EX-99.1 2 exhibit991.htm PRESS RELEASE exhibit991.htm
 
Exhibit 99.1
LOWE'S LOGO

May 21, 2012
For 6:00 am ET Release

                                                                                              
 
 Contacts:   Shareholders’/Analysts’ Inquiries:     Media Inquiries:
   Tiffany Mason    Chris Ahearn
   704-758-2033    704-758-2304
 
                                                                      
LOWE’S REPORTS FIRST QUARTER SALES AND EARNINGS RESULTS
 
MOORESVILLE, N.C.  – Lowe’s Companies, Inc. (NYSE: LOW), the world’s second largest home improvement retailer, today reported net earnings of $527 million for the quarter ended May 4, 2012, a 14.3 percent increase over the same period a year ago.  Diluted earnings per share increased 26.5 percent to $0.43 from $0.34 in the first quarter of 2011.

Sales for the quarter increased 7.9 percent to $13.2 billion from $12.2 billion in the first quarter of 2011.

Lowe’s fiscal year ends on the Friday nearest the end of January; therefore, fiscal year 2011 included 53 weeks.  The 2012 quarterly comparisons will be impacted by a shift in comparable weeks.  The week shift aided the first quarter sales increase by $514 million or 4.2 percent, and contributed approximately $0.05 to the diluted earnings per share growth.

Included in the above reported results is a charge related to a previously announced reduction in staff at U.S. headquarters.  This charge reduced pre-tax earnings for the first quarter by $17 million and diluted earnings per share by $0.01.
 
Comparable store sales for the quarter increased 2.6 percent, while comparable store sales for the U.S. business increased 2.7 percent.

“We delivered solid results for the quarter, consistent with our expectation at the beginning of the year,” commented Robert A. Niblock, Lowe’s chairman, president and CEO.  “While we capitalized on better than anticipated weather during most of the quarter, demand for seasonal products slowed toward the end.

“We continue to maintain a cautious view of the housing and macro demand environment, and are focused on what we can control,” Niblock added.  “We are building on our core strengths and strategically investing in ways that will better position Lowe’s for success.  I would like to express my gratitude to our employees for their continued dedication and customer focus.”

As of May 4, 2012, Lowe’s operated 1,747 stores in the United States, Canada and Mexico representing 196.7 million square feet of retail selling space.

A conference call to discuss first quarter 2012 operating results is scheduled for today (Monday, May 21) at 9:00 am ET.  The conference call will be available through a webcast and can be accessed by visiting Lowe’s website at www.Lowes.com/investor and clicking on Lowe’s First Quarter 2012 Earnings Conference Call Webcast.  A replay of the call will be archived on Lowes.com until August 19, 2012.

 
 

 
 
 Lowe’s Business Outlook
 
Fiscal Year 2012 – a 52-week Year (comparisons to fiscal year 2011 – a 53-week year)
·  
Total sales are expected to increase 1 to 2 percent. On a 52 versus 52 week basis, total sales are expected to increase approximately 3 percent.
·  
The company expects comparable store sales to increase 1 to 3 percent (52 versus 52 week basis).
·  
The company expects to open approximately 10 stores in fiscal year 2012.
·  
Earnings before interest and taxes as a percentage of sales (operating margin) are expected to increase approximately 90 basis points.
·  
Depreciation expense is expected to be approximately $1.5 billion.
·  
The effective income tax rate is expected to be approximately 37.9%.
·  
Diluted earnings per share of $1.73 to $1.83 are expected for the fiscal year ending February 1, 2013.
 
