MOORESVILLE, N.C., Feb. 27, 2019 /PRNewswire/ -- Lowe's
Companies, Inc. (NYSE: LOW) today reported a net loss of
$824 million and diluted loss per share of ($1.03) for the quarter ended Feb. 1, 2019, which included pre-tax charges of
$1.6 billion, compared to net
earnings of $554 million and diluted
earnings per share of $0.67 in the
fourth quarter of 2017. Excluding certain charges which are
described below, adjusted diluted earnings per share1
increased 8.1 percent to $0.80 in the
fourth quarter of 2018 compared to adjusted diluted earnings per
share1 of $0.74 in the
fourth quarter of 2017.
The $1.6 billion in pre-tax
charges recognized in the fourth quarter included the
following:
- $952 million related to a
non-cash goodwill impairment charge associated with the company's
Canadian operations;
- $208 million of charges,
primarily lease obligations, related to the previously announced
closing of all Orchard Supply Hardware locations;
- $150 million of charges,
primarily lease and severance obligations as well as accelerated
depreciation and amortization, related to the previously announced
closing of certain underperforming stores in the U.S. and
Canada as well as other locations
in Canada;
- $222 million related to asset
impairment charges associated with the previously announced exit of
retail operations in Mexico;
- $32 million of inventory
write-down, severance obligations and other costs associated with
the wind down of Iris Smart Home;
and
- $13 million in severance
obligations associated with the elimination of the Project
Specialists Interiors position.
Sales for the fourth quarter were $15.6
billion compared to $15.5
billion in the fourth quarter of 2017, and comparable sales
increased 1.7 percent. Comparable sales for the U.S. home
improvement business increased 2.4 percent for the fourth
quarter.
"Overall, we are pleased with the progress we are making in our
business," commented Marvin R.
Ellison, Lowe's president and CEO. "Most of the
intense work over the past six months to transform our company has
been in preparation for an improved spring season and fiscal
2019. Therefore, we are encouraged by an improved comparable
sales progression through the fourth quarter, culminating in U.S.
home improvement comp growth of 5.8% in January. Although we
have remaining work to do, we are pleased with the results we are
seeing in early spring categories, which is evidence that we are
focused on the right actions at this stage of our
transformation.
"U.S. macroeconomic fundamentals remain sound for 2019, and we
will continue to implement process and technology improvements to
capitalize on the immediate opportunity to improve results.
We anticipate continued weakness in the Canadian housing market in
the near-term, but remain confident in our market position in
Canada and the long-term potential
of that business. I would like to thank all of our associates
for their commitment and dedication to serving our customers and
communities," 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 $529
million of stock under its share repurchase program and paid
$387 million in dividends in the
fourth quarter.
As of Feb. 1, 2019, Lowe's
operated 2,015 home improvement and hardware stores in the United States, Canada and Mexico representing 209.5 million square feet
of retail selling space.
A conference call to discuss fourth quarter 2018 operating
results is scheduled for today (Wednesday,
Feb. 27) 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 Fourth Quarter 2018 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 May 21, 2019.
Reclassification of Shipping and Handling Costs
During the fourth quarter of fiscal 2018, the company changed
its accounting policy for shipping and handling costs from its
stores, distribution centers, and other locations to
customers. As a result, shipping and handling costs related
to the delivery of products from the company to customers are
included in cost of sales, whereas previously they were included in
selling, general and administrative expense as well as depreciation
and amortization. This reclassification resulted in a
decrease in gross margin of $289
million in the fourth quarter. The consolidated
statements of current and retained earnings reflect the effect of
this accounting policy change in all years presented, and this
change had no impact on operating income, net earnings, or diluted
earnings per share. The consolidated balance sheets and the
consolidated statements of comprehensive income and cash flows are
not impacted by this accounting policy change.
