The Home Depot, Inc. (HD) 16 Aug 222022 Q2 Earnings call transcript

Greetings and welcome to The Home Depot Second Quarter 2022 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Isabel Janci. Please go ahead.

Thank you, Christine and good morning, everyone. second earnings Depot’s Home to quarter call. XXXX Welcome

and today Decker, Vice CEO us Vice of on President; Ted call our President Executive McPhail, Executive Joining and are; Jeff and Richard Financial Chief Officer. Merchandising; President Kinnaird,

during we be to to remarks, be call, Questions Department one one the analysts investors. question will to your reminder, a If for And questions. with Following our as our call are please call open get Investor prepared XXX-XXX-XXXX. and the at question unable will to limited limit please follow-up. yourself Relations

Ted, press Before limited filings results release non-GAAP Commission. me are our are subject will certain factors measures. identified I of to turn differ include, on by uncertainties statements the materially actual also call is and presentations Private our these Today’s projections. Reconciliation the risks the to provided but in you over and our press and Act that to from These and website. Securities measures today’s defined These include could to, include Exchange Reform cause the the forward-looking let as XXXX. that statements made risks Securities uncertainties release expectations in executives remind not and the presentations and of in with our Litigation

let over the to call me turn Now, Ted.

team same XX the and positive share call X.X%. year, our were second our sales last a same on inflation Thank quarterly has from quarter sales average. done from perspective, the comps while posted of up comps period you, second From last navigate the in XX.X% second disruptions were last per we and $X.XX each up Isabel, serving market. for our a up and the in the Comp regions of billion, labor customers, had versus were $X.XX joining Diluted the We this last to a comps X.X% stores and the Mexico US year. history. continuing morning. in delivered Sales X.X% highest US our while geographical of In year. appreciate earnings job quarter $XX.X period tight good from us morning, everyone. our quarter, delivered positive quarter you company's second above chain the year, fantastic The company Canada supply global in earnings

improvement the in results reflect Our quarter strong projects. home continued for demand second

As strong was Jeff across departments. the will business our detail,

While first for in that offset than business by these the as more expectations outperformed categories positive our was expectations. seasonal our This broke quarter, project-related strength comps half in our the second spring underperformed the of categories year.

We also remain saw growth healthy. backlogs our are Pro that encouraged in and with quarter and customers project both DIY the

While environment. well backdrop predict first and macroeconomic the the can't are business impact of will navigating very we We through consumer year, evolving remained the a half our unique customer the how our performed resilient forward. going

are we demand believe improvement, on distinct advantages continue we capitalize remains uncertainties, elasticities leverage competitive environment. that monitor experience we in for space. opportunities and and to our underpinnings that tools, effectively growth any trends closely across and we categories to Despite positioned the and well the home have However, the of to in near-term our team manage respective long-term to strong believe our compelling

before an not with if placing quoting associate an questions website new deeper or other capabilities our customer personalized customers, believe and BXB we interconnected Pro to a our continue systems, capabilities, our and seamlessly was we to more for website the Pros. had we to past, as order, our experience launched drive so the fulfillment, our could In the changes experience, quoting enhanced integrated tools For are enhance engagement shopping the not the resonating. online business Pro customer, In our management on with in ecosystem as of including May, invest efforts ordering well order. modify and

Our new the both orders, second both year. collaborate and quarter pros leveraging last capabilities in-store on versus them and platforms to allowing associates, our remove for XX% digital friction increased interconnected online. Sales

saw app. mobile traffic record downloads, sales in via also We our

ongoing to our see conversion continue digital customers. our resonating properties We improved are rates, are enhancements as within with properties

what Our important, team is customers. is focused our on associates and most

our over Our for qualified call their Based did for to service them the associates. thanking merchants, job like on me for hourly chain XXX% partners store teams throughout first and Jeff. value that, turn Success close outstanding stores let program and half by met I'd supply work. quarter. and customers With and to teams, profit-sharing Sharing, supplier our to an dedication results, delivering the our of hard

also Thank I and by thanking everyone. associates commitment all for to their our want communities. you, customers supplier morning, Ted, of and our and partners serving start to ongoing good

partners. to As you from for the teams supplier quarter, demand during strong see heard second we our projects Ted, and and strong continued execution from improvement home

our the quarter. second during Turning performance to comp

outdoor comps. appliances, posted merchandising millwork, tools, and company average. the below lumber hardware average. but All the were garden, all storage, and positive, of positive and flooring materials, apartments indoor kitchen Bill our bath, garden were decor plumbing, company above paint Electrical, and

