Home Depot's Q3 earnings rose 1% from a year ago to US$947M as sales rose 4.6% to US$18.1B, comparable-store sales grew 4.2%; company raises sales growth guidance to 5.2% for year, with diluted EPS expected to be up 18%

ATLANTA , November 13, 2012 (press release) – The Home Depot®, the world's largest home improvement retailer, today reported sales of $18.1 billion for the third quarter of fiscal 2012, a 4.6 percent increase from the third quarter of fiscal 2011. Comparable store sales for the third quarter of fiscal 2012 were positive 4.2 percent, and comp sales for U.S. stores were positive 4.3 percent.

Net earnings for the third quarter were $947 million, or $0.63 per diluted share, compared with net earnings of $934 million, or $0.60 per diluted share, in the same period of fiscal 2011. These results reflect a nonrecurring charge of approximately $165 million, net of tax, or $0.11 per diluted share due to the previously announced closing of seven stores in China. On an adjusted basis, the Company reported net earnings of $1.1 billion, or $0.74 per diluted share, a 23.3 percent increase from the same period in the prior year.

"Our third-quarter results were better than we expected and reflected, in part, what we believe is the start of the path toward the healing of the housing market," said Frank Blake, chairman & CEO. "I particularly want to thank all of our associates who are helping the communities impacted by Hurricane Sandy. They are working under difficult circumstances, often with their own lives and homes disrupted by the storm, and their efforts exemplify our core values."

Updated Fiscal 2012 Guidance

Based on its performance through the third quarter, the Company updated its fiscal 2012 guidance and raised its sales growth guidance to be up approximately 5.2 percent for the year on a 53-week basis. The Company expects fiscal 2012 diluted earnings per share to be up approximately 18 percent to $2.92 for the year.

On an adjusted basis, the Company raised its diluted earnings per share growth guidance to be up approximately 23 percent to $3.03 excluding the $0.11 per diluted share impact related to the closing of seven stores in China.

This earnings-per-share guidance includes the benefit of the Company's year-to-date share repurchases and the Company's intent to repurchase $700 million in additional shares in the fourth quarter of fiscal 2012, which will bring the total dollar amount of shares repurchased to $4 billion for the year.

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 earnings.homedepot.com.

At the end of the third quarter, the Company operated a total of 2,250 retail stores in all 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, 10 Canadian provinces and Mexico.

The Company employs more than 300,000 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.

To provide clarity, internally and externally, about the Company's operating performance for recently completed fiscal periods, the Company has supplemented its reporting with non-GAAP financial measures to reflect the impact of the charges related to the closing of seven stores in China. The Company believes that these non-GAAP financial measures better enable management and investors to understand and analyze the Company's performance by providing them with meaningful information relevant to events of unusual nature or frequency that impact the comparability of underlying business results from period to period. However, this supplemental information should not be considered in isolation or as a substitute for the related GAAP measures. A reconciliation of the non-GAAP financial measures to the comparable GAAP measures can be found attached to this press release and at http://earnings.homedepot.com.

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 store sales, 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, inventory and in-stock positions, commodity price inflation and deflation, implementation of store and supply chain initiatives, continuation of share repurchase programs, net earnings performance, earnings per share, capital allocation and expenditures, liquidity, return on invested capital, management of relationships with our suppliers and vendors, stock-based compensation expense, the effect of accounting charges, the effect of adopting certain accounting standards, the ability to issue debt on terms and at rates acceptable to us, store openings and closures, expense leverage, guidance for fiscal 2012 and beyond and financial outlook. 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 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 29, 2012 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.

THE HOME DEPOT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 28, 2012 AND OCTOBER 30, 2011

(Unaudited)

(Amounts in Millions Except Per Share Data and as Otherwise Noted)

 

 

Three Months Ended

     

Nine Months Ended

   
 

October 28,
2012

 

October 30,
2011

 

% Increase

(Decrease)

 

October 28, 2012

 

October 30, 2011

 

% Increase
(Decrease)

NET SALES

$

18,130

   

$

17,326

   

4.6

%

 

$

56,508

   

$

54,381

   

3.9

%

Cost of Sales

11,863

   

11,365

   

4.4

   

37,032

   

35,716

   

3.7

 

