10-QPeriod: Q3 FY2013

HOME DEPOT, INC. Quarterly Report for Q3 Ended Oct 28, 2012

Filed November 21, 2012For Securities:HD

Summary

Home Depot's fiscal Q3 2012 filing demonstrates a solid increase in net sales and operating income, signaling a positive trajectory despite some one-time charges. Net sales rose by 4.6% year-over-year for the quarter, reaching $18.1 billion, driven by a 4.2% increase in comparable store sales. This growth was fueled by higher average ticket prices and an increase in customer transactions. While the company incurred a $165 million charge related to closing its remaining seven big box stores in China, the underlying business performance remained strong. Excluding this charge, diluted earnings per share (EPS) saw a significant improvement, highlighting the company's operational efficiency and effective capital allocation. The company continued its robust share repurchase program, alongside consistent dividend payments, underscoring a commitment to returning value to shareholders.

Financial Highlights

50 data points
Beta

Revenue

$18.13B

34.6% Gross Margin

Net Income

$947.00M

5.2% Net Margin

EPS (Diluted)

$0.63

Total Assets

$41.66B

Cash & Equivalents

$2.55B

Free Cash Flow

$1.12B

Financial Statements
Beta
Revenue$18.13B
Cost of Revenue$11.86B
Gross Profit$6.27B
SG&A Expenses$4.14B
Operating Expenses$4.53B
Operating Income$1.73B
Interest Expense$155.00M
Net Income$947.00M
EPS (Basic)$0.64
EPS (Diluted)$0.63
Shares Outstanding (Basic)1.49B
Shares Outstanding (Diluted)1.50B

Key Highlights

  • 1Net sales increased 4.6% to $18.1 billion for Q3 FY2012 compared to $17.3 billion in Q3 FY2011, driven by comparable store sales growth of 4.2%.
  • 2Diluted EPS was $0.63 for Q3 FY2012, an increase from $0.60 in Q3 FY2011. Excluding China store closing charges, adjusted EPS was $0.74.
  • 3Operating income grew 7.3% to $1.7 billion for the quarter, with a notable 17.5% increase when excluding the China store closing charge.
  • 4The company repurchased approximately $3.3 billion of its common stock in the first nine months of fiscal 2012 through various Accelerated Share Repurchase (ASR) agreements and open market purchases.
  • 5Cash flow from operations remained strong at $5.4 billion for the first nine months of fiscal 2012, supporting investments in capital expenditures, share repurchases, and dividends.
  • 6Inventory turnover improved to 4.6 times at the end of Q3 2012, up from 4.3 times in the prior year's comparable period, indicating improved inventory management.
  • 7The company closed its remaining seven big box stores in China, resulting in a $165 million charge, impacting reported earnings per share by $0.11.

Frequently Asked Questions

Home Depot recorded a $165 million charge (net of tax) related to the closing of its remaining seven big box stores in China during the third quarter of fiscal 2012. This charge negatively impacted diluted earnings per share by $0.11.

Net sales increased by 4.6% to $18.1 billion in the third quarter of fiscal 2012 compared to the same period in fiscal 2011. This growth was primarily driven by a 4.2% increase in comparable store sales, a 2.9% rise in average ticket price, and an increase in customer transactions.

Home Depot continued its active share repurchase program, spending approximately $3.3 billion on repurchases in the first nine months of fiscal 2012. The company also paid $1.3 billion in dividends to stockholders during the same period, demonstrating a commitment to shareholder returns.

The company maintained a strong liquidity position with $2.6 billion in cash and cash equivalents at the end of the third quarter of fiscal 2012. Net cash provided by operating activities was $5.4 billion for the first nine months of fiscal 2012. Management believes current cash, debt market access, and operating cash flow are sufficient to fund capital expenditures, dividends, and debt payments.