MOORESVILLE, N.C., May 22, 2019 /PRNewswire/ -- Lowe's Companies,
Inc. (NYSE: LOW) today reported net earnings of $1.0 billion and diluted earnings per share of
$1.31 for the quarter ended
May 3, 2019, compared to net earnings
of $988 million and diluted earnings
per share of $1.19 in the first
quarter of 2018.
The company previously announced its intention to exit its
Mexico retail operations and had
planned to sell the operating business. However, in the first
quarter after an extensive market evaluation, the decision was made
to instead sell the assets of the business. That decision
resulted in an $82 million tax
benefit in the quarter. The tax benefit offset $12 million of pre-tax operating costs for the
Mexico retail operations in the
quarter.
Excluding the tax benefit and operating costs associated with
the Mexico retail operations,
adjusted diluted earnings per share1 was $1.22.
Sales for the first quarter increased 2.2 percent to
$17.7 billion from $17.4 billion in the first quarter of 2018, and
comparable sales increased 3.5 percent. Comparable sales for the
U.S. home improvement business increased 4.2 percent.
"Our first quarter comparable sales performance is a clear
indication that the consumer is healthy and our focus on retail
fundamentals is gaining traction. Our commitment to improving
in-stocks and customer service coupled with our focus on winning
with the pro customer were integral to driving improved sales,"
commented Marvin R. Ellison, Lowe's
president and CEO. "However, the unanticipated impact of the
convergence of cost pressure, significant transition in our
merchandising organization, and ineffective legacy pricing tools
and processes led to gross margin contraction in the quarter which
impacted earnings. We are taking the necessary actions to
more systematically analyze and implement retail price changes to
mitigate cost pressure. Our recent acquisition of the Retail
Analytics platform from Boomerang Commerce will also assist in
modernizing and digitizing our approach to pricing. We are
still in the early stages of our transformation, and with the
changes we are putting in place, we expect to deliver improved
gross margin performance over the balance of the year.
"I would like to thank all of our associates for their
commitment and dedication to serving our customers and the
communities in which they live and work," added Ellison.
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.
|
Delivering on its commitment to return excess cash to
shareholders, the company repurchased $818
million of stock under its share repurchase program and paid
$385 million in dividends in the
first quarter.
As of May 3, 2019, Lowe's operated
2,002 home improvement and hardware stores in the United States and Canada representing 208.8 million square feet
of retail selling space.
A conference call to discuss first quarter 2019 operating
results is scheduled for today (Wednesday,
May 22) 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 First Quarter 2019 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 on Lowes.com/investor until August 20, 2019.
Adoption of Lease Accounting Standard
During the first quarter, the company adopted ASU No. 2016-02,
which pertains to accounting for leases. Under the standard,
lessees are required to recognize lease right of use assets and
lease liabilities on the balance sheet for all leases. The company
adopted this standard and related amendments during the quarter
using a prospective transition approach, which applies the
provisions of the new standard at the effective date without
adjusting the comparative periods. The adoption of the standard
resulted in an increase in lease-related assets of $3.6 billion, and an increase in lease-related
liabilities of $3.9 billion.
The difference between the increases in lease-related assets and
liabilities, net of the deferred tax impact, was recorded as an
adjustment to beginning retained earnings in fiscal 2019. The
standard had no impact on the company's debt-covenant compliance
under its current agreements.
Lowe's Business Outlook
The company has updated its Fiscal Year 2019 Business Outlook to
reflect the impact of the gross margin contraction identified in
the first quarter.
Fiscal Year 2019 (comparisons to fiscal year
2018)
- Total sales are expected to increase approximately 2
percent.
- Comparable sales are expected to increase approximately 3
percent.
- Operating income as a percentage of sales (operating margin) is
expected to increase 310 to 340 basis points.
- Adjusted operating income as a percentage of sales (adjusted
operating margin) is expected to increase 20 to 50 basis
points.
- The effective income tax rate is expected to be approximately
24%.
- The target leverage ratio is 2.75x, therefore the company
expects to repurchase approximately $4
billion of stock.
- Diluted earnings per share of $5.54 to $5.74 are
expected for the fiscal year ending Jan. 31,
2020.
- Adjusted diluted earnings per share of $5.45 to $5.65 are
expected for the fiscal year ending Jan. 31,
2020.
