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(1) Represents the dilutive impact of stock-based awards.
8.
9.
billion, subject to customary adjustments for SRS’s debt, cash, transaction expenses and net working capital. The closing of the acquisition is subject to customary closing conditions, including regulatory approvals, and is expected to be completed by the end of fiscal 2024. Under the terms of the merger agreement, the Company will be obligated to pay a termination fee of $ million in the event SRS or the Company terminates the merger agreement due to an antitrust-related governmental prohibition on the transaction or if the closing has not occurred on or before the termination date, as defined in the merger agreement, and all other closing conditions are otherwise satisfied. The acquisition is expected to be funded through a combination of cash on hand; borrowings under our commercial paper program, which has been expanded in anticipation of the pending acquisition as further discussed in Note 4; and the issuance of long-term debt. | | | | | | | | |
Fiscal Q1 2024 Form 10-Q | 11 | |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors
The Home Depot, Inc.:
Results of Review of Interim Financial Information
We have reviewed the consolidated balance sheet of The Home Depot, Inc. and its subsidiaries (the “Company”) as of April 28, 2024, the related consolidated statements of earnings, comprehensive income, stockholders’ equity, and cash flows for the three-month periods ended April 28, 2024 and April 30, 2023, and the related notes (collectively, the “consolidated interim financial information”). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial information for it to be in conformity with U.S. generally accepted accounting principles.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheet of the Company as of January 28, 2024, and the related consolidated statements of earnings, comprehensive income, stockholders’ equity, and cash flows for the fiscal year then ended (not presented herein); and in our report dated March 13, 2024, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of January 28, 2024 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
Basis for Review Results
This consolidated interim financial information is the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our reviews in accordance with the standards of the PCAOB. A review of consolidated interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
/s/ KPMG LLP
Atlanta, Georgia
May 20, 2024
| | | | | | | | |
Fiscal Q1 2024 Form 10-Q | 12 | |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion provides an analysis of the Company’s financial condition and results of operations from management's perspective and should be read in conjunction with the consolidated financial statements and related notes included in this report and in the 2023 Form 10-K and with our MD&A included in the 2023 Form 10-K.
TABLE OF CONTENTS
EXECUTIVE SUMMARY
We reported net sales of $36.4 billion in the first quarter of fiscal 2024. Net earnings were $3.6 billion, or $3.63 per diluted share.
We opened two new stores in the U.S. during the first quarter of fiscal 2024, resulting in a total store count of 2,337 at April 28, 2024. A total of 320 stores, or 13.7%, were located in Canada and Mexico. For the first quarter of fiscal 2024, sales per retail square foot were $572.69. Our inventory turnover ratio was 4.5 times at the end of the first quarter of fiscal 2024, compared to 3.9 times at the end of the first quarter of fiscal 2023. The increase in our inventory turnover ratio was primarily driven by lower average inventory levels during the first quarter of fiscal 2024.
We generated $5.5 billion of cash flow from operations during the first three months of fiscal 2024. This cash flow, together with cash on hand, was used to fund cash payments of $2.2 billion for dividends and repay $1.2 billion of long-term debt. In addition, we funded $847 million in capital expenditures and $649 million for share repurchases, before we paused share repurchases in March 2024 due to the pending acquisition of SRS. In February 2024, we announced a 7.7% increase in our quarterly cash dividend to $2.25 per share.
Our ROIC for the trailing twelve-month period was 37.1% at the end of the first quarter of fiscal 2024 and 43.6% at the end of the first quarter of fiscal 2023. The decrease in ROIC was primarily driven by lower operating income and an increase in average equity as a result of pausing share repurchases in March 2024. See the “Non-GAAP Financial Measures” section below for our definition and calculation of ROIC, as well as a reconciliation of NOPAT, a non-GAAP financial measure, to net earnings (the most comparable GAAP financial measure).
