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

November 19, 2012
For 6:00 am ET Release

                                                                                              
 
 Contacts:  Shareholders’/Analysts’ Inquiries:    Media Inquiries:
  Tiffany Mason   Chris Ahearn
  704-758-2033   704-758-2304
  tiffany.l.mason@lowes.com    chris.c.ahearn@lowes.com 
 
                                                                      
LOWE’S REPORTS THIRD QUARTER SALES AND EARNINGS RESULTS
-- Third Quarter Comparable Store Sales Increased 1.8 Percent --

MOORESVILLE, N.C.  – Lowe’s Companies, Inc. (NYSE: LOW), the world’s second largest home improvement retailer, today reported net earnings of $396 million for the quarter ended November 2, 2012, a 76.0 percent increase over the same period a year ago.  Diluted earnings per share increased 94.4 percent to $0.35.  For the nine months ended November 2, 2012, net earnings increased 10.1 percent from the same period a year ago to $1.67 billion, while diluted earnings per share increased 21.4 percent to $1.42.

Included in the above reported results are charges related to long-lived asset impairments, discontinued projects, and a change in the discount rate applied to self-insurance claims which, in the aggregate, reduced pre-tax earnings for the third quarter by $85 million and diluted earnings per share by $0.05.  For the same period a year ago, reported results included charges related to store closings, long-lived asset impairments, and discontinued projects which, in the aggregate, reduced pre-tax earnings by $368 million and diluted earnings per share by $0.18.

Lowe’s fiscal year ends on the Friday nearest the end of January; therefore, fiscal year 2011 included 53 weeks.  The quarterly comparisons in 2012, which is a 52-week year, are impacted by a shift in comparable weeks.  Sales for the third quarter increased 1.9 percent to $12.1 billion from $11.9 billion in the third quarter of 2011.  The week shift negatively impacted total sales by $62 million or 0.5 percent for the third quarter.  For the nine month period, sales were $39.5 billion, a 2.3 percent increase over the same period a year ago.  The week shift accounted for $192 million or 0.5 percent of the total sales increase for the nine month period.

The week shift had an insignificant impact on diluted earnings per share in the third quarter.  For the nine month period, the week shift contributed approximately $0.02 to diluted earnings per share.

Comparable store sales for the third quarter increased 1.8 percent on a consolidated basis as well as for the U.S. business.  For the nine month period, comparable store sales increased 1.3 percent, while comparable store sales for the U.S. business increased 1.4 percent.  Comparable store sales are based on comparable 13-week periods.

“We are keenly focused on improving our core business,” commented Robert A. Niblock, Lowe’s chairman, president and CEO.  “Our level of execution is improving and we delivered solid results in the third quarter.  I would like to thank our employees for their continued dedication and customer focus.
 
 
 

 

“I would also like to express our sympathy for all those impacted by the devastating effects of superstorm Sandy,” Niblock added.  “Our employees are working diligently to help communities recover from the damage.  Additionally, our stores as well as lowes.com are official donation sites for the American Red Cross Disaster Relief Fund, and Lowe’s is contributing $1 million to the relief efforts through various partner organizations.”

Delivering on the commitment to return excess cash to shareholders, the company repurchased $850 million or 29.6 million shares of stock and paid $184 million in dividends in the third quarter.  For the nine month period, the company repurchased $3.6 billion or 124.4 million shares of common stock and paid $524 million in dividends.

As of November 2, 2012, Lowe’s operated 1,750 stores in the United States, Canada and Mexico representing 197.0 million square feet of retail selling space.

A conference call to discuss third quarter 2012 operating results is scheduled for today (Monday, November, 19) 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 Third Quarter 2012 Earnings Conference Call Webcast.  A replay of the call will be archived on Lowes.com/investor until February 24, 2013.

 Lowe’s Business Outlook
 
Fiscal Year 2012 – a 52-week Year (comparisons to fiscal year 2011 – a 53-week year; based on U.S. GAAP unless otherwise noted)
·  
Total sales are expected to be approximately flat.  On a 52 versus 52 week basis, total sales are expected to increase approximately 2 percent.
·  
The company expects comparable store sales to increase approximately 1 percent (on a 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 40 basis points.
·  
Depreciation expense is expected to be approximately $1.5 billion.
·  
The effective income tax rate is expected to be approximately 37.7%.
·  
Diluted earnings per share of approximately $1.64 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, cash flows, 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, pending combination of expiring tax cuts and mandatory reductions in federal spending at the end of 2012, 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.
 
