What changed in this filing

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Item 1. Financial Statements

2023-05-23 compared with 2022-11-22 · 99 added, 134 removed, 265 unchanged (47% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

in millions, except per share data October 30,

in millions, except per share data April 30,

2023 January 29,

13 unchanged sentences

Current liabilities:

Short-term debt $ — $ 1,035

Accounts payable $ 12,630 $ 11,443

2 unchanged sentences

Deferred revenue 3,119 3,064

Income taxes payable 1,054 50

Current installments of long-term debt 1,338 1,231

4 unchanged sentences

Long-term operating lease liabilities 6,209 6,226

Deferred income taxes 954 1,019

Other long-term liabilities 2,500 2,566

Total liabilities 76,024 74,883

Contingencies (Note 8)

Common stock, par value $ 0.05 ;

10,000 shares;

1,793 shares at October 30, 2022 and 1,792 shares at January 30, 2022;

1,020 shares at October 30, 2022 and 1,035 shares at January 30, 2022

1,795 shares at April 30, 2023 and 1,794 shares at January 29, 2023;

1,007 shares at April 30, 2023 and 1,016 shares at January 29, 2023

Paid-in capital 12,584 12,592

1 unchanged sentence

Accumulated other comprehensive loss ( 637 ) ( 718 )

Treasury stock, at cost, 773 shares at October 30, 2022 and 757 shares at January 30, 2022

Treasury stock, at cost, 788 shares at April 30, 2023 and 778 shares at January 29, 2023

( 90,326 ) ( 87,298 )

Total stockholders’ equity (deficit) 1,298 ( 1,696 )

Total stockholders’ equity 362 1,562

Total liabilities and stockholders’ equity

1 unchanged sentence

See accompanying notes to consolidated financial statements.

Fiscal Q1 2023 Form 10-Q 1

THE HOME DEPOT, INC.

CONSOLIDATED STATEMENTS OF EARNINGS

Three Months Ended Nine Months Ended

in millions, except per share data October 30,

2022 October 31,

2021 October 30,

2022 October 31,

Three Months Ended

in millions, except per share data April 30,

Net sales $ 37,257 $ 38,908

18 unchanged sentences

See accompanying notes to consolidated financial statements.

Fiscal Q1 2023 Form 10-Q 2

THE HOME DEPOT, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended Nine Months Ended

in millions October 30,

2022 October 31,

2021 October 30,

2022 October 31,

Three Months Ended

in millions April 30,

Net earnings $ 3,873 $ 4,231

2 unchanged sentences

Cash flow hedges 2 1

Other — — — 27

Total other comprehensive income (loss), net of tax 81 21

1 unchanged sentence

See accompanying notes to consolidated financial statements.

Fiscal Q1 2023 Form 10-Q 3

THE HOME DEPOT, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Three Months Ended Nine Months Ended

in millions October 30,

2022 October 31,

2021 October 30,

2022 October 31,

Three Months Ended

in millions April 30,

Common Stock:

Balance at beginning of period $ 90 $ 90

Shares issued under employee stock plans — — — 1

Shares issued under employee stock plans, net — —

Balance at end of period 90 90

1 unchanged sentence

Balance at beginning of period 12,592 12,132

Shares issued under employee stock plans ( 2 ) 18 ( 21 ) 50

Shares issued under employee stock plans, net ( 119 ) ( 154 )

Stock-based compensation expense 111 101

10 unchanged sentences

Cash flow hedges, net of tax 2 1

Other, net of tax — — — 27

Balance at end of period ( 637 ) ( 683 )

3 unchanged sentences

Balance at end of period ( 90,326 ) ( 83,044 )

Total stockholders' equity $ 1,298 $ 1,035 $ 1,298 $ 1,035

Total stockholders' equity (deficit) $ 362 $ ( 1,709 )

See accompanying notes to consolidated financial statements.

