LOWES COMPANIES INC Q2 FY2025 earnings call

• Announced the acquisition of Foundation Building Materials (FBM), a premier distributor of interior building products, which is a transformational move to advance the total home strategy and enhance shareholder value. FBM's acquisition expands the pro offering, diversifies revenue streams, and targets the $250 billion total addressable market for large pro customers. • In Q2, Lowe's had positive comps in nine of 14 merchandise divisions, driven by growth in pro, online, and spring seasonal categories. Hardlines saw strength in hardware, lawn and garden, and tools. Building products had positive comps in materials, plumbing, and lumber. Home decor had positive comps in paint, flooring, and appliances. • Perpetual productivity improvement (PPI) initiatives continued, such as streamlining the freight flow process with Smarter Truck Organization, improved labeling, and redesigned carts. • Opened three new stores in key growth markets: North Fort Worth, Texas; Georgetown, Texas; and Maricopa, Arizona, with more stores set to open. • Closed on the acquisition of Artisan Design Group (ADG) in June, which positions Lowe's to offer large pro customers a full complement of interior finishes.

In Q2 2025, Lowe's delivered sales of $24 billion with comparable sales up 1.1%. Adjusted diluted earnings per share was $4.33, an increase of 5.6% over the prior year. The pro segment continued to show year-over-year growth, building on mid-single-digit gains in Q2 2024. Online sales grew by 7.5%. ADG operations did not have a material impact on Q2 operating results. Revenue contribution details weren't explicitly broken down by specific product segments beyond general pro, DIY, and online categories.

• Full-year 2025 sales are expected to be in the range of $84.5 billion to $85.5 billion with comparable sales flat to up 1%. • Adjusted operating margin is expected to be in the range of 12.2% to 12.3% and adjusted diluted earnings per share is approximately $12.2 to $12.45. • Paused share repurchases until the debt is deleveraged down to the target ratio by the end of 2027. • Intends to fund the acquisition of FBM through a combination of short-term and long-term debt, expecting to delever quickly and maintain investment-grade credit ratings.

• Regulatory approvals required for the acquisition of FBM could delay the closing or affect the transaction. • Integration challenges of FBM and ADG could impact operational performance and synergies realization. • Macroeconomic uncertainties, such as changes in housing market conditions, consumer spending, and interest rates, could affect home improvement demand and the company's financial performance.

Q: Steven Forbes asked about Foundation Building Materials' year-to-date performance in 2025 and the percentage of net new SKUs to Lowe's offering.

A: Marvin Ellison stated they're not at the detail level yet but are excited about FBM's historical performance, and Brandon Sink mentioned synergy opportunities with cross-selling and plugging FBM's products into Lowe's infrastructure.

Q: Peter Benedict inquired about pro sentiment survey details and flooring category performance.

A: Marvin Ellison said pros have stable backlogs, and Bill Boltz and Joe McFarland discussed strength in flooring across segments and central selling efforts for flooring.

Q: David Bellinger asked about customer numbers in the FBM deal and guidance on same-store sales growth.

A: Brandon Sink noted FBM has a diverse customer base with no single customer accounting for over 1% of revenue, and Marvin Ellison and Brandon Sink discussed guidance on comp growth and pricing management.

Q: Christopher Horvers asked about weather impact on Q2 and CapEx for pro fulfillment.

A: Brandon Sink said weather impact was as expected, and Marvin Ellison discussed plans for integrating FBM and future CapEx for growth.

Q: Zach Fadem asked about comp inflection and Lowe's strategy change.

A: Brandon Sink said no macro inflection expected, and Marvin Ellison explained the evolution of strategy to align with housing recovery and total home strategy.

Q: Michael Lasser asked about return on investment for pro acquisitions and integration impact on recovery.

A: Marvin Ellison discussed differentiation through combined offerings and commitment to focused execution.

Q: Brian Nagel asked about geographic trends and trade impact.

A: Marvin Ellison discussed geographic trends and trade management, focusing on diversification and pricing dynamics.

Q: Jonathan Mazzewski asked about FBM's fast fulfillment and marketplace impact.

A: Marvin Ellison explained improved fulfillment with FBM and Brandon Sink discussed marketplace progress.

Q: Steven Zaccone asked about margin impact of FBM acquisition and share repurchases.

A: Brandon Sink and Marvin Ellison discussed margin expectations, debt reduction, and share repurchase plans.