8-K
LOWES COMPANIES INC (LOW)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 24, 2021
LOWE’S COMPANIES, INC.
(Exact name of registrant as specified in its charter)
| North Carolina | 1-7898 | 56-0578072 | |||
|---|---|---|---|---|---|
| (State or other jurisdiction<br>of incorporation) | (Commission File<br>Number) | (IRS Employer<br> Identification No.) | 1000 Lowes Blvd., Mooresville, NC | 28117 | |
| --- | --- | ||||
| (Address of principal executive offices) | (Zip Code) | ||||
| Registrant’s telephone number, including area code | (704) 758-1000 |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | | --- | --- || ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | | --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.50 per share | LOW | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| ☐ | Emerging growth company | | --- | --- || ☐ | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | | --- | --- |
Item 2.02 Results of Operations and Financial Condition.
On February 24, 2021, Lowe’s Companies, Inc. (the “Company”) issued a press release and related infographic, furnished as Exhibits 99.1 and 99.2, respectively, and incorporated herein by reference, announcing the Company’s financial results for its fourth quarter and year ended January 29, 2021.
The information provided pursuant to Item 2.02, including the exhibits attached hereto, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in any such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| LOWE’S COMPANIES, INC. | ||
|---|---|---|
| Date: February 24, 2021 | By: | /s/ Dan C. Griggs, Jr. |
| Dan C. Griggs, Jr.<br>Senior Vice President, Tax and Chief Accounting Officer |
Document
Exhibit 99.1
February 24, 2021
For 6:00 am ET Release
LOWE’S REPORTS FOURTH QUARTER 2020 SALES AND EARNINGS RESULTS
— U.S. Comparable Sales Increased 28.6% —
— Fourth Quarter Diluted EPS of $1.32; Adjusted Diluted EPS of $1.331 —
— Fiscal 2020 Diluted EPS of $7.75; Adjusted Diluted EPS of $8.861 —
MOORESVILLE, N.C. - Lowe’s Companies, Inc. (NYSE: LOW) today reported net earnings of $978 million and diluted earnings per share (EPS) of $1.32 for the quarter ended January 29, 2021 compared to net earnings of $509 million and diluted EPS of $0.66 in the fourth quarter of 2019. Excluding charges in both periods related to the strategic review of certain operations, fourth quarter adjusted diluted EPS increased 41.5 percent to $1.33 from adjusted diluted EPS of $0.94 in the fourth quarter of 20191.
Total sales for the fourth quarter were $20.3 billion compared to $16.0 billion in the fourth quarter of 2019, and comparable sales increased 28.1 percent. Comparable sales for the U.S. home improvement business increased 28.6 percent for the fourth quarter.
In the fourth quarter, the Company invested over $100 million in COVID-related support of frontline hourly associates, bringing its total COVID-related associate financial support to more than $900 million for fiscal 2020. As a reflection of its commitment to supporting its associates and communities, Lowe’s invested nearly $1.3 billion in COVID-related support for its associates, store safety and community pandemic relief in fiscal 2020.
“Strong execution enabled us to meet broad-based demand driven by the continued consumer focus on the home, with growth over 16% in all merchandising departments, over 19% across all U.S. regions and 121% on Lowes.com. I would like to thank our front-line associates for their continued dedication to serving our customers and communities and supporting safety in our stores. I am pleased with our progress in 2020 as we generated nearly $90 billion in sales, with annual sales growth of over $17 billion, while also enhancing our operating efficiency. Looking ahead to 2021, we expect to grow market share and drive further operating margin expansion,” commented Marvin R. Ellison, Lowe’s president and CEO.
Capital Allocation
The Company repurchased 21.1 million shares for $3.4 billion during the quarter, and it paid $452 million in dividends. For the year, capital returns to shareholders totaled $6.7 billion, with $5.0 billion in share repurchases and $1.7 billion in dividends.
At quarter-end, the Company had $4.7 billion of cash and cash equivalents as well as $3.0 billion in undrawn capacity on its revolving credit facilities, which will be available for any unanticipated liquidity needs.
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.
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 $9 billion in share repurchases and $2 billion in capital expenditures in 2021.
| 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 $90 billion, Lowe’s and its related businesses operate or service more than 2,200 home improvement and hardware stores and employ over 300,000 associates. Based in Mooresville, N.C., Lowe’s supports the communities it serves through programs focused on creating safe, affordable housing and helping to develop the next generation of skilled trade experts. For more information, visit Lowes.com.
| 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.
| 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 $973 million for the three months ended January 29, 2021, and $508 million for the three months ended January 31, 2020. Net earnings allocable to common shares used in the basic and diluted earnings per share calculation were $5,811 million for the fiscal year ended January 29, 2021, and $4,268 million for the fiscal year ended January 31, 2020.
