Lowe's Companies, Inc.

Good morning, everyone. Welcome to Lowe's Company's third quarter 2024 earnings conference call. My name is Rob, and I'll be your operator for today's call. As a reminder, this conference is being recorded. I will now turn the call over to Kay Pearlman, Vice President of Investor Relations and Treasurer.

Thank you, and good morning. Here with me today are Marvin Ellison, Chairman and Chief Executive Officer, Bill Bolts, our Executive Vice President, Merchandising, Joe McFarland, our Executive Vice President Storrs, and Brandon Sink, our Executive Vice President and Chief Financial Officer. I would like to remind you that our notice regarding forward-looking statements is included in our press release this morning, which can be found on Lowe's Investor Relations website. During this call, we will be making comments that are forward-looking, including our expectations for fiscal 2024. Actual results may differ materially from those expressed or implied as a result of various risks, uncertainties, and important factors, including those discussed in the risk factors, MD&A, and other sections of our annual report on Form 10-K and our other SEC filings. Additionally, we'll be discussing certain non-GAAP financial measures. A reconciliation of these items to U.S. GAAP can be found on the quarterly earnings section of our investor relations website. Now, I'll turn the call over to Marvin.

Thank you, Kate, and good morning, everyone, and thank you for joining us today. Before discussing our third quarter results, I'd like to take a moment to offer my sympathy to the Marcus family on the passing of Bernie Marcus. Bernie and his partners Arthur Blank, Ken Langone, and Pat Ferrer invented the modern home improvement business model. And many years ago, Bernie took me on his wing to teach me the home improvement business. As a young executive eager to learn about merchandising, marketing, and business strategy for one of the icons of the industry, I was surprised that during my first meeting, the only thing that Bernie talked about was the importance of people, both customers and associates. Bernie provided me with a lot of coaching, wisdom, and advice during my early years in home improvement. He was a true original in every sense of the word. And because of his generosity and philanthropy, he leaves a legacy far beyond the home improvement industry. From me personally and from all of us at Lowe's, our thoughts and our prayers go out to his family and to his loved ones. Now allow me to transition to our third quarter results. Third quarter sales were 20, point two billion dollars in comparable sales were down one point one percent. Our results were modestly better than expected, even excluding storm related activity driven by strong pro and online sales and smaller ticket outdoor DIY projects. While demand for DIY discretionary bigger ticket projects remain soft, we're tightly managing our operating expenses and continue to invest in our total home strategy. We're particularly pleased with the sustained strength we're delivering in two key areas, pro and online sales. Our pro sales were up again in Q3 with high single-digit positive comps. This growth is being driven by the investments we've made to better serve the small to medium-sized pro, which is our core pro customer. Our efforts to transform the pro shopping experience continue to pay dividends. We have the inventory depth and the brands that are the most important to these customers, and we're making it easy for them to shop in our stores and online, and through our pro loyalty program, we're giving them reasons to keep coming back. Later in the call, Joe will provide more detail on our efforts to continue our momentum in pro. We also continue to grow our online sales with 6% comparable sales growth. We've increased both online conversion and traffic, including a double-digit increase in traffic on our Lowe's mobile app. And we're making it easier and more convenient for customers to order paint and paint supplies online by expanding our free same-day paint delivery program via iGIG Network. And as a reminder, paint remains the number one home improvement project, so we've added more brands and products to our same-day delivery options so customers can get what they need to finish their projects faster delivered right to their home or job site. Customers are also leveraging our new insurer mode in the Lowe's app, which gives them product information at their fingertips. Through the app, they're able to quickly access product details, reviews, and in-stock information, and they can more easily navigate the store to find what they're looking for. And if they don't see the exact product they need on the shelf, they can shop on the app right within the aisles of our stores for a larger selection of products and finishes from our extended aisle on Lowes.com. Another way we're driving traffic both online and in-store is through our My Lowes Rewards loyalty program, which we just launched in March. This free program is designed to reward DIY customers for choosing Lowes over other retail competitors for their home improvement needs. Customers are engaging in the program to take advantage of new member-only offers, earn My Lowes money, and use their rewards. You'll hear more about our loyalty program from Bill later in the call. Now allow me to transition to the economy. When it comes to the macro environment, this remains a challenging home improvement market. While interest rates are beginning to drop, consumers continue to face affordability challenges as both inflation and interest rates are putting pressures on their wallet. Mortgage rates also remain stubbornly high, and there's still a meaningful gap between current mortgage rates to purchase a home and the homeowners' existing rates, with over half of current rates below 4%. Combined with the lack of available homes for sale, housing turnover remains near 30-year lows. Looking ahead, it's unclear when lower rates and improved consumer sentiment will translate into improved home improvement demand. However, the three primary drivers of our business continue to work in our favor. One, strong home price appreciation. Two, disposable personal income is outpacing inflation, and three, the median age of homes is the oldest it's been in U.S. history, currently sitting at 41 years old. These drivers will support demand over the long term, which means existing homeowners are likely to continue investing in repairs and upgrades to their homes. Especially as interest rate pressures ease, we expect that homeowners will start to tap into the record $35 trillion in home equity to finance larger home improvement projects. These factors along with long-term demand drivers like millennial household formation, baby boomers aging in place, and continued remote work reinforce our optimism around the medium to long-term outlook for the home improvement industry. In the meantime, we're investing in our total home strategy to position the company for long-term growth and sustainable market share gains in preparation for the anticipated home improvement market recovery. We're looking forward to telling you more about our plans at our Analyst and Investor Conference next month. Before I wrap up, I'd like to extend our thoughts and prayers to everyone who was impacted by Hurricanes Helene and Milton, and I want to express my gratitude to our associates, suppliers, and first responders for their efforts to support those in the storm's path. Working together, the teams provided round-the-clock support ahead of both hurricanes and immediately mobilize in their wake to help address urgent needs in impacted communities across the Southeast. As part of the largest storm recovery efforts in our company's history, Lowe's has pledged $12 million to support disaster relief assistance through several nonprofit organizations with boots on the ground. As part of this commitment, we recently announced plans to provide $2.5 million in grants and support to help small businesses in Western North Carolina recover and to rebuild. Joe, Bill, and Brandon will each share more detail on Lowe's response efforts and provide more context on how these storms impacted our results. In closing, I'd like to thank all of our frontline associates for their dedication to serving our customers and supporting our communities. I especially would like to salute our frontline associates in Florida and North Carolina for their commitment to their neighbors and for their resiliency. Now I'd like to turn the call over to Joe to talk more about our storm recovery efforts and our store operations.