The Home Depot Announces Third Quarter Results; Raises Fiscal Year 2013 Guidance

The Home Depot Announces Third Quarter Results; Raises Fiscal Year 2013 Guidance



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ATLANTA, Nov. 19, 2013 /PRNewswire/ — The Home Depot®, the world’s largest home improvement retailer, today reported sales of $19.5 billion for the third quarter of fiscal 2013, a 7.4 percent increase from the third quarter of fiscal 2012. On a like for like basis, comparable store sales for the third quarter of fiscal 2013 were positive 7.4 percent, and comp sales for U.S. stores were positive 8.2 percent.

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

Net earnings for the third quarter were $1.4 billion, or $0.95 per diluted share, compared with net
earnings of $947 million, or $0.63 per diluted share, in the same period of fiscal 2012. For the third quarter of fiscal 2013, diluted earnings per share increased 50.8 percent from the same period in the prior year. The prior year results reflect a nonrecurring charge of approximately $165 million, net of tax, or $0.11 per diluted share, due to the closing of seven stores in China. On an adjusted basis, the Company reported a 28.4 percent increase in diluted earnings per share from the same period in the prior year.

“Our third quarter results reflect the continuing improvement in the housing market and our solid operational performance,” said Frank Blake, chairman & CEO. “I would like to thank our associates for their hard work and dedication.”

Updated Fiscal 2013
Guidance

Based on its year-to-date performance and outlook for the remainder of the year, the Company raised its fiscal 2013 sales guidance and now expects sales to be up approximately 5.6 percent. Comparable store sales, on a 52-week like for like basis, are expected to be up approximately 7.0 percent for the year. The Company raised its fiscal 2013 diluted earnings-per-share guidance and now expects diluted earnings per share to be up approximately 24.0 percent to $3.72 for the year. The Company’s fiscal 2013 sales and diluted earnings-per-share guidance is based on a 52-week year compared to fiscal 2012, a 53-week year.

This diluted earnings-per-share guidance includes the benefit of the Company’s year-to-date share repurchases totaling $6.4 billion and the Company’s intent to repurchase $2.1 billion of additional shares in the fourth quarter of fiscal
2013.

On December 11 at 9 a.m. ET, the Company will hold an Investor and Analyst Conference. All presentations will be webcast live at ir.homedepot.com in the Events & Presentations section.

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 third quarter, the Company operated a total of 2,260 retail stores in all 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, 10 Canadian provinces and Mexico. 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 recently completed fiscal periods, the Company has supplemented its reporting with non-GAAP financial measures to reflect the impact of the closing of seven stores in China in fiscal 2012. 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 that impact the comparability of underlying business results from period to period. 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 comparable GAAP measures can be found attached to this press release and at
http://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, inventory and in-stock positions, commodity price inflation and deflation, implementation of store and supply chain initiatives, continuation of share repurchase programs, net earnings performance, earnings per share, capital allocation and expenditures, liquidity, return on invested capital, management of
relationships with our suppliers and vendors, stock-based compensation expense, the effect of accounting charges, the effect of adopting certain accounting standards, the ability to issue debt on terms and at rates acceptable to us, store openings and closures, expense leverage, guidance for fiscal 2013 and beyond and financial outlook. Forward-looking statements are based on currently available information and our current assumptions, expectations and projections about future events. You should not rely 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 3, 2013 and in our subsequent Quarterly Reports on Form 10-Q.

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 AND NINE MONTHS ENDED NOVEMBER 3, 2013 AND OCTOBER 28, 2012

(Unaudited)

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

 
 
   

Three Months Ended

     

Nine Months Ended

   
   

November 3,

2013

 

October 28,

2012

 

% Increase

(Decrease)

November 3,

2013

 

October 28,

2012

 

% Increase

(Decrease)

NET SALES

 

$

19,470

   

$

18,130

   

7.4

%

$

61,116

   

$

56,508

   

8.2

%

Cost of Sales

 

12,672

   

11,863

   

6.8

   

39,918

   

37,032

   

7.8

 

GROSS PROFIT

 

6,798

   

6,267

   

8.5

   

21,198

   

19,476

   

8.8

 

 

