MOORESVILLE, NC — Lowe’s Companies, Inc. (NYSE: LOW) today reported net earnings of $624 million for the quarter ended May 2, 2014, a 15.6 percent increase over the same period a year ago. Diluted earnings per share increased 24.5 percent to $0.61 from $0.49 in the first quarter of 2013.

Included in the above reported results are charges related to long-lived asset impairments, which reduced pre-tax earnings for the first quarter by $23 million and diluted earnings per share by $0.01. Also included in the above reported results is the impact of a lower tax rate in the first quarter. The lower tax rate, primarily the result of a settlement of prior year tax matters, contributed $0.04 to diluted earnings per share.

Sales for the first quarter increased 2.4 percent to $13.4 billion from $13.1 billion in the first quarter of 2013, and comparable sales increased 0.9 percent.

“We executed well during the quarter, despite an unexpectedly prolonged winter in many areas of the country,” commented Robert A. Niblock, Lowe’s chairman, president and CEO. “While poor weather dampened traffic and negatively impacted performance of exterior categories, results for indoor categories were solid. We effectively aligned inventory, staffing and marketing resources by climatic zone to best serve customers’ needs. I would like to thank our employees for their dedication to serving customers.

“Performance has improved in May which, together with our strengthening execution, gives us the confidence to reaffirm our sales and operating profit outlook for the year,” Niblock added.

Delivering on the commitment to return excess cash to shareholders, the company repurchased $850 million of stock under its share repurchase program and paid $186 million in dividends in the first quarter.

As of May 2, 2014, Lowe’s operated 1,836 home improvement and hardware stores in the United States, Canada and Mexicorepresenting 200.7 million square feet of retail selling space.

A conference call to discuss first quarter 2014 operating results is scheduled for today (Wednesday, May 21) at 9:00 am ET. The conference call will be available through a webcast and can be accessed by visiting Lowe’s website atwww.Lowes.com/investor and clicking on Lowe’s First Quarter 2014 Earnings Conference Call Webcast. Supplemental slides will be available fifteen minutes prior to the start of the conference call. A replay of the call will be archived onLowes.com/investor until August 19, 2014.

Lowe’s Business Outlook

Fiscal Year 2014 (comparisons to fiscal year 2013; based on U.S. GAAP unless otherwise noted)

•Total sales are expected to increase approximately 5 percent.

•Comparable sales are expected to increase approximately 4 percent.

•The company expects to open approximately 10 home improvement and 5 hardware stores.

•Earnings before interest and taxes as a percentage of sales (operating margin) are expected to increase approximately 65 basis points.

•The effective income tax rate is expected to be approximately 37.2%.

•Diluted earnings per share of approximately $2.63 are expected for the fiscal year ending January 30, 2015.

The company raised its diluted earnings per share outlook for the year as a result of the lower tax rate, primarily the result of a settlement of prior year tax matters, offset by charges related to long-lived asset impairments in the first quarter.