Pending SRS Acquisition
On March 27, 2024, we entered into a definitive agreement to acquire SRS, a leading residential specialty trade distribution company across several verticals serving the professional roofer, landscaper and pool contractor. We believe the acquisition of SRS will accelerate the Company’s growth with the residential professional customer. The acquisition is expected to complement our existing capabilities and enable us to better serve complex project purchase occasions with the renovator/remodeler, while also establishing the Company as a leading specialty trade distributor across multiple verticals. Under the terms of the merger agreement, a subsidiary of The Home Depot, Inc. will merge with and into Shingle Acquisition Holdings, Inc., the parent company of SRS, and we will pay aggregate consideration of $18.25 billion, subject to customary adjustments for SRS’s debt, cash, transaction expenses and net working capital. The closing of the acquisition is subject to customary closing conditions, including regulatory approvals, and is expected to be completed by the end of fiscal 2024. The acquisition is expected to be funded through a combination of cash on hand; borrowings under our commercial paper program, which has been expanded in anticipation of the pending acquisition as further discussed in Note 4 to our consolidated financial statements; and the issuance of long-term debt. | | | | | | | | |
Fiscal Q1 2024 Form 10-Q | 13 | |
RESULTS OF OPERATIONS
The following table presents the percentage relationship between net sales and major categories in our consolidated statements of earnings.
FISCAL 2024 AND FISCAL 2023 THREE MONTH COMPARISONS
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| April 28, 2024 | | April 30, 2023 |
| dollars in millions | $ | | % of
Net Sales | | $ | | % of
Net Sales |
| Net sales | $ | 36,418 | | | | | $ | 37,257 | | | |
| Gross profit | 12,433 | | | 34.1 | % | | 12,557 | | | 33.7 | % |
| Operating expenses: | | | | | | | |
| Selling, general and administrative | 6,667 | | | 18.3 | | | 6,355 | | | 17.1 | |
| Depreciation and amortization | 687 | | | 1.9 | | | 651 | | | 1.7 | |
| Total operating expenses | 7,354 | | | 20.2 | | | 7,006 | | | 18.8 | |
| Operating income | 5,079 | | | 13.9 | | | 5,551 | | | 14.9 | |
| Interest and other (income) expense: | | | | | | | |
| Interest income and other, net | (57) | | | (0.2) | | | (33) | | | (0.1) | |
| Interest expense | 485 | | | 1.3 | | | 474 | | | 1.3 | |
| Interest and other, net | 428 | | | 1.2 | | | 441 | | | 1.2 | |
| Earnings before provision for income taxes | 4,651 | | | 12.8 | | | 5,110 | | | 13.7 | |
| Provision for income taxes | 1,051 | | | 2.9 | | | 1,237 | | | 3.3 | |
| Net earnings | $ | 3,600 | | | 9.9 | % | | $ | 3,873 | | | 10.4 | % |
—————
Note: Certain percentages may not sum to totals due to rounding.
| | | | | | | | | | | | | | | | | |
| Three Months Ended | | |
| Selected financial and sales data: | April 28,
2024 | | April 30,
2023 | | % Change |
Comparable sales (% change) | (2.8) | % | | (4.5) | % | | N/A |
Comparable customer transactions (% change) (1) | (1.5) | % | | (5.0) | % | | N/A |
Comparable average ticket (% change) (1) | (1.3) | % | | 0.2 | % | | N/A |
Customer transactions (in millions) (1) | 386.8 | | | 390.9 | | | (1.0) | % |
Average ticket (1) (2) | $ | 90.68 | | | $ | 91.92 | | | (1.3) | % |
Sales per retail square foot (1) (3) | $ | 572.69 | | | $ | 592.94 | | | (3.4) | % |
Diluted earnings per share | $ | 3.63 | | | $ | 3.82 | | | (5.0) | % |
—————
(1)Does not include results for HD Supply.
(2)Average ticket represents the average price paid per transaction and is used by management to monitor the performance of the Company, as it represents a primary driver in measuring sales performance.
