The Home Depot Announces First Quarter Results; Reaffirms Fiscal Year 2019 Guidance

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May 21, 2019, 06:00 ET

ATLANTA, May 21, 2019 /PRNewswire/ -- The Home Depot^®, the world's largest home improvement retailer, today reported sales of $26.4 billion for the first quarter of fiscal 2019, a 5.7 percent increase from the first quarter of fiscal 2018. Comparable sales for the first quarter of fiscal 2019 were positive 2.5 percent, and comparable sales in the U.S. were positive 3.0 percent. In the first quarter, the difference between the Company's sales growth and comparable sales performance reflects a shift in the calendar base due to 53 weeks of sales in fiscal 2018.

Net earnings for the first quarter of fiscal 2019 were $2.5 billion, or $2.27 per diluted share, compared with net earnings of $2.4 billion, or $2.08 per diluted share, in the same period of fiscal 2018. For the first quarter of fiscal 2019, diluted earnings per share increased 9.1 percent from the same period in the prior year.

"We were pleased with the underlying performance of the core business despite unfavorable weather in February and significant deflation in lumber prices compared to a year ago," said Craig Menear, chairman, CEO and president.

"Looking ahead, we remain excited about the momentum we are seeing with our strategic investments. As a result of these initiatives, and the current macroeconomic and housing backdrop, today we are reaffirming our sales and earnings guidance for fiscal 2019. I would like to thank our associates for their hard work and continued dedication to our customers."

Fiscal 2019 Guidance

The Company reaffirmed its guidance for fiscal 2019, a 52-week year compared to fiscal 2018, a 53-week year. The Company expects its fiscal 2019 sales to grow by approximately 3.3 percent and comp sales for the comparable 52-week period to be up approximately 5.0 percent. The Company also reaffirmed its diluted earnings-per-share growth guidance for the year and expects diluted earnings-per-share growth of approximately 3.1 percent from fiscal 2018 to $10.03.

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 http://ir.homedepot.com/events-and-presentations.

At the end of the first quarter, the Company operated a total of 2,289 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 400,000 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 sales; effects of competition; implementation of store, interconnected retail, supply chain and technology initiatives; inventory and in-stock positions; state of the economy; state of the housing and home improvement markets; state of the credit markets, including mortgages, home equity loans and consumer credit; issues related to the payment methods we accept; demand for credit offerings; management of relationships with our associates, suppliers and vendors; 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 impact and expected outcome of investigations, inquiries, claims and litigation; the effect of accounting charges; the effect of adopting certain accounting standards; the impact of the Tax Cuts and Jobs Act of 2017 and other regulatory changes; store openings and closures; guidance for fiscal 2019 and beyond; financial outlook; and the integration of acquired companies into our organization and the ability to recognize the anticipated synergies and benefits of those acquisitions. 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, dependent on the actions of third parties, 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, 2019 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. CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)

	Three Months Ended
*in millions, except per share data*	May 5, 2019		April 29, 2018		% Change
Net sales	$	26,381	$	24,947	5.7	%
Cost of sales	17,364		16,330		6.3
Gross profit	9,017		8,617		4.6
Operating expenses:
Selling, general and administrative	4,940		4,779		3.4
Depreciation and amortization	480		457		5.0
Total operating expenses	5,420		5,236		3.5
Operating income	3,597		3,381		6.4
Interest and other (income) expense:
Interest and investment income	(15)		(22)		(31.8)
Interest expense	288		261		10.3
Interest and other, net	273		239		14.2
Earnings before provision for income taxes	3,324		3,142		5.8
Provision for income taxes	811		738		9.9
Net earnings	$	2,513	$	2,404	4.5	%

Basic weighted average common shares	1,101		1,152		(4.4)	%
Basic earnings per share	$	2.28	$	2.09	9.1

Diluted weighted average common shares	1,106		1,158		(4.5)	%
Diluted earnings per share	$	2.27	$	2.08	9.1

	Three Months Ended
Selected Sales Data ⁽¹⁾	May 5, 2019		April 29, 2018		% Change
Customer transactions (in millions)	390.0		375.9		3.8	%
Average ticket	$	67.31	$	66.02	2.0
Sales per square foot	$	435.18	$	412.03	5.6

—————
(1)	Selected Sales Data does not include results for the legacy Interline Brands business, now operating as a part of The Home Depot Pro.

THE HOME DEPOT, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

*in millions*	May 5, 2019		April 29, 2018		February 3, 2019
Assets
Cash and cash equivalents	$	1,882	$	3,599	$	1,778
Receivables, net	2,317		2,296		1,936
Merchandise inventories	15,495		14,432		13,925
Other current assets	859		887		890
Total current assets	20,553		21,214		18,529
Net property and equipment	22,270		21,928		22,375
Operating lease right-of-use assets	5,629		—		—
Goodwill	2,250		2,281		2,252
Other assets	813		1,227		847
Total assets	$	51,515	$	46,650	$	44,003

Liabilities and Stockholders' Equity
Short-term debt	$	372	$	350	$	1,339
Accounts payable	10,311		9,726		7,755
Accrued salaries and related expenses	1,418		1,413		1,506
Current installments of long-term debt	1,084		1,199		1,056
Current operating lease liabilities	793		—		—
Other current liabilities	5,695		5,445		5,060
Total current liabilities	19,673		18,133		16,716
Long-term debt, excluding current installments	26,804		24,244		26,807
Long-term operating lease liabilities	5,145		—		—
Other liabilities	2,036		2,586		2,358
Total liabilities	53,658		44,963		45,881
Total stockholders' (deficit) equity	(2,143)		1,687		(1,878)
Total liabilities and stockholders' equity	$	51,515	$	46,650	$	44,003

THE HOME DEPOT, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Three Months Ended
*in millions*	May 5, 2019		April 29, 2018
Cash Flows from Operating Activities:
Net earnings	$	2,513	$	2,404
Reconciliation of net earnings to net cash provided by operating activities:
Depreciation and amortization	547		532
Stock-based compensation expense	86		84
Changes in working capital	1,333		1,031
Changes in deferred income taxes	5		(9)
Other operating activities	91		(61)
Net cash provided by operating activities	4,575		3,981

Cash Flows from Investing Activities:
Capital expenditures, net of non-cash capital expenditures	(681)		(556)
Proceeds from sales of property and equipment	6		8
Other investing activities	(13)		—
Net cash used in investing activities	(688)		(548)

Cash Flows from Financing Activities:
Repayments of short-term debt, net	(967)		(1,209)
Repayments of long-term debt	(15)		(10)
Repurchases of common stock	(1,368)		(1,121)
Proceeds from sales of common stock	34		14
Cash dividends	(1,499)		(1,189)
Other financing activities	40		115
Net cash used in financing activities	(3,775)		(3,400)
Change in cash and cash equivalents	112		33
Effect of exchange rate changes on cash and cash equivalents	(8)		(29)
Cash and cash equivalents at beginning of period	1,778		3,595
Cash and cash equivalents at end of period	$	1,882	$	3,599