EX-99.1 2 hd_exhibit991x02262019.htm EX-99.1 Exhibit


Exhibit 99.1
hdlogoa02a01a01a01a01a13.jpg

The Home Depot Announces Fourth Quarter and Fiscal 2018 Results;
Increases Quarterly Dividend by 32.0 Percent;
Announces $15.0 Billion Share Repurchase Authorization;
Provides Fiscal 2019 Guidance

ATLANTA, February 26, 2019 -- The Home Depot®, the world's largest home improvement retailer, today reported sales of $26.5 billion for the fourth quarter of fiscal 2018, a 10.9 percent increase from the fourth quarter of fiscal 2017. Comparable sales for the fourth quarter of fiscal 2018 were positive 3.2 percent, and comp sales in the U.S. were positive 3.7 percent.

The fourth quarter of fiscal 2018 consisted of 14 weeks compared with 13 weeks for the prior year. The 14th week added approximately $1.7 billion in sales for the quarter and the year. The additional week is not included in comparable sales results for the quarter or the year.

Net earnings for the fourth quarter of fiscal 2018 were $2.3 billion, or $2.09 per diluted share, compared with net earnings of $1.8 billion, or $1.52 per diluted share, in the same period of fiscal 2017. The 14th week added approximately $0.21 per diluted share for the quarter and year.

Net earnings for the fourth quarter and the year were negatively impacted by a nonrecurring, pre-tax charge of approximately $247 million, or $184 million after tax equaling $0.16 per diluted share, due to an impairment loss related to certain trade names at Interline Brands.

Fiscal 2018

Sales for fiscal 2018 were $108.2 billion, an increase of 7.2 percent from fiscal 2017. Total company comparable sales for fiscal 2018 increased 5.2 percent, and comp sales in the U.S. were positive 5.4 percent for the year.

Earnings per diluted share in fiscal 2018 were $9.73, compared to $7.29 per diluted share in fiscal 2017, an increase of 33.5 percent.

“We achieved record sales and net earnings in fiscal 2018, while making great progress on the strategic investments we laid out in December of 2017. We focused on enhancing the interconnected retail experience for our customers, providing localized and innovative product, and delivering best in class productivity,” said Craig Menear, chairman, CEO and president. “Our view on the health of the economy and the consumer, as well as the momentum of our strategic investments, supports our belief that we can deliver comparable sales growth of 5.0 percent in fiscal 2019. I would like to thank our associates for their solid execution and exceptional work in service to our customers.”





Dividend Declaration and Share Repurchase Authorization

The Company today announced that its board of directors declared a 32.0 percent increase in its quarterly dividend to $1.36 per share.

“As a testament to our commitment to create value for our shareholders and a demonstration of confidence in the business going forward, the board has increased the dividend for the tenth consecutive year,” said Menear. The dividend is payable on March 28, 2019, to shareholders of record on the close of business on March 14, 2019. This is the 128th consecutive quarter the Company has paid a cash dividend.

The board of directors also authorized a new $15 billion share repurchase program, replacing its previous authorization.

Fiscal 2019 Guidance

The Company provided the following guidance for fiscal 2019, a 52-week year compared to fiscal 2018, a 53-week year:

•
Comparable sales growth of approximately 5.0 percent for the comparable 52-week period
•
Sales growth of approximately 3.3 percent
•
Five net new stores
•
Gross margin of approximately 34.0 percent
•
Operating margin of approximately 14.4 percent
•
Net interest expense of approximately $1.2 billion
•
Tax rate of approximately 25.5 percent
•
Share repurchases of approximately $5.0 billion
•
Diluted earnings-per-share growth of approximately 3.1 percent to $10.03
•
Capital spending of approximately $2.7 billion
•
Depreciation and amortization expense of approximately $2.3 billion
•
Cash flow from the business of approximately $14.1 billion

Long-Term Financial Targets

Today the Company reaffirms its fiscal 2020 financial targets as follows:

•
Total sales ranging from approximately $115 billion to approximately $120 billion
•
Operating margin ranging from approximately 14.4 percent to approximately 15.0 percent
•
Return on invested capital of more than 40 percent

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 ir.homedepot.com/events-and-presentations.