(3)Sales per retail square foot represents annualized sales divided by retail store square footage. Sales per retail square foot is a measure of the efficiency of sales based on the total square footage of our stores and is used by management to monitor the performance of the Company’s retail operations as an indicator of the productivity of owned and leased square footage for these retail operations.
Sales
We assess our sales performance by evaluating both net sales and comparable sales.
Net Sales. Net sales for the first quarter of fiscal 2024 were $36.4 billion, a decrease of 2.3% from $37.3 billion for the first quarter of fiscal 2023. The decrease in net sales for the first quarter of fiscal 2024 largely reflects the impact of a negative comparable sales environment, primarily driven by decreases in comparable customer transactions and comparable average ticket, partially offset by sales from new stores and the acquisitions we completed in fiscal 2023.
| | | | | | | | |
Fiscal Q1 2024 Form 10-Q | 14 | |
Online sales, which consist of sales generated through our websites and mobile applications for products picked up at our stores or delivered to customer locations, represented 15.3% of net sales during the first quarter of fiscal 2024 and increased by 3.3% compared to the first quarter of fiscal 2023.
A weaker U.S. dollar positively impacted net sales by $106 million during the first quarter of fiscal 2024.
Comparable Sales. Comparable sales is a measure that highlights the performance of our existing locations and websites by measuring the change in net sales for a period over the comparable prior period of equivalent length. Comparable sales includes sales at all locations, physical and online, open greater than 52 weeks (including remodels and relocations) and excludes closed stores. Retail stores become comparable on the Monday following their 52nd week of operation. Acquisitions are typically included in comparable sales after they have been owned for more than 52 weeks. Comparable sales is intended only as supplemental information and is not a substitute for net sales presented in accordance with GAAP.
Total comparable sales for the first quarter of fiscal 2024 decreased 2.8%, reflecting a 1.5% decrease in comparable customer transactions and a 1.3% decrease in comparable average ticket compared to the first quarter of fiscal 2023. The decrease in comparable customer transactions reflects the impact of macroeconomic factors, including the continued shift in consumer consumption trends away from goods and towards services and the impact of a high interest rate environment, pressuring home improvement demand. The decrease in comparable average ticket primarily reflects price stabilization relative to last year, partially offset by demand for new and innovative products.
During the first quarter of fiscal 2024, our Building Materials and Power merchandising departments posted positive comparable sales compared to the first quarter of fiscal 2023. All of our other merchandising departments posted negative comparable sales during the first quarter of fiscal 2024 compared to the first quarter of fiscal 2023.
Gross Profit
Gross profit for the first quarter of fiscal 2024 decreased 1.0% to $12.4 billion from $12.6 billion for the first quarter of fiscal 2023. Gross profit as a percentage of net sales, or gross profit margin, was 34.1% for the first quarter of fiscal 2024 compared to 33.7% for the first quarter of fiscal 2023. The increase in gross profit margin during the first quarter of fiscal 2024 was primarily driven by lower transportation costs and lower shrink.
Operating Expenses
Our operating expenses are composed of SG&A and depreciation and amortization.
Selling, General & Administrative. SG&A for the first quarter of fiscal 2024 increased $312 million, or 4.9%, to $6.7 billion from $6.4 billion for the first quarter of fiscal 2023. As a percentage of net sales, SG&A was 18.3% for the first quarter of fiscal 2024 compared to 17.1% for the first quarter of fiscal 2023, primarily due to lower legal-related benefits, higher payroll costs, and deleverage from a negative comparable sales environment.
Depreciation and Amortization. Depreciation and amortization for the first quarter of fiscal 2024 increased $36 million, or 5.5%, to $687 million from $651 million for the first quarter of fiscal 2023. As a percentage of net sales, depreciation and amortization was 1.9% for the first quarter of fiscal 2024 compared to 1.7% for the first quarter of fiscal 2023, primarily reflecting increased depreciation expense from ongoing investments in the business and deleverage from a negative comparable sales environment.
