MOORESVILLE, N.C. – Lowe’s Companies, Inc. (NYSE: LOW) reported net earnings of $585 million for the quarter ended Oct. 31, 2014, a 17.3 percent increase over the same period a year ago. Diluted earnings per share increased 25.5 percent to $0.59 from $0.47 in the third quarter of 2013. For the nine months ended October 31, 2014, net earnings increased 13.5 percent from the same period a year ago to $2.25 billion, and diluted earnings per share increased 21.7 percent to $2.24.

Sales for the third quarter increased 5.6 percent to $13.7 billion from $13.0 billion in the third quarter of 2013, and comparable sales for the quarter increased 5.1 percent.  For the nine month period, sales were $43.7 billion, a 4.6 percent increase over the same period a year ago, and comparable sales increased 3.5 percent.

“Our employees’ unwavering commitment to serving customers helped us achieve this quarter’s strong results,” commented Robert A. Niblock, Lowe’s chairman, president and CEO.  “We are pleased with our performance, and continue to be cautiously optimistic about the home improvement landscape.”

Delivering on its commitment to return excess cash to shareholders, the company repurchased $900 million of stock under its share repurchase program and paid $229 million in dividends in the third quarter.  For the nine month period, the company repurchased $2.9 billion of stock under its share repurchase program and paid $597 million in dividends.

As of October 31, 2014, Lowe’s operated 1,836 home improvement and hardware stores in the United States, Canada and Mexico representing 200.7 million square feet of retail selling space.

A conference call to discuss third quarter 2014 operating results is scheduled for today (Wednesday, November 19) at 9:00 am ET.  The conference call will be available by webcast and can be accessed by visiting Lowe’s website at www.Lowes.com/investor and clicking on Lowe’s Third 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 on Lowes.com/investor until February 24, 2015.

Lowe’s Business Outlook

The company has combined its year-to-date performance with its previous assumptions for the fourth quarter in providing the updated outlook below.

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

  • Total sales are expected to increase 4.5 to 5 percent.
  • Comparable sales are expected to increase 3.5 to 4 percent.
  • The company expects to open 6 home improvement and 4 hardware stores.
  • Earnings before interest and taxes as a percentage of sales (operating margin) are expected to increase 70 to 75 basis points.
  • The effective income tax rate is expected to be approximately 37.2%.
  • Diluted earnings per share of approximately $2.68 are expected for the fiscal year ending January 30, 2015.

Disclosure Regarding Forward-Looking Statements

This news release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”). Statements of the company’s expectations for sales growth, comparable sales, earnings and performance, shareholder value, capital expenditures, cash flows, the housing market, the home improvement industry, demand for services, share repurchases, the Company’s strategic initiatives and any statement of an assumption underlying any of the foregoing, constitute “forward-looking statements” under the Act.   Although we believe that the expectations, opinions, projections, and comments reflected in these forward-looking statements are reasonable, we can give no assurance that such statements will prove to be correct. A wide variety of potential risks, uncertainties, and other factors could materially affect our ability to achieve the results either expressed or implied by our forward-looking statements including, but not limited to, changes in general economic conditions, such as the  rate of unemployment, interest rate and currency fluctuations, higher 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, inflation or deflation of commodity prices, and other factors which can negatively affect our customers, as well as our ability to: (i) respond to adverse trends in the housing industry, such as the psychological effects of lower home prices, and moderating rates of growth in housing renovation and repair activity, as well as uneven recovery in commercial building activity; (ii) secure, develop, and otherwise implement new technologies and processes designed to enhance our efficiency and competitiveness; (iii) attract, train, and retain highly-qualified associates; (iv) manage our business effectively as we adapt our traditional operating model to meet the changing expectations of our customers; (v) maintain, improve, upgrade and protect our critical information systems from data security breaches and other cyber threats; (vi) respond to fluctuations in the prices and availability of services, supplies, and products; (vii) respond to the growth and impact of competition; (viii) address changes in existing or new laws or regulations that affect consumer credit, employment/labor, trade, product safety, transportation/logistics, energy costs, health care, tax or environmental issues; and (ix) respond to unanticipated weather conditions that could adversely affect sales. In addition, we could experience additional impairment losses if the actual results of our operating stores are not consistent with the assumptions and judgments we have made in estimating future cash flows and determining asset fair values. For more information about these and other risks and uncertainties that we are exposed to, you should read the “Risk Factors” and “Critical Accounting Policies and Estimates” included in our Annual Report on Form 10-K to the United States Securities and Exchange Commission (the “SEC”) and the description of material changes therein or updated version thereof, if any, included in our Quarterly Reports on Form 10-Q.

The forward-looking statements contained in this news release are based upon data available as of the date of this release or other specified date and speak only as of such date.  All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf about any of the matters covered in this release are qualified by these cautionary statements and the “Risk Factors” included in our Annual Report on Form 10-K to the SEC and the description of material changes, if any, therein included in our Quarterly Reports on Form 10-Q.  We expressly disclaim any obligation to update or revise any forward-looking statement, whether as a result of new information, change in circumstances, future events, or otherwise.

