HD - Earnings call transcript Q2 2025

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Operator

Greetings, and welcome to The Home Depot Second Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Isabel Janci. Please go ahead.

Isabel Janci

Thank you, Christine, and good morning, everyone. Welcome to Home Depot's Second Quarter 2024 Earnings Call.

and call Campbell, Ted Billy Officer. Senior Vice of our and Chair, Bastek, on Vice President Ann-Marie Executive CEO; Executive Merchandising; us today Chief Decker, are President Executive President Joining and McPhail, Financial Richard Vice President;

our reminder, will open your please one to question Questions the limit for and investors. follow-up. call to call, please Relations the Investor (XXX) with are during get be yourself question limited analysts remarks, unable If And prepared questions. Following our be will as to at we a one call department XXX-XXXX.

turn Private release Ted, could let and projections. Securities differ of and identified our release XXXX. These Litigation I as are executives include factors income, me press will operating made call to materially presentations statements today's certain to our risks and include, Reform to also that by our Act non-GAAP that Before earnings not Exchange uncertainties limited over uncertainties share. statements and risks and the include cause These the the remind subject results in to actual filings per forward-looking Commission. Today's Securities you with in including, margin to not presentation from adjusted diluted limited and expectations adjusted the but but adjusted the measures in and are defined

measures release corresponding GAAP our to press other measures, to earnings website. and our For non-GAAP a and of reconciliation refer our these please

Now turn let call me the Ted. to over

Edward Decker

Sales from same $XX.X an X.X% billion, morning, Thank the you, were Isabel, year. last increase and for the quarter everyone. second good period of

last SRS included performance sales our X that include SRS. quarter weeks of XX, to team $X.XX quarter the stores $X.XX last period from a and results. Comp U.S. level. at year. The year, the the we've from comps per in approximately while Recall environment sales quarter, June second in negative we consolidated X.X% same the closed this earnings of on in unique on compared navigate second billion the acquisition declined our their in Our executing share diluted continues X.X%. high had of Adjusted $X.X were to and

macroeconomic improvement the interest broadly, home During higher pressured projects. across resulting and consumer more weaker in uncertainty spend rates demand quarter, greater

of share create United roughly on have new approximately in products share the $X capabilities potential. right growth the a continued interconnected but weather softness of year. the stores. by a classes serving the of on the as the in year, warranted of our to team the throughout we been to moment, have wallet at investing in for take with our a operate were the of guiding will the $XX is customers States. a which remains look the Additionally, which of focused we we home the well build the sales also is underlying the our outlook comp environment, now we the why months for through That values. fiscal through sales right are we we Richard is impacted X% spring pressure trillion And differentiated and focused improvement believe uncertainty in Remember, details Today, the XX% in trillion, at first decline projects, one and continued experience market strategy we asset share cautious base fragmented approximately ensuring growth Pro consumer we representing current installed largest demand, a changes we have saw at around tremendous market. in performance estimated in extreme X executing to homes the best highly you as more X% XXXX. Regardless and remain set for on long-term approximately quarter. When

an on a exceptional our a and family. into Now moments proven Depot track take we Home are SRS growth comment them to has to team The thrilled of with welcome Distribution. I'll few acquisition record, SRS

of reflect their performance the top only in sales growing they operating with a the year. line for financials half, previous our high first growth While income matching first half while generated largely single-digit portion our compared line X-month first to period

fundamentals We our are leveraging synergy and and improvement their combined and have tied convenient. The through incredibly us. through achieve their a in our significant offer drive SRS landscape pool form in strong, advantages. We stores opportunities of the to Home much assets, what will account, more to excited and Depot we desk, We'll about roofing, remains can will capabilities offering home several purchases together growth market we front customers at make our product credit which customers sales competitive we growth to available comprehensive plan of all cross more by of incremental Pro make opportunities. and

share are are digital whether our ecosystem. stores, on through We assets Pro gaining in of our our with customers wallet they shopping our or

any supply in like teams chain an to hard They let that, Ann. our me Our to and job close call by to always merchants, the I'd throughout value met service and and ] serve them work. With quarter, partners outstanding thanking dedication ready are teams, their store and environment. customers turn delivering to did the over [ supplier for

Ann-Marie Campbell

Thanks, Ted, everyone. and morning, good

and our any environment, experience our experience. the the delivering critical the to continue for is As in-store our our occasion to we That serve associates fulfillment We purchase from our associates, to and that in to our customers. channels engaged invest customer success. is capabilities, continue you ready heard Ted, know why shopping best despite be

differentiated the have about create that past ] we tool year, Over the talked this [ us help experience.

in-and-out or in-stock vision are at on and in-stock the OSA availability Today, fast computer our that Sidekick experience provides best-in-class our desires, customers. focus levels foundation for convenient and a of Pro our on-shelf our especially applications. Specifically, OSA our and many and with customers'

specialty enhanced We tools and also our Pros our for use in-store have the associates selling.

