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

PR Newswire

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 (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



 

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