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, $5 par value: Authorized – 5.0 million shares; Issued and outstanding – none | — | — | ||
| Common stock, $0.50 par value: Authorized – 5.6 billion shares; Issued and outstanding – 731 million and 763 million shares, respectively | 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 <br> classified within current assets held for sale | 3,974 | 193 | ||
| Less: Net decrease in cash classified within current <br> assets held for sale | — | 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 |
exhibit992-01292021
Positive Comps Exceeded 16% in all Merchandising Departments Q4 2020 RESULTS U.S. COMPARABLE SALES SUMMARYFINANCIAL HIGHLIGHTS MERCHANDISING DEPARTMENT PERFORMANCE 1 Adjusted Gross Margin, Adjusted Operating Margin, and Adjusted Diluted EPS are non-GAAP financial measures. Refer to Lowes.com/investor for a reconciliation of non-GAAP measures. 2 Beginning on 2/1/2020, the Company changed the basis in which it presents the comparable sales metric. Q4 2019 comp sales have not been adjusted. “All comparisons are to Q4 2019” $20.3B IN SALES +26.7% GROSS MARGIN +70 basis points +28.6% U.S. COMP SALES COMP TRANSACTIONS COMP AVERAGE TICKET LOWES.COM SALES GROWTH 13.9% 14.2% TRANSACTIONS/TICKET COMP SALES BY TICKET SIZE >$500 +29.6% +29.8% +15.2% $50-500 <$50 U.S. MONTHLY COMP PERFORMANCE 2020 20192 NOVEMBER DECEMBER JANUARY +23.8% -0.7% +28.0% +2.1% +35.7% +6.2% Invested an Incremental $100 Million in Financial Assistance for Associates and Committed Millions To Support Communities in Response To COVID-19 +121% Positive Comps Exceeding 19% in All 15 U.S. Regions Our highest priority continues to be protecting the health and safety of our associates and customers through a safe store environment and shopping experience Maintaining Enhanced Store Safety Measures • All frontline hourly associates required to wear masks • Nationwide standard for all customers to wear masks • Providing free masks for customers who need them For more information visit: corporate.lowes.com/covid-19-response Financial Support for Associates • Provided bonuses in January totaling ~$80 million for frontline hourly associates Total COVID-Related Support • Invested nearly $1.3 billion for associates, store safety and community pandemic relief throughout fiscal 2020 LUMBER SEASONAL & OUTDOOR LIVING LAWN & GARDEN PAINT BUILDING MATERIALS ELECTRICAL DÉCOR 31.78% OPERATING MARGIN +152 basis points 7.50% DILUTED EPS +100% $1.32 ADJ. DILUTED EPS1 +41% $1.33 ~$3.9 BILLION TO OUR SHAREHOLDERS THROUGH DIVIDENDS AND SHARE REPURCHASES WE RETURNED ADJ. GROSS MARGIN1 -9 basis points 31.80% ADJ. OPERATING MARGIN1 +41 basis points 7.56% Strong execution enabled us to meet broad-based demand driven by the continued consumer focus on the home, with growth over 16% in all merchandising departments, over 19% across all U.S. regions and 121% on Lowes.com. I would like to thank our front-line associates for their continued dedication to serving our customers and communities and supporting safety in our stores. I am pleased with our progress in 2020, as we generated nearly $90 billion in sales, with annual sales growth of over $17 billion, while also enhancing our operating efficiency. Looking ahead to 2021, we expect to grow market share and drive further operating margin expansion.” –Marvin R. Ellison, Lowe’s President & CEO Lorem ipsum Exhibit 99.2
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Q4 2020 Reconciliation of Non-GAAP Measures Management of Lowe's Companies, Inc. (the Company) uses certain non-GAAP financial measures and considers them to be important supplemental measures of the Company's performance. The Company has presented the non-GAAP financial measures of adjusted gross margin, adjusted operating income, and adjusted diluted earnings per share for comparing its operating performance for the three months ended January 29, 2021, with the respective period ended January 31, 2020. These measures exclude the impacts of certain discrete items, as further described below, not contemplated in Lowe's Business Outlook. These non-GAAP financial measures should not be considered alternatives to, or more meaningful indicators of, the Company's financial measures as prepared in accordance with GAAP. The Company's methods of determining these non- GAAP financial measures may differ from the methods used by other companies and may not be comparable. Fiscal 2020 Impacts During the fourth quarter of 2020, the Company recognized financial impacts from the following discrete item, not contemplated in the Company’s Business Outlook for the fourth quarter: • 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 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 (Canada restructuring). Fiscal 2019 Impacts During the fourth quarter of 2019, the Company recognized financial impacts from the following discrete items, not contemplated in the Company's Business Outlook for the fourth quarter: • 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. During the fourth quarter, pre-tax operating losses associated with the exit and ongoing wind-down of Mexico retail operations totaled $9 million (Mexico adjustments), and; • During 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 actions to improve future performance and profitability of its Canadian operations. 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 (Canada restructuring). The following provides reconciliations of the Company's non-GAAP financial measures to the most directly comparable GAAP financial measures: Three Months Ended Adjusted Gross Margin (in millions) January 29, 2021 January 31, 2020 Gross Margin, As Reported $ 6,456 $ 4,981 Canada restructuring 2 122 Adjusted Gross Margin $ 6,458 $ 5,103 Gross Margin, % of sales 31.78 % 31.08 % Adjusted Gross Margin, % of sales 31.80 % 31.89 %
Three Months Ended Adjusted Operating Income (in millions) January 29, 2021 January 31, 2020 Operating Income, As Reported $ 1,524 $ 958 Canada restructuring 12 176 Mexico adjustments — 9 Adjusted Operating Income $ 1,536 $ 1,143 Operating Margin, % of sales 7.50 % 5.98 % Adjusted Operating Margin, % of sales 7.56 % 7.15 % Three Months Ended January 29, 2021 January 31, 2020 Adjusted Diluted Earnings Per Share Pre-Tax Earnings Tax 1 Net Earnings Pre-Tax Earnings Tax 1 Net Earnings Diluted earnings per share, as reported $ 1.32 $ 0.66 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 1 Represents the corresponding tax benefit or expense related to the item excluded from adjusted diluted earnings per share.
Forward-Looking Statements This presentation 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.