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): May 18, 2022
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 May 18, 2022, 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 first quarter ended April 29, 2022.
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:
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release, datedMay 18, 2022, announcing the financial results of Lowe’s Companies, Inc. for itsfirstquarterendedApril 29, 2022. |
| 99.2 | Infographic relating to the financial results of Lowe’s Companies, Inc. for itsfirstquarterendedApril 29, 2022. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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: May 18, 2022 | By: | /s/ Dan C. Griggs, Jr. |
| Name: | Dan C. Griggs, Jr. | |
| Title: | Senior Vice President, Tax and Chief Accounting Officer |
Document
Exhibit 99.1
May 18, 2022
For 6:00 am ET Release
LOWE’S REPORTS FIRST QUARTER 2022 SALES AND EARNINGS RESULTS
— Consolidated Comparable Sales Decreased 4.0%; U.S. Comparable Sales Decreased 3.8% —
— Represents U.S. Comparable Sales Increase on a Two-Year Basis of 19.7% —
— First Quarter Diluted EPS of $3.51 —
— Affirms Fiscal 2022 Outlook —
MOORESVILLE, N.C. - Lowe’s Companies, Inc. (NYSE: LOW) today reported net earnings of $2.3 billion, in line with prior-year results, and diluted earnings per share (EPS) of $3.51 for the quarter ended April 29, 2022, compared to diluted EPS of $3.21 in the first quarter of 2021.
Total sales for the first quarter were $23.7 billion compared to $24.4 billion in the first quarter of 2021, and comparable sales decreased 4.0%. Comparable sales for the U.S. home improvement business decreased 3.8% for the first quarter. Pro customer sales increased 20%.
“Our sales this quarter were in line with our expectations, excluding our outdoor seasonal categories that were impacted by unseasonably cold temperatures in April. Because 75% of our customer base is DIY, our Q1 sales were disproportionately impacted by the cooler spring temperatures. Now that spring has finally arrived, we are pleased with the improved sales trends we are seeing in May,” commented Marvin R. Ellison, Lowe’s chairman, president and CEO. “This quarter we delivered over 65 basis points of operating margin improvement, driven by our Total Home strategy and the execution of our Perpetual Productivity Improvement or PPI initiatives. Despite some increased uncertainty in the macro environment, we remain confident in the outlook for the home improvement market and our ability to deliver operating margin expansion in 2022. I would like to thank our front-line associates for their ongoing commitment to our customers and our communities.”
Capital Allocation
The company continues to execute a disciplined capital allocation strategy to deliver long-term, sustainable shareholder value. During the quarter, the company repurchased approximately 19 million shares for $4.1 billion, and it paid $537 million in dividends.
As of April 29, 2022, Lowe’s operated 1,971 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.
| Lowe’s Business Outlook |
|---|
The company is affirming its outlook for the operating results of Full Year 2022.
Full Year 2022 Outlook -- a 53-week Year (comparisons to full year 2021 -- a 52-week year)
•Total sales of $97 billion to $99 billion, including the 53rd week
•53rd week expected to increase total sales by approximately $1.0 billion to $1.5 billion
•Comparable sales expected to range from a decline of 1% to an increase of 1%
•Gross margin rate up slightly compared to prior year
•Depreciation and amortization of approximately $1.75 billion
•Operating income as a percentage of sales (operating margin) of 12.8% to 13.0%
•Interest expense of $1.0 to $1.1 billion
•Effective income tax rate of approximately 25%
•Diluted earnings per share of $13.10 to $13.60
•Total share repurchases of approximately $12 billion
•ROIC1 of over 36%
•Capital expenditures of approximately $2 billion
A conference call to discuss first quarter 2022 operating results is scheduled for today, Wednesday, May 18, 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 First Quarter 2022 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 Companies, Inc. |
|---|
Lowe’s Companies, Inc. (NYSE: LOW) is a FORTUNE® 50 home improvement company serving approximately 19 million customer transactions a week in the United States and Canada. With fiscal year 2021 sales of over $96 billion, Lowe’s and its related businesses operate or service nearly 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 volatility and/or lack of liquidity from time to time in U.S. and world financial markets and the consequent reduced availability and/or higher cost of borrowing to Lowe's and its customers, slower rates of growth in real disposable personal income that could affect the rate of growth in consumer spending, inflation and its impacts on discretionary spending and on our costs, shortages, and other disruptions in the labor supply, interest rate and currency fluctuations, home price
1 Return on Invested Capital (ROIC) is calculated using a non-GAAP financial measure. The Company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort.
appreciation or decreasing housing turnover, the availability of consumer credit and of mortgage financing, trade policy changes or additional tariffs, outbreaks of pandemics, fluctuations in fuel and energy costs, inflation or deflation of commodity prices, natural disasters, armed conflicts, acts of both domestic and international terrorism, 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 | Steve Salazar | |
| 704-775-3856 | 704-758-4345 | |
| kate.pearlman@lowes.com | steve.j.salazar@lowes.com |
Lowe’s Companies, Inc.