Accounting Considerations for Fiscal 2019
For fiscal 2019, the company will adopt 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 will
adopt this standard and related amendments in the first quarter of
fiscal 2019 using a prospective transition approach, which applies
the provisions of the new standard at the effective date without
adjusting the comparative periods. The company estimates adoption
of the standard will result in an increase in lease-related assets
of $3.2 billion to $3.6 billion, and an increase in lease-related
liabilities of $3.5 billion to
$3.9 billion. The difference
between the increases in total assets and liabilities will be
recorded as an adjustment to beginning retained earnings in fiscal
2019. The standard will have no impact on the company's
debt-covenant compliance under its current agreements.
Lowe's Business Outlook
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 375 to 385 basis points.
- Adjusted operating income as a percentage of sales (adjusted
operating margin) is expected to increase 85 to 95 basis
points.
- The effective income tax rate is expected to be approximately
24%.
- Diluted earnings per share of $6.00 to $6.10 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, and 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
|
In Millions, Except
Per Share and Percentage Data
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
February 1,
2019
|
|
February 2,
2018
|
|
February 1,
2019
|
|
February 2,
2018
|
Current
Earnings
|
Amount
|
|
%
Sales
|
|
Amount
|
|
%
Sales
|
|
Amount
|
|
%
Sales
|
|
Amount
|
|
%
Sales
|
Net
sales
|
$
|
15,647
|
|
|
100.00
|
|
|
$
|
15,494
|
|
|
100.00
|
|
|
$
|
71,309
|
|
|
100.00
|
|
|
$
|
68,619
|
|
|
100.00
|
|
Cost of
sales
|
10,749
|
|
|
68.70
|
|
|
10,530
|
|
|
67.96
|
|
|
48,401
|
|
|
67.88
|
|
|
46,185
|
|
|
67.31
|
|
Gross
margin
|
4,898
|
|
|
31.30
|
|
|
4,964
|
|
|
32.04
|
|
|
22,908
|
|
|
32.12
|
|
|
22,434
|
|
|
32.69
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
5,097
|
|
|
32.58
|
|
|
3,510
|
|
|
22.66
|
|
|
17,413
|
|
|
24.41
|
|
|
14,444
|
|
|
21.04
|
|
Depreciation and
amortization
|
368
|
|
|
2.35
|
|
|
356
|
|
|
2.30
|
|
|
1,477
|
|
|
2.07
|
|
|
1,404
|
|
|
2.05
|
|
Operating
income/(loss)
|
(567)
|
|
|
(3.63)
|
|
|
1,098
|
|
|
7.08
|
|
|
4,018
|
|
|
5.64
|
|
|
6,586
|
|
|
9.60
|
|
Interest -
net
|
158
|
|
|
1.00
|
|
|
154
|
|
|
0.98
|
|
|
624
|
|
|
0.88
|
|
|
633
|
|
|
0.92
|
|
Loss on
extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
464
|
|
|
0.68
|
|
Pre-tax
earnings/(loss)
|
(725)
|
|
|
(4.63)
|
|
|
944
|
|
|
6.10
|
|
|
3,394
|
|
|
4.76
|
|
|
5,489
|
|
|
8.00
|
|
Income tax
provision
|
99
|
|
|
0.64
|
|
|
390
|
|
|
2.52
|
|
|
1,080
|
|
|
1.52
|
|
|
2,042
|
|
|
2.98
|
|
Net
earnings/(loss)
|
$
|
(824)
|
|
|
(5.27)
|
|
|
$
|
554
|
|
|
3.58
|
|
|
$
|
2,314
|
|
|
3.24
|
|
|
$
|
3,447
|
|
|
5.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding
- basic
|
801
|
|
|
|
|
828
|
|
|
|
|
811
|
|
|
|
|
839
|
|
|
|
Basic
earnings/(loss) per common share (1)
|
$
|
(1.03)
|
|
|
|
|
$
|
0.67
|
|
|
|
|
$
|
2.84
|
|
|
|
|
$
|
4.09
|
|
|
|
Weighted average
common shares outstanding
- diluted
|
801
|
|
|
|
|
829
|
|
|
|
|
812
|
|
|
|
|
840
|
|
|
|
Diluted
earnings/(loss) per common share (1)
|
$
|
(1.03)
|
|
|
|
|
$
|
0.67
|
|
|
|
|
$
|
2.84
|
|
|
|
|
$
|
4.09
|
|
|
|
Cash dividends per
share
|
$
|
0.48
|
|
|
|
|
$
|
0.41
|
|
|
|
|
$
|
1.85
|
|
|
|
|
$
|
1.58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained
Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning
of period
|
$
|
5,156
|
|
|
|
|
$
|
5,289
|
|
|
|
|
$
|
5,425
|
|
|
|
|
$
|
6,241
|
|
|
|
Cumulative effect of
accounting change
|
—
|
|
|
|
|
—
|
|
|
|
|
33
|
|
|
|
|
—
|
|
|
|
Net
earnings/(loss)
|
(824)
|
|
|
|
|
554
|
|
|
|
|
2,314
|
|
|
|
|
3,447
|
|
|
|
Cash dividends
declared
|
(385)
|
|
|
|
|
(340)
|
|
|
|
|
(1,500)
|
|
|
|
|
(1,324)
|
|
|
|
Share
repurchases
|
(495)
|
|
|
|
|
(78)
|
|
|
|
|
(2,820)
|
|
|
|
|
(2,939)
|
|
|
|
Balance at end of
period
|
$
|
3,452
|
|
|
|
|
$
|
5,425
|
|
|
|
|
$
|
3,452
|
|
|
|
|
$
|
5,425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Under the two-class
method, earnings per share is calculated using net earnings/(loss)
allocable to common shares, which is derived by reducing net
earnings by the earnings allocable to participating securities. Net
earnings/(loss) allocable to common shares used in the basic and
diluted earnings per share calculation were $(825) million for the
three months ended February 1, 2019 and $553 million for the
three months ended February 2, 2018. Net earnings allocable to
common shares used in the basic and diluted earnings per share
calculation were $2,307 million for the year ended February 1,
2019 and $3,436 million for the year ended February 2,
2018.
|
Lowe's Companies,
Inc.
|
Consolidated
Statements of Comprehensive Income
|
In Millions, Except
Percentage Data
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
February 1,
2019
|
|
February 2,
2018
|
|
February 1,
2019
|
|
February 2,
2018
|
|
Amount
|
|
%
Sales
|
|
Amount
|
|
%
Sales
|
|
Amount
|
|
%
Sales
|
|
Amount
|
|
%
Sales
|
Net
earnings/(loss)
|
$
|
(824)
|
|
|
(5.27)
|
|
|
$
|
554
|
|
|
3.58
|
|
|
$
|
2,314
|
|
|
3.24
|
|
|
$
|
3,447
|
|
|
5.02
|
|
Foreign currency
translation adjustments -
net of tax
|
(46)
|
|
|
(0.27)
|
|
|
(26)
|
|
|
(0.17)
|
|
|
(221)
|
|
|
(0.30)
|
|
|
251
|
|
|
0.37
|
|
Net unrealized
investment gain - net of tax
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Other
comprehensive income/(loss)
|
(44)
|
|
|
(0.27)
|
|
|
(26)
|
|
|
(0.17)
|
|
|
(220)
|
|
|
(0.30)
|
|
|
251
|
|
|
0.37
|
|
Comprehensive
income/(loss)
|
$
|
(868)
|
|
|
(5.54)
|
|
|
$
|
528
|
|
|
3.41
|
|
|
$
|
2,094
|
|
|
2.94
|
|
|
$
|
3,698
|
|
|
5.39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lowe's Companies,
Inc.
