Home Depot, Inc. (The)

Greetings, and welcome to the Home Depot first quarter 2020 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Isabel Jancy. Please go ahead.

Thank you, Christine, and good morning, everyone. Joining us on our call today are Craig Minear, Chairman, CEO, and President, Ted Decker, Executive Vice President of Merchandising, and Richard McVail, Executive Vice President and Chief Financial Officer. Following our prepared remarks, the call will be open for questions. Questions will be limited to analysts and investors. And as a reminder, please limit yourself to one question with one follow-up. If we are unable to get to your question during the call, please call Investor Relations at 770-384-2387. Before I turn the call over to Craig, let me remind you that today's press release and the presentations made by our executives include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, the factors identified in the release and in our filings with the Securities and Exchange Commission. Today's presentations will also include certain non-GAAP measures. Reconciliation of these measures is provided on our website. Now, let me turn the call over to Craig.

Thank you, Isabel, and thanks to all of you for joining us on our call this morning. We hope that you and your loved ones are safe and healthy, and our thoughts and prayers are with all of those who have been directly impacted by COVID-19. I also want to thank all of our incredible associates and supplier partners for their hard work and dedication to serving our customers and communities in this time of need. And while the purpose of the call today is to update you on our first quarter results, I thought it would be helpful to explain how we are thinking about and making decisions at the Home Depot. When our founders started the company over 40 years ago, they did so by first defining the type of culture and value system that they wanted to promote. These values are the foundation for our business and provide the lens through which we evaluate our decisions. Anchoring to these values in this time of crisis has never been more critical. Our decisions and actions are rooted in a commitment to do the right thing, to take care of our people, and be there for our customers and communities. To that end, as the situation around COVID-19 has evolved, our focus has been and continues to be on two key priorities, the safety and well-being of our associates and customers, and providing our customers and communities with essential products and services. The team's alignment around these two objectives has enabled critical speed and flexibility when making decisions and implementing a number of changes across the business in a rapidly evolving and incredibly fluid environment. I'd like to briefly touch on just a few of the early and decisive actions that we took in support of these primary objectives. To promote a safe environment for associates and customers, we implemented a number of operational changes starting in mid-March. We have adjusted our store hours, closing earlier than usual to give our associates more time to properly clean and sanitize, and restock our shelves. We took a proactive and early stance on limiting customer traffic in our stores to better maintain physical and social distancing protocols. At the height of our spring selling season, we also made the decision to cancel our annual spring events, including Spring Black Friday. This was not a decision that we took lightly. And yet, we made it confidently, giving our belief that having this event would drive footsteps to our stores and directly undermine our commitment to prioritizing safety. To take care of our associates, we expanded our paid time off for all hourly associates. that can be used at their discretion and will be paid out at year end if unused. We also are offering additional paid time off for associates who are 65 or older or deemed to be at higher risk by the CDC guidelines. We have instituted weekly bonuses for our hourly associates in our stores and distribution centers. We are providing double pay for overtime work, and we have extended dependent care benefits and waived related copays. Our more than 400,000 Orange Blooded Associates are the heartbeat of the Home Depot and supporting them is a core value of our company. Beyond the grounding that our culture and values provides and the actions we have taken to support them, we believe that the Home Depot is uniquely positioned to weather COVID-19. Nobody could have predicted what has unfolded since we spoke with you three months ago on our earnings call in February. And yet the distinct competitive advantages and overarching benefits of an interconnected One Home Depot strategy that were reinforced then are perhaps even more in focus and relevant today. Investments we have made over the years in our stores, market leading digital assets, flexible supply chain, and a world class merchandising organization have allowed us to quickly adapt to shifts in customer needs, preferences, and behaviors. Our interconnected retail strategy and underlying technology infrastructure have supported record-level web traffic for several weeks without disruption. Sales leveraging our digital platforms increased approximately 80% in the quarter, and more than 60% of the time our customers opted to pick up their orders at a store. We were able to extend our in-store focus capabilities to curbside pickup in the US in a matter of days, offering customers an additional choice with respect to fulfillment. In the case of our Ontario stores in Canada, this curbside capability was turned on essentially overnight when it became the only option to remain open and operational. with those stores operating under these circumstances for more than a month. The flexibility and agility of our business model, coupled with our focus on execution and strong partnership with our suppliers, helped deliver solid results in the quarter and gave the Board the confidence to declare a $1.50 per share quarterly dividend. Sales for the first quarter were $28.3 billion, up 7.1% from last year. Comp sales were up 6.4% from last year, with U.S. comps of positive 7.5%. Diluted earnings per share were $2.08 in the first quarter. Richard will walk you through the details in a moment, but I want to stress that while we were pleased with the results in the quarter and we see an engaged customer, there was significant volatility. Month to month and even week to week, We saw extreme ups and downs across different categories and geographies. As a result, we are cautious to extrapolate trends from the first quarter into a forecast for the remaining of the year, particularly given the tremendous amount of uncertainty we face with regards to the duration and continued impacts of the virus. Despite the many unknowns of the current environment, we are confident that we have taken the steps to ensure that we will emerge from this crisis stronger and in a better position for the future. Though this crisis is unparalleled in size and scope, we have built a reputation through our history of doing whatever it takes to be there for our associates, customers, and communities in the most critical times. And this situation is no different. Once again, I want to thank our incredible associates and express how grateful and proud I am of the resiliency and strength that our teams have demonstrated as we navigate these extraordinary circumstances together. This reminds me of the words of our founder, Bernie Marcus, that have never resonated more deeply than they do today. If you take care of our associates, they take care of the customers and everything else takes care of itself. And with that, I'd like to turn the call over to Ted.