The items referenced above for the fourth quarter consisted of the following:
$0.06 per share for severance-related costs associated with the company's productivity efforts;$0.04 per share for a tax charge primarily related to the issuance of final Internal Revenue Code Section 987 regulations inDecember 2016 ; and$0.02 per share for the premium paid to acquire the outstanding RONA preferred shares.
For the fiscal year ended
In addition to the items referenced above, the fiscal year also included the following:
$0.05 per share for the net gain on the settlement of a foreign currency hedge entered into in advance of the company's acquisition of RONA in the first half of the year;$0.33 per share for a charge related to the joint venture with Woolworths inAustralia recognized in the third quarter;$0.07 per share for project write-offs recognized in the third quarter that were canceled as a part of the company's ongoing review of strategic initiatives in an effort to focus on the critical projects that will drive desired outcomes; and$0.05 per share for goodwill and long-lived asset impairment charges associated with the company's Orchard Supply Hardware operations as part of a strategic reassessment of this business during the third quarter.
1 Adjusted diluted earnings per share are non-GAAP financial measures. 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.
Sales for the fourth quarter increased 19.2 percent to
"We achieved strong fourth quarter results, delivering comparable sales growth and adjusted earnings per share above our expectations," commented
"We've entered 2017 well-positioned to capitalize on a favorable macroeconomic backdrop for home improvement by continuing to execute on our strategies to expand customer reach and develop capabilities to anticipate and support their needs. We remain committed to making productivity a core strength and investing in future capabilities that will add the most value for customers. We have the vision, the drive, the plan, and the leadership team to deliver long-term value for customer and shareholders," Niblock added.
Delivering on its commitment to return excess cash to shareholders, the company repurchased
As of
A conference call to discuss fourth quarter 2016 operating results is scheduled for today (
Lowe's Business Outlook
Fiscal Year 2017 -- a 52-week Year (comparisons to fiscal year 2016 -- a 53-week year; based on
- Total sales are expected to increase approximately 5 percent
- Comparable sales are expected to increase approximately 3.5 percent
- The company expects to add approximately 35 home improvement and hardware stores.
- Earnings before interest and taxes as a percentage of sales (operating margin) are expected to increase approximately 120 basis points2.
- The effective income tax rate is expected to be approximately 37.8%.
- Diluted earnings per share of approximately
$4.64 are expected for the fiscal year endingFebruary 2, 2018 .
2 Includes the net gain on the settlement of the foreign currency hedge entered into in advance of the company's acquisition of RONA (1Q 2016 and 2Q 2016) and the impact of the non-cash charge associated with the joint venture with Woolworths in
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,
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, and other factors that can negatively affect our customers, as well as our ability to: (i) respond to adverse trends in the housing industry, such as a demographic shift from single family to multi-family housing, 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; (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; (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 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 that are accounted for under the equity method. With respect to the acquisition of RONA inc., potential risks include the effect of the transaction on
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
|
|||||||||||||||||
Consolidated Statements of Current and Retained Earnings |
|||||||||||||||||
In Millions, Except Per Share and Percentage Data |
|||||||||||||||||
Three months ended |
Year ended |
||||||||||||||||
(Unaudited) |
(Unaudited) |
(Unaudited) |
|||||||||||||||
|
|
|
|
||||||||||||||
Current Earnings |
Amount |
% Sales |
Amount |
% Sales |
Amount |
% Sales |
Amount |
% Sales |
|||||||||
Net sales |
$ |
15,784 |
100.00 |
$ |
13,236 |
100.00 |
$ |
65,017 |
100.00 |
$ |
59,074 |
100.00 |
|||||
