Lowe's ( $LOW ) Earnings BreakdownHighlights

Lowe's ( $LOW ) Earnings Breakdown
Highlights
- Earnings reported 3.06 vs estimated 2.95 (+3.72%)
-Revenue reported 21.36b vs estimated 21.13b (+1.08%)
-Net Earnings: $1.8 billion
-Diluted Earnings Per Share (EPS): $3.06
-Total Sales: $21.4 billion, down from $22.3 billion last year
-Comparable Sales: Decreased by 4.1%
-Full Year 2024 Outlook: Total sales of $84 to $85 billion, with EPS of approximately $12.00 to $12.30

Good Parts
-Strong Customer Service and Execution: Mentioned positive feedback and execution in spring, expanding DIY loyalty program, same-day delivery options, and gaining market share in key categories.
-Pro and Online Sales: Positive comparable sales in Pro and online segments, indicating growth in these areas.
-Shareholder Returns: Continued repurchasing shares and paying dividends ($743 million in share repurchases and $633 million in dividends).
-Cash Flow Improvement: Net cash provided by operating activities increased significantly to $4.3 billion from $2.1 billion in the prior year.

Bad Parts
-Decrease in Comparable Sales: A 4.1% decrease in comparable sales, primarily due to a decline in DIY big-ticket discretionary spending.
-Decrease in Total Sales: Total sales dropped by approximately $1 billion compared to the same quarter last year.
-Increased Expenses: Selling, general, and administrative expenses increased to 18.77% of sales from 17.12% last year.
-Lower EPS Compared to Last Year: EPS decreased from $3.77 to $3.06, and adjusted EPS from $3.67 to $3.06.

Income Statement Grade: B-
Good Parts:
-Net Sales: $21.4 billion, showing significant revenue.
-Gross Margin: Maintained a strong gross margin of 33.19%.
-Operating Income: $2.65 billion, which is 12.42% of sales, showing decent profitability.

Bad Parts:
-Decreased Sales: Down from $22.3 billion in the prior year.
-Increased Costs: Cost of sales was $14.27 billion, slightly down but impacting margins.
-Higher Expenses: Selling, general, and administrative expenses increased to 18.77% of sales from 17.12%.
-Lower Operating Income: Down from $3.29 billion last year, with a lower operating margin.

Notes:
-Strong gross margin but lower overall sales and higher expenses negatively impacted operating income.
-Decline in EPS indicates pressure on profitability.

Balance Sheet Grade: C+
Good Parts:
-Current Assets: $22.75 billion, with a significant increase in cash and cash equivalents.
-Total Assets: Relatively stable at $45.37 billion.

Bad Parts:
-Current Liabilities: Increased to $19.51 billion.
-Long-term Debt: Remains high at $34.62 billion, though slightly down from last year.
-Shareholders' Deficit: Increased slightly to $14.61 billion, indicating negative equity due to share repurchases and accumulated deficit.

Notes:
-Strong liquidity with higher cash reserves.
-High debt levels and negative equity are concerning.
-Stability in total assets but increased liabilities pose risks.

Cash Flow Statement Grade: B+
Good Parts:
-Operating Cash Flow: Significantly improved to $4.26 billion.
-Investing Activities: Reduced net cash used, indicating controlled capital expenditures and investments.
-Financing Activities: Reduced net cash used in financing activities compared to the prior year, showing better management of financing flows.

Bad Parts:
-Negative Cash Flow from Investing Activities: Continued negative cash flow, though improved from last year.
-Cash Used for Share Repurchases: Significant amount of cash used for share repurchases, which while returning value to shareholders, reduced available cash for other uses.

Notes:
-Strong operating cash flow indicates robust core business operations.
-Controlled capital expenditures and investments suggest prudent financial management.
-High share repurchases reflect confidence but reduce liquidity.

Summary
Lowe’s Companies Inc. faced a challenging first quarter in 2024 with decreased sales and higher expenses impacting profitability. Despite this, the company showed resilience through strong cash flow management, positive growth in Pro and online sales, and maintained strong customer service and operational execution. The company's disciplined capital allocation, including substantial share repurchases and dividend payments, reflects confidence in long-term sustainability but also indicates areas of financial strain, particularly with high debt levels and increased expenses.