###

 
 

 
Lowe's Companies, Inc.
                                     
Consolidated Statements of Current and Retained Earnings (Unaudited)
                           
In Millions, Except Per Share and Percentage Data
                                 
                                       
   
Three Months Ended
   
Nine Months Ended
 
   
November 2, 2012
October 28, 2011
 
November 2, 2012
 
October 28, 2011
Current Earnings
 
Amount
 
Percent
 
Amount
 
Percent
   
Amount
 
Percent
   
Amount
 
Percent
 
Net sales
  $ 12,073     100.00   $ 11,852     100.00     $ 39,475     100.00     $ 38,579     100.00  
                                                       
Cost of sales
    7,930     65.68     7,815     65.94       25,933     65.70       25,208     65.34  
                                                       
Gross margin
    4,143     34.32     4,037     34.06       13,542     34.30       13,371     34.66  
                                                       
Expenses:
                                                     
                                                       
Selling, general and administrative
    3,023     25.03     3,233     27.27       9,436     23.91       9,583     24.84  
                                                       
Depreciation
    371     3.08     361     3.05       1,111     2.81       1,098     2.84  
                                                       
Interest - net
    114     0.95     91     0.77       313     0.79       269     0.70  
                                                       
Total expenses
    3,508     29.06     3,685     31.09       10,860     27.51       10,950     28.38  
                                                       
Pre-tax earnings
    635     5.26     352     2.97       2,682     6.79       2,421     6.28  
                                                       
Income tax provision
    239     1.98     127     1.07       1,012     2.56       904     2.35  
                                                       
Net earnings
  $ 396     3.28   $ 225     1.90     $ 1,670     4.23     $ 1,517     3.93  
                                                       
                                                       
Weighted average common shares outstanding - basic
    1,126           1,250             1,163             1,283        
                                                       
Basic earnings per common share (1)
  $ 0.35         $ 0.18           $ 1.43           $ 1.17        
                                                       
Weighted average common shares outstanding - diluted
    1,128           1,252             1,165             1,286        
                                                       
Diluted earnings per common share (1)
  $ 0.35         $ 0.18           $ 1.42           $ 1.17        
                                                       
Cash dividends per share
  $ 0.16         $ 0.14           $ 0.46           $ 0.39        
                                                       
                                                       
Retained Earnings
                                                     
Balance at beginning of period
  $ 14,199         $ 16,060           $ 15,852           $ 17,371        
Net earnings
    396           225             1,670             1,517        
Cash dividends
    (180 )         (176 )           (530 )           (498 )      
Share repurchases
    (813 )         -             (3,390 )           (2,281 )      
Balance at end of period
  $ 13,602         $ 16,109           $ 13,602           $ 16,109        
                                                       
                                                       
(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 $393 million for the three months ended November 2 , 2012 and $223 million for the three months ended October 28 2011. Net earnings allocable to common shares used in the basic and diluted earnings per share calculation were $1,659 million for the nine months ended November 2, 2012 and $1,505 million for the nine months ended October 28, 2011.
 
                                                       
                                                       
Lowe's Companies, Inc.
                                                     
Consolidated Statements of Comprehensive Income (Unaudited)
                                           
In Millions, Except Percentage Data
                                                   
                                                       
   
Three Months Ended
   
Nine Months Ended
 
   
November 2, 2012
 
October 28, 2011
   
November 2, 2012
   
October 28, 2011
 
   
Amount
 
Percent
 
Amount
 
Percent
   
Amount
 
Percent
   
Amount
 
Percent
 
Net earnings
  $ 396     3.28   $ 225     1.90     $ 1,670     4.23     $ 1,517     3.93  
                                                       
Foreign currency translation adjustments
    8     0.07     (35 )   (0.29 )     7     0.02       (8 )   (0.01 )
                                                       
Net unrealized investment (losses)/gains
    (2 )   (0.02 )   (1 )   -       -     -       1     -  
                                                       
Other comprehensive income/(loss)
    6     0.05     (36 )   (0.29 )     7     0.02       (7 )   (0.01 )
                                                       
Comprehensive income
  $ 402     3.33   $ 189     1.61     $ 1,677     4.25     $ 1,510     3.92  
                                                       
                                                       

 
 

 

Lowe's Companies, Inc.
                   