At the end of the fourth quarter, the Company operated a total of 2,287 retail stores in all 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, 10 Canadian provinces and Mexico. The Company employs more than 400,000 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.

###




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 sales; effects of competition; implementation of store, interconnected retail, supply chain and technology initiatives; inventory and in-stock positions; 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; issues related to the payment methods we accept; demand for credit offerings; management of relationships with our associates, suppliers and vendors; continuation of share repurchase programs; net earnings performance; earnings per share; dividend targets; capital allocation and expenditures; liquidity; return on invested capital; expense leverage; stock-based compensation expense; commodity price inflation and deflation; the ability to issue debt on terms and at rates acceptable to us; the impact and expected outcome of investigations, inquiries, claims and litigation; the effect of accounting charges; the effect of adopting certain accounting standards; the impact of the Tax Cuts and Jobs Act of 2017 and other regulatory changes; store openings and closures; guidance for fiscal 2019 and beyond; financial outlook; and the integration of acquired companies into our organization and the ability to recognize the anticipated synergies and benefits of those acquisitions. 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, dependent on the actions of third parties, 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 January 28, 2018 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.


For more information, contact:
 
 
Financial Community
 
News Media
Isabel Janci
 
Stephen Holmes
Vice President of Investor Relations and Treasurer
 
Senior Director of Corporate Communications
770-384-2666
 
770-384-5075
isabel_janci@homedepot.com
 
stephen_holmes@homedepot.com
 
 
 



THE HOME DEPOT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
 
Three Months Ended (1)


 
Fiscal Year Ended (2)
 
 
in millions, except per share data
February 3,
2019

January 28,
2018

% Change
 
February 3,
2019
 
January 28,
2018
 
% Change
Net sales
$
26,491


$
23,883


10.9
 %
 
$
108,203

 
$
100,904

 
7.2
 %
Cost of sales
17,464


15,790


10.6

 
71,043

 
66,548

 
6.8

Gross profit
9,027


8,093


11.5

 
37,160

 
34,356

 
8.2

Operating expenses:




 
 
 
 
 
 
 
Selling, general and administrative
4,922


4,440


10.9

 
19,513

 
17,864

 
9.2

Depreciation and amortization
480


464


3.4

 
1,870

 
1,811

 
3.3

Impairment loss
247

 
—

 


 
247

 
—

 


Total operating expenses
5,649


4,904


15.2

 
21,630

 
19,675

 
9.9

Operating income
3,378


3,189


5.9

 
15,530

 
14,681

 
5.8

Interest and other (income) expense:




 
 
 
 
 
 
 
Interest and investment income
(20
)

(23
)

(13.0
)
 
(93
)
 
(74
)
 
25.7

Interest expense
269


269


—

 
1,051

 
1,057

 
(0.6
)
Other
16

 
—

 


 
16

 
—

 


Interest and other, net
265


246


7.7

 
974

 
983

 
(0.9
)
Earnings before provision for income taxes
3,113


2,943


5.8

 
14,556

 
13,698

 
6.3

Provision for income taxes
769


1,164


(33.9
)
 
3,435

 
5,068

 
(32.2
)
Net earnings
$
2,344


$
1,779


31.8
 %
 
$
11,121

 
$
8,630

 
28.9
 %







 
 
 
 
 
 
 
Basic weighted average common shares
1,116


1,160


(3.8
)%
 
1,137

 
1,178

 
(3.5
)%
Basic earnings per share
$
2.10

 
$
1.53


37.3

 
$
9.78

 
$
7.33

 
33.4








 
 
 
 
 
 