tough and expectations As the comps -- first chemicals like categories the you of Keep seasonal versus some outdoor up year, heard from positive businesses underperformed by are against that best Ted, our on in living and last focus these performing our first the comparisons quarter, we while when and our in customers very half of our second mowers. for are these two fertilizers, they in grills, posted mind departments. driven categories, half the years,

for and ticket up or average pipe lower in and primarily by and comp comp categories, the driven to positive. primarily X.X%. Deflation of transactions across ticket second healthy growth prices. core was categories demand categories driven our ticket and transactions innovative comp and product commodity impacted inflation a big We by basis, like ticket the our transactions XX.X% a across as saw XX from were and were Big last well growth new fittings, our quarter, On compared average by as second increased both negatively average our lumber quarter decreased gypsum The comp average ticket strength comp X% comp products. during many second the $X,XXX During over year. ticket points fasteners. quarter, Pro-heavy three-year basis those

and remain Pros quarter, the DIY growth second DIY. we both with the are their us by backlogs they healthy. During positive, momentum was Pro continued our tell encouraged sales Pro seeing outpacing with We're and

as the and tubs During fittings, business. and project project-related in can our conduit the the comp be quarter, categories materials, departments demand like as saw showers in build boxes performance a countertops. across we certain millwork and double-digit siding, This plumbing well fencing, and seen of robust

tub new exclusive can any big new in & big the products fraction of delivers our of bath, introduce formula XX Classic we're simplifying season Henry's and and helping waterproof to bathroom nationally series the with applied continue series to assortment exclusive Delta easy In it having in materials, the And we we're with Roof great to to Tropi-Cool channel. box that Home about launched The makes a the is Home the is a wall offers more a It aimed on This application. minutes We One XXX example time our the Pros and in or Depot Shower combinations. jobs. transformation maximum simple Henry's surface XXX% Coatings. where Tub building install rain-safe take innovative Tropi-Cool to clean. at easy this is project, saving helping costs. be reduce to excited Delta success system shower Depot box time. in and cooling This reflectivity, within acrylic in of is a product channel. its them big

Turning to online our sales.

with are customers, second platforms Pro our with are Sales site delivered XX% robust drive leveraging We dollar our digital This the resonating capabilities our help search enhanced more experience increased investments, was and quarter. by during conversion. performance very fulfillment in driven sales capabilities continued company which and volume we online the of digital the as our pleased improve assets history. highest

chose were of testament than of second that power stores, to with interconnected us quarter, through online to our a the customers during transact our strategy. those orders the fulfilled online more retail XX% our For

As highlighted Last being for committed customers. back look products our for the remain year, advocate to we we innovative customers' value. the to new we half forward several quarter, of our

big is rolling Hubspace same such RYOBI XX-volt the customized The heavier XGT categories. This products quarter, and operating Smart up excited fixtures workplace. without launch tools these can Hubspace Makita's the XGT and meet manage to success as to engineered excited your of Halloween. Home systems, the to the sacrificing and XX-volt Milwaukee with one-battery power technology workshop several out utilizing cordless Depot pairs new needs and PACKOUT is the load The of on control, in voice-controlled system Depot. channel. organization, exclusive we'll We're LINK well lighting organizational smart across equipment assortment time. outdoor achieve to your Max be locks, door locking fans. announce required we're system Home the and about This to be easier The box exclusive it the platform, and home makes wall also our system We're excited for platform to our garage to in for power to set ceiling And that systems. across also our from tools lineup expanding and the our run optimum our applications categories of solution build Home are And

preview Our with These supplier to success. an traffic this products our was worked assortment excitement a bring help and of for Halloween our drive expanded tremendous sneak have merchants offerings Halloween season. stores together put product lineup to partners and our of our

We I'll upcoming With are call turn Richard. thrilled in over weeks. full the rollout for the that, the to

of good X.X% billion, the year. $X.X or total and morning, In an increase quarter, sales were Jeff, you, second $XX.X last billion everyone. from Thank

X.X% second XX.X%, comps chain and the in May, in the were in June investments. July. X.X% in of quarter, US points our in comps positive second a for approximately X.X% was last company in approximately primarily by X.X% margin X.X% XX June with with basis gross quarter, positive X.X% the total May, comps of driven positive in decrease were of July. the our quarter, positive year, from and X.X% In supply Comps During X.X%

as and maintaining value. our We continue the customer's to cost successfully for advocate offset pressures significant transportation product position while

points second quarter, of as a decreased basis sales expense the approximately During XX.X%. percent XX to operating

solid for expense quarter during the management leverage reflects the operating quarter. second Our

rate million, $XXX second levels second Our operating due up primarily of quarter was tax to second XXXX. $XX the XXXX. in compared to increased second the one to expense million from fiscal second than quarter long-term quarter our by XX.X%, effective the for was XX.X% In in XX.X% quarter, higher debt year quarter ago. the Interest and of other the for XX.X% margin

