HOME DEPOT INC

We reported net sales of $43.2 billion in the second quarter of fiscal 2024. Net earnings were $4.6 billion, or $4.60 per diluted share. For the first six months of fiscal 2024, net sales were $79.6 billion and net earnings were $8.2 billion, or $8.23 per diluted share.

During the second quarter of fiscal 2024, we opened two new stores in the U.S. and one new store in Mexico, resulting in a total store count of 2,340 at July 28, 2024. A total of 321 stores, or 13.7%, were located in Canada and Mexico. For the second quarter of fiscal 2024, sales per retail square foot were $660.17, and for the first six months of fiscal 2024, sales per retail square foot were $616.17. Our inventory turnover ratio was 4.9 times at the end of the second quarter of fiscal 2024, compared to 4.4 times at the end of the second quarter of fiscal 2023. The increase in our inventory turnover ratio was primarily driven by lower average inventory levels during the first six months of fiscal 2024.

During the first six months of fiscal 2024, we generated $10.9 billion of cash flow from operations, received approximately $10.0 billion of proceeds from the issuance of long-term debt, net of discounts, and received $2.5 billion of proceeds from commercial paper borrowings, net of repayments. We utilized a combination of commercial paper borrowings and the issuance of this long-term debt, together with cash on hand, to fund the acquisition of SRS, with cash purchase consideration totaling $17.7 billion. Specifically, in June 2024, leading up to the acquisition on June 18, 2024, we raised commercial paper borrowings of over $15.0 billion to fund the transaction, of which approximately $10.0 billion was then immediately repaid with the proceeds from our issuance of long-term debt. We continued to repay these outstanding commercial paper borrowings during the quarter and ended the second quarter with $2.5 billion of commercial paper borrowings outstanding.

During the first six months of fiscal 2024, we also paid $4.5 billion in cash dividends, funded $1.6 billion in capital expenditures, repaid $1.3 billion of long-term debt, and funded $649 million of share repurchases, prior to pausing share repurchases in March 2024 in anticipation of the acquisition of SRS.

In February 2024, we announced a 7.7% increase in our quarterly cash dividend to $2.25 per share.

Our ROIC for the trailing twelve-month period was 31.9% at the end of the second quarter of fiscal 2024 and 41.5% at the end of the second quarter of fiscal 2023. The decrease in ROIC was primarily driven by higher average long-term debt levels due to the financing of the SRS acquisition and lower operating income. See the Non-GAAP Financial Measures section below for our definition and calculation of ROIC, as well as a reconciliation of NOPAT, a non-GAAP financial measure, to net earnings (the most comparable GAAP financial measure).

SRS Acquisition

On March 27, 2024, we entered into a definitive agreement to acquire SRS, a leading residential specialty trade distribution company across several verticals serving the professional roofer, landscaper and pool contractor. On June 18, 2024, following the satisfaction or waiver of the applicable closing conditions, including receipt of the requisite regulatory approvals, the acquisition was completed and all merger consideration was transferred. We believe the acquisition of SRS will accelerate the Company’s growth with the residential professional customer. The acquisition is expected to complement our existing capabilities and enable us to better serve complex project purchase occasions with the renovator/remodeler, while also establishing the Company as a leading specialty trade distributor across multiple verticals. Refer to Note 2 and Note 10 to our consolidated financial statements for further discussion of the impact of the acquisition on our consolidated financial statements.