Why did GAAP diluted EPS decline while adjusted EPS increased?

GAAP diluted EPS fell to $2.88 from $2.99 because of $129 million in pre-tax costs (about $0.23 per share before tax effects, or $0.18 after tax) tied to the FBM and ADG acquisitions, including transaction costs and intangible amortization. Adjusted diluted EPS excludes these items and rose 5.9% to $3.06, though the adjusted measure is non-GAAP and may not be comparable to peers.

What does the revised full-year guidance signal about underlying demand?

Comparable sales guidance was reduced to flat from a range of flat to +1%, signaling caution about the macroeconomic environment. Total sales guidance rose, but that increase largely reflects acquired FBM revenue rather than organic growth. The narrower adjusted operating margin outlook and higher net interest expense also point to modest pressure on profitability.

How significantly did the FBM acquisition change Lowe's balance sheet and cash position?

The acquisition was substantial. Nine-month acquisition outflows totaled about $10.1 billion, and long-term debt rose to $37.5 billion from $32.9B. Intangible assets grew to $6.0B from $0.3B and goodwill to $4.0B from $0.3B. Cash fell to $621 million from $3.3 billion a year earlier, and the company now carries a shareholders' deficit of $(10.4) billion.

Is the dividend and shareholder return program still intact?

Yes. The company paid $673 million in dividends during the quarter, and quarterly dividends per share increased to $1.20 from $1.15. Share repurchases were minimal in the quarter, with nine-month repurchases of about $211 million in cash flow terms, reflecting a shift in capital priority toward the FBM acquisition and debt servicing.

What are the key items to watch in future quarters?

Investors should monitor whether FBM and ADG integration improves Pro customer growth and margins, whether SG&A leverage recovers from the 20.0% of sales level, whether comparable sales turn positive for the full year given the flat guidance, and how higher interest expense and debt levels affect free cash flow and future capital returns.

LOW 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed November 19, 2025. Cited figures are marked; the original filing is the authoritative source.

Lowe's (LOW) reported third-quarter fiscal 2025 results for the quarter ended October 31, 2025: diluted EPS of $2.88^a (down from $2.99 a year earlier) and adjusted diluted EPS of $3.06 (up 5.9%), excluding $129 million in pre-tax acquisition-related costs and intangible amortization tied to Foundation Building Materials (FBM) and Artisan Design Group (ADG).

Total sales rose 3.2% to $20.8 billion^b, and comparable sales grew 0.4%, supported by 11.4% online sales growth, double-digit home services growth and continued Pro growth. Gross margin expanded to 34.2% from 33.7%, but SG&A deleveraged to 20.0% of sales from 19.0%, and operating margin fell to 11.9% from 12.6%. Net earnings declined 4.7% to $1.6 billion.

The balance sheet changed materially. Long-term debt rose to $37.5 billion^c from $32.9 billion, goodwill and intangibles increased sharply following the FBM acquisition ($8.8 billion invested in the quarter), and nine-month acquisition cash outflows totaled $10.1 billion. Shareholders' deficit narrowed to $(10.4) billion.

Management said November started with positive comparable sales, despite hurricane-related comparisons from the prior year. Full-year 2025 guidance was revised: total sales were raised to $86.0 billion^d (from $84.5–85.5 billion) to include FBM, while comparable sales are now expected to be flat (previously flat to +1%). Adjusted operating margin was narrowed to 12.1% (from 12.2–12.3%), net interest expense was raised to about $1.4 billion, and the tax rate was lowered to about 24.0%.

Adjusted diluted EPS guidance was narrowed to about $12.25 (from $12.20–12.45), and capex was capped at up to $2.5 billion. Investors will focus on whether the FBM integration can lift margins and Pro growth given the softer comp outlook.

02—Key points

Key Highlights

Q3 FY2025 diluted EPS was $2.88 versus $2.99 a year ago; adjusted diluted EPS rose 5.9% to $3.06 after excluding $129M of acquisition-related pre-tax expenses.
Total sales increased 3.2% to $20.8B; comparable sales rose 0.4%, with online sales up 11.4% and double-digit home services growth.
Operating margin contracted to 11.9% from 12.6% as SG&A rose to 20.0% of sales, partly offset by a 59 bp gross margin improvement to 34.2%.
FY2025 total sales guidance raised to $86.0B (from $84.5–85.5B), largely reflecting the FBM acquisition, while comparable sales guidance was lowered to flat from flat-to-+1%.
Adjusted diluted EPS guidance narrowed to about $12.25 (from $12.20–12.45); adjusted operating margin guidance narrowed to 12.1% (from 12.2–12.3%).
Long-term debt increased to $37.5B from $32.9B year over year, and goodwill and intangibles rose sharply after the FBM and ADG acquisitions, with $8.8B invested in FBM during the quarter.
Management said November began with positive comparable sales despite hurricane-related prior-year headwinds.

03—Questions

Frequently Asked Questions

Why did GAAP diluted EPS decline while adjusted EPS increased?
GAAP diluted EPS fell to $2.88 from $2.99 because of $129 million in pre-tax costs (about $0.23 per share before tax effects, or $0.18 after tax) tied to the FBM and ADG acquisitions, including transaction costs and intangible amortization. Adjusted diluted EPS excludes these items and rose 5.9% to $3.06, though the adjusted measure is non-GAAP and may not be comparable to peers.
What does the revised full-year guidance signal about underlying demand?
Comparable sales guidance was reduced to flat from a range of flat to +1%, signaling caution about the macroeconomic environment. Total sales guidance rose, but that increase largely reflects acquired FBM revenue rather than organic growth. The narrower adjusted operating margin outlook and higher net interest expense also point to modest pressure on profitability.
How significantly did the FBM acquisition change Lowe's balance sheet and cash position?
The acquisition was substantial. Nine-month acquisition outflows totaled about $10.1 billion, and long-term debt rose to $37.5 billion from $32.9B. Intangible assets grew to $6.0B from $0.3B and goodwill to $4.0B from $0.3B. Cash fell to $621 million from $3.3 billion a year earlier, and the company now carries a shareholders' deficit of $(10.4) billion.
Is the dividend and shareholder return program still intact?
Yes. The company paid $673 million in dividends during the quarter, and quarterly dividends per share increased to $1.20 from $1.15. Share repurchases were minimal in the quarter, with nine-month repurchases of about $211 million in cash flow terms, reflecting a shift in capital priority toward the FBM acquisition and debt servicing.
What are the key items to watch in future quarters?
Investors should monitor whether FBM and ADG integration improves Pro customer growth and margins, whether SG&A leverage recovers from the 20.0% of sales level, whether comparable sales turn positive for the full year given the flat guidance, and how higher interest expense and debt levels affect free cash flow and future capital returns.

04—Continue

← View all 8-K filings