activity MyView have Depot. with which customers' better tool, our [ associates ] Home the The applications, to many we has our Within in-store given visibility

drive throughout patterns Pros, we our our example, kitchen view this consolidated easily sales platform we while With specific insights conversion for For deliver associates to have that their store as specialty expiring This customers, customers. To a equipping a perks, journey. to pipeline more and our buying ] for with share and projects, Pipeline effectively customer's interconnected tool, of with customers allows communicating with digital able will designs. activities partner and trends, [ complex enables known for to new value be associates selling journey. in-store better more Management associates our see and can leaders, now to launched product for our manage wallet their multiple all related

and efforts wallet of different project progress grow assets on a share around our capabilities organic to Additionally, we continue make to with complex occasion. our purchase

a to broader assortment, are have force now pleased that digital markets, broader XX We announce and in a fulfillment capabilities sales full product we options. key assets, including

our days, are Our still the for stayed with trade is credit have program time. of while and pilot longer resonate early we period and benefits program seen products credit of it's also for extending the a customers underway, that scale larger

We roll order the as management progress on our are system. to also making system out selling to we end-to-end enhancements continue

focused customer serving continued service about certification to our excited customers. the are and our product very delivering best on complex success the are all We

our all strong look care over me opportunities the is I thank execution customers. With do forward and to of us, that, and call many turn of engaged. associates they ahead our to and to all want the readiness store Billy. to take associates let for Our are I our

William Bastek

Thank customers everyone. you, want I by all and serving of ongoing Ann, partners associates to thanking our their and good communities. for our also start supplier morning, to and commitment

demand. second quarter, during macroeconomic Ted, the you environment the from As heard greater and interest overall rate pressured project higher uncertainty

sales a which quarter. season, our extreme softer selling the changes addition, was throughout the in also impacted reflect by spring In weather

the Turning to our second merchandising performance department comp quarter. for

building appliances the positive company and paint posted while comp, department plumbing average. above were materials, power, Our a all

the X.X%. and transactions quarter, comp During to decreased ticket decreased average second our comp X.X%

our innovative Big of However, customers continued $X,XXX ticket up or were quarter comp compared quarter, second X.X%, trading during we year. to new for the the over last and products. see those transactions down to

and typically the the in Pro's to bath both website. BXB customer, positive where softer in the We for continue job discretionary project deliveries Pro see kitchen and outperformed Pro's larger remodels. Extra who financing were site engage to projects saw DIY We quarter. to our such growth fund engagement customers program, the as negative use but with

leveraging Turning our stores. increased company digital those Sales And year. to last that approximately of online were quarter second through second to of transact our the sales. fulfilled platforms for online chose our nearly the during X%, total online orders half us compared customers to with quarter,

expanded addition, nationwide. experience shopping to during we [ improve the the ] Instacart second our partnership quarter, In interconnected with

encouraged While we in with we are partnership, days expanded the seeing. the of our early are results we are still

structures line deliver value and products focusing customer with quarter, continue updated During on resonating projects focused and some We while that the into a our are on second customers. experience. to we proposition compelling the innovation leaned

vinyl [ category the customer the example, investments in-store paint, outdoor in to features, For and modified which finally, also This products in benefits we our power value see better in the [indiscernible] We tremendous job categories, serve positive continue driving Pro unit we LifeProof heaters, site to in service dollar new comps needs. making we quarter. In fulfillment both in gains And recently our continued engagement introducing adding and line on-trend the our we and increased continue we options, simplified and structure And ] proposition, drive of better length. equipment all the share comps colors, are patterns with success the the our including the capabilities the see the water helped and for [indiscernible], upgraded positive to durability of our quarter. while drove category. in quarter. our around driving delivery

that before, continue of strong share allows in to with categories. we have a battery-powered platforms advantage our these extensive we've mentioned competitive lineup grow us built to As

best-in-class the means to we that in-stock for our and merchandising for being third advocate assortment our available customers value. remains customers' on look need a broad This ahead are our provide As to focused when it. they products of organization quarter, continuing

the products We to lean to project, and we will simplify market. That's our time the why about also into bring money. saving I'm the excited innovation customers continue to continue that so

push and the quarter, new to a River ]. [ [ our glass in a are will door customers. This compatible innovation allows big be with is with to door to bring of the the retail This market This privacy our frosted space Home a the River glass first-to-market change glass launching channel. easily to continues to clear ecosystem. technology The hub is leader customers exclusive box fibre Feather smart we door and with ] button Feather or Depot from in

to electrical hand in Milwaukee and have we with in adoption business continue great tools. lean seen exclusive the across Additionally, our of partner

will and Our the partnership with our retail a customers tools. to call lasting channel. With of These tools the the continue of Box Made destination for to position strengthen that, Richard. USA is for expanding the trade to precision I'd in assortment #X as over Big degree in with a like our turn results provide broader electrical high Pro the

