Le Lézard
Classified in: Business
Subjects: ERN, CCA, ERP, HSP

The Home Depot Announces Second Quarter Results; Updates Fiscal Year 2018 Guidance



ATLANTA, Aug. 14, 2018 /CNW/ -- The Home Depot®, the world's largest home improvement retailer, today reported sales of $30.5 billion for the second quarter of fiscal 2018, an 8.4 percent increase from the second quarter of fiscal 2017. Comparable sales for the second quarter of fiscal 2018 were positive 8.0 percent, and comp sales in the U.S. were positive 8.1 percent.

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

Net earnings for the second quarter of fiscal 2018 were $3.5 billion, or $3.05 per diluted share, compared with net earnings of $2.7 billion, or $2.25 per diluted share, in the same period of fiscal 2017. For the second quarter of fiscal 2018, diluted earnings per share increased 35.6 percent from the same period in the prior year.

"We were very pleased with our record second quarter sales and earnings. Not only did our seasonal business rebound from the first quarter, but our overall results exceeded our expectations," said Craig Menear, chairman, CEO and president. "These results exemplify the outstanding execution of our combined team of store associates, merchants, suppliers and supply chain."

Updated Fiscal 2018 Guidance

Based on its year-to-date performance, the Company updated its fiscal 2018 sales growth guidance and now expects sales will be up approximately 7.0 percent including the 53rd week, with comp sales growth of approximately 5.3 percent for the comparable 52-week period. The Company also raised its diluted earnings-per-share growth guidance for the year and now expects diluted earnings-per-share growth of approximately 29.2 percent from fiscal 2017 to $9.42. The Company's diluted earnings-per-share growth guidance includes $6 billion of share repurchases for fiscal 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.

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.

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 statements of earnings and balance sheet for periods and dates subsequent to fiscal 2017 reflect the effect of this accounting policy adoption.

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

At the end of the second quarter, the Company operated a total of 2,286 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




Six Months Ended



in millions, except per share data

July 29,
2018


July 30,
 2017


% Change


July 29,
2018


July 30,
 2017


% Change

Net sales

$

30,463



$

28,108



8.4

%


$

55,410



$

51,995



6.6

%

Cost of sales

20,098



18,647



7.8



36,428



34,380



6.0


Gross profit

10,365



9,461



9.6



18,982



17,615



7.8


Operating expenses:












Selling, general and administrative

5,004



4,549



10.0



9,783



8,910



9.8


Depreciation and amortization

460



449



2.4



917



893



2.7


Total operating expenses

5,464



4,998



9.3



10,700



9,803



9.2


Operating income

4,901



4,463



9.8



8,282



7,812



6.0


Interest and other (income) expense:












Interest and investment income

(26)



(16)



62.5



(48)



(29)



65.5


Interest expense

272



265



2.6



533



519



2.7


Interest and other, net

246



249



(1.2)



485



490



(1.0)


Earnings before provision for income taxes

4,655



4,214



10.5



7,797



7,322



6.5


Provision for income taxes

1,149



1,542



(25.5)



1,887



2,636



(28.4)


Net earnings

$

3,506



$

2,672



31.2

%


$

5,910



$

4,686



26.1

%













Basic weighted average common shares

1,144



1,183



(3.3)

%


1,148



1,191



(3.6)

%

Basic earnings per share

$

3.06



$

2.26



35.4



$

5.15



$

3.93



31.0














Diluted weighted average common shares

1,149



1,189



(3.4)

%


1,154



1,197



(3.6)

%

Diluted earnings per share

$

3.05



$

2.25



35.6



$

5.12



$

3.91



30.9















Three Months Ended




Six Months Ended



Selected Sales Data (1)

July 29,
2018


July 30,
 2017


% Change


July 29,
2018


July 30,
 2017


% Change

Customer transactions (in millions)

455.4



441.8



3.1

%


831.2



822.6



1.1

%

Average ticket

$

66.20



$

63.05



5.0



$

66.12



$

62.74



5.4


Sales per square foot

504.20



464.38



8.6



458.07



429.17



6.7


?????


