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The Home Depot Announces Positive First Quarter Results

Staff Report From Georgia CEO

Tuesday, May 17th, 2016

The Home Depot, the world's largest home improvement retailer, today reported sales of $22.8 billion for the first quarter of fiscal 2016, a 9.0 percent increase from the first quarter of fiscal 2015. Comparable store sales for the first quarter of fiscal 2016 were positive 6.5 percent, and comp sales for U.S. stores were positive 7.4 percent.

Net earnings for the first quarter of fiscal 2016 were $1.8 billion, or $1.44 per diluted share, compared with net earnings of $1.6 billion, or $1.21 per diluted share, in the same period of fiscal 2015. For the first quarter of fiscal 2016, diluted earnings per share increased 19.0 percent from the same period in the prior year. 

"We were pleased with our stronger than expected start to the year, driven by solid execution and broad-based growth across the store," said Craig Menear, chairman, CEO and president. "This was made possible by our hard working associates and their continued dedication to our customers in a quarter marked by week-to-week demand spikes caused by weather variability."

Updated Fiscal 2016 Guidance

The Company raised its fiscal 2016 sales guidance and now expects sales will be up approximately 6.3 percent and comp sales will be up approximately 4.9 percent. The Company also raised its diluted earnings-per-share guidance for the year and now expects diluted earnings per share to grow approximately 14.8 percent from fiscal 2015 to $6.27.

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 first quarter, the Company operated a total of 2,275 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 385,000 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.

THE HOME DEPOT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

FOR THE THREE MONTHS ENDED MAY 1, 2016 AND MAY 3, 2015 

(Unaudited)

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

Three Months Ended

    
 

May 1,
2016

  

May 3,
 2015

  

% Increase

(Decrease)

NET SALES

$

22,762

    

$

20,891

    

9.0

%

Cost of Sales

14,971

    

13,712

    

9.2

  

GROSS PROFIT

7,791

    

7,179

    

8.5

  

 

Operating Expenses:

          

Selling, General and Administrative

4,281

    

4,163

    

2.8

  

Depreciation and Amortization

433

    

419

    

3.3

  

Total Operating Expenses

4,714

    

4,582

    

2.9

  

OPERATING INCOME

3,077

    

2,597

    

18.5

  

Interest and Other (Income) Expense:

          

Interest and Investment Income

(7)

    

(4)

    

75.0

  

Interest Expense

244

    

197

    

23.9

  

Interest and Other, net

237

    

193

    

22.8

  

 

EARNINGS BEFORE PROVISION FOR

INCOME TAXES

2,840

    

2,404

    

18.1

  

Provision for Income Taxes

1,037

    

825

    

25.7

  
           

NET EARNINGS

$

1,803

    

$

1,579

    

14.2

%
           

Weighted Average Common Shares

1,247

    

1,298

    

(3.9)

%

BASIC EARNINGS PER SHARE

$

1.45

    

$

1.22

    

18.9

  
           

Diluted Weighted Average Common Shares

1,252

    

1,305

    

(4.1)

%

DILUTED EARNINGS PER SHARE

$

1.44

    

$

1.21

    

19.0

  
           
 

Three Months Ended

    

SELECTED SALES DATA(1)

May 1,
2016

  

May 3,
 2015

  

% Increase

(Decrease)

Number of Customer Transactions

374.8

    

360.2

    

4.1

%

Average Ticket (actual)

$

60.03

    

$

58.60

    

2.4

  

Sales per Square Foot (actual)

$

376.73

    

$

353.70

    

6.5

  
   

(1)

Selected Sales Data does not include results for the Interline acquisition that was completed in the third quarter of fiscal 2015. 

THE HOME DEPOT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF MAY 1, 2016, MAY 3, 2015 AND JANUARY 31, 2016 

(Unaudited)

(Amounts in Millions)
           
 

May 1,
2016

  

May 3,

2015(1)

  

January 31,

2016 (1)

ASSETS

          

Cash and Cash Equivalents

$

3,257

    

$

2,827

    

$

2,216

  

Receivables, net

1,989

    

1,839

    

1,890

  

Merchandise Inventories

13,219

    

12,306

    

11,809

  

Other Current Assets

545

    

520

    

569

  

Total Current Assets

19,010

    

17,492

    

16,484

  

 

Property and Equipment, net

22,243

    

22,562

    

22,191

  

Goodwill

2,123

    

1,359

    

2,102

  

Other Assets

1,200

    

544

    

1,196

  

TOTAL ASSETS

$

44,576

    

$

41,957

    

$

41,973

  
           

LIABILITIES AND STOCKHOLDERS' EQUITY

          

Short-Term Debt

$

—

    

$

—

    

$

350

  

Accounts Payable

8,711

    

8,070

    

6,565

  

Accrued Salaries and Related Expenses

1,339

    

1,283

    

1,515

  

Current Installments of Long-Term Debt

44

    

3,052

    

77

  

Other Current Liabilities

5,055

    

4,597

    

4,017

  

Total Current Liabilities

15,149

    

17,002

    

12,524

  

 

Long-Term Debt, excluding current installments

20,904

    

13,738

    

20,789

  

Other Long-Term Liabilities

2,188

    

2,013

    

2,344

  

Total Liabilities

38,241

    

32,753

    

35,657

  

 

Total Stockholders' Equity

6,335

    

9,204

    

6,316

  

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

44,576

    

$

41,957

    

$

41,973

  
   

(1)

The Consolidated Balance Sheets as of May 3, 2015 and January 31, 2016 were retrospectively adjusted to reflect the adoption of Accounting Standards Update ("ASU") No. 2015-03, "Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs" and ASU No. 2015-17, "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes" in the first quarter of fiscal 2016.

THE HOME DEPOT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MAY 1, 2016 AND MAY 3, 2015 

(Unaudited)

(Amounts in Millions)
   
 

Three Months Ended
 

May 1,
2016

  

May 3,
 2015

CASH FLOWS FROM OPERATING ACTIVITIES:

      

Net Earnings

$

1,803

    

$

1,579

  

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

      

Depreciation and Amortization

486

    

454

  

Stock-Based Compensation Expense

72

    

69

  

Changes in Working Capital and Other

1,275

    

1,302

  

Net Cash Provided by Operating Activities

3,636

    

3,404

  

 

CASH FLOWS FROM INVESTING ACTIVITIES:

      

Capital Expenditures

(325)

    

(322)

  

Proceeds from Sales of Property and Equipment

4

    

5

  

Net Cash Used in Investing Activities

(321)

    

(317)

  

 

CASH FLOWS FROM FINANCING ACTIVITIES:

      

Repayments of Short-Term Borrowings, net

(350)

    

(290)

  

Proceeds from Long-Term Borrowings, net of discounts

2,989

    

—

  

Repayments of Long-Term Debt

(3,012)

    

(10)

  

Repurchases of Common Stock

(1,157)

    

(1,125)

  

Proceeds from Sales of Common Stock

29

    

47

  

Cash Dividends Paid to Stockholders

(862)

    

(769)

  

Other Financing Activities

25

    

146

  

Net Cash Used in Financing Activities

(2,338)

    

(2,001)

  

Change in Cash and Cash Equivalents

977

    

1,086

  

Effect of Exchange Rate Changes on Cash and Cash Equivalents

64

    

18

  

Cash and Cash Equivalents at Beginning of Period

2,216

    

1,723

  

Cash and Cash Equivalents at End of Period

$

3,257

    

$

2,827