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

August 21, 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 SECOND QUARTER SALES AND EARNINGS RESULTS
-- Comparable Sales Increased 9.6 Percent –
-- Diluted Earnings Per Share Increased 37.5 Percent --

MOORESVILLE, N.C.  – Lowe’s Companies, Inc. (NYSE: LOW), the world’s second largest home improvement retailer, today reported net earnings of $941 million for the quarter ended August 2, 2013, a 26.0 percent increase over the same period a year ago.  Diluted earnings per share increased 37.5 percent to $0.88 from $0.64 in the second quarter of 2012.  For the six months ended August 2, 2013, net earnings increased 16.2 percent from the same period a year ago to $1.48 billion, and diluted earnings per share increased 27.1 percent to $1.36.

Sales for the quarter increased 10.3 percent to $15.7 billion from $14.2 billion in the second quarter of 2012, and comparable sales for the quarter increased 9.6 percent.  For the six month period, sales were $28.8 billion, a 5.1 percent increase over the same period a year ago, and comparable sales increased 4.6 percent.

“Home improvement demand was strong during the quarter, and we capitalized on it with improving execution. I’d like to thank our employees for their hard work and continued dedication to serving customers,” commented Robert A. Niblock, Lowe’s chairman, president and CEO.  “We drove a healthy balance of ticket and transaction growth, and delivered solid performance across all product categories."

Delivering on the commitment to return excess cash to shareholders, the company repurchased $1.0 billion of stock and paid $174 million in dividends in the quarter.  For the six month period, the company repurchased $2.0 billion and paid $352 million in dividends.

As of August 2, 2013, Lowe’s operated 1,758 stores in the United States, Canada and Mexico, representing 197.7 million square feet of retail selling space.

A conference call to discuss second quarter 2013 operating results is scheduled for today (Wednesday, August 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 Second Quarter 2013 Earnings Conference Call Webcast.  Supplemental slides will be available fifteen minutes prior to the start of the conference call.   A replay of the call will be archived on Lowes.com/investor until November 19, 2013.
 
 
 

 
 
 Lowe’s Business Outlook
 
The company has combined its year-to-date performance with its previous assumptions for the second half of 2013 when providing the updated outlook below.
 
Fiscal Year 2013 (comparisons to fiscal year 2012; based on U.S. GAAP unless otherwise noted)
·  
Total sales are expected to increase approximately 5 percent.
·  
Comparable sales are expected to increase approximately 4.5 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 65 basis points.
·  
The effective income tax rate is expected to be approximately 37.9%.
·  
Diluted earnings per share of approximately $2.10 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 sales, earnings and performance, shareholder value, capital expenditures, cash flows, 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 (Unaudited)
                   
In Millions, Except Per Share and Percentage Data
                         
                                 
 
Three Months Ended
 
Six Months Ended
 
 
August 2, 2013
 
August 3, 2012
 
August 2, 2013
 
August 3, 2012
 
Current Earnings
Amount
 
Percent
 
Amount
 
Percent
 
Amount
 
Percent
 
Amount
 
Percent
 
Net sales
$ 15,711     100.00   $ 14,249     100.00   $ 28,800     100.00   $ 27,402     100.00  
                                                 
Cost of sales
  10,314     65.65     9,415     66.07     18,848     65.44     18,003     65.70  
                                                 
Gross margin
  5,397     34.35     4,834     33.93     9,952     34.56     9,399     34.30  
                                                 
Expenses:
                                               
                                                 
Selling, general and administrative
  3,414     21.73     3,172     22.26     6,635     23.04     6,414     23.40  
                                                 
Depreciation
  367     2.33     369     2.59     719     2.50     739     2.70  
                                                 
Interest - net
  110     0.70     96     0.68     223     0.77     199     0.73  
                                                 
Total expenses
  3,891     24.76     3,637     25.53     7,577     26.31     7,352     26.83  
                                                 
Pre-tax earnings
  1,506     9.59     1,197     8.40     2,375     8.25     2,047     7.47  
                                                 
Income tax provision
  565     3.60     450     3.15     893     3.11     772     2.82  
                                                 
Net earnings
$ 941     5.99   $ 747     5.25   $ 1,482     5.14   $ 1,275     4.65  
                                                 
                                                 
Weighted average common shares outstanding - basic
  1,067           1,157           1,077           1,182        
                                                 
Basic earnings per common share (1)
$ 0.88         $ 0.64         $ 1.37         $ 1.07        
                                                 
Weighted average common shares outstanding - diluted
  1,068           1,159           1,079           1,183        
                                                 
Diluted earnings per common share (1)
$ 0.88         $ 0.64         $ 1.36         $ 1.07        
                                                 
Cash dividends per share
$ 0.18         $ 0.16         $ 0.34         $ 0.30        
                                                 
                                                 
Retained Earnings
                                               
Balance at beginning of period
$ 12,618         $ 14,557         $ 13,224         $ 15,852        
Net earnings
  941           747           1,482           1,275        
Cash dividends
  (192 )         (184 )         (366 )         (350 )      
Share repurchases
  (863 )         (921 )         (1,836 )         (2,578 )      
Balance at end of period
$ 12,504         $ 14,199         $ 12,504         $ 14,199        
                                                 
                                                 
(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 $935 million for the three months ended August 2, 2013 and $742 million for the three months ended August 3, 2012. Net earnings allocable to common shares used in the basic and diluted earnings per share calculation were $1,472 million for the six months ended August 2, 2013 and $1,266 million for the six months ended August 3, 2012.
 