Fiscal Q1 2023 Form 10-Q 4

THE HOME DEPOT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

in millions October 30,

2022 October 31,

Three Months Ended

in millions April 30,

Cash Flows from Operating Activities:

15 unchanged sentences

( 905 ) ( 704 )

Payments for businesses acquired, net — ( 416 )

Other investing activities 2 3

18 unchanged sentences

See accompanying notes to consolidated financial statements.

Fiscal Q1 2023 Form 10-Q 5

THE HOME DEPOT, INC.

1 unchanged sentence

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Home Depot, Inc., together with its subsidiaries (the “Company,” “Home Depot,” “we,” “our” or “us”), is a home improvement retailer that sells a wide assortment of building materials, home improvement products, lawn and garden products, décor items, and facilities maintenance, repair and operations products, and provides a number of services, in stores and online.

We also provide a number of services, including home improvement installation services and tool equipment rental.

We operate in the U.S.

8 unchanged sentences

Recently Adopted Accounting Pronouncements

We did not adopt any new accounting pronouncements during the first nine months of fiscal 2022 that had a material impact on our consolidated financial condition, results of operations or cash flows.

Recently Issued Accounting Pronouncements

In September 2022, the FASB issued ASU No.

2 unchanged sentences

The guidance does not affect the recognition, measurement, or financial statement presentation of obligations covered by supplier finance programs.

2022-04 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the requirement on rollforward information, which is effective for fiscal years beginning after December 15, 2023.

Early adoption is permitted.

We are currently evaluating the impact of the standard on our consolidated financial statements and related disclosures .

Recent accounting pronouncements pending adoption not discussed above or in the 2021 Form 10-K are either not applicable or will not have or are not expected to have a material impact on our consolidated financial condition, results of operations or cash flows.

2022-04 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the required rollforward information, which is effective for fiscal years beginning after December 15, 2023.

On January 30, 2023, we adopted ASU No.

2022-04 with no impact to our consolidated financial condition, results of operations, or cash flows.

We have a supplier finance program whereby we have entered into payment processing agreements with several financial institutions.

Under these agreements, the financial institutions act as our paying agents with respect to accounts payable due to certain suppliers.

Participating suppliers may, at their sole discretion, elect to receive payment for one or more of our payment obligations, prior to their scheduled due dates, at a discounted price from participating financial institutions.

We are not a party to the agreements between the participating financial institutions and the suppliers in connection with the program, and our rights and obligations to our suppliers are not impacted.

We do not reimburse suppliers for any costs they incur for participation in the program.

We have not pledged any assets as security or provided any guarantees as part of the program.

We have no economic interest in our suppliers’ decision to participate in the program.

Our responsibility is limited to making payment to the respective financial institution according to the terms originally negotiated with the supplier, regardless of whether the supplier elects to receive early payment from the financial institution.

The payment terms we negotiate with our suppliers are consistent, irrespective of whether a supplier participates in the program.

Our current payment terms with a majority of our suppliers generally range from 30 to 60 days, which we deem to be commercially reasonable.

Our outstanding payment obligations under our supplier finance program were $ 334 million at April 30, 2023, and $ 480 million at January 29, 2023 and are recorded within accounts payable on the consolidated balance sheets.

The associated payments are included in operating activities within the consolidated statements of cash flows.

Fiscal Q1 2023 Form 10-Q 6

Recently Issued Accounting Pronouncements

There were no significant changes in recently issued accounting pronouncements pending adoption from those disclosed in the 2022 Form 10-K.

Recent accounting pronouncements pending adoption not discussed in the 2022 Form 10-K are either not applicable or are not expected to have a material impact on our consolidated financial condition, results of operations or cash flows.

The following table presents net sales, classified by geography:

Three Months Ended Nine Months Ended

in millions October 30,

2022 October 31,

2021 October 30,

2022 October 31,

Three Months Ended

in millions April 30,

Net sales – in the U.S.