Operating Expenses:

                       

Selling, General and Administrative

 

4,096

   

4,139

   

(1.0)

   

12,573

   

12,291

   

2.3

 

Depreciation and Amortization

 

409

   

395

   

3.5

   

1,220

   

1,169

   

4.4

 

Total Operating Expenses

 

4,505

   

4,534

   

(0.6)

   

13,793

   

13,460

   

2.5

 

 

OPERATING INCOME

 

 

2,293

   

1,733

   

32.3

   

7,405

   

6,016

   

23.1

 

Interest and Other (Income) Expense:

                       

Interest and Investment Income

 

(3)

   

(5)

   

(40.0)

   

(8)

   

(14)

   

(42.9)

 

Interest Expense

 

191

   

155

   

23.2

   

529

   

466

   

13.5

 

Other

 

   

   

   

   

(67)

   

(100.0)

 

Interest and Other, net

 

188

   

150

   

25.3

   

521

   

385

   

35.3

 

 

EARNINGS BEFORE PROVISION FOR

INCOME TAXES

 

2,105

   

1,583

   

33.0

   

6,884

   

5,631

   

22.3

 
                                     

Provision for Income Taxes

 

754

   

636

   

18.6

   

2,512

   

2,117

   

18.7

 
                         

NET EARNINGS

 

$

1,351

   

$

947

   

42.7

%

 

$

4,372

   

$

3,514

   

24.4

%

                         

Weighted Average Common Shares

 

1,408

   

1,487

   

(5.3)

%

 

1,438

   

1,505

   

(4.5)

%

BASIC EARNINGS PER SHARE

 

$

0.96

   

$

0.64

   

50.0

   

$

3.04

   

$

2.33

   

30.5

 
                         

Diluted Weighted Average Common Shares

 

1,417

   

1,498

   

(5.4)

%

 

1,448

   

1,517

   

(4.5)

%

DILUTED EARNINGS PER SHARE

 

$

0.95

   

$

0.63

   

50.8

   

$

3.02

   

$

2.32

   

30.2

 
                         
   

Three Months Ended

     

Nine Months Ended

   

SELECTED HIGHLIGHTS

 

November 3,

2013

 

October 28,

2012

 

% Increase

(Decrease)

 

November 3,

2013

 

October 28,

2012

 

% Increase

(Decrease)

Number of Customer Transactions

 

344.3

   

331.0

   

4.0

%

 

1,074.6

   

1,034.8

   

3.8

%

Average Ticket (actual)

 

$

56.27

   

$

54.55

   

3.2

   

$

56.99

   

$

54.71

   

4.2

 

Weighted Average Weekly Sales per

Operating Store (in thousands)

 

$

659

   

$

616

   

7.0

   

$

695

   

$

644

   

7.9

 

Square Footage at End of Period

 

236

   

235

   

0.4

   

236

   

235

   

0.4

 

Capital Expenditures

 

$

365

   

$

336

   

8.6

   

$

964

   

$

887

   

8.7

 

Depreciation and Amortization (1)

 

$

440

   

$

424

   

3.8

%

 

$

1,317

   

$

1,257

   

4.8

%

_________

 

(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 STATEMENTS OF EARNINGS ITEMS EXCLUDING CERTAIN ADJUSTMENTS (NON-GAAP)

FOR THE THREE MONTHS ENDED NOVEMBER 3, 2013 AND OCTOBER 28, 2012

(Unaudited)

(Amounts in Millions Except Per Share Data)

 
   
   

Three Months Ended November 3, 2013

   

Actuals

 

Adjustments

 

As Adjusted

(Non-GAAP)

Gross Profit

 

$

6,798

   

$

   

$

6,798

 

Selling, General and Administrative

 

4,096

   

   

4,096

 

Operating Income

 

2,293

   

   

2,293

 

Net Earnings

 

1,351

   

   

1,351

 

Diluted Earnings per Share

 

$

0.95

   

$

   

$

0.95

 
             
   

Three Months Ended October 28, 2012

   

Actuals

 

Adjustments(1)

 

As Adjusted

(Non-GAAP)

Gross Profit

 

$

6,267

   

$

(10)

   

$

6,277

 

Selling, General and Administrative

 

4,139

   

155

   

3,984

 

Operating Income

 

1,733

   

(165)

   

1,898

 

Net Earnings

 

947

   

(165)

   

1,112

 

Diluted Earnings per Share

 

$

0.63

   

$

(0.11)

   

$

0.74

 

_________

 
 

(1) Adjustments are related to the closing of seven stores in China.