Richard McPhail

Thank the $X.X billion SRS, billion, and acquisition X good Total X.X% everyone. the you, an which the sales from sales Billy, Total last include represents weeks second $XX.X quarter. In year. approximately increase of were morning, in approximately sales quarter, of of from recent

second XX second by in basis X.X%, During the shrink, as was quarter, offset quarter, of negative total and from negative the company and transportation last for June quarter, margin the year, July. in a quarter X.X% in in X.X% gross negative May, of negative and with SRS our primarily in May, in the U.S. driven in negative of Comps with comps lower negative June benefits increase result the costs partially of July. In the mix acquisition. second XX.X%, by X.X% negative negative approximately points our from comps X.X% X.X% were X% comps X.X% were an

the of expense XXXX. as to to of During sales the compared approximately second basis second XX quarter, a increased XX.X% points quarter percent operating

measures line with per better performance. to operating intangible quarter, noncash our Our will of earnings following measures, excludes our We non-GAAP these income, addition in believe investors share, acquired the adjusted GAAP providing measures: in this analyze margin and help operating adjusted we expense diluted expectations. Beginning assets. and supplemental amortization performance understand which our adjusted was are operating

was the for compared including XX.X% amortization margin to asset quarter second million, operating the related second $XX pretax quarter of SRS. Our XXXX. million to XX.X% in was $XX In the quarter, intangible

quarter second in intangible quarter by the higher quarter XX.X% quarter $XX second the XX.X%, year tax million balances our other expense $XXX the quarter, XX.X% due debt second the quarter, to margin in XX.X% compared amortization and In than ago. a XXXX. million primarily compared was to of fiscal in our for the to operating of Excluding the adjusted and second XXXX. Interest second the asset rate to effective increased for was

decrease to second for of the per $X.XX, quarter approximately Our XXXX. of compared a diluted second quarter X% share were earnings the

amortization, quarter essentially the Excluding for to adjusted intangible quarter compared of share per our $X.XX, flat XXXX. diluted asset second were earnings the second

second XXX million $XXX new XXXX, billion, our quarter, bringing X compared the end second opened count approximately or X.Xx, quarter square footage from At approximately the were last were we million total turns to merchandise of During the the inventories was year. Retail down of and selling X,XXX. stores, X.Xx to quarter, store inventory up $XX.X square feet.

Turning allocation. to capital

in During the $X.X business approximately in the of $XXX expenditures. form second billion quarter, invested our to paid approximately capital during quarter, million into we the we shareholders. And back our dividends

allocation capital remains approach unchanged. disciplined Our to

X% approximately in in return average approximately pay quarter long-term business, an we of shareholders Computed trailing and for of the dividend repurchases. on expect down cash the beginning excess from XXXX. the to will XX XX.X%, in any invested it and annual form to of is the plan and and on our fiscal XX.X% investing After on debt intent and sales of expenditures of share foremost, we equity the capital months, was second invest to in the First the basis. business return ending capital

Now updated comment on XXXX. for outlook I will fiscal our

half Ted, demand, continued from the we of year softer-than-expected outlook in first is underlying heard for cautious a year, the more you reflecting given and As uncertainty believe performance warranted. the around consumer the

acquisition, for we year. in their now closing of the including results outlook With the consolidated recent our SRS the are

We in period sales. earnings our reflected operating with SRS first sales over to high largely several the just efforts, next half, our years, for fully Pro that and and will the the for SRS its decline week sales which periods company. Updating includes not in our fiscal growth The week. believe guidance of growth to X% a is expect add accelerate $X.X in generated the percentage X.X%, our XXXX. period. the prior X% first half the sales. Comparable billion high between is contribute billion sales total total sales. XXrd now financial We sales demand with fiscal expected line factors For incremental range are negative consistent our of help end own, and XX-week for implies the matching statements, The $X.X our expected X.X% consumer acquisition to SRS approximately negative single-digit environment income on SRS with combined growth discussed. through between XXXX including to the and and acquisition projected we to growing approximately and XXrd

beyond the While low negative range, trajectory we comparable today. not consumer sales are currently incremental demand comp on pressure for a implies seeing the end of company X% what are on the for the

We to open new expect XX stores. approximately

approximately Our XX.X%. margin be expected gross is to

between XX.X% We expect operating between and be operating XX.X%. adjusted XX.X%, to to margin be margin and and XX.X%

approximately at is effective XX%. rate tax targeted Our

We approximately net expect expense interest $X.X of billion.

compared the extra and contributing fiscal $X.XX. decline to approximately per will X% XXXX, diluted between week X% negative earnings share negative Our percent with

decline percent week to our have with X%, negative business $X.XX. We negative we've model. positioned per in X% in customers fiscal XXXX, contributing compared that enabled our environment. the our made investments have our to expect believe operating share any adjusted the extra The diluted between approximately we to meet We of needs earnings agility ourselves in and

are our with scale than customers, continue value. Thank faster we for shareholder low-cost As and participation today's And our to to questions. market your and ready drive position growth strengthen call. you leverage will to we now position for in we look deliver invest forward, our Christine, the

