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Form 8-K LOWES COMPANIES INC For: Aug 17

August 17, 2022 8:46 AM EDT

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LOWES COMPANIES INC0000060667false00000606672022-08-172022-08-17

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): August 17, 2022
low-20220817_g1.jpg
LOWE’S COMPANIES, INC.
(Exact name of registrant as specified in its charter)
North Carolina1-789856-0578072
(State or other jurisdiction
of incorporation)
(Commission File
Number)
(IRS Employer
 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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.50 per shareLOWNew 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 August 17, 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 second quarter ended July 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:




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: August 17, 2022
By:/s/ Dan C. Griggs, Jr.
Name:Dan C. Griggs, Jr.
Title:Senior Vice President, Tax and Chief Accounting Officer




Exhibit 99.1
lowesgraphicimage01a.jpg
August 17, 2022
For 6:00 a.m. ET Release

LOWE’S REPORTS SECOND QUARTER 2022 SALES AND EARNINGS RESULTS
— Consolidated Comparable Sales Decreased 0.3%; U.S. Comparable Sales Increased 0.2% —
— Second Quarter Diluted EPS of $4.67 —

MOORESVILLE, N.C., Aug. 17, 2022 - Lowe’s Companies, Inc. (NYSE: LOW) today reported net earnings of $3.0 billion, in line with prior-year results, and diluted earnings per share (EPS) of $4.67 for the quarter ended July 29, 2022, compared to diluted EPS of $4.25 in the second quarter of 2021.

Total sales for the second quarter were $27.5 billion compared to $27.6 billion in the second quarter of 2021, and comparable sales decreased 0.3%. Comparable sales for the U.S. home improvement business increased 0.2% for the second quarter. DIY sales were impacted by the shortened spring and lower demand in certain discretionary categories, which was partially offset by a 13% increase in Pro customer sales.

“I am pleased that our team drove operating margin improvement and effectively managed inventory despite lower-than-expected sales – a clear reflection of our relentless focus on operating discipline and productivity," commented Marvin R. Ellison, Lowe's chairman, president and CEO. "Our results in the first half were disproportionately impacted by our 75% DIY customer mix, which was partially offset by our double-digit Pro growth for the ninth consecutive quarter. Despite continued macro uncertainty, we remain confident in the long-term strength of the home improvement market and our ability to take share. To help our hourly front-line associates during this period of high inflation, we are awarding an incremental bonus of $55 million. I’d like to thank our associates for their continued hard work and dedication.”

Capital Allocation
With a disciplined focus on its best-in-class capital allocation program, the company continues to create sustainable value for its shareholders. During the quarter, the company repurchased approximately 21.6 million shares for $4.0 billion, and it paid $524 million in dividends.

As of July 29, 2022, Lowe’s operated 1,969 home improvement and hardware stores in the U.S. and Canada representing 208 million square feet of retail selling space, and it serviced approximately 212 dealer-owned stores.





















Lowe’s Business Outlook
The company now expects full year 2022 total and comparable sales toward the bottom end of its outlook range, and expects operating income and diluted EPS toward the top end of its outlook range. This reflects first half sales performance and expectations for continued Pro strength and improving DIY trends. It also reflects the company’s disciplined expense management and benefits of its productivity initiatives.

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 $1.1 to $1.2 billion (previously $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 second quarter 2022 operating results is scheduled for today, Wednesday, August 17, at 9 a.m. 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 Second 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
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.



