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The Home Depot Announces Third Quarter Results; Reaffirms Fiscal Year 2014 Guidance
  

ATLANTA, Nov. 18, 2014 /PRNewswire/ -- The Home Depot®, the world's largest home improvement retailer, today reported sales of $20.5 billion for the third quarter of fiscal 2014, a 5.4 percent increase from the third quarter of fiscal 2013. Comparable store sales for the third quarter of fiscal 2014 were positive 5.2 percent, and comp sales for U.S. stores were positive 5.8 percent.

Net earnings for the third quarter were $1.5 billion, or $1.15 per diluted share, compared with net earnings of $1.4 billion, or $0.95 per diluted share, for the same period of fiscal 2013. For the third quarter of fiscal 2014, diluted earnings per share increased 21.1 percent from the same period in the prior year.

Third quarter of fiscal 2014 results reflect a pretax gain on sale of $100 million related to the sale of a portion of the Company's equity ownership in HD Supply Holdings, Inc. and pretax net expenses of $28 million related to the Company's data breach.

"During the quarter we saw strong performance across all geographies led by growth in transactions and continued strength in the core of the store," said Craig Menear, CEO and president. "I would like to thank our associates for their hard work and dedication to our customers, and I would like to thank our customers for their continued confidence in The Home Depot."

Reaffirmed Fiscal 2014 Guidance

The Company confirmed that it expects fiscal 2014 sales growth of approximately 4.8 percent. The Company also confirmed that it expects fiscal 2014 diluted earnings per share to grow by 21 percent to approximately $4.54. This earnings-per-share guidance includes the benefit of the Company's year-to-date share repurchases of $5.74 billion and the Company's intent to repurchase an additional $1.26 billion of shares in the fourth quarter. The earnings-per-share guidance also includes an estimate of net breach-related costs of approximately $34 million for the year.

The Company's fiscal 2014 diluted earnings-per-share guidance does not include an accrual for other probable losses related to the breach that cannot be estimated at this time. Other than the breach-related costs contained in the Company's updated fiscal 2014 diluted earnings-per-share guidance, at this time the Company is not able to estimate the costs, or a range of costs, related to the breach. Costs related to the breach may include liabilities to payment card networks for reimbursements of credit card fraud and card reissuance costs; liabilities related to the Company's private label credit card fraud and card reissuance; liabilities from current and future civil litigation, governmental investigations and enforcement proceedings; future expenses for legal, investigative and consulting fees; and incremental expenses and capital investments for remediation activities. Those costs may have a material adverse effect on the Company's financial results in the fourth quarter of fiscal 2014 and/or future periods.

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 2,266 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 related to our recent data breach; 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 2014 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 8.01 of our Current Report on Form 8-K filed November 18, 2014.

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. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 2, 2014 AND NOVEMBER 3, 2013

(Unaudited)

(Amounts in Millions Except Per Share Data and as Otherwise Noted)












Three Months Ended





Nine Months Ended





November 2,
2014


November 3,
2013


% Increase

(Decrease)


November 2,
2014


November 3,
2013


% Increase
(Decrease)

NET SALES

$

20,516



$

19,470



5.4

%


$

64,014



$

61,116



4.7

%

Cost of Sales

13,331



12,672



5.2



41,783



39,918



4.7


GROSS PROFIT

7,185



6,798



5.7



22,231



21,198



4.9


Operating Expenses:


















Selling, General and Administrative

4,217



4,096



3.0



12,709



12,573



1.1


Depreciation and Amortization

415



409



1.5



1,244



1,220



2.0


Total Operating Expenses

4,632



4,505



2.8



13,953



13,793



1.2


OPERATING INCOME

2,553



2,293



11.3



8,278



7,405



11.8


Interest and Other (Income) Expense:


















Interest and Investment Income

(105)



(3)



N/M



(222)



(8)



N/M


Interest Expense

218



191



14.1



617



529



16.6


Interest and Other, net

113



188



(39.9)



395



521



(24.2)


EARNINGS BEFORE PROVISION FOR

INCOME TAXES

2,440



2,105



15.9



7,883



6,884



14.5


Provision for Income Taxes

903



754



19.8



2,917



2,512



16.1




















NET EARNINGS

$

1,537



$

1,351



13.8

%


$

4,966



$

4,372



13.6

%



















Weighted Average Common Shares

1,327



1,408



(5.8)