 
   
 

THE HOME DEPOT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF NOVEMBER 3, 2013, OCTOBER 28, 2012 AND FEBRUARY 3, 2013

(Unaudited)

(Amounts in Millions)

 
 
   

November 3,

2013

 

October 28,

2012

 

February 3,

2013

ASSETS

           

Cash and Cash Equivalents

 

$

4,853

   

$

2,554

   

$

2,494

 

Receivables, net

 

1,606

   

1,645

   

1,395

 

Merchandise Inventories

 

11,348

   

10,960

   

10,710

 

Other Current Assets

 

791

   

796

   

773

 

Total Current Assets

 

18,598

   

15,955

   

15,372

 

 

Property and Equipment, net

 

23,557

   

24,124

   

24,069

 

Goodwill

 

1,172

   

1,141

   

1,170

 

Other Assets

 

487

   

441

   

473

 

TOTAL ASSETS

 

$

43,814

   

$

41,661

   

$

41,084

 
             

LIABILITIES AND STOCKHOLDERS’ EQUITY

           

Accounts Payable

 

$

6,366

   

$

6,010

   

$

5,376

 

Accrued Salaries and Related Expenses

 

1,315

   

1,311

   

1,414

 

Current Installments of Long-Term Debt

 

1,317

   

34

   

1,321

 

Other Current Liabilities

 

3,531

   

3,311

   

3,351

 

Total Current Liabilities

 

12,529

   

10,666

   

11,462

 

 

Long-Term Debt, excluding current installments

 

14,692

   

10,779

   

9,475

 

Other Long-Term Liabilities

 

2,379

   

2,478

   

2,370

 

Total Liabilities

 

29,600

   

23,923

   

23,307

 

 

Total Stockholders’ Equity

 

14,214

   

17,738

   

17,777

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

43,814

   

$

41,661

   

$

41,084

 
 

THE HOME DEPOT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED NOVEMBER 3, 2013 AND OCTOBER 28, 2012

(Unaudited)

(Amounts in Millions)

 
 
   

Nine Months Ended

   

November 3,

2013

 

October 28,

2012

CASH FLOWS FROM OPERATING ACTIVITIES:

       

Net Earnings

 

$

4,372

   

$

3,514

 

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

       

Depreciation and Amortization

 

1,317

   

1,257

 

Stock-Based Compensation Expense

 

169

   

158

 

Changes in Working Capital and Other

 

123

   

455

 

Net Cash Provided by Operating Activities

 

5,981

   

5,384

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

       

Capital Expenditures

 

(964)

   

(887)

 

Payments for Businesses Acquired, net

 

(15)

   

(121)

 

Proceeds from Sales of Property and Equipment

 

34

   

21

 

Net Cash Used in Investing Activities

 

(945)

   

(987)

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

       

Proceeds from Long-Term Borrowings, net of discount

 

5,222

   

 

Repayments of Long-Term Debt

 

(25)

   

(23)

 

Repurchases of Common Stock

 

(6,446)

   

(3,330)

 

Proceeds from Sales of Common Stock

 

164

   

697

 

Cash Dividends Paid to Stockholders

 

(1,699)

   

(1,312)

 

Other

 

104

   

133

 

Net Cash Used in Financing Activities

 

(2,680)

   

(3,835)

 

 

Change in Cash and Cash Equivalents

 

 

2,356

   

562

 

Effect of Exchange Rate Changes on Cash and Cash Equivalents

 

3

   

5

 

Cash and Cash Equivalents at Beginning of Period

 

2,494

   

1,987

 

 

Cash and Cash Equivalents at End of Period

 

$

4,853

   

$

2,554

 
 

SOURCE  The Home Depot

The Home Depot Announces Third Quarter Results; Raises Fiscal Year 2013 Guidance