Home Depot announces Record Sales

May 22, 2006
The Home Depot last week reported first-quarter earnings were at a 22.8-percent increase in earnings per diluted share over the first quarter of fiscal 2005

The Home Depot last week reported first-quarter net earnings of $1.5 billion, or 70 cents per diluted share, compared to 57 cents per diluted share and net earnings of $1.2 billion reported for the same period in fiscal 2005. This resulted in a 22.8-percent increase in earnings per diluted share over the first quarter of fiscal 2005.

Sales for the first quarter of fiscal 2006 totaled $21.5 billion, a 13.1-percent increase from the first quarter of fiscal 2005.

During the first quarter, the company acquired Hughes Supply, more than doubling the size of Home Depot Supply, which now has more than 20,000 associates operating in more than 900 locations nationwide and in Canada with projected fiscal 2006 sales approaching $12 billion. The company now operates and provides financial information for two business segments: HD Retail and HD Supply.

Sales in the first quarter for HD Retail were 19.4 billion, a 5.7-percent increase from $18.3 billion in the same period a year ago. First-quarter sales for HD Supply were $2.1 billion, a 224.5-percent increase from $657 million a year ago.

On May 1, 2006 the company acquired Cox Lumber, the largest privately owned lumber company in Florida. Cox Lumber joins the company's Williams Brothers business and together now operate 46 branches in the Atlanta and Central Florida markets.

"The Home Depot has a disciplined approach to capital allocation and growth. At the end of the quarter, we reached a return on invested capital of 24.2 percent, up 220 basis points from the first quarter of fiscal 2005," said Carol Tome, executive vice president and CFO.

At the end of the first quarter, the company reported total assets of $52.7 billion, up 18 percent from the end of fiscal 2005 reflecting the impact of the Hughes acquisition and total stockholders' equity of $27.8 billion.

In related news, The Home Depot also announced last week that its board of directors authorized actions to provide near-term enhancement for shareholders, including the approval of an additional $2 billion to repurchase outstanding shares and the approval of the immediate repurchase of $2 billion of outstanding shares through an accelerated share repurchase program. With this authorization, the company's share-repurchase authorization increased to $14 billion from $12 billion. Since 2002 and through April 30, 2006, the company has returned more than $10.3 billion of cash to shareholders through repurchases, repurchasing nearly 291 million shares.

The company entered into an accelerated share repurchase agreement with Lehman Brothers, which will provide for the immediate purchase of about 53 million shares, bringing our total number of shares purchased to more than 344 million or approximately 15 percent of the outstanding shares since the start of the program in 2002. Excluding the accelerated share repurchase program, the company has returned nearly 60 percent of its cumulative net earnings over the past five years to its shareholders in the form of dividends and share repurchases. This demonstrates its balanced approach to generating shareholder returns through business investments and cash returns. The company's strong financial discipline is also evidenced by a return on invested capital of 24.2 percent for the first quarter of fiscal year 2006.

Atlanta-based Home Depot Rentals is No. 5 on the RER 100.