low-20240503

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 3, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File Number 1-7898

LOWE’S COMPANIES, INC.

(Exact name of registrant as specified in its charter)


North Carolina						56-0578072
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

1000 Lowes Blvd., Mooresville, North Carolina						28117
(Address of principal executive offices)						(Zip Code)

Registrant’s telephone number, including area code:						(704) 758-1000

Former name, former address and former fiscal year, if changed since last report: Not Applicable

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.50 per share	LOW	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


CLASS						OUTSTANDING AT 5/28/2024
Common Stock, $0.50 par value						569,835,275

LOWE’S COMPANIES, INC.

- TABLE OF CONTENTS -


			Page No.
Forward-Looking Statements			ii
PART I - Financial Information			1
	Item 1.	Financial Statements	1
		Consolidated Statements of Earnings	1
		Consolidated Statements of Comprehensive Income	1
		Consolidated Balance Sheets	2
		Consolidated Statements of Shareholders’ Deficit	3
		Consolidated Statements of Cash Flows	4
		Notes to Consolidated Financial Statements	5
		Note 1: Summary of Significant Accounting Policies	5
		Note 2: Revenue	5
		Note 3: Restricted Investments	6
		Note 4: Fair Value Measurements	6
		Note 5: Accounts Payable	8
		Note 6: Debt	8
		Note 7: Derivative Instruments	9
		Note 8: Shareholders’ Deficit	9
		Note 9: Earnings Per Share	10


		Note 1 0 : Supplemental Disclosure	10

		Report of Independent Registered Public Accounting Firm	12
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	19
	Item 4.	Controls and Procedures	19
PART II - Other Information			20
	Item 1.	Legal Proceedings	20
	Item 1A.	Risk Factors	20
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20
	Item 5.	Other Information	20
	Item 6.	Exhibits	21
		Signature	22


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FORWARD-LOOKING STATEMENTS

This Form 10-Q includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements including words such as “believe”, “expect”, “anticipate”, “plan”, “desire”, “project”, “estimate”, “intend”, “will”, “should”, “could”, “would”, “may”, “strategy”, “potential”, “opportunity”, “outlook”, “scenario”, “guidance”, and similar expressions are forward-looking statements. Forward-looking statements involve, among other things, expectations, projections, and assumptions about future financial and operating results, objectives (including objectives related to environmental and social matters), business outlook, priorities, sales growth, shareholder value, capital expenditures, cash flows, the housing market, the home improvement industry, demand for products and services including customer acceptance of new offerings and initiatives, macroeconomic conditions and consumer spending, share repurchases, and Lowe’s strategic initiatives, including those relating to acquisitions and dispositions and the impact of such transactions on our strategic and operational plans and financial results. Such statements involve risks and uncertainties and we can give no assurance that they will prove to be correct. Actual results may differ materially from those expressed or implied in such statements.

A wide variety of potential risks, uncertainties, and other factors could materially affect our ability to achieve the results either expressed or implied by these forward-looking statements including, but not limited to, changes in general economic conditions, such as volatility and/or lack of liquidity from time to time in U.S. and world financial markets and the consequent reduced availability and/or higher cost of borrowing to Lowe’s and its customers, slower rates of growth in real disposable personal income that could affect the rate of growth in consumer spending, inflation and its impacts on discretionary spending and on our costs, shortages, and other disruptions in the labor supply, interest rate and currency fluctuations, home price appreciation or decreasing housing turnover, age of housing stock, the availability of consumer credit and of mortgage financing, trade policy changes or additional tariffs, outbreaks of pandemics, fluctuations in fuel and energy costs, inflation or deflation of commodity prices, natural disasters, geopolitical or armed conflicts, acts of both domestic and international terrorism, and other factors that can negatively affect our customers.

