Lowe's Reports Fourth Quarter 2020 Sales And Earnings Results
Lowe's Companies reported strong financial results for Q4 2020, with net earnings of $978 million and diluted EPS of $1.32, up from $509 million and $0.66 respectively in Q4 2019. Adjusted diluted EPS increased 41.5% to $1.33. Total sales reached $20.3 billion, a 28.1% increase, with comparable sales for the U.S. home improvement sector rising 28.6%. The company also repurchased 21.1 million shares for $3.4 billion during the quarter. Looking ahead, Lowe's anticipates further market share growth and operating margin expansion in 2021.
- Net earnings increased to $978 million, up 92% year-over-year.
- Diluted EPS rose to $1.32 with a 41.5% increase in adjusted diluted EPS.
- Total sales rose to $20.3 billion, a 28.1% increase.
- U.S. home improvement comparable sales increased by 28.6%.
- Strong sales momentum continued into February 2021.
- None.
MOORESVILLE, N.C., Feb. 24, 2021 /PRNewswire/ -- Lowe's Companies, Inc. (NYSE: LOW) today reported net earnings of
Total sales for the fourth quarter were
In the fourth quarter, the Company invested over
"Strong execution enabled us to meet broad-based demand driven by the continued consumer focus on the home, with growth over
Capital Allocation
The Company repurchased 21.1 million shares for
At quarter-end, the Company had
As of January 29, 2021, Lowe's operated 1,974 home improvement and hardware stores in the United States and Canada representing 208 million square feet of retail selling space, and it serviced approximately 230 dealer-owned stores.
A conference call to discuss fourth quarter 2020 operating results is scheduled for today, Wednesday, February 24, at 9:00 am 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 Fourth Quarter 2020 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 Business Outlook |
The Company delivered very strong financial results in the fourth quarter of 2020, with continued sales momentum in February. The Company is reiterating the perspectives provided at the December 9, 2020 Investor Update, during which the Company presented its planning expectations for three potential scenarios for 2021 which assume modest mix-adjusted market contraction. In each of these scenarios, the Company expects to drive further market share gains and operating margin improvement. Additionally, consistent with expectations provided at the Investor Update, the Company is planning for
Lowe's Companies, Inc. |
Lowe's Companies, Inc. (NYSE: LOW) is a FORTUNE® 50 home improvement company serving approximately 20 million customers a week in the United States and Canada. With fiscal year 2020 sales of nearly
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, 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 the rate of unemployment, interest rate and currency fluctuations, fuel and other energy costs, slower growth in personal income, changes in consumer spending, changes in the rate of housing turnover, the availability of consumer credit and of mortgage financing, changes in commodity prices, changes or threatened changes in tariffs, outbreak of public health crises, such as the COVID-19 pandemic, availability and cost of goods from suppliers, changes in our management and key personnel, and other factors that can negatively affect our customers.
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
1 Adjusted diluted earnings per share is a non-GAAP financial measure. Refer to the "Non-GAAP Financial Measures Reconciliation" section of this release for additional information as well as reconciliations between the Company's GAAP and non-GAAP financial results.
Contacts: | Shareholder/Analyst Inquiries: | Media Inquiries: | |
Kate Pearlman | Jackie Pardini Hartzell | ||
704-775-3856 | 704-758-4317 | ||
kate.pearlman@lowes.com | jaclyn.pardini@lowes.com |
Lowe's Companies, Inc. Consolidated Statements of Current and Retained Earnings (Unaudited) In Millions, Except Per Share and Percentage Data | |||||||||||||||||||||||||||
