Lowe's Companies, Inc. · NYSE:LOW
Lowe's Companies — Investor Day (December 2021)
39 slides from Lowe's Companies's investor day presentation, Dec 15, 2021
Slide 1: 2022 Financial Outlook
2022 Financial Outlook DECEMBER 15, 2021
Slide 2: Forward-looking statements
Forward-looking statements This presentation includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements including words such as “believe”, “expect”, “anticipate”, “plan”, “desire”, “project”, “estimate”, “intend”, “will”, “should”, “c
Slide 3: Non-GAAP disclosure
Non-GAAP disclosure Management of Lowe's Companies, Inc. (the Company) uses certain non-GAAP financial measures and considers them to be important supplemental measures of the Company's performance. In addition, management believes these non-GAAP financial measures provide additional insight for ana
Slide 4: Marvin Ellison
Marvin Ellison CHAIRMAN AND CEO
Slide 5: Responsible corporate citizen
Responsible corporate citizen Sustainability Our Associates Our Communities • Reduced enterprise GHG • Providing a diverse, equitable • Contributed $150M+ to emissions by 29.8% since and inclusive workplace support our communities in 2016 where our associates can 2020, including $55M in grow and thr
Slide 6: Home Improvement market outlook
Home Improvement market outlook S E C U L A R TA I LW IN D S D R I V I NG H O M E I M P R O V E M E N T D E M A N D • Strong home price appreciation trends • Aging housing stock Traditional • Healthy consumer balance sheets Drivers • Mortgage rates near all-time lows • Increased wear and tear due to
Slide 7: Total Home Strategy
Total Home Strategy M A R K E T S H A R E A C C E L E R AT I O N Drive Pro Accelerate Expand Drive Elevate penetration online business installation localization assortment services Providing a full complement of products and services for Pros and consumers alike, enabling a Total Home solution for e
Slide 8: Lowe's is committed to the Pro
Lowe's is committed to the Pro Dedicated Pro loaders Pro Drop Zone Job lot quantities Pro CRM
Slide 9: Expanding Pro brands and products
Expanding Pro brands and products Added in 2021
Slide 10: Driving long-term Pro growth
Driving long-term Pro growth +24 % 2021 YTD Pro ~$ 450B Total Addressable Pro Sales Target Grow at 2x market Sales Comp Market rate for next 3 years 2021 Highlights • Re-platformed Lowes4Pros.com to the cloud • Introduced new brands and products • Enhanced Pro experience
Slide 11: Launching Lowe's Livable Home
Launching Lowe's Livable Home M O D I FY I N G C U S TO M E R S ’ H O M E S TO F I T T H E I R L I F E S TY L E N E E D S
Slide 12: Increasing private brand penetration
Increasing private brand penetration W I TH I N A B A L A N C E D B R A N D S T R AT E G Y ® ™ ® ®
Slide 13: Launching Origin 21
Launching Origin 21 Origin2! ji | eat
Slide 14: Extending exclusive STAINMASTER lineup
Extending exclusive STAINMASTER lineup Up to 99% anti-microbial protection Lifetime warranty stain & slip resistant WATERPROOF FLOOR & WALL TILE
Slide 15: Transitioning from store delivery model…
Transitioning from store delivery model… I N E F F I CI E N T A N D O V E R LY C O M P L I CAT E D 1 1 Vendor 2 Bulk DC Time-consuming 3 in-store sales process 4 4 5 6 7 Customer SKU…x SKU…x SKU…x SKU…x 8 SKU…x SKU…x Non-optimized Customer Store Stockroom Storage Containers delivery
Slide 16: …to market delivery model
…to market delivery model F U L LY R O L L E D O U T I N 2 0 2 3 1 Streamlined, customer-focused process Vendor 2 Customer Product Qty Freezer 3 Bulk DC 3 Online scheduling In-store 4 Cross-dock Terminal 3PL Delivery Customer Drives operating margin expansion, incremental sales, improved inventory t
Slide 17: Omni-channel evolution
Omni-channel evolution T R A N S F O R MI N G O N L I NE U S E R E X P E R I E N C E … Innovating to add product visualization & configuration Launching “Measure Your Space" … end-to-end room scanning & measurement tool
Slide 18: Omni-channel evolution
Omni-channel evolution … A N D E X PA N D I N G B O P I S A N D F U L F I L L M E N T O P T I O N S Curbside pickup Leverage 10k sq ft backroom for New touchless lockers same-day / next-day fulfillment
Slide 19: Elevating brand reputation
Elevating brand reputation #1 Specialty Retailer 3 years in a row #22 Overall in 2021 Recognized by leading voices in Diversity and Inclusion
Slide 20: Total Home Strategy
Total Home Strategy M A R K E T S H A R E A C C E L E R AT I O N Drive Pro Accelerate Expand Drive Elevate penetration online business installation localization assortment services Providing a full complement of products and services for Pros and consumers alike, enabling a Total Home solution for e
Slide 21: Dave Denton
Dave Denton E V P, C H I E F F I N A N C I A L O F F I C E R
Slide 22: Value Creation Roadmap
Value Creation Roadmap Core operational excellence Significant cash flow generation Enhanced shareholder Optimized capital returns deployment
Slide 23: Strong operating performance
Strong operating performance SALES PER SQUARE FOOT ADJ. OPERATING MARGIN1 RETURN ON INVESTED CAPITAL (ROIC)1 >33% $457 12.4% $431 27.7% 10.8% +380 +2,200 +36% 8.6% 9.1% bps bps 19.9% $346 $336 11.2% 2018 2019 2020 2021E 2 2018 2019 2020 2021E 2 2018 2019 2020 2021E 2 Over $30B returned to shareholde
