LOWE'S REPORTS FIRST QUARTER 2023 SALES AND EARNINGS RESULTS
— Diluted EPS of
— Comparable Sales Decreased
— Updates Full Year 2023 Outlook —
During the first quarter, the company recognized a gain associated with the 2022 sale of the Canadian retail business. This positively impacted first quarter diluted EPS by
Total sales for the quarter were
"We are pleased with the performance of our business despite record lumber deflation and unfavorable spring weather. Although we delivered positive comparable sales in Pro and online for the first quarter, we are updating our full-year outlook to reflect softer-than-expected consumer demand for discretionary purchases," said Marvin R. Ellison, Lowe's chairman, president and CEO. "We remain optimistic about the medium-to-long term outlook for home improvement and our ability to continue to grow market share through our Total Home strategy. I would like to thank all of our front-line associates for their continued hard work and dedication."
Capital Allocation
The company continues to execute a disciplined capital allocation program to deliver long-term, sustainable shareholder value. During the quarter, the company repurchased approximately 10.6 million shares for
1 | Adjusted diluted earnings per share is a non-GAAP financial measure. Refer to the "Non-GAAP Financial Measure Reconciliation" section of this release for additional information as well as a reconciliation between the company's GAAP and non-GAAP financial results. |
2 | Total first quarter sales includes approximately |
Lowe's Business Outlook |
Based on higher-than-expected lumber deflation and lower-than-expected DIY discretionary sales, the company is updating its outlook for the operating results of full year 2023.
Adjusted operating income, adjusted operating margin, adjusted diluted EPS and adjusted effective income tax rate are non-GAAP financial measures that exclude the gain associated with the 2022 sale of the Canadian retail business, recorded in the first quarter. The company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items without unreasonable effort, including timing of adjustments associated with the sale of our Canadian retail business.
Full Year 2023 Outlook – a 52-week Year (comparisons to full year 2022 – a 53-week year)
- Total sales of approximately
$87 $89 billion $88 - Comparable sales expected to be down -
2% to -4% as compared to prior year (previously flat to down -2% ) - Adjusted operating income as a percentage of sales (adjusted operating margin) of
13.4% to13.6% (previously13.6% to13.8% ) - Interest expense of approximately
$1.5 billion - Adjusted effective income tax rate of approximately
25% - Adjusted diluted earnings per share of
$13.20 $13.60 $13.60 $14.00 - Capital expenditures of up to
$2 billion
A conference call to discuss first quarter 2023 operating results is scheduled for today, Tuesday, May 23, at 9 a.m. ET. The conference call will be available by webcast and can be accessed by visiting Lowe's website at ir.lowes.com and clicking on Lowe's First Quarter 2023 Earnings Conference Call Webcast. Supplemental slides will be available approximately 15 minutes prior to the start of the conference call. A replay of the call will be archived at ir.lowes.com.
Lowe's Companies, Inc. |
Lowe's Companies, Inc. (NYSE: LOW) is a FORTUNE® 50 home improvement company serving approximately 17 million customer transactions a week in the
Disclosure Regarding Forward-Looking Statements |
This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Statements including words such as "believe", "expect", "anticipate", "plan", "desire", "project", "estimate", "intend", "will", "should", "could", "would", "may", "strategy", "potential", "opportunity", "outlook", "scenario", "guidance", and similar expressions are forward-looking statements. Forward-looking statements involve, among other things, expectations, projections, and assumptions about future financial and operating results, objectives (including objectives related to environmental, social, and governance matters), business outlook, priorities, sales growth, shareholder value, capital expenditures, cash flows, the housing market, the home improvement industry, demand for products and services, share repurchases, Lowe's strategic initiatives, including those relating to acquisitions and dispositions and the impact of such transactions on our strategic and operational plans and financial results. Such statements involve risks and uncertainties, and we can give no assurance that they will prove to be correct. Actual results may differ materially from those expressed or implied in such statements.
A wide variety of potential risks, uncertainties, and other factors could materially affect our ability to achieve the results either expressed or implied by these forward-looking statements including, but not limited to, changes in general economic conditions, such as volatility and/or lack of liquidity from time to time in
Investors and others should carefully consider the foregoing factors and other uncertainties, risks and potential events including, but not limited to, those described in "Item 1A - Risk Factors" in our most recent Annual Report on Form 10-K and as may be updated from time to time in Item 1A in our quarterly reports on Form 10-Q or other subsequent filings with the SEC. All such forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update these statements other than as required by law.