|
Consolidated
Balance Sheets
|
In Millions, Except
Par Value Data
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
February 1,
2019
|
|
February 2,
2018
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
$
|
511
|
|
|
$
|
588
|
|
Short-term
investments
|
|
|
218
|
|
|
102
|
|
Merchandise inventory
- net
|
|
|
12,561
|
|
|
11,393
|
|
Other current
assets
|
|
|
938
|
|
|
689
|
|
Total current
assets
|
|
|
14,228
|
|
|
12,772
|
|
Property, less
accumulated depreciation
|
|
|
18,432
|
|
|
19,721
|
|
Long-term
investments
|
|
|
256
|
|
|
408
|
|
Deferred income taxes
- net
|
|
|
294
|
|
|
168
|
|
Goodwill
|
|
|
303
|
|
|
1,307
|
|
Other
assets
|
|
|
995
|
|
|
915
|
|
Total
assets
|
|
|
$
|
34,508
|
|
|
$
|
35,291
|
|
|
|
|
|
|
|
Liabilities and
shareholders' equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Short-term
borrowings
|
|
|
$
|
722
|
|
|
$
|
1,137
|
|
Current maturities of
long-term debt
|
|
|
1,110
|
|
|
294
|
|
Accounts
payable
|
|
|
8,279
|
|
|
6,590
|
|
Accrued compensation
and employee benefits
|
|
|
662
|
|
|
747
|
|
Deferred
revenue
|
|
|
1,299
|
|
|
1,378
|
|
Other current
liabilities
|
|
|
2,425
|
|
|
1,950
|
|
Total current
liabilities
|
|
|
14,497
|
|
|
12,096
|
|
Long-term debt,
excluding current maturities
|
|
|
14,391
|
|
|
15,564
|
|
Deferred revenue -
extended protection plans
|
|
|
827
|
|
|
803
|
|
Other
liabilities
|
|
|
1,149
|
|
|
955
|
|
Total
liabilities
|
|
|
30,864
|
|
|
29,418
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
Preferred stock - $5
par value, none issued
|
|
|
—
|
|
|
—
|
|
Common stock - $0.50
par value;
|
|
|
|
|
|
Shares issued and
outstanding
|
|
|
|
|
|
February 1,
2019
|
801
|
|
|
|
|
|
February 2,
2018
|
830
|
|
|
401
|
|
|
415
|
|
Capital in excess of
par value
|
|
|
—
|
|
|
22
|
|
Retained
earnings
|
|
|
3,452
|
|
|
5,425
|
|
Accumulated other
comprehensive income/(loss)
|
|
|
(209)
|
|
|
11
|
|
Total
shareholders' equity
|
|
|
3,644
|
|
|
5,873
|
|
Total liabilities
and shareholders' equity
|
|
|
$
|
34,508
|
|
|
$
|
35,291
|
|
|
|
|
|
|
|
Lowe's Companies,
Inc.
|
Consolidated
Statements of Cash Flows
|
In
Millions
|
|
|
Year
Ended
|
|
(Unaudited)
|
|
|
|
February 1,
2019
|
|
February 2,
2018
|
Cash flows from
operating activities:
|
|
|
|
Net
earnings
|
$
|
2,314
|
|
|
$
|
3,447
|
|
Adjustments to
reconcile net earnings to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
1,607
|
|
|
1,540
|
|
Deferred income
taxes
|
(151)
|
|
|
53
|
|
Loss on property and
other assets - net
|
630
|
|
|
40
|
|
Impairment of
goodwill
|
952
|
|
|
—
|
|
Loss on
extinguishment of debt
|
—
|
|
|
464
|
|
(Gain) loss on cost
method and equity method investments
|
9
|
|
|
(82)
|
|
Share-based payment
expense
|
74
|
|
|
99
|
|
Changes in operating
assets and liabilities:
|
|
|
|
Merchandise inventory
- net
|
(1,289)
|
|
|
(791)
|
|
Other operating
assets
|
(110)
|
|
|
250
|
|
Accounts
payable
|
1,720
|
|
|
(92)
|
|
Other operating
liabilities
|
437
|
|
|
137
|
|
Net cash provided
by operating activities
|
6,193
|
|
|
5,065
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Purchases of
investments
|
(1,373)
|
|
|
(981)
|
|
Proceeds from
sale/maturity of investments
|
1,393
|
|
|
1,114
|
|
Capital
expenditures
|
(1,174)
|
|
|
(1,123)
|
|
Proceeds from sale of
property and other long-term assets
|
76
|
|
|
45
|
|
Acquisition of
business - net
|
—
|
|
|
(509)
|
|
Other -
net
|
(2)
|
|
|
13
|
|
Net cash used in
investing activities
|
(1,080)
|
|
|
(1,441)
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Net change in
short-term borrowings
|
(415)
|
|
|
625
|
|
Net proceeds from
issuance of long-term debt
|
—
|
|
|
2,968
|
|
Repayment of
long-term debt
|
(326)
|
|
|
(2,849)
|
|
Proceeds from
issuance of common stock under share-based payment plans
|
114
|
|