XXXX. second earnings XX.X% of diluted for quarter compared per increase share to an of Our $X.XX, second the the were quarter

were the of selling $XX.X of $X.X square billion At billion, quarter reflects from turns year. the square was end the last to the of the times at were feet. XXXX. count inventories second quarter compared X,XXX of store inventory XXX total year-over-year X.X up inflation. X.X down million in Our times, end Approximately footage the was and increase second cost quarter, half product Inventory

Our chain new disruption, investment and deliberate events forward inventory inventory inventory. reflects and spring some half higher investments facilities continued in in-stock response in back our pull chain levels supply and for supply to carryover also of seasonal of global

Turning cash repurchases. in it is intent capital return paying our dividend, in business share allocation. to excess the of form to our After and investing shareholders to our

during form second shareholders, share $XXX on in returned billion return to XX of we the the invested $X the trailing and form quarter, ending Computed XX.X%, beginning second long-term in $X.X quarter, we dividends we and the up the of invested XX.X% repurchases. fiscal into and million on paid debt to XXXX. in our in for And capital our the approximately quarter the approximately During of was capital months, approximately approximately expenditures. equity average back billion shareholders of business from

will I comment for on XXXX. Now, fiscal our guidance

pleased our was we with As expectations. reaffirming you from we during XXXX. heard which for in line the Ted, our Today, guidance very quarter, strong the saw with are are second performance we

sales comp fiscal and of We XXXX. X% for expect growth approximately growth sales

first year the of the expect stronger to We of half in in year. comp the second the half sales be than

share And we ourselves while with managing environment in a seen global monetary operating We our year. fiscal percent unique supply against diluted earnings crosscurrents. the mid-single-digit find moderate per the intended XXXX We decades in not margin compared a We're fiscal expect to we to growth in growth backdrop approximately in policy XXXX. diluted operating be environment inflationary constrained mid-single-digit of in shifts expect percent expect XX.X% all conditions, for demand. four broad-based many through to chain

resilient to time for demand. in structural will we home and environment, improvement are support that and for engaged see feel our We market for in dynamic continue manage call. with exceptional value. homeowners questions. now who than homes spending more shareholder also have We consumers we confident faster project Thank sheets, strong you continued Christine, flexibility balance and while through a their growing And participation delivering today's ready your

Thank you.

We session. will a Thank question-and-answer now conducting Instructions] [Operator be you.

comes Lasser UBS. Please your Our with from with line first question. of question Michael the proceed

improvement? Thanks seasonal are taking that for sign that short expectation performance a the question. you some my housing on negative its any the signs leak some morning. is Could it starting lot to having impact of of the of way in home is Are seeing underlying fell that business? a Good housing a your be challenges into that

morning good Hey Michael.

yet. that seen not have We

markets, across our some time. has been lowest the been in that In strong we've variability lowest performance regions fact, with the seen the quarter, in has this the

all we business anything follow housing. from those have macro not and headlines our very appreciate in But we So closely. the yet seen

going has case, frame over the what place in Is healthy of Perhaps that experienced what's the the the Home efforts that in return on been a the where on a versus could Dallas you've Depot which facilities the the the made market. investments it's longest Pro there couple of generating not last because is and some market, as Ted, you very you're rest years? this where in the of have evident business for distribution in

questions some very top our DIY many quarterly mean profits again, about reaffirmed the things seeing through about we're the currents customer all interest are has environment as two and But is Sure. we economy, questions, housing business, take years. markets guidance, resilient. We and and we couldn't real and though, each the feel that's Pro, a record seeing which cross on rates inflation incredibly we're the Hector all sales what like. been in disruptions business. the reported $XX and past closely. very a we're And us we'll better things We just will billion with in that, our get following Pro. But chain incredibly see said, the of given the and growth just in customer, engaged strong. with our our overall operating to supply and in of in unique and our And But Richard Dallas and Michael

said, demand incredibly is Jeff project As strong.