2 unchanged sentences

$ 37,257 $ 38,908

$ 38,872 $ 36,820 $ 121,572 $ 115,438

The following table presents net sales by products and services:

Three Months Ended Nine Months Ended

in millions October 30,

2022 October 31,

2021 October 30,

2022 October 31,

Three Months Ended

in millions April 30,

Net sales – products $ 35,888 $ 37,465

6 unchanged sentences

Hardlines Hardware, Indoor Garden, Outdoor Garden, and Tools

The following table presents net sales by major product lines (and related services):

Three Months Ended Nine Months Ended

in millions October 30,

2022 October 31,

2021 October 30,

2022 October 31,

The following table presents net sales by major product line (and related services):

Three Months Ended

in millions April 30,

Building Materials $ 14,079 $ 14,869

6 unchanged sentences

Such performance obligations are part of contracts with expected original durations of typically three months or less.

As of October 30, 2022 and January 30, 2022, deferred revenue for products and services was $ 2.2 billion and $ 2.6 billion, respectively.

As of April 30, 2023 and January 29, 2023, deferred revenue for products and services was $ 2.1 billion and $ 2.0 billion, respectively.

We further record deferred revenue for the sale of gift cards and recognize the associated revenue upon the redemption of those gift cards, which generally occurs within six months of gift card issuance.

As of both October 30, 2022 and January 30, 2022, our performance obligations for unredeemed gift cards were $ 1.0 billion.

Gift card breakage income, which is our estimate of the portion of our gift card balance not expected to be redeemed, was immaterial during the three and nine months ended October 30, 2022 and October 31, 2021.

As of April 30, 2023 and January 29, 2023, our performance obligations for unredeemed gift cards were $ 1.0 billion and $ 1.1 billion, respectively.

Gift card breakage income, which is our estimate of the portion of our outstanding gift card balance not expected to be redeemed, was immaterial during the three months ended April 30, 2023 and May 1, 2022.

Fiscal Q1 2023 Form 10-Q 7

PROPERTY AND LEASES

Net Property and Equipment

Net property and equipment includes accumulated depreciation and finance lease amortization of $ 27.5 billion as of October 30, 2022 and $ 26.1 billion as of January 30, 2022.

The following table presents the consolidated balance sheet location of assets and liabilities related to operating and finance leases:

in millions Consolidated Balance Sheet Classification October 30,

Net property and equipment includes accumulated depreciation and finance lease amortization of $ 27.0 billion as of April 30, 2023 and $ 26.6 billion as of January 29, 2023.

The following table presents the consolidated balance sheet classification related to operating and finance leases:

in millions Consolidated Balance Sheet Classification April 30,

2023 January 29,

8 unchanged sentences

Total lease liabilities $ 10,474 $ 10,456

(1) Finance lease assets are recorded net of accumulated amortization of $ 1.2 billion as of October 30, 2022 and $ 1.0 billion as of January 30, 2022.

(1) Finance lease assets are recorded net of accumulated amortization of $ 1.1 billion as of April 30, 2023 and $ 1.2 billion as of January 29, 2023.

The following table presents supplemental non-cash information related to leases:

Nine Months Ended

in millions October 30,

2022 October 31,

Three Months Ended

in millions April 30,

Lease assets obtained in exchange for new operating lease liabilities $ 254 $ 256

2 unchanged sentences

Short-Term Debt

In July 2022, we expanded our commercial paper program from $ 3.0 billion to $ 5.0 billion to further enhance our financial flexibility.

All of our short-term borrowings in the first nine months of fiscal 2022 were under our commercial paper program, and the maximum amount outstanding at any time was $ 2.7 billion.

In connection with our program, we have back-up credit facilities with a consortium of banks.

In July 2022, we also expanded the borrowing capacity under these back-up facilities from $ 3.0 billion to $ 5.0 billion, by entering into a five-year $ 3.5 billion credit facility scheduled to expire in July 2027 and a 364 -day $ 1.5 billion credit facility scheduled to expire in July 2023.