Interest and Other, net
Interest and other, net for the first quarter of fiscal 2024 decreased $13 million, or 2.9%, to $428 million from $441 million for the first quarter of fiscal 2023. As a percentage of net sales, interest and other, net was 1.2% for the first quarter of both fiscal 2024 and fiscal 2023, and primarily reflected higher interest income due to elevated cash balances as a result of pausing share repurchases in March 2024, offset by deleverage from a negative comparable sales environment and a slight increase in interest expense driven by higher average debt balances.
Provision for Income Taxes
Our combined effective income tax rate was 22.6% for the first quarter of fiscal 2024 compared to 24.2% for the first quarter of fiscal 2023. The decrease in our effective rate was driven by certain discrete tax benefits recognized during the first quarter of fiscal 2024.
Diluted Earnings per Share
Diluted earnings per share were $3.63 for the first quarter of fiscal 2024 compared to $3.82 for the first quarter of fiscal 2023. The decrease in diluted earnings per share was primarily driven by lower net earnings during the first quarter of fiscal 2024, partially offset by lower diluted shares.
| | | | | | | | |
Fiscal Q1 2024 Form 10-Q | 15 | |
NON-GAAP FINANCIAL MEASURES
To provide clarity on our operating performance, we supplement our reporting with certain non-GAAP financial measures. However, this supplemental information should not be considered in isolation or as a substitute for the related GAAP measures. Non-GAAP financial measures presented herein may differ from similar measures used by other companies.
Return on Invested Capital
We believe ROIC is meaningful for management, investors and ratings agencies because it measures how effectively we deploy our capital base. ROIC is a profitability measure, not a measure of financial performance under GAAP. We define ROIC as NOPAT, a non-GAAP financial measure, for the most recent twelve-month period, divided by average debt and equity. We define average debt and equity as the average of beginning and ending long-term debt (including current installments) and equity for the most recent twelve-month period.
The following table presents the calculation of ROIC, together with a reconciliation of NOPAT to net earnings (the most comparable GAAP measure):
| | | | | | | | | | | |
| | Twelve Months Ended |
| dollars in millions | April 28,
2024 | | April 30,
2023 |
| Net earnings | $ | 14,870 | | | $ | 16,747 | |
| Interest and other, net | 1,752 | | | 1,634 | |
| Provision for income taxes | 4,595 | | | 5,280 | |
| Operating income | 21,217 | | | 23,661 | |
Income tax adjustment (1) | (5,021) | | | (5,671) | |
| NOPAT | $ | 16,196 | | | $ | 17,990 | |
| | | |
| Average debt and equity | $ | 43,629 | | | $ | 41,264 | |
| | | |
| ROIC | 37.1 | % | | 43.6 | % |
—————
(1)Income tax adjustment is defined as operating income multiplied by our effective tax rate for the trailing twelve months.
LIQUIDITY AND CAPITAL RESOURCES
At April 28, 2024, we had $4.3 billion in cash and cash equivalents, of which $664 million was held by our foreign subsidiaries. We believe that our current cash position, cash flow generated from operations, funds available from our commercial paper program, and access to the long-term debt capital markets should be sufficient not only for our operating requirements, any required debt payments, and satisfaction of other contractual obligations, but also to enable us to invest in the business, fund dividend payments, and fund any share repurchases through the next several fiscal years, as well as complete the pending acquisition of SRS. In addition, we believe that we have the ability to obtain alternative sources of financing, if necessary.
Our material cash requirements include contractual and other obligations arising in the normal course of business. These obligations primarily include long-term debt and related interest payments, operating and finance lease obligations, and purchase obligations. In addition to our cash requirements, we follow a disciplined approach to capital allocation. This approach first prioritizes investing in the business, followed by paying dividends, with the intent of then returning excess cash to shareholders in the form of share repurchases. In March 2024, we paused share repurchases to preserve cash in anticipation of funding the pending acquisition of SRS. Following the completion of the acquisition, we do not plan to resume share repurchases until we have used our excess cash to reduce our outstanding debt.