GROSS PROFIT

6,267

   

5,961

   

5.1

   

19,476

   

18,665

   

4.3

 
                       

Operating Expenses:

                     

Selling, General and Administrative

4,139

   

3,956

   

4.6

   

12,291

   

12,151

   

1.2

 

Depreciation and Amortization

395

   

390

   

1.3

   

1,169

   

1,183

   

(1.2)

 

Total Operating Expenses

4,534

   

4,346

   

4.3

   

13,460

   

13,334

   

0.9

 
                                   

OPERATING INCOME

1,733

   

1,615

   

7.3

   

6,016

   

5,331

   

12.8

 
                                   

Interest and Other (Income) Expense:

                     

Interest and Investment Income

(5)

   

(4)

   

25.0

   

(14)

   

(9)

   

55.6

 

Interest Expense

155

   

162

   

(4.3)

   

466

   

452

   

3.1

 

Other

   

   

   

(67)

   

   

N/A

 

Interest and Other, net

150

   

158

   

(5.1)

   

385

   

443

   

(13.1)

 
                                   

EARNINGS BEFORE PROVISION FOR

INCOME TAXES

1,583

   

1,457

   

8.6

   

5,631

   

4,888

   

15.2

 
                                   

Provision for Income Taxes

636

   

523

   

21.6

   

2,117

   

1,779

   

19.0

 
                       

NET EARNINGS

$

947

   

$

934

   

1.4

%

 

$

3,514

   

$

3,109

   

13.0

%

                       

Weighted Average Common Shares

1,487

   

1,540

   

(3.4)

%

 

1,505

   

1,572

   

(4.3)

%

BASIC EARNINGS PER SHARE

$

0.64

   

$

0.61

   

4.9

   

$

2.33

   

$

1.98

   

17.7

 
                       

Diluted Weighted Average Common Shares

1,498

   

1,548

   

(3.2)

%

 

1,517

   

1,581

   

(4.0)

%

DILUTED EARNINGS PER SHARE

$

0.63

   

$

0.60

   

5.0

   

$

2.32

   

$

1.97

   

17.8

 
                       
 

Three Months Ended

     

Nine Months Ended

   

SELECTED HIGHLIGHTS

October 28,
2012

 

October 30,
2011

 

% Increase

(Decrease)

 

October 28, 2012

 

October 30, 2011

 

% Increase

(Decrease)

Number of Customer Transactions

331.0

   

325.3

   

1.7

%

 

1,034.8

   

1,014.5

   

2.0

%

Average Ticket (actual)

$

54.55

   

$

53.03

   

2.9

   

$

54.71

   

$

53.50

   

2.3

 

Weighted Average Weekly Sales per

Operating Store (in thousands)

$

616

   

$

590

   

4.4

   

$

644

   

$

620

   

3.9

 

Square Footage at End of Period

235

   

235

   

   

235

   

235

   

 

Capital Expenditures

$

336

   

$

351

   

(4.3)

   

$

887

   

$

820

   

8.2

 

Depreciation and Amortization (1)

$

424

   

$

416

   

1.9

%

 

$

1,257

   

$

1,265

   

(0.6)

%

__________

 
   

(1)

Includes depreciation of distribution centers and tool rental equipment included in Cost of Sales and amortization of

 

deferred financing costs included in Interest Expense.

N/A - Not Applicable

 

THE HOME DEPOT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS ITEMS EXCLUDING CERTAIN ADJUSTMENTS (NON-GAAP)

FOR THE THREE MONTHS ENDED OCTOBER 28, 2012 AND OCTOBER 30, 2011

(Unaudited)

(Amounts in Millions Except Per Share Data)

 

 

Three Months Ended October 28, 2012

 

Actuals

 

Adjustments(1)

 

As Adjusted

(Non-GAAP)

Cost of Sales

$

11,863

   

$

10

   

$

11,853

 

Gross Profit

$

6,267

   

$

(10)

   

$

6,277

 

Total Operating Expenses

$

4,534

   

$

155

   

$

4,379

 

Operating Income

$

1,733

   

$

(165)

   

$

1,898

 

Net Earnings

$

947

   

$

(165)

   

$

1,112

 

Diluted Earnings Per Share

$

0.63

   

$

(0.11)

