The Home Depot Announces Second Quarter Results; Updates Fiscal Year 2011 Guidance

The Home Depot Announces Second Quarter Results; Updates Fiscal Year 2011 Guidance



SHARE THIS ARTICLE

ATLANTA, Aug.
16, 2011 /PRNewswire/ — The Home Depot®, the world’s largest home improvement
retailer, today reported second quarter of fiscal 2011 net earnings of $1.4
billion, or $0.86 per diluted share, compared with net earnings of $1.2 billion,
or $0.72 per diluted share, in the same period of fiscal 2010. For the second
quarter of fiscal 2011, diluted earnings per share increased 19.4 percent from
the prior year.  


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

Sales for
the second quarter totaled $20.2 billion, a 4.2 percent increase from the second
quarter of fiscal 2010. Comparable store sales for the second quarter were
positive 4.3 percent, and comp sales for U.S. stores were positive 3.5 percent.

“Our
second-quarter results were driven by a rebound in our seasonal business,
storm-related repairs and strength in our core categories,” said Frank Blake,
chairman & CEO. “We continue to deliver a strong operating performance while
also investing in customer service and our merchandising initiatives. I would
like to thank our associates for their hard work and dedication. It is their
efforts that enabled us to deliver these results.”

Updated
Fiscal 2011 Guidance

The Company
confirmed that it expects fiscal 2011 sales will be up approximately 2.5 percent
from fiscal 2010. Based on its year-to-date performance and outlook for the
balance of the year, the Company raised its fiscal 2011 diluted
earnings-per-share guidance and now expects diluted earnings-per-share from
continuing operations to be up approximately 16 percent to $2.34 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.

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 2,245 retail stores in
all 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam,
10 Canadian provinces, Mexico and 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.

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,
inventory and in-stock positions, commodity price inflation and deflation,
implementation of store and supply chain 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 and the timing of its completion,
the ability to issue debt on terms and at rates acceptable to us, store openings
and closures, expense leverage, fiscal 2011 guidance 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 30, 2011, and in Part II, Item 1A, “Risk
Factors” and elsewhere in our Quarterly Report on Form 10-Q for the fiscal
quarter ended May 1, 2011.


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

JULY 31, 2011
AND AUGUST 1, 2010

 

(Unaudited)

 

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

 


 

 


 


 

 


 

Three Months Ended


 

% Increase


 


 

Six Months Ended


 

% Increase

 


 

7-31-11


 

8-1-10


 

(Decrease)


 


 

7-31-11


 

8-1-10


 

(Decrease)

 

NET SALES

$ 20,232


 

$ 19,410


 

4.2

%


 

$ 37,055


 

$ 36,273


 

2.2

%

 

Cost of Sales

13,356


 

12,828


 

4.1


 


 

24,351


 

23,897


 

1.9


 

 

 GROSS PROFIT

6,876


 

6,582


 

4.5


 


 

12,704


 

12,376


 

2.7


 

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 

Operating Expenses:


 


 


 


 


 


 


 


 


 


 


 


 


 

 

  Selling, General and
Administrative

4,186


 

4,127


 

1.4


 


 

8,195


 

8,205


 

(0.1)


 

 

  Depreciation and Amortization

396


 

406


 

(2.5)


 


 

793


 

817


 

(2.9)


 

 

    Total Operating Expenses

4,582


 

4,533


 

1.1


 


 

8,988


 

9,022


 

(0.4)


 

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 

 OPERATING INCOME

2,294


 

2,049


 

12.0


 


 

3,716


 

3,354


 

10.8


 

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 

Interest and Other (Income)
Expense:


 


 


 


 


 


 


 


 


 


 


 


 


 

 

 Interest and Investment Income

(3)


 

(3)


 


 


 

(5)


 

(7)


 

(28.6)


 

 

 Interest Expense

149


 

151


 

(1.3)


 


 

290


 

293


 

(1.0)


 

 

 Other


 


 


 


 


 

51


 

(100.0)


 

 

    Interest and Other, net

146


 

148


 

(1.4)


 


 

285


 

337


 

(15.4)


 

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 

EARNINGS BEFORE PROVISION FOR
INCOME TAXES

2,148


 

1,901


 

13.0


 


 

3,431


 

3,017


 

13.7


 

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 

Provision for Income Taxes

785


 

709


 

10.7


 


 

1,256


 

1,100


 

14.2


 

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 

 NET EARNINGS

$   1,363


 

$   1,192


 

14.3

%


 

$   2,175


 

$   1,917


 

13.5

%

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 

Weighted Average Common Shares

1,568


 

1,653


 

(5.1)

%


 

1,585


 

1,666


 

(4.9)

%

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 

BASIC EARNINGS PER SHARE

$     0.87


 

$     0.72


 

20.8


 


 

$     1.37


 

$     1.15


 

19.1


 

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 

Diluted Weighted Average Common
Shares

1,577


 

1,663


 

(5.2)

%


 

1,595


 

1,676


 

(4.8)

%

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 

DILUTED EARNINGS PER SHARE

$     0.86


 

$     0.72


 

19.4


 


 

$     1.36


 

$     1.14


 

19.3


 

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 

SELECTED HIGHLIGHTS

Three Months Ended


 

% Increase


 


 

Six Months Ended


 

% Increase

 


 

7-31-11


 

