MOORESVILLE, N.C.– Lowe’s Companies, Inc. (NYSE: LOW), the world’s second largest home improvement retailer, today reported net earnings of $288 million and diluted earnings per share of $0.26 for the fourth quarter of 2012. For the fiscal year, net earnings were $2.0 billion and diluted earnings per share were $1.69. Lowe’s fiscal year ends on the Friday nearest the end of January; therefore, fourth quarter and fiscal year 2011 included an extra week compared to 2012. As a result of the extra week in 2011, net earnings for the fourth quarter declined 10.6 percent and diluted earnings per share were flat from the fourth quarter of 2011. Net earnings for the fiscal year increased 6.5 percent and diluted earnings per share increased 18.2 percent from fiscal year 2011.
Sales for the fourth quarter decreased 5.0 percent to $11.0 billion from $11.6 billion in the fourth quarter of 2011. For the fiscal year, sales were $50.5 billion, a 0.6% increase over fiscal year 2011.
The 53rd week contributed $766 million to sales and approximately $0.05 to diluted earnings per share in fourth quarter and fiscal year 2011. The quarterly comparisons in 2012 were also impacted by a week shift which negatively impacted sales by $119 million and diluted earnings per share by approximately $0.02 in the fourth quarter of 2012. For the fiscal year, the week shift had an insignificant impact on sales and diluted earnings per share.
Comparable store sales for the fourth quarter of 2012 increased 1.9 percent on a consolidated basis as well as for the U.S. business. For the fiscal year, comparable store sales increased 1.4 percent, while comparable store sales for the U.S. business increased 1.5 percent. Comparable store sales are based on comparable 13-week and 52-week periods, respectively.
“We delivered solid results in the fourth quarter,” commented Robert A. Niblock, Lowe’s chairman, president and CEO. “Our results are a testament to the team’s success in driving more balanced performance across the quarter, our response to the demand created by recovery efforts in the wake of superstorm Sandy, and the momentum we’re creating with our initiatives.
“I’d like to thank our employees for their perseverance in a year of significant change, and for their continued dedication to serving customers,” Niblock added.
Delivering on the commitment to return excess cash to shareholders, the company repurchased $750 million or 21.3 million shares of stock and paid $180 million in dividends in the fourth quarter of 2012. For the fiscal year, the company repurchased $4.35 billion or 146 million shares of common stock and paid $704 million in dividends.
To further deliver on this commitment, the Board of Directors has authorized the repurchase of up to $5 billion of the company’s common stock. The remaining prior authorization was simultaneously terminated. Although this new repurchase authorization has no expiration date, the company expects to use the full amount over the next two years. The repurchases will be subject to market conditions and will be made from time to time either in the open market or through off market private transactions in accordance with the requirements of the Securities and Exchange Commission. The company’s repurchase program may be suspended, discontinued or resumed at any time.
As of February 1, 2013, Lowe’s operated 1,754 stores in the United States, Canada and Mexico representing 197.4 million square feet of retail selling space.
A conference call to discuss fourth quarter 2012 operating results is scheduled for today (Monday, February 25) at 9:00 am ET. The conference call will be available through a webcast and can be accessed by visiting Lowe’s website at www.Lowes.com/investor and clicking on Lowe’s Fourth Quarter 2012 Earnings Conference Call Webcast. A replay of the call will be archived on Lowes.com/investor until May 21, 2013.
Lowe’s Business Outlook
Fiscal Year 2013 (comparisons to fiscal year 2012; based on U.S. GAAP unless otherwise noted)
•Total sales are expected increase approximately 4 percent.
•Comparable store sales are expected to increase approximately 3.5 percent.
•The company expects to open approximately 10 stores in fiscal year 2013.
•Earnings before interest and taxes as a percentage of sales (operating margin) are expected to increase approximately 60 basis points.
•The effective income tax rate is expected to be approximately 38.1%.
•Diluted earnings per share of approximately $2.05 are expected for the fiscal year ending January 31, 2014.
