The Home Depot Announces Second Quarter Results; Updates Fiscal Year 2011 Guidance

Aug 16, 2011, 06:00 ET from The Home Depot

ATLANTA, Aug. 16, 2011 /PRNewswire/ -- The Home Depot®, the world's largest home improvement retailer, today reported second quarter of fiscal 2011 net earnings of $1.4 billion, or $0.86 per diluted share, compared with net earnings of $1.2 billion, or $0.72 per diluted share, in the same period of fiscal 2010. For the second quarter of fiscal 2011, diluted earnings per share increased 19.4 percent from the prior year.  

(Logo:  http://photos.prnewswire.com/prnh/20030502/HOMEDEPOTLOGO )

Sales for the second quarter totaled $20.2 billion, a 4.2 percent increase from the second quarter of fiscal 2010. Comparable store sales for the second quarter were positive 4.3 percent, and comp sales for U.S. stores were positive 3.5 percent.

“Our second-quarter results were driven by a rebound in our seasonal business, storm-related repairs and strength in our core categories,” said Frank Blake, chairman & CEO. “We continue to deliver a strong operating performance while also investing in customer service and our merchandising initiatives. I would like to thank our associates for their hard work and dedication. It is their efforts that enabled us to deliver these results.”

Updated Fiscal 2011 Guidance

The Company confirmed that it expects fiscal 2011 sales will be up approximately 2.5 percent from fiscal 2010. Based on its year-to-date performance and outlook for the balance of the year, the Company raised its fiscal 2011 diluted earnings-per-share guidance and now expects diluted earnings-per-share from continuing operations to be up approximately 16 percent to $2.34 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.

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 2,245 retail stores in all 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, 10 Canadian provinces, Mexico and China. 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, 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 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 and the timing of its completion, the ability to issue debt on terms and at rates acceptable to us, store openings and closures, expense leverage, fiscal 2011 guidance 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 January 30, 2011, and in Part II, Item 1A, "Risk Factors" and elsewhere in our Quarterly Report on Form 10-Q for the fiscal quarter ended May 1, 2011.

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 MONTHS AND SIX MONTHS ENDED JULY 31, 2011 AND AUGUST 1, 2010

(Unaudited)

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

Three Months Ended

% Increase

Six Months Ended

% Increase

7-31-11

8-1-10

(Decrease)

7-31-11

8-1-10

(Decrease)

NET SALES

$ 20,232

$ 19,410

4.2

%

$ 37,055

$ 36,273

2.2

%

Cost of Sales

13,356

12,828

4.1

24,351

23,897

1.9

 GROSS PROFIT

6,876

6,582

4.5

12,704

12,376

2.7

Operating Expenses:

  Selling, General and Administrative

4,186

4,127

1.4

8,195

8,205

(0.1)

  Depreciation and Amortization

396

406

(2.5)

793

817

(2.9)

    Total Operating Expenses

4,582

4,533

1.1

8,988

9,022

(0.4)

 OPERATING INCOME

2,294

2,049

12.0

3,716

3,354

10.8

Interest and Other (Income) Expense:

 Interest and Investment Income

(3)

(3)

-

(5)

(7)

(28.6)

 Interest Expense

149

151

(1.3)

290

293

(1.0)

 Other

-

-

-

-

51

(100.0)

    Interest and Other, net

146

148

(1.4)

285

337

(15.4)

EARNINGS BEFORE PROVISION FOR INCOME TAXES

2,148

1,901

13.0

3,431

3,017

13.7

Provision for Income Taxes

785

709

10.7

1,256

1,100

14.2

 NET EARNINGS

$   1,363

$   1,192

14.3

%

$   2,175

$   1,917

13.5

%

Weighted Average Common Shares

1,568

1,653

(5.1)

%

1,585

1,666

(4.9)

