MOORESVILLE, North Carolina
,
November 16, 2022
(press release)
–
—U.S. Comparable Sales Increased 3.0% —
Total sales for the third quarter were
"We delivered better-than-expected results this quarter, with
Capital Allocation As of Oct. 28, 2022, Lowe's operated 1,969 home improvement and hardware stores in the
Lowe's Business Outlook The company is increasing its full year 2022 financial outlook reflecting stronger-than-expected operating results. All Adjusted measures exclude asset impairment and expected transaction costs associated with the sale of our Canadian retail business, which is currently expected to close in early 2023. Full Year 2022 Outlook -- a 53-week Year (comparisons to full year 2021 -- a 52-week year) The Canadian retail business represents less than 6% of consolidated full year 2022 sales outlook, and approximately 60 basis points of dilution on the consolidated full year 2022 operating margin outlook. A conference call to discuss third quarter 2022 operating results is scheduled for today, Wednesday, Nov. 16, at 9 a.m. ET. The conference call will be available by webcast and can be accessed by visiting Lowe's website at ir.lowes.com and clicking on Lowe's Third Quarter 2022 Earnings Conference Call Webcast. Supplemental slides will be available approximately 15 minutes prior to the start of the conference call. A replay of the call will be archived at ir.lowes.com. Lowe's Companies, Inc. Lowe's Companies, Inc. (NYSE: LOW) is a FORTUNE® 50 home improvement company serving approximately 19 million customer transactions a week in
Disclosure Regarding Forward-Looking Statements This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Statements including words such as "believe", "expect", "anticipate", "plan", "desire", "project", "estimate", "intend", "will", "should", "could", "would", "may", "strategy", "potential", "opportunity", "outlook", "scenario", "guidance", and similar expressions are forward-looking statements. Forward-looking statements involve, among other things, expectations, projections, and assumptions about future financial and operating results, objectives, business outlook, priorities, sales growth, shareholder value, capital expenditures, cash flows, the housing market, the home improvement industry, demand for products and services, share repurchases, Lowe's strategic initiatives, including those relating to acquisitions and dispositions and the impact of such transactions on our strategic and operational plans and financial results. Such statements involve risks and uncertainties and we can give no assurance that they will prove to be correct. Actual results may differ materially from those expressed or implied in such statements. A wide variety of potential risks, uncertainties, and other factors could materially affect our ability to achieve the results either expressed or implied by these forward-looking statements including, but not limited to, changes in general economic conditions, such as volatility and/or lack of liquidity from time to time in
Investors and others should carefully consider the foregoing factors and other uncertainties, risks and potential events including, but not limited to, those described in "Item 1A - Risk Factors" in our most recent Annual Report on Form 10-K and as may be updated from time to time in Item 1A in our quarterly reports on Form 10-Q or other subsequent filings with the SEC. All such forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update these statements other than as required by law. LOW-IR Contacts: Shareholder/Analyst Inquiries: Media Inquiries: Kate Pearlman Steve Salazar 704-775-3856 704-881-4272 1 Adjusted diluted earnings per share is a non-GAAP financial measure. Refer to the "Non-GAAP Financial Measures Reconciliation" section of this release for additional information as well as reconciliations between the Company's GAAP and non-GAAP financial results. 