| Lowe’s Companies, Inc. | ||||||||||||||||||||||||||
| Consolidated Statements of Current and Retained Earnings | ||||||||||||||||||||||||||
| In Millions, Except Per Share and Percentage Data | ||||||||||||||||||||||||||
| Three Months Ended (1) | Year Ended (1) | |||||||||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||||||||
| February 1, 2013 | February 3, 2012 | February 1, 2013 | February 3, 2012 | |||||||||||||||||||||||
| Current Earnings | Amount | Percent | Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||
| Net sales | $ | 11,046 | 100.00 | $ | 11,629 | 100.00 | $ | 50,521 | 100.00 | $ | 50,208 | 100.00 | ||||||||||||||
| Cost of sales | 7,261 | 65.73 | 7,650 | 65.78 | 33,194 | 65.70 | 32,858 | 65.44 | ||||||||||||||||||
| Gross margin | 3,785 | 34.27 | 3,979 | 34.22 | 17,327 | 34.30 | 17,350 | 34.56 | ||||||||||||||||||
| Expenses: | ||||||||||||||||||||||||||
| Selling, general and administrative | 2,809 | 25.43 | 3,009 | 25.88 | 12,244 | 24.24 | 12,593 | 25.08 | ||||||||||||||||||
| Depreciation | 412 | 3.73 | 383 | 3.29 | 1,523 | 3.01 | 1,480 | 2.95 | ||||||||||||||||||
| Interest – net | 109 | 0.99 | 102 | 0.88 | 423 | 0.84 | 371 | 0.74 | ||||||||||||||||||
| Total expenses | 3,330 | 30.15 | 3,494 | 30.05 | 14,190 | 28.09 | 14,444 | 28.77 | ||||||||||||||||||
| Pre-tax earnings | 455 | 4.12 | 485 | 4.17 | 3,137 | 6.21 | 2,906 | 5.79 | ||||||||||||||||||
| Income tax provision | 167 | 1.51 | 163 | 1.40 | 1,178 | 2.33 | 1,067 | 2.13 | ||||||||||||||||||
| Net earnings | $ | 288 | 2.61 | $ | 322 | 2.77 | $ | 1,959 | 3.88 | $ | 1,839 | 3.66 | ||||||||||||||
| Weighted average common shares outstanding – basic | 1,109 | 1,239 | 1,150 | 1,271 | ||||||||||||||||||||||
| Basic earnings per common share (2) | $ | 0.26 | $ | 0.26 | $ | 1.69 | $ | 1.43 | ||||||||||||||||||
| Weighted average common shares outstanding – diluted | 1,112 | 1,241 | 1,152 | 1,273 | ||||||||||||||||||||||
| Diluted earnings per common share (2) | $ | 0.26 | $ | 0.26 | $ | 1.69 | $ | 1.43 | ||||||||||||||||||
| Cash dividends per share | $ | 0.16 | $ | 0.14 | $ | 0.62 | $ | 0.53 | ||||||||||||||||||
| Retained Earnings | ||||||||||||||||||||||||||
| Balance at beginning of period | $ | 13,602 | $ | 16,109 | $ | 15,852 | $ | 17,371 | ||||||||||||||||||
| Net earnings | 288 | 322 | 1,959 | 1,839 | ||||||||||||||||||||||
| Cash dividends | (178 | ) | (174 | ) | (708 | ) | (672 | ) | ||||||||||||||||||
| Share repurchases | (488 | ) | (405 | ) | (3,879 | ) | (2,686 | ) | ||||||||||||||||||
| Balance at end of period | $ | 13,224 | $ | 15,852 | $ | 13,224 | $ | 15,852 | ||||||||||||||||||
| (1) The fiscal year and three months ended February 3, 2012, had 53 weeks and 14 weeks, respectively. The fiscal year and three months ended February 1, 2013, had 52 weeks and 13 weeks, respectively. | |
| (2) 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 $286 million for the three months ended February 1, 2013 and $320 million for the three months ended February 3, 2012. Net earnings allocable to common shares used in the basic and diluted earnings per share calculation were $1,945 million for the fiscal year ended February 1, 2013 and $1,824 million for the fiscal year ended February 3, 2012. | |
| Lowe’s Companies, Inc. | ||||||||||||||||||||||||
| Consolidated Statements of Comprehensive Income | ||||||||||||||||||||||||
| In Millions, Except Percentage Data | ||||||||||||||||||||||||
| Three Months Ended (1) | Year Ended (1) | |||||||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||||||
| February 1, 2013 | February 3, 2012 | February 1, 2013 | February 3, 2012 | |||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||||
| Net earnings | $ | 288 | 2.61 | $ | 322 | 2.77 | $ | 1,959 | 3.88 | $ | 1,839 | 3.66 | ||||||||||||
| Foreign currency translation adjustments | - | - | (1 | ) | - | 6 | 0.01 | (8 | ) | (0.02 | ) | |||||||||||||
| Net unrealized investment (losses)/gains | - | - | - | - | - | - | 1 | - | ||||||||||||||||
| Other comprehensive (loss)/income | - | - | (1 | ) | - | 6 | 0.01 | (7 | ) | (0.02 | ) | |||||||||||||
| Comprehensive income | $ | 288 | 2.61 | $ | 321 | 2.77 | $ | 1,965 | 3.89 | $ | 1,832 | 3.64 | ||||||||||||
| (1) The fiscal year and three months ended February 3, 2012, had 53 weeks and 14 weeks, respectively. The fiscal year and three months ended February 1, 2013, had 52 weeks and 13 weeks, respectively. |