years? demand demand hot spring had seen bad across are then Is business. country very we Our see weakness and through prior seasonal late incredibly two of strong strong businesses Pro particular, is backlog we overlap the their have in we is the DIY, seasonal where say healthy. incredibly Again, to and in remains fundamental In in parse weather the they it's the really a in we it pressures? some turned fundamental broad-based or did weakness. it a not that the as difficult But the that, pressure

business, whatever look be specifically be share So I management can comments, I and very just an are we any if business, some comes, And Hector, say, agile said an Pro happier watching Michael, to my in experienced couldn't can overall And with in closely. on as environment. you great. color the would give Dallas and team, it we we take overall

of to But lock multitude To friction do and fulfillment new as of that quantities. product removing to personalized our enhanced Michael, multitude know, Yeah. all loyalty with at it's as supply it delivery, assets options a interconnected serve really tool Pros, reliable about And it other offerings these We're the and propylene of a tools extra tell expanding starts and sales allow assortments contact, Quotecenter. them an will and unique rental, team And more Pro offerings a different single and tool to building ecosystem most with inside you includes we're we're for advanced ecosystem Pro our I another our quarter-over-quarter. with assets, growing of capture a our building have well. and extremely will brand you specifically also value-added job performing point capabilities, you purchase. and And chain experience, digital to for as Dallas level. know, that a credit, onsite is us I such you the team. And other or capabilities tough us new markets Dallas, serve are have supply share see to Pros live. our spend larger markets we part where their our market Pros, trying that And is for through thrilled chain sales hence where we of

luck. very you good and Thank much

line Simeon your next of with Our question. the Stanley. comes proceed Gutman Please with Morgan question from

oldie, good. on given you're wanted the significant occurred post-COVID. Good have Hope morning, everyone. an reversion I gains goodie the that ask to but

One looking base. that it at of the reversion in most ways that basically of we've the suggests is the been unit

the of and year. significant growing the XXXX, asking rebaselined on and looking you opens it? kind curious anything any in at interesting that we've next part So how on this XXXX business a of for I'm at you're as units it question but endorsement reversion door not look to

-- Michael sorry. Well,

Sorry, Simeon. It's question. good a

the really we'd the growth year, to we resilient haven't -- I customer, a transaction, the commentary expect we seen that the sort the Pro driven though, very more of in year. have in think of than beginning when even Ted's guidance issued assumed see inflation offset has we of return like-for-like at beginning at that. we that ticket consumer, been When expected and to we we consumer our by

see it's may based a a It assumes that observation that does persists in to level the it guidance at on inflation some right now. today. really offset our QX and slightly current reaffirmed conservative greater increased in year. And transactions as a levels But and assume assumption we that through that -- X% led not of guidance so comp. We've

and is resilient. consumer the -- So customer

Simeon, been and in the and And, now, all on those share house obviously, travel and PCE reengaged in in goods activities has in hospitality. share clearly, strong, we've the watching, on outside metrics consumer right incredibly services US eating and out, is

we So laid to increase has in what there home particular, services just movement of to as the PCE wealth really been in in dynamic of strong, the many the you which a the wages their at home Again, are but just guidance from improvement. But strong see our the up don't engagement us been, X% But improvement, of engaged the time Richard essentially cross-currents was all that the the time still the out, customers led level. about just economy, has our thought. incredibly savings year equity when so rates, It's more incredibly people again, and improving to continuing remain home we the flat home that and affirmed. the think in start don't they're we home bullish -- and from that the we core jobs excess slowdown as billion, spending $X-odd we're just that in earnings growth that spend general, fact more in. and to at super of

certainly dynamic. So benefiting we're that longer-term from

still of position survey say fixed to emerging do few kind very like saying, data there's mortgage, another the dynamic against We their reversion. going who think, an we're intent in I sizes high. think in may rate to pushes projects my I'm into home. mortgage that looking their to stay where interesting and a in at move customers my years I of And, see those is ago, place that equity all is And and that about looked like remodel. I have you house

you other ask going or basically you not the the expecting healthy, of lot so complex, because Ted a still my I seeing contracting spending high-ticket to really yet at and answered Richard, looking And across the basically Yes. we're are it think think, was it. consumer why is saying, I you're and backlogs it. follow-up, that

anything I but question, because point. if income think more. to it vibrancy if answered to else, of partly it's mostly in but your it's know last housing you there's the cohort, the the the curious response don't there's market, if I

heavily customer skews Our homeowner.

And over you look place And at carries XX% as and Our a our XX%, homeowners is compares last on just I our over years favorably. sales were to DIY at said, to appreciation in behalf a it almost now. the look of Pros of of you spend is customer, our on creation when two real customers, good wealth think that a over a Ted if of the income, price really right that to purchasing also customer take power homeowner.

Thank you.