(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

July 29,
2018


July 30,
 2017


January 28,
 2018

Assets






Cash and cash equivalents

$

3,490



$

4,830



$

3,595


Receivables, net

2,164



2,187



1,952


Merchandise inventories

14,044



12,868



12,748


Other current assets

1,104



626



638


Total current assets

20,802



20,511



18,933


Net property and equipment

21,909



22,035



22,075


Goodwill

2,251



2,235



2,275


Other assets

1,270



1,178



1,246


Total assets

$

46,232



$

45,959



$

44,529








Liabilities and Stockholders' Equity






Short-term debt

$

?



$

?



$

1,559


Accounts payable

9,407



8,541



7,244


Accrued salaries and related expenses

1,535



1,503



1,640


Current installments of long-term debt

2,203



545



1,202


Other current liabilities

5,281



5,234



4,549


Total current liabilities

18,426



15,823



16,194


Long-term debt, excluding current installments

23,295



24,422



24,267


Other liabilities

2,502



2,160



2,614


Total liabilities

44,223



42,405



43,075


Total stockholders' equity

2,009



3,554



1,454


Total liabilities and stockholders' equity

$

46,232



$

45,959



$

44,529


 

 

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



Six Months Ended

in millions

July 29,
2018


July 30,
 2017

Cash Flows from Operating Activities:




Net earnings

$

5,910



$

4,686


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




Depreciation and amortization

1,062



1,015


Stock-based compensation expense

234



148


Changes in working capital and other, net of acquisition effects

791



2,013


Net cash provided by operating activities

7,997



7,862






Cash Flows from Investing Activities:




Capital expenditures, net of non-cash capital expenditures

(1,091)



(846)


Payments for business acquired, net

?



(268)


Proceeds from sales of property and equipment

16



23


Net cash used in investing activities

(1,075)



(1,091)






Cash Flows from Financing Activities:




Repayments of short-term debt, net

(1,559)



(710)


Proceeds from long-term debt, net of discounts

?



1,994


Repayments of long-term debt

(28)



(21)


Repurchases of common stock

(3,121)



(3,921)


Proceeds from sales of common stock

35



137


Cash dividends

(2,373)



(2,130)


Other financing activities

142



2


Net cash used in financing activities

(6,904)



(4,649)


Change in cash and cash equivalents

18



2,122


Effect of exchange rate changes on cash and cash equivalents

(123)



170


Cash and cash equivalents at beginning of period

3,595



2,538


Cash and cash equivalents at end of period

$

3,490



$

4,830


 

 

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 three and six month periods ended July 29, 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 July 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

$

30,463


100.0

%


$

33



$

30,430


100.0

%

Cost of sales

20,098


66.0



(119)



20,217


66.4


Gross profit

10,365


34.0



152



10,213


33.6


Selling, general and administrative

5,004


16.4



152



4,852


15.9


Total operating expenses

5,464


17.9



152



5,312


17.5







Six Months Ended July 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

$

55,410


100.0

%


$

66



$

55,344


100.0

%

Cost of sales

36,428


65.7



(217)



36,645


66.2


Gross profit

18,982


34.3



283



18,699


33.8


Selling, general and administrative

9,783


17.7



283



9,500


17.2


Total operating expenses

10,700


19.3



283



10,417


18.8


 

 

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 July 29, 2018.



July 29, 2018

in millions

As 

Reported


ASU 

No. 2014-09
Effect


Excluding
ASU No. 2014-09 Effect

Assets






Receivables, net

$

2,164



$

(46)



$

2,210


Other current assets

1,104



272



832


Total current assets

20,802



226



20,576


Total assets

46,232



226



46,006








Liabilities and Stockholders' Equity






Other current liabilities

$

5,281



$

127



$

5,154


Total current liabilities

18,426



127



18,299


Other liabilities

2,502



24



2,478


Total liabilities

44,223



151



44,072


Total stockholders' equity

2,009



75



1,934


Total liabilities and stockholders' equity

46,232



226



46,006


 

 

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


 

SOURCE The Home Depot


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