2 Adjusted operating income, adjusted operating margin, adjusted diluted earnings per share, and adjusted effective income tax rate are non-GAAP financial measures. In addition, adjusted Return on Invested Capital (ROIC) is calculated using a non-GAAP financial measure. The Company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items without unreasonable effort, including timing of and deal-related transaction costs associated with the sale of our Canadian retail business. Lowe's Companies, Inc. Consolidated Statements of Current Earnings and (Accumulated Deficit)/Retained Earnings (Unaudited) In Millions, Except Per Share and Percentage Data Three Months Ended Nine Months Ended October 28, 2022 October 29, 2021 October 28, 2022 October 29, 2021 Current Earnings Amount % Sales Amount % Sales Amount % Sales Amount % Sales Net sales $ 23,479 100.00 $ 22,918 100.00 $ 74,614 100.00 $ 74,911 100.00 Cost of sales 15,661 66.70 15,331 66.90 49,614 66.49 49,882 66.59 Gross margin 7,818 33.30 7,587 33.10 25,000 33.51 25,029 33.41 Expenses: Selling, general and administrative 6,443 27.45 4,373 19.08 15,200 20.38 13,559 18.10 Depreciation and amortization 451 1.92 425 1.85 1,345 1.80 1,226 1.64 Operating income 924 3.93 2,789 12.17 8,455 11.33 10,244 13.67 Interest – net 295 1.25 223 0.97 802 1.07 650 0.86 Pre-tax earnings 629 2.68 2,566 11.20 7,653 10.26 9,594 12.81 Income tax provision 475 2.02 670 2.93 2,174 2.92 2,359 3.15 Net earnings $ 154 0.66 $ 1,896 8.27 $ 5,479 7.34 $ 7,235 9.66 Weighted average common shares outstanding – 618 690 638 704 Basic earnings per common share (1) $ 0.25 $ 2.74 $ 8.56 $ 10.23 Weighted average common shares outstanding – 620 692 640 706 Diluted earnings per common share (1) $ 0.25 $ 2.73 $ 8.53 $ 10.21 Cash dividends per share $ 1.05 $ 0.80 $ 2.90 $ 2.20 (Accumulated Deficit)/Retained Earnings Balance at beginning of period $ (8,895) $ (460) $ (5,115) $ 1,117 Net earnings 154 1,896 5,479 7,235 Cash dividends declared (643) (551) (1,833) (1,544) Share repurchases (3,929) (2,798) (11,844) (8,721) Balance at end of period $ (13,313) $ (1,913) $ (13,313) $ (1,913) (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
Lowe's Companies, Inc. Consolidated Statements of Comprehensive Income (Unaudited) In Millions, Except Percentage Data Three Months Ended Nine Months Ended October 28, 2022 October 29, 2021 October 28, 2022 October 29, 2021 Amount % Sales Amount % Sales Amount % Sales Amount % Sales Net earnings $ 154 0.66 $ 1,896 8.27 $ 5,479 7.34 $ 7,235 9.66 Foreign currency translation adjustments – net (168) (0.72) 19 0.08 (173) (0.23) 78 0.10 Cash flow hedges – net of tax 170 0.72 41 0.18 352 0.47 56 0.07 Other 1 — (1) — (3) — (4) — Other comprehensive income 3 — 59 0.26 176 0.24 130 0.17 Comprehensive income $ 157 0.66 $ 1,955 8.53 $ 5,655 7.58 $ 7,365 9.83 Lowe's Companies, Inc. Consolidated Balance Sheets (Unaudited) In Millions, Except Par Value Data October 28, 2022 October 29, 2021 January 28, 2022 Assets Current assets: Cash and cash equivalents $ 3,192 $ 6,121 $ 1,133 Short-term investments 464 552 271 Merchandise inventory – net 19,817 16,685 17,605 Other current assets 1,518 1,491 1,051 Total current assets 24,991 24,849 20,060 Property, less accumulated depreciation 17,275 18,925 19,071 Operating lease right-of-use assets 3,512 4,161 4,108 Long-term investments 63 213 199 Deferred income taxes – net 301 220 164 Other assets 831 1,032 1,038 Total assets $ 46,973 $ 49,400 $ 44,640 Liabilities and shareholders' deficit Current liabilities: Short-term borrowings $ — $ 1,000 $ — Current maturities of long-term debt 609 1,352 868 Current operating lease liabilities 651 573 636 Accounts payable 12,249 11,334 11,354 Accrued compensation and employee benefits 1,405 1,353 1,561 Deferred revenue 1,736 1,954 1,914 Other current liabilities 4,226 3,268 3,335 Total current liabilities 20,876 20,834 19,668 Long-term debt, excluding current maturities 32,904 23,881 23,859 Noncurrent operating lease liabilities 4,048 4,136 4,021 Deferred revenue – Lowe's protection plans 1,184 1,119 1,127 Other liabilities 829 1,006 781 Total liabilities 59,841 50,976 49,456 Shareholders' deficit: Preferred stock,
