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

February 25, 2013
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 FOURTH QUARTER SALES AND EARNINGS RESULTS
-- Fourth Quarter Comparable Store Sales Increased 1.9 Percent --
-- Announces $5 Billion Share Repurchase Program --

MOORESVILLE, N.C.  – Lowe’s Companies, Inc. (NYSE: LOW), the world’s second largest home improvement retailer, today reported net earnings of $288 million and diluted earnings per share of $0.26 for the fourth quarter of 2012.  For the fiscal year, net earnings were $2.0 billion and diluted earnings per share were $1.69.  Lowe’s fiscal year ends on the Friday nearest the end of January; therefore, fourth quarter and fiscal year 2011 included an extra week compared to 2012.  As a result of the extra week in 2011, net earnings for the fourth quarter declined 10.6 percent and diluted earnings per share were flat from the fourth quarter of 2011.  Net earnings for the fiscal year increased 6.5 percent and diluted earnings per share increased 18.2 percent from fiscal year 2011.

Sales for the fourth quarter decreased 5.0 percent to $11.0 billion from $11.6 billion in the fourth quarter of 2011.  For the fiscal year, sales were $50.5 billion, a 0.6% increase over fiscal year 2011.

The 53rd week contributed $766 million to sales and approximately $0.05 to diluted earnings per share in fourth quarter and fiscal year 2011.  The quarterly comparisons in 2012 were also impacted by a week shift which negatively impacted sales by $119 million and diluted earnings per share by approximately $0.02 in the fourth quarter of 2012.  For the fiscal year, the week shift had an insignificant impact on sales and diluted earnings per share.

Comparable store sales for the fourth quarter of 2012 increased 1.9 percent on a consolidated basis as well as for the U.S. business.  For the fiscal year, comparable store sales increased 1.4 percent, while comparable store sales for the U.S. business increased 1.5 percent.  Comparable store sales are based on comparable 13-week and 52-week periods, respectively.

“We delivered solid results in the fourth quarter,” commented Robert A. Niblock, Lowe’s chairman, president and CEO.  “Our results are a testament to the team’s success in driving more balanced performance across the quarter, our response to the demand created by recovery efforts in the wake of superstorm Sandy, and the momentum we’re creating with our initiatives.

“I’d like to thank our employees for their perseverance in a year of significant change, and for their continued dedication to serving customers,” Niblock added.

 
 

 

Delivering on the commitment to return excess cash to shareholders, the company repurchased $750 million or 21.3 million shares of stock and paid $180 million in dividends in the fourth quarter of 2012.  For the fiscal year, the company repurchased $4.35 billion or 146 million shares of common stock and paid $704 million in dividends.

To further deliver on this commitment, the Board of Directors has authorized the repurchase of up to $5 billion of the company’s common stock.  The remaining prior authorization was simultaneously terminated.  Although this new repurchase authorization has no expiration date, the company expects to use the full amount over the next two years.  The repurchases will be subject to market conditions and will be made from time to time either in the open market or through private off market transactions in accordance with the requirements of the Securities and Exchange Commission. The company’s repurchase program may be suspended, discontinued or resumed at any time.

As of February 1, 2013, Lowe’s operated 1,754 stores in the United States, Canada and Mexico representing 197.4 million square feet of retail selling space.

A conference call to discuss fourth quarter 2012 operating results is scheduled for today (Monday, February 25) 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 Fourth Quarter 2012 Earnings Conference Call Webcast.  A replay of the call will be archived on Lowes.com/investor until May 21, 2013.
 
 Lowe’s Business Outlook
 
Fiscal Year 2013 (comparisons to fiscal year 2012; based on U.S. GAAP unless otherwise noted)
·  
Total sales are expected to increase approximately 4 percent.
·  
Comparable store sales are expected to increase approximately 3.5 percent.
·  
The company expects to open approximately 10 stores in fiscal year 2013.
·  
Earnings before interest and taxes as a percentage of sales (operating margin) are expected to increase approximately 60 basis points.
·  
The effective income tax rate is expected to be approximately 38.1%.
·  
Diluted earnings per share of approximately $2.05 are expected for the fiscal year ending January 31, 2014.

