The Home Depot, Inc. Q4 FY2025 earnings call

• Ted Decker mentioned sales, comps, adjusted earnings per share, regional performance, and that fourth quarter results were largely in line with expectations, with storm activity in January providing sales benefit. Also talked about growing market share, investing across business, and support for SRS. - Ann-Marie Campbell thanked associates for serving during Winter Storm Fern, talked about focus on core and culture, enabling tools/processes for associates to serve customers better, transitioning tasking to MET team, realigning store positions for better customer experience, and Pro team elevating Pro experience. - Billy Bastek discussed merchandising department comp performance, online comp sales growth, enhancements in delivery reliability, hosting events with strong engagement, and upcoming spring selling season with innovative products. - Richard McPhail provided details on sales, comps, gross margin, operating expense, earnings per share, inventory, capital allocation, and outlook for 2026.

Sales for fiscal 2025 were $164.7 billion, up 3.2% from prior year. Comp sales increased 0.3% from prior year, with U.S. comps up 0.5%. Fourth quarter comp sales increased 0.4%, U.S. comps up 0.3%. Regional performance varied: Northern and Western divisions had positive comps; Mexico had positive comps in local currency, Canada had negative. For the year, gross margin was ~33.3%, down 10 basis points. Fourth quarter gross margin ~32.6%, down ~20 basis points. Operating margin for the year was 12.7%, down from 13.5% in 2024. Fourth quarter operating margin 10.1%, down from 11.3% in prior year. Adjusted diluted earnings per share for fiscal 2025 were $14.69, down 3.6% from prior year. Fourth quarter adjusted diluted earnings per share $2.72, down 13.1% from prior year. SRS grew organic sales low single-digit percentage in 2025 and expects mid-single-digit growth in 2026.

• Expect total sales growth of approximately 2.5% to 4.5% in fiscal 2026. - Comparable sales growth of approximately flat to 2%. - Adjusted diluted earnings per share to grow approximately flat to 4%. - SRS expected to deliver mid-single-digit percent organic sales growth. - Plan to open approximately 15 new stores and 40 to 50 new SRS locations. - Gross margin expected to be approximately 33.1%. - Operating margin expected to be approximately 12.4% to 12.6% and adjusted operating margin approximately 12.8% to 13%. - Effective tax rate targeted at approximately 24.3%. - Net interest expense expected to be approximately $2.3 billion. - Plan to continue investing in business with capital expenditures of approximately 2.5% of sales for fiscal 2026.

• Risks and uncertainties include factors identified in the release in most recent annual report on Form 10-K and other filings with SEC, such as consumer uncertainty and pressure on housing, impact of mortgage rates and home prices on housing affordability, low housing turnover, general economic uncertainty including inflation, job concerns, higher financing costs, and impacts of tariffs and other market dynamics.

• Q: Steven Forbes asked about initiatives to improve Pro value proposition.

A: Ted Decker and Michael Rowe discussed mature sales force, order management, trade credit platform, AI tools for Pro like project management and list builders, improved in-store tools, delivery reliability, customer communications. - Q: Zach Fadem asked about market performance in Florida, Texas, etc.

A: Edward Decker talked about stable comp performance across country, impact of storms, home prices, turnover, and no significant regional differences yet. - Q: Michael Lasser asked about SRS pricing, gross margin volatility, and capital allocation if housing turnover muted.

A: Edward Decker and Richard McPhail discussed SRS taking share, guidance embedded, and capital allocation principles of reinvesting first, then returning to shareholders. - Q: Simeon Gutman asked about consumer value consciousness, Pro capabilities rollout.

A: William Bastek and Michael Rowe talked about balanced consumer behavior, continued Pro capability rollout. - Q: Steven Zaccone asked about same-store sales, big ticket, and first vs second quarter comps.

A: Richard McPhail and William Bastek discussed ticket, transactions, big ticket performance, and impact of winter on spring. - Q: Zhihan Ma asked about big ticket sales trends and inventory.

A: Edward Decker and Richard McPhail talked about big ticket as telltale for market change, and inventory driven by GMS, cost, and accelerated delivery