HD
$202.45
Home Depot
($.18)
(.09%)
Earnings Details
1st Quarter April 2018
Tuesday, May 15, 2018 6:00:00 AM
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Summary

Home Depot Misses

Home Depot (HD) reported 1st Quarter April 2018 earnings of $2.08 per share on revenue of $24.9 billion. The consensus earnings estimate was $2.06 per share on revenue of $25.2 billion. The Earnings Whisper number was $2.11 per share. Revenue grew 4.4% on a year-over-year basis.

The company said it continues to expect fiscal year earnings of approximately $9.31 per share and now expects revenue of approximately $107.66 billion. The company's previous guidance was revenue of approximately $107.46 billion and the current consensus earnings estimate is $9.44 per share on revenue of $107.67 billion for the year ending January 31, 2019.

Home Depot, Inc., is a home improvement retailer. Its stores sell an assortment of building materials, home improvement and lawn and garden products and provide a number of services.

Results
Reported Earnings
$2.08
Earnings Whisper
$2.11
Consensus Estimate
$2.06
Reported Revenue
$24.95 Bil
Revenue Estimate
$25.23 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

The Home Depot Announces First Quarter Results; Reaffirms Fiscal Year 2018 Guidance

ATLANTA, May 15, 2018 /PRNewswire/ -- The Home Depot®, the world's largest home improvement retailer, today reported sales of $24.9 billion for the first quarter of fiscal 2018, a 4.4 percent increase from the first quarter of fiscal 2017. Comparable sales for the first quarter of fiscal 2018 were positive 4.2 percent, and comp sales in the U.S. were positive 3.9 percent.

The Home Depot logo. (PRNewsFoto/The Home Depot) (PRNewsFoto/)

Net earnings for the first quarter of fiscal 2018 were $2.4 billion, or $2.08 per diluted share, compared with net earnings of $2.0 billion, or $1.67 per diluted share, in the same period of fiscal 2017. For the first quarter of fiscal 2018, diluted earnings per share increased 24.6 percent from the same period in the prior year.

"We are pleased by the strength of our business despite a slow start to the spring selling season," said Craig Menear, chairman, CEO and president. "Outside of our seasonal business, we had solid results in all markets and categories and are seeing strong momentum in all lines of business during these first few weeks of May. These trends, as well as a favorable housing and macroeconomic backdrop, give us confidence to reaffirm our sales and earnings guidance for fiscal 2018. I would like to thank our associates for their hard work and continued dedication to our customers."

Fiscal 2018 Guidance

Including the adoption of ASU No. 2014-09 discussed below, the Company expects its fiscal 2018 sales to grow by approximately 6.7 percent and comp sales to be up approximately 5.0 percent. The Company also reaffirmed its diluted earnings-per-share growth guidance for the year and expects diluted earnings-per-share growth of approximately 28.0 percent from fiscal 2017 to $9.31.

Recent Accounting Pronouncement – Revenue Recognition

During the first quarter of fiscal 2018, the Company adopted ASU No. 2014-09, which pertains to revenue recognition. The adoption of this standard will not materially impact the Company's consolidated financial statements or related disclosures. Under ASU No. 2014-09, the Company has changed the presentation of certain expenses and cost reimbursements associated with its private label credit card program, certain expenses related to the sale of gift cards to customers, and gift card breakage income. The Company also has changed its recognition of gift card breakage income to be recognized proportionately as redemption occurs, rather than based on historical redemption patterns. 

The Company has adopted this standard on a modified retrospective basis. In accordance therewith, financial information prior to fiscal 2018 will not be recast. The consolidated statement of earnings and balance sheet for the first quarter of fiscal 2018 reflect the effect of this accounting policy adoption. The impact of adoption was an increase of $33 million to net sales, a decrease of $98 million to cost of sales, and a corresponding increase of $131 million to operating expenses for the first quarter of fiscal 2018. There is no impact from the Company's adoption on operating income, net earnings or earnings per share. The balance sheet reflects the cumulative impact of adoption using the modified retrospective method as well as the impact of recording the sales return allowance on a gross basis rather than as a net liability. Additional information about the impact of the adoption of ASU No. 2014-09 is available at http://ir.homedepot.com/financial-reports/quarterly-earnings/2018.  

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 http://ir.homedepot.com/events-and-presentations.