Three Months Ended | Fiscal Year Ended | ||||||||||||||||||||||||||
January 29, 2021 | January 31, 2020 | January 29, 2021 | January 31, 2020 | ||||||||||||||||||||||||
Current Earnings | Amount | % Sales | Amount | % Sales | Amount | % Sales | Amount | % Sales | |||||||||||||||||||
Net sales | $ | 20,311 | 100.00 | $ | 16,027 | 100.00 | $ | 89,597 | 100.00 | $ | 72,148 | 100.00 | |||||||||||||||
Cost of sales | 13,855 | 68.22 | 11,046 | 68.92 | 60,025 | 66.99 | 49,205 | 68.20 | |||||||||||||||||||
Gross margin | 6,456 | 31.78 | 4,981 | 31.08 | 29,572 | 33.01 | 22,943 | 31.80 | |||||||||||||||||||
Expenses: | |||||||||||||||||||||||||||
Selling, general and administrative | 4,541 | 22.36 | 3,685 | 22.99 | 18,526 | 20.68 | 15,367 | 21.30 | |||||||||||||||||||
Depreciation and amortization | 391 | 1.92 | 338 | 2.11 | 1,399 | 1.56 | 1,262 | 1.75 | |||||||||||||||||||
Operating income | 1,524 | 7.50 | 958 | 5.98 | 9,647 | 10.77 | 6,314 | 8.75 | |||||||||||||||||||
Interest – net | 204 | 1.00 | 183 | 1.14 | 848 | 0.95 | 691 | 0.96 | |||||||||||||||||||
Loss on extinguishment of debt | — | — | — | — | 1,060 | 1.18 | — | — | |||||||||||||||||||
Pre-tax earnings | 1,320 | 6.50 | 775 | 4.84 | 7,739 | 8.64 | 5,623 | 7.79 | |||||||||||||||||||
Income tax provision | 342 | 1.69 | 266 | 1.66 | 1,904 | 2.13 | 1,342 | 1.86 | |||||||||||||||||||
Net earnings | $ | 978 | 4.81 | $ | 509 | 3.18 | $ | 5,835 | 6.51 | $ | 4,281 | 5.93 | |||||||||||||||
Weighted average common shares outstanding – basic | 734 | 763 | 748 | 777 | |||||||||||||||||||||||
Basic earnings per common share (1) | $ | 1.33 | $ | 0.67 | $ | 7.77 | $ | 5.49 | |||||||||||||||||||
Weighted average common shares outstanding – diluted | 735 | 764 | 750 | 778 | |||||||||||||||||||||||
Diluted earnings per common share (1) | $ | 1.32 | $ | 0.66 | $ | 7.75 | $ | 5.49 | |||||||||||||||||||
Cash dividends per share | $ | 0.60 | $ | 0.55 | $ | 2.30 | $ | 2.13 | |||||||||||||||||||
Retained Earnings | |||||||||||||||||||||||||||
Balance at beginning of period | $ | 3,942 | $ | 2,238 | $ | 1,727 | $ | 3,452 | |||||||||||||||||||
Cumulative effect of accounting change | — | — | — | (263) | |||||||||||||||||||||||
Net earnings | 978 | 509 | 5,835 | 4,281 | |||||||||||||||||||||||
Cash dividends declared | (440) | (420) | (1,724) | (1,653) | |||||||||||||||||||||||
Share repurchases | (3,363) | (600) | (4,721) | (4,090) | |||||||||||||||||||||||
Balance at end of period | $ | 1,117 | $ | 1,727 | $ | 1,117 | $ | 1,727 | |||||||||||||||||||
(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. Consolidated Statements of Comprehensive Income (Unaudited) In Millions, Except Percentage Data | |||||||||||||||||||||||||||
Three Months Ended | Fiscal Year Ended | ||||||||||||||||||||||||||
January 29, 2021 | January 31, 2020 | January 29, 2021 | January 31, 2020 | ||||||||||||||||||||||||
Amount | % Sales | Amount | % Sales | Amount | % Sales | Amount | % Sales | ||||||||||||||||||||
Net earnings | $ | 978 | 4.81 | $ | 509 | 3.18 | $ | 5,835 | 6.51 | $ | 4,281 | 5.93 | |||||||||||||||
Foreign currency translation adjustments – net of tax | 105 | 0.52 | 34 | 0.21 | 78 | 0.09 | 94 | 0.13 | |||||||||||||||||||
Cash flow hedges – net of tax | 5 | 0.02 | (6) | (0.04) | (79) | (0.09) | (22) | (0.03) | |||||||||||||||||||
Other | (1) | — | — | — | 1 | — | 1 | — | |||||||||||||||||||
Other comprehensive income | 109 | 0.54 | 28 | 0.17 | — | — | 73 | 0.10 | |||||||||||||||||||
Comprehensive income | $ | 1,087 | 5.35 | $ | 537 | 3.35 | $ | 5,835 | 6.51 | $ | 4,354 | 6.03 | |||||||||||||||
Lowe's Companies, Inc. Consolidated Balance Sheets (Unaudited) In Millions, Except Par Value Data | ||||||||
January 29, 2021 | January 31, 2020 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 4,690 | $ | 716 | ||||
Short-term investments | 506 | 160 | ||||||
Merchandise inventory – net | 16,193 | 13,179 | ||||||
Other current assets | 937 | 1,263 | ||||||
Total current assets | 22,326 | 15,318 | ||||||