Consolidated Statements of Current Earnings and (Accumulated Deficit)/Retained Earnings (Unaudited)
In Millions, Except Per Share and Percentage Data
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| April 29, 2022 | April 30, 2021 | |||||
| Current Earnings | Amount | % Sales | Amount | % Sales | ||
| Net sales | $ | 23,659 | 100.00 | $ | 24,422 | 100.00 |
| Cost of sales | 15,609 | 65.97 | 16,292 | 66.71 | ||
| Gross margin | 8,050 | 34.03 | 8,130 | 33.29 | ||
| Expenses: | ||||||
| Selling, general and administrative | 4,303 | 18.19 | 4,494 | 18.40 | ||
| Depreciation and amortization | 445 | 1.88 | 391 | 1.60 | ||
| Operating income | 3,302 | 13.96 | 3,245 | 13.29 | ||
| Interest – net | 243 | 1.03 | 211 | 0.87 | ||
| Pre-tax earnings | 3,059 | 12.93 | 3,034 | 12.42 | ||
| Income tax provision | 726 | 3.07 | 713 | 2.92 | ||
| Net earnings | $ | 2,333 | 9.86 | $ | 2,321 | 9.50 |
| Weighted average common shares outstanding – basic | 660 | 718 | ||||
| Basic earnings per common share (1) | $ | 3.52 | $ | 3.22 | ||
| Weighted average common shares outstanding – diluted | 662 | 720 | ||||
| Diluted earnings per common share (1) | $ | 3.51 | $ | 3.21 | ||
| Cash dividends per share | $ | 0.80 | $ | 0.60 | ||
| (Accumulated Deficit)/Retained Earnings | ||||||
| Balance at beginning of period | $ | (5,115) | $ | 1,117 | ||
| Net earnings | 2,333 | 2,321 | ||||
| Cash dividends declared | (524) | (430) | ||||
| Share repurchases | (4,061) | (2,910) | ||||
| Balance at end of period | $ | (7,367) | $ | 98 |
(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 $2,325 million for the three months ended April 29, 2022, and $2,312 million for the three months ended April 30, 2021.
Lowe’s Companies, Inc.
Consolidated Statements of Comprehensive Income (Unaudited)
In Millions, Except Percentage Data
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| April 29, 2022 | April 30, 2021 | |||||
| Amount | % Sales | Amount | % Sales | |||
| Net earnings | $ | 2,333 | 9.86 | $ | 2,321 | 9.50 |
| Foreign currency translation adjustments – net of tax | (17) | (0.07) | 102 | 0.41 | ||
| Cash flow hedges – net of tax | 219 | 0.93 | 24 | 0.10 | ||
| Other | (2) | (0.01) | (1) | — | ||
| Other comprehensive income | 200 | 0.85 | 125 | 0.51 | ||
| Comprehensive income | $ | 2,533 | 10.71 | $ | 2,446 | 10.01 |
Lowe’s Companies, Inc.
Consolidated Balance Sheets (Unaudited)
In Millions, Except Par Value Data
| April 29, 2022 | April 30, 2021 | January 28, 2022 | ||||
|---|---|---|---|---|---|---|
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 3,414 | $ | 6,692 | $ | 1,133 |
| Short-term investments | 368 | 454 | 271 | |||
| Merchandise inventory – net | 20,239 | 18,382 | 17,605 | |||
| Other current assets | 1,590 | 1,288 | 1,051 | |||
| Total current assets | 25,611 | 26,816 | 20,060 | |||
| Property, less accumulated depreciation | 18,890 | 19,059 | 19,071 | |||
| Operating lease right-of-use assets | 4,131 | 3,886 | 4,108 | |||
| Long-term investments | 76 | 197 | 199 | |||
| Deferred income taxes – net | 33 | 213 | 164 | |||
| Other assets | 984 | 1,029 | 1,038 | |||
| Total assets | $ | 49,725 | $ | 51,200 | $ | 44,640 |
| Liabilities and shareholders' (deficit)/equity | ||||||
| Current liabilities: | ||||||
| Current maturities of long-term debt | $ | 121 | $ | 1,338 | $ | 868 |
| Current operating lease liabilities | 639 | 551 | 636 | |||
| Accounts payable | 13,831 | 13,964 | 11,354 | |||
| Accrued compensation and employee benefits | 1,190 | 1,312 | 1,561 | |||
| Deferred revenue | 2,094 | 2,022 | 1,914 | |||
| Other current liabilities | 3,956 | 3,705 | 3,335 | |||
| Total current liabilities | 21,831 | 22,892 | 19,668 | |||
| Long-term debt, excluding current maturities | 28,776 | 21,906 | 23,859 | |||
| Noncurrent operating lease liabilities | 4,061 | 3,925 | 4,021 | |||
| Deferred revenue – Lowe's protection plans | 1,137 | 1,050 | 1,127 | |||
| Other liabilities | 797 | 982 | 781 | |||
| Total liabilities | 56,602 | 50,755 | 49,456 | |||
| Shareholders' (deficit)/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 – 652 million, 715 million, and 670 million shares, respectively | 326 | 358 | 335 | |||
| Capital in excess of par value | — | — | — | |||
| (Accumulated deficit)/retained earnings | (7,367) | 98 | (5,115) | |||
| Accumulated other comprehensive income/(loss) | 164 | (11) | (36) | |||
| Total shareholders' (deficit)/equity | (6,877) | 445 | (4,816) | |||
| Total liabilities and shareholders' (deficit)/equity | $ | 49,725 | $ | 51,200 | $ | 44,640 |
Lowe’s Companies, Inc.