At the end of the first quarter, the Company operated a total of 2,285 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 400,000 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 sales; effects of competition; implementation of store, interconnected retail, supply chain and technology initiatives; issues related to the payment methods we accept; 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; 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 impact and expected outcome of investigations, inquiries, claims and litigation; the effect of accounting charges; the effect of adopting certain accounting standards; the impact of the Tax Cuts and Jobs Act of 2017; store openings and closures; guidance for fiscal 2018 and beyond; financial outlook; and the integration of acquired companies into our organization and the ability to recognize the anticipated synergies and benefits of those acquisitions.  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 January 28, 2018 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.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)



Three Months Ended



in millions, except per share data

April 29,
2018


April 30,
 2017


% Change

Net sales

$

24,947



$

23,887



4.4

%

Cost of sales

16,330



15,733



3.8


Gross profit

8,617



8,154



5.7


Operating expenses:






Selling, general and administrative

4,779



4,361



9.6


Depreciation and amortization

457



444



2.9


  Total operating expenses

5,236



4,805



9.0


Operating income

3,381



3,349



1.0


Interest and other (income) expense:






Interest and investment income

(22)



(13)



69.2


Interest expense

261



254



2.8


  Interest and other, net

239



241



(0.8)


Earnings before provision for income taxes

3,142



3,108



1.1


Provision for income taxes

738



1,094



(32.5)


  Net earnings

$

2,404



$

2,014



19.4

%







Basic weighted average common shares

1,152



1,198



(3.8)

%

Basic earnings per share

$

2.09



$

1.68



24.4








Diluted weighted average common shares

1,158



1,204



(3.8)

%

Diluted earnings per share

$

2.08



$

1.67



24.6









Three Months Ended



Selected Sales Data (1)

April 29,
2018


April 30,
 2017


% Change

Customer transactions (in millions)

375.9



380.8



(1.3)

%

Average ticket

$

66.02



$

62.39



5.8


Sales per square foot

412.03



394.17



4.5


 —————

(1)

Selected Sales Data does not include results for Interline Brands, Inc., which was acquired in fiscal 2015.

 

 

THE HOME DEPOT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)


in millions

April 29,
2018


April 30,
 2017


January 28,
 2018

Assets






Cash and cash equivalents

$

3,599



$

3,565



$

3,595


Receivables, net

2,296



2,164



1,952


Merchandise inventories

14,432



13,609



12,748


Other current assets

887



558



638


Total current assets

21,214



19,896



18,933


Net property and equipment

21,928



21,789



22,075


Goodwill

2,281



2,095



2,275


Other assets

1,227



1,164



1,246


Total assets

$

46,650



$

44,944



$

44,529








Liabilities and Stockholders' Equity






Short-term debt

$

350



$



$

1,559


Accounts payable

9,726



9,138



7,244


Accrued salaries and related expenses

1,413



1,353



1,640


Current installments of long-term debt

1,199



544



1,202


Other current liabilities

5,445



5,403



4,549


Total current liabilities

18,133



16,438



16,194


Long-term debt, excluding current installments

24,244



22,393



24,267


Other liabilities

2,586



2,151



2,614


Total liabilities

44,963



40,982



43,075


Total stockholders' equity

1,687



3,962



1,454


Total liabilities and stockholders' equity

$

46,650



$

44,944



$

44,529


 

 

THE HOME DEPOT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)



Three Months Ended

in millions

April 29,
2018


April 30,
 2017

Cash Flows from Operating Activities:




Net earnings

$

2,404



$

2,014


Reconciliation of net earnings to net cash provided by operating activities:




Depreciation and amortization

532



505


Stock-based compensation expense

84



81


Changes in working capital and other, net of acquisition effects

961



1,964


  Net cash provided by operating activities

3,981



4,564






Cash Flows from Investing Activities:




Capital expenditures, net of non-cash capital expenditures

(556)



(458)


Proceeds from sales of property and equipment

8



13


Net cash used in investing activities

(548)



(445)






Cash Flows from Financing Activities:




Repayments of short-term debt, net

(1,209)



(710)


Repayments of long-term debt

(10)



(11)


Repurchases of common stock

(1,121)



(1,289)


Proceeds from sales of common stock

14



31


Cash dividends

(1,189)



(1,069)


Other financing activities

115



(33)


Net cash used in financing activities

(3,400)



(3,081)


Change in cash and cash equivalents

33



1,038


Effect of exchange rate changes on cash and cash equivalents

(29)



(11)


Cash and cash equivalents at beginning of period

3,595



2,538


Cash and cash equivalents at end of period

$

3,599



$

3,565


 

THE HOME DEPOT, INC.
ASU NO. 2014-09 IMPACT OF ADOPTION
(Unaudited)

The Company adopted ASU No. 2014-09, which pertains to revenue recognition, in the first quarter of fiscal 2018. The following table shows the impact of adopting ASU No. 2014-09 on the consolidated statement of earnings for the first quarter of fiscal 2018. The implementation of this accounting standard resulted in an increase in net sales, gross profit, selling, general and administrative, and total operating expenses and a decrease in cost of sales. There was no impact on operating income, net earnings, or earnings per share.


