Lowe's Reports Fourth Quarter Sales And Earnings Results

Lowe's Reports Fourth Quarter Sales And Earnings Results-- Comparable Sales Increased 7.3 Percent ---- Diluted Earnings Per Share Increased 58.6 Percent to a Record $0.46 --

MOORESVILLE, N.C., Feb. 25, 2015 /PRNewswire/ -- Lowe's Companies, Inc. (NYSE: LOW) today reported net earnings of $450 million for the quarter ended January 30, 2015, a 47.0 percent increase over the same period a year ago. Diluted earnings per share increased 58.6 percent to $0.46 from $0.29 in the fourth quarter of 2013. For the fiscal year ended January 30, 2015, net earnings increased 18.0 percent from the same period a year ago to $2.7 billion, and diluted earnings per share increased 26.6 percent to $2.71

Lowe's Companies, Inc. Logo

Sales for the fourth quarter increased 7.6 percent to $12.5 billion from $11.7 billion in the fourth quarter of 2013, and comparable sales for the quarter increased 7.3 percent. Comparable sales for the U.S. business increased 7.4%. For the fiscal year, sales were $56.2 billion, a 5.3 percent increase over the same period a year ago, and comparable sales increased 4.3 percent on a consolidated basis and for the U.S. business.

"I would like to thank our employees for their hard work and dedication," commented Robert A. Niblock, Lowe's chairman, president and CEO.  "Their steadfast commitment to serving customers is critical to our success, and an important driver of this quarter's strong results.

"We remain focused on improving our profitability even while investing in key capabilities to drive sales growth," Niblock added.  "Our transformation is gaining momentum, and macroeconomic fundamentals are aligned for modestly stronger home improvement industry growth in 2015." 

Delivering on its commitment to return excess cash to shareholders, the company repurchased $1.0 billion of stock under its share repurchase program and paid $225 million in dividends in the fourth quarter.  For the fiscal year, the company repurchased $3.9 billion of stock under its share repurchase program and paid $822 million in dividends. 

As of January 30, 2015, Lowe's operated 1,840 home improvement and hardware stores in the United States, Canada and Mexico representing 200.9 million square feet of retail selling space.

A conference call to discuss fourth quarter 2014 operating results is scheduled for today (Wednesday, February 25) 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 2014 Earnings Conference Call Webcast.  Supplemental slides will be available fifteen minutes prior to the start of the conference call. A replay of the call will be archived on Lowes.com/investor until May 19, 2015.

Lowe's Business Outlook

Fiscal Year 2015 (comparisons to fiscal year 2014; based on U.S. GAAP unless otherwise noted) 

  • Total sales are expected to increase 4.5 to 5 percent.
  • Comparable sales are expected to increase 4 to 4.5 percent.
  • The company expects to open 15 to 20 home improvement and hardware stores.
  • Earnings before interest and taxes as a percentage of sales (operating margin) are expected to increase 80 to 100 basis points.
  • The effective income tax rate is expected to be approximately 38.1%.
  • Diluted earnings per share of approximately $3.29 are expected for the fiscal year ending January 29, 2016.

Disclosure Regarding Forward-Looking Statements

This news release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"). Statements of the company's 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, the Company's strategic initiatives and any statement of an assumption underlying any of the foregoing, constitute "forward-looking statements" under the Act.   Although we believe that the expectations, opinions, projections, and comments reflected in these forward-looking statements are reasonable, we can give no assurance that such statements will prove to be correct. A wide variety of potential risks, uncertainties, and other factors could materially affect our ability to achieve the results either expressed or implied by our 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, and other factors which can negatively affect our customers, as well as our ability to: (i) respond to adverse trends in the housing industry, such as the psychological effects of lower home prices, and moderating 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 designed to enhance our efficiency and competitiveness; (iii) attract, train, and retain highly-qualified associates; (iv) manage our business effectively as we adapt our traditional operating model to meet the changing expectations of our customers; (v) maintain, improve, upgrade and protect our critical information systems from data security breaches 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 or environmental issues; and (ix) respond to unanticipated weather conditions that could adversely affect sales. In addition, we could experience additional impairment losses if 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. For more information about these and other risks and uncertainties that we are exposed to, you should read the "Risk Factors" and "Critical Accounting Policies and Estimates" included in our Annual Report on Form 10-K to the United States Securities and Exchange Commission (the "SEC") and the description of material changes therein or updated version thereof, if any, included in our Quarterly Reports on Form 10-Q.

The forward-looking statements contained in this news release 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 the "Risk Factors" included in our Annual Report on Form 10-K to the SEC and the description of material changes, if any, therein included in our Quarterly Reports on Form 10-Q.  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.

