The Home Depot Announces Q4 and Fiscal 2012 Results
Announces $17 Billion share repurchase authorization; Increases quarterly dividend by 34 percent.
The Home Depot today reported sales of $18.2 billion for the fourth quarter of fiscal 2012, a 13.9 percent increase from the fourth quarter of fiscal 2011. Comparable store sales for the fourth quarter of fiscal 2012 increased 7.0 percent, and comp sales for U.S. stores were 7.1 percent.
The fourth quarter of fiscal 2012 consisted of 14 weeks compared with 13 weeks for the prior year. The 14th week added approximately $1.2 billion in sales for the quarter and the year. Excluding the 14th week, fourth quarter sales increased by 6.3 percent compared to the fourth quarter of fiscal 2011. The additional week is not included in comparable store sales results for the quarter or the year.
Net earnings for the fourth quarter were $1.0 billion, or $0.68 per diluted share, compared with net earnings of $774 million, or $0.50 per diluted share, in the same period of fiscal 2011. These results reflect a favorable adjustment to a previously announced China store closing charge of approximately $20 million, net of tax, or $0.01 per diluted share. The 14th week increased earnings per diluted share by approximately $0.07 for the quarter and the year.
Fiscal 2012
Sales for fiscal 2012 were $74.8 billion, an increase of 6.2 percent from fiscal 2011. Total company comparable store sales for the year increased 4.6 percent, and comp sales for U.S. stores were 4.9 percent for the year. Excluding the 53rd week, sales for fiscal 2012 increased by 4.5 percent from fiscal 2011.
Earnings per diluted share in fiscal 2012 were $3.00, compared to $2.47 per diluted share in fiscal 2011, an increase of 21.5 percent. These results reflect a nonrecurring charge of approximately $145 million, net of tax, or $0.10 per diluted share, associated with the China store closings. On an adjusted basis, earnings per diluted share in fiscal 2012 were $3.10, compared to $2.47 per diluted share in fiscal 2011, an increase of 25.5 percent.
"We ended the year with a strong performance as our business benefited from a continued recovery in the housing market coupled with sales related to repairs in the areas impacted by Hurricane Sandy," said Frank Blake, chairman & CEO. "I'd like to thank our associates for their hard work and dedication."
Capital Allocation Strategy
The Company today announced that its board of directors declared a 34 percent increase in its quarterly dividend to $0.39 cents per share. "The board increased the dividend for the fourth time in as many years. In line with our targeted dividend payout of 50 percent, the dividend increase is a testament to our commitment to create value for our shareholders," said Blake. The dividend is payable on March 28, 2013, to shareholders of record on the close of business on March 14, 2013. This is the 104th consecutive quarter the Company has paid a cash dividend.
The board of directors also authorized a $17.0 billion share repurchase program replacing its previous authorization. Since 2002 and through February 3, 2013, the Company has returned more than $37.5 billion of cash to shareholders through repurchases, repurchasing approximately 1 billion shares.
Combined with today's announcements, the Company reiterated its capital allocation principles:
- Dividend Principle: Targeting a dividend payout ratio of approximately 50 percent.
- Share Repurchase Principle: After meeting the needs of the business, will use excess cash to repurchase shares, with the intent of completing $17.0 billion of share repurchases by the end of fiscal 2015.
- Return on Invested Capital Principle: Maintain a high return on invested capital, with a goal of reaching 24 percent by the end of fiscal 2015.
Fiscal 2013 Guidance
The Company provided the following guidance for fiscal 2013, a 52-week year compared to fiscal 2012, a 53-week year:
- Sales growth of approximately 2 percent
- Comparable store sales growth of approximately 3 percent
- Nine new stores
- Moderate gross margin expansion
- Operating margin expansion of approximately 65 basis points
- Tax rate of approximately 37 percent
- Share repurchases of approximately $4.5 billion
- Diluted earnings-per-share growth after anticipated share repurchases of approximately 12 percent to $3.37
- Capital spending of approximately $1.5 billion
- Depreciation and amortization expense of approximately $1.7 billion
- Cash flow from the business of approximately $7.2 billion
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