During the first three months of fiscal 2024, we invested approximately $847 million back into our business in the form of capital expenditures. For fiscal 2024, in line with our expectation of approximately two percent of net sales on an annual basis, we plan to invest approximately $3.0 billion to $3.5 billion back into our business in the form of capital expenditures, with investments focused on new stores and improving the customer experience, including through technology and development of other differentiated capabilities. However, we may adjust our capital expenditures to support the operations of the business, to enhance long-term strategic positioning, or in response to the economic environment, as necessary or appropriate.
| | | | | | | | |
Fiscal Q1 2024 Form 10-Q | 16 | |
In February 2024, we announced a 7.7% increase in our quarterly cash dividend from $2.09 to $2.25 per share. During the first three months of fiscal 2024, we paid cash dividends of $2.2 billion to shareholders. We intend to pay a dividend in the future; however, any future dividend is subject to declaration by our Board of Directors based on our earnings, capital requirements, financial condition, and other factors considered relevant by our Board of Directors.
In August 2023, our Board of Directors approved a $15.0 billion share repurchase authorization that replaced the previous authorization of $15.0 billion, which was approved in August 2022. The August 2023 authorization does not have a prescribed expiration date. As of April 28, 2024, approximately $11.7 billion of the $15.0 billion share repurchase authorization remained available. During the first three months of fiscal 2024, we had cash payments of $649 million for repurchases of our common stock through open market purchases, prior to pausing share repurchases in March 2024 as discussed above.
DEBT
As of April 28, 2024, we had a commercial paper program that allowed for borrowings up to $5.0 billion. In connection with our program, we had back-up credit facilities with a consortium of banks for borrowings up to $5.0 billion, which consisted of a five-year $3.5 billion credit facility scheduled to expire in July 2027 and a 364-day $1.5 billion credit facility scheduled to expire in July 2024. All of our short-term borrowings in the first three months of fiscal 2024 were under this commercial paper program, and the maximum amount outstanding at any time was $117 million. At April 28, 2024, we had outstanding borrowings under our commercial paper program of $8 million, we had no outstanding borrowings under our back-up credit facilities, and we were in compliance with all of the covenants contained in our credit facilities, none of which are expected to impact our liquidity or capital resources.
In May 2024, we increased our commercial paper program from $5.0 billion to $19.5 billion in connection with the anticipated financing of the pending acquisition of SRS. In May 2024, in connection with the increase in the commercial paper program, we also entered into additional back-up credit facilities that consist of a 364-day $3.5 billion credit facility scheduled to expire in May 2025, a three-year $1.0 billion credit facility scheduled to expire in May 2027, and a 364-day $10.0 billion credit facility scheduled to expire in May 2025. The $10.0 billion credit facility also provides that the commitments and any borrowings under this facility will be reduced by the amount of net cash proceeds we receive from any future debt issuance. In the aggregate, our commercial paper program now allows for borrowings up to $19.5 billion and is supported by $19.5 billion of back-up credit facilities.
We also issue senior notes from time to time as part of our capital management strategy. We did not have any issuances of senior notes during the first three months of fiscal 2024. We expect to issue senior notes as part of our planned funding of the pending SRS acquisition. The timing of this issuance is subject to market and other factors. Upon the issuance of these notes, we expect to terminate the $10.0 billion credit facility discussed above and reduce our commercial paper program by $10.0 billion. In February 2024, we repaid $1.1 billion of senior notes at maturity.
The indentures governing our senior notes do not generally limit our ability to incur additional indebtedness or require us to maintain financial ratios or specified levels of net worth or liquidity. The indentures governing our notes contain various customary covenants; however, none are expected to impact our liquidity or capital resources. See Note 4 to our consolidated financial statements for further discussion of our debt arrangements. CASH FLOWS SUMMARY
Operating Activities
Cash flow generated from operations provides us with a significant source of liquidity. Our operating cash flows result primarily from cash received from our customers, offset by cash payments we make for products and services, associate compensation, operations, occupancy costs, and income taxes. Cash provided by or used in operating activities is also subject to changes in working capital. Working capital at any point in time is subject to many variables, including seasonality, inventory management and category expansion, the timing of cash receipts and payments, vendor payment terms, and fluctuations in foreign exchange rates.