%

BASIC EARNINGS PER SHARE

$     0.87

$     0.72

20.8

$     1.37

$     1.15

19.1

Diluted Weighted Average Common Shares

1,577

1,663

(5.2)

%

1,595

1,676

(4.8)

%

DILUTED EARNINGS PER SHARE

$     0.86

$     0.72

19.4

$     1.36

$     1.14

19.3

SELECTED HIGHLIGHTS

Three Months Ended

% Increase

Six Months Ended

% Increase

7-31-11

8-1-10

(Decrease)

7-31-11

8-1-10

(Decrease)

Number of Customer Transactions

373

369

1.1

%

689

692

(0.4)

%

Average Ticket (actual)

$   54.04

$   52.30

3.3

$   53.72

$   52.41

2.5

Weighted Average Weekly Sales

   per Operating Store (in thousands)

$      690

$      662

4.2

$      634

$      621

2.1

Square Footage at End of Period

235

235

-

235

235

-

Capital Expenditures

$      270

$      240

12.5

$      469

$      407

15.2

Depreciation and Amortization (1)

$      425

$      428

(0.7)

%

$      849

$      866

(2.0)

%

(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 BALANCE SHEETS

AS OF JULY 31, 2011, AUGUST 1, 2010 AND JANUARY 30, 2011

(Unaudited)

(Amounts in Millions)

7-31-11

8-1-10

1-30-11

ASSETS

  Cash and Cash Equivalents

$   2,551

$   2,395

$      545

  Receivables, net

1,332

1,218

1,085

  Merchandise Inventories  

10,756

10,759

10,625

  Other Current Assets

1,218

1,385

1,224

     Total Current Assets

15,857

15,757

13,479

  Property and Equipment, net

24,798

25,190

25,060

  Goodwill

1,177

1,187

1,187

  Other Assets

445

401

399

     TOTAL ASSETS

$ 42,277

$ 42,535

$ 40,125

LIABILITIES AND STOCKHOLDERS' EQUITY

  Accounts Payable

$   5,890

$   5,919

$   4,717

  Accrued Salaries and Related Expenses

1,262

1,226

1,290

  Current Installments of Long-Term Debt

44

2,022

1,042

  Other Current Liabilities

3,751

3,572

3,073

     Total Current Liabilities

10,947

12,739

10,122

  Long-Term Debt

10,731

7,727

8,707

  Other Long-Term Liabilities

2,366

2,624

2,407

     Total Liabilities

24,044

23,090

21,236

  Total Stockholders' Equity  

18,233

19,445

18,889

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$ 42,277

$ 42,535

$ 40,125

THE HOME DEPOT, INC. AND SUBSIDIARIES  

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JULY 31, 2011 AND AUGUST 1, 2010

(Unaudited)

(Amounts in Millions)

Six Months Ended

7-31-11

8-1-10

CASH FLOWS FROM OPERATING ACTIVITIES:

Net Earnings

$ 2,175

$ 1,917

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

    Depreciation and Amortization  

849

866

    Stock-Based Compensation Expense

108

112

    Changes in Working Capital and Other

1,355

468

    Net Cash Provided by Operating Activities

4,487

3,363

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital Expenditures

(469)

(407)

Other

27

44

    Net Cash Used in Investing Activities

(442)

(363)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from Long-Term Borrowings, net of discount

1,994

-

Repayments of Long-Term Debt

(1,014)

(17)

Repurchases of Common Stock

(2,251)

(1,209)

Cash Dividends Paid to Stockholders

(798)

(793)

Other

29

(11)

   Net Cash Used in Financing Activities

(2,040)

(2,030)

Change in Cash and Cash Equivalents

2,005

970

Effect of Exchange Rate Changes on Cash and Cash Equivalents

1

4

Cash and Cash Equivalents at the Beginning of the Period

545

1,421

Cash and Cash Equivalents at the End of the Period

$ 2,551

$ 2,395

SOURCE The Home Depot



RELATED LINKS

http://www.homedepot.com