Ciccarelli question with with Our comes proceed your Truist. question. next from the of Scot Please line

Good morning, guys.

of a here, a sake shorter-term guess, not that ticked I hundred sales the stack notice points weather, basis might couple on question point to interest of kind guess that anything I July at I'm it's the So specific, asking, up be a wondering, basis. to And prices? helpful. easing we've on seen it slight in or would Any be you gas of guys rates hard color

basis, Scot. On morning. Yes. Good three-year it's more or a less stable.

But as the in including start a it midway from had the noticed because of has service And couple here August. in and particularly traveling South, mentioned relatively very vacations school as July, continued going easier say, Pros, August. people we I business back -- has that acceleration PCE up. the July So in have I think saw weeks. come again, people here into strength continued and -- down QX will our have came back, We early through people, we and early of And the compare. into we one spending thing first

cetera and I engaging in back the think and the from people are et beach, home mountains, back home projects. improvement home

expectations. And of on for Okay. That's it then of there the a short first way to a magnitude Obviously, half? a came you adverse us? the helpful. Is impact size just in that can provide little seasonal

our offsets to demand accustomed in look business we Ted at in We improvement -- as total. home and said, we're

And always exactly demand but had a there. great we the about the think met we way are, said, never we quarter expectations. we we out There's so feel we that we as saw --

Thanks, guys

you. Thank

you. Thank

your line question. the Zaccone Citi. of Please from comes proceed question next with Stephen Our with

I my your in backdrop. Good revisit in Because hoping lag macro could you concerned be improvement comments could you've factor for was a morning, about at demand Thanks time? questions. the appreciation Ted, we that looked home just price slow taking there past, a could as key sense demand. Are the home over guys. for the

flattish for to prices decline You're outlook and term? home the near demand stay could on here the potentially concerned or medium that your that does alter from view

So it yet. of for price hasn't our the we as seeing. is cetera, what formation, multiple most but on this and And we're home transactions, inputs price appreciation, correlated about talk appreciation. the housing strongest et household mean I sales is home

as that's to $X of gone $X couple Now XX% wealth customer in is translates up, base. years, Richard last we core said, which trillion the our believe, with trillion, increased high XX%, of what

minute, rates mortgage fact not a touched if couple home this in of of that The construction years so so gone after people we and that we year going remodel, demand from we've we're rates year so in a in the tear. position in after is coupled and these If certainly, saw up when homes, for feel up incredible demand. going don't serve, year point again X% home, are the that at to new holding have equity homes years you less repair you much mortgage more the will, impacting So see on immediately. there appreciation price the and with in their increase spending is strong two time wear that past

ages we there it often. and of course, then fact is aging US aging, more had year, because stock of you're underbuilt years You're to it's disproportionately that And home we improvements in want every the the because or those going many and so housing. home more space the just but in

homes over old. So years States the now over we have United the well in XX half

supports strong some incredibly these come, we the that home beyond price with in appreciation factors there's those all levels have home if time stretches effect there never correlated thought to we near-term. seen that saw or for multiple a we've regardless you lag So over periods. heard appreciation always period-to-period think run-up and improvement that value, And in

are fundamentals we Ted So here as think said, strong.

Very Great. helpful.

like how the levels. inventory Maybe of share. you on basis, is follow-up on quick right inventory if up a now? the in much at level And feel you unit Just in-stocks business do a could you're

you this Kinnaird. environment. From we are manage it's at morning, is if our of half inflationary that Stephen, Good -- as Jeff look perspective, we total inflation through inventory inventory, an

a in-stock our to hand-in-hand building our We year just is better improvement, we in-stock year. point, where still our happy improvement, suppliers Second worked progress. our how supply versus go merchants, team, our very ways -- but of your last terms have to we're happy -- in with have this a with chain in we improvement,

know, having to inventory forward. You still are we pull

other our our the there think be timing and lock about you today's of focus terms chain in environment, is supply for the be right If to of to job for customers, and there events pros activities. our right quantities

inventory ensuring terms from customers of in-stock. the ready season. season, is our We're do that have next some very So feel inflation part and in inventory customers. managing our good work the for spring our we're through obviously of for there our there it position. of and we about inventory we're be for but is our overall, in inventory overage due that carryover that will really in-stock But to in environment managing being low-risk terms of We

of the in very Thanks luck back Best half. much.