Slide 24: Affirming 2021 financial outlook
Affirming 2021 financial outlook 95B 12.4 $ Gross Margin % rate up slightly Sales vs. prior year Operating Margin1 ~$ 2B Capital ~$ 12B Share >33 ROIC2 % Expenditures Repurchases 1 Operating income as a percentage of sales 2 Return on Invested Capital is a Non-GAAP financial measure
Slide 25: Lowe's 2022 relevant market expectations
Lowe’s 2022 relevant market expectations Relevant market expected to decline mid-single digits ~$ 900B Total Addressable Market 75/25 50/50 ~ % ~ % Lowe's DIY / Pro Mix NAICS DIY / Pro Mix
Slide 26: 2022 financial outlook
2022 financial outlook O U T P E R F O R M R E L E VA N T M A R K E T B Y 3 0 0 -4 0 0 B P S $ 94-97B 12.5-12.8 Sales1 Operating Margin2,3 % 12 -13 $ .25 $ Diluted EPS3 .00 ~$ 2B Capital 12B ~$ Share ~ 35 ROIC4 % Expenditures Repurchases 1 Sales include 53rd week for Fiscal 2022 and comparable sales
Slide 27: 2022 operating margin drivers
2022 operating margin drivers Gross Margin SG&A Pricing & product cost management Higher private brand penetration Supply chain cost increases Product inflation Market Delivery Model Perpetual Productivity Improvement (PPI) Wage & COVID cost increases Gross Margin rate SG&A levers 10 – 30 flat vs. p
Slide 28: Expecting to return nearly $40B in capital over next 3 years
Expecting to return nearly $40B in capital over next 3 years C A S H G E N E R AT I O N & C A P I TA L A L L O C ATI O N A R E M A J O R C O N T R I B U TO R S TO VA L U E C R E AT I O N $14B ~$40B $32B ($6B) ~20% of Current Market $26B Capitalization OPERATING CASH FLOW CAPEX FREE CASH FLOW NET DEB
Slide 29: Continue to enhance shareholder value
Continue to enhance shareholder value Cash available for enhancing shareholder value ~$15B1 annually Return on Share Dividends Invested Capital repurchases Drive ROIC with Target payout ~$12B1 annually profit-enhancing projects ratio of 35% value-creating Board increased share repurchase authorizati
Slide 30: Key investment highlights
Key investment highlights Favorable Industry Backdrop & Resilient Business Model Well-Capitalized Big Box Retailers Investing in Omni-channel Capabilities in Advantageous Position Taking Market Share Across DIY and Pro Significant Productivity Expansion Opportunity Responsible Corporate Citizen Disc
Slide 31: APPENDIX
APPENDIX
Slide 32: Strong record of capital allocation
Strong record of capital allocation FUND GROWTH RETURN OF CAPITAL Invest in Balance Sheet Strategic Outlays Dividends Share Repurchase the Business Management Growth Opportunistic Strong Consistency Value-Enhancing • Run the business • Build capabilities • Return to target • Target payout ratio • Pl
Slide 33: Reconciliation of Non-GAAP measures
Reconciliation of Non-GAAP measures Management of Lowe's Companies, Inc. (the Company) uses certain non-GAAP financial measures and considers them to be important supplemental measures of the Company's performance. In addition, management believes these non-GAAP financial measures provide additional
Slide 34: Operating performance
Operating performance The Company has provided the non-GAAP financial measure of adjusted operating margin for fiscal years 2020, 2019, and 2018 for comparing its operating performance to the Lowe's Business Outlook for fiscal year 2021. This measure excludes the impacts of certain discrete items, a
Slide 35: Operating performance
Operating performance FISCAL 2020 AND 2019 IMPACTS For fiscal 2020, the Company recognized financial impacts from the following discrete item: • In the third quarter of fiscal 2019, the Company began a strategic review of its Canadian operations, and in the fourth quarter of fiscal 2019, the Company
Slide 36: Operating performance
Operating performance FISCAL 2018 IMPACTS For fiscal 2018, the Company recognized financial impacts from the following discrete items: • During the fourth quarter of fiscal 2018, the Company recorded $952 million of goodwill impairment associated with its Canadian operations (Canadian goodwill impai
Slide 37: Operating performance
Operating performance The following measures are presented for comparison of operating performance for the fiscal years ended January 29, 2021, January 31, 2020, and February 1, 2019: Year Ended Adjusted Operating Income January 29, January 31, February 1, Product Sustainability Our (in millions, ex
Slide 38: Capital/asset productivity measures
Capital/asset productivity measures Return on Invested Capital Return on Invested Capital (ROIC) is calculated using a non-GAAP financial measure. Management believes ROIC is a meaningful metric for analysts and investors as a measure of how effectively the Company is using capital to generate profi
Slide 39: Capital/asset productivity measures
Capital/asset productivity measures Year Ended Return on Invested Capital January 29, January 31, February 1, (in millions, except percentage data) 2021 2020 2019 Numerator Net earnings $ 5,835 $ 4,281 $ 2,314 Plus: Interest expense – net Product Sustainability Our People and 848 Communities691 624