EX-99.1 2 hd_exx991x11032013.htm EX-99.1 HD_EX_99.1_11.03.2013


Exhibit 99.1
The Home Depot Announces Third Quarter Results;
Raises Fiscal Year 2013 Guidance

ATLANTA, November 19, 2013 -- The Home Depot®, the world's largest home improvement retailer, today reported sales of $19.5 billion for the third quarter of fiscal 2013, a 7.4 percent increase from the third quarter of fiscal 2012. On a like for like basis, comparable store sales for the third quarter of fiscal 2013 were positive 7.4 percent, and comp sales for U.S. stores were positive 8.2 percent.

Net earnings for the third quarter were $1.4 billion, or $0.95 per diluted share, compared with net earnings of $947 million, or $0.63 per diluted share, in the same period of fiscal 2012. For the third quarter of fiscal 2013, diluted earnings per share increased 50.8 percent from the same period in the prior year. The prior year results reflect a nonrecurring charge of approximately $165 million, net of tax, or $0.11 per diluted share, due to the closing of seven stores in China. On an adjusted basis, the Company reported a 28.4 percent increase in diluted earnings per share from the same period in the prior year.

“Our third quarter results reflect the continuing improvement in the housing market and our solid operational performance,” said Frank Blake, chairman & CEO. “I would like to thank our associates for their hard work and dedication.”

Updated Fiscal 2013 Guidance

Based on its year-to-date performance and outlook for the remainder of the year, the Company raised its fiscal 2013 sales guidance and now expects sales to be up approximately 5.6 percent. Comparable store sales, on a 52-week like for like basis, are expected to be up approximately 7.0 percent for the year. The Company raised its fiscal 2013 diluted earnings-per-share guidance and now expects diluted earnings per share to be up approximately 24.0 percent to $3.72 for the year. The Company’s fiscal 2013 sales and diluted earnings-per-share guidance is based on a 52-week year compared to fiscal 2012, a 53-week year.

This diluted earnings-per-share guidance includes the benefit of the Company’s year-to-date share repurchases totaling $6.4 billion and the Company’s intent to repurchase $2.1 billion of additional shares in the fourth quarter of fiscal 2013.

On December 11 at 9 a.m. ET, the Company will hold an Investor and Analyst Conference. All presentations will be webcast live at ir.homedepot.com in the Events & Presentations section.

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 2,260 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
-more-




-2-

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 closing of seven stores in China in fiscal 2012. 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 2013 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 February 3, 2013 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
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 NINE MONTHS ENDED NOVEMBER 3, 2013 AND OCTOBER 28, 2012
(Unaudited)
(Amounts in Millions Except Per Share Data and as Otherwise Noted)
 
 
Three Months Ended
 
 
 
Nine Months Ended
 
 
 
November 3,
2013
 
October 28,
2012
 
% Increase
(Decrease)
 
November 3, 2013
 
October 28, 2012
 
% Increase
(Decrease)
NET SALES
$
19,470

 
$
18,130

 
7.4
 %
 
$
61,116

 
$
56,508

 
8.2
 %
Cost of Sales
12,672

 
11,863

 
6.8

 
39,918

 
37,032

 
7.8

GROSS PROFIT
6,798

 
6,267

 
8.5

 
21,198

 
19,476

 
8.8


Operating Expenses:
 
 
 
 
 
 
 
 
 
 
 
Selling, General and Administrative
4,096

 
4,139

 
(1.0
)
 
12,573

 
12,291

 
2.3

Depreciation and Amortization
409

 
395

 
3.5

 
1,220

 
1,169

 
4.4

Total Operating Expenses
4,505

 
4,534

 
(0.6
)
 
13,793

 
13,460

 
2.5


OPERATING INCOME

2,293

 
1,733

 
32.3

 
7,405

 
6,016

 
23.1

Interest and Other (Income) Expense:
 
 
 
 
 
 
 
 
 
 
 
Interest and Investment Income
(3
)
 
(5
)
 
(40.0
)
 
(8
)
 
(14
)
 
(42.9
)
Interest Expense
191

 
155

 
23.2

 
529

 
466

 
13.5

Other
—

 
—

 
—

 
—

 
(67
)
 
(100.0
)
Interest and Other, net
188

 
150

 
25.3

 
521

 
385

 
35.3


EARNINGS BEFORE PROVISION FOR
INCOME TAXES
2,105

 
1,583

 
33.0

 
6,884

 
5,631

 
22.3

Provision for Income Taxes
754

 
636

 
18.6

 
2,512

 
2,117

 
18.7

 
 
 
 
 
 
 
 
 
 
 
 
NET EARNINGS
$
1,351

 
$
947

 
42.7
 %
 
$
4,372

 
$
3,514

 
24.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
Weighted Average Common Shares
1,408

 
1,487

 
(5.3
)%
 
1,438

 
1,505

 
(4.5
)%
BASIC EARNINGS PER SHARE
$
0.96

 
$
0.64

 
50.0

 
$
3.04

 
$
2.33

 
30.5

 
 
 
 
 
 
 
 
 
 
 
 
Diluted Weighted Average Common Shares
1,417

 
1,498

 
(5.4
)%
 
1,448

 
1,517

 
(4.5
)%
DILUTED EARNINGS PER SHARE
$
0.95

 
$
0.63

 
50.8

 
$
3.02

 
$
2.32

 
30.2

 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
Nine Months Ended
 
 
SELECTED HIGHLIGHTS
November 3,
2013
 
October 28,
2012
 
% Increase
(Decrease)
 