Investors and others should carefully consider the foregoing factors and other uncertainties, risks and potential events including, but not limited to, those described in “Item 1A - Risk Factors” and “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates” in our most recent Annual Report on Form 10-K and as may be updated from time to time in our quarterly reports on Form 10-Q or other subsequent filings with the SEC. All such forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update these statements other than as required by law.


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Part I - FINANCIAL INFORMATION

Item 1. Financial Statements

Lowe’s Companies, Inc.

Consolidated Statements of Earnings (Unaudited)

In Millions, Except Per Share and Percentage Data


	Three Months Ended
	May 3, 2024				May 5, 2023
Current Earnings	Amount		% Sales		Amount		% Sales
Net sales	$	21,364	100.00	%	$	22,347	100.00	%
Cost of sales	14,274		66.81		14,820		66.32
Gross margin	7,090		33.19		7,527		33.68
Expenses:
Selling, general and administrative	4,009		18.77		3,824		17.12
Depreciation and amortization	428		2.00		415		1.85
Operating income	2,653		12.42		3,288		14.71
Interest – net	352		1.65		349		1.56

Pre-tax earnings	2,301		10.77		2,939		13.15
Income tax provision	546		2.56		679		3.04
Net earnings	$	1,755	8.21	%	$	2,260	10.11	%


Weighted average common shares outstanding – basic	571				596
Basic earnings per common share	$	3.06			$	3.78
Weighted average common shares outstanding – diluted	572				597
Diluted earnings per common share	$	3.06			$	3.77

See accompanying notes to the consolidated financial statements (unaudited).

Lowe’s Companies, Inc.

Consolidated Statements of Comprehensive Income (Unaudited)

In Millions, Except Percentage Data


	Three Months Ended
	May 3, 2024				May 5, 2023
	Amount		% Sales		Amount		% Sales
Net earnings	$	1,755	8.21	%	$	2,260	10.11	%

Cash flow hedges – net of tax	(3)		(0.02)		(4)		(0.02)
Other	(1)		—		1		0.01
Other comprehensive loss	(4)		(0.02)		(3)		(0.01)
Comprehensive income	$	1,751	8.19	%	$	2,257	10.10	%

See accompanying notes to the consolidated financial statements (unaudited).


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Lowe’s Companies, Inc.

Consolidated Balance Sheets (Unaudited)

In Millions, Except Par Value Data


	May 3, 2024		May 5, 2023		February 2, 2024
Assets
Current assets:
Cash and cash equivalents	$	3,237	$	2,950	$	921
Short-term investments	264		423		307
Merchandise inventory – net	18,224		19,522		16,894
Other current assets	1,025		1,023		949
Total current assets	22,750		23,918		19,071
Property, less accumulated depreciation	17,531		17,402		17,653
Operating lease right-of-use assets	3,829		3,504		3,733
Long-term investments	306		103		252
Deferred income taxes – net	115		150		248
Other assets	834		840		838
Total assets	$	45,365	$	45,917	$	41,795

Liabilities and shareholders' deficit
Current liabilities:
Short-term borrowings	$	—	$	72	$	—
Current maturities of long-term debt	1,294		589		537
Current operating lease liabilities	552		525		487
Accounts payable	11,737		11,885		8,704
Accrued compensation and employee benefits	870		766		954
Deferred revenue	1,409		1,645		1,408
Other current liabilities	3,644		3,728		3,478
Total current liabilities	19,506		19,210		15,568
Long-term debt, excluding current maturities	34,622		35,863		35,384
Noncurrent operating lease liabilities	3,759		3,479		3,737
Deferred revenue – Lowe's protection plans	1,225		1,206		1,225
Other liabilities	859		869		931
Total liabilities	59,971		60,627		56,845

Shareholders' deficit:
Preferred stock, $5 par value: Authorized – 5.0 million shares; Issued and outstanding – none	—		—		—
Common stock, $0.50 par value: Authorized – 5.6 billion shares; Issued and outstanding – 572 million, 592 million, and 574 million shares, respectively	286		296		287

Accumulated deficit	(15,188)		(15,310)		(15,637)
Accumulated other comprehensive income	296		304		300
Total shareholders' deficit	(14,606)		(14,710)		(15,050)
Total liabilities and shareholders' deficit	$	45,365	$	45,917	$	41,795

See accompanying notes to the consolidated financial statements (unaudited).


