10-QPeriod: Q1 FY2022

LOWES COMPANIES INC Quarterly Report for Q1 Ended Apr 30, 2021

Filed May 27, 2021For Securities:LOW

Summary

Lowe's Companies, Inc. reported a strong first quarter for fiscal year 2021, with net sales increasing by 24.1% to $24.4 billion compared to the same period in 2020. This growth was primarily driven by a significant increase in comparable sales, up 25.9%, reflecting broad-based demand across DIY and Pro customers, both in-store and online. The company's 'Total Home' strategy, focusing on Pro customers, online expansion, installation services, and product assortment, is showing positive momentum. Net earnings saw a substantial increase of 73.6% to $2.3 billion, leading to a diluted earnings per common share of $3.21, an 82.1% rise from the prior year. This performance was supported by improved gross margins, leverage in SG&A expenses, and disciplined capital allocation, including significant share repurchases ($3.0 billion) and dividend payments ($440 million). The company maintains a strong liquidity position with $6.7 billion in cash and cash equivalents and ample credit facility availability.

Financial Highlights

50 data points
Beta

Revenue

$24.42B

33.3% Gross Margin

Net Income

$2.32B

9.5% Net Margin

EPS (Diluted)

$3.21

Total Assets

$51.20B

Cash & Equivalents

$6.69B

Free Cash Flow

$4.03B

Financial Statements
Beta
Revenue$24.42B
Cost of Revenue$16.29B
Gross Profit$8.13B
SG&A Expenses$4.49B
Operating Income$3.25B
Net Income$2.32B
EPS (Basic)$3.22
EPS (Diluted)$3.21
Shares Outstanding (Basic)718.00M
Shares Outstanding (Diluted)720.00M

Key Highlights

  • 1Net sales surged 24.1% to $24.4 billion in Q1 2021.
  • 2Comparable sales increased by a robust 25.9%, with broad-based strength across most product categories.
  • 3Net earnings grew significantly by 73.6% to $2.3 billion.
  • 4Diluted earnings per share rose 82.1% to $3.21.
  • 5The company returned $3.0 billion to shareholders through share repurchases and $440 million in dividends.
  • 6Operating margin improved substantially due to higher sales, SG&A leverage, and productivity initiatives.
  • 7Cash flow from operations remained strong at $4.5 billion.

Frequently Asked Questions

The significant increase in net sales was primarily driven by a 25.9% rise in comparable sales, indicating strong customer demand. This was supported by a 14.1% increase in average ticket price and an 11.8% increase in customer transactions, reflecting both higher purchase volumes and potentially rising prices.

During the first quarter of fiscal year 2021, Lowe's repurchased $3.0 billion of its common stock and paid $440 million in dividends. The company also has a substantial remaining authorization for share repurchases, indicating a continued commitment to capital return.

The 'Total Home' strategy is Lowe's initiative to accelerate market share gains by focusing on key areas: the Pro customer, expanding online capabilities, modernizing installation services, improving localization, and elevating product assortment. The company reports gaining momentum with Pro customers through improved inventory, services, and a new loyalty program, and is enhancing the online customer experience with improved website functionality and mobile app engagement.

Lowe's demonstrates strong financial health and liquidity. They ended the quarter with $6.7 billion in cash and cash equivalents, generated $4.5 billion in cash flow from operating activities, and had $3.0 billion in undrawn capacity on its revolving credit facilities. The company's debt ratings from S&P and Moody's are stable, supporting their access to capital markets.