These facilities replaced our previously existing five-year $ 2.0 billion credit facility, which was scheduled to expire in December 2023, and our 364 -day $ 1.0 billion credit facility, which was scheduled to expire in December 2022.

At October 30, 2022, we had no outstanding borrowings under our commercial paper program, and at January 30, 2022, we had $ 1.0 billion of outstanding borrowings under our commercial paper program.

We have a commercial paper program that allows for borrowings up to $ 5.0 billion.

In connection with our program, we have back-up credit facilities with a consortium of banks for borrowings up to $ 5.0 billion, which consist of a five-year $ 3.5 billion credit facility scheduled to expire in July 2027 and a 364 -day $ 1.5 billion credit facility scheduled to expire in July 2023.

All of our short-term borrowings in the first three months of fiscal 2023 were under our commercial paper program, and the maximum amount outstanding at any time was $ 1.5 billion.

At April 30, 2023 and January 29, 2023, there were no outstanding borrowings under our commercial paper program.

Long-Term Debt

September 2022 Issuance.

In September 2022, we issued three tranches of senior notes.

• The first tranche consisted of $ 750 million of 4.00 % senior notes due September 15, 2025 at a discount of $ 0.3 million.

Interest on these notes is due semi-annually on March 15 and September 15 of each year, beginning March 15, 2023.

• The second tranche consisted of $ 1.25 billion of 4.50 % senior notes due September 15, 2032 at a discount of $ 1 million.

Interest on these notes is due semi-annually on March 15 and September 15 of each year, beginning March 15, 2023.

• The third tranche consisted of $ 1.0 billion of 4.95 % senior notes due September 15, 2052 at a discount of $ 14 million.

Interest on these notes is due semi-annually on March 15 and September 15 of each year, beginning March 15, 2023.

• Issuance costs totaled $ 15 million.

March 2022 Issuance.

In March 2022, we issued four tranches of senior notes.

• The first tranche consisted of $ 500 million of 2.70 % senior notes due April 15, 2025 at a discount of $ 1 million.

Interest on these notes is due semi-annually on April 15 and October 15 of each year, beginning October 15, 2022.

• The second tranche consisted of $ 750 million of 2.875 % senior notes due April 15, 2027 at a discount of $ 4 million.

Interest on these notes is due semi-annually on April 15 and October 15 of each year, beginning October 15, 2022.

• The third tranche consisted of $ 1.25 billion of 3.25 % senior notes due April 15, 2032 at a discount of $ 6 million.

Interest on these notes is due semi-annually on April 15 and October 15 of each year, beginning October 15, 2022.

• The fourth tranche consisted of $ 1.5 billion of 3.625 % senior notes due April 15, 2052 at a discount of $ 32 million.

Interest on these notes is due semi-annually on April 15 and October 15 of each year, beginning October 15, 2022.

• Issuance costs totaled $ 22 million.

Each of these senior notes may be redeemed by us at any time, in whole or in part, at the redemption price plus accrued interest up to the redemption date.

Prior to the Par Call Date, as defined in the notes, the redemption price is equal to the greater of (1) 100 % of the principal amount of the notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest to the Par Call Date.

On or after the Par Call Date, the redemption price is equal to 100 % of the principal amount of the notes.

Additionally, if a Change in Control Triggering Event occurs, as defined in the notes, holders of all such notes have the right to require us to redeem those notes at 101 % of the aggregate principal amount of the notes plus accrued interest up to the redemption date.

The indenture governing the notes does not generally limit our ability to incur additional indebtedness or require us to maintain financial ratios or specified levels of net worth or liquidity.

The indenture governing the notes contains various customary covenants;

however, none are expected to impact our liquidity or capital resources.

In March 2022, we repaid our $ 700 million 3.25 % senior notes and $ 300 million floating rate senior notes at maturity.

In May 2022, we repaid our $ 1.25 billion 2.625 % senior notes, which had a maturity date of June 2022, at the Par Call Date for the notes.

We did not have any new issuances of senior notes during the first three months of fiscal 2023.