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Lowe’s Companies, Inc.

Consolidated Statements of Shareholders’ Deficit (Unaudited)

In Millions


	Three Months Ended May 3, 2024
	Common Stock			Capital in Excess of Par Value		Accumulated Deficit		Accumulated Other Comprehensive Income		Total
	Shares	Amount
Balance February 2, 2024	574	$	287	$	—	$	(15,637)	$	300	$	(15,050)

Net earnings	—	—		—		1,755		—		1,755
Other comprehensive loss	—	—		—		—		(4)		(4)
Cash dividends declared, $1.10 per share	—	—		—		(629)		—		(629)
Share-based payment expense	—	—		50		—		—		50
Repurchases of common stock	(3)	(2)		(64)		(677)		—		(743)
Issuance of common stock under share-based payment plans	1	1		14		—		—		15
Balance May 3, 2024	572	$	286	$	—	$	(15,188)	$	296	$	(14,606)


	Three Months Ended May 5, 2023
	Common Stock			Capital in Excess of Par Value		Accumulated Deficit		Accumulated Other Comprehensive Income		Total
	Shares	Amount
Balance February 3, 2023	601	$	301	$	—	$	(14,862)	$	307	$	(14,254)
Net earnings	—	—		—		2,260		—		2,260
Other comprehensive loss	—	—		—		—		(3)		(3)
Cash dividends declared, $1.05 per share	—	—		—		(624)		—		(624)
Share-based payment expense	—	—		55		—		—		55
Repurchases of common stock	(11)	(6)		(59)		(2,084)		—		(2,149)
Issuance of common stock under share-based payment plans	2	1		4		—		—		5
Balance May 5, 2023	592	$	296	$	—	$	(15,310)	$	304	$	(14,710)

See accompanying notes to the consolidated financial statements (unaudited).


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Lowe’s Companies, Inc.

Consolidated Statements of Cash Flows (Unaudited)

In Millions


	Three Months Ended
	May 3, 2024		May 5, 2023
Cash flows from operating activities:
Net earnings	$	1,755	$	2,260
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	486		465
Noncash lease expense	131		108
Deferred income taxes	135		102
(Gain)/loss on property and other assets – net	(7)		11

Gain on sale of business	—		(67)
Share-based payment expense	55		59
Changes in operating assets and liabilities:
Merchandise inventory – net	(1,330)		(990)
Other operating assets	(86)		157
Accounts payable	3,033		1,361
Other operating liabilities	90		(1,360)
Net cash provided by operating activities	4,262		2,106

Cash flows from investing activities:
Purchases of investments	(277)		(450)
Proceeds from sale/maturity of investments	266		412
Capital expenditures	(382)		(380)
Proceeds from sale of property and other long-term assets	15		8

Proceeds from sale of business	—		123
Other – net	—		(17)
Net cash used in investing activities	(378)		(304)

Cash flows from financing activities:
Net change in commercial paper	—		(427)
Net proceeds from issuance of debt	—		2,983
Repayment of debt	(22)		(22)
Proceeds from issuance of common stock under share-based payment plans	15		5
Cash dividend payments	(633)		(633)
Repurchases of common stock	(923)		(2,106)
Other – net	(5)		—
Net cash used in financing activities	(1,568)		(200)



Net increase in cash and cash equivalents	2,316		1,602
Cash and cash equivalents, beginning of period	921		1,348
Cash and cash equivalents, end of period	$	3,237	$	2,950

See accompanying notes to the consolidated financial statements (unaudited).