— — — Common stock,
305 343 335 Capital in excess of par value — — — Accumulated deficit (13,313) (1,913) (5,115) Accumulated other comprehensive income/(loss) 140 (6) (36) Total shareholders' deficit (12,868) (1,576) (4,816) Total liabilities and shareholders' deficit $ 46,973 $ 49,400 $ 44,640 Lowe's Companies, Inc. Consolidated Statements of Cash Flows (Unaudited) In Millions Nine Months Ended October 28, 2022 October 29, 2021 Cash flows from operating activities: Net earnings $ 5,479 $ 7,235 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 1,509 1,388 Noncash lease expense 403 383 Deferred income taxes (252) 96 Asset impairment and loss on property – net 2,113 25 Share-based payment expense 165 169 Changes in operating assets and liabilities: Merchandise inventory – net (2,308) (446) Other operating assets 20 (130) Accounts payable 921 436 Deferred revenue (117) 444 Other operating liabilities 205 (421) Net cash provided by operating activities 8,138 9,179 Cash flows from investing activities: Purchases of investments (659) (2,325) Proceeds from sale/maturity of investments 597 2,261 Capital expenditures (1,090) (1,256) Proceeds from sale of property and other long-term assets 37 94 Other – net — (134) Net cash used in investing activities (1,115) (1,360) Cash flows from financing activities: Net proceeds from issuance of debt 9,667 4,972 Repayment of debt (831) (595) Proceeds from issuance of common stock under share-based payment plans 86 72 Cash dividend payments (1,727) (1,433) Repurchases of common stock (12,127) (8,999) Other – net — (408) Net cash used in financing activities (4,932) (6,391) Effect of exchange rate changes on cash (32) 3 Net increase in cash and cash equivalents 2,059 1,431 Cash and cash equivalents, beginning of period 1,133 4,690 Cash and cash equivalents, end of period $ 3,192 $ 6,121 Lowe's Companies, Inc. To provide additional transparency, the Company has presented a comparison to the non-GAAP financial measure of adjusted diluted earnings per share for the three months ended October 28, 2022. This measure excludes the impact of a discrete item, further described below, not contemplated in Lowe's Business Outlook to assist analysts and investors in understanding operational performance for the third quarter of fiscal 2022. Fiscal 2022 Impacts During the third quarter, the Company recognized financial impacts from the following discrete item, not contemplated in the Company's Business Outlook for fiscal 2022: Adjusted diluted earnings per share should not be considered an alternative to, or more meaningful indicator of, the Company's diluted earnings per share as prepared in accordance with GAAP. The Company's methods of determining non-GAAP financial measures may differ from the method used by other companies and may not be comparable. The Company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items without unreasonable effort, including timing of and deal-related transaction costs associated with the sale of our Canadian retail business. A reconciliation between the Company's GAAP and non-GAAP financial results is shown below and available on the Company's website at ir.lowes.com. Three Months Ended October 28, 2022 Pre-Tax Tax1 Net Diluted earnings per share, as reported $ 0.25 Non-GAAP adjustments – per share impacts
3.32 (0.30) 3.02 Adjusted diluted earnings per share $ 3.27 1 Represents the corresponding tax benefit or expense related to the item excluded from adjusted diluted earnings per share. SOURCE Lowe's Companies, Inc.
— Third Quarter Diluted EPS of
— Raises Full Year 2022 Outlook—
With a disciplined focus on its leading capital allocation program, the company continues to generate long-term shareholder value. During the quarter, the company repurchased approximately 20.5 million shares for
basic
diluted
of tax
outstanding – none
and outstanding – 611 million, 686 million, and 670 million shares,
respectively
Non-GAAP Financial Measure Reconciliation (Unaudited)
Earnings
Earnings
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