Lowe's Companies, Inc. (NYSE: LOW) is a FORTUNE® 100 home improvement company serving approximately 16 million customers a week in the United States, Canada and Mexico through its stores and online at lowes.com, lowes.ca and lowes.com.mx.  With fiscal year 2014 sales of $56.2 billion, Lowe's has 1,840 home improvement and hardware stores and more than 265,000 employees.  Founded in 1946 and based in Mooresville, N.C., Lowe's supports the communities it serves through programs that focus on K-12 public education and community improvement projects. 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) 

       
       

January 30, 2015

   

January 31, 2014

   

January 30, 2015

   

January 31, 2014

Current Earnings

     

 Amount 

Percent

   

 Amount 

Percent

   

 Amount 

Percent

   

 Amount 

Percent

Net sales

   

$

12,540

100.00

 

$

11,660

100.00

 

$

56,223

100.00

 

$

53,417

100.00

                                   

Cost of sales

     

8,194

65.34

   

7,618

65.33

   

36,665

65.21

   

34,941

65.41

                                   

Gross margin

     

4,346

34.66

   

4,042

34.67

   

19,558

34.79

   

18,476

34.59

                                   

Expenses:

                                 
                                   

Selling, general and administrative

     

3,165

25.24

   

3,045

26.12

   

13,281

23.62

   

12,865

24.08

                                   

Depreciation

     

362

2.89

   

370

3.17

   

1,485

2.64

   

1,462

2.74

                                   

Interest - net

     

132

1.05

   

128

1.10

   

516

0.92

   

476

0.89

                                   

Total expenses

     

3,659

29.18

   

3,543

30.39

   

15,282

27.18

   

14,803

27.71

                                   

Pre-tax earnings 

     

687

5.48

   

499

4.28

   

4,276

7.61

   

3,673

6.88

                                   

Income tax provision 

     

237

1.90

   

193

1.66

   

1,578

2.81

   

1,387

2.60

                                   

Net earnings

   

$

450

3.58

 

$

306

2.62

 

$

2,698

4.80

 

$

2,286

4.28

                                   
                                   

Weighted average common shares outstanding - basic

     

964

     

1,035

     

988

     

1,059

 
                                   

Basic earnings per common share (1)

   

$

0.46

   

$

0.29

   

$

2.71

   

$

2.14

 
                                   

Weighted average common shares outstanding - diluted

     

967

     

1,037

     

990

     

1,061

 
                                   

Diluted earnings per common share (1)

   

$

0.46

   

$

0.29

   

$

2.71

   

$

2.14

 
                                   

Cash dividends per share

   

$

0.23

   

$

0.18

   

$

0.87

   

$

0.70

 
                                   
                                   

Retained Earnings

                                 

Balance at beginning of period

   

$

10,271

   

$

12,103

   

$

11,355

   

$

13,224

 

Net earnings 

     

450

     

306

     

2,698

     

2,286

 

Cash dividends

     

(222)

     

(186)

     

(858)

     

(741)

 

Share repurchases

     

(908)

     

(868)

     

(3,604)

     

(3,414)

 

Balance at end of period

   

$

9,591

   

$

11,355

   

$

9,591

   

$

11,355

 
                                   
                                   

(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 $447 million for the three months ended January 30, 2015 and $304 million for the three months ended January 31, 2014. Net earnings allocable to common shares used in the basic and diluted earnings per share calculation were $2,682 million for the year ended January 30, 2015 and $2,271 million for the year ended January 31, 2014.

 

Lowe's Companies, Inc.

                             

Consolidated Statements of Comprehensive Income

                 

In Millions, Except Percentage Data

                             
                                   
       

Three months ended

   

Year ended

       

(Unaudited)

   

(Unaudited)

   

(Unaudited)

     
       

January 30, 2015

   

January 31, 2014

   

January 30, 2015

   

January 31, 2014

       

 Amount 

Percent

   

 Amount 

Percent

   

 Amount 

Percent

   

 Amount 

Percent

Net earnings

   

$

450

3.58

 

$

306

2.62

 

$

2,698

4.80

 

$

2,286

4.28

                                   

Foreign currency translation adjustments - net of tax

     

(75)

(0.59)

   

(40)

(0.34)

   

(86)

(0.15)

   

(68)

(0.13)

                                   

Net unrealized investment losses - net of tax

     

-

-

   

-

-

   

-

-

   

(1)

-

                                   

Other comprehensive loss

     

(75)

(0.59)

   

(40)

(0.34)

   

(86)

(0.15)

   

(69)

(0.13)

                                   

Comprehensive income

   

$

375

2.99

 

$

266

2.28

 

$

2,612

4.65

 

$

2,217

4.15

                                   
 

 

Lowe's Companies, Inc.