Net cash provided by operating activities decreased by $117 million in the first three months of fiscal 2024 compared to the first three months of fiscal 2023, primarily driven by a decrease in net earnings, partially offset by changes in working capital.
Investing Activities
Net cash used in investing activities decreased by $73 million in the first three months of fiscal 2024 compared to the first three months of fiscal 2023, primarily resulting from lower capital expenditures.
| | | | | | | | |
Fiscal Q1 2024 Form 10-Q | 17 | |
Financing Activities
Net cash used in financing activities in the first three months of fiscal 2024 primarily reflected $2.2 billion of cash dividends paid, $1.2 billion of repayments of long-term debt, and $649 million of share repurchases prior to pausing share repurchases in March 2024. Net cash used in financing activities in the first three months of fiscal 2023 primarily reflected $2.9 billion of share repurchases, $2.1 billion of cash dividends paid, and $1.1 billion of repayments of long-term debt.
CRITICAL ACCOUNTING ESTIMATES
During the first three months of fiscal 2024, there were no changes to our critical accounting estimates or our significant accounting policies as disclosed in the 2023 Form 10-K. Our significant accounting policies are disclosed in Note 1 to our consolidated financial statements. ADDITIONAL INFORMATION
For information on accounting pronouncements that have impacted or are expected to materially impact our consolidated financial condition, results of operations, or cash flows, see Note 1 to our consolidated financial statements. Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Our exposure to market risk results primarily from fluctuations in interest rates in connection with our long-term debt portfolio. We are also exposed to risks from foreign currency exchange rate fluctuations on the translation of our foreign operations into U.S. dollars and on the purchase of goods by these foreign operations that are not denominated in their local currencies. Additionally, we may experience inflation and deflation related to our purchase and sale of certain commodity products. There have been no material changes to our exposure to market risks from those disclosed in the 2023 Form 10-K, including the types of instruments we use to manage our exposure to such risks, during the first quarter of fiscal 2024.
Item 4. Controls and Procedures.
Under the direction and with the participation of our Chief Executive Officer and Chief Financial Officer, we evaluated our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) and concluded that our disclosure controls and procedures were effective as of April 28, 2024.
We are in the process of an ongoing business transformation initiative, which includes upgrading and migrating certain accounting and finance systems. We plan to continue to migrate additional business processes over the course of the next few years and have modified and will continue to modify the design and implementation of certain internal control processes as the transformation continues.
Except as described above, there were no other changes in our internal control over financial reporting during the fiscal quarter ended April 28, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1A. Risk Factors.
In addition to the other information set forth in this report, you should carefully consider the factors discussed under Part I, Item 1A. Risk Factors and elsewhere in the 2023 Form 10-K. These risks and uncertainties could materially and adversely affect our business, consolidated financial condition, results of operations, or cash flows. Our operations could also be affected by additional factors that are not presently known to us or by factors that we currently do not consider material to our business. There have been no material changes in the risk factors discussed in the 2023 Form 10-K.
