Home Depot 4Q15 Earnings Call Notes

Craig A. Menear – Chairman, President & Chief Executive Officer

EPS +16%

“We achieved sales of $88.5 billion, the highest in company history. We also recorded the highest net earnings in company history and fiscal 2015 earnings per share grew 15.9% to $5.46. Sales for the fourth quarter were $21 billion, up 9.5% from last year. Comp sales were up 7.1% from last year and our U.S. stores had a positive comp of 8.9%.”

Continue to see positive signs in housing data

“Turning to the macro environment, while 2016 consensus U.S. GDP growth projections have moderated, we continue to see positive signs in the housing data with home price appreciation, housing turnover and household formation being the key drivers of growth for our business. We expect 2016 comp growth of approximately 4.5%. ”

Some segments of our business are best in store

“There are segments of our business – we’ve shared in the past that we believe the best business model is in the store. And the customers, they’re smart, they have a tendency to gravitate to the best business models. And so we think there are elements of things like concrete and soils and mulches that make sense, and that’s where the customer will find the best value to purchase the product.”

Carol B. Tomé – Chief Financial Officer & EVP-Corporate Services

Our business was good and continues to be good

Peter, we’re not seeing that. Our business was good and continues to be good.

65% of the homes in the US are older than 30 years

“65% of the homes in the United States are older than 30 years and there’s external research that shows that spending on older homes is higher. John Burns would suggest it’s something like 7.5% higher, our own internal research suggests it’s 8% higher, so this aging housing stock bodes very well for us. And if we could take you back to the last mild recession, and I’m talking a lot here and I apologize, but if I take you back to the last mild recession of 2001, the housing stock was a lot younger 10 years ago.”

Inventories are in the best shape we’ve seen

“So our inventories are in the best shape we’ve seen and I’ve been here, this is my 21st year, so I can speak from authority, they’re in really great shape. We have one-tenth improvement in inventory plan for 2016 and Mark Holifield is here and I would say we might want to try to get even better than that, but that’s the plan.”

Mark Holifield – Executive VP-Supply Chain & Product Development

West coast port disruption led to artificially low inventory last year

“Just one thing, just color on inventory, one thing to keep in mind is last year we had the West Coast port disruption which led to artificially lower inventory, so we’re actually very pleased with where our inventory is and on top of that, we’re very, very pleased with where our in-stock is compared to last year which we’re really seeing a material improvement in-stock versus last year because we’re overlapping those port disruptions from last year.”