             

Consolidated Balance Sheets

             

In Millions, Except Par Value Data

             
               
     

 (Unaudited) 

       
     

January 30, 2015

   

January 31, 2014

 

Assets

             
               

     Current assets:

             

     Cash and cash equivalents

 

$

466

 

$

391

 

     Short-term investments 

   

125

   

185

 

     Merchandise inventory - net

   

8,911

   

9,127

 

     Deferred income taxes - net 

   

230

   

252

 

     Other current assets

   

348

   

341

 
               

     Total current assets

   

10,080

   

10,296

 
               

     Property, less accumulated depreciation  

   

20,034

   

20,834

 

     Long-term investments 

   

354

   

279

 

     Other assets

   

1,359

   

1,323

 
               

     Total assets

 

$

31,827

 

$

32,732

 
               

Liabilities and Shareholders' Equity

             
               

     Current liabilities:

             

     Short-term borrowings

 

$

-

 

$

386

 

     Current maturities of long-term debt

   

552

   

49

 

     Accounts payable

   

5,124

   

5,008

 

     Accrued compensation and employee benefits 

 

773

   

785

 

     Deferred revenue

   

979

   

892

 

     Other current liabilities

   

1,920

   

1,756

 
               

     Total current liabilities

   

9,348

   

8,876

 
               

     Long-term debt, excluding current maturities 

 

10,815

   

10,086

 

     Deferred income taxes - net  

   

97

   

291

 

     Deferred revenue - extended protection plans

 

730

   

730

 

     Other liabilities 

   

869

   

896

 
               

     Total liabilities

   

21,859

   

20,879

 
               

     Shareholders' equity:

             

     Preferred stock - $5 par value, none issued

   

-

   

-

 

     Common stock - $.50 par value; 

             

Shares issued and outstanding

             

January 30, 2015

960

           

January 31, 2014

1,030

 

480

   

515

 

     Capital in excess of par value

   

-

   

-

 

     Retained earnings

   

9,591

   

11,355

 

     Accumulated other comprehensive loss

   

(103)

   

(17)

 
               

     Total shareholders' equity

   

9,968

   

11,853

 
               

     Total liabilities and shareholders' equity

$

31,827

 

$

32,732

 
               
               
               

 

Lowe's Companies, Inc.

       

Consolidated Statements of Cash Flows

   

In Millions

       
         
   

Year Ended

   

(Unaudited)

   
   

January 30, 2015

 

January 31, 2014

Cash flows from operating activities:

       

Net earnings 

 

$                       2,698

 

$                      2,286

Adjustments to reconcile net earnings to net cash provided by

       

operating activities:

       

Depreciation and amortization

 

1,586

 

1,562

Deferred income taxes

 

(171)

 

(162)

Loss on property and other assets - net

 

25

 

64

Loss on equity method investments

 

57

 

52

Share-based payment expense

 

119

 

100

Changes in operating assets and liabilities:

       

Merchandise inventory - net

 

170

 

(396)

Other operating assets

 

130

 

(5)

Accounts payable 

 

127

 

291

Other operating liabilities

 

188

 

319

Net cash provided by operating activities

 

4,929

 

4,111

         

Cash flows from investing activities:

       

Purchases of investments

 

(820)

 

(759)

Proceeds from sale/maturity of investments

 

805

 

709

Capital expenditures

 

(880)

 

(940)

Contributions to equity method investments - net

 

(241)

 

(173)

Proceeds from sale of property and other long-term assets

 

52

 

75

Acquisition of business - net

 

-

 

(203)

Other - net

 

(4)

 

5

Net cash used in investing activities

 

(1,088)

 

(1,286)

         

Cash flows from financing activities:

       

Net change in short-term borrowings

 

(386)

 

386

Net proceeds from issuance of long-term debt

 

1,239

 

985

Repayment of long-term debt

 

(48)

 

(47)

Proceeds from issuance of common stock under
   share-based payment plans

 

137

 

165

Cash dividend payments

 

(822)

 

(733)

Repurchase of common stock

 

(3,905)

 

(3,710)

Other - net

 

24

 

(15)

Net cash used in financing activities

 

(3,761)

 

(2,969)

         

Effect of exchange rate changes on cash

 

(5)

 

(6)

         

Net increase/(decrease) in cash and cash equivalents

 

75

 

(150)

Cash and cash equivalents, beginning of year

 

391

 

541

Cash and cash equivalents, end of year

 

$                        466

 

$                       391

         

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SOURCE Lowe's Companies, Inc.