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Fiscal Q1 2024 Form 10-Q | 18 | |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
ISSUER PURCHASES OF EQUITY SECURITIES
The following table presents the number and average price of shares purchased in each fiscal month of the first quarter of fiscal 2024:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Period | | Total Number of Shares Purchased(1) | | Average Price Paid Per Share(1)(3) | | Total Number of Shares Purchased as Part of Publicly Announced Program(2) | | Dollar Value of Shares that May Yet Be Purchased Under the Program(2)(3) |
| January 29, 2024 – February 25, 2024 | | 1,309,940 | | | $ | 360.57 | | | 1,296,485 | | | $ | 11,788,339,150 | |
February 26, 2024 – March 24, 2024 (4) | | 483,688 | | | 380.44 | | | 347,367 | | | 11,657,503,041 | |
| March 25, 2024 – April 28, 2024 | | 180,311 | | | 383.46 | | | — | | | 11,657,503,041 | |
| | 1,973,939 | | | 367.53 | | | 1,643,852 | | | |
—————
(1)These amounts include repurchases pursuant to our Omnibus Stock Incentive Plan, as Amended and Restated May 19, 2022, and our 1997 Omnibus Stock Incentive Plan (collectively, the “Plans”). Under the Plans, participants surrender shares as payment of applicable tax withholding on the vesting of restricted stock. Participants in the Plans may also exercise stock options by surrendering shares of common stock that the participants already own as payment of the exercise price. Shares so surrendered by participants in the Plans are repurchased pursuant to the terms of the Plans and applicable award agreement and not pursuant to publicly announced share repurchase programs.
(2)On August 14, 2023, our Board of Directors approved a $15.0 billion share repurchase authorization that replaced the previous authorization of $15.0 billion, which was approved on August 18, 2022. The August 2023 authorization does not have a prescribed expiration date.
(3)Excludes excise taxes incurred on share repurchases.
(4)In March 2024, we paused share repurchases as a result of the pending acquisition of SRS.
SALES OF UNREGISTERED SECURITIES
During the first quarter of fiscal 2024, we issued 531 deferred stock units under The Home Depot, Inc. Nonemployee Directors’ Deferred Stock Compensation Plan pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act and Rule 506 of the SEC’s Regulation D thereunder. The deferred stock units were credited during the first quarter of fiscal 2024 to the accounts of those non-employee directors who elected to receive all or a portion of board retainers in the form of deferred stock units instead of cash. The deferred stock units convert to shares of common stock on a one-for-one basis following a termination of service as described in this plan.
During the first quarter of fiscal 2024, we credited 7,658 deferred stock units to participant accounts under the Restoration Plans pursuant to an exemption from the registration requirements of the Securities Act for involuntary, non-contributory plans. The deferred stock units convert to shares of common stock on a one-for-one basis following a termination of service as described in these plans.
Item 5. Other Information.
Trading Arrangements
During the fiscal quarter ended April 28, 2024, no director or officer of the Company or a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of the SEC’s Regulation S-K.
Change in Prior Period Presentation
As discussed in Note 2 to our consolidated financial statements, during the first quarter of fiscal 2024, we made certain changes to our merchandising department structure that had no impact on our consolidated net sales. These changes realign certain merchandising departments across our three major product lines. As a result, we have updated our net sales by major product line and net sales by merchandising department disclosures from our 2023 Form 10-K to reclassify prior year amounts to conform with the presentation adopted in the current fiscal year. These updated disclosures are reflected below. | | | | | | | | |