Property, less accumulated depreciation (1) | 19,155 | 18,769 | ||||||
Operating lease right-of-use assets | 3,832 | 3,891 | ||||||
Long-term investments | 200 | 372 | ||||||
Deferred income taxes – net | 340 | 216 | ||||||
Other assets (1) | 882 | 905 | ||||||
Total assets | $ | 46,735 | $ | 39,471 | ||||
Liabilities and shareholders' equity | ||||||||
Current liabilities: | ||||||||
Short-term borrowings | $ | — | $ | 1,941 | ||||
Current maturities of long-term debt | 1,112 | 597 | ||||||
Current operating lease liabilities | 541 | 501 | ||||||
Accounts payable | 10,884 | 7,659 | ||||||
Accrued compensation and employee benefits | 1,350 | 684 | ||||||
Deferred revenue | 1,608 | 1,219 | ||||||
Other current liabilities | 3,235 | 2,581 | ||||||
Total current liabilities | 18,730 | 15,182 | ||||||
Long-term debt, excluding current maturities | 20,668 | 16,768 | ||||||
Noncurrent operating lease liabilities | 3,890 | 3,943 | ||||||
Deferred revenue – extended protection plans | 1,019 | 894 | ||||||
Other liabilities | 991 | 712 | ||||||
Total liabilities | 45,298 | 37,499 | ||||||
Shareholders' equity: | ||||||||
Preferred stock, | — | — | ||||||
Common stock, | 366 | 381 | ||||||
Capital in excess of par value | 90 | — | ||||||
Retained earnings | 1,117 | 1,727 | ||||||
Accumulated other comprehensive loss | (136) | (136) | ||||||
Total shareholders' equity | 1,437 | 1,972 | ||||||
Total liabilities and shareholders' equity | $ | 46,735 | $ | 39,471 | ||||
(1) | Effective for the year ending January 29, 2021, excess property amounts previously reported in other assets were reclassified to property, less accumulated depreciation. The consolidated balance sheet as of January 31, 2020, has been revised to conform with current presentation. |
Lowe's Companies, Inc. Consolidated Statements of Cash Flows (Unaudited) In Millions | |||||||
Fiscal Year Ended | |||||||
January 29, 2021 | January 31, 2020 | ||||||
Cash flows from operating activities: | |||||||
Net earnings | $ | 5,835 | $ | 4,281 | |||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||
Depreciation and amortization | 1,594 | 1,410 | |||||
Noncash lease expense | 479 | 468 | |||||
Deferred income taxes | (108) | 177 | |||||
Loss on property and other assets – net | 139 | 117 | |||||
Loss on extinguishment of debt | 1,060 | — | |||||
Share-based payment expense | 155 | 98 | |||||
Changes in operating assets and liabilities: | |||||||
Merchandise inventory – net | (2,967) | (600) | |||||
Other operating assets | 326 | (364) | |||||
Accounts payable | 3,211 | (637) | |||||
Deferred revenue | 512 | (15) | |||||
Other operating liabilities | 813 | (639) | |||||
Net cash provided by operating activities | 11,049 | 4,296 | |||||
Cash flows from investing activities: | |||||||
Purchases of investments | (3,094) | (743) | |||||
Proceeds from sale/maturity of investments | 2,926 | 695 | |||||
Capital expenditures | (1,791) | (1,484) | |||||
Proceeds from sale of property and other long-term assets | 90 | 163 | |||||
Other – net | (25) | — | |||||
Net cash used in investing activities | (1,894) | (1,369) | |||||
Cash flows from financing activities: | |||||||
Net change in commercial paper | (941) | 220 | |||||
Net proceeds from issuance of debt | 7,929 | 3,972 | |||||
Repayment of debt | (5,618) | (1,113) | |||||
Proceeds from issuance of common stock under share-based payment plans | 152 | 118 | |||||
Cash dividend payments | (1,704) | (1,618) | |||||
Repurchases of common stock | (4,971) | (4,313) | |||||
Other – net | (38) | (1) | |||||
Net cash used in financing activities | (5,191) | (2,735) | |||||
Effect of exchange rate changes on cash | 10 | 1 | |||||
Net increase in cash and cash equivalents, including cash | 3,974 | 193 | |||||
Less: Net decrease in cash classified within current | — | 12 | |||||
Net increase in cash and cash equivalents | 3,974 | 205 | |||||
Cash and cash equivalents, beginning of period | 716 | 511 | |||||
Cash and cash equivalents, end of period | $ | 4,690 | $ | 716 | |||
Lowe's Companies, Inc.
