Lowe's Companies Inc LOW
Q4 2012 Earnings Call Transcript

Transcript Call Date 02/25/2013

Operator: Good morning, everyone, and welcome to the Lowe's Companies' Fourth Quarter 2012 Earnings Conference Call. This call is being recorded.

Statements made during this call will include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Management's expectations and opinions reflected in those statements are subject to risks and the Company can give no assurance that they will prove to be correct. Those risks are described in the Company's earnings release and in its filings with the Securities and Exchange Commission.

Also, during this call, management will be using certain non-GAAP financial measures. You can find a reconciliation to the most directly comparable GAAP financial measures and other information about them, posted on Lowe's Investor Relations website, under Investor Documents.

Hosting today's conference will be, Mr. Robert Niblock, Chairman, President and Chief Executive Officer; Mr. Greg Bridgeford, Chief Customer Officer; and Mr. Bob Hull, Chief Financial Officer.

I will now turn the program over to Mr. Niblock for opening remarks. Please go ahead, sir.

Robert A. Niblock - Chairman, President and CEO: Good morning, and thanks for your interest in Lowe's. Following my remarks, Greg Bridgeford will review our operational performance and Bob Hull will review our financial results in detail, but first, I'll provide some highlights of the quarter as well as our view on the economic landscape in 2013.

We delivered solid results in the fourth quarter. Comparable store sales were positive 1.9%, driven by an increase in comp average ticket. We delivered these results despite tough prior year comparisons from both unseasonably warm weather, and a more promotional holiday season.

In fact, 10 of 14 product categories had positive comps for the quarter. We had strength in core categories like, Plumbing and Hardware, as well as holiday items like tool gift sets and holiday decor. We had consistent performance across the U.S. operating divisions and continue to see strength in our products and services business, which outperformed the Company average.

Gross margin expanded five basis points in the fourth quarter, driven by a number of factors that Bob will discuss, including continued benefits from our value improvement program. We continue to effectively control operating expenses in the quarter and deliver earnings per share of $0.26 for the quarter and $1.69 for the year.

Delivering on our commitment to return excess cash to shareholders, in the fourth quarter we repurchased $750 million or 21.3 million shares of stock and paid $180 million in dividends. For the year, we repurchased $4.35 billion or 146 million shares of stock and paid $704 million in dividends.

Our solid fourth quarter results are a testament to several factors; first, team success in driving more balanced performance across the quarter; second, the team responded well to the demand created in the Northeast as a result of recovery efforts in the wake of Superstorm Sandy; and finally, the momentum we're with value improvement through better line designs, better in-stock positions and simplified deal structures, as well as the momentum from our product differentiation program. As we've discussed, think of value improvement as the inner circle enhancing the core and product differentiation as the outer circle driving excitement and flexibility in our stores.

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