Consolidated Statements of Cash Flows (Unaudited)
In Millions
| Three Months Ended | ||||
|---|---|---|---|---|
| April 29, 2022 | April 30, 2021 | |||
| Cash flows from operating activities: | ||||
| Net earnings | $ | 2,333 | $ | 2,321 |
| Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||
| Depreciation and amortization | 503 | 443 | ||
| Noncash lease expense | 135 | 124 | ||
| Deferred income taxes | 59 | 110 | ||
| Loss/(gain) on property and other assets – net | 4 | (15) | ||
| Share-based payment expense | 50 | 54 | ||
| Changes in operating assets and liabilities: | ||||
| Merchandise inventory – net | (2,646) | (2,123) | ||
| Other operating assets | (212) | (343) | ||
| Accounts payable | 2,479 | 3,058 | ||
| Deferred revenue | 191 | 442 | ||
| Other operating liabilities | 81 | 421 | ||
| Net cash provided by operating activities | 2,977 | 4,492 | ||
| Cash flows from investing activities: | ||||
| Purchases of investments | (109) | (293) | ||
| Proceeds from sale/maturity of investments | 132 | 347 | ||
| Capital expenditures | (343) | (461) | ||
| Proceeds from sale of property and other long-term assets | 10 | 64 | ||
| Other – net | — | (134) | ||
| Net cash used in investing activities | (310) | (477) | ||
| Cash flows from financing activities: | ||||
| Net proceeds from issuance of debt | 4,964 | 1,988 | ||
| Repayment of debt | (773) | (543) | ||
| Proceeds from issuance of common stock under share-based payment plans | 1 | 9 | ||
| Cash dividend payments | (537) | (440) | ||
| Repurchases of common stock | (4,037) | (3,038) | ||
| Other – net | (4) | 4 | ||
| Net cash used in financing activities | (386) | (2,020) | ||
| Effect of exchange rate changes on cash | — | 7 | ||
| Net increase in cash and cash equivalents | 2,281 | 2,002 | ||
| Cash and cash equivalents, beginning of period | 1,133 | 4,690 | ||
| Cash and cash equivalents, end of period | $ | 3,414 | $ | 6,692 |
exhibit992-04292022
Associates & Communities Financial Highlights U.S. Comparable Sales Summary Product Category Performance 2-Year Comp above company average in 8 of 15 product categories ABOVE COMPANY AVERAGE (vs. Q1 2021) WE RETURNED $4.7 BILLION to our shareholders through dividends and share repurchases “Our sales this quarter were in line with our expectations, excluding our outdoor seasonal categories that were impacted by unseasonably cold temperatures in April. This quarter we delivered over 65 basis points of operating margin improvement, driven by our Total Home strategy and the execution of our Perpetual Productivity Improvement or PPI initiatives. I would like to thank our front-line associates for their ongoing commitment to our customers and our communities.” – Marvin R. Ellison, Chairman & CEO All 15 Regions Delivered 2-year Comp Growth over +9% Q1 2022 RESULTS +8.5% -7.8% -6.9% +24.0% +35.9% +13.9% FEB MAR APR 2022 2021 +8.5% -8.2% -7.2% +23.9% +37.6% +16.0% FEB MAR APR 2022 2021 -14.2% -8.3% +6.3% <$50 $50–$500 >$500 Consolidated Monthly Comp Performance U.S. Monthly Comp Performance U.S. Comp Sales by Ticket Size Delivering on Initiatives • MVPs Pro Rewards and Partnership Program exceeded expectations • Expanded Market Delivery Model to Kentucky/Tennessee Region (4thmarket) • Expanded utilization of Store Inventory Management System driving additional associate productivity • Launched STAINMASTER extensions into Tile and Vinyl • Lowe's Livable Home in 1,400+ stores and online Launched Lowe’s Hometowns, a five year $100 million investment to improve the communities in which we live and work COMP TRANSACTIONS COMP $103.87 AVERAGE TICKET LOWES.COM SALES GROWTH -13.1% +9.3% +2.4% $23.7B IN SALES -3.1% -3.8% 34.03% GROSS MARGIN +74 basis points 13.96% OPERATING MARGIN +67 basis points $3.51 DILUTED EPS +9.3% ELECTRICAL PAINT ROUGH PLUMBING BUILDING MATERIALS U.S. COMP SALES MILLWORK FLOORING DÉCOR LUMBER KITCHENS & BATH APPLIANCES Exhibit 99.2
Total Home Strategy Providing a full complement of products and services for Pros and Consumers alike, enabling a Total Home solution for every need in the home Market Share Acceleration Drive Pro penetration Accelerate online business Expand installation services Drive localization Elevate assortment