Home Depot, Inc. (The)

Greetings, and welcome to the Home Depot third quarter 2024 earnings conference call. At this time, all participants are in 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. Welcome to Home Depot's third quarter 2024 earnings call. Joining us on our call today are Ted Decker, Chair, President, and CEO, Anne-Marie Campbell, Senior Executive Vice President, Billy Bastic, Executive Vice President of Merchandising, and Richard McVale, 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 our Investor Relations Department at 770-384-2387. Before I turn the call over to Ted, 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 presentation will also include certain non-GAAP measures including but not limited to adjusted operating margin and adjusted diluted earnings per share. For a reconciliation of these and other non-GAAP measures to the corresponding GAAP measures, please refer to our earnings press release and our website. Now, let me turn the call over to Ted.

Thank you, Isabel, and good morning, everyone. Sales for the third quarter were $40.2 billion, an increase of 6.6% from the same period last year. Comp sales declined 1.3% from the same period last year, and our U.S. stores had negative comps of 1.2%. Adjusted diluted earnings per share were $3.78 in the third quarter, compared to $3.85 in the third quarter last year. From a geographical perspective, storms and more favorable weather throughout the quarter drove a higher degree of variability in the performance across our divisions. and four of our 19 U.S. regions delivered positive comps. In local currency, Mexico and Canada posted comps above the company average, with Mexico posting positive comps in the quarter. In the third quarter, our associates and communities were impacted by two hurricanes. As you'll hear from Anne, our associates and supplier partners worked tirelessly under difficult circumstances to serve our customers and communities. Our thoughts continue to be with those impacted by hurricanes Helene and Milton. Excluding the impacts from the hurricanes, our third quarter performance exceeded our expectations. As weather normalized, we saw better engagement across seasonal goods and certain outdoor projects. But as Billy will detail, we continue to see pressure on larger remodeling projects driven by the higher interest rate environment and continued macroeconomic uncertainty. Today, we updated our guidance, primarily as a result of the better performance in the third quarter, as well as expected hurricane-related demand in the fourth quarter. For fiscal 2024, we now expect our sales to grow approximately 4%, comps to decline approximately 2.5%, and adjusted diluted earnings per share to decline approximately 1%. Richard will take you through the details in a moment. Despite the continued uncertainty in the macroeconomic environment, our focus remains on creating the best interconnected experience, growing pro-wallet share through a differentiated set of capabilities, and building new stores. Today, I would like to highlight where we are improving the interconnected experience. Recall that over the last several years, we built a network of downstream supply chain facilities. including 19 direct fulfillment centers, allowing us to reach 90% of the U.S. population with same or next-day delivery. Recently, we expanded our assortment in these facilities to allow for faster delivery speeds across more products. We made significant website enhancements to better communicate faster delivery options. Many customers were not aware of our robust delivery options. In the third quarter, we launched a marketing campaign that builds awareness of our faster delivery speed While this is just launched, we are seeing the intended results, greater customer engagement, higher conversion, and incremental sales. This is also the first quarter that reflects a full period of SRS in our financials. SRS gives us the right to win with a specialty trade pro customer who needs specialized capabilities to complete their project. The SRS team did an exceptional job in the quarter and is on track to deliver $6.4 billion in sales for the approximately seven months we'll owe them in fiscal 2024. As you would expect, the immediate focus with SRS is supporting their growth, both organically and through acquisitions. However, we are also seeing incremental cross-sale opportunities from our distinct product catalogs and competitive advantages. As you can tell, we remain excited about the growth opportunities in front of us. We are committed to investing in our capabilities to continue growing share in any environment. Our merchants, store and met teams, supplier partners, and supply chain teams did an outstanding job executing throughout the quarter, and I'd like to thank them for their dedication and hard work. Before I turn the call over to Anne, I'd like to take a moment to reflect on the legacy of our co-founder, Bernie Marcus. we owe an immeasurable debt of gratitude to Bernie. He was a master merchant and a retail visionary. But even more importantly, he valued our associates, customers, and communities above all. He's left us with an invaluable legacy and the backbone of our company, our values and culture. The entire Home Depot family is deeply saddened by his passing. He will be missed. With that, let me turn the call over to Anne.