Exhibit 99.1
[Home Depot logo]
The Home Depot Announces First Quarter 2006 Results
- Record EPS of 70 cents, up 22.8 percent
- Record Sales of $21.5 Billion, up 13.1 percent
- Record Gross Margin of 33.7 percent
- Record Operating Margin of 11.3 percent
ATLANTA, MAY 16, 2006 - The Home Depot(R), the world's largest home
improvement retailer, today reported first quarter net earnings of $1.5 billion,
or 70 cents per diluted share, compared to 57 cents per diluted share and net
earnings of $1.2 billion reported for the same period in fiscal 2005. This
resulted in a 22.8 percent increase in earnings per diluted share over the first
quarter of fiscal 2005.
Sales for the first quarter of fiscal 2006 totaled $21.5 billion, a 13.1 percent
increase from the first quarter of fiscal 2005.
"This quarter marked a milestone for The Home Depot with the acquisition of
Hughes Supply. We are pleased to welcome the Hughes associates to our team,"
said Bob Nardelli, chairman, president & CEO of The Home Depot.
During the first quarter, the Company acquired Hughes Supply. The transaction
more than doubled the size of Home Depot Supply, which now has more than 20,000
associates operating in more than 900 locations nationwide and in Canada with
projected fiscal 2006 sales approaching $12 billion. The results of Hughes
Supply are included in the Company's consolidated results beginning March 30,
2006, the date of acquisition.
The Company now operates and provides financial information for two business
segments: HD Retail and HD Supply.
FIRST QUARTER
-----------------
$ MILLIONS 2006 2005 % INCREASE
- ---------- ------- ------- ----------
SALES
HD Retail $19,376 $18,329 5.7%
HD Supply $ 2,132 $ 657 224.5%
OPERATING PROFIT
HD Retail $ 2,278 $ 1,976 15.3%
HD Supply $ 149 $ 28 432.1%
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"The Home Depot has a disciplined approach to capital allocation and growth. At
the end of the quarter, we reached a return on invested capital of 24.2 percent,
up 220 basis points from the first quarter of fiscal 2005," said Carol Tome,
executive vice president and CFO.
In the first quarter, the board of directors authorized an additional $1 billion
in share repurchases, bringing the total share repurchase authorization to $12
billion. During the first quarter, the Company repurchased $565 million or 14
million shares. Since its share repurchase program began in 2002, the Company
has repurchased 291 million, or approximately 13 percent of its outstanding
shares and spent $10.3 billion under its $12 billion authorization. In January
2006, the company increased its quarterly dividend by 50 percent. Over the past
five years, the company's dividend has increased by 275 percent.
At the end of the first quarter, the Company reported total assets of $52.7
billion, up 18 percent from the end of fiscal 2005 reflecting the impact of the
Hughes acquisition and total stockholders' equity of $27.8 billion.
ENHANCING THE CORE
The Company saw average ticket growth across all merchandise categories. In the
first quarter of fiscal 2006, The Home Depot increased its average ticket by 4.3
percent to a record $60.75.
"Our stores are well prepared for spring and summer with an unprecedented number
of new and exclusive products," said Tom Taylor, executive vice president,
Merchandising and Marketing. "Throughout 2006, we will continue our focus on
providing distinctive, one-of-a-kind merchandise and creating excitement in our
stores. Beginning in this quarter, we are accelerating the reset activity in 500
of our highest volume stores and will reset over 100 bays in each of those
stores by year-end."
Significant first quarter merchandising accomplishments included:
- - Achieved a 9.9 percent market share in appliances, up 140 basis points on a
12-month rolling basis, according to an independent third party
- - Introduced the most comprehensive lineup of top brand lawn tractors and
mowers available nationwide: Cub Cadet(R), Toro(R), John Deere(R) and
Honda(R)
- - Launched several new, EXCLUSIVE product lines:
- Team Colors, a new sports-themed paint line offering customers the
exact colors of their favorite 125 professional and college sports
teams
- Unique outdoor living products, such as the Hampton Bay(TM) solar
powered umbrella
- Pavestone(R) Natural Impressions a stacked stone retaining wall, which
looks like stacked stone, but is a much better value and easier to
build and maintain
- Vigoro(R) lawn and VIVA! (R) garden products
EXTENDING THE BUSINESS
During the quarter, the Company opened 23 new stores, including 4 relocations,
with 4 new stores in Canada and 2 new stores in Mexico, bringing the total store
count to 2,051. As of the
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end of the quarter, approximately 10 percent of the Company's store base was in
Canada and Mexico. As in the U.S., the Company continues to be the market leader
in Canada and Mexico.