Operator

Scott Our first Truist. of from with Ciccarelli the comes question [Operator Instructions] line

Scot Ciccarelli

seeing consumer around from like incremental weakness seemed hesitancy can we kind previously let's towards, be more a understand patterns? you projects. Can provide call a a spending to bit broader just of the consumer guys better So you of what it, shift couple on hesitancy are finance it sounds examples of so

Edward Decker

broader think I in just Well, Scott. it's projects,

said remains couple prior engaged. of we As in few consumer quarters, the the

are increased these pandemic. the the values their healthy. right up has their quite remains -- the in since particular, in almost years, consumer, XX% XX% home last X who before Our have seen Again, go consumers home equity

that And construction materials very change to that in values What tied the we over specifically saw this engagement lumber to we quarters projects. in in categories quarter recent most pressure translates strong. But $XX see larger trillion. in are larger last building the several saw are the further saw that are is project. progressed. And in really been strong, we that projects. strong, earnings jobs So Equity a we have that quarter smaller was as

Scot Ciccarelli

pressure So in out, project-oriented but it, other purchases? let's increased necessarily call not words, like it's broadening it's on,

Edward Decker

over that Yes. the it. the course change we happened quarter. mean And the believe you said I of

quarter, some Everyone's customers' XX-year turnover we're financing impacting in And to particular, of impact people X the years We're interest on buying then grills through and That's going the numbers last XX%. And a we've spending the that first transition, pandemic. And et period where the that the that. And largely. to services. forward we which environment fall. the from lots we're to but now largely before spring this month, way relative working equal -- less so back also basis, we're the PCE completely on annualized are working And housing I goods of spending share through bit that pandemic thing projects. of some segment. furniture we're if approaching been we was patio pull forward, saw in you rate say think in a cetera. in our not go expecting through spend then back when into rates the our in from saw shift had, moderation, market I'd interest some started going is mean more certainly we to is through last it or was housing first down higher were I an pull effectively lows. the larger

So we're projects. But broader unemployment There's a those with lot ticked economy. recently noise the political with geopolitical and just concern is more has again, deferring environment, macro a happened what of keeps these just eating macro uncertainties. away through we think took of at the of progress inflation because a up, more or quarter disposable And income. people pause a I as pause

Operator

next question Our the from Sigman comes Barclays. Seth with line of

Seth Sigman

to I just wanted across channels. performance different about ask

think on So it's HD just tell clear. seems side. can kind Supply, then seeing Depot but if core there. of to hard maybe outperformed, But pretty from our SRS, Home elaborate I And retail, you're more it like Home that's you Depot on the trends or

step an the you've about, years. business come up built few diverse timing you hopefully, eventual how this out this? different of back mean think about As you these very I recovery, how the of and they segments and over last think do

Richard McPhail

-- we're of we're business. all I'll Well, proud tell Seth. Sure, very of our you, components

and level We are executing call exceptionally core at across an that across the businesses you out. high the

While has sales part of through penetrating even out don't had exceptional core, are we say Supply to HD Supply have had and that is generate late we to quarter. growth our second of the as record track in -- HD an split we proud positive

so real Home spot The bright for a Depot. that's And

you XX company. company growth all growth SRS, so told their last SRS has acquiring is has faster competition in growing years. than acquired of and a Now the record this we a their as for verticals we when SRS, done a of track

months. we second we'll percentages the weeks own accomplished had the they of expect and high months book X SRS for them own look the If them book for of again, only XXXX, the single-digit X to, we year growth healthy grew only of results. quarter first them weeks, in the But in what in we though year, first only the single-digit so the again, you in even X at growth entirety X in half. They

market the and accustomed SRS So to models, are great share are delivering well. business as these examples who of bottom two and line Supply leaders growing HD

Edward Decker

good add I'd we HD to the business publicly in business, that, very landscape And going operating appropriate comparables. there's and MRO we're Supplies against comparatives. those to And there's roofing, case, break not about traded some the in Yes. feel out the SRS, Seth, the pool But segments. really comparatives much

Seth Sigman

If Depot, may Home super there in your if That's then just be widening on categories seeing core zoom And gap. you some just speak back maybe that helpful. about Okay. are relative we performance.

cited You number called been to spots, out tough a pressure, be outdoor a as equipment, average. Obviously, a were appliances power seem of bright cyclical category. categories that that's you of mentioned above but under lot

even having vinyl I think mentioned comps. you plank positive

of widening that those categories may So maybe and just speak be you seeing where to gap? some