                                                 
                                                 
Lowe's Companies, Inc.
                                               
Consolidated Statements of Comprehensive Income (Unaudited)
                                     
In Millions, Except Percentage Data
                                               
                                                 
 
Three Months Ended
 
Six Months Ended
 
 
August 2, 2013
 
August 3, 2012
 
August 2, 2013
 
August 3, 2012
 
 
Amount
 
Percent
 
Amount
 
Percent
 
Amount
 
Percent
 
Amount
 
Percent
 
Net earnings
$ 941     5.99   $ 747     5.25   $ 1,482     5.14   $ 1,275     4.65  
                                                 
Foreign currency translation adjustments - net of tax
  (26 )   (0.17 )   (8 )   (0.05 )   (26 )   (0.09 )   (1 )   -  
                                                 
Net unrealized investment gains - net of tax
  -     -     3     0.01     -     -     2     0.01  
                                                 
Other comprehensive (loss)/income
  (26 )   (0.17 )   (5 )   (0.04 )   (26 )   (0.09 )   1     0.01  
                                                 
Comprehensive income
$ 915     5.82   $ 742     5.21   $ 1,456     5.05   $ 1,276     4.66  
                                                 
                                                 

 
 

 

Lowe's Companies, Inc.
               
Consolidated Balance Sheets
               
In Millions, Except Par Value Data
               
                 
     
(Unaudited)
 
(Unaudited)
     
     
August 2, 2013
 
August 3, 2012
 
February 1, 2013
 
Assets
               
                 
Current assets:
               
Cash and cash equivalents
    $ 1,085   $ 1,710   $ 541  
Short-term investments
      189     586     125  
Merchandise inventory - net
      9,106     8,699     8,600  
Deferred income taxes - net
      224     279     217  
Other current assets
      309     325     301  
                       
Total current assets
      10,913     11,599     9,784  
                       
Property, less accumulated depreciation
      20,969     21,734     21,477  
Long-term investments
      306     485     271  
Other assets
      1,220     1,214     1,134  
                       
Total assets
    $ 33,408   $ 35,032   $ 32,666  
                       
Liabilities and shareholders' equity
                     
                       
Current liabilities:
                     
Current maturities of long-term debt
    $ 47   $ 594   $ 47  
Accounts payable
      5,664     5,084     4,657  
    Accrued compensation and employee benefits     651     561     670  
Deferred revenue
      985     847     824  
Other current liabilities
      1,993     1,936     1,510  
                       
Total current liabilities
      9,340     9,022     7,708  
                       
Long-term debt, excluding current maturities
    9,015     9,008     9,030  
Deferred income taxes - net
      390     580     455  
Deferred revenue - extended protection plans
    733     726     715  
Other liabilities
      868     872     901  
                       
Total liabilities
      20,346     20,208     18,809  
                       
Shareholders' equity:
                     
Preferred stock - $5 par value, none issued
      -     -     -  
Common stock - $.50 par value;
                     
Shares issued and outstanding
                     
August 2, 2013
1,063                    
August 3, 2012
1,152                    
February 1, 2013
1,110     532     576     555  
Capital in excess of par value
      -     2     26  
Retained earnings
      12,504     14,199     13,224  
Accumulated other comprehensive income
      26     47     52  
                       
Total shareholders' equity
      13,062     14,824     13,857  
                       
Total liabilities and shareholders' equity
  $ 33,408   $ 35,032   $ 32,666  
                       
                       

 
 

 

Lowe's Companies, Inc.
         
Consolidated Statements of Cash Flows (Unaudited)
         
In Millions
         
           
 
Six Months Ended
 
 
August 2, 2013
   
August 3, 2012
 
Cash flows from operating activities:
         
Net earnings
$ 1,482     $ 1,275  
Adjustments to reconcile net earnings to net cash provided by operating activities:
             
Depreciation and amortization
  767       789  
Deferred income taxes
  (56 )     (59 )
Loss on property and other assets - net
  12       36  
Loss on equity method investments
  27       29  
Share-based payment expense
  44       54  
Changes in operating assets and liabilities:
             
Merchandise inventory - net
  (517 )     (345 )
Other operating assets
  4       (159 )
Accounts payable
  1,009       731  
Other operating liabilities
  584       445  
Net cash provided by operating activities
  3,356       2,796  
               
Cash flows from investing activities:
             
Purchases of investments
  (303 )     (1,176 )
Proceeds from sale/maturity of investments
  224       897  
Capital expenditures
  (376 )     (622 )
Contributions to equity method investments - net
  (113 )     (159 )
Proceeds from sale of property and other long-term assets
  47       49  
Other - net
  3       (21 )
Net cash used in investing activities
  (518 )     (1,032 )
               
Cash flows from financing activities:
             
Net proceeds from issuance of long-term debt
  -       1,984  
Repayment of long-term debt
  (22 )     (20 )
Proceeds from issuance of common stock under share-based payment plans
  100       90  
Cash dividend payments
  (352 )     (340 )
Repurchase of common stock
  (2,027 )     (2,793 )
Other - net
  8       13  
Net cash used in financing activities
  (2,293 )     (1,066 )
               
Effect of exchange rate changes on cash
  (1 )     (2 )
               
Net increase in cash and cash equivalents
  544       696  
Cash and cash equivalents, beginning of period
  541       1,014  
Cash and cash equivalents, end of period
$ 1,085     $ 1,710