Our next Brian question from Oppenheimer. of your Nagel comes proceed the line question. with Please with

Nice Hi. congratulations. Good morning. quarter,

Thank you.

a questions. of So have I couple

sales done company followed building has of to model off, that. and a very First forecasting Home your a off job historically, understand own and inputs your the good long now say, macro time, then Depot a for so having

business now. should a this out questions. you -- than have models is right somewhat, some your tracking macro there would I type break you're is is dictate? where prior of macro factors, your the now know with variables variables mean look actually I various on the is be, the at there, or actually But with I question So the -- -- follow-up it performing right better you as various some of consistent the where you

What I we managing our off think, share agile of positioned than take in environment and that than we probably are that macroeconomic to Brian, we're in now way. less been to is consistently build in environment. that such we've a in share market time valuable factors are spending taking is confident to try any market better unique models an ever

the just macroeconomic said respect factor. in on at for what's going statistics not same here. over Ted we're now. we least watched moment, to, And at we've As any earlier, environment a to homeowner. tied given the positive given directionally, But to with housing the we understand dynamism a think decade economy the this There's very going

coming doing mean, integration size of seen we mentioned that, really larger talking than I to more Yeah, our to come on, the and it's that to as the we Brian, we're they research add in what drive of many have the is capabilities in And a just truly talked large doing ecosystem ecosystem building are we buildings this all I comp. Pro metro is This supply number of if parts prepared in expected. our about we now the outlined. starting Pros to incredibly truly that not in can there set quoting which I building one larger markets, and the increase I but with we're of are thrilled develop of Dallas, mean, better website, Pro that, are with Pro business force, to do our with chain Pro more capabilities strong we Hector specifically any purchase. we're did, online, are to serve marketplace. comfortable than as their our And Hector a we this plan of and Home is of open Depot parts different my remarks, Pro sales capabilities BXB together what

that TAM we million as is Pro, see yes, opportunity. earlier tremendous this billion would updated outperforming And So a in category I it. $XXX happy and with say, being we that of just for our year we $XXX to are that

That's any is, great, have very, inflation, the has a have, I very push inflation But somewhat regard are is price business. the consumer back once guess again, your evidence driver these to with helpful. to And the higher starting so seeing points? of question incremental on follow-up question I I been then that unrelated. you

higher that's unit higher than inflation. we average – are and we Brian, growth, have retail

the we've above and to seeing that speaks really trade Pro So in $X,XXX any the customer. not into project got strength our down, ticket

sensitivity. like the We forward, items, is other COVID Ted stimulus from as other the on bigger and possible consumer a to a is very went commented, projects. And spring it's hot markets. effect. will grills, there's few We say mowers, very in and cold wet our of laundry pull price a in there focusing majority categories a But summer there's ticket

that has about think You consumer shifted.

we're and about to about across think last paint it was Then our categories the we This categories, see say, large trade it's supplier and that and like project the the renovation year, also backyard. all other and proud around and merchants I'll a continue lot our the seeing business. year, job and Pros of partners You couldn't consumer consumer. innovation what Pro the of our more products innovation, got We've simplifying customers. of for helping the the finish up our delivered for I faster be we around and our

place. taking down no significant trade So,

you. Thank Appreciate.

your Our next JPMorgan. with with question Chris line Horvers from Please comes of proceed question. the

Good morning, Thanks. everybody.

that follow-up are A I performance overall, quarters. this, growth the question What large the last attribute performance ground of Pro Pro I'm a Yeah. on DIY? - Pro the with seeing large but is that? the then sure, overall not Pro? that our high sort several amongst versus because will smaller the Chris, Broggi Jordan been And the transaction you was Pro Pro. can you spend Can to of you track very over relative outperforming? has the share you transaction is you growth, down, if consistent Is talk presumably, about would So the

as very to size We're other accelerate the quarter-over-quarter. Pro as pleased of that. far we're business see our customer seeing areas So

talking feel next just a substantial good. really couple with spent of time quarters. them amount feel backlogs, we good We we about for the about where they're positioned So and of very

sorry, to So, interpret. just

you're Pro performer? has that large best been So, saying the

Our were quarter. the performers this large best right, Chris. Pros That's

for And the you it Pro? level transactions up on it. are look a Got then able at were to transaction

break that out any strong to professional that let's with further, going not the but is just larger demand say customer. We're

on that follow-up that time are where the then DIY How September category. Last of, your happen year on frame came the reengaged vacation And in back Ted, more seemed in it. point you have DIY the to and are come Got people about as maybe are thinking the versus about reengaged. the sort from to and back things and to school? the DIY kids fading fall and get fall? do But risk the done going we maybe into back the September some get business there need people you how that think on into

super half reaffirm second strong lower which second the the that's us. if that's implied frankly, first when question. continues better for that in a implies that We're know consumer than But quarter, given on. hangs And to And a comfortable for second the motor comp question half we the half, and really strong to and to guidance, we is in the the the Chris, comp frankly, there. great do with Well, question opportunity the the don't -- Pro; answer.

