PR Newswire | Aug 18, 2021 06:00AM EDT

08/18 05:00 CDT

Lowe's Reports Second Quarter 2021 Sales and Earnings Results-- Consolidated Comparable Sales Decreased 1.6%; U.S. Comparable Sales Decreased 2.2% --- Represents U.S. Comparable Sales Increase on a Two-Year Basis of 32.0% --- Second Quarter Diluted EPS of $4.25 --- Raises Fiscal 2021 Financial Outlook -- MOORESVILLE, N.C., Aug. 18, 2021

MOORESVILLE, N.C., Aug. 18, 2021 /PRNewswire/ -- Lowe's Companies, Inc. (NYSE: LOW) today reported net earnings of $3.0 billion and diluted earnings per share (EPS) of $4.25 for the quarter ended July 30, 2021 compared to net earnings of $2.8 billion and diluted EPS of $3.74 in the second quarter of 2020. Excluding charges in the prior-year period related to the strategic review of certain operations, second quarter diluted EPS of $4.25 increased 13% from adjusted diluted EPS of $3.75 in the second quarter of 20201.

Total sales for the second quarter were $27.6 billion compared to $27.3 billion in the second quarter of 2020, and comparable sales decreased 1.6%. Comparable sales for the U.S. home improvement business decreased 2.2% for the second quarter.

For the sixth consecutive quarter, 100% of Lowe's stores earned a Winning Together profit-sharing bonus, resulting in an expected total payout of $91 million to front-line hourly associates. This payment is $20 million above the target level.

"Our strong results this quarter demonstrate that our Total Home strategy is working, with U.S. sales comps up 32% on a two-year basis. In the quarter, we drove 21% growth in Pro, 10% growth in Installation Services and strong comps across Dcor product categories. On Lowes.com, sales grew 7% on top of 135% growth last year. We also delivered significant operating margin expansion through our disciplined focus on driving productivity across the company," commented Marvin R. Ellison, Lowe's chairman, president and CEO. "I would like to thank our front-line associates for their continued dedication to serving our customers and supporting safety in our stores. Looking forward, I am confident in the positive outlook for our industry, and our ability to drive operating margin expansion and market share gains."

Capital AllocationThe Company continues to leverage its disciplined capital allocation program to deliver long-term, sustainable shareholder value. During the quarter, the Company repurchased 16.4 million shares for $3.1 billion and paid $430 million in dividends.

As of July 30, 2021, Lowe's operated 1,973 home improvement and hardware stores in the United States and Canada representing 208 million square feet of retail selling space, and it serviced approximately 230 dealer-owned stores.

Lowe's Business Outlook

The Company delivered very strong financial results in the first half of 2021, with strong sales trends continuing into August. While the business environment remains uncertain, the Company is raising its outlook for the operating results of Full Year Fiscal 2021.

Full Year 2021 Financial Outlook (comparisons to full year 2020)

* Revenue of approximately $92 billion, representing approximately 30% comparable sales growth on a two-year basis. * Gross margin rate up slightly, compared to prior year. * Operating income as a percentage of sales (operating margin) of 12.2%. * Share repurchase of a minimum of $9 billion.

For Fiscal 2021, the Company expects capital expenditures of approximately $2 billion.

A conference call to discuss second quarter 2021 operating results is scheduled for today, Wednesday, August 18, at 9:00 am 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 Second Quarter 2021 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(r) 50 home improvement company serving approximately 20 million customers a week in the United States and Canada. With fiscal year 2020 sales of nearly $90 billion, Lowe's and its related businesses operate or service more than 2,200 home improvement and hardware stores and employ over 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, 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 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, changes in commodity prices, trade policy changes or additional tariffs, outbreaks of public health crises, such as the COVID-19 pandemic, availability and cost of goods from suppliers, 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

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.