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" and similar expressions are forward-looking
statements. Forward-looking statements involve estimates,
expectations, projections, goals, forecasts, assumptions, risks and
uncertainties. Forward-looking statements include, but are
not limited to, statements about future financial and operating
results, Lowe's plans, objectives, business outlook, priorities,
expectations and intentions, 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,
Lowe's strategic initiatives, including those relating to
acquisitions and dispositions by Lowe's and the expected impact of
such transactions on our strategic and operational plans and
financial results, and any statement of an assumption underlying
any of the foregoing and other statements that are not historical
facts. Although we believe that the expectations, opinions,
projections and comments reflected in these forward-looking
statements are reasonable, such statements involve risks and
uncertainties and we can give no assurance that such statements
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, inflation or deflation of commodity prices,
recently enacted or proposed tariffs, disruptions caused by our
recent management and key personnel changes, and other factors that
can negatively affect our customers, as well as our ability to: (i)
respond to adverse trends in the housing industry, a reduced rate
of growth in household formation, and slower 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 necessary to
realize the benefits of our strategic initiatives focused on
omni-channel sales and marketing presence and enhance our
efficiency, and otherwise successfully execute on our strategy and
implement our strategic initiatives, including acquisitions,
dispositions and the closing of certain stores and facilities;
(iii) attract, train, and retain highly-qualified associates; (iv)
manage our business effectively as we adapt our operating model to
meet the changing expectations of our customers; (v) maintain,
improve, upgrade and protect our critical information systems from
system outages, data security breaches, ransomware 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, environmental issues or privacy and
data protection; (ix) positively and effectively manage our public
image and reputation and respond appropriately to unanticipated
failures to maintain a high level of product and service quality
that could result in a negative impact on customer confidence and
adversely affect sales; and (x) effectively manage our
relationships with selected suppliers of brand name products and
key vendors and service providers, including third party
installers. In addition, we could experience impairment losses and
other charges if either 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,
or we are required to reduce the carrying amount of our investment
in certain unconsolidated entities. With respect to acquisitions
and dispositions, potential risks include the effect of such
transactions on Lowe's and the target company's or operating
business's strategic relationships, operating results and
businesses generally; our ability to integrate or divest personnel,
labor models, financial, IT and other systems successfully;
disruption of our ongoing business and distraction of management;
hiring additional management and other critical personnel;
increasing or decreasing the scope, geographic diversity and
complexity of our operations; significant integration or
disposition costs or unknown liabilities; and failure to realize
the expected benefits of the transaction. For more information
about these and other risks and uncertainties that we are exposed
to, you should read the "Risk Factors" and "Management's Discussion
and Analysis of Financial Condition and Results of
Operations-Critical Accounting Policies and Estimates" included in
our most recent Annual Report on Form 10-K filed with the U.S.
Securities and Exchange Commission (the "SEC") and the description
of material changes thereto, if any, included in our Quarterly
Reports on Form 10-Q or subsequent filings with the SEC.
The forward-looking statements contained in this news release
are expressly qualified in their entirety by the foregoing
cautionary statements. The foregoing list of important factors that
may affect future results is not exhaustive. When relying on
forward-looking statements to make decisions, investors and others
should carefully consider the foregoing factors and other
uncertainties and potential events. All such forward-looking
statements 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 in the "Risk Factors" included in our most recent
Annual Report on Form 10-K and the description of material changes
thereto, if any, included in our Quarterly Reports on Form 10-Q or
subsequent filings with the SEC. 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, except as may be required by law.
Lowe's Companies, Inc.