Fiscal Q1 2024 Form 10-Q | 19 | |
The following table presents net sales by major product line (and related services):
| | | | | | | | | | | | | | | | | |
| Fiscal | | Fiscal | | Fiscal |
| in millions | 2023 | | 2022 | | 2021 |
| Building Materials | $ | 52,661 | | | $ | 54,572 | | | $ | 50,045 | |
| Décor | 51,945 | | | 54,442 | | | 52,106 | |
| Hardlines | 48,063 | | | 48,389 | | | 49,006 | |
| Net sales | $ | 152,669 | | | $ | 157,403 | | | $ | 151,157 | |
The following table presents net sales by merchandising department (and related services):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fiscal | | Fiscal | | Fiscal |
| 2023 | | 2022 | | 2021 |
| dollars in millions | Net
Sales | | % of
Net Sales | | Net
Sales | | % of
Net Sales | | Net
Sales | | % of
Net Sales |
| Appliances | $ | 13,917 | | | 9.1 | % | | $ | 14,521 | | | 9.2 | % | | $ | 14,157 | | | 9.4 | % |
| Bath | 6,630 | | | 4.3 | | | 6,855 | | | 4.4 | | | 6,595 | | | 4.4 | |
| Building Materials | 12,118 | | | 7.9 | | | 11,410 | | | 7.2 | | | 9,972 | | | 6.6 | |
| Electrical | 8,038 | | | 5.3 | | | 8,824 | | | 5.6 | | | 8,261 | | | 5.5 | |
| Flooring | 8,762 | | | 5.7 | | | 9,198 | | | 5.8 | | | 9,236 | | | 6.1 | |
| Hardware | 9,010 | | | 5.9 | | | 8,953 | | | 5.7 | | | 8,776 | | | 5.8 | |
| Indoor Garden | 10,283 | | | 6.7 | | | 10,105 | | | 6.4 | | | 10,900 | | | 7.2 | |
Kitchen & Blinds | 7,154 | | | 4.7 | | | 7,751 | | | 4.9 | | | 6,636 | | | 4.4 | |
| Lighting | 4,531 | | | 3.0 | | | 5,036 | | | 3.2 | | | 5,132 | | | 3.4 | |
| Lumber | 11,721 | | | 7.7 | | | 13,436 | | | 8.5 | | | 13,343 | | | 8.8 | |
| Millwork | 8,301 | | | 5.4 | | | 8,428 | | | 5.4 | | | 7,408 | | | 4.9 | |
| Outdoor Garden | 10,278 | | | 6.7 | | | 10,039 | | | 6.4 | | | 10,321 | | | 6.8 | |
| Paint | 10,951 | | | 7.2 | | | 11,081 | | | 7.0 | | | 10,350 | | | 6.8 | |
| Plumbing | 12,483 | | | 8.2 | | | 12,474 | | | 7.9 | | | 11,061 | | | 7.3 | |
| Power | 12,864 | | | 8.4 | | | 13,271 | | | 8.4 | | | 13,687 | | | 9.1 | |
Storage & Organization | 5,628 | | | 3.7 | | | 6,021 | | | 3.8 | | | 5,322 | | | 3.5 | |
| Total | $ | 152,669 | | | 100.0 | % | | $ | 157,403 | | | 100.0 | % | | $ | 151,157 | | | 100.0 | % |
—————Note: Certain percentages may not sum to totals due to rounding.
| | | | | | | | |
Fiscal Q1 2024 Form 10-Q | 20 | |
Item 6. Exhibits.
Exhibits marked with an asterisk (*) are incorporated by reference to exhibits or appendices previously filed with the SEC, as indicated by the references in brackets. All other exhibits are filed or furnished herewith.
| | | | | | | | |
| Exhibit | | Description |
| ‡ | |
| * | [Form 10-Q filed on September 1, 2011, Exhibit 3.1] |
| * | [Form 8-K filed on February 28, 2023, Exhibit 3.2] |
| | |
| | |
| | |
| | |
| | |
| 101.INS | | XBRL Instance Document - the instance document does not appear in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document |
| 101.SCH | | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 | | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
—————
‡ Certain schedules and other similar attachments to this exhibit have been omitted from this filing pursuant to Item 601(a)(5) of Regulation S-K. The registrant will provide a copy of such omitted documents to the SEC upon request.
| | | | | | | | |
Fiscal Q1 2024 Form 10-Q | 21 | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | | | | |
THE HOME DEPOT, INC. (Registrant) |
| |
| By: | /s/ EDWARD P. DECKER |
| Edward P. Decker, Chair, President and Chief Executive Officer (Principal Executive Officer) |
|
| /s/ RICHARD V. MCPHAIL |
| Richard V. McPhail, Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
| |
| /s/ KIMBERLY R. SCARDINO |
| Kimberly R. Scardino, Senior Vice President – Finance, Chief Accounting Officer and Controller (Principal Accounting Officer) |
|
| Date: | May 20, 2024 |
| | | | | | | | |
Fiscal Q1 2024 Form 10-Q | 22 | |
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