8-1-10


 

(Decrease)


 


 

7-31-11


 

8-1-10


 

(Decrease)

 

Number of Customer Transactions

373


 

369


 

1.1

%


 

689


 

692


 

(0.4)

%

 

Average Ticket (actual)

$   54.04


 

$   52.30


 

3.3


 


 

$   53.72


 

$   52.41


 

2.5


 

 

Weighted Average Weekly Sales


 


 


 


 


 


 


 


 


 


 


 


 


 

 

   per Operating Store (in
thousands)

$      690


 

$      662


 

4.2


 


 

$      634


 

$      621


 

2.1


 

 

Square Footage at End of Period

235


 

235


 


 


 

235


 

235


 


 

 

Capital Expenditures

$      270


 

$      240


 

12.5


 


 

$      469


 

$      407


 

15.2


 

 

Depreciation and Amortization
(1)

$      425


 

$      428


 

(0.7)

%


 

$      849


 

$      866


 

(2.0)

%

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 

(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. 

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 

THE HOME DEPOT, INC. AND
SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS

 

AS OF JULY 31, 2011, AUGUST
1, 2010 AND JANUARY 30, 2011

 

(Unaudited)

 

(Amounts in Millions)

 


 


 


 


 


 


 

 


 

7-31-11


 

8-1-10


 

1-30-11

 

ASSETS


 


 


 


 


 

 

  Cash and Cash Equivalents

$   2,551


 

$   2,395


 

$      545

 

  Receivables, net

1,332


 

1,218


 

1,085

 

  Merchandise Inventories  

10,756


 

10,759


 

10,625

 

  Other Current Assets

1,218


 

1,385


 

1,224

 

     Total Current Assets

15,857


 

15,757


 

13,479

 


 


 


 


 


 


 

 

  Property and Equipment, net

24,798


 

25,190


 

25,060

 

  Goodwill

1,177


 

1,187


 

1,187

 

  Other Assets

445


 

401


 

399

 

     TOTAL ASSETS

$ 42,277


 

$ 42,535


 

$ 40,125

 


 


 


 


 


 


 

 

LIABILITIES AND STOCKHOLDERS’
EQUITY


 


 


 


 


 

 

  Accounts Payable

$   5,890


 

$   5,919


 

$   4,717

 

  Accrued Salaries and Related
Expenses

1,262


 

1,226


 

1,290

 

  Current Installments of
Long-Term Debt

44


 

2,022


 

1,042

 

  Other Current Liabilities

3,751


 

3,572


 

3,073

 

     Total Current Liabilities

10,947


 

12,739


 

10,122

 


 


 


 


 


 


 

 

  Long-Term Debt

10,731


 

7,727


 

8,707

 

  Other Long-Term Liabilities

2,366


 

2,624


 

2,407

 

     Total Liabilities

24,044


 

23,090


 

21,236

 


 


 


 


 


 


 

 

  Total Stockholders’ Equity  

18,233


 

19,445


 

18,889

 

     TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY

$ 42,277


 

$ 42,535


 

$ 40,125

 


 


 


 


 


 


 


 

 

THE HOME DEPOT, INC. AND
SUBSIDIARIES  

 

CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS

 

FOR THE SIX MONTHS ENDED JULY
31, 2011 AND AUGUST 1, 2010

 

(Unaudited)

 

(Amounts in Millions)

 


 


 


 


 

 


 


 

 


 

Six Months Ended

 


 

7-31-11


 

8-1-10

 

CASH FLOWS FROM OPERATING
ACTIVITIES:


 


 


 

 

Net Earnings

$ 2,175


 

$ 1,917

 

Reconciliation of Net Earnings
to Net Cash Provided by Operating Activities:


 


 


 

 

    Depreciation and
Amortization  

849


 

866

 

    Stock-Based Compensation
Expense

108


 

112

 

    Changes in Working Capital
and Other

1,355


 

468

 

    Net Cash Provided by
Operating Activities

4,487


 

3,363

 


 


 


 


 

 

CASH FLOWS FROM INVESTING
ACTIVITIES:


 


 


 

 

Capital Expenditures

(469)


 

(407)

 

Other

27


 

44

 

    Net Cash Used in Investing
Activities

(442)


 

(363)

 


 


 


 


 

 

CASH FLOWS FROM FINANCING
ACTIVITIES:


 


 


 

 

Proceeds from Long-Term
Borrowings, net of discount

1,994


 

 

Repayments of Long-Term Debt

(1,014)


 

(17)

 

Repurchases of Common Stock

(2,251)


 

(1,209)

 

Cash Dividends Paid to
Stockholders

(798)


 

(793)

 

Other

29


 

(11)

 

   Net Cash Used in Financing
Activities

(2,040)


 

(2,030)

 


 


 


 


 

 

Change in Cash and Cash
Equivalents

2,005


 

970

 


 


 


 


 

 

Effect of Exchange Rate Changes
on Cash and Cash Equivalents

1


 

4

 

Cash and Cash Equivalents at the
Beginning of the Period

545


 

1,421

 


 


 


 


 

 

Cash and Cash Equivalents at the
End of the Period

$ 2,551


 

$ 2,395

 


 


 


 


 


 

 

SOURCE  The
Home Depot

The Home Depot Announces Second Quarter Results; Updates Fiscal Year 2011 Guidance