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The Home Depot Announces Second Quarter Results; Updates Fiscal Year 2014 Guidance

ATLANTA, Aug. 19, 2014 /PRNewswire/ -- The Home Depot®, the world's largest home improvement retailer, today reported sales of $23.8 billion for the second quarter of fiscal 2014, a 5.7 percent increase from the second quarter of fiscal 2013. Comparable store sales for the second quarter of fiscal 2014 were positive 5.8 percent, and comp sales for U.S. stores were positive 6.4 percent.

Net earnings for the second quarter were $2.1 billion, or $1.52 per diluted share, compared with net earnings of $1.8 billion, or $1.24 per diluted share, in the same period of fiscal 2013. For the second quarter of fiscal 2014, diluted earnings per share increased 22.6 percent from the same period in the prior year.

"In the second quarter, our spring seasonal business rebounded, and we saw strong performance in the core of the store and across all of our geographies," said Frank Blake, chairman and CEO. "I would like to thank our associates for their hard work and dedication, especially at this time of increased demand."

Updated Fiscal 2014 Guidance

The Company confirmed that it expects fiscal 2014 sales will be up approximately 4.8 percent from fiscal 2013. Based on its second quarter performance and its outlook for the year, the Company raised its fiscal 2014 diluted earnings-per-share guidance and now expects diluted earnings per share to be up approximately 20.2 percent to $4.52 for the year. This earnings-per-share guidance includes the benefit of the Company's year-to-date share repurchases of $3.5 billion and the Company's intent to repurchase an additional $3.5 billion of shares over the remainder of the year.

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 2,264 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; inventory and in-stock positions; implementation of store, interconnected retail and supply chain initiatives; management of relationships with our 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 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 1A, "Risk Factors," and elsewhere in our Annual Report on Form 10-K for our fiscal year ended February 2, 2014 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. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

FOR THE THREE AND SIX MONTHS ENDED AUGUST 3, 2014 AND AUGUST 4, 2013

(Unaudited)

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












Three Months Ended





Six Months Ended





August 3,
 2014


August 4,
 2013


% Increase

(Decrease)


August 3,

2014


August 4,

2013


% Increase
(Decrease)

NET SALES

$

23,811



$

22,522



5.7

%


$

43,498



$

41,646



4.4

%

Cost of Sales

15,650



14,801



5.7



28,452



27,246



4.4


GROSS PROFIT

8,161



7,721



5.7



15,046



14,400



4.5


 

Operating Expenses:


















Selling, General and Administrative

4,298



4,294



0.1



8,492



8,477



0.2


Depreciation and Amortization

415



409



1.5



829



811



2.2


Total Operating Expenses

4,713



4,703



0.2



9,321



9,288



0.4


OPERATING INCOME

3,448



3,018



14.2



5,725



5,112



12.0


Interest and Other (Income) Expense:


















Interest and Investment Income

(17)



(2)



N/M



(117)



(5)



N/M


Interest Expense

208



174



19.5



399



338



18.0


Interest and Other, net

191



172



11.0



282



333



(15.3)


EARNINGS BEFORE PROVISION FOR

INCOME TAXES

3,257



2,846



14.4



5,443



4,779



13.9


Provision for Income Taxes

1,207



1,051



14.8



2,014



1,758



14.6




















NET EARNINGS

$

2,050



$

1,795



14.2

%


$

3,429



$

3,021



13.5

%



















Weighted Average Common Shares

1,346



1,434



(6.1)

%


1,358



1,452



(6.5)

%

BASIC EARNINGS PER SHARE

$

1.52



$

1.25



21.6



$

2.53



$

2.08



21.6




















Diluted Weighted Average Common Shares

1,353



1,443



(6.2)

%


1,365



1,462



(6.6)

%

DILUTED EARNINGS PER SHARE

$

1.52



$

1.24



22.6



$

2.51



$

2.07



21.3





















Three Months Ended





Six Months Ended




SELECTED HIGHLIGHTS

August 3,
 2014


August 4,
 2013


% Increase

(Decrease)


August 3,

2014


August 4,

2013


% Increase

(Decrease)

Number of Customer Transactions

409.7



393.2



4.2

%


754.2



730.3



3.3

%

Average Ticket (actual)

$

58.43



$

57.39



1.8



$

58.05



$

57.32



1.3


Sales per Square Foot (actual)

$

403.90



$

382.99



5.5



$

368.92



$

355.56



3.8


N/M – Not Meaningful

 

 


THE HOME DEPOT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF AUGUST 3, 2014, AUGUST 4, 2013 AND FEBRUARY 2, 2014

(Unaudited)

(Amounts in Millions)








August 3,
 2014


August 4,
 2013


February 2,
 2014

ASSETS









Cash and Cash Equivalents

$

4,216



$

3,419



$

1,929


Receivables, net

1,637



1,542



1,398


Merchandise Inventories

11,665



11,086



11,057


Other Current Assets

973



848



895


Total Current Assets

18,491



16,895



15,279


 

Property and Equipment, net

23,126



23,650



23,348


Goodwill

1,295



1,170



1,289


Other Assets

567



477



602


TOTAL ASSETS

$

43,479



$

42,192



$

40,518











LIABILITIES AND STOCKHOLDERS' EQUITY









Accounts Payable

$

7,165



$

6,585



$

5,797


Accrued Salaries and Related Expenses

1,325



1,423



1,428


Current Installments of Long-Term Debt

34



1,308



33


Other Current Liabilities

4,315



3,679



3,491


Total Current Liabilities

12,839



12,995



10,749


 

Long-Term Debt, excluding current installments

16,702



11,450



14,691


Other Long-Term Liabilities

2,481



2,269



2,556


Total Liabilities

32,022



26,714



27,996


 

Total Stockholders' Equity

11,457



15,478



12,522


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

43,479



$

42,192



$

40,518


 

 

THE HOME DEPOT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED AUGUST 3, 2014 AND AUGUST 4, 2013

(Unaudited)

(Amounts in Millions)




Six Months Ended


August 3,
 2014


August 4,
 2013

CASH FLOWS FROM OPERATING ACTIVITIES:






Net Earnings

$

3,429



$

3,021


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






Depreciation and Amortization

896



877


Stock-Based Compensation Expense

119



116


Changes in Working Capital and Other

953



704


Net Cash Provided by Operating Activities

5,397



4,718


CASH FLOWS FROM INVESTING ACTIVITIES:






Capital Expenditures

(631)



(599)


Payments for Business Acquired, net



(13)


Proceeds from Sales of Property and Equipment

16



16


Net Cash Used in Investing Activities

(615)



(596)


CASH FLOWS FROM FINANCING ACTIVITIES:






Proceeds from Long-Term Borrowings, net of discount

1,981



1,994


Repayments of Long-Term Debt

(21)



(17)


Repurchases of Common Stock

(3,500)



(4,346)


Proceeds from Sales of Common Stock

148



150


Cash Dividends Paid to Stockholders

(1,285)



(1,143)


Other Financing Activities

181



154


Net Cash Used in Financing Activities

(2,496)



(3,208)


 

Change in Cash and Cash Equivalents

 

2,286



914


Effect of Exchange Rate Changes on Cash and Cash Equivalents

1



11


Cash and Cash Equivalents at Beginning of Period

1,929



2,494


 

Cash and Cash Equivalents at End of Period

$

4,216



$

3,419


 

 

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SOURCE The Home Depot

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