| Lowe’s Companies, Inc. | ||||||
| Consolidated Balance Sheets | ||||||
| In Millions, Except Par Value Data | ||||||
| (Unaudited) | ||||||
| February 1, 2013 | February 3, 2012 | |||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 541 | $ | 1,014 | ||
| Short-term investments | 125 | 286 | ||||
| Merchandise inventory – net | 8,600 | 8,355 | ||||
| Deferred income taxes – net | 217 | 183 | ||||
| Other current assets | 301 | 234 | ||||
| Total current assets | 9,784 | 10,072 | ||||
| Property, less accumulated depreciation | 21,477 | 21,970 | ||||
| Long-term investments | 271 | 504 | ||||
| Other assets | 1,134 | 1,013 | ||||
| Total assets | $ | 32,666 | $ | 33,559 | ||
| Liabilities and Shareholders’ Equity | ||||||
| Current liabilities: | ||||||
| Current maturities of long-term debt | $ | 47 | $ | 592 | ||
| Accounts payable | 4,657 | 4,352 | ||||
| Accrued compensation and employee benefits | 670 | 613 | ||||
| Deferred revenue | 824 | 801 | ||||
| Other current liabilities | 1,510 | 1,533 | ||||
| Total current liabilities | 7,708 | 7,891 | ||||
| Long-term debt, excluding current maturities | 9,030 | 7,035 | ||||
| Deferred income taxes – net | 455 | 531 | ||||
| Deferred revenue – extended protection plans | 715 | 704 | ||||
| Other liabilities | 901 | 865 | ||||
| Total liabilities | 18,809 | 17,026 | ||||
| Shareholders’ equity: | ||||||
| Preferred stock – $5 par value, none issued | - | - | ||||
| Common stock – $.50 par value; | ||||||
| Shares issued and outstanding | ||||||
| February 1, 2013 | 1,110 | |||||
| February 3, 2012 | 1,241 | 555 | 621 | |||
| Capital in excess of par value | 26 | 14 | ||||
| Retained earnings | 13,224 | 15,852 | ||||
| Accumulated other comprehensive income | 52 | 46 | ||||
| Total shareholders’ equity | 13,857 | 16,533 | ||||
| Total liabilities and shareholders’ equity | $ | 32,666 | $ | 33,559 | ||
| Lowe’s Companies, Inc. | ||||||||
| Consolidated Statements of Cash Flows | ||||||||
| In Millions | ||||||||
| Year Ended | ||||||||
| (Unaudited) | ||||||||
| February 1, 2013 | February 3, 2012 | |||||||
| Cash flows from operating activities: | ||||||||
| Net earnings | $ | 1,959 | $ | 1,839 | ||||
| Adjustments to reconcile net earnings to net cash provided by | ||||||||
| operating activities: | ||||||||
| Depreciation and amortization | 1,623 | 1,579 | ||||||
| Deferred income taxes | (140 | ) | 54 | |||||
| Loss on property and other assets – net | 83 | 456 | ||||||
| Loss on equity method investments | 48 | 12 | ||||||
| Share-based payment expense | 100 | 107 | ||||||
| Net changes in operating assets and liabilities: | ||||||||
| Merchandise inventory – net | (244 | ) | (33 | ) | ||||
| Other operating assets | (87 | ) | 125 | |||||
| Accounts payable | 303 | (5 | ) | |||||
| Other operating liabilities | 117 | 215 | ||||||
| Net cash provided by operating activities | 3,762 | 4,349 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchases of investments | (1,444 | ) | (1,433 | ) | ||||
| Proceeds from sale/maturity of investments | 1,837 | 2,120 | ||||||
| Capital expenditures | (1,211 | ) | (1,829 | ) | ||||
| Change in equity method investments | (219 | ) | (232 | ) | ||||
| Proceeds from sale of property and other long-term assets | 130 | 52 | ||||||
| Other – net | 4 | (115 | ) | |||||
| Net cash used in investing activities | (903 | ) | (1,437 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Net proceeds from issuance of long-term debt | 1,984 | 993 | ||||||
| Repayment of long-term debt | (591 | ) | (37 | ) | ||||
| Proceeds from issuance of common stock under share-based payment plans |
349 | 100 | ||||||
| Cash dividend payments | (704 | ) | (647 | ) | ||||
| Repurchase of common stock | (4,393 | ) | (2,937 | ) | ||||
| Other – net | 22 | (21 | ) | |||||
| Net cash used in financing activities | (3,333 | ) | (2,549 | ) | ||||
| Effect of exchange rate changes on cash | 1 | (1 | ) | |||||
| Net (decrease)/increase in cash and cash equivalents | (473 | ) | 362 | |||||
| Cash and cash equivalents, beginning of year | 1,014 | 652 | ||||||
| Cash and cash equivalents, end of year | $ | 541 | $ | 1,014 | ||||
Source: Lowe's
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