In April 2023, we repaid our $ 1.0 billion 2.70 % senior notes at maturity.

Fiscal Q1 2023 Form 10-Q 8

Derivative Instruments and Hedging Activities

We had outstanding interest rate swap agreements with combined notional amounts of $ 5.4 billion at both October 30, 2022 and January 30, 2022.

We had outstanding interest rate swap agreements with combined notional amounts of $ 5.4 billion at both April 30, 2023 and January 29, 2023.

These agreements are accounted for as fair value hedges that swap fixed for variable rate interest to hedge changes in the fair values of certain senior notes.

At October 30, 2022, the fair values of these agreements totaled $ 1.0 billion, all of which is recognized within other long-term liabilities on the consolidated balance sheet.

At January 30, 2022, the fair values of these agreements totaled $ 191 million, with $ 249 million recognized in other long-term liabilities and $ 58 million recognized in other assets on the consolidated balance sheet.

At April 30, 2023 and January 29, 2023, the fair values of these agreements totaled $ 740 million and $ 778 million, respectively, all of which is recognized within other long-term liabilities on the consolidated balance sheets.

All of our interest rate swap agreements designated as fair value hedges meet the shortcut method requirements under GAAP.

3 unchanged sentences

To further limit our credit risk, we enter into collateral security arrangements that provide for collateral to be received or posted when the net fair value of certain derivative instruments exceeds or falls below contractually established thresholds.

The cash collateral posted by the Company related to derivative instruments under our collateral security arrangements was $ 883 million as of October 30, 2022, which was recorded in other current assets on the consolidated balance sheet.

We did not hold any cash collateral as of October 30, 2022, and cash collateral both held and posted was immaterial as of January 30, 2022.

The cash collateral posted by the Company related to derivative instruments under our collateral security arrangements was $ 637 million and $ 634 million as of April 30, 2023 and January 29, 2023, respectively, which was recorded in other current assets on the consolidated balance sheets.

We did not hold any cash collateral as of April 30, 2023 or January 29, 2023.

STOCKHOLDERS' EQUITY

1 unchanged sentence

The following table presents a reconciliation of the number of shares of our common stock outstanding and cash dividends per share:

shares in millions Three Months Ended Nine Months Ended

2022 October 31,

2021 October 30,

2022 October 31,

shares in millions Three Months Ended

Common stock:

Balance at beginning of period 1,793 1,791 1,792 1,789

Shares issued under employee stock plans — — 1 2

Balance at end of period 1,793 1,791 1,793 1,791

Shares at beginning of period

Shares issued under employee stock plans, net

Shares at end of period

Treasury stock:

Balance at beginning of period ( 769 ) ( 735 ) ( 757 ) ( 712 )

Shares at beginning of period

( 778 ) ( 757 )

Repurchases of common stock ( 10 ) ( 7 )

Balance at end of period ( 773 ) ( 745 ) ( 773 ) ( 745 )

Shares at end of period

( 788 ) ( 764 )

Shares outstanding at end of period 1,007 1,029

2 unchanged sentences

In August 2022, our Board of Directors approved a $ 15.0 billion share repurchase authorization that replaced the previous authorization of $ 20.0 billion, which was approved in May 2021.

This new authorization does not have a prescribed expiration date.

As of October 30, 2022, $ 14.0 billion of the $ 15.0 billion share repurchase authorization remained available.

The August 2022 authorization does not have a prescribed expiration date.

As of April 30, 2023, $ 9.5 billion of the $ 15.0 billion share repurchase authorization remained available.

Fiscal Q1 2023 Form 10-Q 9

The following table presents information about our repurchases of common stock, all of which were completed through open market purchases:

in millions Three Months Ended Nine Months Ended

2022 October 31,

2021 October 30,

2022 October 31,

in millions Three Months Ended

Total number of shares repurchased 10 7

Total cost of shares repurchased (1)

These amounts may differ from the repurchases of common stock amounts in the consolidated statements of cash flows due to unsettled share repurchases at the end of a period.