 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, 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 2012 sales of $50.5 billion, Lowe’s Companies, Inc. is a FORTUNE® 100 company that serves approximately 15 million customers a week at more than 1,750 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
                         
In Millions, Except Per Share and Percentage Data
                             
                                     
   
Three Months Ended (1)
   
Year Ended (1)
 
   
(Unaudited)
 
(Unaudited)
   
(Unaudited)
         
   
February 1, 2013
 
February 3, 2012
   
February 1, 2013
 
February 3, 2012
 
Current Earnings
 
Amount
 
Percent
 
Amount
 
Percent
   
Amount
 
Percent
 
Amount
 
Percent
 
Net sales
  $ 11,046   100.00   $ 11,629   100.00     $ 50,521   100.00   $ 50,208   100.00  
                                             
Cost of sales
    7,261   65.73     7,650   65.78       33,194   65.70     32,858   65.44  
                                             
Gross margin
    3,785   34.27     3,979   34.22       17,327   34.30     17,350   34.56  
                                             
Expenses:
                                           
                                             
Selling, general and administrative
    2,809   25.43     3,009   25.88       12,244   24.24     12,593   25.08  
                                             
Depreciation
    412   3.73     383   3.29       1,523   3.01     1,480   2.95  
                                             
Interest - net
    109   0.99     102   0.88       423   0.84     371   0.74  
                                             
Total expenses
    3,330   30.15     3,494   30.05       14,190   28.09     14,444   28.77  
                                             
Pre-tax earnings
    455   4.12     485   4.17       3,137   6.21     2,906   5.79  
                                             
Income tax provision
    167   1.51     163   1.40       1,178   2.33     1,067   2.13  
                                             
Net earnings
  $ 288   2.61   $ 322   2.77     $ 1,959   3.88   $ 1,839   3.66  
                                             
                                             
Weighted average common shares outstanding - basic
    1,109         1,239           1,150         1,271      
                                             
Basic earnings per common share (2)
  $ 0.26       $ 0.26         $ 1.69       $ 1.43      
                                             
Weighted average common shares outstanding - diluted
    1,112         1,241           1,152         1,273      
                                             
Diluted earnings per common share (2)
  $ 0.26       $ 0.26         $ 1.69       $ 1.43      
                                             
Cash dividends per share
  $ 0.16       $ 0.14         $ 0.62       $ 0.53      
                                             
                                             
Retained Earnings
                                           
Balance at beginning of period
  $ 13,602       $ 16,109         $ 15,852       $ 17,371      
Net earnings
    288         322           1,959         1,839      
Cash dividends
    (178 )       (174 )         (708 )       (672 )    
Share repurchases
    (488 )       (405 )         (3,879 )       (2,686 )    
Balance at end of period
  $ 13,224       $ 15,852         $ 13,224       $ 15,852      
                                             
                                             
(1) The fiscal year and three months ended February 3, 2012, had 53 weeks and 14 weeks, respectively. The fiscal year and three months ended February 1, 2013, had 52 weeks and 13 weeks, respectively.
 
                                             
(2) 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 $286 million for the three months ended February 1, 2013 and $320 million for the three months ended February 3, 2012. Net earnings allocable to common shares used in the basic and diluted earnings per share calculation were $1,945 million for the fiscal year ended February 1, 2013 and $1,824 million for the fiscal year ended February 3, 2012.
 
                                             
Lowe's Companies, Inc.
                                           
Consolidated Statements of Comprehensive Income
                                   
In Millions, Except Percentage Data
                                     
                                             
   
Three Months Ended (1)
   
Year Ended (1)
 
   
(Unaudited)
 
(Unaudited)
   
(Unaudited)
           
   
February 1, 2013
 
February 3, 2012
   
February 1, 2013
 
February 3, 2012
 
   
Amount
 
Percent
 
Amount
 
Percent
   
Amount
 
Percent
 
Amount
 
Percent
 
Net earnings
  $ 288   2.61   $ 322   2.77     $ 1,959   3.88   $ 1,839   3.66  
                                             
Foreign currency translation adjustments
    -   -     (1 ) -       6   0.01     (8 ) (0.02 )
                                             
Net unrealized investment (losses)/gains
    -   -     -   -       -   -     1   -  
                                             
Other comprehensive (loss)/income
    -   -     (1 ) -       6   0.01     (7 ) (0.02 )
                                             
Comprehensive income
  $ 288   2.61   $ 321   2.77     $ 1,965   3.89   $ 1,832   3.64  
                                             
                                             
(1) The fiscal year and three months ended February 3, 2012, had 53 weeks and 14 weeks, respectively. The fiscal year and three months ended February 1, 2013, had 52 weeks and 13 weeks, respectively.
 