Lowe’s Companies, Inc.
Consolidated Statements of Current and Retained Earnings (Unaudited)
In Millions, Except Per Share and Percentage Data
Three Months Ended
May 2, 2014 May 3, 2013
Current Earnings  Amount  Percent  Amount  Percent
Net sales $ 13,403 100.00 $ 13,088 100.00
Cost of sales 8,645 64.50 8,533 65.20
Gross margin 4,758 35.50 4,555 34.80
Expenses:
Selling, general and administrative 3,319 24.76 3,222 24.62
Depreciation 373 2.78 352 2.69
Interest – net 124 0.93 113 0.86
Total expenses 3,816 28.47 3,687 28.17
Pre-tax earnings  942 7.03 868 6.63
Income tax provision 318 2.37 328 2.50
Net earnings $ 624 4.66 $ 540 4.13
Weighted average common shares outstanding – basic 1,015 1,088
Basic earnings per common share (1) $ 0.61 $ 0.49
Weighted average common shares outstanding – diluted 1,017 1,090
Diluted earnings per common share (1) $ 0.61 $ 0.49
Cash dividends per share $ 0.18 $ 0.16
Retained Earnings
Balance at beginning of period $ 11,355 $ 13,224
Net earnings 624 540
Cash dividends (183) (174)
Share repurchases (811) (972)
Balance at end of period $ 10,985 $ 12,618
(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 $620 million for the three months ended May 2, 2014 and $537 million for the three months ended May 3, 2013.
Lowe’s Companies, Inc.
Consolidated Statements of Comprehensive Income (Unaudited)
In Millions, Except Percentage Data
Three Months Ended 
May 2, 2014 May 3, 2013
 Amount  Percent  Amount  Percent
Net earnings $ 624 4.66 $ 540 4.13
    Foreign currency translation adjustments – net of tax 8 0.06 - -
Other comprehensive income 8 0.06 - -
Comprehensive income $ 632 4.72 $ 540 4.13
Lowe’s Companies, Inc.
Consolidated Balance Sheets
In Millions, Except Par Value Data
 (Unaudited)   (Unaudited) 
May 2, 2014 May 3, 2013 January 31, 2014
Assets
     Current assets:
     Cash and cash equivalents $ 658 $ 1,081 $ 391
     Short-term investments 110 118 185
     Merchandise inventory – net 10,515 10,274 9,127
     Deferred income taxes – net 283 228 252
     Other current assets 386 313 341
     Total current assets 11,952 12,014 10,296
     Property, less accumulated depreciation 20,617 21,257 20,834
     Long-term investments 360 272 279
     Other assets 1,300 1,188 1,323
     Total assets $ 34,229 $ 34,731 $ 32,732
Liabilities and shareholders’ equity
     Current liabilities:
     Short-term borrowings $ - $ - $ 386
     Current maturities of long-term debt 47 47 49
     Accounts payable 7,051 7,041 5,008
     Accrued compensation and employee benefits 501 467 785
     Deferred revenue 1,055 1,008 892
     Other current liabilities 2,160 1,876 1,756
     Total current liabilities 10,814 10,439 8,876
     Long-term debt, excluding current maturities 10,080 9,026 10,086
     Deferred income taxes – net 261 440 291
     Deferred revenue – extended protection plans 730 717 730
     Other liabilities 862 857 896
     Total liabilities 22,747 21,479 20,879
     Shareholders’ equity:
     Preferred stock – $5 par value, none issued - - -
     Common stock – $.50 par value;
Shares issued and outstanding
May 2, 2014 1,012
May 3, 2013 1,088
January 31, 2014 1,030 506 544 515
     Capital in excess of par value - 38 -
     Retained earnings 10,985 12,618 11,355
     Accumulated other comprehensive (loss)/income (9) 52 (17)
     Total shareholders’ equity 11,482 13,252 11,853
     Total liabilities and shareholders’ equity $ 34,229 $ 34,731 $ 32,732




Lowe’s Companies, Inc.
Consolidated Statements of Cash Flows (Unaudited)
In Millions
Three Months Ended
May 2, 2014 May 3, 2013
Cash flows from operating activities:
Net earnings $                      624 $                        540
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depreciation and amortization 398 376
Deferred income taxes (67) (26)
Loss on property and other assets – net 24 5
Loss on equity method investments 17 15
Share-based payment expense 28 18
Changes in operating assets and liabilities:
Merchandise inventory – net (1,384) (1,674)
Other operating assets 44 (5)
Accounts payable 2,041 2,381
Other operating liabilities 269 362
Net cash provided by operating activities 1,994 1,992
Cash flows from investing activities:
Purchases of investments (163) (84)
Proceeds from sale/maturity of investments 157 89
Capital expenditures (194) (196)
Contributions to equity method investments – net (91) (73)
Proceeds from sale of property and other long-term assets 16 6
Other – net (5) (5)
Net cash used in investing activities (280) (263)
Cash flows from financing activities:
Net decrease in short-term borrowings (386) -
Repayment of long-term debt (12) (11)
Proceeds from issuance of common stock under
share-based payment plans
24 40
Cash dividend payments (186) (178)
Repurchase of common stock (910) (1,046)
Other – net 23 5
Net cash used in financing activities (1,447) (1,190)
Effect of exchange rate changes on cash - 1
Net increase in cash and cash equivalents 267 540
Cash and cash equivalents, beginning of period 391 541
Cash and cash equivalents, end of period $                     658 $                    1,081

Source: Lowe’s Companies, Inc.

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