Lowe's Companies, Inc.

Good morning, everyone, and welcome to Lowe's Company's fourth 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'll now turn the call over to Kate Perlman, 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 Boltz, our Executive Vice President, Merchandising, Joe McFarland, our Executive Vice President, Stores, 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 2025. 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. In the fourth quarter, we delivered sales of $18.6 billion and positive comparable sales of 0.2%. Looking at the full fiscal year 2024, we delivered sales of $83.7 billion, adjusted operating margin of 12.3%, and adjusted earnings per share of $11.99. We're very pleased with our performance in 2024 in a very difficult home improvement macro environment. And we're also pleased to deliver positive comparable sales this quarter with results that exceeded our expectations and were driven by continued momentum in pro and online, strong seasonal DIY performance, and rebuilding efforts in the wake of recent hurricanes. Despite these better than expected fourth quarter results, we're still seeing a cautious consumer leading to continued near-term pressure on DIY discretionary spending, particularly in bigger ticket projects. And with this challenging backdrop, we remain focused on delivering strong operating performance while continuing to make the right long-term investments for growth. Turning to our pro results in the fourth quarter, where we delivered high single-digit comps for the second consecutive quarter. We're gaining momentum with our pro customer through a flywheel effect that we've created with a transformed pro offering with the right brands and products, greater inventory depth, improved job site delivery, dedicated service levels, and a best-in-class digital experience. Last week, we took the next steps in tailoring our offering for the small to medium pro with the nationwide launch of our redesigned pro loyalty program, Milo's Pro Rewards. Later in the call, Joe will share more detail about how we updated the program to drive greater engagement with our pros. Shifting to online, we drove strong sales growth of 9.5% in Q4, reflected in broad-based improvement across all merchandising divisions, which included record-breaking sales during the Black Friday and Cyber Monday holiday. Through our new free DIY loyalty program, Milo's Rewards, we're generating excitement and driving more traffic to Lowe's.com. These results give us confidence that our online and omnichannel investments are paying off. These investments include a more intuitive user experience in the app and online, more same-day delivery options, combined with enhanced AI user experiences. And our digital enhancements are earning outside recognition as Forrester just rated the Lowe's mobile app as the overall digital experience leader in U.S. retail mobile apps, highlighting not just the table stake functionalities and omnichannel features, but also innovative AI-enabled solutions like Style Your Space that helps customers reimagine rooms that they want to refresh through the touch of a button. Next month, in collaboration with OpenAI, we will launch the first AI-powered home improvement virtual advisor on Lowes.com, leveraging the same technology that our associates are using on their store companion app to give our customers helpful advice as they tackle their home improvement projects. This new virtual advisor will provide Lowes customers with both project know-how and product recommendations with direct links to specific Lowes products for a seamless checkout. This is another example of how we're leaning into emerging technology to enhance the customer experience, saving them both time and money. Now allow me to transition to our view of the macro. Even though short-term interest rates have started to come down, this remains a challenging home improvement market. Mortgage rates are higher than they've been in more than two decades, creating a significant gap between today's rates for home buyers and the lower rates many homeowners currently enjoy. This has led to a lock-in effect and the lowest pace of existing home sales in the U.S. in nearly 30 years. Although it's difficult to predict the timing of when we'll see lower rates and increased home improvement demand, we remain confident in the medium to long-term outlook of our business. As I've stated before, the key drivers of our business are still supportive. Home price appreciation, disposable personal income growing faster than inflation, and the oldest existing housing stock in U.S. history. These drivers will sustain long-term demand as homeowners invest in repairs and upgrades. And we anticipate that some homeowners will begin to tap into record levels of equity in their homes to fund larger renovation projects. Beyond these factors, structural trends such as millennial household formation, baby boomers aging in place, and the persistence of remote work reinforce our confidence in the medium to long-term strength of the home improvement industry. In the meantime, we've refined our total home strategy and are making investments that are closely aligned with the long-term drivers of home improvement demand. We unveiled our updated strategy at the December Analyst and Investor Conference. It includes driving pro-penetration, accelerating our online sales, expanding our home services, creating a loyalty ecosystem, and increasing our space productivity. In addition to the investments we're making in our total home strategy, we're also continuing to take cost out of our operating model through our perpetual productivity initiatives, or PPI. Together, our total home strategy, coupled with our disciplined focus on productivity, ensure that we are well-positioned to capitalize on the home improvement recovery and take share when the market inflects. When we look ahead to 2025, we're confident that the three market scenarios that we outlined at our December conference captured a range of potential outcomes we could see in the home improvement industry this year. And we're very confident in our strategic agility and our ability to execute in any economic environment. So we are prepared to outperform the market in each macro scenario that we outlined in December. Before I close, I'd like to take a minute to thank our teams who stepped up to support our customers across Southern California who were impacted by the devastating wildfires. Although this is not an area where we have significant store presence, we felt it was important to help these communities recover. As a reflection of this commitment, Lowe's donated $2 million for relief efforts in the impacted areas. And please join me in continuing to keep those impacted by the wildfires in our thoughts and our prayers. I continue to visit stores across the country every week, which gives me a great opportunity to personally thank our frontline associates for their dedication and to learn how we can remove friction for them and improve the customer experience. To demonstrate our appreciation for our hardworking frontline associates, we're awarded year-end discretionary bonuses of $80 million, including our store managers and assistant managers across the company. This bonus reflects our appreciation for their leadership and commitment to customer service. And with that, I turn things over to Bill.