 
Diluted weighted average common shares
1,121


1,167


(3.9
)%
 
1,143

 
1,184

 
(3.5
)%
Diluted earnings per share
$
2.09

 
$
1.52


37.5

 
$
9.73

 
$
7.29

 
33.5

 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended (1)
 
 
 
Fiscal Year Ended (2)
 
 
Selected Sales Data (3)
February 3,
2019
 
January 28,
2018
 
% Change
 
February 3,
2019
 
January 28,
2018
 
% Change
Customer transactions (in millions)
394.8

 
366.5

 
7.7
 %
 
1,620.8

 
1,578.6

 
2.7
 %
Average ticket
$
65.59

 
$
64.00

 
2.5

 
$
65.74

 
$
63.06

 
4.2

Sales per square foot
$
414.17

 
$
394.87

 
4.9

 
$
446.86

 
$
417.02

 
7.2

 —————
(1)
Three months ended February 3, 2019 include 14 weeks. Three months ended January 28, 2018 include 13 weeks.
(2)
Fiscal year ended February 3, 2019 includes 53 weeks. Fiscal year ended January 28, 2018 includes 52 weeks.
(3)
Selected Sales Data does not include results for Interline Brands, Inc., which was acquired in fiscal 2015.



 






THE HOME DEPOT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
in millions
February 3,
2019
 
January 28,
2018
Assets
 
 
 
Cash and cash equivalents
$
1,778

 
$
3,595

Receivables, net
1,936

 
1,952

Merchandise inventories
13,925

 
12,748

Other current assets
890

 
638

Total current assets
18,529

 
18,933

Net property and equipment
22,375

 
22,075

Goodwill
2,252

 
2,275

Other assets
847

 
1,246

Total assets
$
44,003

 
$
44,529

 
 
 
 
Liabilities and Stockholders' Equity
 
 
 
Short-term debt
$
1,339

 
$
1,559

Accounts payable
7,755

 
7,244

Accrued salaries and related expenses
1,506

 
1,640

Current installments of long-term debt
1,056

 
1,202

Other current liabilities
5,060

 
4,549

Total current liabilities
16,716

 
16,194

Long-term debt, excluding current installments
26,807

 
24,267

Other liabilities
2,358

 
2,614

Total liabilities
45,881

 
43,075

Total stockholders’ (deficit) equity
(1,878
)
 
1,454

Total liabilities and stockholders’ (deficit) equity
$
44,003

 
$
44,529





THE HOME DEPOT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Fiscal Year Ended (1)
in millions
February 3,
2019

January 28,
2018
Cash Flows from Operating Activities:



Net earnings
$
11,121


$
8,630

Reconciliation of net earnings to net cash provided by operating activities:
 
 
 
Depreciation and amortization
2,152

 
2,062

Stock-based compensation expense
282

 
273

Impairment loss
247

 
—

Changes in working capital, net of acquisition effects
(687
)
 
554

Changes in deferred income taxes
26

 
92

Other operating activities
(103
)
 
420

Net cash provided by operating activities
13,038

 
12,031

 
 
 
 
Cash Flows from Investing Activities:
 
 
 
Capital expenditures, net of non-cash capital expenditures
(2,442
)
 
(1,897
)
Payments for business acquired, net
(21
)
 
(374
)
Proceeds from sales of property and equipment
33

 
47

Other investing activities
14

 
(4
)
Net cash used in investing activities
(2,416
)
 
(2,228
)
 
 
 
 
Cash Flows from Financing Activities:
 
 
 
(Repayments of) proceeds from short-term debt, net
(220
)
 
850

Proceeds from long-term debt, net of discounts
3,466

 
2,991

Repayments of long-term debt
(1,209
)
 
(543
)
Repurchases of common stock
(9,963
)
 
(8,000
)
Proceeds from sales of common stock
236

 
255

Cash dividends
(4,704
)
 
(4,212
)
Other financing activities
(26
)
 
(211
)
Net cash used in financing activities
(12,420
)
 
(8,870
)
Change in cash and cash equivalents
(1,798
)
 
933

Effect of exchange rate changes on cash and cash equivalents
(19
)
 
124

Cash and cash equivalents at beginning of period
3,595

 
2,538

Cash and cash equivalents at end of period
$
1,778

 
$
3,595

 —————
(1)
Fiscal year ended February 3, 2019 includes 53 weeks. Fiscal year ended January 28, 2018 includes 52 weeks.