for the and underperforming the Jeff things As for first half, it's having in to then And went more the they half. that of the get reengage, backyard et great called for seasonal and we two other if crosscurrents, potential conservatism various that's obviously little in reasons fall so these like if cetera. that. will did said, relatively focus of a haven't weather, bit news. the second years just things, be they with the and in go back But long in And beach,

much. very Thanks it. Got luck. Best of

Please the Our question. proceed line with Grom Chuck comes with next your question Haskett. from of Gordon

thanks. Hey,

Chris’ that a couple curious the question. And of you what quarters continues next over from on think of perspective build planning weeks that to over XXXX. lead, just that a it off kind to Just start maybe you've is how and past your or into shift category maybe the to expectation seen few you're business front? the Pro early I'm do see we that

in stores in the leveraging of a capabilities we the prepared and innovation weeks great and set category I Pro, the the quantities be we'll other spoke supply upcoming ago are launch, innovation it early we comes to in that morning. at value. performing. how Hector that weeks it and just and we'll in Look, capabilities chain success to and good our project to look Chuck, saw and customer and Halloween to. point when few for When of terms launched there continuation the comes job-lock and Halloween forward the

business, Day, Friday planning a Halloween, value. continuation in a we'll few We've of our for there Black for it great and be for for coming program So being consumer Pro be as business, we the got great the comes when planned the in our there with we'll project to Day, up through And our advocate weeks. for head customers continue timeframe, the the we Labor customers. as we'll move Labor value

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to obviously hear. good That's

Just couple gears the next years. of a little switching bit to

guys couple you you But the you the bit. of and be of it little next complete can you've the if wondering how up opened much new that a the a rollout? that country largely on touched discuss can benefits facilities as over you're tailwind in Dallas that across Just seeing, years

off. start I'll Yeah,

we're component is home same-day, our supply the in and reaching the delivery customers an really to And reliable of service a and XX% most on serve our to important households big ecosystem with and fastest, build that building productivity. Our is improvement next-day of drive bulky. intent and efficient network chain parcel

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the excited possibilities and so our And investment with we're that remain strategy. Supply about Chain our One

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Thanks Ted.

Please line with question. with comes proceed the Our next from Steven question your Guggenheim. Forbes of

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jump I'll in well. So Pro on just Xtra as

spring. the terms That's Xtra in leap Just thrilled this been loyalty with to great see of perks engagement. forward see of are our We cards sign-ups. credit the our commercial and And terms enrollments performance. the second We significant existing our of another is performance. in revenue Pro We overall Pros engagement. strong. linked in year past seeing strong and in we the that great then engaging level growth member new are are And

just follow-up, and a then Richard. -- And quick maybe for

Ted Success last for we the or, that that mentioned expense qualified think the think compared stores original to I plan Any year how about year, the on I guess, XXX% to as the Sharing. for of color build? payment

It was equivalent last to roughly year.

you. Thank

line Our Please comes next with Baker of D.A. question. your with Davidson. proceed Mike the from question

guys. Hi,

you'd are obviously, operating business at margins. comp about maybe at the that, to guys margin that about it all, I the just Is in target X% above breakeven your go it parts, comp to to environment, Is looks up, flattish be of least sort that breakeven, about the way X%, and you the something margins according of wanted moving think but et right guidance, through So you going lot at with cetera. like, longer-term? a the ask, to where

the Just view. wondering about long-term

very typically expect our the expenses do into of part part operating We And and for comp. We question. we is model so, we operating a leveraging the been low expense to do always financial would of -- single-digit business. a thank you how lever

but see where generate going how fluctuation to to expense year operating expect sit managed about expectations we've leverage. and Longer-term, teams through from this quarter-to-quarter, have we our You're and we met feel environment. great again, this

to is and market think worked about that's working gain terms though profit for deliver of to driving value in operating we goal here growth. think keep dollar Our value. us, it's share shareholder and shareholder That's we delivering And a for us. formula going

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think Again, first we about thank -- for think growth returns, and question. dollar We you the cash-on-cash about we foremost. and

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say we so appliances would as that on business, our that back, again single time. every we look do impact And we

market return will and capital. to share, look operating dollar drive profit growth drive for invested We on opportunities drive

color. the for Thanks sense. Makes Perfect.

