The Home Depot Announces Third Quarter Results; Updates Fiscal Year 2010
Guidance
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<p><span class="xn-location">ATLANTA</span> <span class="xn-chron">Nov. 16, 2010</span> /CNW/ -- The Home Depot® (NYSE: HD), the world's largest home improvement retailer, today reported third quarter of fiscal 2010 net earnings of <span class="xn-money">$834 million</span>, or <span class="xn-money">$0.51</span> per diluted share, compared with net earnings of <span class="xn-money">$689 million</span>, or <span class="xn-money">$0.41</span> per diluted share, in the same period of fiscal 2009.</p>
<p/>
<p>Sales for the third quarter totaled <span class="xn-money">$16.6 billion</span>, a 1.4 percent increase from the third quarter of fiscal 2009. Comparable store sales for the third quarter of fiscal 2010 were positive 1.4 percent, and comp sales for U.S. stores were positive 1.5 percent.</p>
<p/>
<p>"Our third quarter sales reflect the fourth consecutive quarter of positive same store sales for our business. As the business stabilizes, we continue to improve our operational performance. We are exercising good control over our expenses but we're also investing in the business to drive improvements across customer service, merchandising and our supply chain," said <span class="xn-person">Frank Blake</span>, chairman & CEO. "I want to thank our associates for their hard work and dedication."</p>
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Updated Fiscal 2010 Guidance
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<p>Based on its year-to-date performance and expectations for the remainder of the fiscal year, the Company updated its fiscal 2010 guidance and now expects sales to be up approximately 2.2 percent for the year. The Company expects diluted earnings per share from continuing operations as reported to increase by approximately 25 percent to <span class="xn-money">$1.94</span> for the year. This earnings per share guidance includes the benefit of the Company's year-to-date share repurchases, but excludes the impact of future share repurchases.</p>
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<p>On <span class="xn-chron">December 8</span> at <span class="xn-chron">9 a.m. ET</span>, the Company will hold its Investor and Analyst Conference to update the investment community on key areas of the business. All presentations will be webcast live at <a href="http://ir.homedepot.com">http://ir.homedepot.com</a> in the Events & Presentations section.</p>
<p/>
<p>The Home Depot will conduct a conference call today at <span class="xn-chron">9 a.m. ET</span> 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.</p>
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<p>At the end of the third quarter, the Company operated a total of 2,244 retail stores, which included 1,976 The Home Depot stores in the <span class="xn-location">United States</span> (including the Commonwealth of <span class="xn-location">Puerto Rico</span>, the territory of the <span class="xn-location">U.S. Virgin Islands</span> and the territory of <span class="xn-location">Guam</span>), 179 stores in <span class="xn-location">Canada</span>, 80 stores in <span class="xn-location">Mexico</span> and 9 stores in <span class="xn-location">China</span>. 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.</p>
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<p>To provide clarity, internally and externally, about the Company's operating performance for recently completed fiscal periods, the Company supplemented its reporting with non-GAAP financial measures to reflect the impact of the store rationalization charges, business rationalization charges, related restructuring charges and the charge related to the extension of the Company's guarantee of a third party senior secured loan. 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. 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 corresponding GAAP measures can be found attached to this press release and at earnings.homedepot.com.</p>
<p/>
<p>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, commodity price inflation and deflation, implementation of store initiatives, continuation of reinvestment plans, net earnings performance, earnings per share, stock-based compensation expense, capital allocation and expenditures, liquidity, the effect of adopting certain accounting standards, return on invested capital, management of our purchasing or customer credit policies, the effect of accounting charges, the planned recapitalization of the Company, timing of the completion of the recapitalization, the ability to issue debt securities on terms and at rates acceptable to us, store openings and closures and financial outlook. Forward-looking statements are based on currently available information and our current assumptions, expectations and projections about future events. You are cautioned not to place undue reliance 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 <span class="xn-chron">January 31, 2010</span>, and in Part II, Item 1A, "Risk Factors" and elsewhere in our Quarterly Report on Form 10-Q for the fiscal quarter ended <span class="xn-chron">August 1, 2010</span>.</p>
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<p>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.</p>
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<p> </p>
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THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 31, 2010 AND
NOVEMBER 1, 2009
(Unaudited)
