Investor Meetings - The Home Depot/media/Files/H/HomeDepot-IR... · 2019-04-29 · Investor...
Transcript of Investor Meetings - The Home Depot/media/Files/H/HomeDepot-IR... · 2019-04-29 · Investor...
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Forward Looking Statements and Non-GAAP Financial Measurements
Certain statements contained herein constitute “forward-looking statements” as defined in the Private Securities Litigation Reform Act of
1995. Forward-looking statements may relate to, among other things, the demand for our products and services; net sales growth;
comparable sales; effects of competition; implementation of store, interconnected retail, supply chain and technology initiatives; inventory
and in-stock positions; state of the economy; state of the housing and home improvement markets; state of the credit markets, including
mortgages, home equity loans and consumer credit; issues related to the payment methods we accept; demand for credit offerings;
management of relationships with our associates, suppliers and vendors; continuation of share repurchase programs; net earnings
performance; earnings per share; dividend targets; capital allocation and expenditures; liquidity; return on invested capital; expense leverage;
stock-based compensation expense; commodity price inflation and deflation; the ability to issue debt on terms and at rates acceptable to us;
the impact and expected outcome of investigations, inquiries, claims and litigation; the effect of accounting charges; the effect of adopting
certain accounting standards; the impact of the Tax Cuts and Jobs Act of 2017; store openings and closures; guidance for fiscal 2019 and
beyond; financial outlook; and the integration of acquired companies into our organization and the ability to recognize the anticipated
synergies and benefits of those acquisitions.
Forward-looking statements are based on currently available information and our current assumptions, expectations and projections about
future events. You should not rely on our forward-looking statements. These statements are not guarantees of future performance and are
subject to future events, risks and uncertainties – many of which are beyond our control, dependent on the actions of third parties, or are
currently unknown to us – as well as potentially inaccurate assumptions that could cause actual results to differ materially from our
expectations and projections. These risks and uncertainties include, but are not limited to, those described in Item 1A, “Risk Factors,” and
elsewhere in our Annual Report on Form 10-K for our fiscal year ended February 3, 2019 and in our subsequent Quarterly Reports on Form
10-Q. Forward-looking statements speak only as of the date they are made, and we do not undertake to update these statements other than
as required by law. You are advised, however, to review any further disclosures we make on related subjects in our periodic filings with the
Securities and Exchange Commission.
This presentation is also supplemented with certain non-GAAP financial measures. We believe these non-GAAP financial measures better
enable management and investors to understand and analyze our performance. However, this supplemental information should not be
considered in isolation or as a substitute for the related GAAP measures. Reconciliations of the supplemental information to the comparable
GAAP measures can be found on our Investor Relations website at ir.homedepot.com.
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• Providing a best-in-class interconnected shopping experience for our customers while
continuing to drive shareholder value
• Maintaining our position as #1 in product authority for home improvement through a
comprehensive product offering, delivering innovation and exceptional value
• Investing ~$11B across the business over 3 years (nearly double our business as usual
investment spend) to position the company for continued, long-term success
The Home Depot: 3-Year View
Driving Consistent Results Across the Business
$94.6B
$100.9B
$108.2B
$85B
$90B
$95B
$100B
$105B
$110B
2016 2017 2018
Sales
14.19%
14.55%14.35%
13.0%
13.5%
14.0%
14.5%
15.0%
2016 2017 2018
Operating Margin
2)
$6.45
$7.29
$9.73
$4.00
$5.00
$6.00
$7.00
$8.00
$9.00
$10.00
2016 2017 2018
Earnings Per Share
31.4% 34.2%
44.8%
0%
10%
20%
30%
40%
50%
2016 2017 2018
ROIC
1) Fiscal year 2018 included 53 weeks. Fiscal year 2017 and 2016 included 52 weeks.
2) Reflects the first year of an ~$11B investment plan, nearly double our investment spend in a business as usual environment.