 
 Disclosure Regarding Forward-Looking Statements
 
This news release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"). Statements of the company's expectations for sales growth, comparable store sales, earnings and performance, shareholder value, capital expenditures, store openings, the housing market, the home improvement industry, demand for services, share repurchases, the Company’s strategic initiatives and any statement of an assumption underlying any of the foregoing, constitute "forward-looking statements" under the Act. Although we believe that the expectations, opinions, projections, and comments reflected in these forward-looking statements are reasonable, we can give no assurance that such statements will prove to be correct. A wide variety of potential risks, uncertainties, and other factors could materially affect our ability to achieve the results either expressed or implied by our forward-looking statements including, but not limited to, changes in general economic conditions, such as continued high rates of unemployment, interest rate and currency fluctuations, higher fuel and other energy costs, slower growth in personal income, changes in consumer spending, changes in the rate of housing turnover, the availability and increasing regulation of consumer credit and of mortgage financing, inflation or deflation of commodity prices and other factors which can negatively affect our customers, as well as our ability to: (i) respond to adverse trends in the housing industry, such as the psychological effects of lower home prices, and in the level of repairs, remodeling, and additions to existing homes, as well as a general reduction in commercial building activity; (ii) secure, develop, and otherwise implement new technologies and processes designed to enhance our efficiency and competitiveness; (iii) attract, train, and retain highly-qualified associates; (iv) manage our business effectively as we adapt our traditional operating model to meet the changing expectations of our customers; (v) to maintain, improve, upgrade and protect our critical information systems; (vi) respond to fluctuations in the prices and availability of services, supplies, and products; (vii) respond to the growth and impact of competition; (viii) address changes in existing or new laws or regulations that affect consumer credit, employment/labor, trade, product safety, transportation/logistics, energy costs, health care, tax or environmental issues; and (ix) respond to unanticipated weather conditions that could adversely affect sales. In addition, we could experience additional impairment losses if the actual results of our operating stores are not consistent with the assumptions and judgments we have made in estimating future cash flows and determining asset fair values. For more information about these and other risks and uncertainties that we are exposed to, you should read the "Risk Factors" and "Critical Accounting Policies and Estimates" included in our Annual Report on Form 10-K to the United States Securities and Exchange Commission (the “SEC”) and the description of material changes therein or updated version thereof, if any, included in our Quarterly Reports on Form 10-Q.

The forward-looking statements contained in this news release are based upon data available as of the date of this release or other specified date and speak only as of such date.  All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf about any of the matters covered in this release are qualified by these cautionary statements and the “Risk Factors” included in our Annual Report on Form 10-K to the SEC and the description of material changes, if any, therein included in our Quarterly Reports on Form 10-Q.  We expressly disclaim any obligation to update or revise any forward-looking statement, whether as a result of new information, change in circumstances, future events, or otherwise.

With fiscal year 2011 sales of $50.2 billion, Lowe’s Companies, Inc. is a FORTUNE® 100 company that serves approximately 15 million customers a week at more than 1,745 home improvement stores in the United States, Canada and Mexico. Founded in 1946 and based in Mooresville, N.C., Lowe’s is the second-largest home improvement retailer in the world. For more information, visit Lowes.com.
 
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Lowe's Companies, Inc.
                       
Consolidated Statements of Current and Retained Earnings (Unaudited)
                   
In Millions, Except Per Share and Percentage Data
                       
                         
   
Three Months Ended
 
   
May 4, 2012
   
April 29, 2011
 
Current Earnings
 
Amount
   
Percent
   
Amount
   
Percent
 
Net sales
  $ 13,153       100.00     $ 12,185       100.00  
                                 
Cost of sales
    8,589       65.30       7,866       64.56  
                                 
Gross margin
    4,564       34.70       4,319       35.44  
                                 
Expenses:
                               
                                 
Selling, general and administrative
    3,241       24.65       3,120       25.60  
                                 
Depreciation
    370       2.81       371       3.05  
                                 
Interest - net
    103       0.78       88       0.72  
                                 
Total expenses
    3,714       28.24       3,579       29.37  
                                 
Pre-tax earnings
    850       6.46       740       6.07  
                                 
Income tax provision
    323       2.45       279       2.28  
                                 
Net earnings
  $ 527       4.01     $ 461       3.79  
                                 
                                 
Weighted average common shares outstanding - basic
    1,206               1,324          
                                 
Basic earnings per common share (1)
  $ 0.43             $ 0.35          
                                 
Weighted average common shares outstanding - diluted
    1,208               1,328          
                                 
Diluted earnings per common share (1)
  $ 0.43             $ 0.34          
                                 
Cash dividends per share
  $ 0.14             $ 0.11          
                                 
                                 
Retained Earnings
                               
Balance at beginning of period
  $ 15,852             $ 17,371          
Net earnings
    527               461          
Cash dividends
    (165 )             (145 )        
Share repurchases
    (1,657 )             (972 )        
Balance at end of period
  $ 14,557             $ 16,715          
                                 
                                 
                                 
(1) Under the two-class method, earnings per share is calculated using net earnings allocable to common shares, which is derived by reducing net earnings by the earnings allocable to participating securities. Net earnings allocable to common shares used in the basic and diluted earnings per share calculation were $524 million for the three months ended May 4, 2012 and $458 million for the three months ended April 29, 2011.
 
                                 
Lowe's Companies, Inc.
                               