William Bastek

Seth. Thanks,

to saw as called prepared Billy. said that see did that's to I our pressure. you number paint. and we just we've Having we the plank, unit that in our I talk new well. sales think that, the news. remarks efforts We're great it's heaters, Pro in as as in total. power Vinyl out projects, That performance of So certainly, businesses finance Listen, paint And we in with mentioned, the it, continue a I platforms about our business and both Water again, mentioned across thrilled mention Paints paint continue comps. had don't ongoing we with

to prepared the like projects, to put businesses in we're to did finance those to remarks, of rates, pleased pieces example, larger uncertainty some to pressure an with like purchase of ongoing relates as interest that as see in our projects. categories it just we continue see while riders some we good it's we continued other the onetime non-finance softness ticket, that going some pieces engagement well. some the continue pressure mentioned, as the I But on So in of alluded seasonal

Operator

Our the next line comes question UBS. from Lasser Michael with of

Michael Lasser

rather just XX-year in is does think in than Depot do rate change, that fixed drive business the What the moderation that rate order mortgage a erosion Home to level for decrease change, the rates due key in level you to in to And inflation? the labor is fall an needs to market or higher?

Edward Decker

hit what of for down, a the I to is came some X%, towards say, you number below off, even added as bit. end high moderated can question rates historically magical rate is and full Hard X.X% and there is do All I there. pressure. think with that the Michael, over year then last pinpoint reference when

the in to activity, unfortunately, spike housing saw And mortgage again. up refi immediate mortgage applications. increase back then applications, You rates X% think an almost

trending we're again. So down

broader you're the mortgage. qualified Caveat engage. I think that for of year, to people a approaching X.X% are again, end level would pause some this to little towards on sorted but be, we approaching we saw you're a this be what geopolitical to would until activity. think that towards might would bit And we even going of economic, which gets as last based concerns people down expect out, still X%, head that would see understandable, rates

or thought on know, of There's this of golden dynamic folks, family going and those as of golden rate, as handcuffs But other you employment, piece on, The enjoy whole size increases, as those mortgages puzzle or bit X you under for X dynamic low And goes is might family the with household stay again, for the in changes. And formation, as years, moves rates. little time of definitely cetera. et low are in but retirement, X%. mortgages plenty a amount handcuff X%. who a

adds would gradual bit to housing that environment. we a -- a little rate traditional for from unlocking a So of to see even cut that of if response delay a

Michael Lasser

question downturn longer or Depot to influence follow-up SRS way invest market of item? pull of margin could this underlying this does could the core line that the apart on versus as maybe as a a sustain the this, you your an an reflect guidance Home upturn? to gross to part And dynamics Depot on updated price eventual within share value My more have that it is Home inclination in Okay. grab persists,

William Bastek

and Michael, I'll it question. thanks. on then the of piece second a Yes, to take part I'll Richard that that, of hand first

going value our As it just to activity, and I continue innovation listen, create consumers. drive to relates promotional for the to we're mean,

our in perform be around as bring promotional the adoption. the the stores and be to like great driving environment day. just and value, to are come for creating things. And good on very about these seen to been promotional. sector, creating nor improvement feel want our there's the We in stores able into our to more We're excitement We've we've are we business. We opportunities those position our very going value where into customers and every that environment and the pressure been with pleased need innovation brands We the see see to in don't really forward. cadence don't home in category opportunities marketplace. continue rational Areas in well focused while and don't in need very a proprietary some the to We change our relates we're a promotional it like very appliances.

toss to more it gross I'll for Now the Richard on piece. margin

Richard McPhail

Great. Yes.

actually you're let margin, question about give talk context, I it's because if gross So a me moment. think for to let's SRS broader about important broaden just asking the the

and digit out X% line us -- and grow conference, we the EPS accelerants case the our accelerate conference, case in growth we base So base last pointed is accelerate profit to could to growth. investor SRS that EPS June's in SRS sales to grow Pro, mid- Investor those said that than laid one faster top a be our to high earnings base pushing to high sales case. single is acquisition to growth, accelerated The that and base operating objective push X% towards of we case, to contributors there growth. The accelerate that and of that to would to with single-digit So right? of was case us share

So the noncash of from EPS company intangible of immediately. acquisition months to amortization. XX cash can a March. for SRS and sales EPS as accretive profit adjusting XX first already the be contributing see, operating it's perspective, be will an EPS accretive you From perspective, our cash in associated the as we will ownership months the said of in It first in ownership

we QX in our just as months financials. in a So of results reminder, our reflected from in about in Again, X SRS X of let's is SRS year. full we about include weeks talk will our how SRS, include and

About about their than margins So SRS, simply Depot, their on look, The then the have Home carries Depots in right? different Home average. Home of product is than X/X products different gross and X/X The mix a remaining roofing The a mix rate Depot. and similar margin just pool carry than thinking margin reflects is they company's as lower But product landscape. SRS Home products Depot. Those a similar

the what we of XX of means if gross of margin, margin. think by margin when our XX profile about so about think talking that about And kind about impacted a SRS gross a for you're you basis gross an points. second points reset figure, margin in annualized basis of And quarter kind

for effect, again, reset Home of it's will an that be a about sort around look a Depot. of The XX you in to products points. That's mix at new at points annualized basis So kind somewhere reflect then if basis And of XX is, figure, what XXXX.