The Company's retail services business grew by 8.5 percent to $844 million in
the first quarter of fiscal 2006. Categories such as countertops, windows, solar
and exterior patios and doors reported solid growth.
On May 1, 2006, the Company acquired Home Decorators Collection (HDC), a leader
in catalog and online sales of home decor merchandise. HDC is part of Home Depot
Direct, the direct-to-consumer division of The Home Depot. With HDC, Home Depot
Direct will be a $1 billion business by the end of fiscal 2006. Home Depot
Direct provides customers with an "endless aisle" of home improvement and decor
merchandise through in-store catalogs, mail-order catalogs and Web sites that
enhance and extend the special order offerings in the Company's retail stores.
EXPANDING THE MARKET
Serving business-to-business customers, including home builders, professional
contractors, municipalities and maintenance professionals, Home Depot Supply
provides professional customers with a continuum of products and services from
infrastructure through construction to lifetime maintenance.
The Company continues to expand its presence in the professional market by
growing Home Depot Supply, which as of the end of the first quarter represented
approximately 10 percent of the Company's sales. During the first quarter of
fiscal 2006, Home Depot Supply experienced 225 percent sales growth and made
significant progress in its integration of Hughes Supply.
"With the acquisition of Hughes Supply, we are well positioned to serve our
professional customers and gain a greater share of the more than $400 billion
professional contractor market," said Joe DeAngelo, executive vice president,
Home Depot Supply. "I am very pleased that our Hughes integration is off to a
great start and is already ahead of expectations in terms of driving sales,
managing costs and achieving synergies."
On May 1, 2006 the Company acquired Cox Lumber, the largest privately owned
lumber company in Florida. Cox Lumber joins the Company's Williams Brothers
business and together now operate 46 branches in the Atlanta and Central Florida
markets.
OTHER NOTABLE EVENTS
- - Awarded the U.S. EPA's 2006 ENERGY STAR(R) Retail Partner of the Year Award
for outstanding contributions to reducing greenhouse gas emissions through
energy efficiency
- - Awarded the President's National Hire Veterans Committee Chairman's Award
for the Company's ongoing efforts in the hiring and retaining of military
personnel and veterans
- - Received the Brick Award by Do Something, a nationwide nonprofit
organization whose mission is to give young people the tools, inspiration
and opportunity to make a difference
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- - Supported 38 associate - athletes in the 2006 U.S. Olympic and Paralympic
Winter Games, bringing home 10 medals
- - Participated in over 1,300 hands-on community service projects through Team
Depot, the Company's associate volunteer force
- - Planted 1,000 trees in 10 major cities across the country in recognition of
Arbor Day 2006
The Home Depot will conduct a conference call today at 9 a.m. ET to discuss
information included in this news release and related matters. The conference
call will be available in its entirety through a webcast and replay at
homedepot.com under the Investor Relations section.
At the end of the first quarter, the Company operated a total of 2,051 retail
stores, which included The Home Depot stores with 1,807 stores in the United
States (including the Commonwealth of Puerto Rico and the territory of the U.S.
Virgin Islands), 141 stores in Canada, and 56 stores in Mexico. The Company also
operates 34 EXPO Design Centers, 11 The Home Depot Landscape Supply stores, and
two The Home Depot Floor Stores. Through its Home Depot Supply(SM) businesses,
The Home Depot is also one of the largest diversified wholesale distributors in
the United States, with more than 900 locations, including 10 Contractor's
Warehouse locations, in the United States and Canada offering products and
services for building, improving and maintaining homes, businesses and
municipal infrastructures. The Company employs approximately 355,000 associates
and has been recognized by FORTUNE magazine as the No. 1 Most Admired Specialty
Retailer and the No. 13 Most Admired Corporation in America for 2006. The Home
Depot's stock is traded on the New York Stock Exchange (NYSE: HD) and is
included in the Dow Jones industrial average and Standard & Poor's 500 index.