THE HOME DEPOT, INC.
ASU NO. 2014-09 IMPACT OF ADOPTION
(Unaudited)
The Company adopted ASU No. 2014-09, which pertains to revenue recognition, in the first quarter of fiscal 2018. The following table shows the impact of adopting ASU No. 2014-09 on the consolidated statements of earnings for the three and twelve month periods ended February 3, 2019. The implementation of this accounting standard resulted in an increase in net sales, gross profit, selling, general and administrative, and total operating expenses and a decrease in cost of sales. There was no impact on operating income, net earnings, or earnings per share.
 
Three Months Ended February 03, 2019 (1)
in millions
As
Reported
 
% of
Net Sales
 
ASU No. 2014-09
Impact
 
Excluding
ASU No. 2014-09 Impact
 
% of
Net Sales
Net sales
$
26,491

 
100.0
%
 
$
86

 
$
26,405

 
100.0
%
Cost of sales
17,464

 
65.9

 
(82
)
 
17,546

 
66.4

Gross profit
9,027

 
34.1

 
168

 
8,859

 
33.6

Selling, general and administrative
4,922

 
18.6

 
168

 
4,754

 
18.0

Total operating expenses
5,649

 
21.3

 
168

 
5,481

 
20.8

 
Fiscal Year Ended February 03, 2019 (2)
in millions
As
Reported
 
% of
Net Sales
 
ASU No. 2014-09
Impact
 
Excluding
ASU No. 2014-09 Impact
 
% of
Net Sales
Net sales
$
108,203

 
100.0
%
 
$
216

 
$
107,987

 
100.0
%
Cost of sales
71,043

 
65.7

 
(382
)
 
71,425

 
66.1

Gross profit
37,160

 
34.3

 
598

 
36,562

 
33.9

Selling, general and administrative
19,513

 
18.0

 
598

 
18,915

 
17.5

Total operating expenses
21,630

 
20.0

 
598

 
21,032

 
19.5

—————
(1)
Three months ended February 3, 2019 include 14 weeks.
(2)
Fiscal year ended February 3, 2019 includes 53 weeks.





THE HOME DEPOT, INC.
ASU NO. 2014-09 IMPACT OF ADOPTION
(Unaudited)
The Company adopted ASU No. 2014-09, which pertains to revenue recognition, in the first quarter of fiscal 2018. The following table shows the impact of adopting ASU No. 2014-09 on the consolidated balance sheet as of February 3, 2019.
 
February 3, 2019
in millions
As
Reported
 
ASU No. 2014-09
Impact
 
Excluding
ASU No. 2014-09 Impact
Assets
 
 
 
 
 
Receivables, net
$
1,936

 
$
(40
)
 
$
1,976

Other current assets
890

 
256

 
634

Total current assets
18,529

 
216

 
18,313

Total assets
44,003

 
216

 
43,787

 
 
 
 
 
 
Liabilities and Stockholders' Equity
 
 
 
 
 
Other current liabilities
$
5,060

 
$
117

 
$
4,943

Total current liabilities
16,716

 
117

 
16,599

Other liabilities
2,358

 
24

 
2,334

Total liabilities
45,881

 
141

 
45,740

Total stockholders’ deficit
(1,878
)
 
75

 
(1,953
)
Total liabilities and stockholders’ deficit
44,003

 
216

 
43,787





THE HOME DEPOT, INC.
PRO FORMA EFFECT OF ASU NO. 2014-09
(Unaudited)
The Company adopted ASU No. 2014-09, which pertains to revenue recognition, in the first quarter of fiscal 2018 using the modified retrospective method. In accordance therewith, financial information prior to fiscal 2018 will not be recast as the modified retrospective method does not permit recasting pre-adoption financial information. The following tables present selected as-reported financial results and the pro forma effect of ASU No. 2014-09 as if the recognition and presentation guidance in the accounting standard had been applied in fiscal 2017. There was no impact on operating income, net earnings, or earnings per share. The fiscal 2017 pro forma financial information included in the tables below is presented for informational purposes only.
 
