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Home Depot CEO Discusses Q4 2012 Results Earnings Call Transcript

Home Depot (HD) Q4 2012 Results Earnings Call February 26, 2013 9:00 AM ET


Good day everyone, and welcome to today’s Home Depot fourth quarter 2012 earnings conference call. [Operator instructions.] Beginning today’s discussion is Ms. Diane Dayhoff, vice president, investor relations. Ms. Dayhoff, please go ahead.

Diane Dayhoff - Investor Relations

Thank you, Yolanda, and good morning to everyone. Welcome to the Home Depot fourth quarter earnings conference call. Joining us on our call today are Frank Blake, chairman and CEO of the Home Depot; Craig Menear, executive vice president of merchandising; Carol Tome, chief financial officer and executive vice president, corporate services.

Following our prepared remarks the call will be open for analyst questions. Questions will be limited to analysts and investors, and as a reminder, we would appreciate it if the participants would limit themselves to one question with one follow-up, please. If we are unable to get to your question during the call, please call our Investor Relations department at (770) 384-2387.

Now, before I turn the call over to Frank, let me remind you that today's press release and the presentations made by our executives include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995.

These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, those factors identified in the release and in our filings with the Securities and Exchange Commission. Today's presentations will also include certain non-GAAP measurements. Reconciliations of these measurements is included in the release, and is provided on our website.

Now let me turn the call over to Frank Blake.

Frank Blake

Thank you, Diane, and good morning everyone. Sales for the fourth quarter were $18.2 billion, up 13.9% from last year. Comp sales were positive 7% and our diluted earnings per share were $0.68. Our stores in the United States had a positive comp of 7.1%.

Even though we were anniversarying strong sales from last year’s warm weather and storm repair, all three of our U.S. divisions positively comped in the quarter, and 38 of our top 40 markets had positive comps.

New York and New Jersey were our best-performing regions, driven principally by Hurricane Sandy related repair activity. And we continue to see recovery in our Florida, California, and Arizona markets.

On the international front, our Canadian business had positive comps for the fifth consecutive quarter, and our Mexican business had another quarter of positive comps, making it 37 quarters in a row of positive comp growth. During the quarter, we also opened our 100th store in Mexico, a significant milestone in the growth of our business there.

In the U.S., our results benefited from storm repair, but they also reflected an improving housing market. During the housing market downturn and even during the stabilization of the last few quarters, our pro sales performance lagged our consumer sales growth. An encouraging sign in the fourth quarter was that sales to our pro customers grew on particular with sales to consumers.

We’re also beginning to see growth within our smaller pro segment. Previously, the growth in our pro business occurred predominantly within the larger pro segment. We had a hypothesis that the growth would start to reach our smaller volume pros as the market recovered, and our fourth quarter results provide at least one data point to suggest that is occurring.

Our services business is also recovering. In the quarter we saw double digit growth in this business, with strength across our key programs. We have now had nine consecutive quarters of growth in services, and we are adding technology with our “My Install” functionality, which provides customers more real time updates and project tracking throughout the installation process.