- 
——– ———-  
——–   ——— ———-

     

Net

      

Sales   $14,569        $-   
$14,569    $66,176     $221   
$65,955

     

Gross

      

Profit    5,013               5,013     22,412       28     22,384

     

Total

      

Operating                                                     

      

Ex-

      

penses    4,286               4,286     17,609      174    
17,435

     

Operating

      

Income      727                 727      4,803     (146)     4,949

     

Interest

      

and Other,                                                    

      

net         321       163        158        821      163        658

     

Earnings from                                      
            

      

Continuing

      

Oper

      

-ations     301      (101)       402      2,620     (191)    
2,811

     

Earnings from                                                  

      

Discontinued                                                   

      

Operations,

      

Net of                                                        

      

Tax          41                  41         41                 41

     

Net

      

Earnings   $342     $(101)      $443     $2,661    $(191)   
$2,852

     

Diluted

      

Earnings Per                                           

      

Share from

      

Continuing                                         

      

Oper-

      

ations    $0.18    $(0.06)     $0.24      $1.55   $(0.11)    
$1.66

     

Diluted

      

Earnings Per                                                 

      

Share

      

from

      

Discontinued                                                 

      

Oper-

      

ations    $0.02        $-      $0.02      $0.02       $-     
$0.02

     

Diluted

      

Earnings

      

Per                                                           

      

Share     $0.20    $(0.06)     $0.26      $1.57   $(0.11)    
$1.69

                                                                        

 

                                                                         

                                                                         

                 Three Months Ended 2-1-09         Year Ended 2-1-09

               —————————-   ——————————

                                    
As                              As

                        
Adjust   
Adjusted             
Adjust-  Adjusted

               Actuals  
ments(2) (Non-GAAP)  Actuals    ments(2) (Non-GAAP)

               ——-  
——– ———- 
——–   ——— ———-

   

Net

    

Sales    $14,607       $-   
$14,607     $71,288        $-    
$71,288

   

Gross

    

Profit     4,960      (20)    
4,980      23,990       (30)     24,020

   

Total

    

Operating                                                       

    

Expenses   4,694      367     
4,327      19,631       921      18,710

   

Operating

    

Income       266     (387)       653       4,359      (951)      5,310

   

Interest

    

and Other,                                                       

    

net          297      163        134         769       163         606

   

Earnings

    

(Loss)

    

from                                                              

    

Continuing

    

Operations    (2)    (329)       327       2,312      (684)      2,996

   

Loss from

    

Discontinued                                                     

    

Operations,

    

Net of Tax   (52)               (52)        (52)                 (52)

   

Net Earnings

    

(Loss)      $(54)   $(329)     
$275      $2,260     $(684)     $2,944

   

Diluted

    

Earnings

    

Per Share

    

from

    

Continuing                                                      

    

Operations    $-   $(0.20)    
$0.19       $1.37    $(0.41)      $1.78

   

Diluted Loss

    

Per Share                                                       

    

from

    

Discontinued                                                    

    

Oper-

    

ations    $(0.03)      $-    
$(0.03)     $(0.03)       $-     
$(0.03)

   

Diluted

    

Earnings

    

(Loss)                                                         

    

Per

    

Share     $(0.03)  $(0.20)    
$0.16       $1.34    $(0.41)      $1.75

 

   

Note: Certain amounts in Diluted Earnings Per Share may not foot due to

rounding.   

 

    
(1) Adjustment is comprised of a charge to write-down the Company’s
investment in HD Supply.

   

(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, 
charges related to restructuring of support functions and investment
impairment charges. 

 

SOURCE The Home Depot

 

The Home Depot Announces Fourth Quarter and Fiscal 2009 Results; Declares Dividend Increase and Provides Fiscal 2010 Outlook