Three Months Ended April 29, 2018

in millions

As Reported

% of

Net Sales


ASU No. 2014-09
Impact


Excluding
ASU No. 2014-09
Impact

% of

Net Sales

Net sales

$

24,947


100.0

%


$

33



$

24,914


100.0

%

Cost of sales

16,330


65.5



(98)



16,428


65.9


Gross profit

8,617


34.5



131



8,486


34.1


Selling, general and administrative

4,779


19.2



131



4,648


18.7


Total operating expenses

5,236


21.0



131



5,105


20.5



 

THE HOME DEPOT, INC.
ASU NO. 2014-09 IMPACT OF ADOPTION
(Unaudited)

The Company adopted ASU No. 2014-09, which pertains to revenue recognition, in the first quarter of fiscal 2018. The following table shows the impact of adopting ASU No. 2014-09 on the consolidated balance sheet as of April 29, 2018.


April 29, 2018

in millions

As Reported


ASU No. 2014-09
Effect


Excluding
ASU No. 2014-09
Effect

Assets






Receivables, net

$

2,296



$

(46)



$

2,342


Other current assets

887



269



618


Total current assets

21,214



223



20,991


Total assets

46,650



223



46,427








Liabilities and Stockholders' Equity






Other current liabilities

$

5,445



$

124



$

5,321


Total current liabilities

18,133



124



18,009


Other liabilities

2,586



24



2,562


Total liabilities

44,963



148



44,815


Total stockholders' equity

1,687



75



1,612


Total liabilities and stockholders' equity

46,650



223



46,427


 


THE HOME DEPOT, INC.
PRO FORMA EFFECT OF ASU NO. 2014-09
(Unaudited)

The Company adopted ASU No. 2014-09, which pertains to revenue recognition, in the first quarter of fiscal 2018 using the modified retrospective method. In accordance therewith, financial information prior to fiscal 2018 will not be recast as the modified retrospective method does not permit recasting pre-adoption financial information. The following tables present selected as-reported financial results and the pro forma effect of ASU No. 2014-09 as if the recognition and presentation guidance in the accounting standard had been applied in fiscal 2017. There was no impact on operating income, net earnings, or earnings per share. The fiscal 2017 pro forma financial information included in the tables below is presented for informational purposes only.


Three Months Ended April 30, 2017

in millions

As Reported

% of

Net Sales


ASU No. 2014-09
Effect


Including
ASU No. 2014-09
Effect

% of

Net Sales

Net sales

$

23,887


100.0

%


$

48



$

23,935


100.0

%

Cost of sales

15,733


65.9



(90)



15,643


65.4


Gross profit

8,154


34.1



138



8,292


34.6


Selling, general and administrative

4,361


18.3



138



4,499


18.8


Total operating expenses

4,805


20.1



138



4,943


20.7
















Three Months Ended July 30, 2017

in millions

As Reported

% of

Net Sales


ASU No. 2014-09
Effect


Including
ASU No. 2014-09
Effect

% of

Net Sales

Net sales

$

28,108


100.0

%


$

33



$

28,141


100.0

%

Cost of sales

18,647


66.3



(114)



18,533


65.9


Gross profit

9,461


33.7



147



9,608


34.1


Selling, general and administrative

4,549


16.2



147



4,696


16.7


Total operating expenses

4,998


17.8



147



5,145


18.3
















Three Months Ended October 29, 2017

in millions

As Reported

% of

Net Sales


ASU No. 2014-09
Effect


Including
ASU No. 2014-09
Effect

% of

Net Sales

Net sales

$

25,026


100.0

%


$

44



$

25,070


100.0

%

Cost of sales

16,378


65.4



(85)



16,293


65.0


Gross profit

8,648


34.6



129



8,777


35.0


Selling, general and administrative

4,514


18.0



129



4,643


18.5


Total operating expenses

4,968


19.9



129



5,097


20.3
















Three Months Ended January 28, 2018

in millions

As Reported

% of

Net Sales


ASU No. 2014-09
Effect


Including
ASU No. 2014-09
Effect

% of

Net Sales

Net sales

$

23,883


100.0

%


$

41



$

23,924


100.0

%

Cost of sales

15,790


66.1



(85)



15,705


65.6


Gross profit

8,093


33.9



126



8,219


34.4


Selling, general and administrative

4,440


18.6



126



4,566


19.1


Total operating expenses

4,904


20.5



126



5,030


21.0
















Fiscal Year Ended January 28, 2018

in millions

As Reported

% of

Net Sales


ASU No. 2014-09
Effect


Including
ASU No. 2014-09
Effect

% of

Net Sales

Net sales

$

100,904


100.0

%


$

166



$

101,070


100.0

%

Cost of sales

66,548


66.0



(374)



66,174


65.5


Gross profit

34,356


34.0



540



34,896


34.5


Selling, general and administrative

17,864


17.7



540



18,404


18.2


Total operating expenses

19,675


19.5



540



20,215


20.0


 

 

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SOURCE The Home Depot