you. Thank

Fargo. comes next your with Fadem from the proceed line Zach Our Wells with question. question Please of

terms is investments And some wanted to can customer the now share facility comp performance the time seems for to at market to share there or or versus for I supply and expectations. that your your morning. of in new good fleet? any Hey, had market, follow-up chain wins lift overall tracking as be you on you've above resonate, Dallas your quantification wallet gains

continue just our our purchases Look, we're it with Dallas specific great and the We're for seeing our break to repeating you to customers, business. top performance towards again, not and Dallas. those trying engagement who comes our going of But of are to and has performance grow. reaction when tell us down segment those would that been I are baskets Pro capabilities the the from

servicing expanded,, the sales and So, we're customers. are our second our excited resources outside the ecosystem. to continue to members We doing team or just Pro time, great enhance for those

to what just Dallas customers. -- purchases markets. with in we're just our ecosystem they consolidate from customers other When consolidate over again, But and of times about encouraged build-out early of you us. Pro we're in other can to the it's purchases. And So, transformation, the to customers other really think their want it's coming to in but very those year our and want having serve seeing early we to to their coming stores back about our projects, a our signals go retailers and the they great XX complements needs for Pro then

quarter of good at they're size have we I've tracking breakdown and buying look mentioned days larger in another the And Zach, item before, sets this have add, exactly emergency can delivered. to a And capability we various of purchase what what we infill as see, Pro, that's Pros pretty you if at of building, the we're the I small the hope you'd is capabilities. these and a as then engage that expect look versus plan out we're see to seeing this

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to seeing what purchases. we're what working, that's you'd purchases. We're with you of Again, more that would capabilities, demonstrate out exactly seeing. As this we're is everything they larger seeing to want engage map see more repeat is sort

happier. be a couldn't journey. It's we So,

now the sure in with NPV-positive to incremental this even particular. but we're markets the markets growing incrementality and need As again, them. Dallas by know levels tracking an behind look most many at Dallas to that growing paying exactly the that different and of large incrementality metro not now we working we've specifically, sales we're in mean ecosystem, way of right look drive levels and said, accident what performance these I market Single established, we're many is -- force. very this whole is that resource. our we do Pro it's make we're the with we capabilities. individual capabilities different of with And rep, add sales an is sales different what But project, we in to the for Pro Pro different incredible is we're at built

for and also after for coming the complete of And the that. advanced lot think again. engage restore with, a only unplanned that thing to the seeing last unplanned Zach, I project. Pro is order pickup. planned product, deliver about purchases pulls same the we're We're go only project customer to large And seeing you also Hector it's purchase add The project will purchase but that that every not back that

So the ecosystem well. working is really

basket. helpful. your all Got also with out it. leveling to That's just down And of commodity in recent CPI the the and wanted I ask step

or could that input of more savings do sustainable? or pass immediately just the customers, through moderate. impact as start you'll costs to recent view to talk increases freight Is on say it majority you or that the your here to your fair you less If price

in we do we when stay almost all manage off. on fall market. commodities the have a goods. and on say, yes, like Zach, see we for We portfolio of what Hi And a a lot our of components it will also cost analysis And we're I suppliers sell. competitive will deep large competitive pricing work understanding all of with of products that almost working looks we the

certainly a there's we competitiveness watching commodities what market the watch index. takes in on commodity off maintain broader the we in the As midterm with here. short as will fall We're that the and very been in place you our and closely, said,

for Thanks time. the

question. time we more for Christine, have one

Thank you.

line David question. MKM from comes final Please your with Our the Partners. question of proceed with Bellinger

thanks Hey, on. quick getting of ones. A me for couple

mentioned a half year. the implied pace back slower sales for the you to So to X% of in comp get the

tied expense the you're operating QX? sales we after remind much to results just expense better can, the in just to real QX? should in And QX your that taking think how up specific to about growth structure is relation ability down you measures us, cost payroll in Any or flex how of if and to on time? and nice So, get both growth leverage in

taken order, to in -- reverse we just really other With it don't payroll guidance. We sales, expense, we the of point respect to remainder our very percentage manage our of our to year, closely. is operating I and it the out largest you break

operating in heading. anticipate. year the to great but is You're respect again, with guidance going least we what point to have we about leverage, at we where I And variability feel quarter-to-quarter you think to expense

QX this buyback X. We've where Can other tax X% January you talk just one given landed, potential acceleration? one. added repurchase the And just any about share potential coming Okay. share numbers got then outlook, have

Just change buyback? the on any

change approach. allocation in no our or philosophy There's capital

We will continue shareholders. to return excess cash to

to now closing Janci, turn floor you like to I'd back over Ms. comments. the for

November. Thanks, you forward today. on earnings Christine, and us third call our look to in joining quarter with everybody, for speaking We thanks,

does today's this Ladies teleconference. conclude and gentlemen,

disconnect you your participation, time. Thank and at You may have lines your day. wonderful for this a