Lowe's Companies, Inc. (NYSE: LOW) is a FORTUNE® 50 home
improvement company serving more than 18 million customers a week
in the United States, Canada and Mexico. With fiscal year 2018 sales of
$71.3 billion, Lowe's and its related
businesses operate or service more than 2,200 home improvement and
hardware stores and employ approximately 300,000 people. Founded in
1946 and based in Mooresville,
N.C., Lowe's supports its hometown Charlotte region and all communities it serves
through programs focused on safe, affordable housing and careers in
the skilled trades. 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
|
|
May 3,
2019
|
|
May 4,
2018
|
Current
Earnings
|
Amount
|
|
|
%
Sales
|
|
|
Amount
|
|
|
%
Sales
|
|
Net
sales
|
$
|
17,741
|
|
|
100.00
|
|
|
$
|
17,360
|
|
|
100.00
|
|
Cost of
sales
|
12,160
|
|
|
68.54
|
|
|
11,612
|
|
|
66.89
|
|
Gross
margin
|
5,581
|
|
|
31.46
|
|
|
5,748
|
|
|
33.11
|
|
Expenses:
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
3,862
|
|
|
21.77
|
|
|
3,934
|
|
|
22.66
|
|
Depreciation and
amortization
|
302
|
|
|
1.70
|
|
|
349
|
|
|
2.01
|
|
Operating
income
|
1,417
|
|
|
7.99
|
|
|
1,465
|
|
|
8.44
|
|
Interest -
net
|
162
|
|
|
0.92
|
|
|
160
|
|
|
0.92
|
|
Pre-tax
earnings
|
1,255
|
|
|
7.07
|
|
|
1,305
|
|
|
7.52
|
|
Income tax
provision
|
209
|
|
|
1.17
|
|
|
317
|
|
|
1.83
|
|
Net
earnings
|
$
|
1,046
|
|
|
5.90
|
|
|
$
|
988
|
|
|
5.69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding - basic
|
796
|
|
|
|
|
825
|
|
|
|
Basic earnings per
common share (1)
|
$
|
1.31
|
|
|
|
|
$
|
1.19
|
|
|
|
Weighted average
common shares outstanding - diluted
|
797
|
|
|
|
|
826
|
|
|
|
Diluted earnings
per common share (1)
|
$
|
1.31
|
|
|
|
|
$
|
1.19
|
|
|
|
Cash dividends per
share
|
$
|
0.48
|
|
|
|
|
$
|
0.41
|
|
|
|
|
|
|
|
|
|
|
|
Retained
Earnings
|
|
|
|
|
|
|
|
Balance at beginning
of period
|
$
|
3,452
|
|
|
|
|
$
|
5,425
|
|
|
|
Cumulative effect of
accounting change
|
(263)
|
|
|
|
|
33
|
|
|
|
Net
earnings
|
1,046
|
|
|
|
|
988
|
|
|
|
Cash dividends
declared
|
(382)
|
|
|
|
|
(338)
|
|
|
|
Share
repurchases
|
(758)
|
|
|
|
|
(703)
|
|
|
|
Balance at end of
period
|
$
|
3,095
|
|
|
|
|
$
|
5,405
|
|
|
|
|
|
|
|
|
|
|
|
(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 $1,043 million for the three
months ended May 3, 2019 and $985 million for the three months
ended May 4, 2018.
|
Lowe's Companies,
Inc.
Consolidated
Statements of Comprehensive Income (Unaudited)
In Millions, Except
Percentage Data
|
|
|
Three Months
Ended
|
|
May 3,
2019
|
|
May 4,
2018
|
|
Amount
|
|
|
%
Sales
|
|
|
Amount
|
|
|
%
Sales
|
|
Net
earnings
|
$
|
1,046
|
|
|
5.90
|
|
|
$
|
988
|
|
|
5.69
|
|
Foreign currency
translation adjustments - net of tax
|
(33)
|
|
|
(0.18)
|
|
|
(83)
|
|
|
(0.48)
|
|
Other
|
(15)
|
|
|
(0.09)
|
|
|
—
|
|
|
—
|
|
Other
comprehensive loss
|
(48)
|
|
|
(0.27)
|
|
|
(83)
|
|
|
(0.48)
|
|
Comprehensive
income
|
$
|
998
|
|
|
5.63
|
|
|
$
|
905
|
|
|
5.21
|
|
|
|
|
|
|
|
|
|
Lowe's Companies,
Inc.