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 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 PearlmanSteve Salazar
704-775-3856704-881-4272
kate.pearlman@lowes.comsteve.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 EndedSix Months Ended
July 29, 2022July 30, 2021July 29, 2022July 30, 2021
Current EarningsAmount% SalesAmount% SalesAmount% SalesAmount% Sales
Net sales$27,476 100.00 $27,570 100.00 $51,135 100.00 $51,993 100.00 
Cost of sales18,343 66.76 18,258 66.22 33,952 66.40 34,551 66.45 
Gross margin9,133 33.24 9,312 33.78 17,183 33.60 17,442 33.55 
Expenses:
Selling, general and administrative4,455 16.22 4,693 17.02 8,758 17.12 9,187 17.67 
Depreciation and amortization449 1.63 409 1.49 894 1.75 800 1.54 
Operating income4,229 15.39 4,210 15.27 7,531 14.73 7,455 14.34 
Interest – net264 0.96 216 0.78 507 0.99 427 0.82 
Pre-tax earnings3,965 14.43 3,994 14.49 7,024 13.74 7,028 13.52 
Income tax provision 973 3.54 976 3.54 1,699 3.33 1,688 3.25 
Net earnings$2,992 10.89 $3,018 10.95 $5,325 10.41 $5,340 10.27 
Weighted average common shares outstanding – basic
638 705 649 711 
Basic earnings per common share (1)
$4.68 $4.27 $8.18 $7.48 
Weighted average common shares outstanding – diluted
639 707 651 713 
Diluted earnings per common share (1)
$4.67 $4.25 $8.16 $7.46 
Cash dividends per share
$1.05 $0.80 $1.85 $1.40 
(Accumulated Deficit)/Retained Earnings
Balance at beginning of period$(7,367)$98 $(5,115)$1,117 
Net earnings2,992 3,018 5,325 5,340 
Cash dividends declared(666)(563)(1,190)(993)
Share repurchases(3,854)(3,013)(7,915)(5,924)
Balance at end of period$(8,895)$(460)$(8,895)$(460)
(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 $2,983 million for the three months ended July 29, 2022, and $3,007 million for the three months ended July 30, 2021. Net earnings allocable to common shares used in the basic and diluted earnings per share calculation were $5,308 million for the six months ended July 29, 2022, and $5,318 million for the six months ended July 30, 2021.

Lowe’s Companies, Inc.
Consolidated Statements of Comprehensive Income (Unaudited)
In Millions, Except Percentage Data
 Three Months EndedSix Months Ended
 July 29, 2022July 30, 2021July 29, 2022July 30, 2021
 Amount% SalesAmount% SalesAmount% SalesAmount% Sales
Net earnings$2,992 10.89 $3,018 10.95 $5,325 10.41 $5,340 10.27 
Foreign currency translation adjustments – net of tax
12 0.05 (44)(0.17)(5)(0.02)58 0.11 
Cash flow hedges – net of tax(38)(0.14)(9)(0.03)181 0.36 15 0.03 
Other
(1)— (1)— (3)0.01 (2)— 
Other comprehensive (loss)/income(27)(0.09)(54)(0.20)173 0.35 71 0.14 
Comprehensive income$2,965 10.80 $2,964 10.75 $5,498 10.76 $5,411 10.41 





Lowe’s Companies, Inc.
Consolidated Balance Sheets (Unaudited)
In Millions, Except Par Value Data
July 29, 2022July 30, 2021January 28, 2022
Assets
Current assets:
Cash and cash equivalents$1,482 $4,835 $1,133 
Short-term investments 450 1,420 271 
Merchandise inventory – net19,329 17,322 17,605 
Other current assets1,406 1,506 1,051 
Total current assets22,667 25,083 20,060 
Property, less accumulated depreciation18,713 19,031 19,071 
Operating lease right-of-use assets4,158 3,820 4,108 
Long-term investments 56 225 199 
Deferred income taxes – net104 221 164 
Other assets1,027 1,024 1,038 
Total assets$46,725 $49,404 $44,640 
Liabilities and shareholders' deficit
Current liabilities:
Short-term borrowings$— $1,000 $— 
Current maturities of long-term debt121 1,344 868 
Current operating lease liabilities652 557 636 
Accounts payable12,631 12,011 11,354 
Accrued compensation and employee benefits 1,227 1,331 1,561 
Deferred revenue1,968 2,041 1,914 
Other current liabilities3,767 3,380 3,335 
Total current liabilities20,366 21,664 19,668 
Long-term debt, excluding current maturities 28,763 21,967 23,859 
Noncurrent operating lease liabilities4,069 3,841 4,021 
Deferred revenue – Lowe's protection plans1,169 1,097 1,127 
Other liabilities 800 1,010 781 
Total liabilities55,167 49,579 49,456 
Shareholders' deficit:
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 – 631 million, 699 million, and 670 million shares, respectively316 350 335 
Capital in excess of par value— — — 
Accumulated deficit(8,895)(460)(5,115)
Accumulated other comprehensive income/(loss)137 (65)(36)
Total shareholders' deficit(8,442)(175)(4,816)
Total liabilities and shareholders' deficit$46,725 $49,404 $44,640 
  





