LOWE’S REPORTS FIRST QUARTER 2023 SALES AND EARNINGS RESULTS
— Diluted EPS of $3.77; Adjusted Diluted EPS1 of $3.67 —
— Comparable Sales Decreased 4.3% —
— Updates Full Year 2023 Outlook —
MOORESVILLE, N.C., May 23, 2023 – Lowe’s Companies, Inc. (NYSE: LOW) today reported net earnings of $2.3 billion and diluted earnings per share (EPS) of $3.77 for the quarter ended May 5, 2023, compared to diluted EPS of $3.51 in the first quarter of 2022.
During the first quarter, the company recognized a gain associated with the 2022 sale of the Canadian retail business. This positively impacted first quarter diluted EPS by $0.10. Excluding this benefit, the company delivered adjusted diluted EPS1 of $3.67, an increase of 5% compared to prior year.
Total sales for the quarter were $22.3 billion2. Comparable sales decreased 4.3%, driven by lumber deflation, unfavorable weather and lower DIY discretionary sales. Comparable sales are based on comparison to weeks 2-14 in 2022.
“We are pleased with the performance of our business despite record lumber deflation and unfavorable spring weather. Although we delivered positive comparable sales in Pro and online for the first quarter, we are updating our full-year outlook to reflect softer-than-expected consumer demand for discretionary purchases,” said Marvin R. Ellison, Lowe’s chairman, president and CEO. “We remain optimistic about the medium-to-long term outlook for home improvement and our ability to continue to grow market share through our Total Home strategy. I would like to thank all of our front-line associates for their continued hard work and dedication.”
Capital Allocation
The company continues to execute a disciplined capital allocation program to deliver long-term, sustainable shareholder value. During the quarter, the company repurchased approximately 10.6 million shares for $2.1 billion, and it paid $633 million in dividends.
1 Adjusted diluted earnings per share is a non-GAAP financial measure. Refer to the “Non-GAAP Financial Measure Reconciliation” section of this release for additional information as well as a reconciliation between the company’s GAAP and non-GAAP financial results.
2 Total first quarter sales includes approximately $735 million related to a timing shift in our fiscal calendar as we cycle over a 53-week year.
Lowe’s Business Outlook
Based on higher-than-expected lumber deflation and lower-than-expected DIY discretionary sales, the company is updating its outlook for the operating results of full year 2023.
Adjusted operating income, adjusted operating margin, adjusted diluted EPS and adjusted effective income tax rate are non-GAAP financial measures that exclude the gain associated with the 2022 sale of the Canadian retail business, recorded in the first quarter. 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 without unreasonable effort, including timing of adjustments associated with the sale of our Canadian retail business.
Full Year 2023 Outlook – a 52-week Year (comparisons to full year 2022 – a 53-week year)
•Total sales of approximately $87 – $89 billion (previously $88 – 90 billion)
•Comparable sales expected to be down -2% to -4% as compared to prior year (previously flat to down -2%)
•Adjusted operating income as a percentage of sales (adjusted operating margin) of 13.4% to 13.6% (previously 13.6% to 13.8%)
•Interest expense of approximately $1.5 billion
•Adjusted effective income tax rate of approximately 25%
•Adjusted diluted earnings per share of $13.20 to $13.60 (previously $13.60 to $14.00)
•Capital expenditures of up to $2 billion
A conference call to discuss first quarter 2023 operating results is scheduled for today, Tuesday, May 23, 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 First Quarter 2023 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 17 million customer transactions a week in the U.S. With total fiscal year 2022 sales of over $97 billion, approximately $92 billion of sales were generated in the U.S., where Lowe's operates over 1,700 home improvement stores and employs approximately 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 (including objectives related to environmental, social, and governance matters), 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, age of housing stock, 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.
LOW-IR
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Contacts:
Shareholder/Analyst Inquiries:
Media Inquiries:
Kate Pearlman
Steve Salazar
704-775-3856
steve.j.salazar@lowes.com
kate.pearlman@lowes.com
Lowe’s Companies, Inc.
Consolidated Statements of Current Earnings and Accumulated Deficit (Unaudited)
In Millions, Except Per Share and Percentage Data
Three Months Ended
May 5, 2023
April 29, 2022
Current Earnings
Amount
% Sales
Amount
% Sales
Net sales
$
22,347
100.00
$
23,659
100.00
Cost of sales
14,820
66.32
15,609
65.97
Gross margin
7,527
33.68
8,050
34.03
Expenses:
Selling, general and administrative
3,824
17.12
4,303
18.19
Depreciation and amortization
415
1.85
445
1.88
Operating income
3,288
14.71
3,302
13.96
Interest – net
349
1.56
243
1.03
Pre-tax earnings
2,939
13.15
3,059
12.93
Income tax provision
679
3.04
726
3.07
Net earnings
$
2,260
10.11
$
2,333
9.86
Weighted average common shares outstanding – basic
596
660
Basic earnings per common share (1)
$
3.78
$
3.52
Weighted average common shares outstanding – diluted
597
662
Diluted earnings per common share (1)
$
3.77
$
3.51
Cash dividends per share
$
1.05
$
0.80
Accumulated Deficit
Balance at beginning of period
$
(14,862)
$
(5,115)
Net earnings
2,260
2,333
Cash dividends declared
(624)
(524)
Share repurchases
(2,084)
(4,061)
Balance at end of period
$
(15,310)
$
(7,367)
(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 $2,254 million for the three months ended May 5, 2023, and $2,325 million for the three months ended April 29, 2022.