So operating to margin impact it's gross now that look about SRS' let's because context. and talk margin in at important

So SRS profile, base lowering to full it adjusts just if XX our lowers in base by points mix, it you for about you basis of year margin our QX it operating XXXX. -- and margin when XX profile by basis our add the about operating points

that's several we our get numbers, we GAAP an number, and full XX to XX SRS numbers, the adjusted annual are like. When exceptional points margin we for think gross margin to about that then operators. And of point can basis want for across about our the out you'd period. into So those for is performances quarter, the annualize if Again, XXXX. from if you year adjustment base again

to brought merchant our First a of benefit decrease in supply and and our chain us from benefit significant shrink transportation year-over-year. all, by significant partners partners

returns were we of point can points, and a It's the exceptional our shrink put are year investments those that shift gross directly team in. at XX to basis that on last entire of performance. in a continue we what actually now fantastic points drives together row. you long And the a back way quarters of XX invest an several board exceptional. That's we year-over-year benefit And versus margin in have SRS across year, team. last basis you saying, if at by performance versus gross look the margin out performance mix our We

Operator

comes Simeon with Our the next from question Morgan of Stanley. Gutman line

Simeon Gutman

they if they're question it a XXXX, like look One a bit. to transactions, to little look have related at to we reversion. down in way I look flat at

most still of given like XX-ish looks about point on Ted's though, XX%. is earlier, to transactions. that up back Ticket percent, So it's

of the the if signs and deflating, are function items, of inflation non of in look pricing a signs is, lumber. the changing either number noncommodity that's inflation. My because Any just we there consumers at basket product any channel? the there think disinflating, reporting of piece, was I and -- [ the question ] stuff, prices, So in

Edward Decker

No, question. Simeon, the for thanks

Your is sort of any The seeing there. spot in math on not good retails. news is or cost no. broad step We're down

That half. the of really what out a is half, basis XX would AUR have retail There laid points we've moves on XXX for year, from about points at function to second first look cost we new associated said a front. in last the of pressure retail and isn't lapping of or in that we'd you all the AUR cost basis this the activity of year. the that moderate If net lot

and In cost fact, sort of cost out in activity.

We neutral have robust with our pretty not we're all a of on works very team It's a now, right that activity. ton merchants this.

retailer And in Pros that ] our a we're of seeing The The We're Things promotional. matter are our We're neutral. we're is We're to as down to in lot to several an [ penetration. give trade last periods seeing AUR day. of EDLP what not is on of the an environment is OPP lapping. value particular. price not not seeing Billy activity. a pretty cost neutral increase has neutral. environment to So every -- particularly going said, be

in we we're from in the input as would that, matter the just cost years increase seen So materials, hold we seeing the our retail last we that. not team, cost levels. well in has cost our labor there's -- levels very, have of largely transportation and into working from base, the we're not a good where and levels view everyone are X But with as finance terms it's over very which Remember, costs, a significant today you costs still supplier expect understand through of to costs.

component you and structure, levels. has the can come why a don't big those And similarly. wow, the So cost that say, Well, highly that's that's back. has inflationary, we to increased see price XX, eroding irrationally labor marketplace in that being fact,

Simeon Gutman

of the more it like are in dollars think terms looks roughly before I think is gave Follow-up, some some business Okay. the the about clues. business, margins trying EBIT second to core whole guidance the But in of same. us the Richard's what half? comments dollar doing of decremental

before. We have a single midpoint one now, we had a point

it in whatever negative decrementals picking negative Is the low it or that we're like seems right the we're the are right? losing persists? to back XX% looks of sort up core, And run that from SRS. XX%. around comp So comp if like somewhere environment Is this rate

Richard McPhail

manner. talk the would performance and outperformed certain to about sold. we our as date I -- is exceptional has have, said, why expectations how don't we what -- cost of I And guidance an let's because expenses to do date in performance managed reflects the I goods in -- actually what team So

And that through guide. means what me so let the walk for

the to take of line negative a that year we we negative XX.X% a can a in XX began guide -- a deleverage from if with margin. well, that of you comp as natural operating X% recall, in to In top call take X% with it, that isolation, expectation. to comp points were is, a X%, So XX reduction see we negative basis would we

However, we've and favorability where it our know We year-to-date. had that from, favorability enhances earnings. comes

we the negative margin And if a operating our operating for side, set like were so excluding and SRS again, drop a margin margin, to of now with operating guiding for to XX.X% at side XX.X% SRS XX%. XX.X% X%, of to we I'm by a XX.X% SRS taking this would discussion, so naturally, to moment, Instead, way X%. simplification, to our in at something instead the a negative a are the

we've at flowing that That's that XX% core we we held we through are because that created comp. have negative margin investments through a operating made. So X% essence, have benefits in

operating SRS I mix obviously, our Now basis a in said, there's if we margin include shift in as this, about point XX base.