Consolidated
Balance Sheets
In Millions, Except
Par Value Data
|
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
May 3,
2019
|
|
May 4,
2018
|
|
February 1,
2019
|
Assets
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
$
|
2,973
|
|
|
$
|
1,565
|
|
|
$
|
511
|
|
Short-term
investments
|
|
|
190
|
|
|
205
|
|
|
218
|
|
Merchandise inventory
- net
|
|
|
15,026
|
|
|
13,204
|
|
|
12,561
|
|
Other current
assets
|
|
|
1,146
|
|
|
1,059
|
|
|
938
|
|
Total current
assets
|
|
|
19,335
|
|
|
16,033
|
|
|
14,228
|
|
Property, less
accumulated depreciation
|
|
|
18,150
|
|
|
19,500
|
|
|
18,432
|
|
Operating lease
right-of-use assets
|
|
|
3,926
|
|
|
—
|
|
|
—
|
|
Long-term
investments
|
|
|
235
|
|
|
321
|
|
|
256
|
|
Deferred income taxes
- net
|
|
|
495
|
|
|
199
|
|
|
294
|
|
Goodwill
|
|
|
303
|
|
|
1,288
|
|
|
303
|
|
Other
assets
|
|
|
775
|
|
|
896
|
|
|
995
|
|
Total
assets
|
|
|
$
|
43,219
|
|
|
$
|
38,237
|
|
|
$
|
34,508
|
|
|
|
|
|
|
|
|
|
Liabilities and
shareholders' equity
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Short-term
borrowings
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
722
|
|
Current maturities of
long-term debt
|
|
|
1,008
|
|
|
896
|
|
|
1,110
|
|
Current operating
lease liabilities
|
|
|
500
|
|
|
—
|
|
|
—
|
|
Accounts
payable
|
|
|
11,485
|
|
|
10,104
|
|
|
8,279
|
|
Accrued compensation
and employee benefits
|
|
|
769
|
|
|
715
|
|
|
662
|
|
Deferred
revenue
|
|
|
1,376
|
|
|
1,439
|
|
|
1,299
|
|
Other current
liabilities
|
|
|
2,643
|
|
|
2,620
|
|
|
2,425
|
|
Total current
liabilities
|
|
|
17,781
|
|
|
15,774
|
|
|
14,497
|
|
Long-term debt,
excluding current maturities
|
|
|
16,542
|
|
|
14,948
|
|
|
14,391
|
|
Noncurrent operating
lease liabilities
|
|
|
4,064
|
|
|
—
|
|
|
—
|
|
Deferred revenue -
extended protection plans
|
|
|
837
|
|
|
808
|
|
|
827
|
|
Other
liabilities
|
|
|
759
|
|
|
962
|
|
|
1,149
|
|
Total
liabilities
|
|
|
39,983
|
|
|
32,492
|
|
|
30,864
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
|
|
Preferred stock - $5
par value, none issued
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Common stock - $0.50
par value;
|
|
|
|
|
|
|
|
Shares issued and
outstanding
|
|
|
|
|
|
|
|
May 3,
2019
|
795
|
|
|
|
|
|
|
|
May 4,
2018
|
822
|
|
|
|
|
|
|
|
February 1,
2019
|
801
|
|
|
397
|
|
|
411
|
|
|
401
|
|
Capital in excess of
par value
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Retained
earnings
|
|
|
3,095
|
|
|
5,405
|
|
|
3,452
|
|
Accumulated other
comprehensive loss
|
|
|
(256)
|
|
|
(71)
|
|
|
(209)
|
|
Total
shareholders' equity
|
|
|
3,236
|
|
|
5,745
|
|
|
3,644
|
|
Total liabilities
and shareholders' equity
|
|
|
$
|
43,219
|
|
|
$
|
38,237
|
|
|
$
|
34,508
|
|
|
|
|
|
|
|
|
|
Lowe's Companies,
Inc.