(Amounts in Millions Except Per Share Data and as Otherwise Noted)
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<p> </p>
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Three Months
Ended % Increase
10-31-10 11-1-09 (Decrease)
-------- ------- ----------
NET SALES $16,598 $16,361 1.4%
Cost of Sales 10,913 10,800 1.0
------ ------
GROSS PROFIT 5,685 5,561 2.2
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<p> </p>
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Operating
Expenses:
Selling, General
and
Administrative 3,837 3,870 (0.9)
Depreciation and
Amortization 400 428 (6.5)
--- ---
Total Operating
Expenses 4,237 4,298 (1.4)
----- -----
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<p> </p>
<p> OPERATING INCOME 1,448 1,263 14.6</p>
<p> </p>
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Interest and
Other (Income)
Expense:
Interest and
Investment
Income (4) (4) -
Interest Expense 146 168 (13.1)
Other - - -
--- ---
Interest and
Other, net 142 164 (13.4)
--- ---
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<p> </p>
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EARNINGS BEFORE
PROVISION FOR
INCOME TAXES 1,306 1,099 18.8
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<p> </p>
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Provision for
Income Taxes 472 410 15.1
--- ---
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<p> </p>
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NET EARNINGS $834 $689 21.0%
==== ====
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<p> </p>
<p> </p>
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Weighted Average
Common Shares 1,637 1,682 (2.7)%
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<p> </p>
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BASIC EARNINGS
PER SHARE $0.51 $0.41 24.4
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<p> </p>
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Diluted Weighted
Average Common
Shares 1,646 1,693 (2.8)%
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<p> </p>
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DILUTED EARNINGS
PER SHARE $0.51 $0.41 24.4
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<p> </p>
<p> </p>
<p> </p>
<p> </p>
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SELECTED Three Months
HIGHLIGHTS Ended % Increase
-----------
10-31-10 11-1-09 (Decrease)
-------- ------- ----------
Number of
Customer
Transactions 322 314 2.5%
Average Ticket
(actual) $51.47 $51.89 (0.8)
Weighted Average
Weekly Sales
per Operating
Store (in
thousands) $567 $558 1.6
Square Footage at
End of Period 235 235 -
Capital
Expenditures $282 $215 31.2
Depreciation and
Amortization (1) $426 $453 (6.0)%
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<p> </p>
<p> </p>
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Nine Months %
Ended Increase
10-31-10 11-1-09 (Decrease)
-------- ------- ----------
NET SALES $52,871 $51,607 2.4%
Cost of Sales 34,810 34,208 1.8
------ ------
GROSS PROFIT 18,061 17,399 3.8
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<p> </p>
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Operating
Expenses:
Selling, General
and
Administrative 12,042 12,033 0.1
Depreciation and
Amortization 1,217 1,290 (5.7)
----- -----
Total Operating
Expenses 13,259 13,323 (0.5)
------ ------
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<p> </p>
<p> OPERATING INCOME 4,802 4,076 17.8</p>
<p> </p>
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Interest and
Other (Income)
Expense:
Interest and
Investment
Income (11) (15) (26.7)
Interest Expense 439 515 (14.8)
Other 51 - N/M
--- ---
Interest and
Other, net 479 500 (4.2)
--- ---
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<p> </p>
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EARNINGS BEFORE
PROVISION FOR
INCOME TAXES 4,323 3,576 20.9
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<p> </p>
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Provision for
Income Taxes 1,572 1,257 25.1
----- -----
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<p> </p>
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NET EARNINGS $2,751 $2,319 18.6%
====== ======
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<p> </p>
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Weighted Average
Common Shares 1,657 1,684 (1.6)%
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<p> </p>
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BASIC EARNINGS
PER SHARE $1.66 $1.38 20.3
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<p> </p>
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Diluted Weighted
Average Common
Shares 1,667 1,692 (1.5)%
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<p> </p>
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DILUTED EARNINGS
PER SHARE $1.65 $1.37 20.4
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<p> </p>
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<p> </p>
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SELECTED Nine Months %
HIGHLIGHTS Ended Increase
-----------
10-31-10 11-1-09 (Decrease)
-------- ------- ----------
Number of
Customer
Transactions 1,013 986 2.7%
Average Ticket
(actual) $52.11 $52.27 (0.3)
Weighted Average
Weekly Sales
per Operating
Store (in
thousands) $603 $586 2.9
Square Footage at
End of Period 235 235 -
Capital
Expenditures $689 $568 21.3
Depreciation and
Amortization (1) $1,292 $1,364 (5.3)%
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<p> </p>
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(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.