So that negative range the of XX% today. the becomes alongside XX.X% top we've the guided end that X%

Simeon Gutman

Got it.

Richard McPhail

operating to together, up corresponds margin tie our with XX.X%. XX.X% it just that of all adjusted And

eliminate on margin XX.X% operating expect of So we to on report expense for X%. intangible the when assets, amortization noncash year, we a comp negative of

Operator

comes Haskett. of Our with question next . Chuck the Gordon line from Grom

Charles Grom

success? the made rate it do think growth all 'XX? And acquisitions that environment. I'm range guys talked organic? Has Were high into I which there single-digit what's You we curious really some move in been strong SRS? SRS by is we growth driving guess, year-to-date, as about about revenue how that this in

Edward Decker

and Chuck. they between single organic robust split and Thanks, -- acquisitions. digit growth grower, roughly Yes, a high equally that remain of share-taking is lapping split between

Charles Grom

'XX? Okay. Great. thoughts into And of go pace the will on that any how

Edward Decker

demonstrated some add-on. inception greenfield their growth, of branches the branches, in and they is Yes. remember, since M&A, in up base comping guidance then geographical 'XX. roll the balanced opening mid-XXXXs, We which their customer list have mode any open branches, a wouldn't between give existing this But grower there their of

for So that going exactly profile that's grown will years, is they've that forward. support and the profile we that the

Richard McPhail

clarity's our base. And just for comp sake, is SRS in not

in are And for will reflected comp so comp XX become not we've sales once owned They they them our months. guidance.

Charles Grom

mortgage mean the Okay. line to And your then, deferring begins possible pace rates Richard, do you've that's the parts the consumer the for But That's we over quarters? X% helpful. materialize, it to talked could next what can the about most past I the start the exposed? of lower prospects ramp of for begin couple And quarters. if higher projects you rate. Is maybe sight over think a case, be of business see as few deferrals of to that

Richard McPhail

what it's we've intuitively, Well, probably the seen. converse of

picking certainly We're is direct echo at going up between that amount decreases and turnover. you to our that rates customers large not in, under large Ted just pressure. and relationship but there kitchen, in it's tell flooring, because call the being in to bath, deferred. that timing. But things categories mortgage a components You project Billy, of chime activity are project, are said, certainly to is of us the And about try lighting what the please least see think all those

And important are as the years, we've so is, improvement demand of for long-term point the home fundamentals said I think here strong.

to We the XX this highest years for the And of that business timing it. marks we're moderation. amount to are is have we bullish uncertain, CapEx on back invested through of but invest We because period the ready continued future. the we've really be in last going XXXX in --

Operator

Brian of Nagel the from line comes with Oppenheimer. question Next

Brian Nagel

you question, just with was So notable just there gave at the my growing prepared Or June was to we delays pace of first your remarks, from Is to July. so respect there? mark that anything about? there slowdown it the that's comps, a numbers talked

William Bastek

a And to the in minus were for X.X%. thanks minus question. then reiterate comps, Brian, X.X%, and minus our Yes, we X.X%

those us categories, circulation, in there's call saw, fans, everyone see watering, where comments, in is extreme I we the think some July, did question saw, some no think Ted's sales heat of weather-related we we on a think as air ACs we While in and and that in into took think July to the as come forward typically for softness June. the significantly that time pull back frame, alluded

back of really let bit a I'll it categories a some of the Richard just So was expand shift June, move into saw and further. little we half as those

Richard McPhail

And what than a factors would comp consistent case. X% we went more little there But level a an guidance what That of in how Yes. general expect again, of we've a has And about with better maybe a of lot negative heat-related just And general of on. comps at had result are with were signs expect level right? The were a more There were the in range. quarter. August for consistent weakness. negative that talk categories. influence into comments signs are our -- There on off let's Brian, and the off comp August July, But some started Billy's -- started X% those guidance. year. off started we'd that kind we our range were August spot weakness. driver major at the has so let's

Brian Nagel

is lot we're a that. very That's appreciate question I But picture. now the when closed. guess, about second And the I helpful. bigger talking I acquisition the have, SRS,

we're you opportunities working should mean on exploring Because professional market, other the into this watching Depot, the expecting I be acquisition to there? integration. Home we be You're push continued

Edward Decker

business planning that I utilizing joint always this in early, said, continue SRS creation, transaction just about of significant to early having large value as and their to M&A we cetera. not and for just we've feel us in expect opportunities, or a expect or geographies et that, whether Well, Brian, continue do large but geographies it's to will bases. do us done SRS. very segments, anything acquisition days with Look, activity we great very talked fill growth customer about And do to made segments

Operator

question of next Wells Fadem from Our with the Zach line comes Fargo.