   

$

0.74

 
           
 

Three Months Ended October 30, 2011

 

Actuals

 

Adjustments

 

As Adjusted

(Non-GAAP)

Cost of Sales

$

11,365

   

$

   

$

11,365

 

Gross Profit

$

5,961

   

$

   

$

5,961

 

Total Operating Expenses

$

4,346

   

$

   

$

4,346

 

Operating Income

$

1,615

   

$

   

$

1,615

 

Net Earnings

$

934

   

$

   

$

934

 

Diluted Earnings Per Share

$

0.60

   

$

   

$

0.60

 

__________

   

(1)

Adjustments are comprised of charges related to the closing of seven stores in China.

THE HOME DEPOT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF OCTOBER 28, 2012, OCTOBER 30, 2011 AND JANUARY 29, 2012

(Unaudited)

(Amounts in Millions)

 

 

October 28,
2012

 

October 30,
2011

 

January 29,
2012

ASSETS

         

Cash and Cash Equivalents

$

2,554

   

$

2,234

   

$

1,987

 

Receivables, net

1,645

   

1,384

   

1,245

 

Merchandise Inventories

10,960

   

10,717

   

10,325

 

Other Current Assets

796

   

1,143

   

963

 

Total Current Assets

15,955

   

15,478

   

14,520

 

 

Property and Equipment, net

24,124

   

24,532

   

24,448

 

Goodwill

1,141

   

1,072

   

1,120

 

Other Assets

441

   

417

   

430

 

TOTAL ASSETS

$

41,661

   

$

41,499

   

$

40,518

 
           

LIABILITIES AND STOCKHOLDERS' EQUITY

         

Accounts Payable

$

6,010

   

$

5,669

   

$

4,856

 

Accrued Salaries and Related Expenses

1,311

   

1,227

   

1,372

 

Current Installments of Long-Term Debt

34

   

44

   

30

 

Other Current Liabilities

3,311

   

3,646

   

3,118

 

Total Current Liabilities

10,666

   

10,586

   

9,376

 

 

Long-Term Debt

10,779

   

10,739

   

10,758

 

Other Long-Term Liabilities

2,478

   

2,405

   

2,486

 

Total Liabilities

23,923

   

23,730

   

22,620

 

 

Total Stockholders' Equity

17,738

   

17,769

   

17,898

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

41,661

   

$

41,499

   

$

40,518

 

THE HOME DEPOT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED OCTOBER 28, 2012 AND OCTOBER 30, 2011

(Unaudited)

(Amounts in Millions)

 

 

Nine Months Ended

 

October 28,
2012

 

October 30,
2011

CASH FLOWS FROM OPERATING ACTIVITIES:

     

Net Earnings

$

3,514

   

$

3,109

 

Reconciliation of Net Earnings to Net Cash Provided by Operating Activities:

     

Depreciation and Amortization

1,257

   

1,265

 

Stock-Based Compensation Expense

158

   

157

 

Changes in Working Capital and Other

455

   

1,160

 

Net Cash Provided by Operating Activities

5,384

   

5,691

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

     

Capital Expenditures

(887)

   

(820)

 

Payments for Businesses Acquired, net

(121)

   

 

Proceeds from Sale of Business, net

   

101

 

Proceeds from Sales of Property and Equipment

21

   

36

 

Net Cash Used in Investing Activities

(987)

   

(683)

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

     

Proceeds from Long-Term Borrowings, net of discount

   

1,994

 

Repayments of Long-Term Debt

(23)

   

(1,021)

 

Repurchases of Common Stock

(3,330)

   

(3,056)

 

Proceeds from Sales of Common Stock

697

   

91

 

Cash Dividends Paid to Stockholders

(1,312)

   

(1,187)

 

Other

133

   

(118)

 

Net Cash Used in Financing Activities

(3,835)

   

(3,297)

 

 

Change in Cash and Cash Equivalents

 

562

   

1,711

 

Effect of Exchange Rate Changes on Cash and Cash Equivalents

5

   

(22)

 

Cash and Cash Equivalents at the Beginning of the Period

1,987

   

545

 

 

Cash and Cash Equivalents at the End of the Period

$

2,554

   

$

2,234

 
SOURCE The Home Depot





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