%


1,348



1,438



(6.3)

%

BASIC EARNINGS PER SHARE

$

1.16



$

0.96



20.8



$

3.68



$

3.04



21.1




















Diluted Weighted Average Common Shares

1,334



1,417



(5.9)

%


1,356



1,448



(6.4)

%

DILUTED EARNINGS PER SHARE

$

1.15



$

0.95



21.1



$

3.66



$

3.02



21.2





















Three Months Ended





Nine Months Ended




SELECTED HIGHLIGHTS

November 2,
2014


November 3,
2013


% Increase

(Decrease)


November 2,
2014


November 3,
2013


% Increase

(Decrease)

Number of Customer Transactions

355.4



344.3



3.2

%


1,109.5



1,074.6



3.3

%

Average Ticket (actual)

$

57.55



$

56.27



2.3



$

57.90



$

56.99



1.6


Sales per Square Foot (actual)

$

347.79



$

328.69



5.8



$

361.73



$

346.64



4.4
























N/M – Not Meaningful






















 

THE HOME DEPOT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF NOVEMBER 2, 2014, NOVEMBER 3, 2013 AND FEBRUARY 2, 2014

(Unaudited)

(Amounts in Millions)








November 2,
2014


November 3,
2013


February 2,
2014

ASSETS









Cash and Cash Equivalents

$

2,181



$

4,853



$

1,929


Receivables, net

1,611



1,606



1,398


Merchandise Inventories

12,008



11,348



11,057


Other Current Assets

949



791



895


Total Current Assets

16,749



18,598



15,279


Property and Equipment, net

22,940



23,557



23,348


Goodwill

1,283



1,172



1,289


Other Assets

540



487



602


TOTAL ASSETS

$

41,512



$

43,814



$

40,518











LIABILITIES AND STOCKHOLDERS' EQUITY









Accounts Payable

$

6,897



$

6,366



$

5,797


Accrued Salaries and Related Expenses

1,303



1,315



1,428


Current Installments of Long-Term Debt

34



1,317



33


Other Current Liabilities

4,026



3,531



3,491


Total Current Liabilities

12,260



12,529



10,749


Long-Term Debt, excluding current installments

16,693



14,692



14,691


Other Long-Term Liabilities

2,449



2,379



2,556


Total Liabilities

31,402



29,600



27,996


Total Stockholders' Equity

10,110



14,214



12,522


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

41,512



$

43,814



$

40,518


 

 

THE HOME DEPOT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED NOVEMBER 2, 2014 AND NOVEMBER 3, 2013

(Unaudited)

(Amounts in Millions)

 


Nine Months Ended


November 2,
 2014


November 3,
 2013

CASH FLOWS FROM OPERATING ACTIVITIES:






Net Earnings

$

4,966



$

4,372


Reconciliation of Net Earnings to Net Cash Provided by Operating Activities:






Depreciation and Amortization

1,345



1,317


Stock-Based Compensation Expense

174



169


Changes in Working Capital and Other

(238)



123


Net Cash Provided by Operating Activities

6,247



5,981


CASH FLOWS FROM INVESTING ACTIVITIES:






Capital Expenditures

(999)



(964)


Proceeds from Sales of Investments

212




Payments for Businesses Acquired, net



(15)


Proceeds from Sales of Property and Equipment

20



34


Net Cash Used in Investing Activities

(767)



(945)


CASH FLOWS FROM FINANCING ACTIVITIES:






Proceeds from Long-Term Borrowings, net of discount

1,981



5,222


Repayments of Long-Term Debt

(30)



(25)


Repurchases of Common Stock

(5,578)



(6,446)


Proceeds from Sales of Common Stock

178



164


Cash Dividends Paid to Stockholders

(1,912)



(1,699)


Other Financing Activities

150



104


Net Cash Used in Financing Activities

(5,211)



(2,680)


 

Change in Cash and Cash Equivalents

 

269



2,356


Effect of Exchange Rate Changes on Cash and Cash Equivalents

(17)



3


Cash and Cash Equivalents at Beginning of Period

1,929



2,494


 

Cash and Cash Equivalents at End of Period

$

2,181



$

4,853


 

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SOURCE The Home Depot