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1)
HD Must Continue to Keep Pace with Changing Environment
Retail Customers Expect More
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Personalized Experiences
SeamlessCheckout
ImprovedDelivery
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Strategic Investments for the Future
1) Investments: Capital and Expense, excludes incremental depreciation. Amounts shown are estimates as of December 2017.
2) BAU represents our spend in a “business as usual” environment.
2018 – 2020 Investments1) ($ in billions)
BAU
Investment
Supply
Chain
IT /
Online
Stores5.0
0.6
1.8
0.8
2.9
Other
New Stores
0.8
0.6
Supply Chain
IT
Other
New Stores
0.2
1.7
Stores2.4
$5.7B
$11.1B
TargetBAU2)
Improving the Customer Shopping Experience Both In-Store and Online
Investing in Stores & Associates
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Maintaining Our Position as the #1 Retailer for Product Authority in Home Improvement
Investing in Product & Innovation
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Delivering Tailored Marketing Messages to Create a More Personalized Shopping Experience
Investing in Personalized Experiences
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Leveraging Data and Analytics to Better Understand and Serve Our Pro Customers
Investing in Pro & Services
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Leveraging Our Upstream Competitive Advantage to Drive Greater Efficiencies Downstream
Investing in Our Supply Chain
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DC Network
(Bulk / Stocking / Flow)
Upstream
Stores
Vendors
• 2007 – 2017: • Upstream Supply Chain transformation• Built Rapid Deployment Center (RDC)
network, creating a competitive advantage in our upstream network
• 2018 – 2022:• Leveraging our competitive advantage
in our upstream network• Investing in increased mechanization
to drive further efficiency
Investing in Our Supply Chain
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Downstream
• 2007 – 2017: • Built interconnected network to enable
BOSS, BODFS, and home delivery• Enabled 2-day parcel delivery to ~95%
of U.S. population
• 2018 – 2022:• Enhancing our downstream network by
building out ~150+ new facilities• Enabling same day/next day delivery of
a wider assortment of products, including big and bulky goods
• 2022 Goal: Enable Same-Day/Next-Day Delivery to ~90% of the U.S. Population
Direct Fulf i l lment Centers(Parcel / F la tbed / Local )
Market Delivery Stores
Customers(D IY / Pro / MRO)
Market Delivery Operations
Creating the Fastest, Most Efficient Delivery and Flow in Home Improvement
Productivity is Our Virtuous Cycle
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Cost of
Goods Sold
Operating
Expenses
Continued Focus on Productivity
One Home Depot: 2020 Targets
Enhancing the Customer Experience, Investing for the Future, Creating Value
*As of May 15, 2018
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Sales Operating Margin ROIC
14.5%
2020T20172020T
$101B
2017
34.2%
2017 2020T
~$120.4B ~15.0% ~40%+
~$115.5B
~14.4%
*
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Fiscal 2019 Guidance1)
1) All guidance based on GAAP
2) Fiscal year 2019 includes 52 weeks. Fiscal year 2018 included 53 weeks. Comparable sales growth is calculated on a 52-week basis.
(As of February 26, 2019)
Sales growth ~3.3%
Comp sales growth ~5.0%
New store openings 5 net new stores
Operating margin ~14.4%
Diluted EPS growth ~$10.03, or an increase of ~3.1%
Share repurchases Targeting $5 billion
2)
2)
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Drivers of Home Improvement Spend
Housing TurnoverAge of Housing
Stock
Increases DemandDrives Spending Both
Pre And Post Sale
Demands Ongoing Repairs
And Major Repairs
Impact on HI
Spend
Recent
Impact
Expected
Future Impact
Acceleration
Home Price
Appreciation
Supports Incremental
Investments
Continued
Appreciation
Stays At
Current Rate
Forward
ViewPer Unit Spend
Increases
Household
Formation
Target Market Opportunity
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Sources: 2017 HIRI Reference Guide; NAICS; and external market analysis
U.S. Addressable Market
$600 Billion
$ in Billions
~$200B
~$50B Maintenance, Repair and Operations
Home Services
Home Improvement ~$350B