Lowe’s Companies, Inc.
Consolidated Statements of Comprehensive Income (Unaudited)
In Millions, Except Percentage Data
Three Months Ended
May 5, 2023
April 29, 2022
Amount
% Sales
Amount
% Sales
Net earnings
$
2,260
10.11
$
2,333
9.86
Foreign currency translation adjustments – net of tax
—
—
(17)
(0.07)
Cash flow hedges – net of tax
(4)
(0.02)
219
0.93
Other
1
0.01
(2)
(0.01)
Other comprehensive (loss)/income
(3)
(0.01)
200
0.85
Comprehensive income
$
2,257
10.10
$
2,533
10.71
Lowe’s Companies, Inc.
Consolidated Balance Sheets (Unaudited)
In Millions, Except Par Value Data
May 5, 2023
April 29, 2022
Assets
Current assets:
Cash and cash equivalents
$
2,950
$
3,414
Short-term investments
423
368
Merchandise inventory – net
19,522
20,239
Other current assets
1,023
1,590
Total current assets
23,918
25,611
Property, less accumulated depreciation
17,402
18,890
Operating lease right-of-use assets
3,504
4,131
Long-term investments
103
76
Deferred income taxes – net
150
33
Other assets
840
984
Total assets
$
45,917
$
49,725
Liabilities and shareholders' deficit
Current liabilities:
Short-term borrowings
$
72
$
—
Current maturities of long-term debt
589
121
Current operating lease liabilities
525
639
Accounts payable
11,885
13,831
Accrued compensation and employee benefits
766
1,190
Deferred revenue
1,645
2,094
Income taxes payable
526
741
Other current liabilities
3,202
3,215
Total current liabilities
19,210
21,831
Long-term debt, excluding current maturities
35,863
28,776
Noncurrent operating lease liabilities
3,479
4,061
Deferred revenue – Lowe's protection plans
1,206
1,137
Other liabilities
869
797
Total liabilities
60,627
56,602
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 – 592 million and 652 million, respectively
296
326
Accumulated deficit
(15,310)
(7,367)
Accumulated other comprehensive income
304
164
Total shareholders' deficit
(14,710)
(6,877)
Total liabilities and shareholders' deficit
$
45,917
$
49,725
Lowe’s Companies, Inc.
Consolidated Statements of Cash Flows (Unaudited)
In Millions
Three Months Ended
May 5, 2023
April 29, 2022
Cash flows from operating activities:
Net earnings
$
2,260
$
2,333
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization
465
503
Noncash lease expense
108
135
Deferred income taxes
102
59
Asset impairment and loss on property – net
11
4
Gain on sale of business
(67)
—
Share-based payment expense
59
50
Changes in operating assets and liabilities:
Merchandise inventory – net
(990)
(2,646)
Other operating assets
157
(212)
Accounts payable
1,361
2,479
Deferred revenue
48
191
Other operating liabilities
(1,408)
81
Net cash provided by operating activities
2,106
2,977
Cash flows from investing activities:
Purchases of investments
(450)
(109)
Proceeds from sale/maturity of investments
412
132
Capital expenditures
(380)
(343)
Proceeds from sale of property and other long-term assets
8
10
Proceeds from sale of business
123
—
Other – net
(17)
—
Net cash used in investing activities
(304)
(310)
Cash flows from financing activities:
Net change in commercial paper
(427)
—
Net proceeds from issuance of debt
2,983
4,964
Repayment of debt
(22)
(773)
Proceeds from issuance of common stock under share-based payment plans
To provide additional transparency, the Company has presented a comparison to the non-GAAP financial measure of adjusted diluted earnings per share for the three months ended May 5, 2023. This measure excludes the impact of certain items, further described below, not contemplated in Lowe’s Business Outlook to assist analysts and investors in understanding operational performance for the first quarter of fiscal 2023.
Fiscal 2023 Impacts
During fiscal 2023, the Company recognized financial impacts from the following, not contemplated in the Company's Business Outlook for fiscal 2023:
•In the first quarter of fiscal 2023, the Company recognized pre-tax income of $63 million consisting of a realized gain on the contingent consideration and estimated adjustments to the selling price associated with the fiscal 2022 sale of the Canadian retail business (Canadian retail business transaction).
Adjusted diluted earnings per share should not be considered an alternative to, or more meaningful indicator of, the Company’s diluted earnings per share as prepared in accordance with GAAP. The Company’s methods of determining non-GAAP financial measures may differ from the method used by other companies and may not be comparable.
A reconciliation between the Company’s GAAP and non-GAAP financial results is shown below and available on the Company’s website at ir.lowes.com.
Three Months Ended
May 5, 2023
Pre-Tax Earnings
Tax1
Net Earnings
Diluted earnings per share, as reported
$
3.77
Non-GAAP adjustments – per share impacts
Canadian retail business transaction
(0.10)
—
(0.10)
Adjusted diluted earnings per share
$
3.67
1 Represents the corresponding tax benefit or expense specifically related to the item excluded from adjusted diluted earnings per share.