LOW-IR
Contacts: | Shareholder/Analyst Inquiries: | Media Inquiries: | |
Kate Pearlman | Steve Salazar | ||
704-775-3856 | steve.j.salazar@lowes.com | ||
kate.pearlman@lowes.com |
Lowe's Companies, Inc. | |||||||
Three Months Ended | |||||||
May 5, 2023 | April 29, 2022 | ||||||
Current Earnings | Amount | % Sales | Amount | % Sales | |||
Net sales | $ 22,347 | 100.00 | $ 23,659 | 100.00 | |||
Cost of sales | 14,820 | 66.32 | 15,609 | 65.97 | |||
Gross margin | 7,527 | 33.68 | 8,050 | 34.03 | |||
Expenses: | |||||||
Selling, general and administrative | 3,824 | 17.12 | 4,303 | 18.19 | |||
Depreciation and amortization | 415 | 1.85 | 445 | 1.88 | |||
Operating income | 3,288 | 14.71 | 3,302 | 13.96 | |||
Interest – net | 349 | 1.56 | 243 | 1.03 | |||
Pre-tax earnings | 2,939 | 13.15 | 3,059 | 12.93 | |||
Income tax provision | 679 | 3.04 | 726 | 3.07 | |||
Net earnings | $ 2,260 | 10.11 | $ 2,333 | 9.86 | |||
Weighted average common shares outstanding – basic | 596 | 660 | |||||
Basic earnings per common share (1) | $ 3.78 | $ 3.52 | |||||
Weighted average common shares outstanding – diluted | 597 | 662 | |||||
Diluted earnings per common share (1) | $ 3.77 | $ 3.51 | |||||
Cash dividends per share | $ 1.05 | $ 0.80 | |||||
Accumulated Deficit | |||||||
Balance at beginning of period | $ (14,862) | $ (5,115) | |||||
Net earnings | 2,260 | 2,333 | |||||
Cash dividends declared | (624) | (524) | |||||
Share repurchases | (2,084) | (4,061) | |||||
Balance at end of period | $ (15,310) | $ (7,367) | |||||
1 | Under the two-class method, earnings per share is calculated using net earnings allocable to common shares, which is derived by reducing net earnings by the earnings allocable to participating securities. Net earnings allocable to common shares used in the basic and diluted earnings per share calculation were |
Lowe's Companies, Inc. | |||||||
Three Months Ended | |||||||
May 5, 2023 | April 29, 2022 | ||||||
Amount | % Sales | Amount | % Sales | ||||
Net earnings | $ 2,260 | 10.11 | $ 2,333 | 9.86 | |||
Foreign currency translation adjustments – net of tax | — | — | (17) | (0.07) | |||
Cash flow hedges – net of tax | (4) | (0.02) | 219 | 0.93 | |||
Other | 1 | 0.01 | (2) | (0.01) | |||
Other comprehensive (loss)/income | (3) | (0.01) | 200 | 0.85 | |||
Comprehensive income | $ 2,257 | 10.10 | $ 2,533 | 10.71 | |||
Lowe's Companies, Inc. | ||||
May 5, 2023 | April 29, 2022 | |||
Assets | ||||
Current assets: | ||||
Cash and cash equivalents | $ 2,950 | $ 3,414 | ||
Short-term investments | 423 | 368 | ||
Merchandise inventory – net | 19,522 | 20,239 | ||
Other current assets | 1,023 | 1,590 | ||
Total current assets | 23,918 | 25,611 | ||
Property, less accumulated depreciation | 17,402 | 18,890 | ||
Operating lease right-of-use assets | 3,504 | 4,131 | ||
Long-term investments | 103 | 76 | ||
Deferred income taxes – net | 150 | 33 | ||
Other assets | 840 | 984 | ||
Total assets | $ 45,917 | $ 49,725 | ||
Liabilities and shareholders' deficit | ||||
Current liabilities: | ||||
Short-term borrowings | $ 72 | $ — | ||
Current maturities of long-term debt | 589 | 121 | ||
Current operating lease liabilities | 525 | 639 | ||
Accounts payable | 11,885 | 13,831 | ||
Accrued compensation and employee benefits | 766 | 1,190 | ||
Deferred revenue | 1,645 | 2,094 | ||
Income taxes payable | 526 | 741 | ||
Other current liabilities | 3,202 | 3,215 | ||
Total current liabilities | 19,210 | 21,831 | ||
Long-term debt, excluding current maturities | 35,863 | 28,776 | ||
Noncurrent operating lease liabilities | 3,479 | 4,061 | ||
Deferred revenue – Lowe's protection plans | 1,206 | 1,137 | ||
Other liabilities | 869 | 797 | ||
Total liabilities | 60,627 | 56,602 | ||
Shareholders' deficit: | ||||
Preferred stock, | — | — | ||
Common stock, | 296 | 326 | ||