Three Months Ended April 30, 2017
in millions
As
Reported
 
% of
Net Sales
 
ASU No. 2014-09
Effect
 
Including
ASU No. 2014-09 Effect
 
% of
Net Sales
Net sales
$
23,887

 
100.0
%
 
$
48

 
$
23,935

 
100.0
%
Cost of sales
15,733

 
65.9

 
(90
)
 
15,643

 
65.4

Gross profit
8,154

 
34.1

 
138

 
8,292

 
34.6

Selling, general and administrative
4,361

 
18.3

 
138

 
4,499

 
18.8

Total operating expenses
4,805

 
20.1

 
138

 
4,943

 
20.7

 
Three Months Ended July 30, 2017
in millions
As
Reported
 
% of
Net Sales
 
ASU No. 2014-09
Effect
 
Including
ASU No. 2014-09 Effect
 
% of
Net Sales
Net sales
$
28,108

 
100.0
%
 
$
33

 
$
28,141

 
100.0
%
Cost of sales
18,647

 
66.3

 
(114
)
 
18,533

 
65.9

Gross profit
9,461

 
33.7

 
147

 
9,608

 
34.1

Selling, general and administrative
4,549

 
16.2

 
147

 
4,696

 
16.7

Total operating expenses
4,998

 
17.8

 
147

 
5,145

 
18.3

 
Three Months Ended October 29, 2017
in millions
As
Reported
 
% of
Net Sales
 
ASU No. 2014-09
Effect
 
Including
ASU No. 2014-09 Effect
 
% of
Net Sales
Net sales
$
25,026

 
100.0
%
 
$
44

 
$
25,070

 
100.0
%
Cost of sales
16,378

 
65.4

 
(85
)
 
16,293

 
65.0

Gross profit
8,648

 
34.6

 
129

 
8,777

 
35.0

Selling, general and administrative
4,514

 
18.0

 
129

 
4,643

 
18.5

Total operating expenses
4,968

 
19.9

 
129

 
5,097

 
20.3

 
Three Months Ended January 28, 2018
in millions
As
Reported
 
% of
Net Sales
 
ASU No. 2014-09
Effect
 
Including
ASU No. 2014-09 Effect
 
% of
Net Sales
Net sales
$
23,883

 
100.0
%
 
$
41

 
$
23,924

 
100.0
%
Cost of sales
15,790

 
66.1

 
(85
)
 
15,705

 
65.6

Gross profit
8,093

 
33.9

 
126

 
8,219

 
34.4

Selling, general and administrative
4,440

 
18.6

 
126

 
4,566

 
19.1

Total operating expenses
4,904

 
20.5

 
126

 
5,030

 
21.0

 
Fiscal Year Ended January 28, 2018
in millions
As
Reported
 
% of
Net Sales
 
ASU No. 2014-09
Effect
 
Including
ASU No. 2014-09 Effect
 
% of
Net Sales
Net sales
$
100,904

 
100.0
%
 
$
166

 
$
101,070

 
100.0
%
Cost of sales
66,548

 
66.0

 
(374
)
 
66,174

 
65.5

Gross profit
34,356

 
34.0

 
540

 
34,896

 
34.5

Selling, general and administrative
17,864

 
17.7

 
540

 
18,404

 
18.2

Total operating expenses
19,675

 
19.5

 
540

 
20,215

 
20.0