$ 3,028 $ 2,250

(1) Effective January 1, 2023, the Company’s share repurchases are subject to a 1% excise tax as a result of the Inflation Reduction Act of 2022.

Excise taxes incurred on share repurchases represent direct costs of the repurchase and are recorded as a part of the cost basis of the shares within treasury stock.

The cost of shares repurchased may differ from the repurchases of common stock amounts in the consolidated statements of cash flows due to unsettled share repurchases at the end of a period and excise taxes incurred on share repurchases.

FAIR VALUE MEASUREMENTS

8 unchanged sentences

The following table presents the assets and liabilities that are measured at fair value on a recurring basis:

October 30, 2022 January 30, 2022

in millions Level 1

April 30, 2023 January 29, 2023

in millions Fair Value

Derivative agreements – assets $ — $ —

5 unchanged sentences

Long-lived assets, goodwill, and other intangible assets are subject to nonrecurring fair value measurement for the assessment of impairment.

During the third quarter of fiscal 2022, we completed our annual assessment of the recoverability of goodwill for our U.S., Canada and Mexico reporting units based on qualitative factors.

We performed a qualitative assessment to determine if there were any indicators of impairment and concluded that while there have been events and circumstances in the macro-environment that have impacted us, we have not experienced any entity-specific indicators that would indicate that it is more likely than not that the fair value of any of our reporting units were less than their carrying amounts.

Additionally, during the third quarter of fiscal 2022, we completed our annual assessment of the recoverability of our indefinite-lived intangibles based on quantitative factors and concluded no impairment losses should be recognized.

We did not have any material assets or liabilities that were measured at fair value on a nonrecurring basis during the three and nine months ended October 30, 2022 or October 31, 2021.

We did not have any material assets or liabilities that were measured at fair value on a nonrecurring basis during the three months ended April 30, 2023 or May 1, 2022.

Other Fair Value Disclosures

The carrying amounts of cash and cash equivalents, receivables, accounts payable, and short-term debt approximate fair value due to their short-term nature.

The carrying amounts of cash and cash equivalents, receivables, and accounts payable approximate fair value due to their short-term nature.

The following table presents the aggregate fair values and carrying values of our senior notes:

October 30, 2022 January 30, 2022

April 30, 2023 January 29, 2023

in millions Fair Value

3 unchanged sentences

Senior notes $ 36,992 $ 38,954 $ 38,537 $ 39,908

Fiscal Q1 2023 Form 10-Q 10

WEIGHTED AVERAGE COMMON SHARES

The following table presents the reconciliation of our basic to diluted weighted average common shares:

in millions Three Months Ended Nine Months Ended

2022 October 31,

2021 October 30,

2022 October 31,

in millions Three Months Ended

Basic weighted average common shares 1,010 1,030

6 unchanged sentences

In management’s opinion, any such litigation is not expected to have a material adverse effect on our consolidated financial condition, results of operations or cash flows.

Fiscal Q1 2023 Form 10-Q 11

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

3 unchanged sentences

We have reviewed the consolidated balance sheet of The Home Depot, Inc.

and subsidiaries (the “Company”) as of October 30, 2022, the related consolidated statements of earnings, comprehensive income, and stockholders’ equity for the three-month and nine-month periods ended October 30, 2022 and October 31, 2021, the related consolidated statements of cash flows for the nine-month periods ended October 30, 2022 and October 31, 2021, and the related notes (collectively, the “consolidated interim financial information”).

and its subsidiaries (the “Company”) as of April 30, 2023, the related consolidated statements of earnings, comprehensive income, stockholders’ equity, and cash flows for the three-month periods ended April 30, 2023 and May 1, 2022, and the related notes (collectively, the “consolidated interim financial information”).

Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial information for it to be in conformity with U.S.

12 unchanged sentences

Atlanta, Georgia

November 21, 2022

Fiscal Q1 2023 Form 10-Q 12

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements