Lowes Companies (LOW), a home improvement retailer, has posted a 10.41 percent increase in profit for the quarter ended Aug. 01, 2014, driven by growth in sales and margins.
The company earned $1,039 million or $1.04 a share in the second-quarter compared with $941 million or $0.88 a share a year ago. Analysts on average had predicted net income of $1.02 a share.
Revenue during the second-quarter grew 5.65 percent to $16,599 million from $15,711 million in the last year period.
Gross margin expanded by 20 basis points over the previous year period to 34.55 percent. Total expenses as a percentage of revenues decreased to 89.80 percent from 90.41 percent in the same period last year. That has resulted in improvement of 61 basis points in operating margins to 10.20 percent.
The company disclosed operating income of $1,693 million, compared with $1,506 million in the last year period.
''I would like to thank our employees for their hard work during our peak selling season, which helped us deliver solid results for the second quarter. We were able to recover most of the outdoor product sales missed in the first quarter due to unfavorable weather conditions,'' commented Robert A. Niblock, Lowe's chairman, president and CEO.
The company expects diluted earnings per share of approximately $2.63 for the fiscal year ending Jan. 30, 2015.
Cash Flow
Lowes Companies has generated cash of $3,923 million from operating activities during the first half, up 16.90 percent or $567 million when compared with the last year period.
The company has spent $525 million cash to meet investing activities during the first half, as against cash outgo of $518 million in the last year period. It has made net capital expenditure of $360 million during the first half, which was higher by 9.42 percent or $31 million, from a year ago.
The company's free cash flow accounted for 90.82 percent of operating cash flow for the first half, compared with 90.20 percent in the last year period.
The company has spent $2,751 million cash to meet financing activities during the first half, as against cash outgo of $2,293 million in the last year period. It has made net repayment of $411 million debt during the first half. It has spent net of $1,983 million on repurchase of common stocks.
The company's cash dividend payment increased 4.83 percent or $17 million to $369 million.
As on Aug. 01, 2014, the company's cash balance stood at $1,039 million, down 4.24 percent or $46 million from Aug. 02, 2013.
Working Capital
Lowes Companies has witnessed a decline in the working capital over the last one year. The company's working capital stood at $1,062 million as at Aug. 01, 2014, down $511 million or 32.49 percent from $1,573 million on Aug. 02, 2013. It registered a decrease in current ratio to 1.11 as at Aug. 01, 2014 from 1.17 on Aug. 02, 2013.
Debt Position
Lowes Companies has witnessed an increase in the total debt over the last one year. As on Aug. 01, 2014, total debt stood at $10,117 million, up 11.64 percent or $1,055 million, from Aug. 02, 2013.
The company's total debt was 30.53 percent of total assets as on Aug. 01, 2014, compared with 27.13 percent on Aug. 02, 2013. It has witnessed an increase in debt to equity ratio to 0.90 on Aug. 01, 2014 compared with 0.69 on Aug. 02, 2013.
Shares of the company declined $1.30 or 2.52 percent to trade at $50.22 on Wednesday (9:52AM).