Cost of sales |
10,352 |
65.59 |
8,648 |
65.34 |
42,553 |
65.45 |
38,504 |
65.18 |
|||||||||
Gross margin |
5,432 |
34.41 |
4,588 |
34.66 |
22,464 |
34.55 |
20,570 |
34.82 |
|||||||||
Expenses: |
|||||||||||||||||
Selling, general and administrative |
3,789 |
23.99 |
3,777 |
28.54 |
15,129 |
23.27 |
14,105 |
23.88 |
|||||||||
Depreciation and amortization |
374 |
2.37 |
372 |
2.81 |
1,489 |
2.29 |
1,494 |
2.53 |
|||||||||
Operating income |
1,269 |
8.05 |
439 |
3.31 |
5,846 |
8.99 |
4,971 |
8.41 |
|||||||||
Interest - net |
159 |
1.01 |
144 |
1.08 |
645 |
0.99 |
552 |
0.93 |
|||||||||
Pre-tax earnings |
1,110 |
7.04 |
295 |
2.23 |
5,201 |
8.00 |
4,419 |
7.48 |
|||||||||
Income tax provision |
447 |
2.84 |
284 |
2.14 |
2,108 |
3.24 |
1,873 |
3.17 |
|||||||||
Net earnings |
$ |
663 |
4.20 |
$ |
11 |
0.09 |
$ |
3,093 |
4.76 |
$ |
2,546 |
4.31 |
|||||
Weighted average common shares outstanding - basic |
867 |
910 |
880 |
927 |
|||||||||||||
Basic earnings per common share (1) |
$ |
0.74 |
$ |
0.01 |
$ |
3.48 |
$ |
2.73 |
|||||||||
Weighted average common shares outstanding - diluted |
868 |
912 |
881 |
929 |
|||||||||||||
Diluted earnings per common share (1) |
$ |
0.74 |
$ |
0.01 |
$ |
3.47 |
$ |
2.73 |
|||||||||
Cash dividends per share |
$ |
0.35 |
$ |
0.28 |
$ |
1.33 |
$ |
1.07 |
|||||||||
Retained Earnings |
|||||||||||||||||
Balance at beginning of period |
$ |
6,376 |
$ |
8,298 |
$ |
7,593 |
$ |
9,591 |
|||||||||
Net earnings attributable to |
663 |
11 |
3,091 |
2,546 |
|||||||||||||
Cash dividends |
(304) |
(255) |
(1,169) |
(991) |
|||||||||||||
Share repurchases |
(494) |
(461) |
(3,274) |
(3,553) |
|||||||||||||
Balance at end of period |
$ |
6,241 |
$ |
7,593 |
$ |
6,241 |
$ |
7,593 |
|||||||||
(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 |
|||||||||||||||||
|
|||||||||||||||||
Consolidated Statements of Comprehensive Income |
|||||||||||||||||
In Millions, Except Percentage Data |
|||||||||||||||||
Three months ended |
Year ended |
||||||||||||||||
(Unaudited) |
(Unaudited) |
(Unaudited) |
|||||||||||||||
|
|
|
|
||||||||||||||
Amount |
% Sales |
Amount |
% Sales |
Amount |
% Sales |
Amount |
% Sales |
||||||||||
Net earnings |
$ |
663 |
4.20 |
$ |
11 |
0.09 |
$ |
3,093 |
4.76 |
$ |
2,546 |
4.31 |
|||||
Foreign currency translation adjustments - net of tax |
(27) |
(0.17) |
(15) |
(0.11) |
154 |
0.23 |
(291) |
(0.49) |
|||||||||
Other comprehensive income/(loss) |
(27) |
(0.17) |
(15) |
(0.11) |
154 |
0.23 |
(291) |
(0.49) |
|||||||||
Comprehensive income/(loss) |
$ |
636 |
4.03 |
$ |
(4) |
(0.02) |
$ |
3,247 |
4.99 |
$ |
2,255 |
3.82 |
|||||
|
|||||||
Consolidated Balance Sheets |
|||||||
In Millions, Except Par Value Data |
|||||||
(Unaudited) |
|||||||
|
|
||||||
Assets |
|||||||
Current assets: |
|||||||
Cash and cash equivalents |
$ |
558 |
$ |
405 |
|||
Short-term investments |
100 |
307 |
|||||
Merchandise inventory - net |
10,458 |
9,458 |
|||||
Other current assets |
884 |
391 |
|||||
Total current assets |
12,000 |
10,561 |
|||||
Property, less accumulated depreciation |
19,949 |
19,577 |
|||||
Long-term investments |
366 |
222 |
|||||
Deferred income taxes - net |
222 |
241 |
|||||
|
1,082 |
154 |
|||||
Other assets |
789 |
511 |
|||||
Total assets |
$ |
34,408 |
$ |
31,266 |
|||
Liabilities and equity |
|||||||
Current liabilities: |
|||||||
Short-term borrowings |
$ |
510 |
$ |
43 |
|||
Current maturities of long-term debt |
795 |
1,061 |
|||||
Accounts payable |
6,651 |
5,633 |
|||||
Accrued compensation and employee benefits |
790 |
820 |
|||||
Deferred revenue |
1,253 |
1,078 |
|||||
Other current liabilities |
1,975 |
1,857 |
|||||
Total current liabilities |
11,974 |
10,492 |
|||||
Long-term debt, excluding current maturities |
14,394 |
11,545 |
|||||
Deferred revenue - extended protection plans |
763 |
729 |
|||||
Other liabilities |
843 |
846 |
|||||
Total liabilities |
27,974 |
23,612 |
|||||
Equity: |
|||||||
Preferred stock - |
- |
- |
|||||
Common stock - |
|||||||
Shares issued and outstanding |
|||||||
|
866 |
||||||
|
910 |
433 |
455 |
||||
Capital in excess of par value |
- |
- |
|||||
Retained earnings |
6,241 |
7,593 |
|||||
Accumulated other comprehensive loss |
(240) |
(394) |
|||||
Total equity |
6,434 |
7,654 |
|||||
Total liabilities and equity |
$ |
34,408 |
$ |
31,266 |
|||
|
||||
Consolidated Statements of Cash Flows |
||||
In Millions |
||||
Year Ended |
||||
(Unaudited) |
||||
|
|
|||
Cash flows from operating activities: |
||||