Non-GAAP Financial Measures Reconciliation (Unaudited)
To provide additional transparency, the Company has presented the non-GAAP financial measure of adjusted diluted earnings per share for comparing its operating performance for the three months and fiscal year ended January 29, 2021, with the respective periods ended January 31, 2020. This measure excludes the impact of certain discrete items, as further described below, not contemplated in Lowe's Business Outlook to assist analysts and investors in understanding operational performance for fiscal 2020 and fiscal 2019.
Fiscal 2020 Impacts
During fiscal 2020, the Company recognized financial impacts from the following discrete items, not contemplated in the Company's Business Outlook for the fourth quarter and fiscal year:
- In the third quarter of fiscal 2019, the Company began a strategic review of its Canadian operations, and in the fourth quarter of fiscal 2019, the Company announced additional restructuring actions to improve future performance and profitability of its Canadian operations. As a result of these actions, in the fourth quarter of fiscal 2020, the Company recognized
$12 million of pre-tax operating costs related to inventory write-downs and other closing costs. Total pre-tax charges for fiscal 2020 were$45 million (Canada restructuring), and; - In the third quarter of fiscal 2020, the Company recognized a
$1.1 billion loss on extinguishment of debt in connection with a$3.0 billion cash tender offer (Loss on extinguishment of debt).
Fiscal 2019 Impacts
During fiscal 2019, the Company recognized financial impacts from the following discrete items, not contemplated in the Company's Business Outlook for the fourth quarter and fiscal year:
- Prior to the beginning of fiscal 2019, the Company announced its intention to exit its Mexico retail operations and had planned to sell the operating business. However, in the first quarter of fiscal 2019, after an extensive market evaluation, the decision was made to instead sell the assets of the business. That decision resulted in a tax benefit in the first quarter. During the fourth quarter, pre-tax operating losses associated with the exit and ongoing wind-down of Mexico retail operations totaled
$9 million . Total pre-tax operating costs and charges for fiscal 2019 were$35 million , which were offset by$82 million tax benefit (Mexico adjustments), and; - During the third quarter of fiscal 2019, the Company began a strategic review of its Canadian operations resulting in pre-tax charges of
$53 million associated with long-lived asset impairment. In the fourth quarter, the Company recognized$176 million of pre-tax operating costs and charges related to inventory liquidation, accelerated depreciation and amortization, severance and other costs, as well as a net$26 million impact to income tax expense related to income tax valuation allowance. Total pre-tax operating costs and charges for fiscal 2019 were$230 million (Canada restructuring).
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.
Detailed reconciliations between the Company's GAAP and non-GAAP financial results are shown below and available on the Company's website at www.lowes.com/investor.
Three Months Ended | |||||||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||||||
January 29, 2021 | January 31, 2020 | ||||||||||||||||||
(in millions, except per share data) | Pre-Tax Earnings | Tax | Net Earnings | Pre-Tax Earnings | Tax | Net Earnings | |||||||||||||
Diluted earnings per share, as reported | $ | 1.32 | $ | 0.66 | |||||||||||||||
Non-GAAP adjustments – per share impacts | |||||||||||||||||||
Canada restructuring | 0.01 | — | 0.01 | 0.23 | 0.03 | 0.26 | |||||||||||||
Mexico adjustments | — | — | — | 0.01 | 0.01 | 0.02 | |||||||||||||
Adjusted diluted earnings per share | $ | 1.33 | $ | 0.94 | |||||||||||||||
Year Ended | |||||||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||||||
January 29, 2021 | January 31, 2020 | ||||||||||||||||||
(in millions, except per share data) | Pre-Tax Earnings | Tax | Net Earnings | Pre-Tax Earnings | Tax | Net Earnings | |||||||||||||
Diluted earnings per share, as reported | $ | 7.75 | $ | 5.49 | |||||||||||||||
Non-GAAP adjustments – per share impacts | |||||||||||||||||||
Loss on extinguishment of debt | 1.41 | (0.36) | 1.05 | — | — | — | |||||||||||||
Canada restructuring | 0.06 | — | 0.06 | 0.29 | 0.02 | 0.31 | |||||||||||||
Mexico adjustments | — | — | — | 0.05 | (0.11) | (0.06) | |||||||||||||
Adjusted diluted earnings per share | $ | 8.86 | $ | 5.74 | |||||||||||||||
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SOURCE Lowe's Companies, Inc.
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