Lowe’s Companies, Inc. (NYSE: LOW) is a FORTUNE® 100 home improvement company serving approximately 15 million customers a week in the United States, Canada and Mexico.  With fiscal year 2013 sales of $53.4 billion, Lowe’s has more than 1,835 home improvement and hardware stores and 260,000 employees.  Founded in 1946 and based in Mooresville, N.C., Lowe’s supports the communities it serves through programs that focus on K-12 public education and community improvement projects. For more information, visit 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

 

 

Nine months ended

 

 

October 31, 2014

 

 

November 1, 2013

 

 

October 31, 2014

 

 

November 1, 2013

Current Earnings

 

 Amount 

Percent

 

 

 Amount 

Percent

 

 

 Amount 

Percent

 

 

 Amount 

Percent

Net sales

$

13,681

100.00

 

$

12,957

100.00

 

$

43,682

100.00

 

$

41,757

100.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

8,963

65.51

 

 

8,476

65.42

 

 

28,471

65.18

 

 

27,323

65.43

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin

 

4,718

34.49

 

 

4,481

34.58

 

 

15,211

34.82

 

 

14,434

34.57

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

3,255

23.80

 

 

3,184

24.56

 

 

10,115

23.15

 

 

9,820

23.52

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

375

2.74

 

 

373

2.88

 

 

1,123

2.57

 

 

1,092

2.62

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest – net

 

134

0.98

 

 

125

0.97

 

 

384

0.88

 

 

348

0.83

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total expenses

 

3,764

27.52

 

 

3,682

28.41

 

 

11,622

26.60

 

 

11,260

26.97

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax earnings 

 

954

6.97

 

 

799

6.17

 

 

3,589

8.22

 

 

3,174

7.60

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax provision 

 

369

2.69

 

 

300

2.32

 

 

1,341

3.07

 

 

1,194

2.86

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings

$

585

4.28

 

$

499

3.85

 

$

2,248

5.15

 

$

1,980

4.74

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding – basic

 

978

 

 

 

1,047

 

 

 

996

 

 

 

1,067

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share (1)

$

0.59

 

 

$

0.47

 

 

$

2.24

 

 

$

1.84

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding – diluted

 

980

 

 

 

1,049

 

 

 

998

 

 

 

1,069

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share (1)

$

0.59

 

 

$

0.47

 

 

$

2.24

 

 

$

1.84

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends per share

$

0.23

 

 

$

0.18

 

 

$

0.64

 

 

$

0.52

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retained Earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

$

10,749

 

 

$

12,504

 

 

$

11,355

 

 

$

13,224

 

Net earnings 

 

585

 

 

 

499

 

 

 

2,248

 

 

 

1,980

 

Cash dividends

 

(225)

 

 

 

(189)

 

 

 

(636)

 

 

 

(555)

 

Share repurchases

 

(838)

 

 

 

(711)

 

 

 

(2,696)

 

 

 

(2,546)

 

Balance at end of period

$

10,271

 

 

$

12,103

 

 

$

10,271

 

 

$

12,103

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 $582 million for the three months ended October 31, 2014 and $495 million for the three months ended November 1, 2013. Net earnings allocable to common shares used in the basic and diluted earnings per share calculation were $2,235 million for the nine months ended October 31, 2014 and $1,967 million for the nine months ended November 1, 2013.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lowe’s Companies, Inc.

Consolidated Statements of Comprehensive Income (Unaudited)

In Millions, Except Percentage Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

Nine months ended

 

 

October 31, 2014

 

 

November 1, 2013

 

 

October 31, 2014

 

 

November 1, 2013

 

 

 Amount 

Percent

 

 

 Amount 

Percent

 

 

 Amount 

Percent

 

 

 Amount 

Percent

Net earnings

$

585

4.28

 

$

499

3.85

 

$

2,248

5.15

 

$

1,980

4.74

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments – net of tax

 

(23)

(0.17)

 

 

(4)

(0.03)

 

 

(11)

(0.03)

 

 

(29)

(0.07)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive loss

 

(23)

(0.17)

 

 

(4)

(0.03)

 

 

(11)

(0.03)

 

 

(29)

(0.07)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income

$

562

4.11

 

$

495

3.82

 

$

2,237

5.12

 

$

1,951

4.67

 

 

 

Lowe’s Companies, Inc.