Accumulated deficit | (15,310) | (7,367) | ||
Accumulated other comprehensive income | 304 | 164 | ||
Total shareholders' deficit | (14,710) | (6,877) | ||
Total liabilities and shareholders' deficit | $ 45,917 | $ 49,725 | ||
Lowe's Companies, Inc. | |||
Three Months Ended | |||
May 5, 2023 | April 29, 2022 | ||
Cash flows from operating activities: | |||
Net earnings | $ 2,260 | $ 2,333 | |
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||
Depreciation and amortization | 465 | 503 | |
Noncash lease expense | 108 | 135 | |
Deferred income taxes | 102 | 59 | |
Asset impairment and loss on property – net | 11 | 4 | |
Gain on sale of business | (67) | — | |
Share-based payment expense | 59 | 50 | |
Changes in operating assets and liabilities: | |||
Merchandise inventory – net | (990) | (2,646) | |
Other operating assets | 157 | (212) | |
Accounts payable | 1,361 | 2,479 | |
Deferred revenue | 48 | 191 | |
Other operating liabilities | (1,408) | 81 | |
Net cash provided by operating activities | 2,106 | 2,977 | |
Cash flows from investing activities: | |||
Purchases of investments | (450) | (109) | |
Proceeds from sale/maturity of investments | 412 | 132 | |
Capital expenditures | (380) | (343) | |
Proceeds from sale of property and other long-term assets | 8 | 10 | |
Proceeds from sale of business | 123 | — | |
Other – net | (17) | — | |
Net cash used in investing activities | (304) | (310) | |
Cash flows from financing activities: | |||
Net change in commercial paper | (427) | — | |
Net proceeds from issuance of debt | 2,983 | 4,964 | |
Repayment of debt | (22) | (773) | |
Proceeds from issuance of common stock under share-based payment plans | 5 | 1 | |
Cash dividend payments | (633) | (537) | |
Repurchases of common stock | (2,106) | (4,037) | |
Other – net | — | (4) | |
Net cash used in financing activities | (200) | (386) | |
Net increase in cash and cash equivalents | 1,602 | 2,281 | |
Cash and cash equivalents, beginning of period | 1,348 | 1,133 | |
Cash and cash equivalents, end of period | $ 2,950 | $ 3,414 | |
Lowe's Companies, Inc.
Non-GAAP Financial Measure Reconciliation (Unaudited)
To provide additional transparency, the Company has presented a comparison to the non-GAAP financial measure of adjusted diluted earnings per share for the three months ended May 5, 2023. This measure excludes the impact of certain items, further described below, not contemplated in Lowe's Business Outlook to assist analysts and investors in understanding operational performance for the first quarter of fiscal 2023.
Fiscal 2023 Impacts
During fiscal 2023, the Company recognized financial impacts from the following, not contemplated in the Company's Business Outlook for fiscal 2023:
- In the first quarter of fiscal 2023, the Company recognized pre-tax income of
$63 million
Adjusted diluted earnings per share should not be considered an alternative to, or more meaningful indicator of, the Company's diluted earnings per share as prepared in accordance with GAAP. The Company's methods of determining non-GAAP financial measures may differ from the method used by other companies and may not be comparable.
A reconciliation between the Company's GAAP and non-GAAP financial results is shown below and available on the Company's website at ir.lowes.com.
Three Months Ended | |||||
May 5, 2023 | |||||
Pre-Tax Earnings | Tax1 | Net Earnings | |||
Diluted earnings per share, as reported | $ 3.77 | ||||
Non-GAAP adjustments – per share impacts | |||||
Canadian retail business transaction | (0.10) | — | (0.10) | ||
Adjusted diluted earnings per share | $ 3.67 | ||||
1 | Represents the corresponding tax benefit or expense specifically related to the item excluded from adjusted diluted earnings per share. |
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SOURCE Lowe's Companies, Inc.