November 3, 2013
 
October 28, 2012
 
% Increase
(Decrease)
Number of Customer Transactions
344.3

 
331.0

 
4.0
 %
 
1,074.6

 
1,034.8

 
3.8
 %
Average Ticket (actual)
$
56.27

 
$
54.55

 
3.2

 
$
56.99

 
$
54.71

 
4.2

Weighted Average Weekly Sales per
Operating Store (in thousands)
$
659

 
$
616

 
7.0

 
$
695

 
$
644

 
7.9

Square Footage at End of Period
236

 
235

 
0.4

 
236

 
235

 
0.4

Capital Expenditures
$
365

 
$
336

 
8.6

 
$
964

 
$
887

 
8.7

Depreciation and Amortization (1)
$
440

 
$
424

 
3.8
 %
 
$
1,317

 
$
1,257

 
4.8
 %
 —————
(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.







THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS ITEMS EXCLUDING CERTAIN ADJUSTMENTS (NON-GAAP)
FOR THE THREE MONTHS ENDED NOVEMBER 3, 2013 AND OCTOBER 28, 2012
(Unaudited)
(Amounts in Millions Except Per Share Data)

 
Three Months Ended November 3, 2013
 
Actuals
 
Adjustments
 
As Adjusted
(Non-GAAP)
Gross Profit
$
6,798

 
$
—

 
$
6,798

Selling, General and Administrative
4,096

 
—

 
4,096

Operating Income
2,293

 
—

 
2,293

Net Earnings
1,351

 
—

 
1,351

Diluted Earnings per Share
$
0.95

 
$
—

 
$
0.95

 
 
 
 
 
 
 
Three Months Ended October 28, 2012
 
Actuals
 
Adjustments(1)
 
As Adjusted
(Non-GAAP)
Gross Profit
$
6,267

 
$
(10
)
 
$
6,277

Selling, General and Administrative
4,139

 
155

 
3,984

Operating Income
1,733

 
(165
)
 
1,898

Net Earnings
947

 
(165
)
 
1,112

Diluted Earnings per Share
$
0.63

 
$
(0.11
)
 
$
0.74

_________

(1) Adjustments are related to the closing of seven stores in China.






THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF NOVEMBER 3, 2013, OCTOBER 28, 2012 AND FEBRUARY 3, 2013
(Unaudited)
(Amounts in Millions)

 
November 3,
2013
 
October 28,
2012
 
February 3,
2013
ASSETS
 
 
 
 
 
Cash and Cash Equivalents
$
4,853

 
$
2,554

 
$
2,494

Receivables, net
1,606

 
1,645

 
1,395

Merchandise Inventories
11,348

 
10,960

 
10,710

Other Current Assets
791

 
796

 
773

Total Current Assets
18,598

 
15,955

 
15,372


Property and Equipment, net
23,557

 
24,124

 
24,069

Goodwill
1,172

 
1,141

 
1,170

Other Assets
487

 
441

 
473

TOTAL ASSETS
$
43,814

 
$
41,661

 
$
41,084

 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
 
Accounts Payable
$
6,366

 
$
6,010

 
$
5,376

Accrued Salaries and Related Expenses
1,315

 
1,311

 
1,414

Current Installments of Long-Term Debt
1,317

 
34

 
1,321

Other Current Liabilities
3,531

 
3,311

 
3,351

Total Current Liabilities
12,529

 
10,666

 
11,462


Long-Term Debt, excluding current installments
14,692

 
10,779

 
9,475

Other Long-Term Liabilities
2,379

 
2,478

 
2,370

Total Liabilities
29,600

 
23,923

 
23,307


Total Stockholders' Equity
14,214

 
17,738

 
17,777

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
43,814

 
$
41,661

 
$
41,084





THE HOME DEPOT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED NOVEMBER 3, 2013 AND OCTOBER 28, 2012
(Unaudited)
(Amounts in Millions)
 
 
Nine Months Ended
 
November 3,
2013
 
October 28,
2012
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net Earnings
$
4,372

 
$
3,514

Reconciliation of Net Earnings to Net Cash Provided by Operating Activities:
 
 
 
Depreciation and Amortization
1,317

 
1,257

Stock-Based Compensation Expense
169

 
158

Changes in Working Capital and Other
123

 
455

Net Cash Provided by Operating Activities
5,981

 
5,384


CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Capital Expenditures
(964
)
 
(887
)
Payments for Businesses Acquired, net
(15
)
 
(121
)
Proceeds from Sales of Property and Equipment
34

 
21

Net Cash Used in Investing Activities
(945
)
 
(987
)

CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Proceeds from Long-Term Borrowings, net of discount
5,222

 
—

Repayments of Long-Term Debt
(25
)
 
(23
)
Repurchases of Common Stock
(6,446
)
 
(3,330
)
Proceeds from Sales of Common Stock
164

 
697

Cash Dividends Paid to Stockholders
(1,699
)
 
(1,312
)
Other
104

 
133

Net Cash Used in Financing Activities
(2,680
)
 
(3,835
)

Change in Cash and Cash Equivalents

2,356

 
562

Effect of Exchange Rate Changes on Cash and Cash Equivalents
3

 
5

Cash and Cash Equivalents at Beginning of Period
2,494

 
1,987


Cash and Cash Equivalents at End of Period
$
4,853

 
$
2,554