Consolidated
Statements of Cash Flows (Unaudited)
In
Millions
|
|
|
Three Months
Ended
|
|
May 3,
2019
|
|
May 4,
2018
|
Cash flows from
operating activities:
|
|
|
|
Net
earnings
|
$
|
1,046
|
|
|
$
|
988
|
|
Adjustments to
reconcile net earnings to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
337
|
|
|
387
|
|
Noncash lease
expense
|
114
|
|
|
—
|
|
Deferred income
taxes
|
(106)
|
|
|
(21)
|
|
(Gain) loss on
property and other assets - net
|
(2)
|
|
|
6
|
|
(Gain) loss on cost
method and equity method investments
|
(2)
|
|
|
—
|
|
Share-based payment
expense
|
42
|
|
|
24
|
|
Changes in operating
assets and liabilities:
|
|
|
|
Merchandise inventory
- net
|
(2,478)
|
|
|
(1,846)
|
|
Other operating
assets
|
(273)
|
|
|
(234)
|
|
Accounts
payable
|
3,199
|
|
|
3,521
|
|
Other operating
liabilities
|
260
|
|
|
604
|
|
Net cash provided
by operating activities
|
2,137
|
|
|
3,429
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Purchases of
investments
|
(3)
|
|
|
(573)
|
|
Proceeds from
sale/maturity of investments
|
54
|
|
|
556
|
|
Capital
expenditures
|
(205)
|
|
|
(224)
|
|
Proceeds from sale of
property and other long-term assets
|
24
|
|
|
5
|
|
Other -
net
|
(1)
|
|
|
—
|
|
Net cash used in
investing activities
|
(131)
|
|
|
(236)
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Net change in
short-term borrowings
|
(722)
|
|
|
(1,140)
|
|
Net proceeds from
issuance of long-term debt
|
2,972
|
|
|
—
|
|
Repayment of
long-term debt
|
(616)
|
|
|
(13)
|
|
Proceeds from
issuance of common stock under share-based payment plans
|
32
|
|
|
8
|
|
Cash dividend
payments
|
(385)
|
|
|
(340)
|
|
Repurchase of common
stock
|
(826)
|
|
|
(728)
|
|
Other -
net
|
(9)
|
|
|
(2)
|
|
Net cash provided
by (used in) financing activities
|
446
|
|
|
(2,215)
|
|
|
|
|
|
Effect of exchange
rate changes on cash
|
(2)
|
|
|
(1)
|
|
|
|
|
|
Net increase in cash
and cash equivalents, including cash
classified within current assets held for
sale
|
2,450
|
|
|
977
|
|
Less: Net decrease in
cash classified within current assets
held for sale
|
12
|
|
|
—
|
|
Net increase in cash
and cash equivalents
|
2,462
|
|
|
977
|
|
Cash and cash
equivalents, beginning of period
|
511
|
|
|
588
|
|
Cash and cash
equivalents, end of period
|
$
|
2,973
|
|
|
$
|
1,565
|
|
|
|
|
|
Lowe's Companies, Inc.
Non-GAAP Financial
Measures Reconciliation
To provide additional transparency, the company has presented
the non-GAAP financial measure of adjusted earnings per share and
forecasted adjusted earnings per share to exclude the impact of
certain discrete items, as further described below, not
contemplated in Lowe's original Business Outlook for 2019 to assist
the user in understanding performance relative to that Business
Outlook.
- The company previously announced its intention to exit its
Mexico retail operations and had
planned to sell the operating business. However, in the first
quarter of 2019, after an extensive market evaluation, the decision
was made to instead sell the assets of the business. That
decision resulted in an $82 million
tax benefit in the quarter. The tax benefit offset
$12 million of pre-tax operating
costs for the Mexico retail
operations in the quarter.
In addition, as part of its Business Outlook for 2019, the
company has provided a comparison to the non-GAAP financial measure
of adjusted operating margin for fiscal 2018, which excludes the
impact of certain discrete items, as further described below, not
contemplated in Lowe's original Business Outlook for
2018, to assist the user in further understanding the company's
Business Outlook for fiscal 2019 in comparison to fiscal 2018.