Zachary Fadem

curious that you how It sounds positive mentioned ecosystem. under this you'd percent to in is your Pro's relative like of there's I'm trajectory the now DIY your out Pro versus if widened now Curious expect any trend then QX. SRS this to what belt? there? And comps and spread new for call engaging represents Pro's

Ann-Marie Campbell

we're Yes, go in have outperformed due to about and of invest in ] and mentioned, selfers seeing there. as Chip the Zach it growth to wallet. certainly and ecosystem really the quarter. Ann-Marie. I'll just And we it's and the Pro we speak what grow [ your bit drive to Pro continue to share a over accelerate little investments the

Chip Devine

Yes. Thanks, Zach.

that we better of our Pro after investing. sales it's and XX see we distribution And chain help And in most about team. We've investing in quarter. investing that talk As since last a importantly, we've we markets. in us capabilities this foundational in our we year. had be play, expansion then growth seen year, serve the been when mentioned supply positive we're invested markets invested XX all markets fully outside quarter in of capability past, markets We'll In the markets, those in. we've

progress So to over very we've our last in with continue expansion. progress expectation we're as we the of very, with the pleased and march years X.X 'XX and marched same

Zachary Fadem

Got quick two you. And ones. Richard, then,

how we and line the return? And on about the structural the then second, around margins. First buybacks think on long-term time should

high the we new should SRS. about watermark time? how think impact of You in detail gave the some around Curious over recovery good

Richard McPhail

repurchases. share about talk let's Well,

short-term announced, we paper acquisition raising. commercial as issuances financed So the SRS part we some the acquisition, of in billion bond and $XX then as with

of ratio the X.Xx and out case, XXXX, delever a like the to on at said we basin But investors to That's looks intent the update how returned. And us we current time likely a an from anticipate, we will that time. We obviously we then base ratio. perspective, in restart that calculation, Look, on we always management, currently executing that a of our be profitability into expected degree exceptional kind debt-to-EBITDA are to would will we goods It's in true. take year our when delivering X.Xx. case. we see generate over have long-term We going we on structural base that high expense laid exceptional over now, repurchases. leverage. sometime with will we you over for measurement views. But case, the sold. to cost and have operating to our some talk And We're And at this about the the watermark. we're always -- remain are going And of that accelerated top will really delivering to not continue we rate. update our around would line in before XXXX,

be run. happy the June. and should laid we it in out as cases those that we're case accelerated we we running business believe So base that And that are in

Operator

final comes of the Forbes line question with Steven Our Guggenheim. from

Steven Forbes

a comp. follow-up down SRS. lapping mentioned it quick you Ted, think I between XX-XX you and just acquisitions. Maybe the on said right growth And broke

count it capital the as where of needs So the then would the on how both expansion included summarize guidance? in greenfield maybe fund to acquisition-related update branch business us is just you today? And give an sort spending that and of CapEx

Edward Decker

branch a capital be, of facility pay as more light, reasonably sales news their this for turning good a Depot than modest-sized a it's is inventory DC And on The operations, operation. would force. high Sure. greenfield at Home and think the variable least

operating are a to infill process that They And of the literally first the on X acquisitions, on they up operation. Similarly, very their quickly. and year when they EBITDA up the and to doubling the SRS. they be great X they a do of weekend. it acquire system that opens of on acquisition company in on of a that ownership. them synergies have acquired And Friday, tend get breakeven of Monday, make they have over when record companies So lets a ERP technology ERP company They a years get system. in track process core

of It's on owned expansion last basis, and acquired They more asset-light. reasonably LOIs. fact, it's company. earnings They've they So in made a multiples small a on think it's have on -- an Friday, quickly under Since I deal. a them. pool closed couple greenfield profitable

in these infill business. So acquisitions normal course modest that of they are do the

So reasonably as excited single-digit that smaller generally on watch greenfield on grow. multiple. really asset it's to them are companies EBITDA they're imagine, paying, we're you in the in light can And multiples, again, regional

nice case. acquisition So on their earnings profile

Steven Forbes

for sales? looking year if think percentage a XX The sort off just as last of year, basis we numbers about year's Richard, points restating follow-up I'm amount intangible amortization. maybe correct last And me for we're at as Or maybe there. of very quick a full

Richard McPhail

for million for Yes. full of expense XXXX. Home amortization the Depot year The total was year last $XXX

Edward Decker

And about XXX Steve, [ ]. they're on branches,

So , in when we [ branches XX-plus opened you can in months. ] announced XXX see was their the March, They've profile. just it growth last few

oriented. So these folks are super growth

Operator

turn Thank closing you. the Ms. to Janci, floor comments. back you I will now for over

Isabel Janci

Thank today. in us you, you look call Christine, to with everybody, November. We joining speaking forward quarter on third you, and thank for earnings our

Operator

and today's does Ladies gentlemen, teleconference. conclude this

you and this You day. your lines have your time. a wonderful at participation, disconnect Thank for may

The Home Depot, Inc. (HD) 13 Aug 242025 Q2 Earnings call transcript