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<p> </p>
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N/M - Not Meaningful
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<p> </p>
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THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS ITEMS EXCLUDING CERTAIN
ADJUSTMENTS (NON-GAAP)
FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 31, 2010 AND
NOVEMBER 1, 2009
(Unaudited)
(Amounts in Millions Except Per Share Data)
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<p> </p>
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Three Months Ended 10-31-10
As
Actuals Adjustment Adjusted
------- ---------- --------
(Non-
GAAP)
-----
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<p> </p>
<p> Net Sales <span class="xn-money">$16,598</span> $- <span class="xn-money">$16,598</span></p>
<p> </p>
<p> Gross Profit 5,685 - 5,685</p>
<p> </p>
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Total
Operating
Expenses 4,237 - 4,237
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<p> </p>
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Operating
Income 1,448 - 1,448
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<p> </p>
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Interest and
Other, net 142 - 142
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<p> </p>
<p> Net Earnings <span class="xn-money">$834</span> $- <span class="xn-money">$834</span></p>
<p> </p>
<p> </p>
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Diluted
Earnings Per
Share $0.51 $- $0.51
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<p> </p>
<p> </p>
<p> </p>
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Three Months Ended 11-1-09
--------------------------
As
Actuals Adjustments(2) Adjusted
------- -------------- ---------
(Non-
GAAP)
-----
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<p> </p>
<p> Net Sales <span class="xn-money">$16,361</span> $- <span class="xn-money">$16,361</span></p>
<p> </p>
<p> Gross Profit 5,561 - 5,561</p>
<p> </p>
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Total
Operating
Expenses 4,298 9 4,289
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<p> </p>
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Operating
Income 1,263 (9) 1,272
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<p> </p>
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Interest and
Other, net 164 - 164
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<p> </p>
<p> Net Earnings <span class="xn-money">$689</span> $(6) <span class="xn-money">$695</span></p>
<p> </p>
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Diluted
Earnings Per
Share $0.41 $- $0.41
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<p> </p>
<p> </p>
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Nine Months Ended 10-31-10
As
Actuals Adjustment(1) Adjusted
------- ------------- --------
(Non-
GAAP)
-----
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<p> </p>
<p> Net Sales <span class="xn-money">$52,871</span> $- <span class="xn-money">$52,871</span></p>
<p> </p>
<p> Gross Profit 18,061 - 18,061</p>
<p> </p>
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Total
Operating
Expenses 13,259 - 13,259
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<p> </p>
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Operating
Income 4,802 - 4,802
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<p> </p>
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Interest and
Other, net 479 51 428
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<p> </p>
<p> Net Earnings <span class="xn-money">$2,751</span> $(33) <span class="xn-money">$2,784</span></p>
<p> </p>
<p> </p>
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Diluted
Earnings Per
Share $1.65 $(0.02) $1.67
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<p> </p>
<p> </p>
<p> </p>
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Nine Months Ended 11-1-09
-------------------------
As
Actuals Adjustments(2) Adjusted
------- -------------- ---------
(Non-
GAAP)
-----
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<p> </p>
<p> Net Sales <span class="xn-money">$51,607</span> <span class="xn-money">$221</span> <span class="xn-money">$51,386</span></p>
<p> </p>
<p> Gross Profit 17,399 28 17,371</p>
<p> </p>
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Total
Operating
Expenses 13,323 174 13,149
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<p> </p>
<pre>
Operating
Income 4,076 (146) 4,222
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<p> </p>
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Interest and
Other, net 500 - 500
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<p> </p>
<p> Net Earnings <span class="xn-money">$2,319</span> $(90) <span class="xn-money">$2,409</span></p>
<p> </p>
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Diluted
Earnings Per
Share $1.37 $(0.05) $1.42
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<p> </p>
<p> </p>
<p> </p>
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(1) Adjustment is comprised of a charge related to the extension of
the Company's guarantee of a third-party senior secured loan.
