EX-99.1 2 hd_exx991x08022015.htm EX 99.1 Exhibit


Exhibit 99.1
The Home Depot Announces Second Quarter Results;
Raises Fiscal Year 2015 Guidance

ATLANTA, August 18, 2015 -- The Home Depot®, the world's largest home improvement retailer, today reported sales of $24.8 billion for the second quarter of fiscal 2015, a 4.3 percent increase from the second quarter of fiscal 2014. Comparable store sales for the second quarter of fiscal 2015 were positive 4.2 percent, and comp sales for U.S. stores were positive 5.7 percent.

Net earnings for the second quarter of fiscal 2015 were $2.2 billion, or $1.73 per diluted share, compared with net earnings of $2.1 billion, or $1.52 per diluted share, in the same period of fiscal 2014. For the second quarter of fiscal 2015, diluted earnings per share increased 13.8 percent from the same period in the prior year.

Second quarter of fiscal 2015 results include a pretax net expense of $92 million, or $0.05 per diluted share, related to the Company’s 2014 data breach. This expense includes an accrual for estimated probable losses that the Company expects to incur in connection with the claims made by the payment card networks. Second quarter of fiscal 2015 results also reflect a pretax gain on sale of $144 million, or $0.07 per diluted share, related to the sale of the remaining portion of the Company's equity ownership in HD Supply Holdings, Inc. Adjusting for these two items, diluted earnings per share for the second quarter of fiscal 2015 were $1.71.

“We were pleased with this quarter’s results. We saw balanced growth across our business resulting from strength in the core of the store as well as the continued recovery of the U.S. housing market,” said Craig Menear, chairman, CEO and president. “I would like to thank our associates for their hard work and dedication.”

Updated Fiscal 2015 Guidance

The Company has provided a range of sales, comp sales and diluted earnings-per-share growth to reflect the difference between 2014 average exchange rates and current exchange rates. The low-end of the Company’s sales, comp sales and diluted earnings-per-share growth guidance reflects the U.S. dollar remaining at current foreign exchange rates.

Based on its year-to-date performance and to reflect the planned completion of the acquisition of Interline Brands, Inc., the Company raised its fiscal 2015 sales guidance and now expects sales will grow in a range of approximately 5.2 percent to 6.0 percent and comp sales will grow in a range of approximately 4.1 percent to 4.9 percent. The Company also raised its diluted earnings-per-share guidance for the year and now expects diluted earnings per share to grow in a range of approximately 13 percent to 14 percent from fiscal 2014 to $5.31 to $5.36.

The Company’s earnings-per-share guidance reflects the benefit of the Company's year-to-date share repurchases of $3.1 billion and the Company's intent to repurchase an additional $3.9 billion of shares during the remainder of the year for a total of $7.0 billion.

-more-




-2-

The Company’s estimated probable losses related to the claims made by the payment card networks in connection with the data breach discovered in September 2014 are based on currently available information and expected payments associated with those claims. These estimates may change as new information becomes available or circumstances change. The accrual does not reflect liabilities from current and future civil litigation, governmental investigations and enforcement proceedings, which may have an adverse effect on the Company’s financial results in a future period. The accrual also does not reflect future breach-related legal, consulting or administrative fees, which are expensed as incurred and not expected to be material in any individual period.

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 second quarter, the Company operated a total of 2,270 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.

###

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; effects of competition; 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; demand for credit offerings; inventory and in-stock positions; implementation of store, interconnected retail and supply chain initiatives; management of relationships with our suppliers and vendors; the impact and expected outcome of investigations, inquiries, claims and litigation, including those related to the data breach; issues related to the payment methods we accept and the timing of upgrades and enhancements impacting point of sale devices; 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 effect of accounting charges; the effect of adopting certain accounting standards; store openings and closures; guidance for fiscal 2015 and beyond; financial outlook; successful closing of the Interline acquisition; and the subsequent integration of Interline into our organization and the ability to recognize the anticipated synergies and benefits of the acquisition. 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 February 1, 2015 and in our subsequent Quarterly Reports on Form 10-Q.
-more-




-3-

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
Diane Dayhoff
 
Stephen Holmes
Vice President of Investor Relations
 
Director of Corporate Communications
770-384-2666
 
770-384-5075
diane_dayhoff@homedepot.com
 
stephen_holmes@homedepot.com
 
 
 



THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE AND SIX MONTHS ENDED AUGUST 2, 2015 AND AUGUST 3, 2014
(Unaudited)
(Amounts in Millions Except Per Share Data and as Otherwise Noted)
 
 
Three Months Ended



Six Months Ended


 
August 2,
2015

August 3,
2014

% Increase
(Decrease)

August 2,
2015

August 3,
2014

% Increase
(Decrease)
NET SALES
$
24,829


$
23,811


4.3
 %

$
45,720


$
43,498


5.1
 %
Cost of Sales
16,464


15,804


4.2


30,176


28,734


5.0

GROSS PROFIT
8,365


8,007


4.5


15,544


14,764


5.3


Operating Expenses:











Selling, General and Administrative
4,299


4,146


3.7


8,462


8,213


3.0

Depreciation and Amortization
419


413


1.5


838


826


1.5

Total Operating Expenses
4,718


4,559


3.5


9,300


9,039


2.9

OPERATING INCOME
3,647


3,448


5.8


6,244


5,725


9.1

Interest and Other (Income) Expense:











Interest and Investment Income
(149
)

(17
)

N/M


(153
)

(117
)

30.8

Interest Expense
233


208


12.0


430


399


7.8

Interest and Other, net
84


191


(56.0
)

277


282


(1.8
)

EARNINGS BEFORE PROVISION FOR
INCOME TAXES
3,563


3,257


9.4


5,967


5,443


9.6

Provision for Income Taxes
1,329


1,207


10.1


2,154


2,014


7.0



















NET EARNINGS
$
2,234


$
2,050


9.0
 %

$
3,813


$
3,429


11.2
 %


















Weighted Average Common Shares
1,283


1,346


(4.7
)%

1,291


1,358


(4.9
)%
BASIC EARNINGS PER SHARE
$
1.74


$
1.52


14.5


$
2.95


$
2.53


16.6



















Diluted Weighted Average Common Shares
1,289


1,353


(4.7
)%

1,298


1,365


(4.9
)%
DILUTED EARNINGS PER SHARE
$
1.73


$
1.52


13.8


$
2.94


$
2.51


17.1

 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
Six Months Ended
 
 
SELECTED HIGHLIGHTS
August 2,
2015
 
August 3,
2014
 
% Increase
(Decrease)
 
August 2, 2015
 
August 3, 2014
 
% Increase
(Decrease)
Number of Customer Transactions
420.4

 
409.7

 
2.6
 %
 
780.6

 
754.2

 
3.5
 %
Average Ticket (actual)
$
59.42

 
$
58.43

 
1.7

 
$
59.04

 
$
58.05

 
1.7

Sales per Square Foot (actual)
$
420.37

 
$
403.90

 
4.1

 
$
387.04

 
$
368.92

 
4.9

N/M – Not Meaningful
 






THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF AUGUST 2, 2015, AUGUST 3, 2014 AND FEBRUARY 1, 2015
(Unaudited)
(Amounts in Millions)


August 2,
2015
 
August 3,
2014
 
February 1,
2015
ASSETS
 
 
 
 
 
Cash and Cash Equivalents
$
4,936

 
$
4,216

 
$
1,723

Receivables, net
1,696

 
1,637

 
1,484

Merchandise Inventories
11,859

 
11,665

 
11,079

Other Current Assets
1,040

 
973

 
1,016

Total Current Assets
19,531

 
18,491

 
15,302


Property and Equipment, net
22,302

 
23,126

 
22,720

Goodwill
1,340

 
1,295

 
1,353

Other Assets
625

 
567

 
571

TOTAL ASSETS
$
43,798

 
$
43,479

 
$
39,946

 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
 
Short-Term Debt
$
—

 
$
—

 
$
290

Accounts Payable
7,495

 
7,165

 
5,807

Accrued Salaries and Related Expenses
1,384

 
1,325

 
1,391

Current Installments of Long-Term Debt
3,057

 
34

 
38

Other Current Liabilities
4,463

 
4,315

 
3,743

Total Current Liabilities
16,399

 
12,839

 
11,269


Long-Term Debt, excluding current installments
16,318

 
16,702

 
16,869

Other Long-Term Liabilities
2,444

 
2,481

 
2,486

Total Liabilities
35,161

 
32,022

 
30,624


Total Stockholders' Equity
8,637

 
11,457

 
9,322

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
43,798

 
$
43,479

 
$
39,946




THE HOME DEPOT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED AUGUST 2, 2015 AND AUGUST 3, 2014
(Unaudited)
(Amounts in Millions)
 
 
Six Months Ended
 
August 2,
2015

August 3,
2014
CASH FLOWS FROM OPERATING ACTIVITIES:



Net Earnings
$
3,813


$
3,429

Reconciliation of Net Earnings to Net Cash Provided by Operating Activities:
 
 
 
Depreciation and Amortization
915


896

Stock-Based Compensation Expense
122


119

Gain on Sales of Investments
(144
)
 
(112
)
Changes in Working Capital and Other
1,228


953

Net Cash Provided by Operating Activities
5,934


5,285


CASH FLOWS FROM INVESTING ACTIVITIES:



Capital Expenditures
(705
)

(631
)
Proceeds from Sales of Investments
144

 
112

Proceeds from Sales of Property and Equipment
8


16

Net Cash Used in Investing Activities
(553
)

(503
)

CASH FLOWS FROM FINANCING ACTIVITIES:



Repayments of Short-Term Borrowings, net
(290
)

—

Proceeds from Long-Term Borrowings, net of discount
2,492

 
1,981

Repayments of Long-Term Debt
(19
)

(21
)
Repurchases of Common Stock
(3,085
)

(3,500
)
Proceeds from Sales of Common Stock
134


148

Cash Dividends Paid to Stockholders
(1,533
)

(1,285
)
Other Financing Activities
161


181

Net Cash Used in Financing Activities
(2,140
)

(2,496
)

Change in Cash and Cash Equivalents

3,241


2,286

Effect of Exchange Rate Changes on Cash and Cash Equivalents
(28
)

1

Cash and Cash Equivalents at Beginning of Period
1,723


1,929


Cash and Cash Equivalents at End of Period
$
4,936


$
4,216