Consolidated Balance Sheets
                   
In Millions, Except Par Value Data
                   
                     
     
(Unaudited)
   
(Unaudited)
       
     
November 2, 2012
   
October 28, 2011
   
February 3, 2012
 
Assets
                   
                     
Current assets:
                   
Cash and cash equivalents
    $ 1,091     $ 675     $ 1,014  
Short-term investments
      209       294       286  
Merchandise inventory - net
      8,995       8,990       8,355  
Deferred income taxes - net
      235       237       183  
Other current assets
      300       227       234  
                           
Total current assets
      10,830       10,423       10,072  
                           
Property, less accumulated depreciation
      21,591       21,888       21,970  
Long-term investments
      350       705       504  
Other assets
      1,182       850       1,013  
                           
Total assets
    $ 33,953     $ 33,866     $ 33,559  
                           
Liabilities and shareholders' equity
                         
                           
Current liabilities:
                         
Current maturities of long-term debt
    $ 45     $ 590     $ 592  
Accounts payable
      5,416       5,242       4,352  
Accrued compensation and employee benefits
    581       622       613  
Deferred revenue
      788       789       801  
Other current liabilities
      1,784       1,913       1,533  
                           
Total current liabilities
      8,614       9,156       7,891  
                           
Long-term debt, excluding current maturities
    9,004       6,025       7,035  
Deferred income taxes - net
      486       322       531  
Deferred revenue - extended protection plans
    720       687       704  
Other liabilities
      904       867       865  
                           
Total liabilities
      19,728       17,057       17,026  
                           
Shareholders' equity:
                         
Preferred stock - $5 par value, none issued
      -       -       -  
Common stock - $.50 par value;
                         
Shares issued and outstanding
                         
November 2, 2012
  1,123
                       
October 28, 2011
  1,260
                       
February 3, 2012
  1,241
    561       630       621  
Capital in excess of par value
      9       24       14  
Retained earnings
      13,602       16,109       15,852  
Accumulated other comprehensive income
      53       46       46  
                           
Total shareholders' equity
      14,225       16,809       16,533  
                           
Total liabilities and shareholders' equity
  $ 33,953     $ 33,866     $ 33,559  

 
 

 


Lowe's Companies, Inc.
           
Consolidated Statements of Cash Flows (Unaudited)
           
In Millions
           
             
   
Nine Months Ended
 
   
November 2, 2012
   
October 28, 2011
 
Cash flows from operating activities:
           
Net earnings
  $ 1,670     $ 1,517  
Adjustments to reconcile net earnings to net cash provided by operating activities:
               
Depreciation and amortization
    1,185       1,171  
Deferred income taxes
    (113 )     (200 )
Loss on property and other assets - net
    69       407  
Loss on equity method investments
    38       7  
Share-based payment expense
    75       81  
Net changes in operating assets and liabilities:
               
Merchandise inventory - net
    (640 )     (669 )
Other operating assets
    (150 )     119  
Accounts payable
    1,064       892  
Other operating liabilities
    310       567  
Net cash provided by operating activities
    3,508       3,892  
                 
Cash flows from investing activities:
               
Purchases of investments
    (1,333 )     (1,200 )
Proceeds from sale/maturity of investments
    1,563       1,672  
Property acquired
    (947 )     (1,264 )
Change in equity method investments
    (157 )     (204 )
Proceeds from sale of property and other long-term assets
    105       26  
Other - net
    (14 )     (13 )
Net cash used in investing activities
    (783 )     (983 )
                 
Cash flows from financing activities:
               
Net proceeds from issuance of long-term debt
    1,984       -  
Repayment of long-term debt
    (580 )     (28 )
Proceeds from issuance of common stock under share-based payment plans
    102       55  
Cash dividend payments
    (524 )     (470 )
Repurchase of common stock
    (3,643 )     (2,434 )
Other - net
    11       (9 )
Net cash used in financing activities
    (2,650 )     (2,886 )
                 
Effect of exchange rate changes on cash
    2       -  
                 
Net increase in cash and cash equivalents
    77       23  
Cash and cash equivalents, beginning of period
    1,014       652  
Cash and cash equivalents, end of period
  $ 1,091     $ 675