10-QPeriod: Q3 FY2023

HOME DEPOT, INC. Quarterly Report for Q3 Ended Oct 30, 2022

Filed November 22, 2022For Securities:HD

Summary

Home Depot, Inc. (HD) reported a solid third quarter for fiscal year 2022, demonstrating resilience in a challenging economic environment. Net sales increased by 5.6% year-over-year to $38.9 billion, driven by a 4.3% rise in comparable sales. This growth was primarily fueled by an 8.8% increase in the average ticket price, indicating inflationary impacts and demand for higher-value products, although customer transactions saw a slight decrease of 4.4%. Diluted earnings per share (EPS) also saw a healthy increase of 8.2% to $4.24. For the first nine months of fiscal 2022, net sales grew 5.3% to $121.6 billion, with diluted EPS rising to $13.37. The company has strategically increased inventory levels to mitigate supply chain disruptions and maintain high in-stock rates, leading to a decrease in inventory turnover ratio. Despite increased costs and supply chain investments, Home Depot maintained its gross profit margin and improved its SG&A as a percentage of net sales, showcasing operational efficiency. The company continues to prioritize capital allocation towards business investments, dividends, and share repurchases, highlighting a strong financial position and a commitment to returning value to shareholders.

Financial Highlights

49 data points
Beta

Revenue

$38.87B

34.0% Gross Margin

Net Income

$4.34B

11.2% Net Margin

EPS (Diluted)

$4.24

Total Assets

$76.87B

Cash & Equivalents

$2.46B

Free Cash Flow

$2.84B

Financial Statements
Beta
Revenue$38.87B
Cost of Revenue$25.65B
Gross Profit$13.22B
SG&A Expenses$6.47B
Operating Expenses$7.08B
Operating Income$6.15B
Interest Expense$413.00M
Net Income$4.34B
EPS (Basic)$4.25
EPS (Diluted)$4.24
Shares Outstanding (Basic)1.02B
Shares Outstanding (Diluted)1.02B

Key Highlights

  • 1Net sales for the third quarter of fiscal 2022 increased by 5.6% to $38.9 billion compared to the prior year quarter.
  • 2Comparable sales increased by 4.3%, driven by an 8.8% increase in average ticket, though customer transactions declined by 4.4%.
  • 3Diluted earnings per share (EPS) rose by 8.2% to $4.24 for the third quarter, and $13.37 for the first nine months of fiscal 2022.
  • 4Online sales grew by 9.6% year-over-year in the third quarter, representing 13.3% of total net sales.
  • 5The company repurchased $1.224 billion of common stock in the third quarter and $4.994 billion in the first nine months, as part of a $15.0 billion authorization.
  • 6Gross profit margin remained stable at 34.0% for the quarter, despite increased product and transportation costs.
  • 7Cash flow from operations for the first nine months was $10.0 billion, supporting significant dividend payments ($5.9 billion) and share repurchases ($5.1 billion).

Frequently Asked Questions

Home Depot reported net sales of $38.9 billion for the third quarter of fiscal 2022, representing a 5.6% increase compared to $36.8 billion in the same period last year. This growth was primarily driven by comparable sales, which increased by 4.3%, led by a significant rise in the average ticket price.

The company strategically increased its merchandise inventory levels during the first nine months of fiscal 2022 to ensure higher in-stock availability and to pull forward merchandise in anticipation of ongoing global supply chain disruptions. This led to a decrease in the inventory turnover ratio to 4.3 times from 5.4 times in the prior year.

Home Depot follows a disciplined capital allocation strategy, prioritizing investments back into the business (approximately $3 billion planned for fiscal 2022 capital expenditures), followed by dividend payments. The company also actively returns excess cash to shareholders through share repurchases. In the first nine months of fiscal 2022, they paid $5.9 billion in dividends and repurchased $5.1 billion in stock.

Home Depot issued $3.0 billion in senior notes in September 2022 and $4.0 billion in March 2022. They also expanded their commercial paper program to $5.0 billion and their back-up credit facilities to $5.0 billion for enhanced financial flexibility. During the first nine months of fiscal 2022, they repaid $2.25 billion of senior notes and had no outstanding short-term debt at the end of the quarter.