Consolidated Balance Sheets

In Millions, Except Par Value Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 (Unaudited) 

 

 

 (Unaudited) 

 

 

 

 

 

 

October 31, 2014

 

 

November 1, 2013

 

 

January 31, 2014

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Current assets:

 

 

 

 

 

 

 

 

 

     Cash and cash equivalents

 

$

1,562

 

$

1,101

 

$

391

     Short-term investments 

 

 

211

 

 

115

 

 

185

     Merchandise inventory – net

 

 

9,762

 

 

9,593

 

 

9,127

     Deferred income taxes – net 

 

 

261

 

 

220

 

 

252

     Other current assets

 

 

334

 

 

336

 

 

341

 

 

 

 

 

 

 

 

 

 

     Total current assets

 

 

12,130

 

 

11,365

 

 

10,296

 

 

 

 

 

 

 

 

 

 

     Property, less accumulated depreciation  

 

 

20,180

 

 

20,973

 

 

20,834

     Long-term investments 

 

 

395

 

 

439

 

 

279

     Other assets

 

 

1,327

 

 

1,300

 

 

1,323

 

 

 

 

 

 

 

 

 

 

     Total assets

 

$

34,032

 

$

34,077

 

$

32,732

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Current liabilities:

 

 

 

 

 

 

 

 

 

     Short-term borrowings

 

$

-

 

$

-

 

$

386

     Current maturities of long-term debt

 

 

551

 

 

51

 

 

49

     Accounts payable

 

 

6,459

 

 

5,776

 

 

5,008

     Accrued compensation and employee benefits 

 

 

676

 

 

705

 

 

785

     Deferred revenue

 

 

1,029

 

 

944

 

 

892

     Other current liabilities

 

 

2,089

 

 

1,927

 

 

1,756

 

 

 

 

 

 

 

 

 

 

     Total current liabilities

 

 

10,804

 

 

9,403

 

 

8,876

 

 

 

 

 

 

 

 

 

 

     Long-term debt, excluding current maturities 

 

 

10,806

 

 

10,090

 

 

10,086

     Deferred income taxes – net  

 

 

92

 

 

322

 

 

291

     Deferred revenue – extended protection plans

 

 

736

 

 

730

 

 

730

     Other liabilities 

 

 

864

 

 

881

 

 

896

 

 

 

 

 

 

 

 

 

 

     Total liabilities

 

 

23,302

 

 

21,426

 

 

20,879

 

 

 

 

 

 

 

 

 

 

     Shareholders’ equity:

 

 

 

 

 

 

 

 

 

     Preferred stock – $5 par value, none issued

 

 

-

 

 

-

 

 

-

     Common stock – $.50 par value; 

 

 

 

 

 

 

 

 

 

Shares issued and outstanding

 

 

 

 

 

 

 

 

 

October 31, 2014

974

 

 

 

 

 

 

 

 

November 1, 2013

1,050

 

 

 

 

 

 

 

 

January 31, 2014

1,030

 

487

 

 

525

 

 

515

     Capital in excess of par value

 

 

-

 

 

-

 

 

-

     Retained earnings

 

 

10,271

 

 

12,103

 

 

11,355

     Accumulated other comprehensive (loss)/income

 

 

(28)

 

 

23

 

 

(17)

 

 

 

 

 

 

 

 

 

 

     Total shareholders’ equity

 

 

10,730

 

 

12,651

 

 

11,853

 

 

 

 

 

 

 

 

 

 

     Total liabilities and shareholders’ equity

 

$

34,032

 

$

34,077

 

$

32,732

 

 

 

 

Lowe’s Companies, Inc.

Consolidated Statements of Cash Flows (Unaudited)

In Millions

 

 

 

 

 

Nine Months Ended

 

October 31, 2014

 

November 1, 2013

Cash flows from operating activities:

 

 

 

Net earnings 

$                   2,248

 

$                      1,980

Adjustments to reconcile net earnings to net cash provided by

 

 

 

operating activities:

 

 

 

Depreciation and amortization

1,199

 

1,167

Deferred income taxes

(201)

 

(117)

Loss on property and other assets – net

24

 

22

Loss on equity method investments

47

 

41

Share-based payment expense

84

 

70

Changes in operating assets and liabilities:

 

 

 

Merchandise inventory – net

(641)

 

(847)

Other operating assets

105

 

(11)

Accounts payable 

1,452

 

1,063

Other operating liabilities

367

 

491

Net cash provided by operating activities

4,684

 

3,859

 

 

 

 

Cash flows from investing activities:

 

 

 

Purchases of investments

(600)

 

(530)

Proceeds from sale/maturity of investments

458

 

391

Capital expenditures

(587)

 

(610)

Contributions to equity method investments – net

(196)

 

(137)

Proceeds from sale of property and other long-term assets

44

 

62

Acquisition of business – net

-

 

(203)

Other – net

(6)

 

4

Net cash used in investing activities

(887)

 

(1,023)

 

 

 

 

Cash flows from financing activities:

 

 

 

Net change in short-term borrowings

(386)

 

-

Net proceeds from issuance of long-term debt

1,239

 

985

Repayment of long-term debt

(36)

 

(34)

Proceeds from issuance of common stock under
share-based payment plans

90

 

117

Cash dividend payments

(597)

 

(543)

Repurchase of common stock

(2,950)

 

(2,797)

Other – net

16

 

(1)

Net cash used in financing activities

(2,624)

 

(2,273)

 

 

 

 

Effect of exchange rate changes on cash

(2)

 

(3)

 

 

 

 

Net increase in cash and cash equivalents

1,171

 

560

Cash and cash equivalents, beginning of period

391

 

541

Cash and cash equivalents, end of period

$                  1,562

 

$                    1,101

 

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