(2) Adjustments are comprised of store rationalization charges
related to the closing of 15 stores and the removal of 50 stores
from our future growth pipeline, business rationalization charges
related to the exit of EXPO, THD Design Center, Yardbirds and HD
Bath businesses, as well as net sales, gross profit and operating
expenses of those exited businesses during the period from closing
announcement to actual closing, and charges related to restructuring
of support functions.
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<p> </p>
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THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF OCTOBER 31, 2010, NOVEMBER 1, 2009 AND JANUARY 31, 2010
(Unaudited)
(Amounts in Millions)
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<p> </p>
<p> </p>
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10-31-10 11-1-09 1-31-10
-------- ------- -------
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<p> </p>
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ASSETS
Cash and Cash Equivalents $1,425 $2,719 $1,421
Receivables, net 1,295 1,188 964
Merchandise Inventories 10,993 10,817 10,188
Other Current Assets 1,363 1,175 1,327
Total Current Assets 15,076 15,899 13,900
------ ------ ------
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<p> </p>
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Property and Equipment, net 25,050 25,581 25,550
Goodwill 1,180 1,163 1,171
Other Assets 435 407 256
TOTAL ASSETS $41,741 $43,050 $40,877
======= ======= =======
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<p> </p>
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable $5,714 $5,829 $4,863
Accrued Salaries and Related Expenses 1,168 1,069 1,263
Current Installments of Long-Term Debt 1,023 1,769 1,020
Other Current Liabilities 3,455 3,788 3,217
Total Current Liabilities 11,360 12,455 10,363
------ ------ ------
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<p> </p>
<pre>
Long-Term Debt 8,752 8,656 8,662
Other Long-Term Liabilities 2,514 2,559 2,459
Total Liabilities 22,626 23,670 21,484
------ ------ ------
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<p> </p>
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Total Stockholders' Equity 19,115 19,380 19,393
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $41,741 $43,050 $40,877
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<p> </p>
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THE HOME DEPOT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED OCTOBER 31, 2010 AND NOVEMBER 1, 2009
(Unaudited)
(Amounts in Millions)
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<p> </p>
<p> </p>
<p> </p>
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Nine Months
Ended
10-31-10 11-1-09
-------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings $2,751 $2,319
Reconciliation of Net Earnings to Net Cash
Provided by Operating Activities:
Depreciation and Amortization 1,292 1,364
Stock-Based Compensation Expense 161 160
Changes in Working Capital and Other (218) 821
Net Cash Provided by Operating Activities 3,986 4,664
----- -----
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<p> </p>
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CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures (689) (568)
Other 65 183
Net Cash Used in Investing Activities (624) (385)
---- ----
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<p> </p>
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Long-Term Borrowings, net of
discount 998 -
Repayments of Long-Term Debt (1,023) (1,015)
Repurchases of Common Stock (1,974) (98)
Cash Dividends Paid to Stockholders (1,184) (1,144)
Other (183) 158
Net Cash Used in Financing Activities (3,366) (2,099)
------ ------
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<p> </p>
<p>(Decrease) Increase in Cash and Cash Equivalents (4) 2,180</p>
<p> </p>
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Effect of Exchange Rate Changes on Cash and Cash
Equivalents 8 20
Cash and Cash Equivalents at the Beginning of the
Period 1,421 519
----- ---
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<p> </p>
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Cash and Cash Equivalents at the End of the
Period $1,425 $2,719
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For further information: Financial Community: Diane Dayhoff, Vice President of Investor Relations, +1-770-384-2666, [email protected]; News Media: Ron DeFeo, Sr. Director, Corporate Communications, +1-770-384-3179, [email protected] Web Site: http://www.homedepot.com
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