###
Certain statements contained herein, including any statements related to Net
Sales growth, increases in comparable store sales, impact of cannibalization,
commodity price inflation and deflation, implementation of store initiatives,
protection of intellectual property rights, Net Earnings performance, including
Depreciation expense, earnings per share, stock-based compensation expense,
store openings and closures, capital allocation and expenditures, the effect of
adopting certain accounting standards, margins, return on invested capital, the
growth of Home Depot Supply, our ability to successfully operate in a non-retail
industry, management of our purchasing or customer credit policies, strategic
direction and the demand for our products and services, constitute
"forward-looking statements" as defined in the Private Securities Litigation
Reform Act of 1995. These statements are based on currently available
information and are based on our current expectations and projections about
future events. These statements are subject to risks and uncertainties that
could cause actual results to differ materially from our historical experience
and expectations. These risks and uncertainties include, but are not limited to:
economic conditions in North America; changes in our cost structure; the
availability of sourcing channels consistent with our strategy of
differentiation; conditions affecting new store development, such as our ability
to find suitable store locations and obtain required permits; conditions
affecting customer transactions and average ticket, including, but not limited
to, weather conditions; the success of our technology initiatives in improving
and streamlining operations and customers' in-store experience; our ability to
identify and respond to evolving trends in demographics and consumer
preferences; our ability to design stores that appeal to customers; the costs of
redesigning stores in light of evolving customer expectations; the success of
new store formats and businesses; the relative success of our expansion
strategy, including our ability to identify acquisition opportunities,
particularly in markets outside the United States, and our ability to complete
acquisitions on financially attractive terms and integrate them with our other
businesses; our ability to successfully integrate Hughes Supply, Inc. with our
other businesses; our ability to create appropriate distribution channels for
key sales platforms; our ability to successfully execute our on-line strategy;
our ability to attract, train and retain highly qualified associates; the impact
of new
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accounting standards; the impact of competition; and decisions by management
related to possible asset impairments, regulation and litigation matters. Undue
reliance should not be placed on such forward-looking statements as they speak
only as of the date hereof and we undertake no obligation to update these
statements to reflect subsequent events or circumstances. Additional information
regarding these and other risks and uncertainties is contained in our periodic
filings with the SEC, including our Annual Report on Form 10-K for the fiscal
year ended January 29, 2006.
For more information contact:
Financial Community
Diane Dayhoff
Vice President of Investor Relations
(770) 384-2666
diane_dayhoff@homedepot.com
News Media
Jerry Shields
(770) 384-2741, jerry_shields@homedepot.com
Paula Smith
(941) 488-1289, paula_c_smith@homedepot.com
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THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS ENDED APRIL 30, 2006 AND MAY 1, 2005
(UNAUDITED)
(AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA AND AS OTHERWISE NOTED)
THREE MONTHS ENDED
------------------ % INCREASE
4-30-06 5-1-05 (DECREASE)
------- -------- ----------
NET SALES $21,461 $18,973 13.1%
Cost of Sales 14,233 12,618 12.8
------- -------
GROSS PROFIT 7,228 6,355 13.7
Operating Expenses:
Selling, General and Administrative 4,386 4,017 9.2
Depreciation and Amortization 420 339 23.9
------- -------
Total Operating Expenses 4,806 4,356 10.3
------- -------
OPERATING INCOME 2,422 1,999 21.2
Interest Income (Expense):
Interest and Investment Income 11 14 (21.4)
Interest Expense (63) (27) 133.3
------- -------
Interest, net (52) (13) 300.0
------- -------
EARNINGS BEFORE PROVISION
FOR INCOME TAXES 2,370 1,986 19.3
Provision for Income Taxes 886 739 19.9
------- -------
NET EARNINGS $ 1,484 $ 1,247 19.0%
======= =======
Weighted Average Common Shares 2,114 2,162 (2.2)%
BASIC EARNINGS PER SHARE $ 0.70 $ 0.58 20.7%
Diluted Weighted Average Common Shares 2,122 2,172 (2.3)%
DILUTED EARNINGS PER SHARE $ 0.70 $ 0.57 22.8%
THREE MONTHS ENDED
------------------ % INCREASE
SELECTED HIGHLIGHTS 4-30-06 5-1-05 (DECREASE)
- ------------------- -------- ------ ----------
Number of Customer Transactions (1) 322 320 0.6%
Average Ticket (1) $60.75 $58.25 4.3
Weighted Average Weekly Sales
per Operating Store (000's) (1) $ 736 $ 757 (2.8)
Square Footage at End of Period (1) 216 203 6.4
Capital Expenditures $ 705 $ 821 (14.1)
Depreciation and Amortization (2) $ 450 $ 361 24.7%
For comparability purposes, the Company will no longer report comparable store
sales but will now report total sales growth for both segments as a percentage
change over the prior period.