|
139
|
|
Cash dividend
payments
|
(1,455)
|
|
|
(1,288)
|
|
Repurchase of common
stock
|
(3,037)
|
|
|
(3,192)
|
|
Other -
net
|
(5)
|
|
|
(10)
|
|
Net cash used in
financing activities
|
(5,124)
|
|
|
(3,607)
|
|
|
|
|
|
Effect of exchange
rate changes on cash
|
(12)
|
|
|
13
|
|
|
|
|
|
Net
increase/(decrease) in cash and cash equivalents,
including cash classified within current
assets held for sale
|
(23)
|
|
|
30
|
|
Less: Net increase in
cash classified within current assets held for sale
|
(54)
|
|
|
—
|
|
Net
increase/(decrease) in cash and cash equivalents
|
(77)
|
|
|
30
|
|
Cash and cash
equivalents, beginning of period
|
588
|
|
|
558
|
|
Cash and cash
equivalents, end of period
|
$
|
511
|
|
|
$
|
588
|
|
|
|
|
|
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 for
the quarters ended February 1, 2019
and February 2, 2018, to exclude the
impact of certain discrete items, as further described below, not
contemplated in Lowe's original Business Outlook for 2018 or 2017,
respectively, to assist the user in understanding performance
relative to those Business Outlooks and comparative performance
between fiscal years.
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.
The company believes these non-GAAP financial measures provide
useful insight for analysts and investors in evaluating the
company's operational performance.
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 is exploring 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).
During the fourth quarter of fiscal 2017, the company recognized
the following charges, not contemplated in the company's original
Business Outlook for 2017:
- The Company recognized $66
million or $0.05 per share
related to the one-time cash bonus to eligible hourly U.S.
employees (One-time cash bonus attributable to tax reform),
and;
- The Company recognized $20
million or $0.02 per share tax
charge associated with the Tax Cuts and Jobs Act of 2017 (Impact of
tax reform).
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 this non-GAAP financial measure
may differ from the method used by other companies for this or
similar non-GAAP financial measures. Accordingly, this non-GAAP
measure 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)
|
|
February 1,
2019
|
|
February 2,
2018
|
(millions, except per
share data)
|
Pre-Tax
Earnings
|
|
Tax
|
|
Net
Earnings
|
|
Pre-Tax
Earnings
|
|
Tax
|
|
Net
Earnings
|
Diluted
earnings/(loss) per share, as reported
|
|
|
|
|
$
|
(1.03)
|
|
|
|
|
|
|
$
|
0.67
|
|
Non-GAAP
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
Canadian goodwill
impairment
|
1.19
|
|
|
(0.03)
|
|
|
1.16
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Orchard Supply
Hardware charges
|
0.25
|
|
|
(0.05)
|
|
|
0.20
|
|
|
—
|
|
|
—
|
|
|
—
|
|
U.S. & Canada
store closure charges
|
0.18
|
|
|
(0.05)
|
|
|
0.13
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Mexico impairment
charges
|
0.28
|
|
|
0.01
|
|
|
0.29
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Non-core activities
charges
|
0.04
|
|
|
(0.01)
|
|
|
0.03
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Project Specialists
Interiors charge
|
0.02
|
|
|
—
|
|
|
0.02
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Impact of tax
reform
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.02
|
|
|
0.02
|
|
One-time cash bonus
attributable to tax reform
|
—
|
|
|
—
|
|
|
—
|
|
|
0.08
|
|
|
(0.03)
|
|
|
0.05
|
|
Adjusted diluted
earnings per share
|
|
|
|
|
$
|
0.80
|
|
|
|
|
|
|
$
|
0.74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
|
|
(Unaudited)
|
(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. & 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
|
%
|
|
|
|
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SOURCE Lowe's Companies, Inc.