Contacts:Shareholder/Analyst Inquiries:Media Inquiries:

Kate Pearlman Jackie Pardini Hartzell

704-775-3856 704-758-4317

kate.pearlman@lowes.com jaclyn.pardini@lowes.com

Lowe's Companies, Inc. Consolidated Statements of Current and Retained Earnings/Accumulated Deficit (Unaudited) In Millions, Except Per Share and Percentage Data



Three Months Ended Six Months Ended

July 30, 2021 July 31, 2020 July 30, 2021 July 31, 2020

Current EarningsAmount % SalesAmount % SalesAmount % SalesAmount % Sales

Net sales $27,570100.00$27,302100.00$51,993100.00$46,977100.00

Cost of sales 18,258 66.22 17,998 65.92 34,551 66.45 31,161 66.33

Gross margin 9,312 33.78 9,304 34.08 17,442 33.55 15,816 33.67

Expenses:

Selling, general and 4,693 17.02 5,020 18.39 9,187 17.67 9,215 19.62 administrative

Depreciation and409 1.49 327 1.20 800 1.54 653 1.39 amortization

Operating income4,210 15.27 3,957 14.49 7,455 14.34 5,948 12.66

Interest - net 216 0.78 219 0.80 427 0.82 423 0.90

Pre-tax earnings3,994 14.49 3,738 13.69 7,028 13.52 5,525 11.76

Income tax 976 3.54 910 3.33 1,688 3.25 1,360 2.89 provision

Net earnings $3,018 10.95 $2,828 10.36 $5,340 10.27 $4,165 8.87





Weighted average common shares 705 752 711 754 outstanding - basic

Basic earnings per common share$4.27 $3.74 $7.48 $5.50 ^(1)

Weighted average common shares 707 753 713 755 outstanding - diluted

Diluted earnings per common share$4.25 $3.74 $7.46 $5.50 ^(1)

Cash dividends $0.80 $0.55 $1.40 $1.10 per share



Retained Earnings/(Accumulated Deficit)

Balance at beginning of $98 $1,722 $1,117 $1,727 period

Net earnings 3,018 2,828 5,340 4,165

Cash dividends (563) (416) (993) (831) declared

Share (3,013) - (5,924) (927) repurchases

Balance at end $(460) $4,134 $(460) $4,134 of period



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 $3,007 million for the three months ended(1) July 30, 2021, and $2,816 million for the three months ended July 31, 2020. Net earnings allocable to common shares used in the basic and diluted earnings per share calculation were $5,318 million for the six months ended July 30, 2021, and $4,149 million for the six months ended July 31, 2020.

Lowe's Companies, Inc. Consolidated Statements of Comprehensive Income (Unaudited) In Millions, Except Percentage Data



Three Months Ended Six Months Ended

July 30, 2021 July 31, 2020 July 30, 2021 July 31, 2020

Amount % SalesAmount % SalesAmount % SalesAmount % Sales

Net earnings $3,01810.95 $2,82810.36 $5,34010.27 $4,1658.87

Foreign currency translation (44) (0.17)114 0.41 58 0.11 (45) (0.10)adjustments - net of tax

Cash flow hedges - net (9) (0.03)(5) (0.02)15 0.03 (108) (0.23)of tax

Other (1) - (1) - (2) - 4 0.01

Other comprehensive(54) (0.20)108 0.39 71 0.14 (149) (0.32)(loss)/income

Comprehensive$2,96410.75 $2,93610.75 $5,41110.41 $4,0168.55 income



Lowe's Companies, Inc. Consolidated Balance Sheets (Unaudited) In Millions, Except Par Value Data





July 30, 2021July 31, 2020January 29, 2021

Assets

Current assets:

Cash and cash equivalents $4,835 $11,641 $ 4,690

Short-term investments 1,420 1,085 506

Merchandise inventory - net 17,322 13,831 16,193

Other current assets 1,506 1,160 937

Total current assets 25,083 27,717 22,326

Property, less accumulated 19,031 18,734 19,155 depreciation ^(1)

Operating lease right-of-use 3,820 3,798 3,832 assets

Long-term investments 225 326 200

Deferred income taxes - net 221 267 340

Other assets ^(1) 1,024 921 882

Total assets $49,404 $51,763 $ 46,735



Liabilities and shareholders' (deficit)/equity

Current liabilities:

Short-term borrowings $1,000 $1,000 $ -

Current maturities of 1,344 609 1,112 long-term debt

Current operating lease 557 520 541 liabilities

Accounts payable 12,011 12,916 10,884

Accrued compensation and 1,331 1,139 1,350 employee benefits

Deferred revenue 2,041 1,715 1,608

Other current liabilities 3,380 3,471 3,235

Total current liabilities 21,664 21,370 18,730

Long-term debt, excluding 21,967 20,197 20,668 current maturities

Noncurrent operating lease 3,841 3,859 3,890 liabilities

Deferred revenue - extended 1,097 981 1,019 protection plans

Other liabilities 1,010 1,000 991

Total liabilities 49,579 47,407 45,298



Shareholders' (deficit)/ equity:

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 350 378 366 outstanding - 699 million, 756 million, and 731 million shares, respectively

Capital in excess of par - 129 90 value

(Accumulated deficit)/ (460) 4,134 1,117 retained earnings

Accumulated other (65) (285) (136) comprehensive loss

Total shareholders' (deficit)(175) 4,356 1,437 /equity

Total liabilities and shareholders' (deficit)/ $49,404 $51,763 $ 46,735 equity



Effective for the year ending January 29, 2021, excess property amounts^ previously reported in other assets were reclassified to property, less(1) accumulated depreciation. The consolidated balance sheet as of July 31, 2020, has been revised to conform with current presentation.

Lowe's Companies, Inc. Consolidated Statements of Cash Flows (Unaudited) In Millions



Six Months Ended

July 30, 2021July 31, 2020

Cash flows from operating activities:

Net earnings $ 5,340 $ 4,165

Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation and amortization 907 747

Noncash lease expense 252 234

Deferred income taxes 110 (14)

Loss on property and other assets - net 1 80

Share-based payment expense 115 64

Changes in operating assets and liabilities:

Merchandise inventory - net (1,096) (674)

Other operating assets (203) 66

Accounts payable 1,115 5,259

Deferred revenue 511 583

Other operating liabilities (139) 1,242

Net cash provided by operating activities 6,913 11,752



Cash flows from investing activities:

Purchases of investments (1,635) (1,132)

Proceeds from sale/maturity of investments 692 260

Capital expenditures (846) (710)

Proceeds from sale of property and other 78 46 long-term assets

Other - net (134) (24)

Net cash used in investing activities (1,845) (1,560)



Cash flows from financing activities:

Net change in commercial paper - (941)

Net proceeds from issuance of debt 2,988 3,961

Repayment of debt (568) (568)

Proceeds from issuance of common stock under 63 83 share-based payment plans

Cash dividend payments (870) (836)

Repurchases of common stock (6,174) (966)

Other - net (366) (4)

Net cash (used in) provided by financing (4,927) 729 activities



Effect of exchange rate changes on cash 4 4



Net increase in cash and cash equivalents 145 10,925

Cash and cash equivalents, beginning of period 4,690 716

Cash and cash equivalents, end of period $ 4,835 $ 11,641



Lowe's Companies, Inc.

Non-GAAP Financial Measures Reconciliation (Unaudited)

To provide additional transparency, the Company has presented the non-GAAP financial measure of adjusted diluted earnings per share for the three months ended July 31, 2020. This measure excludes the impact of a discrete item, further described below, not contemplated in Lowe's Business Outlook for the second quarter of fiscal 2020 to assist analysts and investors in understanding operational performance for the second quarter of fiscal 2020.

Fiscal 2020 ImpactsDuring fiscal 2020, the Company recognized financial impacts from the following discrete item, not contemplated in the Company's Business Outlook for the second quarter:

* Beginning in the third quarter of fiscal 2019, the Company began a strategic review of its Canadian operations, and in the fourth quarter of fiscal 2019, the Company announced additional actions to improve future performance and profitability of its Canadian operations. As a result of this review and related actions, in the second quarter of fiscal 2020, the Company recognized $10 million of pre-tax operating costs related to inventory write-downs and other closing costs (Canada restructuring).

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.

Detailed reconciliations between the Company's GAAP and non-GAAP financial results are shown below and available on the Company's website at ir.lowes.com.

Three Months Ended

(Unaudited)

July 31, 2020

(in millions, except per share data) Pre-Tax TaxNet Earnings Earnings

Diluted earnings per share, as reported $3.74

Non-GAAP adjustments - per share impacts

Canada restructuring 0.01 - 0.01

Adjusted diluted earnings per share $3.75



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SOURCE Lowe's Companies, Inc.