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Lowe’s Companies, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Note 1: Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements (unaudited) and notes to the condensed consolidated financial statements (unaudited) are presented in accordance with the rules and regulations of the Securities and Exchange Commission and do not include all the disclosures normally required in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The condensed consolidated financial statements (unaudited), in the opinion of management, contain all normal recurring adjustments necessary to present fairly the consolidated balance sheets as of May 3, 2024, and May 5, 2023, and the statements of earnings, comprehensive income, shareholders’ deficit, and cash flows for the three months ended May 3, 2024, and May 5, 2023. The February 2, 2024, consolidated balance sheet was derived from the audited financial statements.

These interim condensed consolidated financial statements (unaudited) should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Lowe’s Companies, Inc. (the Company) Annual Report on Form 10-K for the fiscal year ended February 2, 2024 (the Annual Report). The financial results for the interim periods may not be indicative of the financial results for the entire fiscal year.

Accounting Pronouncements Not Yet Adopted

There have been no significant changes in the accounting pronouncements not yet adopted from those disclosed in the Annual Report. Accounting pronouncements not disclosed in this Form 10-Q or in the Annual Report are either not applicable to the Company or are not expected to have a material impact to the Company.

Note 2: Revenue

Net sales consists primarily of revenue, net of sales tax, associated with contracts with customers for the sale of goods and services in amounts that reflect consideration the Company is entitled to in exchange for those goods and services.

The following table presents the Company’s sources of revenue:


(In millions)	Three Months Ended
	May 3, 2024		May 5, 2023
Products	$	20,691	$	21,572
Services	532		528
Other	141		247
Net sales	$	21,364	$	22,347

A provision for anticipated merchandise returns is provided through a reduction of sales and cost of sales in the period that the related sales are recorded. The merchandise return reserve is presented on a gross basis, with a separate asset and liability included in the consolidated balance sheets. The balances and classification within the consolidated balance sheets for anticipated sales returns and the associated right of return assets are as follows:


(In millions)	Classification	May 3, 2024		May 5, 2023		February 2, 2024
Anticipated sales returns	Other current liabilities	$	280	$	318	$	191
Right of return assets	Other current assets	164		185		111

Deferred revenue - retail and stored-value cards

Retail deferred revenue consists of amounts received for which customers have not yet taken possession of the merchandise or for which installation has not yet been completed. The majority of revenue for goods and services is recognized in the quarter following revenue deferral. Stored-value cards deferred revenue includes outstanding stored-value cards such as gift cards and returned merchandise credits that have not yet been redeemed. Deferred revenue for retail and stored-value cards are as


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follows:


(In millions)	May 3, 2024		May 5, 2023		February 2, 2024
Retail deferred revenue	$	889	$	1,063	$	796
Stored-value cards deferred revenue	520		582		612
Deferred revenue	$	1,409	$	1,645	$	1,408

Deferred revenue - Lowe’s protection plans

The Company defers revenues for its separately-priced long-term extended protection plan contracts (Lowe’s protection plans) and recognizes revenue on a straight-line basis over the respective contract term. Expenses for claims are recognized in cost of sales when incurred.


(In millions)	May 3, 2024		May 5, 2023		February 2, 2024
Deferred revenue - Lowe’s protection plans	$	1,225	$	1,206	$	1,225


	Three Months Ended
(In millions)	May 3, 2024		May 5, 2023
Lowe’s protection plans deferred revenue recognized into sales	$	139	$	136
Lowe’s protection plans claim expenses	54		53

Disaggregation of Revenues

The following table presents the Company’s net sales disaggregated by merchandise division:


	Three Months Ended
	May 3, 2024				May 5, 2023
(In millions)	Net Sales		%		Net Sales		%
Home Décor 1	$	7,683	36.0	%	$	8,240	36.9	%
Building Products 2	6,643		31.1

SEC Form 10-Q filed by Lowe's Companies Inc.