During fiscal 2018, the company recognized the following pre-tax
charges, not contemplated in the company's original Business
Outlook for 2018:
- During the fourth quarter of fiscal 2018, the Company
recorded $952M of goodwill impairment associated with its
Canadian operations (Canadian goodwill impairment);
- On August 17, 2018, the Company committed to exit its
Orchard Supply Hardware operations. As a result, the Company
recognized pre-tax charges of $230 million during the
second quarter of fiscal 2018 associated with long-lived asset
impairments and discontinued projects. During the third quarter of
fiscal 2018, the Company recognized pre-tax charges of $123
million associated with accelerated depreciation and
amortization, severance and lease obligations. During the fourth
quarter of fiscal 2018, the Company recognized additional pre-tax
charges of $208 million primarily related to lease
obligations. Total pre-tax charges for fiscal year 2018
were $561 million (Orchard Supply Hardware charges);
- On October 31, 2018, the company committed to close 20
under-performing stores across the U.S. and 31 locations
in Canada, including 27 under-performing stores. As a result,
the company recognized pre-tax charges of $121
million during the third quarter of fiscal 2018 associated
with long-lived asset impairment and severance obligations. During
the fourth quarter of fiscal 2018, the company recognized
additional pre-tax charges of $150 million, primarily
associated with severance and lease obligation costs, as well as
accelerated depreciation. Total pre-tax charges for fiscal year
2018 were $271 million (U.S. and Canada store
closure charges);
- On November 20, 2018, the company announced its plans to
exit retail operations in Mexico and explore strategic
alternatives. During the third quarter, $22 million of
long-lived asset impairment was recognized on certain assets
in Mexico as a result of the strategic evaluation. During
the fourth quarter, an additional $222 million of
impairment was recognized. Total charges for fiscal year 2018
were $244 million (Mexico impairment
charges);
- During the third quarter of fiscal 2018, the company identified
certain non-core activities within its U.S. home improvement
business to exit, including Alacrity Renovation Services
and Iris Smart Home. As a result, during the third quarter of
2018, the company recognized pre-tax charges of $14
million associated with long-lived asset impairment and
inventory write-down. During the fourth quarter of fiscal 2018, the
company recognized additional pre-tax charges of $32 million.
Total pre-tax charges for fiscal year 2018 were $46
million (Non-core activities charges), and;
- During the fourth quarter of fiscal 2018, the company recorded
pre-tax charges of $13 million, associated with severance
costs due to the elimination of the Project Specialists Interiors
position (Project Specialists Interiors charge).
The company believes these non-GAAP financial measures provide
useful insight for analysts and investors in evaluating the
company's operational performance.
Adjusted diluted earnings per share and adjusted operating
margin should not be considered an alternative to, or more
meaningful indicator of, the company's diluted earnings per share
or operating margin as prepared in accordance with GAAP. The
company's methods of determining these non-GAAP financial measures
may differ from the method used by other companies for this or
similar non-GAAP financial measures. Accordingly, these
non-GAAP measures may not be comparable to the measures used by
other companies.
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)
|
|
May 3,
2019
|
|
May 4,
2018
|
|
Pre-Tax
Earnings
|
|
Tax
|
|
Net
Earnings
|
|
Pre-Tax
Earnings
|
|
Tax
|
|
Net
Earnings
|
Diluted earnings
per share, as reported
|
|
|
|
|
$
|
1.31
|
|
|
|
|
|
|
$
|
1.19
|
|
Non-GAAP
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
Mexico
charges
|
0.01
|
|
|
(0.10)
|
|
|
(0.09)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Adjusted diluted
earnings per share
|
|
|
|
|
$
|
1.22
|
|
|
|
|
|
|
$
|
1.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2019 Lowe's
Business Outlook
|
|
Lower End of
Guidance Range
|
|
Upper End of
Guidance Range
|
|
Pre-Tax
Earnings
|
|
Tax
|
|
Net
Earnings
|
|
Pre-Tax
Earnings
|
|
Tax
|
|
Net
Earnings
|
Forecasted diluted
earnings per share
|
|
|
|
|
$
|
5.54
|
|
|
|
|
|
|
$
|
5.74
|
|
Non-GAAP
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
Mexico
charges
|
0.01
|
|
|
(0.10)
|
|
|
(0.09)
|
|
|
0.01
|
|
|
(0.10)
|
|
|
(0.09)
|
|
Adjusted diluted
earnings per share guidance
|
|
|
|
|
$
|
5.45
|
|
|
|
|
|
|
$
|
5.65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
(millions, except
operating margin)
|
February 1,
2019
|
Operating income,
as reported
|
$
|
4,018
|
|
|
Non-GAAP
adjustments
|
|
|
Canadian goodwill
impairment
|
952
|
|
|
Orchard Supply
Hardware charges
|
561
|
|
|
U.S. and Canada store
closure charges
|
271
|
|
|
Mexico impairment
charges
|
244
|
|
|
Non-core activities
charges
|
46
|
|
|
Project Specialists
Interiors charge
|
13
|
|
|
Adjusted operating
income
|
$
|
6,105
|
|
|
Adjusted operating
margin
|
8.56
|
%
|
|
|
|
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/lowes-reports-first-quarter-sales-and-earnings-results-300854702.html
SOURCE Lowe's Companies, Inc.