Lowe’s Companies, Inc.
Consolidated Statements of Cash Flows (Unaudited)
In Millions
Six Months Ended
July 29, 2022July 30, 2021
Cash flows from operating activities:
Net earnings$5,325 $5,340 
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization1,007 907 
Noncash lease expense273 252 
Deferred income taxes— 110 
Loss on property and other assets – net32 
Share-based payment expense110 115 
Changes in operating assets and liabilities:
Merchandise inventory – net(1,728)(1,096)
Other operating assets(120)(203)
Accounts payable 1,279 1,115 
Deferred revenue97 511 
Other operating liabilities(263)(139)
Net cash provided by operating activities6,012 6,913 
Cash flows from investing activities:
Purchases of investments(330)(1,635)
Proceeds from sale/maturity of investments290 692 
Capital expenditures(687)(846)
Proceeds from sale of property and other long-term assets19 78 
Other – net(1)(134)
Net cash used in investing activities(709)(1,845)
Cash flows from financing activities:  
Net proceeds from issuance of debt4,964 2,988 
Repayment of debt(799)(568)
Proceeds from issuance of common stock under share-based payment plans72 63 
Cash dividend payments(1,061)(870)
Repurchases of common stock(8,128)(6,174)
Other – net(2)(366)
Net cash used in financing activities(4,954)(4,927)
Effect of exchange rate changes on cash 4 
Net increase in cash and cash equivalents349 145 
Cash and cash equivalents, beginning of period1,133 4,690 
Cash and cash equivalents, end of period$1,482 $4,835 

Financial Highlights U.S. Comparable Sales Summary Product Category Performance Comp above company average in 8 of 15 product categories We returned $4.5 BILLION to our shareholders through dividends and share repurchases “I am pleased that our team drove operating margin improvement and effectively managed inventory despite lower-than-expected sales – a clear reflection of our relentless focus on operating discipline and productivity. Our results in the first half were disproportionately impacted by our 75% DIY customer mix, which was partially offset by our double-digit Pro growth for the ninth consecutive quarter. Despite continued macro uncertainty, we remain confident in the long-term strength of the home improvement market and our ability to take share.” – Marvin R. Ellison, Chairman & CEO 8 of 15 Regions Delivered Comp Growth Above Company Average Q2 2022 RESULTS -1.5% +0.9% +1.1% -6.4% -1.8% +2.6% MAY JUN JUL 2022 2021 -1.7% +0.2% +0.6% -5.4% -1.2% +2.8% MAY JUN JUL 2022 2021 -8.4% -1.9% +4.7% <$50 $50–$500 >$500 Consolidated Monthly Comp Performance U.S. Monthly Comp Performance U.S. Comp Sales by Ticket Size Associates & Communities To aid our hourly front-line associates during this period of high inflation, we awarded an incremental $55 million bonus COMP TRANSACTIONS COMP $100.40 AVERAGE TICKET LOWES.COM SALES GROWTH - 6.4% +6.6% +7.4% $27.5B IN SALES -0.3% +0.2% 33.24% GROSS MARGIN -54 basis points 15.39% OPERATING MARGIN +12 basis points $4.67 DILUTED EPS +9.9% ELECTRICAL PAINT ROUGH PLUMBING BUILDING MATERIALS U.S. COMP SALES MILLWORK FLOORING LAWN & GARDEN HARDWARE 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


 
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 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 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.


 


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