(1) Includes retail segment only.
(2) Includes depreciation of distribution centers and tool rental equipment
included in Cost of Sales and amortization of deferred financing costs
included in Interest Expense.
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THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF APRIL 30, 2006, MAY 1, 2005 AND JANUARY 29, 2006
(AMOUNTS IN MILLIONS)
4-30-06 5-1-05 1-29-06
----------- ----------- ---------
(Unaudited) (Unaudited) (Audited)
ASSETS
Cash and Short-Term Investments $ 2,586 $ 2,992 $ 807
Receivables, net 3,412 1,973 2,396
Merchandise Inventories 13,401 11,305 11,401
Other Current Assets 880 652 742
------- ------- -------
Total Current Assets 20,279 16,922 15,346
------- ------- -------
Property and Equipment, net 25,295 23,031 24,901
Goodwill 5,432 1,476 3,286
Other Assets 1,673 641 949
------- ------- -------
TOTAL ASSETS $52,679 $42,070 $44,482
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-Term Debt $ -- $ -- $ 900
Accounts Payable 9,452 8,035 6,032
Accrued Salaries and Related Expenses 1,223 1,001 1,176
Current Installments of Long-Term Debt 15 14 513
Other Current Liabilities 5,588 4,643 4,280
------- ------- -------
Total Current Liabilities 16,278 13,693 12,901
------- ------- -------
Long-Term Debt 6,652 2,145 2,672
Other Long-Term Liabilities 1,957 2,411 2,000
------- ------- -------
Total Liabilities 24,887 18,249 17,573
------- ------- -------
Total Stockholders' Equity 27,792 23,821 26,909
------- ------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $52,679 $42,070 $44,482
======= ======= =======
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THE HOME DEPOT, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
FOR THE THREE MONTHS ENDED APRIL 30, 2006 AND MAY 1, 2005
(UNAUDITED)
(AMOUNTS IN MILLIONS)
THREE MONTHS ENDED APRIL 30, 2006
------------------------------------------------------------------
HD Retail (a) HD Supply Eliminations/ Other (b) Consolidated
------------- --------- ----------------------- ------------
Net Sales $19,376 $2,132 $ (47) $21,461
======= ====== ====== =======
Operating Income $ 2,278 $ 149 $ (5) $ 2,422
Interest, net (52)
-------
Earnings Before Provision for Income Taxes $ 2,370
=======
Depreciation and Amortization $ 412 $ 35 $ 3 $ 450
Total Assets $41,592 $9,253 $1,834 $52,679
Capital Expenditures $ 659 $ 46 $ -- $ 705
Payments for Businesses Acquired, net $ -- $3,330 $ -- $ 3,330
THREE MONTHS ENDED MAY 1, 2005
------------------------------------------------------------------
HD Retail (a) HD Supply Eliminations/ Other (b) Consolidated
------------- --------- ----------------------- ------------
Net Sales $18,329 $ 657 $ (13) $18,973
======= ====== ===== =======
Operating Income $ 1,976 $ 28 $ (5) $ 1,999
Interest, net (13)
-------
Earnings Before Provision for Income Taxes $ 1,986
=======
Depreciation and Amortization $ 352 $ 8 $ 1 $ 361
Total Assets $38,937 $1,613 $1,520 $42,070
Capital Expenditures $ 808 $ 13 $ -- $ 821
Payments for Businesses Acquired, net $ -- $ 138 $ -- $ 138
(a) Includes all retail stores, Home Depot Direct and retail installation
services.
(b) Includes elimination of intersegment sales and unallocated corporate
overhead.
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