 
 

 

Lowe's Companies, Inc.
             
Consolidated Balance Sheets
             
In Millions, Except Par Value Data
             
               
     
(Unaudited)
       
     
February 1, 2013
   
February 3, 2012
 
Assets
             
               
Current assets:
             
Cash and cash equivalents
    $ 541     $ 1,014  
Short-term investments
      125       286  
Merchandise inventory - net
      8,600       8,355  
Deferred income taxes - net
      217       183  
Other current assets
      301       234  
                   
Total current assets
      9,784       10,072  
                   
Property, less accumulated depreciation
      21,477       21,970  
Long-term investments
      271       504  
Other assets
      1,134       1,013  
                   
Total assets
    $ 32,666     $ 33,559  
                   
Liabilities and Shareholders' Equity
                 
                   
Current liabilities:
                 
Current maturities of long-term debt
    $ 47     $ 592  
Accounts payable
      4,657       4,352  
Accrued compensation and employee benefits
    670       613  
Deferred revenue
      824       801  
Other current liabilities
      1,510       1,533  
                   
Total current liabilities
      7,708       7,891  
                   
Long-term debt, excluding current maturities
    9,030       7,035  
Deferred income taxes - net
      455       531  
Deferred revenue - extended protection plans
    715       704  
Other liabilities
      901       865  
                   
Total liabilities
      18,809       17,026  
                   
Shareholders' equity:
                 
Preferred stock - $5 par value, none issued
      -       -  
Common stock - $.50 par value;
                 
Shares issued and outstanding
                 
February 1, 2013
1,110                
February 3, 2012
1,241     555       621  
Capital in excess of par value
      26       14  
Retained earnings
      13,224       15,852  
Accumulated other comprehensive income
      52       46  
                   
Total shareholders' equity
      13,857       16,533  
                   
Total liabilities and shareholders' equity
  $ 32,666     $ 33,559  
                   
                   

 
 

 


Lowe's Companies, Inc.
           
Consolidated Statements of Cash Flows
           
In Millions
           
             
   
Year Ended
 
   
(Unaudited)
       
   
February 1, 2013
   
February 3, 2012
 
Cash flows from operating activities:
           
Net earnings
  $ 1,959     $ 1,839  
Adjustments to reconcile net earnings to net cash provided by operating activities:
               
Depreciation and amortization
    1,623       1,579  
Deferred income taxes
    (140 )     54  
Loss on property and other assets - net
    83       456  
Loss on equity method investments
    48       12  
Share-based payment expense
    100       107  
Net changes in operating assets and liabilities:
               
Merchandise inventory - net
    (244 )     (33 )
Other operating assets
    (87 )     125  
Accounts payable
    303       (5 )
Other operating liabilities
    117       215  
Net cash provided by operating activities
    3,762       4,349  
                 
Cash flows from investing activities:
               
Purchases of investments
    (1,444 )     (1,433 )
Proceeds from sale/maturity of investments
    1,837       2,120  
Capital expenditures
    (1,211 )     (1,829 )
Change in equity method investments
    (219 )     (232 )
Proceeds from sale of property and other long-term assets
    130       52  
Other - net
    4       (115 )
Net cash used in investing activities
    (903 )     (1,437 )
                 
Cash flows from financing activities:
               
Net proceeds from issuance of long-term debt
    1,984       993  
Repayment of long-term debt
    (591 )     (37 )
Proceeds from issuance of common stock under share-based payment plans
    349       100  
Cash dividend payments
    (704 )     (647 )
Repurchase of common stock
    (4,393 )     (2,937 )
Other - net
    22       (21 )
Net cash used in financing activities
    (3,333 )     (2,549 )
                 
Effect of exchange rate changes on cash
    1       (1 )
                 
Net (decrease)/increase in cash and cash equivalents
    (473 )     362  
Cash and cash equivalents, beginning of year
    1,014       652  
Cash and cash equivalents, end of year
  $ 541     $ 1,014