Net earnings |
$ 3,093 |
$ 2,546 |
||
Adjustments to reconcile net earnings to net cash provided by |
||||
operating activities: |
||||
Depreciation and amortization |
1,590 |
1,587 |
||
Deferred income taxes |
28 |
(68) |
||
Loss on property and other assets - net |
143 |
30 |
||
Loss on cost method and equity method investments |
302 |
594 |
||
Share-based payment expense |
90 |
117 |
||
Changes in operating assets and liabilities: |
||||
Merchandise inventory - net |
(178) |
(582) |
||
Other operating assets |
(183) |
(34) |
||
Accounts payable |
653 |
524 |
||
Other operating liabilities |
79 |
70 |
||
Net cash provided by operating activities |
5,617 |
4,784 |
||
Cash flows from investing activities: |
||||
Purchases of investments |
(1,192) |
(934) |
||
Proceeds from sale/maturity of investments |
1,254 |
884 |
||
Capital expenditures |
(1,167) |
(1,197) |
||
Contributions to equity method investments - net |
- |
(125) |
||
Proceeds from sale of property and other long-term assets |
37 |
57 |
||
Purchases of derivative instruments |
(103) |
- |
||
Proceeds from settlement of derivative instruments |
179 |
- |
||
Acquisition of business - net |
(2,356) |
- |
||
Other - net |
(13) |
(28) |
||
Net cash used in investing activities |
(3,361) |
(1,343) |
||
Cash flows from financing activities: |
||||
Net change in short-term borrowings |
466 |
43 |
||
Net proceeds from issuance of long-term debt |
3,267 |
1,718 |
||
Repayment of long-term debt |
(1,173) |
(552) |
||
Proceeds from issuance of common stock under |
139 |
125 |
||
Cash dividend payments |
(1,121) |
(957) |
||
Repurchase of common stock |
(3,595) |
(3,925) |
||
Other - net |
(75) |
55 |
||
Net cash used in financing activities |
(2,092) |
(3,493) |
||
Effect of exchange rate changes on cash |
(11) |
(9) |
||
Net increase/(decrease) in cash and cash equivalents |
153 |
(61) |
||
Cash and cash equivalents, beginning of period |
405 |
466 |
||
Cash and cash equivalents, end of period |
$ 558 |
$ 405 |
||
|
|||||||||||||
Non-GAAP Financial Measures Reconciliation |
|||||||||||||
To provide additional transparency, the company has presented non-GAAP financial measures of adjusted earnings per share to exclude the impact of certain discrete items, as further described in the related earnings release, not contemplated in Lowe's Business Outlook for 2016 to assist the user in understanding performance relative to that Business Outlook. The company believes this non-GAAP financial measure provides useful insight for analysts and investors in evaluating what management considers the company's core financial performance. |
|||||||||||||
Three Months Ended |
|||||||||||||
(Unaudited) |
(Unaudited) |
||||||||||||
|
|
||||||||||||
Pre-Tax |
Tax |
Net Earnings |
Pre-Tax |
Tax |
Net Earnings |
||||||||
Diluted earnings per share, as reported |
$ 0.74 |
$ 0.01 |
|||||||||||
Non-GAAP Adjustments - per share impacts |
|||||||||||||
Severance-related costs |
0.10 |
(0.04) |
0.06 |
- |
- |
- |
|||||||
IRC Section 987 charge |
- |
0.04 |
0.04 |
- |
- |
- |
|||||||
Premium on RONA Preferred Shares1 |
- |
- |
0.02 |
- |
- |
- |
|||||||
Australian joint venture impairment |
- |
- |
- |
0.58 |
- |
0.58 |
|||||||
Adjusted diluted earnings per share |
$ 0.86 |
$ 0.59 |
|||||||||||
Year Ended |
|||||||||||||
(Unaudited) |
|||||||||||||
|
|
||||||||||||
Pre-Tax |
Tax |
Net Earnings |
Pre-Tax |
Tax |
Net Earnings |
||||||||
Diluted earnings per share, as reported |
$ 3.47 |
$ 2.73 |
|||||||||||
Non-GAAP Adjustments - per share impacts |
|||||||||||||
Severance-related costs |
0.09 |
(0.03) |
0.06 |
- |
- |
- |
|||||||
IRC Section 987 charge |
- |
0.04 |
0.04 |
- |
- |
- |
|||||||
Premium on RONA Preferred Shares1 |
- |
- |
0.02 |
- |
- |
- |
|||||||
Net gain on foreign currency hedge |
(0.09) |
0.04 |
(0.05) |
- |
- |
- |
|||||||
Australian joint venture impairment |
0.33 |
- |
0.33 |
0.56 |
- |
0.56 |
|||||||
Project write-offs |
0.11 |
(0.04) |
0.07 |
- |
- |
- |
|||||||
Orchard Supply Hardware goodwill and long-lived asset impairment |
0.08 |
(0.03) |
0.05 |
- |
- |
- |
|||||||
Adjusted diluted earnings per share |
$ 3.99 |
$ 3.29 |
|||||||||||
1 Under the two-class method, the premium paid to redeem the RONA preferred shares was deducted from net earnings to compute net earnings allocable to common shareholders |
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/lowes-reports-fourth-quarter-sales-and-earnings-results-300415443.html
SOURCE