Consolidated Statements of Comprehensive Income (Unaudited)
                         
In Millions, Except Percentage Data
                               
                                 
   
Three Months Ended
 
   
May 4, 2012
   
April 29, 2011
 
   
Amount
   
Percent
   
Amount
   
Percent
 
Net earnings
  $ 527       4.01     $ 461       3.79  
                                 
Foreign currency translation adjustments
    7       0.05       31       0.25  
                                 
Net unrealized investment gains
    -       0.00       1       0.01  
                                 
Other comprehensive income
    7       0.05       32       0.26  
                                 
Comprehensive income
  $ 534       4.06     $ 493       4.05  
                                 

 
 

 

Lowe's Companies, Inc.
                       
Consolidated Balance Sheets
                       
In Millions, Except Par Value Data
                       
                         
         
(Unaudited)
   
(Unaudited)
       
         
May 4, 2012
   
April 29, 2011
   
February 3, 2012
 
Assets
                       
                         
Current assets:
                       
Cash and cash equivalents
        $ 3,072     $ 1,496     $ 1,014  
Short-term investments
          161       345       286  
Merchandise inventory - net
          9,786       9,661       8,355  
Deferred income taxes - net
          279       232       183  
Other current assets
          330       239       234  
                               
Total current assets
          13,628       11,973       10,072  
                               
Property, less accumulated depreciation
          21,821       22,060       21,970  
Long-term investments
          710       1,209       504  
Other assets
          1,049       642       1,013  
                               
Total assets
        $ 37,208     $ 35,884     $ 33,559  
                               
Liabilities and Shareholders' Equity
                             
                               
Current liabilities:
                             
Current maturities of long-term debt
        $ 593     $ 38     $ 592  
Accounts payable
          6,977       6,694       4,352  
Accrued compensation and employee benefits
      492       557       613  
Deferred revenue
          881       970       801  
Other current liabilities
          2,053       1,662       1,533  
                               
Total current liabilities
          10,996       9,921       7,891  
                               
Long-term debt, excluding current maturities
      9,018       6,538       7,035  
Deferred income taxes - net
          412       498       531  
Deferred revenue - extended protection plans
      716       650       704  
Other liabilities
          863       818       865  
                               
Total liabilities
          22,005       18,425       17,026  
                               
Shareholders' equity:
                             
Preferred stock - $5 par value, none issued
          -       -       -  
Common stock - $.50 par value;
                             
Shares issued and outstanding
                             
May 4, 2012
    1,187                          
April 29, 2011
    1,318                          
February 3, 2012
    1,241       594       659       621  
Capital in excess of par value
            -       -       14  
Retained earnings
            14,557       16,715       15,852  
Accumulated other comprehensive income
            52       85       46  
                                 
Total shareholders' equity
            15,203       17,459       16,533  
                                 
Total liabilities and shareholders' equity
    $ 37,208     $ 35,884     $ 33,559  
                                 

 
 

 

Lowe's Companies, Inc.
           
Consolidated Statements of Cash Flows (Unaudited)
           
In Millions
           
             
   
Three Months Ended
 
   
May 4, 2012
   
April 29, 2011
 
Cash flows from operating activities:
           
Net earnings
  $ 527     $ 461  
Adjustments to reconcile net earnings to net cash provided by operating activities:
               
Depreciation and amortization
    396       397  
Deferred income taxes
    (230 )     (43 )
Loss on property and other assets - net
    19       9  
Loss on equity method investments
    15       2  
Share-based payment expense
    25       30  
Net changes in operating assets and liabilities:
               
Merchandise inventory - net
    (1,432 )     (1,329 )
Other operating assets
    (65 )     104  
Accounts payable
    2,625       2,339  
Other operating liabilities
    587       453  
Net cash provided by operating activities
    2,467       2,423  
                 
Cash flows from investing activities:
               
Purchases of investments
    (708 )     (627 )
Proceeds from sale/maturity of investments
    627       554  
Property acquired
    (337 )     (313 )
Change in equity method investments - net
    (70 )     (32 )
Proceeds from sale of property and other long-term assets
    29       5  
Other - net
    (11 )     2  
Net cash used in investing activities
    (470 )     (411 )
                 
Cash flows from financing activities:
               
Net proceeds from issuance of long-term debt
    1,984       -  
Repayment of long-term debt
    (10 )     (9 )
Proceeds from issuance of common stock under share-based payment plans
    53       15  
Cash dividend payments
    (174 )     (149 )
Repurchase of common stock
    (1,789 )     (1,031 )
Other - net
    (4 )     3  
Net cash provided by (used in) financing activities
    60       (1,171 )
                 
Effect of exchange rate changes on cash
    1       3  
                 
Net increase in cash and cash equivalents
    2,058       844  
Cash and cash equivalents, beginning of period
    1,014       652  
Cash and cash equivalents, end of period
  $ 3,072     $ 1,496